An aviation advisory panel on Wednesday recommended that federal legislators swiftly appropriate funding to enhance aircraft navigation technology and investigate whether aviation taxes are disproportionately burdensome on the airline industry as well as consumers. The panel also asked the government to require additional transparency for ancillary fees and code share agreements.
Department of Transportation secretary Ray LaHood said a timeframe for implementation of some recommendations would be established in February.
LaHood in April tasked the Future of Aviation Advisory Committee with developing recommendations to advance the aviation industry. This week the committee announced its recommendations, focused on five categories: environmental, financing, competition, workforce and labor and safety. But the primary objective is to urge Congress to approve funding for NextGen air traffic control technology.
"What is apparent through every subcommittee is NextGen," said panelist Thella Bowens, president and CEO of the San Diego County Regional Airport Authority. "That was the common thread that went through every discussion, and to the extent that they were independent recommendations, they are also looked at very holistically."
"The thought was, 'We've got the science, let's go build it,' " agreed David Barger, CEO of JetBlue.
The airline industry traditionally is known as a money-loser, recent net profitsnotwithstanding. LaHood's committee, comprised of members from the private aviation industry, the public sector and the Federal Aviation Administration, is designed to address solutions that focus on the "now," according to LaHood.
"On NextGen we are totally on the same wavelength. Twenty months ago, we were having difficulty getting the attention of some of our friends about NextGen and how to pay for it, but I think we have gotten people's attention at the White House," said LaHood. "We are with you on this and we think we have the White House with us now."
"One of the things that is unique about NextGen is that there is a very positive business case," said FAA administrator Randy Babbitt. "If this was a proposal made to a board of directors, you would all vote for it because you would see the return to the corporation and you would see the benefit on the dollar. This suffers from lack of information to the public."
NextGen technology would switch airline navigation from radar-based to satellite-based, much like that of a car's global positioning system. But a related bill has struggled to pass Congress since its introduction in 2007 because it requires the federal government to foot roughly $50 billion.
If funding were approved, the committee argued, the aviation industry would be able to cut carbon emissions by flying shorter routes and would become more competitive in the global sphere. "We have some incredible heritage in this country around aviation ... but we must recognize that we are competing with others throughout the entire world making significant investments in their infrastructure, in their equipment and in their airlines--and that our ability to take a coordinated approach is absolutely critical for our future," said Nicole Piasecki, vice president of business development for Boeing Commercial Airplanes.
However, Haas School of Business professor Severin Borenstein differed, urging LaHood to deemphasize NextGen.
Said Borenstein, "In these times of extremely tight budgets at the federal level, the standards that we have for consideration of government subsidiary [funding] should be quite high, and we did not see the evidence [for NextGen] in my belief."
The committee then tackled the heavy taxes placed on the aviation industry in what it called a controversial issue. Members were divided on determining whether aviation taxes were "disproportional," and agreed to recommend that the DOT conduct an investigation into the taxes to determine if the collection and redistribution was appropriate or if it hurt profitability.
"We don't think that 17 separate taxes are sufficiently transparent. We certainly don't think that there is a unity of view on who has the jurisdiction on who is to know whether they are appropriate. We really think that it is your team that has the best opportunity to bring some clarity to the efficacy of the tax burden on the industry," said Glenn Tilton, chairman, president and CEO of UAL Corporation.
Calls For Ancillary And Codesharing Visibility
The panel also advised DOT to support further legislation to increase transparency of ancillary fees so that travelers fully understand the total price of a ticket, and for airlines to further disclose code share agreements. The panel also suggested that when reporting major airlines' ontime performance and customer satisfaction scores in their monthly reports, DOT should include code share agreements.
"We found that unfortunately [monthly travel statistics] have become a little less valuable because the DOT categorizes carriers by operating certificate rather than by marketing partners," said William J. McGee of the travel and aviation consultant for Consumers Union. "Quite frankly, consumers are not shopping for carriers based on their regional partners, but that's how the delay statistics to consumers or complaint statistics are segregated--by operating carrier rather than by who is selling the ticket."
Other recommendations issued to LaHood would require the government to better redistribute funding for transportation to and from airports, ensuring a timeline for aircraft operators to utilize NextGen, and to improve methods to predict safety risks incorporating planning for NextGen.
"We recognize how competitive things are. This year alone I went to eight different countries to look at high-speed rail, and I flew into airports and I am shocked everywhere I go [by] the expansion of airports in Europe and in Asia, particularly in China," said LaHood. The committee "really put a fine point on the importance of the work that has to be done, but more importantly the work that needs to be done in order to stay competitive."
LaHood said DOT would dedicate a full-time employee to advance the committee's recommendations ahead of its mid-February target date for setting an implementation timetable.