Roll Call: Latest News on Capitol Hill, Congress, Politics and Elections
December 22, 2014

Posts in "Aviation"

December 17, 2014

For FedEx, Fuel Price Drop Is Not All Good News

460564358 445x296 For FedEx, Fuel Price Drop Is Not All Good News

Workers prepare to offload a FedEx plane at Newark, N.J. (Photo by Andrew Burton/Getty Images)

FedEx chief financial officer Alan Graf said Wednesday the company had “a spectacular second quarter” in fiscal year with a 36 percent increase in earnings per share.

But Graf said on a conference call for investors that performance wasn’t largely due to the dramatic drop in oil prices.

The jet fuel price decline provided “only a slight benefit to operating income” due to the way FedEx passes along costs to its customers through its fuel surcharge and the way it buys fuel.

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December 16, 2014

Robust Boeing & Even More Airports For China

460310358 445x287 Robust Boeing & Even More Airports For China

Boeing Chairman and CEO Jim McNerney (Photo: Mandel Ngan/AFP/Getty Images)

In a sign of a robust commercial aviation industry and a confident corporate leadership, Boeing Chairman and CEO Jim McNerney announced Monday that his company was increasing its quarterly dividend by 25 percent to 91 cents per share.

He cited “the solid growth outlook for commercial aviation” as part of the basis for the higher dividend, which the company has increased by 88 percent over the past two years.

Meanwhile, market observers have been puzzling over whether the plunge in oil prices is a welcome stimulant to economic growth, or an early warning sign of weakening growth, especially in Pacific Rim and Asian economies.

McNerney assured investors in late October that declining oil prices wouldn’t lessen airlines’ demand for the more fuel-efficient planes that Boeing makes.

Oil prices would need to fall “a long way from where we are now” before “you begin to see even [an] incremental impact” on airlines’ demand for more fuel-efficient aircraft, he said.

But when McNerney said that, the Brent crude benchmark was at about $85 a barrel; today it is below $59 a barrel for the first time since the spring of 2009.

China has, of course, been one of Boeing’s best markets for years, and there was related aviation news from China Tuesday with the Financial Times reporting that the top economic planning agency has given its approval to a new $13 billion airport in Beijing.

But the FT portrayed this as “part of government efforts to boost flagging growth by accelerating construction of state-led infrastructure projects.”

The FT notes that Beijing’s existing airport was completed only six years ago. (Just for comparison: New York City’s LaGuardia Airport was built in 1939.)

“An oversupply of airports is different than an oversupply of planes,” explained Derek Scissors, a resident scholar at the American Enterprise Institute who specializes in Asian economic trends.

“China is plainly building too many airports (almost 100 more on the way) and many of them are too large. This is merely to boost short-term economic numbers, and will waste a great deal of money.”

But he added, “Since it’s state-controlled, top to bottom, it doesn’t qualify as a bubble. Just a bad idea.”

He also said, “The Chinese don’t get the same benefits from over-ordering planes and there are no reports of aircraft sitting idle, as there are with facilities. The main threat to Boeing is longer-term: the Chinese are trying, not yet successfully, to make their own aircraft.”

In the near term he added, “Boeing is at risk of overstating the vigor of the Chinese economy and thus the demand for its products.”

December 15, 2014

The Week Ahead: FedEx Peak Day, Spending Bill Signed

107562647 445x289 The Week Ahead: FedEx Peak Day, Spending Bill Signed

A driver unloads his truck at the FedEx sort facility at the Oakland International Airport (Photo by Justin Sullivan/Getty Images)

This week includes what FedEx expects to be its busiest shipping day of the year, as well as the final act of this year’s spending bill melodrama, as President Obama puts his signature on a $1.1 trillion discretionary spending bill which includes a few plums for mass transit and the U.S. travel industry.

Monday

FedEx predicts that today will be its busiest shipping day of the year, estimating that its workers, trucks, and aircraft will carry 22.6 million shipments around the world.

FedEx rival UPS said in October that it expected its 2014 peak delivery day to be a week from today, on Monday, Dec. 22, when it expects to ship more than 34 million packages.

Tuesday

The Senate may vote on a House-passed bill to retroactively extend some 50 tax preferences.

The package includes a few provisions benefiting biodiesel and other biofuel producers and one which would restore tax break parity between mass transit commuters and drivers who get employer-subsidized parking.

Mass transit advocates say the retroactive parity, which applies only to 2014, will benefit almost no mass transit users, because employer payroll systems aren’t set up to recoup the money that commuters could have gotten if tax break parity had been in effect starting Jan 1, 2014.

Wednesday

FedEx reports its earnings for the second quarter of its fiscal year which began June 1.

Like the passenger airlines, FedEx should be benefiting from the drop in jet fuel and diesel fuel costs, and company executives can offer more details on that point in their conference call for investors Wednesday morning.

After languishing in the first half of the year, FedEx’s stock price is up 25 percent since June, which also is the period in which the price of oil has fallen more than 40 percent.

For the 2014 fiscal year which ended in May, FedEx spent $4.5 billion for fuel, both for its jet aircraft and its ground vehicles.

December 12, 2014

Week In Review: Drones, Macadamias, Bankruptcies

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An unmanned aerial vehicle arrives with a delivery at Deutsche Post headquarters in 2013 in Bonn, Germany. (Photo by Andreas Rentz/Getty Images)

With the unmanned aerial vehicle industry in the United States trying to emerge from its infancy, members of the House pressed Federal Aviation Administration official Peggy Gilligan at a hearing Wednesday on why the agency seems so tardy in issuing a rule on small UAVs.

If FAA approves drones for commercial use, they’d enable farmers to monitor their crops and real estate agents to scan neighborhoods and sell houses. Members of the House Transportation and Infrastructure Subcommittee on Aviation said the FAA’s slowness is stifling innovation.

One member of the panel, libertarian-minded Rep. Thomas Massie, R-Ky., also worried about whether drones will encroach on your backyard and violate your property rights.

Full story

Amid Airline Resurgence, A Reminder Of Losses

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American Airlines planes parked at gates in the Miami International Airport (Photo by Joe Raedle/Getty Images)

For readers with short memories, yes, sometimes airlines do file for bankruptcy.

It used to happen quite often, but it may seem a remote possibility at a time when airline are reaping lush profits.

The International Air Transport Association announced this week that airlines are expected to post a collective global net profit of nearly $20 billion this year and $25.0 billion in 2015.

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December 11, 2014

Libertarian GOP Member Sees Drone Privacy Risk

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Rep. Thomas Massie, R-Ky., (Photo By Bill Clark/CQ Roll Call)

Wednesday’s House Aviation Subcommittee hearing on drones was dominated by members’ complaints about the Federal Aviation Administration’s lateness in issuing regulations that would allow the unmanned aerial vehicle industry to grow.

But one panel member, Rep. Thomas Massie, R-Ky., also had privacy on his mind.

While Massie is concerned that “the industry is being stifled” by the Obama administration’s slowness in issuing a UAV rule, he also worries that drones could violate Americans’ privacy.

Massie, one of the House’s outspoken libertarians, spoke in terms reminiscent of his fellow Kentucky Republican Sen. Rand Paul, who during his drone filibuster last year said he worried about drones snooping on a person “swimming in their pool in their backyard or in the hot tub.”

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December 10, 2014

Norwegian Air Cites Supportive Language In Omnibus

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A Boeing 737 operated by Norwegian Air Shuttle, parent company of Norwegan Air International. (Photo: Aas Erlend/AFP/Getty Images)

Advisors to Norwegian Air International contacted me Wednesday to point out that I had neglected in my post on the omnibus spending bill to note an important paragraph which, they say, supports Norwegian’s argument that the Department of Transportation ought to issue a foreign air carrier permit to the low-cost airline.

Here is the paragraph that they point to:

“Nothing in this section shall prohibit, restrict or otherwise preclude the Secretary of Transportation from granting a foreign air carrier permit or an exemption to such an air carrier where such authorization is consistent with the U.S.-E.U.-Iceland-Norway Air Transport Agreement and United States law.” Full story

FAA’s Slow Pace On Drones Draws Fire

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Rep. Thomas Massie, R- Ky., is concerned about FAA’s slow pace in issuing drone rules. (Photo By Bill Clark/CQ Roll Call)

The Federal Aviation Administration is walking a fine line on drone regulation: trying to ensure that the unmanned vehicles don’t collide with airplanes, but also not trying to not stifle an infant industry. At the moment, members of Congress aren’t satisfied, if a hearing Wednesday before the House Transportation and Infrastructure Subcommittee on Aviation was any indication.

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December 9, 2014

Korean Air Executive Resigns In Nut Incident

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Korean Air plane sits on the tarmac at Gimpo airport in Seoul on Dec. 9, 2014.(Photo: Jung Yeon-Je/AFP/Getty Images)

Korean Air Lines executive vice president Cho Hyun-ah resigned Tuesday amid a furor over delaying the departure of a flight from Kennedy Airport in New York after ordering the plane back to the gate and telling a senior crew member to get off.

Cho, the eldest daughter of company chairman Cho Yang-ho, was seated in first class and was angered that a flight attendant and a senior crew member did not know the correct procedure for serving macadamia nuts, according to the Associated Press and other news reports.

Korean Air apologized to its customers for the inconvenience of the plane returning to the gate which delayed the departure by about 20 minutes.

The Financial Times reported that some South Koreans viewed the incident as a case study in the “undue influence” that the founding family members of Korean chaebols often wield over the management of the business conglomerates.

Cho Hyun-ah is the granddaughter of Korean Air Lines founder Choong Hoon Cho, who was the head of the Hanjin Group, which includes Hanjin Shipping, the world’s eighth largest shipping company.

December 8, 2014

Drones, Planes, Oil By Trains, Spending Bill Remains

The safety of drones flying in airspace they share with planes, the safety of shipping oil by trains and little transportation nuggets tucked into the year-end spending bill are all on the agenda this week as lawmakers try to finish business for the 113th Congress.

Tuesday

With many legislatures beginning their sessions in January, state lawmakers will be in Washington to swap ideas and lobby members of Congress as the National Conference of State Legislatures (NCSL) holds its 2014 Forum this week.

A pressing issue facing state governments is the safety of rail shipment of crude oil and the congestion caused by North Dakota’s oil boom.

Full story

Friday Q & A: Charlie Leocha of Travelers United, Part Two

459613380 399x335 Friday Q & A: Charlie Leocha of Travelers United, Part Two

Passengers at Dulles International Airport outside Washington, DC, on Thanksgiving Eve. (Photo: Paul J. Richards/AFP/Getty Images)

Here is the second part of our conversation with travel consumer advocate Charlie Leocha of Travelers United.

Didn’t the House pass a bill in the last several months on disclosure of ancillary fees?

The House passed a bill called the Transparent Airfares Act of 2014, and the Transparent Airfares Act is anything but transparent. It’s an example of Congress operating in the most anti-consumer way possible.

Full story

December 5, 2014

Friday Q & A: Charlie Leocha of Travelers United, Part One

459628096 445x296 Friday Q & A: Charlie Leocha of Travelers United, Part One

A Southwest Airlines jet lands at LAX on Thanksgiving eve in Los Angeles. (Photo by David McNew/Getty Images)

Charlie Leocha is chairman and founder of Travelers United, a non-profit group that argues that travelers should get better treatment from airlines, rental car companies, and other travel businesses.

We spoke to him this week about his group’s focus on ancillary fees and other matters.

Can you give us your views on opaqueness and disclosure of fees that airlines charge?

In 2008 the airlines started to unbundle their airfares and as they were unbundling their airfares and breaking out their baggage fees and they kept adding fees, it kept making it more and more difficult for consumers to know what the full price of travel was going to be.

The old days of being able to go on to Expedia or other websites and compare prices across all airlines was gone.

So that got me to work together with a coalition of other organizations in Washington like the American Society of Travel Agents, a number of the online travel agencies such as Expedia, the Business Travel Coalition, and we all realized we were all trying to get the same thing: disclosure of ancillary fees.

Has Congress fixed that problem?

No, that problem is still not fixed.

We had a partial fix to it from DOT with a rulemaking [in 2011] in which the airlines were required to have one page, linked from their home page, with all the ancillary fees on it.

However, that fix allows airlines to put in ancillary fees in a pricing range, without making it flight-specific and passenger-specific.

In the meantime, the airlines have started to have all sorts of exceptions to their rules.

In other words, there’s a baggage charge for most of the airlines of $25 for the first bag.

However, if you use a certain credit card, you don’t have to pay that; if you are a certain elite level of frequent flyer, you don’t have to pay that; if you’re know somebody and you’re on the same passenger name record or the same reservation record as someone who has these exemptions, those exemptions pass along to the other people on that record.

So the airlines have turned what used to be a relatively simple process of comparing prices across airlines into an incredibly complex situation ….

There is a rulemaking [on ancillary fees] right now … being put together by the Department of Transportation and it will then go to the Office of Management and Budget and then back to the Department of Transportation and be released.

December 1, 2014

An OPEC Windfall For Express Shippers?

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A FedEx jet at O’Hare International Airport (Photo by Scott Olson/Getty Images)

While you were eating turkey and cranberry sauce, the OPEC oil cartel was holding what may be recorded as a historic Thanksgiving Day meeting in Vienna. OPEC members did not reach an agreement to cut their production.

Oil prices, already falling since June, have dropped even further since OPEC’s decision to not cut output.

A price decline is bad news for oil-dependent countries such as Nigeria and Russia. It may crimp demand for electric vehicles, one explanation offered for a decline in Tesla’s stock price Monday morning. But for most American consumers and non-oil businesses, declining oil prices seem a case of “What’s not to like?”

Full story

November 25, 2014

U.S., EU Officials Meet On Norwegian Air Controversy

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A Norwegian Air Shuttle Boeing 737 (Photo: Aas Erlend/AFP/Getty Images)

Transportation Department and State Department officials met Tuesday with representatives of the European Union to discuss why the Transportation Department hasn’t yet decided on an application for a foreign air carrier permit from Norwegian Air International (NAI), the Ireland-based affiliate of the budget airline Norwegian Air Shuttle.

Norwegian Air Shuttle CEO Bjorn Kjos said in a speech in Washington last week that granting the permit was “long overdue.” His company says that by not granting the permit the United States is not honoring its obligations under a EU-U.S Open Skies Agreement.

Full story

November 24, 2014

FAA Review Of Chicago Fire Focuses On Insider Threat

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Passengers wait to reschedule flights at O’Hare International Airport on Sept. 26 after arson destroyed equipment at an air traffic control facility. (Photo by Scott Olson/Getty Images)

Pay more attention on the threats from within.

That’s one lesson of a 30-day internal Federal Aviation Administration review of the Sept. 26 fire set at the Chicago Air Route Traffic Control Center.

Brian Howard, a contractor who worked at the center, was charged in a criminal complaint in the incident which disrupted travel and forced the FAA to move air traffic control to its centers in Minneapolis, Kansas City, Cleveland and Indianapolis.

The internal review, which the FAA released Monday, found that dealing with external threats has until now been “the primary focus of the FAA security regime.”

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