AVS 120 Intro to Aviation

Airports

Airports Types:

• Private

• Military• Especially during WW2

– 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

Authorized funding for capital improvements

Grants and matching funds to Municipalities• Most of the 250 WW2 airports were declared

surplus• returned to Municipalities

Airport/Airway Development Act (1970)

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

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 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 Commercial Service

• 546

• 422 are primary: > 10,000 enplanements pa

Reliever• 260

• Average of 28 GA based there (27% of total GA)

GA• Considered by NPIAS if 10 based GA and > 20

SM from other NPIAS

NPIAS

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

NPIASTable 1 Distribution of Activity

NumberAirports

Airport TypePercentage of

AllEnplanements

Percentage ofActive GA

Aircraft *31 Large-Hub Primary 69.6 1.337 Medium-Hub Primary 19.3 2.974 Small-Hub Primary 7.7 4.7

280 Nonhub Primary 3.2 11.3124 Other Commercial Service 0.1 2.0260 Relievers 0.0 27.1

2,558 General Aviation 0.0 37.23,364 Total Existing NPIAS Airports 100.0 86.4

15,942Other Low Activ ity Landing Areas(Non-NPIAS)

0.0 13.6

* Based on active aircraft fleet of 219,464 aircraft in 1999.

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

Airport Components

3• Airside

• Terminal Operation

• Landside

Airside Runways Taxiways Aprons 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

Provides the link between landside and airside

3 main areas:• Curb-side

• Central processing area

• Links to the airside

Terminal Operation

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

Development has generally lagged:• FAA does not usually provide funds

Enter - Exit Roads Parking Taxi Hotel Rental Cars

Operational Considerations

Runway Layout Local Terrain Local Weather Other Local Airport Operations ATC Requirements

Social Considerations

Local Pax Demand Ground Access Noise Local Environmental Impact/Land Use 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 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

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

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: 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

Goals of deregulation:• 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

Profits skyrocketed • for a very short time period

By early 1980’s • economic recessions hit• airline profits fell, service fell, mergers grew• worst losses in history

Airline Reaction

Airlines were forced to refocus on:• Cost savings:

• 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

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)

Commuter (#135):• 5 scheduled round-trip flights per week• Airplane:

• Non turbojet

• Passenger seats: 9 or less

• Max. payload: 7,500lb or less– Normal/utility/acrobatic/commuter category

Air Carrier

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: > 7,500lb

– Commuter/transport category

Air Carriers

Four carrier groupings for FAA stats. are: • Major Carrier: Annual Gross Over $1B

• National Carrier: Annual Gross $100M

• Large Regional: Annual Gross $20M

• Medium Regional: Annual Gross < $20 M

Definitions for Economics Average Passenger Yield

• Revenue for Carrying One Passenger One Mile

Available Seat Miles• One seat transported one mile

Revenue Passenger Miles• What an air carrier sells

• One revenue passenger transported one mile in revenue service.

More Definitions for Econ.

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

2001 - Average Major US Airline Load Factor was 71.1%

Fiscal Years 2002-2013

FAA Aviation Forecasts

Current Situation

• Industry• Capacity reductions

• 20% at most major carriers except WN

• Government• Airline Stabilization bill:

•$5B in direct aid, $10B 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 1Q02 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

Activity

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

Slight slowdown in 2002, recovery then gradual slowing

Route Transfers=> Longer trip length

Move to Jet Aircraft

Percent Growth

03-134

5

6

7

8

9

10

01 02 03

Risks to Forecast

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

Why Do Regional Airlines Fail?

Management Lack of Knowledge & Experience in Marketing

Under capitalization Competition

Why Do Major Airlines Fail?

Greedy Corporate Raiders? Market Adaptability?

Fares

CAB Set Fares Based on Cost of Operation 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 Goals: 2

• Establish international technical standards• Establish the principles and procedures for

economic regulation of international routes, fares, etc.

Warsaw Convention

Scope:• International carriage:

• Documentation:– Passengers

– Luggage

– Cargo

• Carrier’s liability

Rome Convention

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 per person– Franc equates to gold standard

• Aircraft must be insured to cover

Tokyo Convention

State of Registration has jurisdiction Other States not interfere, except:

• 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 Includes:

• 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)

Formed by 1994 (Uruguay) round of trade talks• Rules of trade through agreements (GATT)• Objectives:

• Free trade flow

• Liberalization of markets

• Dispute settlement

GATT

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 Art III: transparency Art XVI: market access Art XVII: national treatment

5 Freedoms IATA: IASTA & IATA 5 Freedoms Technical Rights: 2

1. Right to Overfly without Landing

2. Right to Land for Technical Purposes

Traffic Rights: 33. 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