AVS 120 Intro to Aviation Airports Airports w

AVS 120 Intro to Aviation Airports

Airports w Types: • Private • Military • Especially during WW 2 – 250 airports were developed for national defense • Municipal Governments • Federal funding was disallowed by the Air Commerce Act of 1926

Federal Airport Act of 1946 w Authorized funding for capital improvements w Grants and matching funds to Municipalities • Most of the 250 WW 2 airports were declared surplus • returned to Municipalities

Airport/Airway Development Act (1970) w Jet aircraft with large payloads required improved airport and terminal facilities • Users were charged a Levy • Held in trust to provide Federal grants and matching funds w National Plan of Integrated Airport Systems • Developed by the FAA • Identified 3, 000 eligible airports for funding • “Adequate” airport: must be located within 20 SM of 97% of U. S. population

Airport Composition Vast majority are closed to the public

There are now 3, 500 NPIAS Airports

NPIAS w Recognizes 3 General Classes of Airports • Commercial Service Airports: 2, 500 PAX Enplanements Per Year • Reliever Airports: General Aviation Airports within the Metro Area • General Aviation Airports: General Aviation Airports Outside the Metro Area

NPIAS w Commercial Service • 546 • 422 are primary: > 10, 000 enplanements pa w Reliever • 260 • Average of 28 GA based there (27% of total GA) w GA • Considered by NPIAS if 10 based GA and 20 SM from other NPIAS >

NPIAS w FAA Hub Classification: • Different to airline • City + Standard Metropolitan Statistical Area: • • Large: at least 1% of total enplanements Medium: at least 0. 25% of total enplanements Small: at least 0. 05% of total emplanements Nonhub

NPIAS 70% of emplanements take place at the 31 Large Hubs!

Airport Components w 3 • Airside • Terminal Operation • Landside

Airside w Runways w Taxiways w Aprons w Influence land area and design: • Type of users (aircraft): size/weight/pax • Location of terminal/maintenance facilities • Available land area • Movement of ground service vehicles

Terminal Operation w Provides the link between landside and airside w 3 main areas: • Curb-side • Central processing area • Links to the airside

Terminal Operation w Must meet the needs of all users: • Primary users: Pax, Mail & Cargo • Secondary users: • Airport/airline/gov’t employees • Meeters-greeters • Well-wishers, etc.

Landside w Development has generally lagged: • FAA does not usually provide funds w Enter - Exit Roads w Parking w Taxi w Hotel w Rental Cars

Operational Considerations w Runway Layout w Local Terrain w Local Weather w Other Local Airport Operations w ATC Requirements

Social Considerations w Local Pax Demand w Ground Access w Noise w Local Environmental Impact/Land Use w Wildlife Habitats

Population affected by Enplanements Although enplanements have increased, the population affected by this has decreased, as airports have been sited away from population centers

AVS 120 - Intro to Aviation Deregulation

The Civil Aeronautics Board w CAB (1938 -1985): • Acted as a public utility • Granted authority to regulate: • • • Entrants Routes/service areas Fares Profit margins Types of aircraft used Even seating configurations!!

1960’s - 1970’s w Economists critical of economic regulation: • Pricing and entry restrictions caused excess service and insufficient pricing competition, inflated airline costs, unsatisfactory profits • Jets introduced in 60’s (wide-bodied in 70’s): – Aircraft faster, more efficient, more comfortable, more reliable, therefore: • Increased passenger demand – Existing airlines unable to meet demand – New entrants not allowed in the club; therefore: • Public disgruntlement

Deregulation 1 w Air Cargo Deregulation Act (1977): • Operate on any domestic route • Charge whatever market would bear • CAB must approve: • Not “public interest” • But “fit, willing, and able” • Growth of express package carriers: • Absorbed local incumbents • Hub & Spoke networks

Deregulation 2 • Passenger carriers given more freedom in setting routes • Initially prospered/growing public support; therefore: w Airline Deregulation Act (Oct, 1978): • 1981: no authority over routes • 1983: no authority over fares • 1985: no CAB: – Antitrust/essential air service to FAA – International regs (BASA/BAA) to Dept of State • overwhelming bi-partisan support • opposed by “in the club” airlines

Deregulation 3 w Goals of deregulation: • • • w time to increase competition improved service with reduced fares stimulate economy introduce innovative service offerings enhance productivity and efficiency Rapid impact: • Airlines reshaped networks • New entrants

Deregulation Effects w Profits skyrocketed • for a very short time period w By early 1980’s • economic recessions hit • airline profits fell, service fell, mergers grew • worst losses in history

Airline Reaction w Airlines were forced to refocus on: • Cost savings: • • w more efficient aircraft personnel reductions wage and benefit reductions route changes Many went under

AVS 120 - Intro to Aviation Air Carriers and Commercial Operators

Air Carrier & Commercial Operators w Certification under Part 119: • Part 121: Flag/domestic/supplemental operations in larger aircraft • Part 125: Corporate aviation in larger aircraft (smaller aircraft operate under Part 91) • Part 135: On-demand/commuter operations in smaller aircraft

Types of Operation (#119) w Commuter (#135): • 5 scheduled round-trip flights per week • Airplane: • Non turbojet • Passenger seats: 9 or less • Max. payload: 7, 500 lb or less – Normal/utility/acrobatic/commuter category

Air Carrier w A person who undertakes directly by lease, or other arrangement, to engage in air transportation (#1). • An air carrier certificated in accordance with Part 121 to conduct scheduled services on specified routes. • Certificated as Flag or Domestic • May also provide nonscheduled/charter services as a secondary operation.

Types of Operation (#119) • Domestic/Flag (#121): • Domestic: – Within lower 48 – Wholly within Hawaii/Alaska • Flag: – Everything else including international • Airplane • Turbojet • Passenger seats: > 9 • Max. payload: > 7, 500 lb – Commuter/transport category

Air Carriers w Four carrier groupings for FAA stats. are: • Major Carrier: Annual Gross Over $1 B • National Carrier: Annual Gross $100 M • Large Regional: Annual Gross $20 M • Medium Regional: Annual Gross < $20 M

Definitions for Economics w Average Passenger Yield • Revenue for Carrying One Passenger One Mile w Available Seat Miles • One seat transported one mile w Revenue Passenger Miles • What an air carrier sells • One revenue passenger transported one mile in revenue service.

More Definitions for Econ. w Load Factor • The Ratio of Seats Occupied (Revenue Passenger Miles) To Seats Available (Available Seat Miles) • Divide seats occupied by seats available • Gives percentage of seating or freight capacity utilized w 2001 - Average Major US Airline Load Factor was 71. 1%

FAA Aviation Forecasts Fiscal Years 2002 -2013

Current Situation • Industry • Capacity reductions • 20% at most major carriers except WN • Government • Airline Stabilization bill: • $5 B in direct aid, $10 B in loan guarantees • Aviation Security bill: • Federalization of screeners, more air marshalls • War risk insurance • Tax deferrals • Traffic is recovering • Yields are improving slowly

Economic Outlook • U. S. • 2 qtr recession ending 1 Q 02 then strong recovery • Long run growth > 3% • Oil prices fall sharply then rise modestly • Inflation remains modest • World • Slowdown in 02 coinciding with U. S. recession • Long run growth averages 3. 3% • Highest growth in Asia and Latin America!

The FAA Forecast: Three Phases 2002: Decline 2003: Recovery 2004 -13: Resumption of Long Run Trend Capacity and traffic falls, then recovers in 2003; BUT real yield continues to fall!!

Regional Carriers’ RPMs Expected to Increase 7. 1% a Year Percent Growth Slight slowdown in 2002, recovery then gradual slowing w Route Transfers=> Longer trip length w Move to Jet Aircraft w 03 -13

Risks to Forecast w w Security issues Return of the business traveler? Financial woes => consolidation Management/labor issues

Why Do Regional Airlines Fail? w Management Lack of Knowledge & Experience in Marketing w Under capitalization w Competition

Why Do Major Airlines Fail? w Greedy Corporate Raiders? w Market Adaptability?

Fares w CAB Set Fares Based on Cost of Operation w Currently Fares Are Based on Market & Competition • Particular Market Segments Drive the Fare Rates-Not Distance Traveled • Big Margins, Make Money-Route A, Break Even. Route B, Lose Money Route C • High Demand Periods-Higher Fares • Low Competition-Higher Fares

AVS 120 - Intro to Aviation International Organizations & Documentation

(Chicago) Convention on International Civil Aviation 1944 w Goals: 2 w • Establish international technical standards • Establish the principles and procedures for economic regulation of international routes, fares, etc.

Warsaw Convention w Scope: • International carriage: • Documentation: – Passengers – Luggage – Cargo • Carrier’s liability

Rome Convention w Damage caused by foreign aircraft to third parties on the surface: • Aircraft or person/object falling from • Liability limited: • Based on aircraft MTOW • Death or injury: 500, 000 Francs person – Franc equates to gold standard • Aircraft must be insured to cover

Tokyo Convention State of Registration has jurisdiction w Other States not interfere, except: w • • • Territory affected Offence against national/PR of State Offence against State security Breach of ROTA In accordance with a multilateral agreement

The Hague Convention Expansion of Tokyo w Includes: w • Unlawful seizure is extraditable offence • Report ASAP to ICAO Council: • Offence • Action taken to restore control to legal owner/PIC • Action taken against offender (extradition, etc. )

World Trade Organization (WTO) w Formed by 1994 (Uruguay) round of trade talks • Rules of trade through agreements (GATT) • Objectives: • Free trade flow • Liberalization of markets • Dispute settlement

GATT w w w Eliminate customs duties No technical barriers No preferred suppliers No unreasonable import quotas No unfair subsidies

General Agreement on Trade in Services (GATS) Art II: no favoritism w Art III: transparency w Art XVI: market access w Art XVII: national treatment w

5 Freedoms IATA: IASTA & IATA 5 Freedoms w Technical Rights: 2 w 1. Right to Overfly without Landing 2. Right to Land for Technical Purposes w Traffic Rights: 3 3. Right to put down pax, cargo, & mail 4. Right to pick up pax, cargo, & mail 5. Right to operate between 2 other countries

Technical Rights 1. Right to Overfly without landing

Technical Rights 2. Right to Land for Technical Purposes

Traffic Rights 3. Right to put down Pax, Cargo, & Mail

Traffic Rights 4. Right to pick up Pax, Cargo, & Mail

Traffic Rights 5. Right to operate between 2 other countries