Storm clouds gather over RAA fall meeting

 - May 9, 2008, 5:25 AM

An RAA fall meeting understandably marked by apprehension and uncertainty also assumed a palpable air of cynicism this year, as an industry whose fate appeared so dubious after 9/11 continues to grapple with the consequences of the U.S. government’s “war on terror.” With threats of imminent bankruptcy at United Airlines, the prospect of a war with Iraq, continuing economic sluggishness and upgraded terrorism warnings aimed specifically at the airline industry, those regional airline executives who attended the October 13 and 14 meeting in Washington, D.C., seemed in no mood for revelry, despite the impressive traffic gains RAA members have registered lately.

As usual, RAA reserved talk about subjects of any real sensitivity for its closed-door meetings, where the association scored high marks for attracting such noted speakers as TSA undersecretary James Loy, FAA Associate Administrator Nick Sabatini and DOT deputy secretary Michael Jackson. But it didn’t take long to recognize the subdued tenor of the entire event, as the usual merrymaking and good-natured banter of pre-9/11 meetings yielded to the hushed tones of private dialogue and cellphone communiques.

“We’re just keeping our heads down right now and waiting for this thing to blow over,” said one regional airline executive during a moment of candor. Although the meeting drew 23 CEOs, roughly the same turnout as last year, a number of perennial participants chose not to attend the meeting at all, leaving the duties to subordinates while they attended to more pressing matters on the home front. Conspicuous absentees included Mesaba Holdings CEO Paul Foley, Air Wisconsin CEO Geoff Crowley, American Eagle president Peter Bowler, ExpressJet president Jim Ream and Big Sky president Kim Champney.

Despite the positive press the regional sector has garnered in recent months for its impressive traffic gains (see chart on page 75), yields continue to suffer as the downward pressure on ticket prices refuses to relent. Although analysts often point to the predominance of so-called “cost-plus” code-share contracts among the big regionals as a cushion against pricing fluctuations, few reckon such an imbalance
can remain sustainable while the major airlines lose billions of dollars each quarter. Although contract-style agreements typically feature a review of costs each year and provide for adjustments, regionals cannot expect their foundering mainline partners to help alleviate the cost pressures borne by such initiatives as cockpit door reinforcements, new flight attendant security training and handguns in the cockpit.

Of course, RAA’s job centers on lobbying for its members against such costly measures and for policies such as those aimed at reducing the so-called “hassle factor” at airports. But during a time of lingering public paranoia and jingoism, such previously inconceivable concepts as a gun-wielding airline pilot, for example, have suddenly risen from the theater of the absurd to potential reality. The environment has left RAA legislative affairs specialist Faye Malarkey with little choice but to enjoin winnable battles, such as congestion pricing and reform of the Railway Labor Act, while the gun legislation breezes through both houses of Congress.

During the Washington meeting, Malarkey laid out RAA’s priorities for the coming year, including the need for alternatives to demand management and what has become euphemistically known as “environmental streamlining.” She also raised the “very important” issue of government-backed war-risk insurance, which House legislators extended through August 31 in their version of the homeland security bill. The House bill, whose counterpart in the Senate remained tied up on a variety of non-aviation-related issues at the time of the RAA meeting, would excuse some airports from the December 31 deadline for the installation of explosive-detection systems. It would allow also pilots to carry firearms in the cockpit.

Adam Tsao, majority professional staff member of the House aviation subcommittee, stressed that the gun proposal does not require pilots to participate, but rather allows volunteers to train as “federal flight-deck officers.” Although he described it as a “voluntary” program, airlines would have no choice but to participate, potentially raising cost and logistical issues of which RAA members want no part.

Tsao, however, said legislators could not ignore the measure’s overwhelming support from the public at large, regardless of the soundness of the arguments against the policy by  RAA and the Air Transport Association. Tsao also expressed less optimism than Malarkey about any movement on Railway Labor Act reform, as Republicans remain leery of antagonizing labor during these tenuous times. “We’re not convinced the White House and Senate are committed to fixing [the Railway Labor Act],” said Tsao. “We don’t see the last election as an economic mandate, but rather a show of support for the President. So we will move gingerly on the issue.”

The second day of the meeting featured an address from newly appointed FAA Administrator Marion Blakey, whose only feedback from the audience of airline executives came from Atlantic Southeast Airlines president Skip Barnette. The ASA leader expressed concern about what he called the lack of consistent safety oversight from one region of the country to the other. According to one ASA executive, the FAA’s increased scrutiny of larger, higher-profile regional airlines has led to an imbalance in safety oversight, costing the Delta Connection subsidiary undue aggravation and money.

“We’ll do everything we can to ensure consistency, to make it the same FAA wherever you go,” answered Blakey. “You can’t be afraid to tick off your local FSDO. You need to be willing to buck up the chain [of command].”   

During her luncheon speech, Blakey stressed the agency’s commitment to addressing the need for capacity improvements, calling the economic downturn and the aftermath of 9/11 a “gift of sorts” to prepare for future concrete needs. “We must streamline permits for major projects at major airports,” she said. “We must get the public to understand that you cannot separate the need for technology from the need for more concrete…A new runway in Phila-delphia is vital. We can shave precious months and dollars by introducing parallel processes.”

Blakey also addressed her position on the agency’s concommitant roles as enforcer and industry promoter. “FAA will take a robust safety oversight role,” she said. “But we must be equitable and consistent. Not only is safety our highest priority, it’s an economic necessity to get people back flying.”

Concerning the April deadline for reinforced cockpit doors, Blakey pledged to RAA members that the “FAA will work with you” on ensuring those mandates do not cripple the industry economically or logistically. As for security in general, the new FAA chief also stressed the need for “a coordinated approach between the FAA and TSA.”

“We must avoid overlapping functions,” she said. “We will work with RAA members to ensure efficiency.”