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Airport Policy and Security Newsletter #51

bob.poole@reason.org (Robert Poole) — Thu, 05 Nov 2009 00:00:00 EST

In this issue:

GAO on TSA Screening Technology
Hub Airlines and Congestion Delays
Bogus Arguments on Private Screening
Gatwick Airport Sale and Other Privatizations
Porter Airlines Breaks the Mold
News Notes
Quotable Quote

GAO Rips TSA Screening Technology Development

We all want to believe that better technology holds the key to easing our way through passenger screening checkpoints. But the way the Transportation Security Administration is going about doing the R&D, testing, and deployment of better technologies leaves a great deal to be desired. That's the message of the latest report on aviation security by the Government Accountability Office, released last month (GAO-10-128, October 2009).

One key finding is that after years and years of rhetoric about risk-based policy from both TSA and its parent agency, the Department of Homeland Security (DHS), "TSA's strategy does not incorporate some key risk management principles-a risk assessment, cost-benefit analysis, and performance measures." Those principles are required by DHS's National Infrastructure Protection Plan (NIPP). TSA responds blithely that it takes risks into account by analyzing threat information, but GAO points out that the NIPP requires a systematic process of doing risk analysis based on threat, vulnerability, and consequence assessments. TSA admits that it has not yet conducted cost-benefit analysis to set priorities for checkpoint screening or established performance measures for deployed technologies. But as the GAO report points out, without doing these things, "TSA cannot ensure that it is targeting the highest priority security needs at checkpoints, measure the extent to which deployed technologies reduce the risk of terrorist attacks, or make needed adjustments to its [checkpoint] strategy."

At the request of the senior members of Congress who called for this report, GAO used the infamous "puffer machines" as a case study in poor decision-making. TSA deployed 101 of these Explosive Trace Portals (ETPs) to airports in 2006, despite the fact that it had done no testing outside of laboratory conditions. They broke down frequently due to dirt and humidity in the airport environment (not to mention that they slowed down throughput compared with walk-through metal detectors). Most are no longer being used, some have been removed, and another 116 that were bought but never deployed remain in storage.

Going forward, GAO acknowledges that TSA, after repeated prodding, has completed a strategic plan for passenger checkpoints that includes goals and objectives-but it has not conducted a risk assessment as part of that process. It has not assessed the vulnerabilities of the checkpoint technologies currently in place, nor the tactics terrorists could use to bypass or spoof them. "TSA lacks a method to systematically test and identify vulnerabilities in its passenger and baggage screening equipment in an operational airport setting." It has not completed a cost-benefit analysis to help set risk-based priorities and guidelines for developing and selecting among new technologies. And it lacks measures to evaluate the extent to which its checkpoints reduce the risk of terrorist attacks.

A section toward the end of the report also makes dismaying reading. It summarizes DHS's response to the report's eight recommendations, all of which the agency said it agrees with. In most cases, however, the GAO states its concerns that the agency either doesn't really mean it or that the actions it says it will take will not (or not fully) address the intent of the recommendation. In two cases, GAO cannot provide a detailed explanation of its concerns, because "TSA determined our evaluation to be sensitive security information."

These are still early days of the Obama administration. I hope DHS Secretary Janet Napolitano and new TSA Administrator Erroll Southers will take this report seriously.

Do Hub Airlines "Internalize" Congestion Delays?

Although most economists who have studied delays at congested airports recommend some form of pricing to bring peak demands into conformity with runway capacity, the past decade has seen several studies claiming that airlines with a dominant position at hubs (e.g., American at DFW or Delta at Atlanta) "internalize" the resulting delays-i.e., accept them as a cost of doing business at the hub (while appreciating that the congestion also deters new entrants from competing there during peak periods). The most cited of these studies was by Jan Brueckner in 2002, who ended up proposing that airport congestion prices should therefore be lower for the dominant hub carrier than for others.

I only recently came across a 2005 paper by economists Katherine Harback and Joseph Daniel which provides a new empirical test of the internalization argument: "(When) Do Hub Airlines Internalize Their Self-Imposed Congestion Delays?" (University of Delaware Department of Economics, Working Paper No. 2005-08) They developed a model of airport congestion and used flight data from 27 major U.S. airports to test whether dominant airlines internalize such self-imposed congestion-- or ignore it. Most of their statistical tests reject the internalization hypothesis. Another test showed that "flights operating during typical large interchange banks at nearly all the highly congested airports do not internalize delays." These results apply to Atlanta, Charlotte, Washington National, Denver, Dallas, Detroit, Newark, Houston, JFK, Minneapolis/St. Paul, Chicago O'Hare, Pittsburgh, San Francisco, and St. Louis. Two notable omissions from this list are LaGuardia and Los Angeles, neither of which has a large dominant carrier, and both of which have high traffic in relation to capacity essentially all day long.

Harback and Daniel conclude with policy recommendations. They argue that any policy to reduce airport congestion should focus on both increased efficiency and increased competition. "Properly implemented, congestion pricing would improve flight connection times for airlines at their own hub airport, while imposing only minor scheduling delays (often less than 15 minutes) from their most preferred operating times at their non hub airports." Moreover, they write, "Hub airlines should support congestion pricing as a means of reducing self-imposed congestion while pricing other airlines out of their periods of peak bank operations." This approach, they maintain, should be considered pro-competitive because, "while it strengthens the local hub, it means that other airlines will be able to provide moe rapid connections at competing hubs. By improving connecting service, there would be more viable competition or potential competition in many origin-destination markets, putting downward pressure on fares."

If You Outsource Airport Screening, Watch Out for Bogus Arguments

Last month the airport board of Glacier Park International Airport in Montana voted to shift from TSA-provided passenger and bag screening to contract screening, under TSA's Screening Partnership Program (SPP). Airport director Cindi Martin had been complaining for years about inadequate screener staffing, especially during the tourist season. TSA has repeatedly reduced the airport's allocation of screeners, which it re-calculates once a year, based on passenger numbers in October (a quiet month at Glacier Park). Although TSA supplements the screener workforce in the summer as best it can via its National Deployment Officers (a kind of flying squad of screeners), that has not been enough to prevent long lines and passenger complaints.

Unfortunately, much of the news coverage of the airport's decision has focused on fears and complaints from the current TSA workforce. In particular, they cite a "GAO report" that found that screening by TSA-approved contractors costs 17% more than screening done by TSA itself. For example, screener Eric Wood was quoted as saying, "To try to increase and add an extra layer of bureaucracy, it seems ludicrous in this economy. Dollar for dollar, it's going to cost you [the taxpayer] more money, and you're not going to get a better product." Even airport director Martin accepts the alleged GAO finding of 17% higher cost, but thinks the reduced lines will be worth it.

The study they both are referring to says nothing of the sort. I reviewed the report (GAO-09-27R) back in February 2009 (Issue No. 42). What GAO did was to review two reports on the costs and performance of screening under the SPP versus TSA-provided screening, one by Catapult Consultants (hired by TSA to do an independent assessment) and the other by the TSA itself. The Catapult report (which has not been made public but is well-summarized by GAO) appears to have been well done. First, Catapult compared six SPP airports with a matched set of TSA airports. The reported costs were, indeed, 17.4% higher, on average, for the six SPP airports. To get a broader picture, Catapult created a regression model using data from all 450 airports with screening, and four years worth of data. That exercise showed 9% higher costs at SPP airports.

But that's not the end of the story. TSA evidently didn't like the Catapult report, because it found (as had previous outside studies) that "SPP airports' overall performance results are equal to or better than those delivered by non-SPP airports." It also noted that TSA assigns administrative and overhead costs at SPP airport that artificially inflate the reported cost of screening there. So TSA did not release the Catapult study; instead, it produced its own quick & dirty "study" using only one year of data (rather than Catapult's four).

What GAO did, in so many words, was to blow the whistle on this skullduggery, by summarizing and contrasting the Catapult and TSA reports. GAO noted that TSA's recorded costs of screening (used in both of those reports) omit such key items as workers comp, general liability insurance, and some retirement costs for TSA screeners that are not in TSA's own budget. And the cost comparison also neglects the revenue the federal government gets in income taxes from the SPP companies. And because TSA did not compare cost with performance, GAO said that "We believe that TSA should not use [their] study as sole support for major policy decisions regarding the SPP."

In short, the arguments being raised in opposition to Glacier Park's decision are bogus, and it's absurd to cite the well-done GAO report to argue against an airport's decision to go with the SPP option. Frankly, I think the airport trade groups-AAAE and ACI-NA-should have done a better job informing their members about the Security Partnership Program. Small-town airport directors like Cindi Martin should not have to rely on this newsletter to learn the facts about this useful program.

P.S.: Seven smaller Montana airports have already joined SPP this past summer, and both Butte and West Yellowstone have applications pending, in addition to Glacier Park.

Gatwick Sale Revives Airport Privatization

Early in 2009, when Chicago's attempt to lease Midway Airport failed for lack of financing, many observers pronounced the end of a short-lived era of infrastructure privatization, that had begun in 2005 with the lease of the Chicago Skyway. In fact, only last week a poorly researched article in USA Today was headlined "Privately Run Infrastructure Deals Dry Up." Only days before, the financial news media announced that Global Infrastructure Partners had purchased London Gatwick Airport from BAA for $2.47 billion. Doesn't sound very dried up to me!

GIP is a $5.64 billion infrastructure fund, one of nearly a hundred worldwide that have raised substantial sums (in excess of $100 billion) to purchase or long-term lease key infrastructure enterprises. GIP is backed by Credit Suisse and General Electric. It already owns the small but growing London City Airport, a U.S. natural gas pipeline, a British port, and a British waste-management company. It is also considering a bid for one of BAA's Scottish airports.

The fact that the Gatwick deal got done, and at a reasonable price, in today's financial markets is a good sign for other planned infrastructure deals-including other airport privatizations. I've reported in recent issues on announced plans for privatization of New Orleans' Louis Armstrong International and Rio de Janeiro's Galeao International Airport. Both of those planned deals look more credible today than they did a month ago, thanks to Gatwick.

And then there's Sheremetyevo, Russia's second-largest airport (in Moscow). Since the collapse of the USSR, it has lost ground to privately managed Domodedovo, the other main Moscow airport. But last month Russia's Transport Ministry announced plans to privatize Sheremetyevo in 2010, in a deal estimated to be worth €1.5 billion. The winning bidder will be expected to pay for building a third runway as well as terminal modernization projects. Even Kosovo has its principal airport on the market.

To be sure, some of these airports will be easier to finance than others-and some may not attract serious bids, depending in part on how fast credit markets recover. But it's good to see that investor interest in the airport sector is picking up again.

Porter Creates Important Niche Market

For several months I've been following with great interest start-up airline Porter Airlines. It began service just three years ago (October 2006), operating out of Toronto City Center Airport, a small airport adjacent to the Toronto central business district. Today it provides regional service to Montreal, Ottawa, Quebec City, Chicago, Boston, New York (Newark), Halifax, Thunder Bay, and St. Johns, using Bombardier Q400 twin turboprop aircraft. By next spring, its fleet will consist of 20 of these quiet, fuel-efficient planes. As a low-cost but high-service airline (free beer, wine, and snacks on board; coffee and newspapers at the airport), it has led to dramatic fare reductions on routes it has entered these past three years.

Porter is a wholly owned subsidiary of Porter Aviation Holdings, Inc., backed by Edgestone Capital Partners, Borealis Infrastructure, GE Asset Management, and Dancap Private Equity. The company has a 50-year history operating other regional airlines in Canada. It also provides the Fixed Base Operator service at Toronto City Center Airport.

The airport is owned by the Toronto Port Authority, and its continued existence as an airport was in question only a few years ago. Apparently, the city government had considered taking over the property and converting it to other uses, a move that would have been popular with a nearby residents' group called Community Air. That group has opposed-to no avail-Porter's currently-under-way project to expand the terminal to a 10-gate configuration with jet-bridges (which passengers will certainly appreciate during Toronto winters). The first phase is to open this fall, with completion of the $45 million project by next summer.

Porter CEO Robert Deluce told Airport Business (August 2009, p. 16) that the company has identified 17 additional destinations, all within a 500-mile range of Toronto City Center Airport, as possible service additions. Deluce better move fast, in my view, since Air Canada Jazz is considering moving into City Center. The airport's small size limits its capacity, and Porter reportedly already uses a large majority of all available slots.

Porter's success in identifying and serving regional markets-and from a downtown airport close to a huge concentration of business people-causes me to once again reflect on the hubris of those who want to take untold billions from general taxpayers to displace self-supporting short-haul airline service with heavily-subsidized inter-city rail. Other cities could do as Toronto has done, providing airport capacity tailored to short-haul, turboprop (perhaps STOL?) service, with entrepreneurial airlines paying for terminal space and runway access. And because of the flexibility of air service, decisions about which cities to serve would be made by individual carriers, responding to the market demands their efforts would discover. Contrast that with the hugely politicized process of deciding which cities will be on the route of a tax-funded rail service-and the "sunk" nature of the cost of the rail infrastructure if those decisions turn out to be flawed.

My hat's off to Porter-and to the enlightened Toronto Port Authority.

News Notes

Should AIP Help Implement NextGen?

At the Air Traffic Control Association annual conference last month, the Colorado Dept. of Transportation (which funded a wide-area multilateration surveillance system that will dramatically increase runway throughput at airports in the mountains) argued that the federal Airport Improvement Program should fund such projects. And the Aviation Week Airports weekly for Oct. 27th quoted FAA associate administrator for airports Catherine Lang as agreeing. "What Colorado paid for was not AIP-eligible, but it's a fair question to ask, why not?" she told the newsletter. I agree; a lot of critical NextGen technology can increase runway throughput, and that seems likely to offer many project opportunities with higher ratios of benefits to costs than many current AIP grants.

Delta to Up-Gauge at LaGuardia

How times change! Two years ago as I was drafting Reason Foundation's proposal for congestion pricing at the congested New York airports, Delta was among the carriers denouncing the idea, and one of its arguments was that "up-gauging won't happen" because airlines needed numerous commuter planes to feed traffic to their longer-haul flights. But now that Delta has acquired 125 LGA slots from US Airways, "Delta plans to accomplish its expansion through larger jets," replacing turboprops operated by US Airways Express.

Use-It-or-Lose-It Exemptions

While I'm not a fan of airport slot controls (much preferring runway pricing to deal with congestion), when such controls exist, I support use-it-or-lose-it regulations to prevent incumbent carriers from hoarding unused slots in order to keep out competitors. Hence, I hope the EU Council of Transport Ministers continues to ignore pleas from the Association of European Airlines to extend the summer 2009 waiver of the 80% rule into the winter season and summer 2010. On the other hand, I can see the logic of the FAA agreeing last month to waive its use-it-or-lose-it rule at New York's JFK airport from March through November, while a major runway is taken out of service for a resurfacing and widening project. This will permit carriers at JFK to reduce their schedules during this period so as to prevent much worse delays and congestion.

Manchester Airport Exempts Kids from Body Scanning

Last month the UK's Manchester began a year-long trial of a checkpoint body scanning machine. A group called Action on Rights for Children objected, claiming that using the device on children would violate the Protection of Children Act of 1978, which makes it illegal to "make" or "show" in indecent image of a child. Two days later, the airport caved, announcing that children will be exempted from going through the RapiScan machine. Since UK law defines children as anyone under the age of 18, terrorist groups now have received what amounts to an invitation to use 16 and 17-year-olds as suicide bombers on planes departing Manchester.

Quotable Quote

"Each item confiscated [at passenger checkpoints] is presumed to have potential explosive, highly flammable, or other characteristics that could endanger life and property. As I understand it, federal health and public safety regulations require that any such suspicious item be isolated until it can be handled by experts, properly attired in protective gear, who would then transport it in an explosion-proof container to a protected laboratory test cell where it would be photographed, x-rayed, measured, weighed, and documented prior to being opened up and examined by remote means to avoid injury to personnel. . . . Why is it that the public safety bureaucrats haven't raised a single eyebrow at the way the TSA folks blithely toss these potential weapons of mass destruction around inside airport terminals full of people? Could it be that they, too, are in on the little secret that this is all just security theater?"

--Aviation reporter (name withheld by request), on an aviation list-serve, Oct. 16, 2009.

Airport Policy and Security Newsletter #50

bob.poole@reason.org (Robert Poole) — Sat, 31 Oct 2009 00:00:00 EDT

Brookings on Air Travel Delays
Will Registered Traveler Rise Again?
Increasing Runway Throughput
Unionizing TSA Screeners
LAX vs. Airlines, Again
GAO on Flawed Access Control
News Notes
Quotable Quote

Brookings on Air Travel Delays: Two-Thirds Right

The Brookings Institution has released a well-done report on the looming problem of increased air travel delays. "Expect Delays: An Analysis of Air Travel Trends in the United States," provides a well-timed warning of the likely return of serious airline delays once economic growth resumes and makes three major policy recommendations. (www.brookings.edu/reports/2009/1008_air_travel_tomer_puentes.aspx).

As a product of the think tank's Metropolitan Policy Program, the report focuses on America's urban areas, which are the source of most air travel. Nearly 99% of all passengers arrive at or depart from one of the 100 largest metro areas, with 73% concentrated in just 26 major metro areas (the largest of which are served by multiple airports with scheduled air service). It's those 26 urban regions that account for most of the seriously delayed flights. Also, nearly half of all airline flights (but just 30% of all passengers) are routes of less than 500 miles, a fact which leads to one of the report's recommendations.

The authors contend that current aviation policy is not focusing resources adequately on those 26 congested regions. For example, only 21.8% of Airport Improvement Program grants (and just 19.9% of airport-related stimulus funds) went to airports in those 26 major metro areas in FY 2009, according to the report's analysis. So one of the three recommendations is to "empower the most congested metropolitan areas to enact congestion mitigation policies" such as runway congestion pricing, which would generate additional revenue while providing incentives to economize on runway use. For the longer term, the authors suggest revising the way the FAA's Future Airport Capacity Task (FACT) process works, to put more emphasis on congestion reduction in the 26 major areas. So far, so good.

A second recommendation is to accelerate the deployment of NextGen technologies and investments to the major airports so as to expand their operational capacities in the medium term, beginning with the kinds of "now-Gen" approaches proposed by the RTCA's recent task force on this subject. It's hard to think of anyone who would oppose this one.

More troubling is the report's third recommendation: to prioritize high-speed rail project selection to focus on short-haul corridors (400 miles or less) where rail could substitute for airline service, thereby easing congestion at the airports at one or both ends of those routes. The 10 busiest corridors of this type, ranging from 185 miles to 358 miles, are Los Angeles-San Francisco, Los Angeles-Las Vegas, Los Angeles-Phoenix, Dallas-Houston, Boston-New York, New York-Washington, Los Angeles-San Jose, Dallas-San Antonio, Chicago-Minneapolis, and Dallas-Austin. Thus, we have four routes from LA, the two principal NE corridor shuttle routes, three in Texas, and one in the Midwest.

True high-speed rail service has in fact captured significant market share from airlines in selected cases: London-Paris, Paris-Lyon, Barcelona-Madrid, Frankfurt-Cologne, Tokyo-Osaka, in particular. And even moderate-speed Amtrak service in the Northeast Corridor has significant market share in competition with the airline shuttle services. But these experiences do not support the report's assertion that such corridors offer opportunities to "begin making returns on investment as soon as possible." Based on the best available public information, while rail service in these high-demand corridors covers its operating costs, none covers its capital investment costs, which are paid for largely or entirely by general taxpayers. So what proponents of replacing short-haul air service with rail are actually calling for is heavy taxpayer subsidies for a new mode to compete with self-supporting (user-paid) airline service. It's as if air fares were set to cover only the operating and maintenance costs of that service-letting general taxpayers cover the costs of buying the planes, building the airports, and creating the air traffic control system.

The OECD's Joint Transport Research Center held an expert round table on the subject of airports, airlines, and high-speed rail last October in Paris. The discussion paper summarizing this meeting concluded that, "The benefits from high-speed rail mainly take the form of time savings compared to other modes, and possibly of congestion relief in other modes. Environmental benefits are minor. In fact, the benefits are outweighed by the costs (in particular the high fixed costs), except in cases where there is high density of demand and there are pressing capacity problems in air and road alternatives." (See JTRC Discussion Paper 2009-7 at www.internationaltransportforum.org). It also points out that low-cost carriers (LCCs) can provide services between regions instead of cities, which is what has happened not only in Europe but in short-haul markets in this country.

Consider the greater Los Angeles area, where five airports are linked to three in the San Francisco Bay Area, all with frequent non-stop service, mostly by LCCs. Now compare that with the route map of the proposed $40-60 billion California High Speed Rail system. It shows 10 stations in the Los Angeles metro area and nine in the Bay Area-but only one main line connecting the two regions. While there will presumably be a number of nonstop express trains from, say, Union Station in LA to the huge new station planned for San Francisco, service from most or all of the other metro-area stations will include numerous stops, making it difficult to compete with nonstop air service, say, from Anaheim to Oakland.

So I cannot agree with the Brookings report on this one. And given the likely politics that will govern the actual selection of federally funded passenger rail corridors, they are unlikely to be located where the Brookings researchers suggest.

New Life for Registered Traveler Program

On September 30th, the House Homeland Security Committee's subcommittee on transportation security and infrastructure protection held a hearing on the future of the Registered Traveler program. Testifying in favor of reviving the program as a risk-based security program-the original intent of Congress in 2001-were two of three companies interested in reviving the service, two business travel groups, and a major airport organization. Subcommittee chair Rep. Sheila Jackson Lee endorsed revival of the program as a risk-based program, a specified in HR 2200, the House-passed Transportation Security Administration reauthorization bill.

The TSA's John Sammon replied that the agency is awaiting the confirmation of its new Administrator, Erroll Southers, to decide how it will proceed on RT. That requires Senate action, as does enactment of a counterpart to the House bill. Thus far, I have not seen any draft Senate provisions on RT, but this could presumably be addressed at the conference committee stage, even if the Senate bill ends up without addressing the issue.

Three companies have expressed interest in buying the membership records of former Clear provider Verified Identity Pass from creditor Morgan Stanley: FLO Corporation, Henry, Inc., and a third that has not been publicly identified. FLO's Fred Fischer and Henry's Alison Townley both testified at the hearing, and both said they would offer special deals to former Clear members. Townley said her firm would enroll former members at no charge for the balance of their terms with Clear. Fischer said that FLO will partner with a service provider that has 1,000 enrollment locations across the country, making it easier for prospective members to sign up.

Both the Business Travel Coalition and the National Business Travel Association strongly endorsed revival of RT as a risk-based security program that would also offer passengers and airports much speedier checkpoint processing of vetted members. BTC's Kevin Mitchell noted the importance of subjecting applicants to a serious criminal history background check, as well as integrating the program with the ongoing Global Entry program (sometimes referred to as International RT) of Customs & Border Protection, TSA's sister agency. And Fischer noted that under the old TSA program, "not a single RT member was ever vetted using a criminal history records check," a point I have independently verified.

AAAE's Carter Morris noted that a risk-based trusted-traveler program was recommended by the October 2001 Rapid Response Team set up by then-DOT Secretary Norm Mineta, which led to the idea's inclusion in the landmark Aviation & Transportation Security Act of 2001, enacted the following month. This type of RT program was also endorsed by the 9/11 Commission, Morris reminded subcommittee members.

I'm encouraged by the strong level of interest in re-starting Registered Traveler as the kind of security program it was intended to be. I hope the Senate does its part to move the issue along, and I'm looking forward to a positive decision by the new TSA Administrator.

Using Technology to Increase Runway Throughput

Of the large airports on the FAA's list of those needing additional runway capacity, 18 have what are defined as "closely spaced" parallel runways. In clear weather, FAA safety regulations permit simultaneous approaches on those runways, on the basis that pilots can see each other and take action to avoid a collision if one drifts toward the other. But under reduced-visibility conditions, such simultaneous approaches are not permitted, which means runway throughput is dramatically reduced.

In the 1990s, the FAA approved a technology improvement called an e-scan Precision Runway Monitor (PRM) that would permit simultaneous approaches on runways 3,000 feet apart, instead of the usual 4,300 feet. Basically, this was an electronically scanned radar whose update rate was 4 to 5 times faster than old-fashioned rotating radar; hence, it could keep more accurate track of both planes' locations as they made simultaneous approaches. PRMs were installed at only a handful of airports. It's not that they didn't work, but that they were costly to buy and costly to operate.

But a new generation of technology is now here, providing a lower-cost alternative to e-scan PRM. Early this month, the first such system went live at Detroit Metropolitan Wayne County Airport. Developed by Sensis Corp., it's designed to work with the company's runway incursion prevention system ASDE-X, which is operational so far at 20 of the 35 major airports targeted by the FAA to get this system. Called PRM-A (for alternative), it builds on the detection capability of ASDE-X (which uses both airport surveillance radar and transponder data) by adding wide-area multilateration (WAM), which can keep track of aircraft within 30 nautical miles of the airport, with once-per-second updates. (Multilateration is a kind of triangulation, using an array of sensors over a geographical area.) Although it still requires a separate display (a modified Raytheon STARS platform) and controller in the TRACON, like conventional PRM, the PRM-A costs about half as much to acquire.

That's doubly good news, because the old PRM is no longer in production. Hence, for the 18 airports with closely spaced parallel runways, the cost of adding this capacity is now significantly less than it used to be. And those few airports with aging PRMs and very limited availability of spare parts now have an option for replacing them with new and better technology.

Thus far, the FAA has approved PRM-A only for runways as closely spaced as 3,000 feet, but some of the 18 airports on FAA's list have runways closer together than that. A 2005 paper presented at the24th Digital Avionics Conference in 2005 argued that for aircraft equipped with ADS-B/In, spacing could be reduced to as little as 750 feet. (This is reference 14 in Viggo Butler, "Increasing Airport Capacity without Increasing Airport Size," http://reason.org/news/show/1002975.html.) It should be a priority for FAA and companies like Sensis to figure out what it would take to permit safe simultaneous approaches to all the remaining runways-and to start planning to do so.

Unionization and TSA Screeners

One of the original provisions of the 2001 Aviation & Transportation Security Act was that due to the critical nature of their work, the newly created federal airport screening workforce would not be allowed to form unions or go on strike. That provision was not popular with unions or their supporters in Congress, but with a Republican in the White House until this year, the odds of changing the law (i.e., of being able to override a presidential veto) looked slim.

That was then; this is now. Two House committees-Oversight & Government Reform and Homeland Security-have recently approved legislation by Rep. Nita Lowey (D, NY) to grant collective bargaining power to most TSA employees. The move is strongly supported by the American Federation of Government Employees and the National Treasury Employees Union. While I have nothing against unions in general, I think it would be a mistake to change the status quo in the field of airport security. Here's why.

Thanks to various audits and reports from both the Government Accountability Office and the Department of Homeland Security Inspector General's Office, we know that there are ongoing performance problems in airport screening. Red-team efforts to sneak prohibited items through airport screening succeed more often than not. Failure rates on TSA's skills test for screeners have exceeded 50% this year, and go as high as 80% at some airports, but in response, both unions urged TSA to suspend use of those tests! AFGE is also seeking to have TSA clear the records of those who fail the tests, because screener compensation is tied in part to performance. In addition, employees who seriously fail can be (and are being) fired, and under current rules cannot be rehired. But wiping those failures from employee records could permit those who were fired to be rehired.

These union pressures are being exerted today from the outside; they would be a lot more effective if the unions officially represented TSA screeners from the inside. It seems to me that airport screening is already a weak link in the chain (as demonstrated by the red team results and the skills test failures). The last thing we need is institutional arrangements that would further weaken screener performance and accountability.

New Developments in Los Angeles Airport Leases Struggle

I last reported on the ongoing struggle between Los Angeles World Airports (LAWA), proprietor of LAX, and various airline tenants back in Issue No. 25, in April 2007. Recent months have seen two important developments in this saga, both of which move LAX further toward a market-based model for airport fees and charges and away from the once-standard residual-cost approach under which the larger airlines (those who signed up to long-term lease and use agreements) gained control over their facilities and only paid the "residual" costs of using the airport (what was left to be paid for after all non-airline revenue were taken into account). This approach was dropped for airside charges in the 1990s under Mayor Richard Riordan (though not without big-time litigation). Recent battles have concerned the landside charges-essentially space rentals.

In August the U.S. Court of Appeals for the DC Circuit ruled in favor of LAWA in a case brought by the mostly low-cost-carriers using Terminals 1 and 3 (Alaska, AirTran, Frontier, Midwest, Southwest, and USAirways). They had argued that LAWA's decision to increase their rental rates was discriminatory, because signatory airlines under long-term lease agreements were not getting their rates increased. The court tossed that silly argument, upholding a prior decision by U.S. DOT that the fees were not discriminatory, since LAWA plans to do likewise for the other airlines once their current leases expire.

But the court also ordered DOT to consider the Terminal 1 and 3 airlines' argument that LAX has monopoly power. That's a pretty amazing claim for those domestic, relatively short-haul carriers to make, since there are four other airports in the greater LA area, all of which serve LCCs providing similar types of service. But that loose end remains until DOT responds.

Another big decision was announced October 6th, concerning Terminals 7 and 8. The airport had sold bonds to pay for rebuilding those terminals in time for the 1984 Olympics, but bankrupt United Airlines had not made all the required debt service payments. LAWA has now reached a settlement with United and UMB Bank (as indenture trustee for the bondholders) over paying off $94 million in bondholder claims. LAWA and United settled on $75 million, with LAWA on the hook for the larger share. Under the deal, United will gradually shift to new market-based rental rates by 2014, while LAWA will regain full control of Terminals 7 and 8 and be able to implement a unified capital charge for all terminal facilities in the future. The deal is subject to approval by the U.S. Bankruptcy Court, and also by the LAWA board and the LA City Council.

Changing from an old paradigm to a new one is never easy or painless, but it looks as if LAX is nearing the end of this long struggle to gain control of its future.

GAO Rips TSA Over Flawed Access Control Pilot Program

I don't enjoy dumping on the TSA, but when the Government Accountability Office says, in very diplomatic language, "You blew it," I feel obligated to summarize their findings in plain language. In Issue No. 36 (June 2008), I reported that TSA had persuaded Congress to hold off on imposing a costly mandate that all airport employees undergo physical screening (like airline passengers) every time they moved between an airport's public areas and its secure areas, whether in the terminal or on the ramp. TSA promised a pilot program that would test various alternatives to 100% screening to see whether equivalent results could be achieved via less-costly methods.

Well, last month GAO issued its report, innocuously titled "Aviation Security: A National Strategy and Other Actions Would Strengthen TSA's Efforts to Secure Commercial Airport Perimeters and Access Controls." (GAO-09-399 at www.gao.gov) But don't let the title dissuade you: the meat of the report is GAO analysts ripping to shreds this so-called pilot program. The one-page summary is bad enough, with statements like this: "[C]lear conclusions could not be drawn because of significant design limitations, and TSA did not document key aspects of the pilot. . . . Because of severe limitations in the design and evaluation of the pilot, . . . it is unclear which method is more cost-effective."

You have to plow through 15 or 20 pages until you get to the heart of the critique. First, GAO reminds us that TSA itself in its 2008 Civil Aviation Threat Assessment cited the threat from airport insiders (i.e., "airport workers with access to secured areas")as "one of the greatest threats to aviation." Then, starting on p. 26, it describes four actions TSA has taken on this issue. In addition to the pilot program on employee screening, it began a separate program of random employee screening called ADASP, put in place more-stringent requirements for employee background checks, and began work on biometric credentialing.

The pilot program to compare 100% screening with random screening was flawed in that (1) it included only seven airports, (2) it lasted only 90 days, (3) it used a variety of techniques, making it hard to compare airports, (4) it had no baseline, and (5) there was limited evaluation of enhanced methods. In addition, there were "significant limitations on the estimated costs and effects of implementing either 100% or random screening nationwide." Thus, while the contractor that did the evaluation reported that random screening was more cost-effective, GAO says no such conclusion can be drawn from such limited and inconsistent results.

The Aviation Direct Access Screening Program (ASASP) is even more of a mess. Here GAO cites an October 2008 report by the DHS Office of the Inspector General (OIG) on how supposedly random screening was actually being carried out in the field. "[A]t most of the seven airports the DHS OIG visited, ADASP screening stations were set up in front of worker access points, which allowed workers to identify that ADASP was being implemented and potentially choose another entry and avoid being screened." Supposedly that defect is in the process of being corrected.

It's hard to know whether to laugh at this obvious incompetence or to cry, in light of the seriousness of airport vulnerability to rogue employees (such as those at Orlando in 2007 who smuggled guns and drugs onto planes at night so they could be transported to Puerto Rico the next morning-but who could instead have been planting bombs).

Two things are clear to me, eight years after the ATSA legislation creating the TSA. First, the agency is devoting a disproportionate share of its resources to passenger and baggage screening, at the expense of lobby security, employee access control, and perimeter security. Second, divided responsibility for airport security (with TSA directly providing screening but a variety of other parties doing the other tasks) is far from optimal. Since TSA is the nation's aviation security policy-maker and regulator, it would be far better for it to do that job full-time, with each airport having undivided responsibility for implementing all airport security tasks (including screening), under TSA's regulatory oversight. But until Congress is willing to make that kind of major change, we're going to remain stuck with the dysfunctional status quo.

News Notes

New Report on Airport Cross-Subsidies

Hard on the heels of last month's USA Today investigation of Airport Improvement Program (AIP) grants comes a new report from the SubsidyScope project of the Pew Charitable Trusts. Overall, it confirms the large degree of cross-subsidy built into AIP, whose funding (entirely from the Aviation Trust Fund) comes 64% from airline passengers but whose grants to large and medium hubs (which serve the large majority of all passengers) account for only 33% of AIP spending. The report includes a searchable database on AIP expenditures from FY2005 through FY2008, including data on $/enplanement and each grant project's National Priority Rating. Go to: http://subsidyscope.com/projects/transportation/aip.

Going Beyond Current Airport Noise Programs

U.S. airports are required to mitigate noise that falls within a contour defined by the Day-Night Average Noise Level (DNL) 65, but some airports have gone beyond that in order to get expansion projects approved. The Airport Cooperative Research Program's Synthesis 16 provides an overview of U.S. airport noise practice in areas outside DNL 65. The researchers surveyed airport staff regarding such cases; in addition to presenting the survey results, the report provides two case studies. (http://onlinepubs.trb.org/onlinepubs/acrp/acrp_syn_016.pdf)

Atlanta Deploys Aerobahn System

Another airport that is equipped with the Sensis Corp. ASDE-X system for monitoring aircraft and vehicles on the ground to prevent runway incursions, has implemented the company's Aerobahn software that permits airlines and airport managers to collaborate on airport operational decisions, with common, real-time data on where all aircraft and ground vehicles are. Atlanta's Hartsfield-Jackson International Airport is the world's busiest airport. Aerobahn is also in use by JFK and Seattle-Tacoma airports, and by selected airlines at Newark Liberty, Houston Intercontinental, Detroit Metro, and Minneapolis/St. Paul. Overseas airport deployments include Orly and DeGaulle in Paris and Hong Kong International.

Shoe Removals Not Required at Checkpoints

It's true-that annoying requirement that you take off your shoes and put them on the belt does not apply . . . in Canada. (Actually, on my two trips to Europe earlier this year, I noticed people not removing their shoes in Germany and Sweden, either.) In fact, the recent Canadian Air Transport Security Authority (CATSA) bulletin on this subject, obtained last month by The Canadian Press under a freedom of information request, did not represent a change of policy. "It sounds new but it's not. It's always been the case since 2001," said Mathieu Larocque of CATSA. "We sent that reminder to make sure we're consistent." There is one exception, however. Air travelers heading for the United States must remove their shoes, to comply with U.S. security regulations.

Rio Airport to be Privatized Before Olympics

The main airport in Rio de Janeiro, the city which was just awarded the 2016 Summer Olympic Games, will be privatized before then, the government announced on October 6th. It turns out that the weakest factor in Rio's selection was the poor quality of Galeao International Airport, the country's largest. The Center for Asia Pacific Aviation reports that the government's privatization council said the terms of the privatization and a schedule are still being developed. The issue was raised last year by state governor Sergio Cabral, citing the need to correct the problems of "unsatisfactory infrastructure, poor airport services, and ineffective management."

Quotable Quote

"The imperative to move forward with some sort of 'trusted traveler' program will only increase as traffic begins to return to the aviation system, which most analysts agree will happen in the near future. Prior to the economic downturn, the situation at many airports was approaching unbearable, with growing lines at screening checkpoints frustrating passengers and creating a dangerous safety and security situation. While the temporary downturn in traffic has pushed many of these problems to the back burner, there is little doubt that they will soon return-making it all the more important that we are here today discussing a concept that holds tremendous promise in enhancing security while improving efficiency in the airport environment."

--Carter Morris, Senior Vice President, Transportation Security Policy, American Association of Airport Executives, testifying before the House Homeland Security Subcommittee on Transportation Security and Infrastructure Protection, Sept. 30, 2009.

Air Traffic Control Reform Newsletter #67

bob.poole@reason.org (Robert Poole) — Fri, 23 Oct 2009 00:00:00 EDT

In this issue:

Wide-Area Multilateration Can Replace Radars
FAA and Airline "Customers"
Digital Communications Back on Track
ATC Revenue and User Fees
GPS Backup Still Lacking
News Notes
Quotable Quotes

Wide-Area Multilateration: Replacement for Secondary Radars

News stories last month announced a development in Colorado that is more important than non-aviation journalists realized. A wide-area multilateration (WAM) system went into full-scale operation in the mountainous area where four airports are located-Yampa Valley, Garfield County, Steamboat Springs, and Craig-Moffat County. Due to the mountainous terrain, there are serious gaps in radar coverage below 13,000 feet, which drastically reduced flight operations during reduced-visibility conditions. But with the new WAM system up and running, controllers at Denver Center can provide normal radar-like separations to planes flying in that airspace.

Multilateration refers to a kind of triangulation, based on measuring differences in the time of arrival of signals from a plane's transponder to sensors at various known locations. It's been used for years in airport surface surveillance systems like ASDE-X, both here and overseas. Wide-area MLat uses a larger array of ground-based sensors; in the case of the new Colorado system, there are 20 of them. They continually listen for signals from planes' transponders and (if so equipped) their ADS-B equipment. A central unit computes the plane's position and sends it to the appropriate ATC center, where it's displayed on the controller's screen just as if it had come from a traditional secondary surveillance radar (SSR).

But as Tony LoBrutto of Sensis Corporation (whose company produced the system installed in Colorado) notes, there are three important differences between SSR and MLat. First, MLat is significantly more accurate than SSR, primarily because its updates occur once per second rather than once every 6 to 12 seconds, and it is not subject to some of SSR's inherent inaccuracies. Second, it is significantly less costly than SSR, both to acquire and to maintain. Third, MLat can handle ADS-B signals, which SSR cannot. Hence, it can provide a backup and integrity check for ADS-B.

Although the Colorado installation is the first WAM application in the United States (and will be expanded to areas served by seven additional airports), air navigation service providers in Austria, the Czech Republic, Fiji and South Africa are already well along on replacing SSR with WAM. Sensis and arch-rival Era Corp. (a subsidiary of SRA International) are involved in these and other MLat projects worldwide. The Czech Republic is one of the pioneers, with two Era WAM systems in operation and a third under contract. They will cover the country's entire airspace, handling all en-route traffic from a single facility near Prague, when linked together in 2010. Since they are being certified to at least equal the capabilities of SSR, under Eurocontrol rules the air navigation service provider (ANS CR) can use the same aircraft spacings as with SSR (5 nm. en-route and 3 nm. terminal). ANS CR plans to phase out its SSRs over a period of 10-15 years.

Fiji is also under way with an Era WAM and ADS-B system for the entire Fiji Flight Information Region. It will replace the current air traffic management system for both en-route operations and at the control towers of Nadi and Nausori International Airports. If commissioned on schedule next year, this will make Fiji the first country whose entire system will be non-radar based but of advanced technology. South Africa in February commissioned Era WAM systems for terminal and en-route air traffic management within 60 naut.mi. of both Cape Town and Johannesburg airports.

If WAM is so much better than SSR, should air navigation service providers whose SSRs are wearing out buy new ones? Era's Russell Hulstrom maintains they should not. In an article in Air Traffic Management last year, he suggested that shifting to WAM instead of SSRs will provide a smooth transition to an eventual ADS-B system, which he terms ADS-X (WAM plus ADS-B). Radars cannot track ADS-B equipped planes, but WAM can. And if the WAM system uses a clock timing system independent of GPS, it can also serve as a backup for ADS-B on an ongoing basis.

There has apparently been a fairly long-standing culture clash within FAA and other ANSPs between the "radar mafia" and advocates of MLat. It looks to me as if MLat is starting to win, and that bodes well for a safer and more affordable air navigation system.

FAA and Airline "Customers"

Responding to criticisms, from Congress and the media, that it has gotten too close to the airline industry, FAA Administrator Randy Babbitt in mid-September announced that the agency will no longer refer to the airlines as its "customers." Instead, that term will be reserved for members of the flying public.

This change in terminology illustrates the schizophrenic nature of the FAA as presently constituted. In its identity as the nation's aviation safety regulator, the decision is absolutely correct. The entities that are subject to its safety regulation are and should be at arm's length from their regulators, and calling those regulatees "customers" sends the wrong message to the airlines, pilots, mechanics, flight schools, airports, and airframe and engine producers that it regulates, as well as to its own safety regulatory staff.

However, this change is exactly wrong for the agency's largest branch, the Air Traffic Organization. The ATO is an "air navigation service provider" (ANSP), and as such, it has customers: those who operate aircraft in the airspace under its control. Creating the ATO early this decade was a big step forward for the FAA, clarifying roles and responsibilities by consolidating the agency's air traffic operations and its "facilities and equipment" branch into a single, dare I say, corporate entity aimed at serving its customers.

Just about every other civilized modern western country has gone further, by organizationally separating its ANSP from its aviation safety regulator. The ANSP is typically made self-supporting via fees and charges paid by its customers, while the air safety regulator typically remains within the transport ministry, funded by general government tax revenues. This model has proven itself over the last decade in country after country, improving both air safety (by providing truly arm's length safety regulation) and air traffic management (by depoliticizing the ANSP and making it more responsive to its customers).

Administrator Babbitt knows about this track record, having served on the advisory board of the best multi-country study of the before-and-after performance of 10 leading ANSPs, "Air Traffic Control Commercialization Policy: Has it Been Effective?" produced by MBS Ottawa and George Mason University, Syracuse University, and McGill University in 2005 and released in January 2006. (www.mbsottawa.com/current.htm) I hope he will issue a clarification, explaining that this new policy does not apply to the ATO.

Digital Communications Back on Track

Way back in mid-2003, the FAA abruptly dropped a promising program called Controller-Pilot Data Link Communications (CPDLC), despite a successful trial run involving American Airlines in South Florida. Shifting routine air-ground communications from VHF voice radio to digital communications (text messages) was and is viewed as a key building block for NextGen, and the FAA decision to put the program on indefinite hold baffled many observers.

The good news is that digital communications is back, in both Europe and the USA. Still called CPDLC in Europe, it was officially mandated by the European Commission in January 2009, for EU air navigation service providers and aircraft flying above 28,500 feet within Europe. For Western Europe, the implementation deadline is February 2013 and for Eastern Europe, February 2015. The aim is to achieve at least 75% equipage in each region by the deadline dates, since most aircraft operators will want to operate at or above 28,500 ft.

The new EU regulation specifies that data link equipment must comply with ICAO standards for controller pilot data link communications. This will permit long-haul aircraft already equipped with FANS-1/A equipment to use its datalink function, while other aircraft may have to add new equipment compliant with ICAO-standard ATN/VDL communications.

The EU action may have inspired the RTCA Task Force that I wrote about last month to include Digital ATC-Aircraft Communications as one of its key near-term ("Now-Gen") recommendations. Data link would be used for departure clearances, re-routes, and routine communications, with implementation beginning this year and proceeding through 2014. Like the EU plan, the RTCA recommendation calls for using already in-place FANS-1/A equipment on long-haul planes and ATN Baseline 1 equipment for other aircraft (including regional jets), which would have to equip by 2014. All Centers would be equipped by 2014, as would larger commercial airport towers. Since FAA does have a similar plan in the works (Segment 1 of its Data Comm program), Task Force members are hoping for timely FAA approval of this recommendation to expedite Segment 1. The RTCA report notes that "initial analysis by flight operator financial executives has shown a conservative ROI payback period of approximately 2.8 years."

ATC Revenue and User Fees

The October 21 issue of Aviation Daily had two apparently unrelated articles on page 2. One was headlined "Yield Decline Worsens in September, ATA Says." The other was captioned "House Lawmakers Caution White House Against User Fees." Let me attempt to connect the dots here.

The first article reflects the latest data compiled by the Air Transport Association on month-by-month "yield" figures-airline revenue in cents per revenue passenger mile (RPM) from air service in four regions (Domestic, Atlantic, Latin America, and Pacific). Overall, yields were down 18% year-on-year, reflecting the 10th consecutive month of fare decreases. The graph on p. 7 of that same issue shows yields from January 2007 through September 2009. Domestic yield averaged about 13.6¢/RPM in January 2007, with a gradual uptrend peaking in summer 2008 at just over 16¢/RPM. Domestic yields have plunged since then to 13.3¢/RPM in September 2009.

This matters for ATC funding, because the single largest source of revenue for the Aviation Trust Fund is the 7.5% tax on airline tickets. Large declines in that source of revenue mean budget squeezes for the FAA overall, and especially for the ATO. The ATO budget is already under pressure due to the increased payroll costs that will occur thanks to the recent contract agreement with controllers' union NATCA. Higher operating costs and lower revenue will mean budget cuts somewhere-and most likely in capital investment (i.e., modernization, also known as NextGen).

In recent years, the FAA itself (under Marion Blakey), the GAO, and the DOT Inspector General have all pointed out that a revenue system based on the price of airline tickets bears less and less relation to ATC costs as time goes on. The FAA, in particular, in its FY2007 budget proposal, laid out a sweeping funding reform, that would have ATC users pay for ATC services via user fees and the airport grant program via a user tax, with the federal general fund covering FAA safety regulatory activities. That proposal, alas, was dead on arrival in Congress.

Some of us cheered when we saw the Obama Administration's initial budget projections, calling for a shift to largely user-fee funding for the FAA starting in FY 2011 (with an estimated $9.6 billion coming from that source). Needless to say, that has set off the usual anti-user-fee campaign among general aviation groups, primarily AOPA (representing mostly individual private pilots). As of this week, they have recruited 118 House members, from both parties, to sign onto their a letter to President Obama calling for the user fee plan to be dropped. The letter urges continuation of status-quo funding, ignoring how out-of-sync that funding is with the factors that drive ATC costs.

The last thing we need is another war between the airlines and business/general aviation over user fees. But we do need to put the ATO on a sustainable funding path, especially with the major capital investments it needs to make on NextGen, which will improve flying for everyone. That sustainable funding path almost certainly must involve the users of Centers and TRACONs paying for the services they get-but in a way that does not impose burdensome administrative costs or put small-plane owners out of business. Canada succeeded in threading this needle when it created the funding system for Nav Canada more than a decade ago. As the Administration works to flesh out its user fee proposal, it would be wise to use the Nav Canada model as a starting point.

GPS Backup Still Lacking

A very sobering article appears as the cover story of the October 2009 issue of Avionics: "Fixing GPs," by Callan James. (www.aviationtoday.com/av/categories/military/35197.htm) James summarizes the Government Accountability Office's assessment, earlier this year, of the vulnerability of the GPS constellation to some of the existing satellites wearing out before enough replacements can be built and launched. (www.gao.gov/new.items/d09325.pdf) But his principal focus is the congressional testimony last May by Prof. Brad Parkinson of Stanford University. Prior to entering academia, Col. Parkinson was the USAF's chief architect of GPS and its original program manager, causing him to be widely known as the Father of GPS.

Parkinson outlined four possible approaches to mitigate (i.e., make less severe) a possible GPS "brownout," due to fewer than necessary satellites being operational. One would be to reactivate five of the satellites that are currently shut down because their solar panels can no longer handle the power-hungry DOD nuclear detection functions-but could still provide civil navigation signals (though their remaining lifespan may be short). Another would be to accelerate the development of the next-generation GPS III satellites, which are far more powerful than the existing ones. But that would take money from other DOD programs, so is not very likely. A third alternative would be to launch some simplified versions of GPS III, sans the military nuclear detection functions-which the military is unlikely to favor. Last-and least good-would be to add more GPS IIF satellites to the current late and over-budget contract, which Parkinson himself said would "be both expensive and risky while not meeting [full] operational requirements."

That, of course, leaves us with getting a back-up system in place, such as eLoran that I've written about in previous issues of this newsletter. It turns out that it was none other than Brad Parkinson who chaired the independent panel of experts (the Independent Assessment Team) that studied the problem for the Departments of Homeland Security and Transportation in 2007 and unanimously recommended eLoran as the best available backup for GPS. That recommendation was accepted by both agencies, and DHS announced in February 2008 that it would begin implementing eLoran as the GPS backup.

But then everything seemed to disappear into a black hole. The report disappeared from public view, and I'm told that the Office of Management & Budget continued its long-time effort to zero out funding for the Loran program-including eLoran. And language to that effect was included in the Obama Administration's initial budget proposal. The report itself was only unearthed via a Freedom of Information Act request earlier this year, and several members of Congress took up the cause of reviving eLoran as the GPS backup.

The latest news is that the DHS appropriations bill approved by a House-Senate conference committee this month allows for termination of Loran-C signals on Jan. 4, 2010 if the Coast Guard (which operates Loran) certifies that the signal is not needed for navigation and if DHS certifies that it is not needed as the GPS backup. Let's hope DHS gets this one right!

News Notes

Naverus Certified for Public-Use RNP Procedures
The company that pioneered development of precision approaches for airlines such as Alaska and Southwest, Naverus, received FAA certification last month to develop such approaches for public use at airports. Naverus has designed over 300 approaches that can be used by aircraft equipped for Required Navigation Performance (RNP)-in Canada, the United States, and other countries. Until now, public-use RNP procedures had been developed only by the FAA. The FAA's decision to allow third-party developers should speed the introduction of such approaches.

CANSO Launches Middle East Region
The Civil Air Navigation Services Organization (CANSO) has launched a new region encompassing the Middle East, reflecting the growth of interest in upgrading ATC in that part of the world. CANSO held its first conference in the region in January 2009, in Jeddah, Saudi Arabia, and its board approved creation of the new region at its annual meeting in July. Thus far, two of the region's Middle Eastern air navigation service providers are full members of the organization, GACA (Saudi Arabia) and NANSC (Egypt).

ATC Still on Inspector General's Problem List
The DOT Office of Inspector General (OIG) produces a list each year of the DOT's top management challenges-and once again, ATC modernization has made the list. Specifically, the OIG defined the problem as "moving toward the next generation air transportation system and improving the national airspace system's performance." The FAA's second appearance on the list concerns air safety regulation: "strengthening aviation's regulatory framework for safety and addressing human factors." As I have written many times before, the strongest step DOT could take in this regard would be to separate the FAA's air safety regulation organization from its ATC operation (the ATO), putting safety regulation truly at arm's length from ATC operations, as is true for all other aspects of aviation.

JPDO Releases New Documents
Early this month, the Joint Planning & Development Office (the interagency group responsible for longer-term research and planning of NextGen) on Oct. 2, 2009 released several new reports, including a revised Integrated Work Plan, NextGen Enterprise Architecture, and enhancements to its Joint Planning Environment. Go to: www.jpdo.gov/newsArticle.asp?id=121.

Belgium Ripping Off Air Travelers
One of the basic principles of commercialized air navigation service providers is financial autonomy-i.e., that the ANSP raises its own budget from the fees it charges for its services. But the government of Belgium is violating that principle when it comes to its allegedly commercialized ANSP, Belgocontrol. In each of the two latest fiscal years, the Belgian government has diverted €20 million from the ANSP to its own general government budget. The Association of European Airlines has rightly protested this ripoff, which is forcing airlines (and hence their passengers) to help cover the government's budget deficit. This kind of thing calls into question the viability of the commercialization model under which the ANSP remains 100% government-owned.

Quotable Quotes

"The Czech strategy is to provide air traffic surveillance at least 20 naut. mi. beyond its own borders. It may be possible for Poland or Austria or another neighbor to make use of aircraft tracking data from [Czech provider] ANS CR when deciding whether or not to replace aging secondary surveillance radars in their own countries. The fact that multilateration makes it easy to share surveillance data means it's a good tool to facilitate cross-border cooperation envisioned in the Single European Sky ATM Research (SESAR) modernization effort."
--David Hughes, "An Alternative to Radar," Aviation Week, October 20, 2008.

"I passionately believe that in 2020 no one will buy secondary surveillance radars. We will have crossed the threshold and our ANSPs and airspace designers will be able to improve safety, increase capacity, reduce fuel consumption, and decrease greenhouse gas emissions in ways that were never possible with secondary radar."
--Russell Hulstrom, SRA Air Traffic Systems, "Why Buy SSR Any Longer?" Air Traffic Management, Issue 4 2008 (www.airtrafficmanagement.net)

"How likely and how serious is the threat of future GPS brownouts? As one senior industry official told Avionics, 'If Brad Parkinson says there's a threat, you'd better believe him, no matter what the DOD says.' . . . Parkinson noted that 'GPS is so much a part of today's embedded infrastructure that brownouts must be avoided.' But he cautioned that 'To avoid this risk will require the best efforts of DOD, Congress, the GPS Program Office, the Air Force Space Command, and the contractors.'"
--Callan James, "Fixing GPS," Avionics, October 2009.

Surface Transportation Innovations #72

bob.poole@reason.org (Robert Poole) — Tue, 13 Oct 2009 00:00:00 EDT

In this issue:

Fund Transit as Social Infrastructure?
The Case Against a Federal Toll Czar
Residential Density and VMT Reduction
Jobs-Housing Balance vs. Retail/Housing Mix
Truck-Only Lanes Moving Forward
Upcoming Conferences
News Notes
Quotable Quotes

Fund Transit as Social Infrastructure?

Last month at the ARTBA Public-Private Ventures conference, a long-time transportation colleague whose work has shifted from public-private partnership (P3) toll roads to transit P3s had an interesting idea. Instead of thinking of highways and transit as the same kind of thing, he said, we really should think of transit (and he seemed to be thinking mostly of rail transit) as social infrastructure. The fact that it generates some revenues isn't that relevant; it's something people want, and it needs to be paid for (mostly) by general taxes, not user fees.

He made a good point, and this links directly to an idea that commuting expert Alan Pisarski put forth several months ago. Recalling that Congress has several times recently used general fund money to bail out the federal Highway Trust Fund (and that this is likely to continue, if Congress does not significantly increase federal fuel taxes), why not have Congress fix the Trust Fund by shifting federal transit funding to the general fund? That would free up considerable Highway Trust Fund monies for highways, which was that fund's original purpose, after all.

I expect the immediate reaction of transit advocates, state DOTs, and Metropolitan Planning Organizations will be opposition to such a major change from the status quo. But every national commission and think tank has called for this reauthorization of the federal program to be a time of thinking outside the box, so I hope you will think through with me the potential advantages of this change.

First, transit is more popular today with elected officials than at any time I can remember. So the natural fear of transit people that losing access to dwindling federal fuel tax revenues would mean a reduction in transit funding seems fanciful to me. The Administration and Congress are, after all, putting $14 billion of new general fund money into inter-city passenger rail. It's inconceivable to me that they would reduce, rather than increase, the amount of federal support for transit, whatever its source. And transit advocates might figure out that instead of always having to fight for a larger share of Highway Trust Fund money, they might do better making the case for larger general fund support.

Second, every credible study of highway funding-the FHWA's Conditions & Performance reports, the AASHTO Bottom Line reports, the Infrastructure Finance Commission's report-finds that this country has a large backlog of deferred highway maintenance, a still-large (though slowly declining) number of deficient bridges, and a huge unmet backlog of capacity additions and bottleneck removals that would pass a benefit-cost test. Yet it seems highly likely that Congress will not increase federal gas and diesel taxes this go-round, so those problems are likely to get even worse during the six-year reauthorization period. Thus, refocusing the Trust Fund on its original highways-only purpose would facilitate much-needed highway investment despite the lack of a gas-tax increase.

Third, making this change would reverse the two-decade trend of gradually converting the fuel tax from a user fee into a general public-works tax. Ample survey research shows that as of now, large fractions of the public won't support increased fuel taxes because they (correctly) expect they will get little or no direct benefit from paying more at the pump. They know all about bridges to nowhere, and the more knowledgeable ones have begun to realize that the Highway Trust Fund has increasingly become a politicians' plaything rather than a means of giving them better highways in exchange for their "user tax" payments. But shifting those revenues back to being 100% for highways could go a long way towards putting trust back in the Trust Fund.

How much could federal highway investment be increased if this change were made? The recent GAO study requested by Sens. McCain and Coburn (GAO-09-729R) found that during fiscal years 2004-2008, $78 billion in Highway Trust Fund monies (out of a total of $244 billion) were spent on transit and other non-highway purposes. In round numbers, that is 32%. When you actually get into the details, it's a bit more complicated, since the question posed to GAO was very narrow (spending on anything other than the construction and maintenance of highways-so the 32% includes highway-related research and planning, operating funds for FHWA, NHTSA, and FMCSA, etc.). Adjusting for some of those things would reduce that 32%. But the GAO calculation appears not to have taken into account the extent to which state DOTs "flexed" some of their highway funds to non-highway projects, as allowed under SAFETEA-LU. Correcting for that would increase the percentage. However the final number works out, it's a pretty sizeable amount of dollars.

I hope this idea gets serious consideration as we rethink the federal role in surface transportation.

We Don't Need a Federal Toll Czar

Assuming the House reauthorization bill moves forward as drafted by Chairman Oberstar and his staff, one of the battles will be over its proposal to centralize decisions over nearly all U.S. toll roads and tolled P3 projects in a new "Office of Public Benefit" in the Federal Highway Administration. You have to sort through several different sections of the bill to understand the full impact: Sec. 1204 on the OPB itself, Sec. 1301 on federal veto power over toll agreements, and Sec. 1504 on P3 agreements.

The first thing to understand is that while proponents claim that the bill "consolidates" a number of current pilot programs on tolling and P3s, what it actually does is to significantly expand federal control. First, it turns back the clock to the days before the 1991 ISTEA legislation (which began to relax what had been a nearly complete ban on tolling on federal-aid highways). Since ISTEA, the only restrictions have been limited to the Interstate system, but the House bill reverts to the bad old days, and would apply to anything on the entire federal-aid highway system.

Second, the tolling section requires that all tolling agreements (which allow some use of tolling on a federal-aid highway) must be approved-or not-by the Office of Public Benefit. This includes the "tolling schedule," which seems to ignore the increasingly common dynamic pricing as used on Managed Lanes and on some recent and planned toll roads. And any "substantial changes" in the toll schedule are also subject to the OPB czar's veto. Public comment would be required before any such tolling went into effect. And-get this-anyone who objected would have 90 days to bring a lawsuit. States would also be required to use any excess toll revenues for transit (including operating costs). And states would be required to mitigate the impact of toll facilities on low-income travelers and others diverted from the roadway due to tolling.

Third, the measure would create new obstacles for P3 projects. Besides spelling out certain provisions that must be included in such agreements, the measure requires negotiated agreements between a state DOT and the competitively selected private partner to be submitted to the federal OPB czar for approval-or not. As former DOT chief counsel D. J. Gribbin wrote in Public Works Financing , "[R]equiring all tolling and P3 agreements to be approved by the Office would severely limit the attractiveness of P3s to both states and the private sector." By creating considerable uncertainty over whether such approval would be granted, "P3 proponents would be at risk of the OPB denying a P3 project after millions of dollars and years of effort were spend to develop it. This puts P3 proponents in a catch-22. OPB will only approve projects [that are] well developed but no one will spend funds to advance a project to that stage unless the project has OPB approval."

Pennsylvania Gov. Ed Rendell cheered P3 proponents at last month's ARTBA Public- Private Ventures conference and again at the Infrastructure Investor: New York conference by asking his audiences to "Help me kill the Office of Public Benefit." In July, the National Governors Association called on Congress to remove federal restrictions on states' authority to toll federally-aided highways and to make decisions about "the appropriate level of private sector participation in their surface transportation programs." I hope AASHTO, the state DOTs'organization, does likewise at their upcoming annual meeting later this month.

Increasing Density and Reduced Driving

Last month I reviewed the important Transportation Research Board report "Driving and the Built Environment" which summarized serious research on key issues in this area. One of its findings is as follows: "The literature suggests that doubling residential density across a metropolitan area might lower household VMT [vehicle miles of travel] by about 5 to 12 percent." It noted that many studies that claim higher impacts "are subject to a number of shortcomings," including the possibility of self-selection-the tendency of people who like urban lifestyles to locate in high-density areas; hence, the findings from those areas are probably not generalizable to the larger metro area population.

This month I'd like to call your attention to an interesting quantitative exercise on this subject carried out by Randal O'Toole of the Cato Institute. He reproduces a Sierra Club graph and data on daily trips per person as a function of density (people per square mile), based on the VMT reduction being 10% for doubled density--consistent with the TRB study. Then he looks at the impact on an area that is shifted to higher density. Using the Sierra Club's figures for auto trips/capita at each density, he calculates and then adds to the graph the total daily auto trips that result from the higher density (lots more people/square mile times a slightly lower trips/person means a lot more trips/square mile). Assuming that congestion increases proportionally to trips/square mile, O'Toole's calculations show that congestion increases by a factor of 10 as per-capita trips are being cut in half, as densities are being increased to a level beyond that of New York City.

This is a nuance that the TRB researchers appear to have missed, and unless there is some basic flaw in what O'Toole has done, this congestion impact is very important. Not only would it impose costly time-wasting on those in the densified areas. It would also increase greenhouse gas emissions from that area. (Go to www.debunkingportland.com/smart/densitycongestion.htm)

Jobs-Housing Balance versus Retail-Housing Mix

Two different urban planning objectives have been promoted as ways of reducing auto travel. One calls for serious efforts to have jobs spread more evenly throughout an urban region, rather than the once-traditional pattern of the jobs being located mostly in a central business district while the suburbs consist largely of bedroom communities. This is called increasing the jobs-housing balance. The other idea, which is more closely linked with smart-growth and new-urbanist planners, calls for mixed-use zoning in residential areas: providing a significant mix of retail and residential uses. The first idea is intended to reduce the length of average commute trips; the second to reduce the use of cars for shopping trips.

Thanks to recent research by Robert Cervero and Michael Duncan of the University of California Transportation Center in Berkeley, we have some solid data on these two approaches' impact on VMT (vehicle miles of travel). (www.uctc.net/papers/825.pdf)

Cervero and Duncan relied on household travel diary data from the year 2000 in the San Francisco Bay Area. Overall, they found that a 10% increase in the number of jobs in the relevant occupational category within four miles of one's residence is associated with a 3.3% lower daily work VMT, and a somewhat larger impact on vehicle hours of travel (VHT) for work trips. For shopping and services trips, the impact of having retail and services close to home was much smaller (which makes sense, because most people need to drive to reach their preferred stores and service providers). Overall, the researchers concluded that jobs-housing balance reduces VMT 72.5% more than mixed-use (housing and retail) development, and reduces VHT by 88% more. They note that these results are consistent with a recent national study that analyzed the influence of seven land-use variables in 1990 on changes in commute time in 2000, for 50 large urban areas. The only one related significantly to lower commute time was jobs-housing proximity.

There is also some evidence that jobs, over time, follow residents to the suburbs, as office and industrial parks get built closer to where many employees (and executives) prefer to live. Cervero and Duncan cite previous research on this from both the Los Angeles and Washington, DC metro areas. The latter is where the term "edge city" was coined, to describe one aspect of this phenomenon, which is now seen nationwide.

Truck-Only Lanes Gain Some Traction

Last month the Federal Highway Administration approved Missouri DOT's request to rebuild its portion of I-70, between Kansas City and St. Louis, with truck-only lanes. The idea was studied as part of a four-state "Corridors of the Future" project, for which study funding was awarded under that FHWA program about two years ago. Four states-Missouri, Illinois, Indiana, and Ohio-took part in that study, one of whose aims was to assess the feasibility of rebuilding and modernizing I-70 in that 800-mile corridor with the added lanes being designed as truck-only lanes. Missouri has gone further towards implementation thus far, perhaps because its need for widening and rebuilding is more urgent than that of the other three states. It plans to seek $200 million in federal stimulus money to build an initial 30 miles of I-70 truck lanes in two counties.

As conceptually designed, the project would add two truck-only lanes in each direction across Missouri. The lanes would be in the center of the right of way, with eastbound and westbound truck lanes separated by a concrete Jersey barrier. The truck lanes would be separated from the general purpose lanes in most places by a grass median. Direct-access ramps would be used to access the truck lanes in high-traffic areas, with slip ramps between the truck lanes and the GP lanes elsewhere. The price tag is estimated at $4 billion, which Missouri DOT does not have. But if the truck lanes offer significant time-saving, safety, and productivity gains (e.g., by permitting turnpike-double rigs), truck tolls could provide at least part of the funding.

Truck-only lanes are being studied as part of a tolling study on rebuilding I-80 in Wyoming, and Florida is moving forward with a project called the I-4/Crosstown Connector that will provide truck-only lanes from the Port of Tampa to I-4, alleviating extensive truck traffic through a local neighborhood called Ybor City. And the greater Los Angeles area continues to pursue a set of truck toll lanes to link the ports of Los Angeles and Long Beach with the distribution centers in the Inland Empire of Riverside County. This project is in the region's long-range transportation plan.

Upcoming Conferences

Note: I don't have space to list all the transportation conferences going on; below are only those that I or a Reason colleague are speaking at.

AASHTO Annual Meeting, Palm Desert, CA, Oct. 22-27, 2009. Details at: www.transportation.org/meetings/181.aspx.

2009 AMPO Annual Conference, Savannah, GA, Oct. 27-30, 2009. Details at: www.ampo.org/content/index.php?pid=200.

Council of State Governments Annual Meeting, Palm Springs, CA, Nov. 12-15, 2009. Details at: www.csg.org/meetings/conferencecalendar.aspx.

The Future for Interurban Passenger Transport, Madrid, Nov. 16-18, 2009, Joint OECD/International Transport Forum conference, Palacio de Congressos. Details at http://istep2009.cedex.es.

IBTTA Transportation Policy & Finance Summit, Washington, DC, Dec. 13-15, 2009, Grand Hyatt Hotel. Details at: www.ibtta.org/Events/eventdetail.cfm?ItemNumber=3855.

News Notes

New Interstate Route: Phoenix to Las Vegas
In discussing highway policy, it's long been taken for granted that "the Interstate system was completed years ago." To be sure, the original map adopted by Congress in 1956 when the program began has been built out. However, that map reflected U.S. population and land use as of the 1940s, when the system was being planned. The country is vastly different today, with Phoenix and Las Vegas having grown from small cow towns in the 1940s to major metropolitan areas today. Yet there is no Interstate route connecting them. Consequently, I was pleased to see an AP story (Sept. 15, 2009) reporting that the Arizona DOT will soon begin an environmental study of the proposed 225-mile I-11 from Phoenix to Las Vegas. Another proposed missing link is the completion of I-69 from its current southern terminus at Indianapolis to southeastern Texas. The idea that a 1940s-era map is sufficient for 21st century highways has long been overdue for rethinking, and it appears that such rethinking has begun.

Status Report on Electric Vehicles
For an excellent three-page overview of where industry has gotten with battery-powered vehicles, read "The Electric-Fuel-Trade Acid Test," pp 75-77, in the Sept. 5, 2009 issue of The Economist. (www.economist.com/displaystory.cfm?story_id=14362092)

"Hobbit Homes" for America?
The idea that government should force high-density residential patterns, beyond what people would freely choose, has been standard practice in the U.K. since the Town and Country Planning Act of 1947. Comparable policies have been followed in a number of other European countries. It occurred to economist Ron Utt to see if that constraint on housing supply could be quantified. (Restricting land available for housing would be expected to lead to smaller units on more-expensive land.) Using data from the BBC on new housing produced from 2004 through 2008 in eight countries, Utt found that the average size of a new U.K. housing unit is now only 818 square feet-compared with 1,022 in Japan, 1,474 in Denmark, 2,116 in Australia, and 2,303 in the United States. U.K. housing is also the most expensive in the English-speaking world. London Mayor Boris Johnson has referred to the tiny British houses as "hobbit homes," and has promised moves to change this trend. (www.heritage.org/research/smartgrowth/wm2601.cfm)

Can Government Effectively Address Global Warming?
In a disturbing Sept. 14, 2009 op-ed piece in the Wall Street Journal, science writer Ronald Bailey (Reason magazine) asks the question: "Is Government Action Worse than Global Warming?" Check it out at: http://online.wsj.com/article/SB10001424052970203917304574413231076020844.html

New CAFÉ Standards' Impact on Highway Trust Fund
In September the EPA and NHTSA (National Highway Traffic Safety Administration) announced the Administration's new CAFÉ (Corporate Average Fuel Economy) standards, aimed at increasing energy efficiency and reducing greenhouse gas emissions from motor vehicles. Under the standards, the combined passenger car/light truck fuel economy of new vehicles will increase from 27.3 mpg for model year 2011 to 34.1 mpg for model year 2016. Transportation Weekly (Sept. 23, 2009) estimates that over the lifetime of vehicles sold from model years 2012 through 2016, the reduced fuel use will cost the federal Highway Trust Fund $11.3 billion-and there would be comparable impacts on state fuel tax revenues, as well.

More Congestion Pricing Primers from Federal Highway Administration
FHWA's excellent series of primers on aspects of congestion pricing continues, with the most recent one being "Transit and Congestion Pricing" (FHWA-HOP-09-015). Other recent additions include "Technologies that Enable Congestion Pricing" and "Economics: Pricing, Demand, and Economic Efficiency." You can peruse an entire library of related documents by going to http://ops.fhwa.dot.gov/publications and paging down to the section called Tolling and Pricing Program.

Quotable Quotes

"[W]e seem to be witnessing a series of disjointed, inconsistent, and dare I say, hypocritical and perhaps demagogic decisions and positions:

Increasing the federal fuel tax is taboo but cap and trade is critical.
Transportation resource allocation should be performance-based across modes, but billions are earmarked for high-speed (and probably not-so-high-speed) rail.
Investments should be very efficient-but create lots of jobs.
We want to reduce vehicle miles of travel, but not lose any jobs in the auto and related industries; we take credit for jobs created by investments in one mode without debating the losses in competing modes.
We are eager to claim credit for economic development near transportation investments but not to debit the foregone development at locations where we didn't choose to invest."

--Steven Polzin, Center for Urban Transportation Research, "Speaking of Clunkers," Planetizen, Aug. 12, 2009 (www.planetizen.com/node/40125)

"Power is at the root of this issue. Congress generally disfavors the use of public-private partnerships because they reduce the 'federal' share of the pie and diminish earmarking capability, thereby reducing the power and influence of the federal legislative branch. In other words, P3s substitute for large public funding by injecting private-sector investment into the system which sometimes supplants the 'power of the purse' from Congress. Many in Congress don't want to see any reduction in their power to control the purse strings because they want to determine which projects are advanced, rather than having the private sector, in consultation with local and state governments, make those decisions."
--Marcus J. Lemon (former chief counsel, Federal Highway Administration), "Reauthorization: A Missed Opportunity for Transportation Funding Reform," Tollroadsnews.com, June 6, 2009. (www.tollroadsnews.com/node/4223)

"One of the biggest killers of all is that states insist on allocating federal transportation funds through a politically devised formula. The result? Smooth, well-paved rural highways and worn-out urban roadways that are paved with a layer of asphalt too thin to withstand heavy use and are therefore in need of excessive, costly maintenance. . . . All of this wouldn't be so bad if even inflated costs brought back large returns. In co-authored, peer-reviewed research . . . I found that over the past decade we have reaped a mere 1% return on our highway investment. And what's more, for every $1 the government has spent trying to reduce roadway congestion, motorists have saved a mere three cents in travel time and other costs."
--Clifford Winston, Brookings Institution, "Stimulus Doesn't Have to Mean Pork," Wall Street Journal, Dec. 29, 2008.

"For the last 50 years, we have relied almost entirely on government to build and operate our highway system. This, in a capitalist country whose citizens are often highly critical of government-run programs. . . . The funny thing is, government-run roads are a relatively new phenomenon in the United States. Prior to the 20th century, almost all roads, bridges, canals, and railroads were build [and operated] by private companies. . . . Today, in the face of stiff opposition to higher taxes, we are faced with a dilemma. We need a modern transportation system to compete in the global marketplace, but we've been unable to reach political agreement on how to fund the improvements. . . . In most industrialized countries, private sector investment has been the preferred option. Here, that idea has been met with significant opposition. . . . As the head of a government transportation agency, it would be easy for me to oppose private investment. But I care too much about Central Texas to put my own [political] interest first. . . . As citizens, we need to face up to the fact that roads are not free, and that unless we want our infrastructure to devolve into resembling a third-world country, we are going to have to increase our investment in transportation infrastructure. Where that investment comes from is ultimately up to how well our political and policy leaders inform the public."
--Mike Heiligenstein, Central Texas Regional Mobility Authority, Sept. 1, 2009 (www.mobilityauthority.com/index.php?option=com_content&view=article&id=165&Itemid=257.)

"Greenhouse gas reduction is the hardest possible case: an effective program would require very large changes in private behavior; it appears that only an ineffective program is politically feasible for the time being; and the prospect that technological change will ameliorate the problem independently (e.g., through development of low-cost, non-carbon energy generation) remains highly uncertain."
--Christopher DeMuth, "Unintended Consequences and Intended Non-Consequences," Bradley Lecture delivered at American Enterprise Institute, June 8, 2009.

Reason Alert: President Obama's Nobel Prize

Fri, 09 Oct 2009 15:00:00 EDT

Reason Alert: October 9, 2009

- Reason.tv Video: President Obama Wins Nobel Peace Prize and Heisman Trophy
- What President Obama's Nobel Prize Says About the World
- The Lessons of Previous Health Care Reforms
- Don't Blame Voters for California's Budget Woes
- Ayn Rand's Place in American Intellectual and Cultural Life
- New at Reason

Reason.tv Video: President Obama Wins Nobel Peace Prize and Heisman Trophy

What President Obama's Nobel Prize Says About the World
"Among many other things, this selection illustrates the United States' way-too-oversized role in the world's imagination. And it shows how people-almost touchingly-remain suckers for likeable politicians who replace guys they hated, investing in them a kind of faith mere mortals usually don't merit. As Chili Davis famously (and presciently) said about Dwight Gooden, 'He ain't God, man.'" - Reason magazine Editor-in-Chief Matt Welch

The Lessons of Previous Health Care Reforms
In The Wall Street Journal, Reason magazine's Peter Suderman writes, "Like participants in a national science fair, state governments have tested variants on most of the major components of the health-care reform plans currently being considered in Congress. The results have been dramatically increased premiums in the individual market, spiraling public health-care costs, and reduced access to care. In other words: The reforms have failed...Despite these state-level failures, President Barack Obama and congressional Democrats are pushing forward a slate of similar reforms. Unlike most high-school science fair participants, they seem unaware that the point of doing experiments is to identify what actually works. Instead, they've identified what doesn't-and decided to do it again."
Health Care Research and Commentary

Don't Blame Voters for California's Budget Woes
In an op-ed in The Wall Street Journal, Reason Foundation's Shikha Dalmia, Adam Summers and Adrian Moore write, "Whatever the wisdom of ballot initiatives that protect some programs from cuts, they are not the root cause of California's fiscal disaster. That cause is the government's spending addiction. From 1990 to 2008, California's revenues increased 167%, but total spending soared 181%."
California Research and Commentary

Ayn Rand's Place in American Intellectual and Cultural Life
"Contempt has long been the standard literati response to Rand. Like Jack Kerouac, Rand is typically written off as a writer whose basic appeal is to maladjusted adolescents, a sort of vaguely embarrassing starter author who is quickly outgrown by those of us who develop more sophisticated aesthetic and ideological tastes. There's more than a small degree of truth to such a characterization, but the extreme prejudice with which Rand is dismissed belies a body of work that continues to reach new audiences. Given that critical context and the recession-driven boomlet in Randian thought, Ayn Rand and the World She Made and Goddess of the Market are not simply well-timed explorations of an enduring writer. They are essential guides to contemporary American politics and culture." - Reason.com Editor Nick Gillespie
Brian Doherty: Why Ayn Rand Is Hot Again
From Reason's Archives: Ayn Rand at 100

New at Reason

Reason.tv Video: Light Bulbs vs the Nanny State

From Guns to Butter
How a Second Amendment case can help restore economic liberty
Jacob Sullum

The Supreme Court Takes on Guns, Again
Heller lawyer Alan Gura revived the Second Amendment. Can he do the same for the 14th?
Brian Doherty

When Public Power Is Used for Private Gain
It's time for New York's highest court to say no to eminent domain abuse
Damon W. Root

Marching with Michael Moore
After a rally, union toughs get a sneak peak of Capitalism: A Love Story
Sean Higgins

Obama and the Socialist Canard
The president is no left-wing extremist
Steve Chapman

Transfer Machine
Why the true burden of government is the spending level
John Stossel

The Doers vs. The "Thinkers"
David Harsanyi
The fatal conceit of trying to plan the economy

Reason.tv Video: Swedish Author Johan Norberg
The origins of the financial crisis
Interview with Michael Moynihan

Chicago Wins By Losing
Why losing the Olympics is a blessing in disguise for the Windy City
Steve Chapman

The Teutonic Turn
In the midst of an economic downturn, German voters go libertarian
Michael C. Moynihan

Scenes From a Crackdown
Police overkill at the G20 summit in Pittsburgh
Radley Balko

Media Contact:
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Reason Foundation, Reason magazine, Reason.tv
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Airport Policy and Security Newsletter #49

bob.poole@reason.org (Robert Poole) — Wed, 30 Sep 2009 00:00:00 EDT

In this issue:

Where AIP Grants Actually Go
Body Cavities and Suicide Bombers
New Orleans Revives Privatization Program
TSA's Belly-Cargo Screening Rule
Airports: Competition vs. Monopoly
News Notes
Quotable Quotes

Where Airport Grants Actually Go

USA Today's recent story by reporter Thomas Frank was described as "the first full accounting of the 28-year-old Airport Improvement Program." According to their analysis, over the years the program has put $15 billion into general aviation (GA) airports that have no scheduled passenger service. And those sums have grown dramatically during the past decade. From $470 million in 1999, the annual amount grew to a record $1.2 billion this year, far outpacing inflation. The story was featured on MSNBC and the Today show, stirring up a firestorm of protest in the GA community, which charged that it was based on a handful of anecdotes (ignoring the interactive national map, on which you can click on any of 3,155 airports and read its number of annual flight operations, number of AIP grants, and cumulative AIP funding: www.usatoday.com/travel/flights/2009-09-16-airport-map_N.htm).

I looked briefly into this issue last winter, finding that there is a large degree of cross-subsidy involved. AIP gets its funding from aviation excise taxes, the largest source of which is airline passengers, via the 7.5% tax on the ticket price plus the $3.60/segment tax. In 2006, for example, 97% of all airline passengers used large, medium, or small hub airports for their travel. But only 46.5% of AIP funding went to those three categories. Another 18.8% went to non-hub airports and a full 34.7% went to "other"-GA and reliever airports.

So it's quite legitimate for airline passengers and taxpayer groups to question the value proposition involved in the taxes they pay on airline tickets. To be sure, as Chip Barclay of the American Association of Airport Executives pointed out in response to the USA Today story, reliever airports in urban areas reduce the extent of congestion that might otherwise exist at hub airports. And certainly airports in small, rural areas can be important for businesses and tourism in those areas. But why should airline passengers-as opposed to local business groups, local taxpayers, and GA airport users-pay the bulk of those small airports' capital costs?

Congress loves AIP, and especially the cross-subsidy nature of it, which allows members to bring home the bacon to their districts, regardless of the benefit/cost ratio of the airport projects. So if data like that gathered by USA Today does not lead to AIP reforms, what hope is there for air travelers whose large and medium hubs have inadequate terminal space and out-of-date runways? Fortunately, Congress allows hub airports to charge per-passenger fees for specific improvement projects. Currently the ceiling on Passenger Facility Charges (PFCs) is $4.50 per enplanement, an amount that has been unchanged since 2000, while construction costs have escalated. The FAA reauthorization bill passed earlier this year by the House would increase that ceiling to $7.00, but there is thus far no comparable provision in the Senate, which is still drafting its bill.

Unlike AIP, which does some good despite being heavily politicized and earmarked, the PFC program is local self-help and a true user fee, in which those who pay are the ones who benefit. The PFC money they pay stays right there at the airport that levies it, and can be used only for specific, FAA-approved improvements to that airport. I'd love to see AIP reformed, but I'm not holding my breath. But the least Congress can do is to give large, medium, and small hub airports permission to raise more funds for much-needed improvements on their own.

Body Cavities and Suicide Bombers

Earlier this month, the Australian Associated Press reported that in a suicide bombing attempt to assassinate the Saudi Deputy Interior Minister Prince Mohammed bin Nayef, an al-Qaeda terrorist hid the bomb in his anal cavity and detonated himself while standing near the official. Fortunately for the latter, only the terrorist was killed in the explosion. But the use of body cavities to bring explosives aboard aircraft is an issue for airport security, worldwide.

A discussion in the Sept. 16^th issue of the STRATFOR Global Security & Intelligence Report ("Convergence: The Challenge of Aviation Security,") highlighted this episode as part of an ominous trend in airliner-related terrorism. First came hijackings for ransom, followed by hijackings leading to destroyed planes and sometimes passenger casualties. Then came bombs smuggled aboard in someone else's suitcase (Pan Am over Lockerbie). Only with the 9/11 attacks came suicide bombers taking over planes to use them as guided missiles. But since that tactic is increasingly unlikely to succeed, more recent plots have involved suicide bombers bringing the materials on board to assemble improvised explosive devices (IEDs) during flight. That was the scenario for which several people were just convicted in the U.K. liquid explosives plot; it was also the M.O. of the thwarted Bojinka plot, which intended to destroy multiple flights over the Pacific.

STRATFOR analyst Scott Stewart notes that body cavities are commonly used by people to smuggle drugs and weapons into prisons. And while exploding a small bomb that is still within the terrorist's body cavity seems unlikely to accomplish his intent of bringing down the plane, it does seem like a workable way to bring aboard components for an IED. So the obvious question becomes: what will the TSA and other aviation security organizations do about this threat?

One course would be to ignore the issue as impossibly gross and privacy-invading. But that would be entirely inconsistent with the global campaign to keep liquids (in any serious quantity) off planes, and all the other passenger and carry-on screening mandates. The other course would be to make greater use of body scanning machines-at the very least for everyone selected for "secondary screening." The STRATFOR report claims that "Even advanced body-imaging systems like the newer backscatter and millimeter wave systems being used to screen travelers for weapons are not capable of picking up explosives hidden inside a person's body." However, that's not what I've heard from a former TSA official who says such devices can be modified to do this job.

Sooner or later, this country is going to have to face up to the fact that putting every single air traveler through the third degree every time she takes an airline trip is a foolish policy. When we come to our senses, we will adopt a risk-based policy that does the best it can to separate the sheep from the goats, applying only nominal precautions to regular travelers who pass a voluntary background check and using intelligence data to identify high-risk travelers who need truly thorough screening. Meanwhile, welcome to body scanning, very possibly for everyone.

New Orleans Filing Revives Airport Privatization Program

When the impending privatization of Chicago's Midway Airport fell through earlier this year, some rushed to declare U.S. airport privatization dead. However, the application filed with the FAA by the New Orleans Aviation Board in August-and its approval in September-puts privatization back on the U.S. policy agenda.

The FAA's approval of the 320-page submission sets in motion what is expected to be a year-long process. The airport board expects to issue a request for qualifications (RFQ) before the end of the year, aiming to solicit bids and select a winner by next spring. If they can keep to that timetable, FAA approval could occur by late 2010.

There are several "ifs" involved in this process. The first is whether the New Orleans Aviation Board can duplicate Chicago's success in reaching an agreement with its air carriers on the terms and conditions of a new master lease agreement defining how rates and charges will be assessed. The largest carrier at New Orleans (MSY) is Southwest, the lead carrier that negotiated the agreement accepted by the other airlines at Midway. But Southwest's share at MSY is smaller than Midway, with a pretty good mix of other airlines (including American, Delta/Northwest, United, and USAirways). So the negotiations might be more complex.

Second, of course, is whether-by the time the final application needs to be approved by the FAA-the deal can be financed. The timing for this deal looks better than the unfortunate timing that killed the Midway deal; credit markets are gradually recovering, and should be in better shape than today by the first half of 2010.

But then there is also Congress to contend with. The much-delayed FAA reauthorization process-already two years late as of September 30^th-- still has a ways to go. The House has passed its version, and it includes anti-privatization provisions inserted by Rep. Jerry Costello (D, IL). They would increase the airline approval requirement from the current 65% to 75% and would also make privatized airports ineligible for AIP grants (though not exempting their passengers from the ticket tax which funds AIP). No comparable provisions are in the draft Senate bill, which has yet to reach the Senate floor. Ideally, the Senate bill would reduce the airline approval to 50%-plus-one and at least double the number of airports allowed to make use of the Pilot Program (from the current five slots).

TSA Belly-Cargo Rule Accepts Reality

In general, the approaches taken to cargo security in the United States differ in principle from those applying to airport passenger security. In the cargo arena-whether air, land, or seaborne-the general approach is risk-based. Instead of very costly and time-consuming mandates to examine 100% of all cargo, the general practice is to vet those in the supply chain handling cargo from origin to destination (e.g., "known shipper" programs), to use intelligence information to inspect specific cargo items, and to rely on random checks of other cargo as a backup. One presumes that the same legislative bodies that went overboard on passenger/baggage screening following 9/11 had the sense to realize the economic consequences of bringing commerce nearly to a halt, had they insisted on 100% physical inspection of all cargo, all the time.

But a crack in that sensible, risk-based approach to cargo was opened up by the 9/11 Commission several years ago, which recommended that 100% of all cargo carried aboard passenger planes (in the "belly," along with checked luggage) be physically screened. And Congress agreed to close this "loophole," not by relaxing the overkill checked-luggage mandate but by imposing the same mandate on belly cargo. The deadline they set was 50% of all such cargo by February 2009 and 100% by August 2010.

Fortunately, somewhat cooler heads have prevailed in the implementation of this congressional mandate. The TSA's "interim final rule," announced in mid-September, permits the widespread use of supply-chain partners to do the cargo screening. Freight forwarders, distribution centers, and other such firms can apply to become part of the Certified Cargo Screening Program (CCSP), under which they must comply with TSA background checks on employees, use TSA-approved screening technologies, and secure the supply chain from their screening location to the airline that will actually carry the cargo. By thus outsourcing the cargo screening function, the CCSP will avoid huge backlogs at airports, where space is at a premium.

An article in Airports International's July 2009 issue profiled the operations of CCSP participant Commercial Freight Services in Romulus, MI. That company is using two TSA-approved technologies, a desktop-size explosive trace detection system for small packages and a 35-foot long two-dimensional X-ray system for palletized cargo, including the industry-standard LD-3 containers. The trace detection system permits fairly rapid and relatively low-cost checking of parcels. And for cargo that arrives on pallets or containers, it's welcome news that TSA has approved technology that can inspect entire pallets or containers, instead of requiring them to be taken apart for individual-item inspection. (As of the time of the article, the huge Smith's Detection HISCAN unit was the only approved cargo screening system large enough for LD-3s.)

I doubt that a quantitative assessment of the cost-effectiveness of this 100% screening mandate would pass muster as a sound investment. But at least it has not served as an excuse for a huge expansion of TSA's own workforce. Instead, however, it is forcing a large unfunded mandate on segments of the goods-movement industry.

Airports: Competition vs. Monopoly

This past summer European low-cost carrier (LCC) Ryanair demanded that a number of UK airports reduce the fees they charge Ryanair to zero-or it would leave. While some complied, Manchester did not, and Ryanair is making good on its threat. In the September 2009 issue of Aviation Intelligence Reporter, Andrew Charlton cites this as an example of the growing market power of airlines vis-a-vis airports in the deregulated European airline market. Charlton argues that while a few airports that serve as major hubs for legacy airlines do have significant market power, most do not-and that airport policy should face up to this fact.

In a more academic form, that is the substance of the argument put forth in a discussion paper from the OECD/International Transport Forum's Joint Transport Research Centre last year. (www.internationaltransportform.org) Noted aviation economist David Starkie used the UK airport market to examine the degree of airport competition in that country-and found it to be generally robust, stimulated by the rapid growth of LCCs over the past decade. The paper includes useful tables indicating the extent of LCC operating bases at UK airports, the driving times between adjacent airports, and the general profitability of UK airports, despite (or perhaps because of) the ongoing competition. One key factor leading to greater competitiveness is the market for corporate control of UK airports, the large majority of which have been privatized, generally via outright sale.

Starkie concludes by noting that countries where airport privatization is pending, such as Spain and Portugal, are proceeding as if airports are inherently monopolies which therefore must undergo economic regulation. He laments that "the alternative approach, of restructuring ownership to provide a less concentrated, more competitive industry structure and then allowing competition to drive the industry forward, does not appear on the radar screen." Price controls could discourage investment and lead to airports skimping on quality of service, problems which have materialized at the BAA airports in London and Scotland, which were kept under common ownership (and hence regulation) when they were privatized. Far better, Starkie says, for government airports policy to foster competition wherever possible.

News Notes

Update re Registered Traveler

Last issue I wrote about the possibility that the database of members of the Clear and other Registered Traveler programs might be erased, which would preclude the sale of such data to any companies that want to offer a similar service (and which is likely the only tangible asset the bankrupt operator has, to satisfy creditors). I wrote that the TSA was proposing to delete the data but got several emails telling me that this was not the case, and that Aviation Daily had relied on a mistaken claim to that effect in a letter sent to TSA by two House members. I've done some further checking and now have copies of TSA's instructions to the AAAE clearinghouse that manages the database ordering them to delete the data. Fortunately, that action has not taken place-due to the timely intervention of Reps. Bennie Thompson (D, MS) and Peter King (R, NY).

CrewPass Expanding

The TSA has approved standards for fingerprint ID checking of airline crew members, enabling them to bypass the passenger checkpoints at airports. The CrewPass system (which was developed in 2007 by the Air Line Pilots Association) began as a TSA pilot program in 2008 at Baltimore, Columbus (GA), and Pittsburgh. ARINC developed the technology platform, and TSA and ARINC will be rolling the program out to airports nationwide.

New Newsletter and Consulting Firm

Aviation consultants David Bentley (U.K.) and Martti Raito (Canada) have launched Big Pond Aviation as a research, analysis and consulting firm based on both sides of the Atlantic. In addition to research and consulting, Big Pond has launched a quarterly newsletter. Details on both are available at: www.bigpondaviation.com

World's Best Airport Cell-Phone Lot?

Many U.S. airports, attempting to stop numerous cars illegally parked along airport entrance roads waiting for an arriving passenger to call, have set up cell-phone lots. Unfortunately, many are small, hard to get to, and fairly remote from the terminal. Tampa International has a 350-space lot, on airport property about a mile before you reach the terminal. Two giant message boards provide up-to-date information on arriving flights, and while you wait, there are rest rooms and free wi-fi service. The lot has been open since November 2005.

Who Writes these Headlines?

A few years ago in this newsletter I wrote about several companies that are helping general aviation airports balance their budgets by automating the process of billing pilots for landing fees. Last month, the weekly "Airports" section of Aviation Daily carried a feature on two of these companies, Passur Aerospace (Landing Fee Management System) and Era (RevenueVue). It was a good story, by veteran Aviation Week reporter Jim Ott. But who on earth penned the headline: "Automated Systems Spy on Operations and Fully Account for Landing Fees"? Meaning GA airports should just wink at people who use their services and refuse to pay? Like shoplifters?

Runway Incursion Systems More Widespread

The high-tech ASDE-X airport surface detection system has recently gone into operation at the 18^th and 19^th U.S. airports, with the addition of Newark Liberty in August and Boston Logan in September. The system uses a combination of surface movement radar, multilateration, and ADS-B to keep track of all aircraft and vehicles on the airport surface, in all kinds of weather. The FAA's goal is to get ASDE-X into operation at 35 airports by 2011. In addition, the agency has selected four companies to test lower-cost ground surveillance systems (LCGS) at four airports: Long Beach (Sensis Corp.), Manchester, NH (Thales), San Jose (SRA International), and Reno (Northrop Grumman).

Quotable Quotes

"I do think if more U.S. airports were privatized and you had a truly private company looking at the bottom line, then a lot of things that are happening in Europe would happen in American airports. There's no way you can say a city-driven airport has quite the same incentive as a truly privatized airport to drive profit to the bottom line."

--Frank Gray, Concession Planning International, in "International Aspirations: U.S. Airports Lag Far Behind in Concessions Revenue," by Carol Ward, Airport Revenue News, September 2009.

"In the end, it is impossible to keep all contraband off aircraft. Even in prison systems . . . corrections officials have not been able to prevent contraband from being smuggled into the system. . . .Obviously, efforts to improve technical methods to locate IED components must not be abandoned, but the existing vulnerabilities in airport screening systems demonstrate that emphasis also needs to be placed on finding the bomber and not merely finding the bomb. Finding the bomber will require placing a greater reliance on other methods such as checking names, conducting interviews, and assigning trained security officers to watch for abnormal behavior and suspicious demeanor. It also means that the often overlooked human elements of airport security, including situational awareness, observation, and intuition, need to be emphasized now more than ever."

--Scott Stewart, "Convergence: The Challenge of Aviation Security," STRATFOR Global Intelligence, Sept. 16, 2009 (www.stratfor.com)

"On the basis of the foregoing evidence, I would argue that a competitive framework is an achievable objective or a national airports policy. It is by no means evident that the industry is inherently a natural monopoly industry and thus requires regulation of prices or financial returns. On the contrary, the UK illustrates the ability of an airports industry to evolve a competitive structure whereby competition is an effective regulator of what the airport can charge the airline. Where there have been problems it is because of the failure to break up the state enterprise, the British Airports Authority, when it was privatized in the mid-1980s so that proximate airports in two UK regions, London and Scotland, continue in common ownership. The lesson to be drawn is clearly apparent."

--David Starkie, in "The Airport Industry in a Competitive Environment: A United Kingdom Perspective," Discussion Paper No. 2008-15, OECD/ITF Joint Transport Research Centre, July 2008.

Surface Transportation Innovations #71

bob.poole@reason.org (Robert Poole) — Fri, 18 Sep 2009 01:07:00 EDT

In this issue:

Congestion and Economic Growth
How Much Would Reducing Driving Reduce Greenhouse Gases?
Rail Access to Ports: When and Where
New Features in State PPP Laws
Cautions on Green Jobs
Upcoming Conferences
News Notes
Quotable Quotes

Gridlock and Growth: Reducing Congestion Boosts Productivity

If you ask most transportation planners about the "cost" of traffic congestion, they will most likely cite the estimates from the Texas Transportation Institute's Urban Mobility Reports, now issued every other year. But the $87 billion annual cost reported in the latest report, like its predecessors, counts only wasted time and fuel due to peak-period trips taking longer than uncongested trips. That is only a fraction of the total cost.

In the 1990s, researchers Rene Prud'homme and C. W. Lee reported on studies of French and Korean metro areas, relating output per worker in an urban region to its accessibility. More specifically, they found that a 10% reduction in travel time is correlated with a one percent increase in output per worker, presumably due to better matching of employee skills to employer needs. In 2001, Robert Cervero reported on comparable effects in the United States. More recently, the Eddington Transport study commissioned by the U.K. government and published in December 2006 went into some detail on the relationship between travel time and economic growth. For the U.K. as a whole, it estimated that a 5% reduction in business travel alone could generate a GDP increase of 0.2%.

Last month, Reason Foundation released a new study on this subject, by David Hartgen and Gregory Fields: "Gridlock and Growth: The Effect of Traffic Congestion on Regional Economic Performance." (http://reason.org/files/ps371_growth_gridlock_cities_full_study.pdf)

They looked at eight large U.S. urban areas (Atlanta, Charlotte, Dallas, Denver, Detroit, Salt Lake City, San Francisco, and Seattle) and in each case studied current and future (2030) accessibility of five locations: downtown, a major mall, a large suburb, a university, and the major airport. Using the traffic network model from each region's Metropolitan Planning Organization, they developed drive-time contours (how far you can drive in X minutes) around each location, for both congested and free-flow conditions in both the base year and 2030. They also calculated the population and jobs within each drive-time contour, as well as the gross regional product (GRP) of each metro area. Then, using a regression model similar to that used by Prud'homme and Lee, they estimated models relating GRP per worker with accessibility measures. Their most commonly cited results are based on 25-minute drive-time contours, though they also used 55-minute contours (which showed somewhat stronger relationships).

While the results vary among cities and among types of location, there were strong enough correlations to suggest a number of conclusions. In general, their results are similar to those of Prud'homme and Lee, finding that reducing congestion enough to increase access by 10% would increase GRP by about 1%. That may not sound like much, but it would mean tens of billions of dollars in increased output of goods and services, many thousands of jobs, and greater tax revenue for governments.

For transportation planners, Hartgen and Fields' more detailed results are worth paying attention to. Although the central business district in most of these regions had more jobs than any of the other sites, growth in the rest of the region over the next 20 years is likely to be far greater in the suburbs. And since reducing congestion in the suburbs is generally less costly than in the center, there may be important benefits from directing more transportation investment there.

Compatible findings emerged from a 2008 study by Kent Hymel of UC Irvine, "Does Traffic Congestion Reduce Employment Growth?" (https://webfiles.uci.edu/khymel/www/files/hymel_job_market.pdf). His study used the Los Angeles metro area as its source of data, and found that a 50% reduction in the level of congestion in 1990 would have generated roughly 100,000 additional jobs by 2003, according to a summary in The Urban Transportation Monitor. Reducing congestion could be effected via either highway capacity expansion or congestion pricing, or some combination of the two.

These employment and productivity implications have not received the attention they deserve in transportation planning. There is a far stronger case for congestion reduction than most debates have recognized.

Is Reducing Vehicle Miles Traveled a Cost-Effective Greenhouse Gas Policy?

Last month I wrote rather critically about the Urban Land Institute report, "Moving Cooler," which presented highly selective data in support of the smart-growth/transit/VMT-reduction approach to greenhouse gas (GHG) reduction. I faulted it for being a very high cost/ton approach (hence, wasting resources), for not counting many costs that this approach would impose (especially reduced housing choice and far more costly mobility), and for over-emphasizing what can be done via behavior change as opposed to technology change.

In the past month, I've come across additional material that reinforces my concerns about the "Moving Cooler" approach. The most important came out Sept. 1^st, from the Transportation Research Board of the National Academy of Sciences. "Driving and the Built Environment: the Effects of Compact Development on Motorized Travel, Energy Use, and CO₂ Emissions," was requested by the Energy Policy Act of 2005 and was produced by a 12-member expert committee, chaired by Jose Gomez-Ibanez of Harvard. In contrast to the "Moving Cooler" report, this TRB study at least attempts to assess what is and is not known about the subject-and on some key points, there was evidently considerable disagreement among the committee members.

http://www8.nationalacademies.org/onpinews/newsitem.aspx?RecordID=12747

The bottom line, as MIT's Technology Review headlined its article on the report, is "Forget Curbing Suburban Sprawl: Building denser cities would do little to reduce CO₂ emissions." (www.technologyreview.com/energy/23343/?nlid=2323). To be sure, the consensus-oriented TRB process would never lead to stating a result in such stark terms. But after all the qualifications are presented, the committee's "moderate" scenario (which postulates 25% of all new and replacement housing being built at twice today's densities and that residents of said housing will drive 12% less), leads to reductions in fuel use and GHGs of just 1% from the business-as-usual case by 2030, and 1.3 to 1.7% less by 2050. In engineering, that's what we would call a rounding error.

The committee's "upper bound" scenario, which calls for 75% of new and replacement housing to be high-density and assumes its residents would drive 25% less was not credible to committee member Anthony Downs of the Brookings Institution, who told Technology Review that "the 75% figure is completely unrealistic," and went on to add of this whole approach, "It's an enormous amount of effort to achieve a tiny amount of outcome. If your principal goal is to reduce fuel emissions, I don't think future growth density is the way to do it." MIT energy expert Henry Jacoby tells the magazine "The bigger bang will come from changing the emissions per mile of the fleet we will have in 2050."

There also appears to be a serious error in the TRB report that none of commentaries on it have caught. It apparently assumes a one-to-one relationship between reduced vehicle miles traveled (VMT) and reduced CO₂ emissions-i.e, that a 10% decrease in VMT leads to a 10% decrease in CO₂. But that's an unwarranted assumption. Wendell Cox alerted me to a submission by the UCLA Lewis Center for Regional Policy Studies to the California Air Resources Board, "Measuring Vehicle Greenhouse Gas Emissions for SB 375 Implementation." (www.arb.ca.gov/cc/sb375/rtac/meetings/070709/commentaddendum.pdf) It makes the case that "VMT is not an ideal proxy for vehicle greenhouse gas emissions," for several reasons. First, CO₂ emissions are significantly greater in stop-and-go congestion than at steady-speed driving; in California, congestion accounts for nearly 6 million megatons of GHG emissions. Second, policies focused on reducing VMT could themselves increase congestion, thereby not only directly increasing CO₂ emissions but also reducing economic activity. Moreover, a VMT metric does not account for differences in the carbon content of fuels or vehicle fuel efficiency, thereby unfairly targeting those who purchase and drive high-mileage or electric vehicles.

One of the five background papers prepared for the TRB study looked quantitatively at alternatives, and found that a 0.1% reduction in the weight of all U.S. vehicles would be 10 times more effective at GHG reduction than a 0.1% increase in housing density nationwide. Lead author Kara Kockelman (a member of the TRB committee) told Technology Review that expanding transit systems could lead to increased GHG emissions, due to the high energy consumption involved in construction. "If you could instead fill existing passenger vehicles or double the fuel economy of an SUV, you would get much greater CO₂ reductions." (http://onlinepubs.trb.org/Onlinepubs/sr/sr298kockelman.pdf)

Rail Access to Ports: When and Where

We all know that on either cost per ton-mile or energy use per ton-mile, rail is more efficient than truck. Hence, the desire of various public officials to increase rail's share of goods movement and decrease the share hauled by trucks. Of course, it's far more complicated than that. Shippers don't choose a freight mode based only on out-of-pocket cost. Speed and reliability of delivery time are often critically important, and in many circumstances railroads can't do what shippers need.

These issues come up when politicians discuss the future of major ports. In furtherance of their all-rail preference, some officials are now promoting on-dock rail as "the" answer, on the grounds that being able to shift containers directly from ship to rail car will eliminate the often somewhat scruffy "drayage" trucks from city streets and freeways. Here again, though, things are not as simple as they seem. In an article several months ago in the Journal of Commerce (April 13, 2009, pp. 28-31), Asaf Ashar, co-director of the Ports & Waterways Institute at the University of New Orleans, provided some very useful context on the current state of intermodal freight service.

Some ports are, in fact, developing into pure rail ports, handling only intermodal containers destined for distant cities. Examples include the new west coast Canadian port at Prince Rupert, the Mexican west coast port of Lazaro Cardenas, and a new east coast port being developed in Nova Scotia, aimed at Suez Canal traffic. But various other trends conflict with that vision.

One is trans-loading, in which 40-foot intermodal ocean containers are unpacked and their contents redistributed into 53-foot domestic (usually truck) containers, which have 50% more capacity. Goods from various manufacturing sources (different incoming ocean containers) can thereby be organized into a single delivery for a major company such as Target or Best Buy. A lot of what takes place in the Inland Empire, about 60 miles from the ports of Los Angeles and Long Beach, is this type of value-added activity. Since there is no space at ports for large trans-loading facilities, this business requires drayage.

Then there's the question of on-dock versus near-dock rail. Because land at ports is almost always scarce, on-dock yards tend to be much smaller than near-dock yards. The latter require drayage, but as Ashar notes, "For [ports] with small rail share, the drayage is less costly than switching long trains to smaller-on-dock yards. The latter requires breaking the trains into short strings, pushing them in and out of the on-dock yards, assembling those strings into trains and then switching them back, blocking the traffic to and from the marine terminals and the surrounding areas." Near-dock yards also operate more efficiently, make for better railcar utilization, offer more frequent service to more destinations, and have less-restrictive labor rules than port labor. Ashar refers to a study of his which concluded that on-dock rail yards are viable only when the rail share of port traffic reaches 50% or more.

Sound goods-movement policy needs to be based on solid analysis, not feel-good ideas like "rail is better than truck." It's good to see people like Ashar getting serious attention.

Innovations in State Transportation PPP Laws

When the Arizona legislature passed a sweeping new transportation PPP bill last spring, the measure included two innovative provisions which I haven't seen in other enabling legislation in this area. One exempts PPP toll roads from property taxes, while the other will provide rebates of motor vehicle taxes, on a per mile basis, for all miles traveled on new toll roads. Not everyone agrees with these measures, but I think both are worthwhile.

Let's take the property tax exemption first. In principle, if limited-access highways were all investor-owned, like other network utilities (e.g., electricity, pipeline, telecommunications), it would make sense for them to pay property taxes just as those utilities do. However, the actual situation today is that government has dominated the U.S. toll road market for most of the past century, which means the private sector must compete on a very unlevel playing field. Public sector toll agencies, of course, pay no property taxes, and they have always been able to borrow (by issuing revenue bonds) at tax-exempt rates. Congress addressed the latter problem in SAFETEA-LU by allowing the U.S. DOT to approve the issuance, by state entities, of tax-exempt "private activity bonds" on behalf of private-sector partners in PPP deals. But until now-with the exception of the Chicago Skyway and Midway Airport, for which Chicago's Mayor Daley proposed and got special state legislation to exempt those assets from property taxes-most PPP toll roads have had to pay up.

And it turned out that issue was holding back the first potential toll-financed PPP toll road in Florida, the proposed First Coast Outer Beltway in Jacksonville. Because of uncertainty over whether the project would be subject to property taxes, Florida DOT took proposed legislation clearly exempting such facilities from property taxes, and it was enacted May 1^st and signed into law by the governor. It will apply to all PPP transportation projects in Florida, both greenfield and brownfield.

As far as I know, Arizona is also the first and only state that will offer rebates on motor vehicle and fuel taxes to customers of PPP toll roads. (Peter Samuel of tollroadsnews.com has noted that several states have quietly offered rebates on fuel taxes to patrons of their state-operated toll roads, but these provisions appear to be little-known and little-used.) State DOTs tend to react negatively to any reduction in their fuel tax revenues, but an attorney friend of mine pointed out that by reducing the "paying twice" argument against new toll roads, this provision will expand the size of the pie. "By my math, if you have a 10-mile toll facility, traveling it will use less than half a gallon for the average vehicle, which would mean 9 cents credit back in gas tax . . . I will take a dollar toll over that any day." And it does address the "paying twice" argument.

I agree, and I can't help but wonder whether the furor over tolls in Texas would have been so furious had the paying-twice argument been addressed by a comparable provision in that state's now-suspended PPP legislation.

The Mirage of "Green Jobs"

When the House passed the Waxman-Markey cap-and-trade bill, which would dramatically increase energy prices, President Obama praised it on the basis of the "millions of new green jobs" it would create. The California Air Resources Board (CARB) uses similar rhetoric to justify the $23 billion of new taxpayer costs of its global warming agenda, essentially arguing that it will actually cost nothing due to all the new green jobs it will create. Californians should have been alarmed that, as Stephen Moore reported in the Wall Street Journal (Feb. 1, 2009), all five economists that CARB commissioned to independently review this logic found it seriously flawed.

MIT's Technology Review published a thoughtful article in its May/June 2009 issue by editor David Rottman. In "Can Technology Save the Economy?" Rottman interviewed a number of leading economists and energy experts on the efforts of the stimulus bill to jump-start the economy via creating, among other things, green jobs. Harvard economist Dale Jorgensen told Rottman that "A lot of these [energy] technologies that are going to be subsidized are not commercially viable without a subsidy. These things have been around for quite awhile, and have never gotten to the stage of being financially viable without a subsidy. What does a subsidy mean? It means it's not good for the economy." It would be more effective, and far less risky, he said, to let carbon pricing determine which energy technologies are viable and which are not.

Two egregious examples of subsidizing energy technologies are solar panels in Germany and alternative energy in Spain. Both were touted as green-jobs bonanzas. As The Economist noted last fall, "Germany's generous solar subsidies covered the roofs of one of the world's most sunless countries with solar cells, thus pushing up the price of silicon and reducing the cost-effectiveness of solar power in countries where it actually makes sense." And Spain's green-energy subsidy program subsidized creation of new wind and solar industries, creating many jobs in the process. But according to a detailed study by Gabriel Calzada Alvarez of King Juan Carlos University, will end up costing taxpayers €29 billion. With 50,200 new jobs created, that works out to be in excess of €570,000 per green job. In Spain's private sector, a new job averages €260,000 to create. Thus, had these funds been left in the private sector, they could have created 2.2 times as many ordinary jobs as these new green ones. More recently, we've seen headlines such as "Spanish Despair Rises as Jobs Shrink" (July) and "Spain's Solar-Power Collapse Dims Subsidy Model" (September).

There is a term for such artificial industries. After the demise of the Soviet Union, when economists got access to detailed data on that country's state-owned industries, the term "value-subtracting enterprise" came into use. A VSE is an entity that takes a given set of inputs (of materials, labor, procedures, etc.) and produces some kind of output. But when you do the sums, the value of the outputs is less than the total of the inputs. Policies that create artificial industries create value-subtracting enterprises-even though they do create visible new jobs. In fact, they are a way to make an economy poorer.

I've taken space in this transportation newsletter to write about this issue because we have already heard the same green jobs mantra with regard to subsidized ethanol, subsidized batteries, and even the ridiculous "hydrogen highway" concept. Governments have always been able to create value-subtracting enterprises by pouring in lots of tax money. But that hardly justifies them as sound public policy-whether in energy or in transportation.

Upcoming Conferences

Note: I don't have space to list all the transportation conferences going on; below are only those that I or a Reason colleague are speaking at.

77^th Annual IBTTA Meeting & Exhibition, Chicago, IL, Sept. 13-16, 2009, The Hyatt Regency. Details at www.ibtta.org/events.

Toward a Customer-Driven Transportation Reauthorization, Washington, DC, Sept. 17, Rayburn House Office Building (B-340). Details at www.cato.org.

David R. Goode National Transportation Policy Conference, Charlottesville, VA , Sept. 9-11, 2009, University of Virginia Miller Center on Public Affairs. Details at: http://millercenter.org/policy/transportation.

ARTBA Public-Private Ventures Conference, Washington, DC, Sept. 24-25, 2009, Loew's L'Enfant Plaza Hotel. Details at www.artba.org.

The Future for Interurban Passenger Transport, Madrid, Nov. 16-18, 2009, Joint OECD/International Transport Forum conference, Palacio de Coingressos. Details at http://istep2009.cedex.es.

IBTTA Transportation Policy & Finance Summit, Washington, DC, Dec. 13-15, 2009, Grand Hyatt Hotel. Details at: www.ibtta.org/Events/eventdetail.cfm?ItemNumber=3855.

News Notes

Seattle HOT Lanes Are Not "Lexus Lanes."

The clever folks at Washington State DOT have gone the extra mile in collecting and reporting data on their first HOT lanes project, on SR 167. In addition to all the usual statistics, they have reported statistics on the brands of toll-paying vehicles using the lanes. By far the most common were Chevy/GMC and Ford, with Dodge, Toyota, and Honda in 3^rd through 5^th place. How many Lexus vehicles were recorded as users? Just 1.6% of the total. All four luxury brands (Acura, BMW, Lexus, Mercedes) added up to just 6.9% of the total. (Source: WSDOT Powerpoint presented at TRB Summer Meeting, August 2009)

Value Pricing Program Grants Available

The FHWA's Value Pricing Program has been a critically important factor in jump-starting HOT lanes and other applications of transportation pricing. Its new solicitation for FY 2010 grant proposals was published last month in the Federal Register. Go to: http://edocket.access.gpo.gov/2009/pdf?E9-18699.pdf.

RAND Says Address Equity Issues Early On

A recent report from the RAND Corporation tackles the issue of equity in congestion pricing projects, primarily HOT lanes. It finds that such issues should be addressed in the design stage of such projects and also that well-designed projects can deliver both cleaner air and reduced congestion. "Equity and Congestion Pricing: A Review of the Evidence," was supported by a grant from the Environmental Defense Fund. Go to: www.rand.org/pubs/technical_reports/TR680.

Citizens Guide to Transportation Reauthorization

Randal O'Toole and the American Dream Coalition have produced a fact-filled (and graph-filled) overview of key issues that should be considered in the forthcoming reauthorization of the federal surface transportation program. Go to:

http://americandreamcoalition.org/CitGuide.pdf.

New Version of Bus Rapid Transit Guidebook

The Center for Urban Transportation Research has released an updated edition of its excellent 2004 handbook "Characteristics of Bus Rapid Transit for Decision-Making." It includes new information on systems implemented since 2004, both in the United States and overseas, as well as new case studies and information on several additional aspects of BRT systems. Go to: www.nbrti.org.

IMF Advice on PPPs and the Global Credit Crisis

Some useful perspective on the impact of the credit crunch on PPPs, along with guidelines on managing crisis risks, are found in an IMF Working Paper, "The Effecs of the Financial Crisis on Public-Private Partnerships," by Philippe Burger, et al. Go to: www.imf.org/external/pubs/ft/wp/2009/wp09144.pdf.

Quotable Quotes

"The good news, in your editor's judgment, is that despite these recent reversals, the longer-term prospects for PPPs and private investment in infrastructure appear surprisingly good. A favorable policy climate at both the state and federal level is one contributing factor. The Mississippi, North Carolina, and California legislatures have passed PPP-enabling legislation, suggesting that the sentiments among state legislators are running in favor of private investment in roads and other infrastructure. On Capitol Hill, the earlier signs of suspicion toward PPPs by certain influential legislators have been replaced by modulated expressions of support. This suggests that PPPs, the Infrastructure Bank, TIFIA, Private Activity Bonds, and other supportive private financing measures will receive favorable treatment in the upcoming surface transportation legislation."

--C. Kenneth Orski, "Some Further Reflections on the Future of PPPs," Innovation NewsBriefs, May 20, 2009. (Available from korski@verizon.net.)

"We have been here before. In the struggle to improve air quality, it turned out that the solution was not so much changing people's behavior as it was technological-largely the improvement of fuel and vehicle technology. In the 1970s we were told that we could not have cleaner air and automobiles; yet in fact, that's exactly what happened, without having to heed a sermon about our need to repent and change our suburban, car-driving ways. Some people just have a penchant for telling others how to live."

--Alan Pisarski, www.newgeography.com/content00932-uli-moving-cooler-report-greenhouse-gases-exaggerations-and-misdirections.

"The application of tolling and road pricing provides the opportunity to solve transportation problems without federal or state funding. It could mean that further gas tax, sales tax, or motor vehicle registration fee increases are not necessary now or in the future. Congestion pricing is not a complete plan of action. It has to be coordinated with other policy measures to maximize success."

--"Economics: Pricing, Demand, and Economic Efficiency: A Primer", U.S. Department of Transportation, 2009. (www.ops.fhwa.dot.gov/publications/fhwahop08041/fhwahop08041.pdf.)

"The weakening of this bill illustrates one of the central problems with cap-and-trade-systems. They are complex, obscure, and therefore susceptible to horse-trading. A chunk of allowances can be handed to one lobby, a sliver to another, and soon the system's effectiveness has been sliced away. The corresponding attraction of a carbon tax, which this newspaper has always supported, is its simplicity. The government sets the rate. Everybody can see what it is. Voters get transparency. Businesses get certainty. And the government gets a large chunk of revenue."

--"Weak Medicine," The Economist, May 23, 2009.

Air Traffic Control Reform Newsletter #66

bob.poole@reason.org (Robert Poole) — Fri, 18 Sep 2009 00:00:00 EDT

In this issue:

RTCA Provides NextGen Reality Check
Controller Fatigue, continued
Progress with 4-D Trajectories
Business Aviation as Business Tool
Progress on Controllers
Upcoming Conferences
News Notes
Quotable Quotes

RTCA Task Force 5: A Bracing Reality Check

Air Traffic Organization (ATO) chief Hank Krakowski did good back in January when he asked the aviation advisory body RTCA to create a special task force to develop consensus recommendations on medium-term NextGen implementation (defined as between now and 2018). RTCA Task Force 5 was established to thrash out the issues of what specific actions should be taken by whom and at what points in time, for the early stages of shifting to the NextGen paradigm-and doing so in a way that makes business sense to those who operate aircraft in the system. In effect, this is the task that a stakeholder board of directors would be doing, were the ATO set up as a business (such as Nav Canada).

The just-released report provides a sobering look at how the customers view the plans for transitioning to NextGen. Given the problem of making significant investments prior to being able to realize significant operational benefits from them, the Task Force put considerable emphasis on figuring out which proposed operational capabilities could begin by using existing equipment on planes, if the ATO changed procedures and provided more training. It also looked into possible ways in which incentives could be offered for aircraft operators to add on-board equipment sooner than they otherwise might. One kind of incentive is financial-low-interest loans, discounts on existing aviation user taxes, etc. But another key emphasis in the report is expansion of the principle of "best-equipped, best-served" as opposed to the traditional "first-come, first-served."

Since I criticized the current Senate FAA reauthorization bill (in the previous issue of this newsletter) for imposing costly and arbitrary equipage deadlines for ADS-B, I was interested to see the Task Force's assessment that the payback period for relatively low-cost ADS-B/Out is considered "long," and payback for the far more expensive ADS-B/In is considered very long. By contrast, digital data communications between pilots and controllers got considerable emphasis as both relatively low-cost and providing a short payback period. The report also puts a lot of emphasis on increasing runway operational capacity, especially for closely spaced parallel runways, increased use of time-based metering (see story below on 4-D trajectories), and greater use of precision navigation such as RNAV/RNP.

It is especially gratifying to see, in tables of recommendations in each functional area, the specific aviation customers willing to pursue implementation (and in many cases, for specific airports or portions of airspace). This includes not only most major airlines but also, in various cases, fractional operator NetJets, NBAA, and in some cases AOPA. And on those recommendations where some of these parties declined participation, they are not objecting to the others moving forward.

Nearly 300 aviation stakeholders took part in this effort, and I'm sure a great many people will be poring over this report for months to come. Since Task Force 5 is only an advisory body, not the ATO's board of directors, what it has produced is only a set of recommendations. But under the current governance and funding arrangements, getting this kind of consensus on how to move forward is a big deal.

Controller Fatigue, Continued

Recent news stories have documented the FAA's current efforts to revise decades-old duty-time rules for airline pilots. A key problem is the limited amount of sleep some pilots get between shifts, which can produce fatigue leading to fatal accidents-such as that of Colgan Air Flight 3407 near Buffalo, NY last February. I'm glad to see the FAA taking action on this. But the equally serious problem of controller fatigue that I wrote about last issue seems to be getting zero real attention.

My article did prompt several vigorous responses. Retired air traffic supervisor Tom Bonacki took his former employer and the controllers union to task for ignoring the issue. "If both sides cared about safety, they could mandate a minimum time off between shifts, say 10 hours. The FARs [federal air regulations] have for years mentioned eight hours between shifts as a minimum; what stops bargainers from going beyond that minimum?"

I also heard from former controller Thomas Anthony, now director of the Aviation Safety and Security Program at the University of Southern California. He sent me a copy of his chilling article, "Wake Me When My Shift Is Over," recently published in the Flight Safety Foundation's magazine AeroSafetyWorld. (www.flightsafety.org/asw/mar09/asw_mar09_p19-21.pdf) He tells me the 2-2-1 shift I discussed last month (swing-swing-day-day-midnight) is known to controllers as "the rattler," because it can double back and bite those who work it.

In the article Anthony summarizes the science that underlies the decrease in performance due to sleep loss and fatigue. The worst combination is an upset to circadian rhythm, acute sleep loss, and chronic sleep loss-exactly the combination produced by the rattler. He recounts his personal experience, as a controller in the 1980s, working this shift schedule and coping with its severe effects. He says flat-out that this type of shift schedule should be abolished.

At least two alternatives exist. As Anthony notes, the Air Force encountered this fatigue problem with fighter pilots doing midnight runs in Vietnam. Their solution was to schedule three straight midnight shifts, separated by days off on either side. And Bonacki notes that when he began with the FAA at JFK tower in 1970s, "Our shifts were a week of swings, a week of days, a week of swings, a week of days, then a week of mids."

Yet in the face of all the evidence, why does the dangerous 2-2-1 shift schedule continue? Bonacki faults FAA leadership for ignoring the issue and controller union leadership for letting member desires for longer weekends conflict with safety. But I still ask why? Especially when the FAA is now moving to change airline pilot scheduling practices to address the very same type of fatigue issue.

I think the answer goes back to the FAA's built-in conflict of interest. When it comes to airlines, the FAA is legally at arm's length from those it regulates-and the same is true for private pilots, aviation mechanics, repair stations, airframe manufacturers, etc. But in the case of controllers, the FAA is essentially "regulating" itself. If the ATC provider (the Air Traffic Organization) were a separate entity, the FAA would become a true air safety regulator, with the same arm's length separation from all those it regulates. It's high time we seriously pursued this change.

Progress on 4-D Trajectories

One of the key concepts of the new air traffic management paradigm being pursued under NextGen in the United States and SESAR in Europe is managing air traffic in four-rather than three-dimensions. The fourth dimension is time. The key insight is that since we now have the technology to keep track far more precisely of where each plane is in three dimensions, in real time, it should be possible to define an optimized flight path for each aircraft, using precise timing as well as precise positional data.

That's the basic idea behind four-dimensional (4-D) trajectories. I've previously written about Continuous Descent Approaches (CDAs), which is the application of these ideas to the descent and landing phase of flight. More recently, the same ideas are being applied to the ascent phase-take-off and climb. In Denmark, air navigation services provider Naviair has spent more than a decade developing Continuous Climb Departures (CCDs) from Copenhagen airport. Under this procedure, the plane is given an optimized flight path to climb continuously from take-off to cruise altitude, rather than having to level off at intermediate altitudes before climbing again. As with CDAs, CCDs save fuel, which also reduces CO2 emissions. Recent simulations by Eurocontrol show that use of CCDs for all departures from Copenhagen would save 10,000 tons of fuel and 32,000 tons of CO2 per year.

The FAA's Air Traffic Organization is rolling out a 4-D tool called Traffic Management Advisor (TMA). Its primary aim is to avoid extra vectoring (to properly sequence planes for landing) when planes near the destination airport. It works by adjusting aircraft speed en-route, to be sure that planes headed toward that airport arrive in the proper sequence. The process begins at departure, when the departure time is entered into the system and software takes into account winds, weather, and other traffic to provide timed guidance for the flight en-route. Thus far, TMA is only operational in some sectors, so its full benefits will not be realized until it is fully operational nationwide.

And starting this fall, Embry Riddle University and the FAA will be doing flight demonstrations of a new on-board flight management system computer designed specifically for 4-D trajectory-based operations.

Business Aviation as a Business Tool

After all the bad press given to business jet use by large corporations earlier this year, somebody needed to take an analytical look at the industry's claims that the use of business aircraft is a vital business tool, rather than a luxury indulgence. Such a study has just been released, by NEXA Advisors, LLC, a consulting firm headed by former Arthur Andersen consultant Michael J. Dyment. "Business Aviation in a Changing Economy" was sponsored by the General Aviation Manufacturers Association, the National Business Aviation Association, Aviation Week, and others.

I have not read the study itself, and am relying here on a summary article in Aviation Week (Sept. 7, 2009). Based on that summary, it appears to be a credible and well-done piece of work.

The key question examined by the NEXA study is whether companies in the S&P 500 that use business aviation (via owning or leasing planes, using fractional providers, or chartering regularly) outperform companies that do not. So the researchers separated the data into 322 "user" companies and 101 "non-users." (The total is less than 500 due to mergers, etc. during the 2003-07 study period; the 423 companies are those in stand-alone existence for the entire period.)

Overall, the study found that companies that use business aviation had better performance on a wide variety of measures: 5-year cumulative annual growth in revenue, in net income, in stock appreciation, return on equity, return on assets, etc. To supplement those data, the study also examined non-financial data sources, specifically lists of "best" companies compiled by various organizations, such as: Business Week's 50 Most Innovative Companies, Fortune's 100 Best Places to Work, and the 100 Best Corporate Citizens, as defined by the Corporate Responsibility officers Association. In each case, the user companies outnumbered the non-user companies on such lists (though this might be due to the 3:1 ratio of users to non-users in the data set).

I'm not surprised by these results, since it seems to me the case for business aviation as a means of time-saving and greater efficiency is a strong one. My only beef with NBAA and its allies is their continued opposition to paying their way in using airports and air traffic control, costs which they could readily afford and which would not significantly undermine the economics of using business jets and turboprops. For details, see my 2006 Reason policy study, "Business Jets and ATC User Fees: Taking a Closer Look."
(http://reason.org/news/show/business-jets-and-atc-user-fee)

Progress in Controller/ATO Relations

It's no news to anyone that the FAA and its ATC division, the Air Traffic Organization, have long had a difficult relationship with their air traffic controller employees. The Obama administration came into office promising to fix the most pressing sore point-the contract with controllers' union NATCA that the ATO imposed, per rules established by Congress, after negotiations on a new contract broke down in 2006. This summer, that effort succeeded, when union leaders and the ATO reached agreement on nearly all the issues, and the final three were settled by a binding arbitration panel. Assuming the membership ratifies the new contract, that sore point should no longer poison labor/management relations at the ATO.

More significant for the future, I think, is a separate effort to change the "almost militaristic approach" that has long characterized many aspects of labor/management relations, exemplified in the punitive approach to dealing with operational errors in air traffic control. For many years now at overseas air navigation service provides, the emphasis has been on creating a "just culture," in which an error is treated as a safety problem and the emphasis is on figuring out what went wrong and how to prevent similar occurrences. In this country, the approach has been a punitive one, with the emphasis on affixing blame. Needless to say, this kind of approach does not necessarily produce safety improvements.

In April 2008 the ATO and FAA's Air Traffic Safety Oversight Service (AOV) reached agreement with NATCA on a change in approach. Under the new Air Traffic Safety Action Program (ATSAP), the emphasis is shifting toward the overseas-type "just culture" approach, similar to what already exists for airline incidents (where the voluntary, anonymous reporting program is called Aviation Safety Action Program--ASAP). As of April 2009, some 4,000 controllers at 35 facilities had completed the four-hour class on what ATSAP is all about, what to report, and how to report it.

NATCA regional vice president Bryan Zilonis, who helped negotiate the Memorandum of Understanding that created ATSAP, told Aviation Week that the message is getting across to controllers about the non-punitive nature of the program. Initially, to be sure, controllers were "deathly afraid" to report anything. But he said most of those who've gone through the training are "mindful and trustful of the program and see its benefits." He said it's harder for ATO managers to accept, because they have to give up some control-and he noted that initially, the airlines faced the same kind of resistance to ASAP from their pilots.

AOV vice president Robert Tarter notes that the program's first year produced about 3,000 reports-incidents AOV might not otherwise have known about. He says AOV is trying to build a just culture within the ATO.

The shift to ATSAP and the resolution of the contract issue should be catalysts for changing the historical command/control culture within the U.S. ATC system. And that is critically important for getting the whole organization constructively involved in the transition to NextGen. One possible near-term impact was reported by Scott McCartney in the Wall Street Journal (Sept. 10, 2009). He reports that at New York area airports, controllers had been defensively increasing the spacing between planes approaching the airports. Newark's landings/hour had declined from 45/hour in 2005 to 40/hour in recent years. But this past summer, with ATSAP in effect, the rate was between 48 and 50/hour. That's enough to make a real difference.

Upcoming Conferences

Future Flight Technologies: The Wings of NextGen, Sept. 16-17, Arlington, VA, Sheraton National Hotel, sponsored by FAA Flight Technologies and Procedures Division. Details at: http://cfd117.cfdynamics.com/secure/cmpfaaafs/c

54th ATCA Annual Conference & Exposition, Oct. 4-7, National Harbor, MD, Gaylord Resort & Convention Center, sponsored by the Air Traffic Control Association. Details at www.atca.org.

» return to top

News Notes

Continental Also Pioneering RNP
In the last issue, I wrote about the efforts of Alaska and Southwest airlines with RNP equipage and procedures. I inadvertently left out the efforts of Continental, whose fleet (except for the dwindling number of 737 classic planes) is now all RNP-equipped, and is therefore well ahead of Southwest in implementing RNP operations.

American to Design Custom RNP Approaches
The FAA has certified American Airlines to design its own RNP approaches at key airports that it serves. It used approaches to its maintenance base at Alliance Airport in Ft. Worth to demonstrate its capability, and will next develop one for its Tulsa base, before moving on to airports where it believes RNP can produce significant operational benefits.

World's First Virtual Tower Debuts at Heathrow
NATS Services Ltd. has received certification from the UK's Civil Aviation Authority for its Virtual Contingency Facility serving London's Heathrow Airport. Located off the airport in a windowless facility, the VCF's layout and equipment are identical to that of the control room at the top of the Heathrow tower. In the event of any problem that would make the tower unable to function, the VCF can take over and operate up to 70% of normal airport operations; pre-VCF contingency plans permitted only 10% of normal operations.

Two ANSPs Defer Rate Increases
In view of the still-difficult financial position of most airlines, two leading air navigation service providers have frozen their ATC user fee levels. Airservices Australia in August announced a rate freeze until 2011, representing a reduction in real terms of an estimated 7 - 8%. And in Central America, COCESNA deferred a planned 9% rate increase for six months, in response to airline requests. COCESNA provides air traffic services for Belize, Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua.

CANSO Secretary General Stepping Down
The first full-time Secretary General of CANSO (Civil Air Navigation Services Organization), Alexander ter Kuile, will step down at the end of 2009, after completing his third term in this position. During the past nine years he has helped to build CANSO into a well-respected member of the global aviation community.

Another Functional Airspace Block for Europe
The member ANSPs of the North Europe ANS Providers (NEAP) group will submit a proposal for the North European Functional Airspace Block during 2010, the group announced in August. NEAP represents the commercialized air navigation service providers of Denmark, Estonia, Finland, Iceland, Ireland, Latvia, Norway, and Sweden.

Metron Aviation Wins Award
ATM 2009, a conference cosponsored by the FAA and Eurocontrol, selected as best-in-session Metron Aviation's paper, "Optimizing Airspace Sectors for Varying Demand Patterns," by Robert Hoffman and Alex Tien. The paper developed an optimization technique to design sector boundaries, taking into account time-varying traffic demand and use of multi-controller operating teams.

Quotable Quotes

"My first reaction to learning about the rattler shift was, 'Does anybody know we are doing this?' I figured the answer had to be 'no,' since no one would intentionally schedule a controller to work live traffic with only three or four hours of sleep. I found out I was wrong. Not only was it done intentionally, but it occurred regularly in facilities around the Federal Aviation Administration. Imagine my reaction [many years later] after reading about the Comair Flight 5191 accident at Lexington, Kentucky-they're still working the rattler."
--Thomas Anthony, "Wake Me When My Shift Is Over," AeroSafetyWorld, March 2009.

"Business aviation adds great value, but in complex ways. It's incumbent on [company] boards to understand that these are valuable business tools, but boards have fallen down on this issue recently. To sit quietly as flight departments are reduced or eliminated is nonsensical since that destroys part of the value of the company."
--Michael J. Dyment, in "Bizav Pays Off," by William Garvey, Aviation Week, Sept. 7, 2009.

"Air traffic controllers must be engaged in the future concepts of operations and given assurances that their jobs will continue to exist, though their role will change. The transition workforce must understand that their jobs will be different and their location choices reduced as consolidation is addressed."
--Neil Planzer, Vice President, ATM Strategy, The Boeing Company, in "How to Move the Next Generation Air Traffic Control System Forward," The Journal of Air Traffic Control, Spring 2009.

Airport Policy and Security Newsletter #48

bob.poole@reason.org (Robert Poole) — Mon, 31 Aug 2009 08:15:00 EDT

In this issue:

Can Registered Traveler Be Revived?
New Data on High-Speed Rail vs. Air Service
A New Pricing Proposal for LaGuardia
Airport Fire/Rescue Proposal Not Cost-Effective
Alternatives to Higher Small-Town Subsidies
News Notes

Can Registered Traveler Program Be Revived?

For reasons that have never been disclosed, the Transportation Security Administration refused to implement Registered Traveler as the kind of risk-based aviation security program that Congress intended. The cost-effectiveness of such an approach-focusing limited aviation security resources away from lower-risk travelers and toward higher-risk travelers-was documented early on in studies by RAND Corporation and Carnegie-Mellon University. More recently, operations researchers at Virginia Commonwealth University and the University of Illinois at Urbana-Champaign released a study offering further support. As published in the June 2009 issue of IIE Transactions, it reported their development of a risk-based security screening methodology. The research was supported by the National Science Foundation, the Air Force Office of Scientific Research, and the Department of Homeland Security. (www.scienceblog.com/cms/research-details-mathematical-model-effectively-screening-airline-passengers-21887.html)

But despite the strong support in Congress and academia for risk-based airport screening, the TSA seems determined to drive a stake through the heart of what remains of the RT program following the demise of leading provider Clear. TSA is now proposing to delete all the RT member data from the program's central database. This despite the fact that at least one other RT provider-FLO Corporation-is potentially in the market to acquire the data on Clear's 250,000 members and restart the program. And despite the fact that the sale of the membership data is the only hope for Clear's creditors to be paid some or all of what they are owed.

The TSA's plan is being challenged by two members of the House Homeland Security Committee, Rep. Bennie Thompson (D, MS) and Rep. Peter King (R, NY). In their August 20, 2009 letter to DHS Secretary Janet Napolitano, they wrote that "We believe the plan to sweep all of the information from this database is shortsighted and could potentially undermine restoration of the program." Thompson and King were among those reaffirming support for a risk-based RT program via language in the TSA Act of 2009, passed by the House several months ago. So far, the Senate has not yet acted on TSA reauthorization, and whether the eventual Senate bill will include a comparable RT provision is uncertain.

TSA's continuing hostility to a risk-based RT program is supremely ironic, given that its sister agency within the Department of Homeland Security continues to expand the risk-based international RT program. Earlier this month, Customs & Border Protection announced that its Global Entry program has been expanded to 13 more airports, bringing the total to 20. Under Global Entry, pre-screened low-risk air travelers get expedited re-entry into the United States from abroad, using kiosks to bypass the often-lengthy passport control lines.

When the Senate holds confirmation hearings for the nominee for TSA Administrator next month, they should grill him on ending the agency's hostility to a risk-based domestic Registered Traveler program. And the Senate should enact RT language comparable to what the House has already done requiring TSA to implement such a program, as Congress mandated in the original Aviation & Transportation Security Act of 2001.

New Data Undermine Case for Rail vs. Short-Haul Air Service

"For reasons of carbon reduction and wider environmental benefits, it is manifestly in the public interest that we systematically replace short-haul aviation with high-speed rail." That was the pronouncement August 5^th by UK Transport Secretary Andrew Adonis. The Reuters report that included this statement says the current Labor government plans to develop a national network of high-speed rail (HSR) lines, beginning with a new line from London to Birmingham.

As the U.S. government gears up to do likewise, we are seeing a growing number of reports that question whether these huge commitments of tax dollars actually make sense. A UK report by Booz Allen Hamilton, released in August (though completed in 2007) concluded that construction and operation of the planned north-south HSR network would emit more CO₂ than continued short-haul air travel over the next 60 years. HSR would only produce net carbon savings if it captured 62% of market share from airlines. But if train service is doubled from current levels (as some propose), HSR would need a market share of 73-85% to achieve net carbon savings.

The Swedish daily Dagens Nyheter published (August 21, 2009) a summary of a report on proposed HSR in Sweden, prepared by the Expert Group for Environmental Studies, for the Ministry of Finance. It is based on an analysis by consulting firm WSP for the National Railways Administration. Basically a social benefit/cost analysis, it concluded that the net social benefit (including environmental benefits) was only 80% of the project cost. The HSR system would eliminate only one percent of the transport sector's carbon emissions, at a very high cost per ton.

The Swedish study did not include the carbon emissions due to the construction of the HSR system, only that from its operations, unlike the UK study. The most comprehensive study on the total carbon footprint of different transport modes remains the one released in June by UC Berkeley analysts Mikhail Chester and Arpad Horvath. They found that leaving out carbon emissions due to the very energy-intensive construction of HSR lines and stations can make HSR appear far more carbon-friendly than it actually is. Including construction CO₂ in the assessment increases the carbon footprint of an airline trip by 31% (compared with only including emissions from operations). But for rail systems, the impact is vastly greater: the lifecycle carbon footprint of rail is increased by 155%.

Finally, you might also want to read an excellent overview of HSR's costs and benefits compared with short-haul air travel. "The Economic Effects of High Speed Rail Investment" by Gines de Rus of the University of Las Palmas in Spain is Discussion Paper No. 2008-16 from the Joint Transport Research Centre of the OECD and its International Transport Forum. One of its most interesting components is three tables comparing total costs (including environmental) and total revenues for the highway, rail, and air transport sectors of France, Germany, Netherlands, and Spain. As you might anticipate, the air transport systems are generally self-supporting, the roadway systems close to self-supporting (except Germany's), but the rail systems cost far more than they take in. Excluding from revenues explicit subsidies for certain "concessionary fares," the rail systems cover 55% of their costs in France, 41% in Germany, 39% in Netherlands, and 26% in Spain.

As de Rus concludes, "The case for HSR investment can rarely be justified on the benefits provided by the diversion of traffic from air transport."

A New Pricing Proposal for LaGuardia (and other Congested Airports)

In 2007, the Reason Foundation published a policy brief by Michael Levine, asking whether the politics surrounding runway congestion pricing could be overcome. (http://reason.org/news/show/congestion-pricing-at-new-york) In a recent online aviation discussion group, airline consultant Hubert Horan took up the Levine challenge. Rather than paraphrase what he wrote, I invited him to present that case here, as a guest article. I hope you find it as thought-provoking as I did.

We have a congestion/capacity problem, because for decades there has been political gridlock preventing even modest changes to aviation funding systems which, combined with obstacles to major infrastructure construction, has made it impossible to add major capacity in and around high traffic areas with congested airports.

Key to understanding the gridlock problem is recognizing that all of the key interest groups are either opposed to building more capacity where it is economically justified, or in paying their share of what that new capacity would cost. While each interest group has some legitimate concerns, most of their public pronouncements are just political posturing designed to ensure gridlock and protect the status quo. No incumbent airline wants the capacity that would support new competition, and they'll fight any new "user fees" that raise their costs. Many airports care much more about political prerogatives and blocking any restrictions on how fee revenues can be used than they do about supporting local economic growth or minimizing delays. No local politicians or members of Congress have the motivation to fight the opposition to new capacity based on noise and NIMBY considerations.

Any kind of longer term solution requires two things: a quasi-market mechanism that sets prices for the use of scarce runway capacity at the levels needed to eliminate "excess demand", and a "capacity-supplying" entity with incentives to maximize the social return on air capacity investments (i.e., expenditures justified by eliminating congestion/delay and creating economically productive new capacity).

What difficult but plausibly achievable intermediate steps should Congress/DOT take to move us in that direction? The near-term focus should be reducing bad incentives and political roadblocks. These proposals should be considered in the context of Mike Levine's question, "Is it possible to fashion remedies, perhaps "impure,"that if adopted will produce a result better than the current situation?"

1. Flat-Rate Landing Fees at Highly Congested Airports. Within today's residual-cost system, all airports at (or approaching) capacity would be required to structure landing fees so that every plane pays the same rate; hence, 757 rates would go down while regional jet (RJ) rates would go up. At LaGuardia (LGA), every existing slot holder would retain its current slots, but with structural incentives for airlines to maximize airport throughput given today's capacity. The assumption here is that airlines "overschedule" RJs since this is the cheapest way to protect slot "assets" and keep out low-cost carrier (LCC) competition. Airlines now doing this will face higher costs, but will be free to cover those costs with revenues from a bigger plane or sell the slot to someone else. This is a "market solution" in the sense of using incentives to let market participants reallocate resources, instead of letting DOT/FAA staff assign slots or make scheduling decisions. Slot values might change, but no slots get confiscated, and airlines never had a "right" to this week's slot values anyway. If throughput increases, the public has just achieved an increase in LGA capacity at a tiny fraction of the cost of building new runways.

This first step doesn't "solve" the capacity problem, but (if I'm right about the RJ issue) it would significantly reduce the external costs that the capacity problem imposes on consumers, airports and local economies. Legacy airlines argue that they fly all those RJs because their New York customers demand that type of high frequency/high fare service, and they are only motivated by the strong profitability of these flights; asset hoarding and LCC competitive threats have nothing to do with it. But the recent Delta/USAirways LGA/DCA slot swap suggests that past scheduling practices did not optimize short-term route profitability, and these carriers are strongly focused on longer-term slot asset values.

2. "Small City" Funding Mechanism for Congested Airports. Any future slot optimization system will have serious problems if there are big chunks of slots excluded from the system and handled "politically". But a rigid demand for no exceptions whatsoever isn't realistic given how the political process actually works. I don't think those "small city" claims would survive serious scrutiny, but they are still a political obstacle. So I propose a system where concerned cities/states could acquire and control some of the slots, based on the system they've used in France for many years. (The Orly slots used by most little planes are controlled by regional governments, not the operating airline). Congress would establish a funding pool linked to the EAS (Essential Air Service) program, and an EAS-like bidding process for cities/states that wanted federal subsidies to buy slots. The controlling city/state could contract with any airline to operate the flight at whatever rates the airlines would accept. These "public" slots could be transferred to other local governments but couldn't be sold back to the airlines. In a more perfect world I wouldn't want taxpayer money spent on these kinds of local airline routes, but I think this is a small price to pay for eliminating the "small cities" political barrier to more efficient use of LGA capacity, just as the original EAS program eliminated a political obstacle to deregulation.

3. Future Slot Sales on Blind Auction Basis. Slot sales would have to follow the "Blind Auction" approach outlined in Mike Levine's recent paper, whereby the selling airline wouldn't know the identity of the purchaser in advance, and with subsequent public disclosure of both the high and second-highest bid. This would provide greater transparency about the opportunity cost when airlines retain slots supporting unprofitable flights, and would reduce one barrier to LCC entry. I'd place a non-punitive excise tax on all slot sales (10%?) to recapture a bit of the scarcity rents, and to help fund the "small city" and other administrative programs.

4. Zero-tolerance Use or Lose. I would tighten rules that allow airlines to retain slots without actually using them, including specific prohibition on bankruptcy estates retaining slots that weren't being operated.

I think it makes more sense to let the dust settle from these initial steps before trying to tackle the more difficult slot pricing and capacity supply questions. If flat-rate fees at LGA have a notable impact, it makes it much easier to structure the next phase of capacity programs. It would also make it possible to reduce hourly slot caps without reducing airport throughput or airport revenues. If flat fees have little impact on scheduling or throughput at LGA, the next phase of capacity becomes much more expensive, but there will be clear evidence that cheaper approaches hadn't worked.-Hubert Horan.

New Airport Fire Requirements Not Cost-Effective

Early in my career, I worked for a consulting firm called Public Safety Systems, Inc. Among other things, we applied minicomputer systems to police and fire dispatching, and that is where I learned about the National Fire Protection Association (NFPA), as well as the power of the firefighters unions.

NFPA has standards for airport rescue and fire fighting (ARFF), and so does the International Civil Aviation Organization (ICAO), both of which are voluntary unless made mandatory by action of the relevant governments. Current FAA standards for ARFF are not as stringent as those of NFPA or ICAO-but that could be about to change. Section 311 of the House bill to reauthorize the FAA (HR 915) would require the FAA to adopt these more-stringent (and hence more-costly) standards. In response to concerns expressed by airport groups, the Transportation Research Board's Airport Cooperative Research Program (ACRP) commissioned a study. It's a web-only document, "How Proposed ARFF Standards Would Impact Airports," by Richard Golaszewski, Benedict Castellano, and Robert E. David. (http://onlinepubs.trb.org/acrp/acrp_webdoc_007.pdf)

The study compares current FAA ARFF standards under Part 139 of the Federal Air Regulations with what would be required under either ICAO or NFPA standards. It uses 11 years worth of data on accidents at 476 U.S. airports governed by Part 139 defined by FAA as Class I, II, and III. (The smallest airports, Class IV, were excluded because of very little passenger service.) The research task was estimate whether the additional fire-fighting staff and equipment under ICAO or NFPA would have made a significant difference to the outcome of the response to each incident. The standards impose more stringent requirements for ARFF response times, which affects the number and location of fire/rescue stations. They also prescribe minimum numbers of vehicles and rules for the number of firefighters to be on duty.

The study analyzed fatal air carrier accidents over the 1997-2007 period for airlines (both scheduled and non-scheduled) as well as air taxi and commuter operations. Eleven of the 23 fatal accidents for Part 121 airlines occurred far from airport property and so were not relevant for ARFF response. Nine others involved cases where fire/rescue response would not have made a difference (e.g., someone killed by walking into a propeller or by a collision between a plane and ground equipment). The other three-a runway overrun with fire, a crash into a maintenance hangar with fire, and a takeoff from a too-short runway with crash and fire-were analyzed and the conclusion in all three cases was that quicker response time would not have prevented any of the fatalities.

The summary of this safety analysis noted the relatively small number of fatal accidents during 11 years, and estimated that at best one life might have been saved due to faster response time.

What about the costs? Using a sample of airports from each size category, the researchers surveyed airport operators to determine the current and projected numbers of vehicles and firefighters under either NFPA or ICAO standards. Those numbers were then extrapolated to all the airports in each category. For the most stringent version-the NFPA two-minute response time standard-the total number of firefighters would more than double for the 476 airports included in the study. Smaller increases would be needed for the NFPA three-minute standard or the ICAO three-minute standard. Vehicle numbers would increase by similar amounts. The annualized operating and depreciation costs of the NFPA two-minute standard would be approximately $1 billion, the majority of which would be payroll costs for the additional firefighters. In general, the cost impacts would be greater the larger the airport, though the increased cost per enplaned passenger would be greater for the smaller airports (ranging from 28 cents/passenger at the largest to nearly $28/passenger at the Class III airports, for the NFPA two-minute standard). Even the least stringent NFPA standard would increase the Class III cost/passenger by nearly $14 (but only 3 cents/passenger at the largest Class I airports).

What I recall from my early exposure to NFPA is that, like most safety-oriented organizations, they want increased fire safety without much concern for cost or cost-effectiveness. And organizations like the International Association of Fire Fighters (the largest U.S. fire union) clearly want-and lobby for-standards that create more union jobs. Based on the ACRP's careful analysis, it's hard to see much of a case for what the House bill seeks to impose, especially on smaller airports.

Alternatives to Rural Air Subsidies

As the Senate Appropriations Committee discussed (and then approved) a 29% increase in funding to subsidize rural airline service, a flurry of newspaper articles appeared around the country. Many focused on Ely, NV as the poster child for the program's excesses. Joe Sharkey's syndicated New York Times column noted that Ely tops the list of subsidy per passenger, at $4,500. Only 414 people flew out of Ely in 2008, with an average load of 0.7 passengers per flight. Many of the other 150 towns and cities receiving subsidized air service cost taxpayers several hundred dollars per passenger.

The Essential Air Services (EAS) program began life in 1978 as a 10-year effort to ease the transition from the regulated-cartel approach that prevailed prior to passage of the Airline Deregulation Act of 1978. In the old days, airlines cross-subsidized service to rural cities with profits from their more-lucrative routes, but that no longer worked once every airline was free to fly anywhere. And since rural areas exist in most states, and every state has two Senators, EAS took on a life of its own, gradually expanding in size and becoming permanent.

Last month the Government Accountability Office released its latest study of EAS ("Options and Analytical Tools to Strengthen DOT's Approach to Supporting Communities' Access to the System"-GAO-09-753, available at www.gao.gov). In the course of looking into ways of reducing the EAS burden on taxpayers, GAO provides many insights into how the program operates. For one thing, about a third of its budget comes from foreigners! EAS receives about $50 million per year in overflight fees paid by aircraft owners (airlines and business jets) who use the U.S. air traffic control system while flying over U.S. territory. The balance comes from the Aviation Trust Fund (which means that you and I, as airline passengers, pay for most of EAS via our ticket taxes.)

GAO also points out that even as the number of small towns participating in EAS has grown over time, the number of participating airlines has shrunk from 34 in 1987 to just 10 as of 2009 (of which four serve 85% of the routes). Also, some of the requirements Congress has imposed-such as planes with at least 15 seats and at least twice-daily service-have contributed to very low load factors and high costs per passenger. The average load factor for EAS flights was 37% in 2008-compared with about 80% for regular air service.

Fundamentally, EAS appears to me to be a vain attempt to preserve an America that no longer exists. As GAO's report points out, many EAS communities have lost population over the last 30 years, meaning there is less demand for such service. The whole phenomenon of low-cost carriers (LCCs) has emerged during these three decades, leading many people in rural areas to drive 70 or 100 miles to an airport offering low-fare LCC service, rather than flying on a high-fare (despite subsidy) local EAS flight. And intercity bus service is enjoying a renaissance, offering new options to those "stranded" in rural America. So it's not at all clear why U.S. air travelers (and foreigners) should be taxed $175 million per year to provide a few small-plane flights to 100+ rural towns.

In an effort to reduce the tax burden, GAO reviews the pros and cons of a number of possible reform measures, including allowing smaller (e.g., nine-seat) planes and less-frequent service, consolidating EAS flights from nearby towns at a single airport, and limiting eligibility to the most remote towns. Those would help a bit, but I think we need to think further outside the box.

GAO does note that on-demand air taxi service and intercity bus service offer additional options that might cost less and provide better service than EAS in its current incarnation. And its report provides a fascinating appendix showing how the use of geographical information system (GIS) tools can identify small community transportation options.

But here are two additional ideas. Instead of having airline passengers on regular routes subsidizing small-town air service, why not take at face value the claims of small-town boosters that airline service makes them more viable places to live, work, and do business? In other words, let those communities put their money where their mouth is and come up with funding to assist one or more airlines with some level of air service. Some small and medium-size cities have been doing this for years, with varying degrees of success-for example, Wichita (KS), Myrtle Beach (SC), and Roswell (NM). These efforts generally involve local tax money and/or waivers of (city-owned) airport landing fees and other charges. Another way of approaching the problem is for the business community, typically the chamber of commerce, to come up with funding, as is done in France, where their chambers operate most of the smaller airports.

As the GAO report concludes, "Changes in the aviation industry and the nation's financial situation over the past 30 years may make this an opportune time to revisit [EAS] program objectives and evaluate design options for the program." I agree.

News Notes

Shoe Scanner on the Market

Although General Electric developed a prototype shoe scanner for use by defunct Registered Traveler provider Clear, it was never able to win TSA approval. Now comes IDO Security, with a $6,000 magnetic shoe scanner. Though not yet approved for U.S. use, the New York-based company has sold its MagShoe device to Israel's Ben-Gurion, Spain's Madrid Barajas International, Rome's Fiumicino, and Hong Kong International. CEO Michael Goldberg told Aviation Daily (Aug. 21, 2008) that he is "unable to discuss prospects for its use at airports in the United States," presumably because testing at TSA is under way.

Airport Privatization Recap

Each year my colleagues at the Reason Foundation produce an Annual Privatization Report, covering a wide range of fields in which governments have sold, leased, or outsourced the operation of traditionally government-run functions. In the 2009 edition, released last month, I wrote the chapter on air transportation, most of which is devoted to airport privatization. You will find the report at http://reason.org/apr2009.

Last Gatwick Bidder Withdraws

In mid-July, the third of three bidders for BAA's proposed sale of London Gatwick airport-Manchester Airports Group-withdrew from the bidding. The MAG team consisted of Manchester Airport, Canada's Borealis pension fund, and the Greater Manchester Pension Fund. BAA had hoped to raise £2 billion ($3.28 billion) from the sale, but due to both the current reduced levels of passenger traffic and credit market conditions, all three bids were far below that level. In withdrawing, MAG said it would not raise its £1.38 billion offer to BAA's new minimum requirement of £1.5 billion. BAA is still appealing a Competition Commission order that it sell Gatwick and two other airports within two years.

Risk-Based Security Paper Available

The policy paper I wrote last fall for the OECD's International Transport Forum has now been published. It compares the aviation security approaches taken by Canada, the European Union countries, and the United States and argues for a more risk-based approach. I presented it at a round-table discussion in Paris last December and again, slightly revised, at the ITF's annual Leipzig conference on transportation policy in May. The paper appears in the OECD/ITF report, Terrorism and International Transport: Towards Risk-Based Security Policy, Round Table #144. Go to: www.internationaltransportforum.org/Pub/new.html.

St. Petersburg, Russia Airport to Be Privatized

At the end of June, the city government of St. Petersburg announced the winning bidder for a 30-year concession to expand and operate Pulkovo Airport, the city's main commercial airport. Fraport, Horizon Air Investments, and Russian state bank VTB comprise the winning team. They will invest an estimated $1.5 billion to build a new terminal and make other improvements. The city will receive 11.5% of the airport's revenues. Whether this deal will increase the odds that Kosovo will attract bidders for its proposed privatization of Kosovo International Airport remains to be seen.

Guards Flunk GAO Covert Testing at Federal Buildings

There is no better test of the ability of a security system than covert testing, in which "red team" members simulate terrorist attempts to get through without being found out. The Federal Protective Service is responsible for protecting about 9,000 federal facilities (and, like TSA, is part of the Department of Homeland Security). Recently, the Government Accountability Office sent covert testers "carrying the components for an improvised explosive device" through security checkpoints at 10 federal facilities. At all 10, they got through without question, assembled the explosive device, and walked freely around the facility with the device in a briefcase. Read the report and weep. (GAO-09-859T, at www.gao.gov.)

Third Chicago Airport Gets New Funding

The proposed public-private project to develop a new south-suburban airport at Peotone, IL received a shot in the arm last month, when Gov. Pat Quinn signed a budget bill that includes $100 million to help the state DOT acquire the remaining 2,000 acres needed for the airport. The current plan calls for the state to acquire the land and manage the airside, while a private consortium develops and operates the landside (terminal, parking, etc.).

New Airport Screening Contracts in Roswell and Montana

Roswell (NM) International Air Center is getting a new airport screening contractor, under the TSA's Screening Partnership Program. The new provider is BOS Security of Athens, GA. BOS is replacing a previous contractor that provided airport screening there from 2007 to 2009. The new contract will run until 2014. And TSA has announced that Trinity Technology Group of Fairfax, VA has been selected to provide screening at seven small airports in Montana.

Surface Transportation Innovations #70

bob.poole@reason.org (Robert Poole) — Wed, 12 Aug 2009 11:35:00 EDT

In this issue:

How Should We Spend Limited Highway Funds?

Several months ago you may have noticed a story in your favorite news source about the poor condition of highways in your state. Those stories were prompted by a study called "Rough Roads Ahead," produced jointly by the American Association of State Highway & Transportation Officials (AASHTO) and The Road Information Project (TRIP). (Go to http://roughroads.transportation.org to download a copy.) The report pointed out that one-third of the nation's highways are in poor condition, including more than one-quarter of major urban roads. More than 60% of the roads in major urban areas such as Los Angeles, San Francisco/Oakland, Honolulu, and Washington, DC are in poor condition.

Underlying much of the data on which the Rough Roads report is based is the much larger AASHTO "Bottom Line Technical Report: Highway and Public Transportation National and State Investment Needs." (http://bottomline.transportation.org/BottomLineReport.pdf) Besides documenting roadway conditions, this report also looks at highway performance, based on several measures of congestion over time. Its Table 3.9 "shows the across-the-board declines in every measure of travel performance at all metro levels of population size over the last 18 years."

The Bottom Line report tallies up the highway investment backlog, which had grown to $430 billion by 2006, with 80% of that in urban areas and 58% of the backlog representing capacity deficiencies (and the other 42% for rebuilding existing roadways). Every two years the Federal Highway Administration (FHWA) calculates the amount of investment needed to maintain current conditions and performance-i.e., to keep things from getting even worse. Since the nation never achieves that investment level, the next time it is calculated, not only is the backlog larger, but the new benchmark is the amount needed to maintain a worse level of performance!

That's what we're facing as Congress begins debating reauthorization of the federal program, especially in a political climate that has put increased fuel tax rates out of bounds. In a situation like this, it makes sense to take a hard look at where those current Highway Trust Fund dollars are going. And that was the point of a report issued last month by Sens. Tom Coburn (R, OK) and John McCain (R, AZ) called "Out of Gas." It aims to call attention to the relatively large sums that are diverted from the Highway Trust Fund for non-highway purposes. The Senators based their report on a study they requested the Government Accountability Office to conduct on this question, which GAO released on June 30th. (GAO-09-729R, "Highway Trust Fund Expenditures on Purposes Other than the Construction and Maintenance of Highways and Bridges During Fiscal Years 2004-2008."

Over that five-year period, $78 billion paid in by highway users was spent on other things (about 32% of the SAFETEA-LU total of $244 billion). More than half, $44 billion, went to the Federal Transit Administration (for the transit account of the Highway Trust Fund), and $5.5 billion covered the budgets of two transportation safety regulatory agencies, NHTSA and FMSA, dealing with auto and truck safety, respectively. The other $28 billion was FHWA money which Congress required the agency to spend on things other than highway construction and maintenance. But the "Out of Gas" report devotes nearly all its attention to just $3.75 billion of that total, which goes towards 12 categories of "Transportation Enhancements." And I agree that those are easy targets. Sidewalks and bikeways, beautification, historic transportation buildings, transportation museums, and billboard removal may be nice things to have, but they are not what motorists signed up to pay for with their highway user fuel taxes.

A good-sized portion of the $28 billion goes for equally low-priority non-highway programs, such as Safe Routes to School, Recreational Trails, Scenic Byways, and the U.S. Bicycle Route System. GAO provides no separate breakdown for these, but my estimate from the data they provide is that about $18 billion of the $28 billion goes for Enhancements and these other programs. Another $8.6 billion is for things like utility relocation, safety work, traffic management facilities and technology, etc. which are clearly highway related. And there's also $1.3 billion for transportation research, most of that also going for highway stuff.

So when you actually parse the numbers, the $78 billion over five years breaks down into $44 billion for transit (which I agree shouldn't be paid for by highway users), $5.5 billion for safety regulatory agencies (which in most other branches of the federal government are paid for by the general fund), $8.5 billion for highway-related spending, and about $18 billion for truly non-highway programs other than transit. The headline premise of the Coburn/McCain report is that if we'd played fair with highway users, we could have applied $78 billion toward the backlog of needed highway investment over five years. Even if that number were accurate, it wouldn't make much of a dent in a $430 billion backlog. And if the kind of thing the Senators spend their time attacking is the real target, those things accounted for "only" $18 billion of the $78 billion. While ending highway user support for bike paths, sidewalks, and recreational trails would make the gas tax more of a user fee, it would only cover a modest portion of the highway investment shortfall.

Footnote: Have you read the hype about how the House's "Surface Transportation Authorization Act of 2009" would consolidate most highway funding into four core categories and give states much greater flexibility? Well, if you take a closer look, you find that all those non-highway programs are retained and protected, by name. The newly created "Office of Livability" within FHWA would be required to take over and run Transportation Enhancements, Recreational Trails, Safe Routes to School, Scenic Byways, and the U.S. Bicycle Route System. Some flexibility!

The Case Against Build America Bonds

Yes, I know the argument for Build America Bonds. The credit markets in general are still reeling, and by having the feds subsidize the interest rate on taxable infrastructure bonds, hard-pressed states, cities, and other infrastructure providers can get back into the capital markets, issuing taxable bonds that cost them less in debt service than they'd have to pay on tax-exempt bonds today. Since the program was launched in April (as part of the stimulus bill), at least four toll road authorities have issued BABs: $1.3 billion for the New Jersey Turnpike, $500 million for the Illinois Tollway, $790 million for the North Texas Tollway Authority, and $352 million for the North Carolina Turnpike Authority.

So why do I think this is a bad idea? For two reasons. In terms of transportation policy, having 35% of the debt service on these bonds come from the federal government's general fund is a major departure from the user-pays principle. Until now, toll roads were the purest example of true user-pay finance in U.S. infrastructure. Growing amounts of general tax support have been creeping into state and county highway budgets in recent years (e.g., California's $20 billion general obligation transportation bond issue a few years back, local transportation sales tax measures across the landscape, etc.). So even though BABs are currently only authorized for issuance this year and next (like the rest of the stimulus), they set a terrible precedent (and there is already talk about making BABs permanent).

Second, even if BAB issuance is limited to just these two years, the hit to federal budget deficits will still be enormous. These are typically 30-year bonds, meaning they will be draining the federal general fund through 2040. Municipal Market Advisors estimates that if $30 billion in BABs is issued this year and again next year, the feds will be on the hook for $25.3 billion over the life of the bonds. Former Comptroller General David M. Walker, who is devoting the rest of his career to raising the alarm about the insolvency of the federal government as CEO of the Peter G. Peterson Foundation, must be tearing his hair out.

The least-bad outcome, as far as I'm concerned, is for the program to die a quiet death at the end of 2010.

"Moving Cooler"Not So Cool

Late in July, the Urban Land Institute released with great fanfare a large report called "Moving Cooler." (http://movingcooler.info). Its basic message is that the United States can cut greenhouse gas (GHG) emissions from transportation in half by 2050-with the right set of policies. It was quickly endorsed by an array of environmental and transit groups-but disavowed by the American Association of State Highway & Transportation Officials (ASHTO), which I'm told had been one of the original co-sponsors of the project.

The basic thrust of the report is that the best "bundle" of transportation/GHG policies is a combination of very aggressive pricing and all-out implementation of the smart-growth/transit/VMT-reduction model that has been the pet cause of transit and environmental groups since long before GHG-reduction became the cause-du-jour in America. This approach is seriously flawed, in numerous ways. Let me summarize some of the major problems.

First, the report implicitly assumes that transportation must make the same percentage reduction in GHG emissions as every other sector, regardless of the relative cost/ton involved. That's economically illiterate, as a 2006 report from the European Conference of Ministers of Transport pointed out: "Cost-effectiveness (cost per ton of CO2 abated) is the fundamental determinant of which abatement policies to adopt and how much the transport sector should contribute . . . . Costs are minimized when the cost of saving an extra ton of CO2 is more or less equal in all sectors. Some of the potential measures for the transport sector have relatively low costs, others very high costs at the margin. . . . By far the largest relatively low cost emission reductions are expected to be achieved in power and heat production. Transport and most other sectors are therefore expected to contribute correspondingly less to overall emissions reductions strategies." ("Review of CO2 Abatement Policies for the Transport Sector," CEMT/CM(2006)4/FINAL, June 1, 2006)

Second, the report does not reveal the full costs of its transit/smart-growth strategies, and it counts some costs as benefits. For example, as Alan Pisarski pointed out in a next-day commentary:

• “Travel times don’t get counted—so shifting from a 15-minute car trip to an hour on transit or walking has no penalty.
• “Transit subsidies don’t get counted—so doubling subsidies to increase ridership has only benefits.
• “Every possible pricing strategy is invoked—congestion pricing, cordon pricing, on-street parking fees, extreme fuel prices—in order to get people out of their cars, and then the loss of their cars is counted as a benefit.”

Third, by deliberately focusing on behavioral rather than technological solutions, "It understates the prospect of gaining the full potential of greater energy efficiency from the vehicle fleet . . . In fact, if the vehicle/fuel assumptions had been as comparably optimistic as the land use assumptions, with a robust and honest assessment of fuel and vehicle technological development opportunities, one wonders whether this report would be worth doing at all," writes Pisarski.
(www.newgeography.com/content/00932-uli-moving-cooler-report-greenhouse-gases-exaggerations-and-misdirections)

Pisarski's assessment is paralleled by that of the European transport ministers and also by a paper on transportation GHG research needs commissioned by the Transportation Research Board. The latter calls for using cost/ton both "for determining how much of the overall GHG reduction responsibility to assign to transportation" and to select the low-hanging fruit among transportation policy measures. ("Recommended Research and Evaluation program: Greenhouse Gas (GHG) and Energy Mitigation for the Transportation Sector," Cynthia J. Burbank, Commissioned paper for the Transportation Research Board, April 3, 2009)

Since Congress is likely to impose GHG-reduction measures in the surface transportation reauthorization bill, it's crucially important that we sort out what sort of measures will cost-effectively save energy and reduce CO2. Drastically changing how and where people live, work, and travel does not appear to be a cost-effective approach-and if this report is the best its advocates can do, their case is very seriously flawed.

An Overview of Highway PPPs

Every year since 1987, the Reason Foundation has published an Annual Privatization Report, which aims to provide a broad overview of federal, state, and local government activity in privatization and public-private partnerships (PPPs). I'm responsible for the section on Surface Transportation, so if you're looking for a pretty comprehensive overview of this field, you might want to read pages 54-75 of this year's report. (http://reason.org/apr2009)

The chapter includes an overview of toll road finance as of the first half of 2009, with tables on large equity funds and institutional investors currently active in this space. I also provide a league table of the top 30 PPP infrastructure transportation companies in 2008, based on the great database of global projects maintained by Bill Reinhardt at Public Works Financing (note: only three US firms make the top 30 list).You will also find my take on a number of national reports released during the past year on PPP toll roads, some of which has already appeared in this newsletter.

What you will not have seen before is a fairly detailed overview of new PPP toll road projects around the country, the status of efforts to lease existing toll roads, and an update on various HOT and Managed Lane projects. And for context, there are also eight pages on toll concession projects in other parts of the world (including a section on China, by my Reason colleague Sam Staley, recently returned from another working trip there).

Dynamic Lanes Project for Los Angeles Freeway

One of the hottest topic at transportation conferences I've been to recently is "active traffic management." As pioneered in Europe and now moving into U.S. transportation planning, the concept involves things like lane-specific speed controls, peak-period use of shoulders as extra travel lanes, greatly expanded uses for variable message signs, etc.

One aspect that I heard about a couple of years ago but dismissed as likely to be too costly is to embed lighted lane-markers in the pavement, such that lane-widths could be changed dynamically-i.e., during peak periods when speeds are low anyway, electronically "restripe" the lanes from the usual 12 feet to 10 or 11 feet, gaining a temporary extra lane (assuming the freeway is wide enough to make the math work).

It turns out that a small-scale version of this idea will go live on a Los Angeles freeway in November. The application is a connector from the northbound 110 freeway to the northbound I-5, north of downtown LA. The connector is now a single lane, and during peak periods it becomes a real bottleneck. Because there is a reservoir on one side and a cliff on the other, there isn't room to add another full lane to the connector. But a second lane can be squeezed out via lighted lane-markings, for use during those slower-speed times.

The key technology is called SmartStud; it consists of lights embedded in the pavement, powered by a single central cable that creates a magnetic field which each stud converts to electricity. For the dual-lane connector ramp marking, about 650 studs will be used, embedded four inches into the pavement. Since the studs are not electrically connected, when one goes bad, it's easy to replace.

New Zealand-based SmartStud has a larger installation already in operation. It's the five-mile Rennsteig Tunnel in Germany, with four lines of lights. Similar studs already exist in the McClure Tunnel in Santa Monica, but just to illuminate the center divider.

The new LA project has a reported cost of $3.2 million; not cheap, but less than it would have cost to somehow build a conventional lane addition in that location.

Transit Ridership Goes Back Down

"First quarter transit ridership exceeds expectations," was the optimistic spin on the June 15th news release from the American Public Transportation Association. Actually, once you read beyond that headline, you learned that transit ridership dropped in the first quarter by 1.2%, compared with first-quarter 2008. Commuter rail was down 3.03%, heavy rail down 1.77%, and bus down 1.22%; only light rail and trolley bus showed single-digit percentage increases.

And worse news may be coming. Data for April from the National Transit Database tally of unlinked passenger trips shows April 2009 down 10.26% from April 2008.

This matters because the media hugely over-hyped the transit ridership increases of 2008, routinely presenting the data in ways that made it look as if comparable numbers of people had stopped driving to work and switched to transit. Uncritical (and/or innumerate) reporters equated percentage decreases in vehicle miles of travel (VMT) with comparable percentage increases in transit ridership-ignoring the huge difference in the base against which each percentage change was figured.

To save you the trouble of doing the math, Wendell Cox has done it for you. By comparing the change in roadway passenger miles and the change in transit passenger miles for all of 2008, he finds that only 2.1% of the decline in roadway passenger miles was captured by public transit. (www.demographia.com/db-hwytr2008f.pdf) The rest apparently is accounted for by trip-chaining and elimination of low-priority trips.

I point this out not to bad-mouth transit, but simply to remind those who think it would be easy to shift large numbers of people from cars to transit that this would be a lot harder than they make it seem.

Upcoming Conferences

Note: I don't have space to list all the transportation conferences going on; below are only those that I or a Reason colleague are speaking at.

TRB HOV, HOT, and Managed Lanes Committee Midyear Meeting, Woods Hole, MA, Sept. 1-2, 2009, Jonsson Woods Hole Center. Details at www.trb.org.

77th Annual IBTTA Meeting & Exhibition, Chicago, IL, Sept. 13-16, 2009, The Hyatt Regency. Details at www.ibtta.org/events.

ARTBA Public-Private Ventures Conference, Washington, DC, Sept. 24-25, 2009, Loew's L'Enfant Plaza Hotel. Details at www.artba.org

News Notes

Gomez-Ibanez on PPP Highways
"The Infrastructure Crisis and Private Highways" is a provocative lecture given March 12, 2009 at USC by Jose (Tony) Gomez-Ibanez, the Derek C. Bok Professor of Urban Planning and Public Policy at the Kennedy School of Government at Harvard. Tony is the author of many important works on transportation, including the book Going Private: The International Experience with Transport Privatization (with John R. Meyer), Brookings, 1993. (http://tr.youtube.com/watch?v=BlxKU_m7sOo)

Revisionism on the "Portland Model"
Portland is clearly the model for many who advocate smart growth and transit as the best way forward for surface transportation and "livability." A provocative challenge to the Portland model comes from Wendell Cox, in "Portland: A Model for National Policy?" Cox uses data 27 years of data on commuting and other issues to question whether Portland itself has done what its boosters claim it has. (www.newgeography.com/content/00818-portland-a-model-national-policy)

Mexico Prepares for Nationwide ETC
Tollroadsnews.com reported in June that Mexican motor vehicle authorities plan to install sticker-tag electronic toll collection transponders in every vehicle in the country. Late last year Neology, Inc. won a $40 million contract from motor vehicle registry REPUVE to provide an initial batch of 10 million sticker tags. Government toll authority CAPUFE does not currently use sticker tags, but has approved a new multi-protocol toll reader that can interface with its existing hard-case transponders and the new sticker tags. Once nationwide deployment of the sticker tags is complete, CAPUFE can phase out its transponders. ( www.tollroadsnews.com/node/4214)

Athens Toll Road Wins Excellence Award
The Attica Tollway Operations Authority (Attikes Diadromes S.A.) has won the 2009 IBTTA Toll Excellence Award in the category of administration. Attiki Odos (Attica Tollway) is the 65 km toll ring road for the Athens metro area in Greece, developed and operated under a long-term toll concession. The award is given each year by the International Bridge, Tunnel & Turnpike Association, and will be presented at the 77th annual meeting taking place in Chicago next month. The award is for a comprehensive project monitoring the tollway's performance and level of service.

Diesel Truck Emissions Drop Dramatically
Federal emissions standards required all truck diesel engines sold starting in 2007 to meet stringent new clean-diesel standards. A new study by the Coordinating Research Council and the Health Effects Institute (and sponsored by the U.S. Energy Department, EPA, the California Air Resources Board, and the Engine Manufacturers Association) found that the new engines have reduced emissions 90% from 2004 models and exceed the requirements of the 2007 regulations. They produce 98% less CO than the 2007 regulations require, 10% less NOx, 95% less non-methane hydrocarbons, and 89% less particulates than the 2007 standards. More stringent standards come into effect in 2010, that will reduce NOx by another 50%. (www.ntis.gov/search/product.aspx?ABBR=PB2009112599)

Cash for Clunkers Study
Last month I reported on the very cost-effective vehicle scrappage program (SCRAP) operated by Unocal in Los Angeles in the 1990s. There is a solid technical report describing the program. It is Elizabeth Deysher and Don H. Pickrell, "Emission Reductions from Vehicle Scrappage Programs," Transportation Research Record, No. 1587, 1997, pp. 121-127.

Correction re FHWA's Pricing Primer
The report that I mentioned last issue, "Technologies to Complement Congestion Pricing," gave an incorrect URL. The correct one is the following:
http://ops.fhwa.dot.gov/publications/fhwahop08043/cp_prim3_00.htm

FDOT Seeking Finance Executive
The Florida DOT is seeking applicants for Assistant Secretary for Finance & Administration. Details available at http://peoplefirst.myflorida.com

Quotable Quotes

"We rich people can't stop the world's 5 billion poor people from burning the couple of trillion tons of cheap carbon that they have within easy reach. We can't even make any durable dent in global emissions-because emissions from the developing world are growing too fast, because the other 80% of humanity desperately needs cheap energy, and because we and they are now part of the same global economy. What we can do, if we're foolish enough, is let carbon worries send our jobs and industries to their shores, making them grow even faster, and their carbon emissions faster still. We don't control the supply of carbon."
--Peter W. Huber, "Bound to Burn," City Journal (Manhattan Institute), Spring 2009. [Note: a thought-provoking and disturbing article; well worth reading.]

"In high profile, big-ticket transactions when lending is based on a single-asset, demand-driven cash flows alone-not balance sheet strength-infrastructure investment becomes a high-stakes game with powerful incentives at play. The forecasting process, imperfect from the start, is seldom insulated from these incentives. Investors need to be asking the right questions of their technical advisors, and having an understanding of the forecasting process is an important prerequisite in that regard. This is as true for toll roads as it is for other transportation projects when limited-recourse lenders are exposed to market risk."
--Robert Bain, author of Toll Road Traffic & Revenue Forecasts: An Interpreter's Guide, May 2009.

"Good intentions and high morals are not enough to ensure good policies. Responsible public administrators and policy analysts have an ethical obligation to critically examine the assumptions behind their preferred programs, to continually and carefully consider the arguments and data that are raised by the program's critics, and to be ready to use their expertise to revise or replace such programs when the facts warrant it. In developing policies to reduce the negative externalities of the automobile in democratic nations with widespread auto ownership, they should consider the principle that mechanical engineering is almost always easier and more cost-effective than social engineering. In other words, it is easier to take the pollution out of automobiles than to take the people out of automobiles."
--James A. Dunn, Jr., "Mobility Contested: Ethical Challenges for Planners, Administrators, and Policy Analysts," presented at the Conference on Ethics and Integrity of Governance, Leuven, Belgium, June 2005.

"Those who see the solution of so many of our present ills to be cramming people into ever-higher densities miss the point. Residential density is one of the most fundamental choices households make. Changing residential densities to make transit work better is the smallest tail wagging the biggest dog I can think of. It puts planning dogma ahead of the most basic human needs and rights."
-Alan Pisarski, "ULI Moving Cooler Report: Greenhouse Gases, Exaggerations, and Misdirections," NewGeography.com, July 29, 2009.

Air Traffic Control Reform Newsletter #65

bob.poole@reason.org (Robert Poole) — Thu, 06 Aug 2009 00:00:00 EDT

In this issue:

Senate Plan to Micro-Manage NextGen
Controller Fatigue Still a Problem
Encouraging Progress on RNP
New O’Hare Runway Cutting Delays
NATCA’s Favorite Congressman
Upcoming Conferences
News Notes
Quotable Quotes

The Senate’s Plan to Micro-Manage NextGen

I’ve been reading Title III of the Senate Commerce Committee’s FAA reauthorization bill, headlined “Air Traffic Control Modernization and FAA Reform.” In brief, Sec. 301 would create an ATC Modernization Oversight Board (MOB); Sec. 302 would create a NextGen “czar” within the FAA; Sec. 308 addresses facility consolidation; and Sec. 314 sets aggressive timetables for implementing various NextGen technologies. I’m sure the Senators and their staff members mean well in creating all these mandates, but I think that whole effort is sorely misguided.

There are two different ways to go about reforming the portion of FAA that provides ATC services (the Air Traffic Organization). One is to convert it into a business enterprise that has strong incentives to give its customers what they want and are willing to pay for. That is what Congress claimed they were doing nearly a decade ago when they authorized the creation of the ATO as a “performance-based organization.” Under that model, the ATC customers and other stakeholders (e.g., airports, employees) basically govern the organization, giving direction to its management and holding it accountable for results. Because maintaining safety is especially critical when we fundamentally change how ATC is provided, arm’s length safety regulation is even more important than it is in day-to-day operations.

The other model is for Congress to be in charge, producing numerous mandates, timetables, etc. and keeping the ATO’s senior people busy producing numerous reports, appearing at hearings, etc. That’s the model represented by the Senate bill (and there are similar provisions in the previously passed House bill). The oversight board (the MOB) is a sort-of board of directors, but not really—and it includes the FAA Administrator, who (as the chief aviation safety regulator) ought to be at arm’s length from making decisions about specific ATC technologies and procedures. And why create a new NextGen czar when that function is already being carried out ably by the ATO’s Senior Vice President for NextGen?

Sec. 314 is arguably the worst section, in that it ignores the process already well under way among ATC stakeholders under the auspices of the RTCA Task Force 5 to develop specific implementation timetables for key NextGen technologies and procedures. Sec. 314 mandates that ADS-B/In capability be on all aircraft by 2015 and ADS-B/Out by 2018, as well as RNAV and RNP procedures at the top 35 airports by 2014 and at (all?) “other airports” by 2018. Would I like to see those milestones met? Yes, I would. Are they realistic for those who would have to pay for them? I honestly don’t know, and neither do the Senators. That’s what the RTCA Task Force is intended to work out.

Then there is Sec. 308, which calls for an assessment of ATC facilities needed (and not needed) in the NextGen future. Making this more complicated than need be, it requires the FAA to hold a public hearing in each and every community that might be affected, if requested. It calls for the MOB to review the FAA’s NextGen facilities plan and make independent recommendations—but it stops there (except to forbid consolidation of any additional facilities into the Southern California or Memphis TRACONs until after the MOB makes its recommendations). What it does not do is to create a process similar to that used successfully for military base realignments and closing (BRAC), under which the list developed by experts is presented to Congress for an up-or-down/no-amendments vote. Given that very large-scale facility consolidations will be essential to NextGen’s success, not providing a mechanism of this sort is an egregious flaw.

I could go on, but I will stop there. I will only add that during the nearly two years that have elapsed since the FAA’s previous authorization expired, the agency has made very tangible progress on NextGen, working constructively with the JPDO and the RTCA. At times like these, I want to tell these well-meaning lawmakers, “Don’t just do something; stand there.”

Controller Fatigue Report: Same Old Same Old

An AP story in July focused on an audit by the DOT Inspector General’s Office of controller fatigue problems at the O’Hare Tower, Chicago TRACON, and Chicago Center, three of the country’s busiest ATC facilities. I downloaded and read the report (AV-2009-065)—and the discussion looked eerily familiar. Sure enough, it was exactly the same issue that I wrote about more than two years ago, in Issue No. 43 (April 2007).

Sen. Richard Durbin (D, IL) had requested the audit, after complaints from Chicago-area controllers, who had alleged that the large use of overtime and the high number of controller trainees was leading to serious fatigue problems. The IG’s audit did find that overtime hours had increased significantly since 2006-07, but that “the potential impact on fatigue was negligible,” because controllers often did not work the scheduled 6-day weeks; about half of them were able to take leave for regular shifts, while still reporting for the sixth day to earn overtime pay. The IG people also found that staffing levels actually “exceeded established staffing ranges for those locations,” but that the staffing ranges did not take into account the percentage of trainees included in the totals, which was slightly higher at the Chicago facilities than the national average of 27%.

But the real kicker was that controllers at all three facilities are still working what is called a 2-2-1 shift schedule, the very kind that the National Transportation Safety Board in an April 2007 report said leads to controller fatigue because it disrupts circadian rhythms. The NTSB recommended that the FAA and the controllers’ union NATCA develop shift rotation schedules that minimize the kinds of sleep disruptions caused by the 2-2-1 schedule. But no such change in scheduling practices has taken place. Thus, as Table 1 of the IG audit shows, a typical 2-2-1 schedule has two evening shifts followed by two day shifts followed by one midnight shift. Between an evening shift that ends at 10 PM and the day shift starting at 7 AM just nine hours elapse, during which the controller presumably drives home, goes to bed, sleeps, gets up and has breakfast, and drives to work again. And on the fourth day, the controller’s day shift ends at 2 PM, and eight hours later he or she must be back in the facility controlling traffic by 10 PM.

It turns out that controllers like the 2-2-1 schedule, because it gives them super-long weekends. The practice predates NATCA and apparently originated under predecessor union PATCO. And that may well explain why the NTSB’s recommendation has not been followed. Unfortunately, while the IG audit does recommend increased rest periods between shifts (10-hour minimum in general, and 16 hours after a midnight shift on the fifth day of a six-day week), it does not call for scrapping 2-2-1. The FAA agreed with these modest recommendations.

I don’t think that’s good enough, and I hope the NTSB revisits the issue in the near future.

RNP—No Longer Just for Difficult Airport Approaches

Required Navigation Performance (RNP) describes a new kind of procedure for precision airport approaches and departures. RNP 0.1 is a performance requirement, defined as an aircraft equipped so as to be able to track a GPS course to within 0.1 nautical mile of the centerline 95% of the time (and 0.2 nm 99.999% of the time). RNP uses GPS position information and the plane’s flight management system (with autothrottle and autopilot) to fly automated approaches and departures independent of radar and instrument landing systems.

For RNP to be used, two things are needed. The aircraft must be equipped with the required equipment (and the cockpit crew trained to use it) and an RNP arrival procedure must be defined, tested, and approved by the FAA. Most passenger planes currently in production come equipped with the necessary equipment, but more than half the U.S. fleet consists of older planes that will either be retrofitted (as Southwest is doing with its 215 older-model 737s) or retired as we move into NextGen implementation.

RNP was pioneered by Alaska Airlines, due to the difficult approaches to several Alaska airports (such as Juneau), some of which could not be used in bad weather. Some of the key people who pioneered RNP there formed Naverus, a Seattle-area company that develops RNP procedures for airlines and airports worldwide. Initial applications focused on airports with geographical and/or weather constraints, such as Cuzco, Peru and Lahsa, Tibet (in addition to those in Alaska). But the past year has seen RNP move into the mainstream as a tool for reducing the time and distance of airport approaches, and thereby producing fuel savings for airlines. The International Civil Aviation Organization projects fuel savings of up to 8% with widespread use of RNP and other precision navigation techniques.

Today, the airline leaders in widespread implementation of RNP include Alaska, Qantas, and Southwest. Alaska in July began tests of RNP approaches at its Seattle hub, where it and its regional partner Horizon Air operate nearly 250 flights a day. Both Alaska’s 737 fleet and Horizon’s Bombardier Q400 turboprop fleet will be fully equipped by the end of 2010. Southwest is likewise equipping its entire fleet, by retrofitting its older 737s, turning on equipment heretofore not used on its newer 737s, training cockpit crews, and working with Naverus to develop RNP approaches for every airport it serves. Qantas has pioneered RNP in Australia, where Brisbane served as the principal test airport. RNP is now being rolled out to 28 major airports, under a contract between Naverus and air navigation service provider Airservices Australia.

In the United States, RNP holds great promise for helping to decongest major airspace in locations such as Chicago and New York. A recent Wall Street Journal article by Scott McCartney recounted Naverus co-founder Steve Fulton’s assessment of LaGuardia Airport. “To Mr. Fulton’s eyes, New York’s LaGuardia Airport . . . is every bit as constrained as Juneau. Instead of mountains, the obstructions are airplanes from other airports—New York’s Kennedy and Newark Liberty in New Jersey. Creating RNP procedures there would move planes into and out of all three New York airports faster and avoid delays in bad weather.” FAA NextGen Senior VP Victoria Cox told McCartney that her priority is to get RNP implemented first at the most congested airports, such as New York and Chicago, “where the need is greatest.”

This sounds great, but some sobering notes of caution were provided by testimony on July 29th by the DOT Inspector General’s Office (CC-2009-086). According to the IG’s review, the number of RNP procedures FAA has implemented is misleading, since most of them are overlays of existing routes, offering little or no time or fuel-saving benefits—and hence are not being used by airlines. In addition policies and procedures for using RNP procedures that are nominally in place do not yet exist—for example, for parallel runways at Atlanta. Moreover, to get maximum benefits from RNP approaches and departures, their introduction needs to be integrated with airspace redesign efforts, especially in complex airspace such as New York’s.

Despite these cautions, I’m encouraged by recent RNP progress. RNP is the kind of low-hanging fruit that can be implemented quickly and at relatively low cost, producing tangible ongoing benefits to offset the initial airline equipage costs. It’s a great first step into NextGen.

(For a more detailed discussion of how RNP and other NextGen technologies can reduce delays and expand the capacity of airports, see Viggo Butler’s “Increasing Airport Capacity without Increasing Airport Size.”)

O’Hare Shows Benefits of Runway Addition

Although there is significant potential for increasing runway throughput via several aspects of NextGen (e.g., the previous article on RNP), there is still a need to add physical runway capacity at key airports. The new runway at Chicago O’Hare is a case in point. ORD has changed from an airport with serious delays (especially in bad weather) to one with dramatically less congestion, since its new northside runway opened last November.

To be sure, the recession takes some of the credit, since fewer flights are operating at ORD than was the case last November. But as the Wall Street Journal reported July 23rd, ORD’s on-time arrival rate has improved by 27% this year, compared with the same period last year, twice as much improvement as the average large airport. According to Airport Commissioner Rosemarie Andolino, the new runway has reduced ORD’s average delay from 24 minutes to 16. This is the first of several major runway improvements planned for the airport, and when all are completed, Andolino says that average delay will be cut to six minutes.

The FAA calculates the maximum arrival rate for each airport, based on its runway configuration and airspace constraints. Before the opening of the new runway, that figure was 96 arrivals per hour in clear weather. The new runway has increased that to 112 per hour. And in bad weather, the rate has increased from 70 to 85. The impact really shows up in the bad-weather statistics. In the first five months of 2008, about 30,000 flights were delayed at ORD due to weather, according to the FAA. For the same period in 2009, there were only 8,000 weather-related delays, and the winter weather was worse than the previous year.

The combination of airline schedule reductions, the new runway, and redesigned arrival and departure routes mean that ORD is now operating with flights scheduled to only 80% of its (now-higher) capacity, compared with nearly 101% of capacity early in 2008. That 20% margin (below 100%) gives wiggle-room when weather deteriorates or other things go wrong.

One anachronistic aspect of the runway addition, at the dawn of the NextGen era, is the following. According to the WSJ article, the new runway is so far from the control tower that a new tower had to be built along with it. This is the kind of situation that could have been addressed at far lower cost by means of the virtual tower concept being developed under NextGen (and, in parallel, under Europe’s SESAR program).

NATCA’s Favorite Congressman?

Several months ago, several members of the Florida congressional delegation sent a letter to DOT Secretary Ray LaHood objecting to the FAA Air Traffic Organization’s plan to consolidate the Palm Beach TRACON into the Miami TRACON. And on July 21st, the FAA announced that the plan had been put on hold until September 30th, pending a new review. The prime mover in this latest illustration of congressional micromanagement was Rep. Alcee Hastings (D, FL). So I can’t say I was surprised to learn (via Aero-News.Net) that Rep. Hastings was recently given the “Sentinel of Safety” award by the air traffic controllers’ union, NATCA.

According to NATCA’s media release, the award “was created as a way to honor a member of the aviation and legislative communities who has displayed outstanding achievement in the advancement of aviation safety.” It is open to all aviation leaders, especially those whose leadership has been “historic, aggressive, and courageous.” NATCA president Pat Forrey went on to say that “It is extremely valuable and inspirational to have a leader like Congressman Hastings standing beside the aviation professionals that NATCA represents, fighting to demand a complete examination of FAA policies and decisions.”

Translated into ordinary English, this means lauding a member of Congress for being willing to take NATCA-provided language and intervene in what would be a basic management decision in any business organization. If this kind of micromanagement cannot be ended, it will be impossible to consolidate the hundreds of ATO air traffic control facilities into the relative handful that will be needed to manage air traffic “everywhere from anywhere,” producing major gains in ATC productivity.

Upcoming Conferences

Future Flight Technologies: The Wings of NextGen, Sept. 16-17, Arlington, VA, Sheraton National Hotel, sponsored by FAA Flight Technologies and Procedures Division. Details at: http://cfd117.cfdynamics.com/secure/cmpfaaafs/c

54th ATCA Annual Conference & Exposition, Oct. 4-7, National Harbor, MD, Gaylord Resort & Convention Center, sponsored by the Air Traffic Control Association. Details at: www.atca.org

News Notes

Poole Article on NextGen Reform in ATCA Journal
The dinner speech that I gave at the FAA NEXTOR conference at Asilomar, CA in April has been published in The Journal of Air Traffic Control’s Spring 2009 issue. “NextGen’s Missing Dimension: Institutional and Funding Reform,” is available to ATCA members online. If you are not a member and would like a copy, I will be happy to email one to you. Contact me at bob.poole@reason.org.

Single-Sky Legislation Enacted in Germany
In another step toward creating functional airspace blocks (FABs) independent of country borders, the German parliament has passed several measures to enable that country’s cooperation with Belgium, France, Luxemburg, the Netherlands, and Switzerland to create the Functional Airspace Block Europe Central. FABEC is to begin phasing in as of 2012 and to be fully operational by 2018. The legislation permits German airspace to be managed by entities not controlled by German authorities. A companion measure creates a new federal air safety regulator, completing the full separation of ATC operations (run by air navigation service provider DFS) from air safety regulation.

Congress Probes FAA Weather Consolidation
Last issue I cited several examples of congressional micromanagement of FAA ATC operations and decision-making, but noted that the agency’s planned consolidation of aviation weather information seemed to have escaped such attention. Wrong. It turns out that members of the House Science & Technology Committee, subcommittee on investigations and oversight, had already requested the GAO to look into the subject. The subcommittee held a hearing on July 16th at which GAO and others testified. The GAO testimony summarized its forthcoming report, which recommends that the FAA and the National Weather Service document baseline performance before proceeding with the consolidation.

More on Virtual Towers in Europe
Saab is the latest company to join the Single European Sky ATM Research (SESAR) joint undertaking, which is developing the EU equivalent of NextGen. As reported by Aviation Week (June 22, 2009), one of its main contributions will be developing its remotely operated control tower concept.

Source for Report on eLORAN
In Issue No. 63 (May 2009) I wrote about the 2007 report by the Departments of Transportation and Homeland Security Independent Assessment Team which unanimously recommended eLORAN as the best backup system for GPS. That report was buried for several years, but was liberated by a Freedom of Information Act request early this year. You can find it at: www.loran.org/ILAArchive/IAT-Report-Jan09.pdf.

European vs. US ATC Costs
Last issue I summarized the latest (2008) Performance Review Report on European air navigation service providers, noting that while the report compared the cost-effectiveness of the European ANSPs, there was no comparison with U.S. cost/flight. Eurocontrol now reminds me that their 2007 PRR did make one such comparison. Its Figure 94 showed that the near-term target for average ATC cost per IFR flight in Europe is €850, with the long-term (2020) SESAR target being €650. That compares with a 2006 U.S. cost of €450, due to substantial economies of scale in the U.S. system compared with the dozens of systems in Europe. All Eurocontrol performance review reports are available from: www.eurocontrol.int/prc.

Quotable Quotes

“Current ‘maximum’ capacity limits on major airport runways are based on surveillance, navigation, and flight path control assumptions from the 1960s that are no longer valid with modern technologies and aircraft. A NextGen goal should be to increase allowable individual runway capacity safely at a rate of one added operation per hour per runway per year from today’s 40 and 45 operations per hour per runway, and achieve at least 60 operations per hour per runway by 2025. NextGen capacity goals will be reached by added runway utilization productivity and some new runway construction at major airports. NextGen precision operations should allow very closely spaced runways to be feasible, thus reducing airport and noise boundaries.”
--Neil Planzer, Vice President, ATM Strategy, The Boeing Company, in “How to Move the Next Generation Air Traffic Control System Forward,” The Journal of Air Traffic Control, Spring 2009.

“Southwest is now able to start taking advantage of Required Navigation Performance (RNP), which it is installing on all its aircraft. Our analysis suggests it will take only one to two years (at full implementation) for the fuel cost savings to repay Southwest’s investment. Indeed, going forward, RNP provides the single largest opportunity for all airlines to achieve massive reductions in fuel consumption.”
--Eric Kronenberg, Andrew Tipping, and Justin White, “New Metric for Fuel Efficiency,” Aviation Week, June 29, 2009, p. 58.

Previous Air Traffic Control Reform Newlsetters

Reason's Air Traffic Control Research and Commentary

Surface Transportation Innovations #69

bob.poole@reason.org (Robert Poole) — Thu, 16 Jul 2009 00:00:00 EDT

In this issue:

CO2 and Transportation
The transit capital cost debacle
Cash for clunkers?
Near-term approach to VMT charging
Is “job sprawl” a problem?
Upcoming Conferences
News Notes
Quotable Quotes

CO2 and Transportation

One of the major ongoing debates over surface transportation policy in this country concerns the role of motor vehicle emissions—and for purposes of this discussion, I’m referring to “light vehicles” such as cars, pickup trucks, and SUVs. This subset of transportation accounts for about 17% of CO2 emissions, according to the EPA, not the “one-third” often carelessly bandied about (which includes trains, planes, ships, trucks, and all other transportation). So while personal vehicles are part of the problem, they are not as large a fraction as many people would like us to think.

The main misconception among many environmentalists and planners is that, when it comes to personal vehicles, carbon taxation “does not work.” What they mean by that is that the elasticity of demand for motor fuel is low. The Congressional Budget Office’s Oct. 6, 2008 analysis estimates that a carbon tax of $28 per metric ton of CO2 would add about 25 cents to the price of a gallon of gas, which would have only a small impact on driving, fuel consumption, and CO2 emissions from those vehicles. Whereas the average reduction in CO2 emissions across the economy from a carbon tax of that level would be 10%, CBO estimates that it would be only 2.5% from motor vehicles (and this would be a somewhat long-term effect based on vehicle replacement decisions, not driving cutbacks).

But think back to your Economics 101 course. The elasticity of demand for goods and services requiring carbon varies greatly, depending on the availability of reasonably priced substitutes. Electricity, for example, has many alternative sources, and much potential for conservation (e.g., by insulating and by changing light bulb types). But petroleum-based motor fuel is still by far the best means of obtaining energy for vehicle propulsion—in terms of high energy density (lots of BTUs per pound and per cubic foot) and low cost. So doesn’t it make sense to first seek the largest reductions in CO2 use in sectors of our economy where we have plentiful substitutes?

That is what a number of recent studies have proposed, such as last year’s McKinsey report (which I covered in Issue No. 57, July 2008), and a new one from an ad-hoc group called the Climate Task Force. This report, “Addressing Climate Change without Impairing the U.S. Economy,” by Robert Shapiro, Nam Pham, and Arun Malik, proposes a gradually increasing carbon tax, beginning at $14 per metric ton in 2010 rising gradually to $50/ton in 2030. They modeled the impact using the Energy Department’s National Energy Modeling System (NEMS); the model estimates that U.S. CO2 emissions would be reduced 30% by 2030 compared with a business-as-usual scenario. The average cost impact per household would be $1,563/year over this time period; to make the program politically feasible, the authors propose rebating 83% of the proceeds on a per-household basis, averaging $1,275 per year. GDP in 2030 would be 0.8% less than under business-as-usual conditions. (www.climatetaskforce.org/pdf/CTF_CarbonTax_Earth_Spgs.pdf)

Both McKinsey and CTF accept the fact that this level of carbon tax would have only modest effects on personal vehicle driving, on the economic grounds discussed above. But that’s not good enough for some people. For example, a new report from the Center for Clean Air Policy concludes that vehicle and fuel technology changes “will not be enough to reach our climate goals without initiatives that address VMT (vehicle miles of travel) as well.” The CCAP report, “Cost-Effective GHG Reductions through Smart Growth & Improved Transportation Choices,” (www.ccap.org) seems to base its position on the premise that every sector of the economy must achieve equal percentage reductions in CO2 emissions, regardless of the relative cost and inconvenience of doing so. The main thrust of their report is that Americans must change their lifestyles to live in high-density, smart growth communities so that they don’t drive as much. Addressing all the problems with that approach is a topic for another time. But the idea that all sectors must reduce their carbon intensity by equal percentages is economically illiterate.

The Transit Capital Cost Debacle

The terrible crash on the Washington, DC Metro Red Line last month has led to a whole raft of calls for increased taxpayer support for rail transit systems, especially the very expensive heavy rail systems like Metro. Late in April, well before the Red Line crash, a report from the Federal Transit Administration on the seven largest heavy rail systems estimated that just those seven need $50 billion in capital investment to bring them back into good repair, and then an additional $5.9 billion per year to properly maintain them. Those seven systems (serving Boston, Chicago, New Jersey, New York, Philadelphia, the San Francisco Bay Area, and Washington, DC) carry 80% of the nation’s rail transit passengers. And similar capital investment shortfalls plague the smaller heavy rail systems of Atlanta and Miami.

Instead of focusing on the magnitude of these needs, I think we first need to step back and ask “How come?” How did these vital transit systems get into such dire straits? Transit expert Tom Rubin assures me that these systems do keep their books via a version of generally accepted accounting principles (GAAP), meaning they do have capital budgets and do depreciate their assets like businesses do. But when it comes time to make decisions, their boards evidently make the politically popular decisions to do things like expand services, build new lines, and increase payrolls rather than making responsible decisions to ensure proper preventive maintenance and to repair or replace aging assets on a timely basis.

An extreme case in point is the Miami Metrorail system, a 24-mile heavy rail system that opened in 1984. Miami Herald reporter Larry Lebowitz has been chronicling this sad tale for several years now, in a superbly researched series of articles. Elected officials and transit leaders in Miami-Dade County have long had plans for a series of additional north-south and east-west rail lines. Funding them was one of the major selling points of a new half-cent transit sales tax, approved by the voters in 2002. But instead of building the new lines, the transit agency first provided large-scale pay and benefit increases, added large numbers of low-ridership bus lines (further increasing payroll costs), eliminated fares for senior citizens, and took other actions that also increased operating costs and reduced revenues. By 2008, the original rail cars were worn out, with an estimated replacement cost of $700 million—but no funds had been set aside for this purpose. So now instead of the new lines, what remains of the sales tax money is going to be spent on replacement railcars.

I don’t have either the space or the details to assess the specifics of how the larger systems got into their current fix. It has recently been revealed that the Washington Metro board ignored a 2006 warning from the National Transportation Safety Board that the 293 oldest cars (Series 1000) were unsafe (not meeting today’s crashworthiness standards) and should be replaced. It was a Series 1000 car that slammed into another train last month, killing nine people.

In short, instead of simply focusing on funding shortfalls, I think we are long overdue for a hard look at the governance model of our large urban transit agencies. The cost of rail transit—when all costs are fully considered, including proper ongoing maintenance and capital replacement costs—is so enormous that these systems make economic sense only in the most high-density corridors. But because rail systems are considered politically sexy and hence necessary to obtain voter support for transit taxes, there are enormous pressures on transit leadership to disguise the true costs. This is more than just dishonest; it leads to bad investments of money that could provide more real transportation benefits if used in other ways; and in some cases (as in DC) it can put real lives in danger.

A Worthwhile Cash-for-Clunkers Program

I was appalled at the mis-named “cash for clunkers” program recently enacted by Congress, offering thousands of dollars in subsidies for people to go out and buy new cars with slightly better gas mileage than what they trade in. A June 23, 2009 letter to the Wall Street Journal described far more cost-effective program, run by oil company Unocal in the early 1990s.

This highly targeted program was aimed at reducing the very serious smog problem in greater Los Angeles by removing thousands of pre-1971 cars from the road. Emissions from those cars were 99 times greater than the then-new 1990 vehicles. Called the South Coast Recycled Auto Program (SCRAP), it offered owners of such clunkers $700 to turn them in to be crushed. Over the three years of the program, over 8,000 vehicles were removed entirely from the fleet, not re-sold as used cars as under the current federal program. Unocal’s interest was to obtain mobile-source emission-reduction credits in order to keep its L.A. refineries in operation. A given amount of hydrocarbon reduction cost Unocal far less at $700/car than what it would have had to spend on refinery fixes.

Living in Los Angeles at the time, I followed SCRAP with great interest. It was a great example of creative, cost-effective emission reduction—which bears no resemblance to the subsidy program created this year by Congress under the same banner.

A Near-Term Approach to VMT Charging

While I’m a proponent of replacing fuel taxes with a charge per mile driven, collected electronically, I’ve been a skeptic of any near-term implementation of this concept. Proposals to do this by means of add-on equipment (analogous to installing an upgraded audio system in your car) struck me (and many others) as far too vulnerable to hacking, motivated by the idea of getting to drive for free while everyone else paid. But the alternative--requiring all new vehicles to come equipped from the factory with tamper-proof on-board units--runs up against the low turnover rate of vehicles. It takes about 20 years for 95% of the vehicle fleet to be replaced with new vehicles. That would mean a very long transition period, beginning after however long it would take to reach some kind of political consensus on mandating the start of the switchover.

But a new proposal from researchers at the University of Minnesota might change all that, by offering an add-on approach that could do (most of) the job while apparently being highly tamper-resistant. As summarized by Peter Samuel (www.tollroadsnews.com/node/4256 ), what Max Donath and his engineering colleagues have proposed is an on-board unit that would plug directly into the vehicle data bus that has been standard on all vehicles sold in the United States since 1996—the On-Board Data link 2 (OBD2). This is the device your mechanic plugs into to run diagnostics on the engine and other vehicle systems; it’s why you can’t do your own vehicle maintenance like your dad did when cars were simple. And rather than relying on GPS satellites to figure out its location (which works poorly in mountains and among urban buildings), the box would identify the nearest cell phone tower, the same way cell phones do. And it would use cell phone-based text messaging to upload its accumulated mileage-travelled and payment-due data periodically.The details are spelled out in a research report, “Technology Enabling Near-Term Nationwide Implementation of Distance Based Road User Fees,” by Max Donath, et al.
(www.its.umn.edu/Publications/ResearchReports/reportdetail.html?id=1790 ) The on-board unit would read the vehicle speed and, using an electronic clock signal, calculate the distance traveled. By using cell-tower data to identify the vehicle’s general location, it would be able to identify a zone of travel, but not individual streets. That would make it possible for per-mile charges to be applied by state and county governments. For toll roads, transponders would still be needed to pay facility-specific tolls.

Peter Samuel, who is often critical of transportation proposals that are not fully thought out, comments that “This seems to be an important concept that has considerable credibility as a first-generation technology for nationwide road use charging,” as recommended by the National Infrastructure Financing Commission earlier this year.

Note: I’m aware of two forthcoming reports on the VMT-charging issue, which will add to the debate and discussion. One is from RAND Corporation, looking at various possible near-term measures (including, I’m told, one along the lines of the Donath proposal). The other, forthcoming from the Transportation Research Board, is a comprehensive assessment of all the issues that must be addressed, both near-term and long-term, in transitioning to a VMT charge replacement of fuel taxes.

Is “Job Sprawl” a Problem?

As described in a news article by Mike Smith in the San Jose Mercury-News, a recent report from the Brookings Institution (“Job Sprawl Revisited,” www.brookings.edu) “sounds the alarm about the oozing spread of commercial development far from downtown areas served by transit.” I’m not sure if the term “job sprawl” was in common use before this report came out in April, but advocates of smart growth like the Greenbelt Alliance have quickly picked up on it.

My immediate reaction to this report and this term was great skepticism that “job sprawl” represents any kind of a problem. So I turned to my Reason colleague, urban policy director Sam Staley, for his take. His blog posting on the report (http://reason.org/blog/show/1007261.html) pointed out numerous problems. First, the report makes no attempt to demonstrate what it claims to be the case—namely, that metro areas with significant suburbanization of jobs have longer commutes and less economic growth. It provides no correlation between centralization and economic growth; for example, only two of the top five centralized metros are fast-growing, while three of the most decentralized (Chicago, Dallas/Ft. Worth, and Los Angeles) are.

Sam also points out that the report presumes it is distance from home to work that affects regional growth. He cites the evidence presented in his book, Mobility First, that it is actually travel time (providing easier access to labor and resources) that affects regional productivity. He also takes issue with the idea that the traditional central business district is the center of income and regional job growth, which he terms “a quaint 20th century notion of the urbanized area,” which “ignores all the relevant changes to urban spatial structure of the past hundred years.”

The Brookings report also relies on the reader assuming that “Living in a central city means living closer to work, shopping, recreation, schools, and other amenities,” as bizarrely asserted in the Center for Clean Air Policy’s report “Cost-Effective GHG Reductions through Smart Growth & Improved Transportation Choices.” Yet neither report presents any evidence to back up that claim.

In fact, the suburbanization of jobs is part of the natural evolution of urban areas, quite likely increasing job choice (in addition to choices of shopping, recreation, schools, and other amenities), in many cases reducing average commute times, and in some cases even reducing average commute lengths. As noted commuting analyst Alan Pisarski said in a recent lecture, “There is really nothing special or beneficial about a process in which suburbanites rush to the center each morning and return at night. A lower jobs/worker ratio in the center and a higher ratio in the suburbs as jobs shift outward would seem, at least on the surface, to provide a more positive context for work travel.”

Our decisions about urban transportation policy need to be based on solid data, not assertions and wishful thinking. “Job sprawl” is a kind of junk term, which does more to muddy our thinking than to clarify it.

Upcoming Conferences

Note: I don’t have space to list all the transportation conferences going on; below are only those that I or a Reason colleague are speaking at:

2009 Transportation Research Board Joint Summer Conference, Seattle, WA, July 19-22, 2009, Seattle Sheraton. Details at: www.trb.org/calendar.

ARTBA Public-Private Ventures Conference, Washington, DC, Sept. 24-25, 2009, Loew’s L’Enfant Plaza Hotel. Details at www.artba.org.

News Notes

New Pricing Report from FHWA
Another in FHWA’s series of primers on congestion pricing has appeared. “Technologies that Complement Congestion Pricing” is just what its title suggests. Go to: http://ops.fhwa.dot.gov/publications/fhwahop08043/cp_prim_00.htm.

FHWA Guidebook on HOV to HOT Conversion
I only recently came across FHWA’s June 2007 report, “Considerations for High Occupancy Vehicle (HOV) to High Occupancy Toll (HOT) Lane Conversion Guidebook,” with lots of useful information based on the first generation of such conversions. Go to: http://ops.fhwa.dot.gov/resources/news/news_detail.asp?ID=552.

CRS Carbon Tax Report Availability
The excellent report from the Congressional Research Service that I wrote about in the May issue of this newsletter can be downloaded from:
http://assets.opencrs.com/rpts/R40242_20090223.pdf.

Mileage-Based User Fee Proceedings Available

A symposium on mileage-based user fees (also known as VMT fees) was organized by the Texas Transportation Institute in April, in Austin, TX (and my Reason colleague Adrian Moore was one of the speakers). The proceedings are now online at:
http://utcm.tamu.edu/mbuf/proceedings/.

Moore Appointed to California PIAC

Speaking of Adrian Moore, last month he was appointed as a member of the new Public Infrastructure Advisory Commission, created by the enabling legislation for California’s new PPP toll roads law. PIAC is charged with identifying privatization opportunities, developing best practices and lessons learned from elsewhere, reviewing proposed privatization agreements, and providing advice and services to the Business, Transportation and Housing Agency (parent of Caltrans). Further information at: www.publicinfrastructure.ca.gov.

Corrections to URLs in June Issue

Two errors crept into URLs that I provided in the June issue; my apologies. For the FHWA report on equity and congestion pricing (part of the Congestion Pricing Primer series), go to:
www.ops.fhwa.dot.gov/publications/fhwahop08040/cp_prim5_00.htm

And for the report on federal transit subsidies by mode, go to:
www.heritage.org/Research/SmartGrowth/bg2283.cfm

Follow-up on Katy Managed Lanes

Last month I reported on the changes in operating policy that took place between the initial planning for the new managed lanes on the expanded Katy Freeway (I-10) in Houston and its opening to paying customers this spring. Mark Burris of Texas Transportation Institute emailed to say that the decision to allow HOV-2 vehicles to use the lanes at no charge during peak periods came from a county judge, rather than from the transportation agencies involved.

First Express Lanes Demonstration Program Agreements

Four years after Congress created the Express Lanes Demonstration Program, authorizing states to add electronically tolled express lanes on federal-aid highways, Texas DOT and FHWA have signed agreements for two such projects. Both are in the Dallas/Ft. Worth area and both are being developed under long-term toll concession agreements. The projects will add congestion-priced managed lanes to the LBJ Freeway (I-635) and create the North Tarrant Express lanes on I-820 and SH 183.

Toronto Highway 407ETR Wins PPP Award

The Canadian Council for Public-Private Partnerships in June announced its 2008 National Awards for Innovation and Excellence in PPPs. Four of the five were highway projects, including the highly successful 407ETR in Toronto, the world’s first all-electronic toll road. Profiles of the winning projects are available in a 145-page softcover book at $79.95 for non-CCPPP members. Details at: www.pppcouncil.ca/pdf/pubflyer.pdf

World Bank Report on Avoiding Infrastructure Boondoggles

This is not a new report, but I only recently came across it. “Avoiding Customer and Taxpayer Bailouts in Private Infrastructure Projects,” by David Ehrhardt and Timothy Irwin is a thoughtful and well-researched report on how to address questions such as leverage, risk allocation, and bankruptcy in large PPP infrastructure projects. It is illustrated with case studies of four transport projects and one electricity project. Go to: www-wds.worldbank.org

Quotable Quotes

“While high speed rail will generally have superior travel times compared with automobile or bus travel for trips greater than 100 miles—depending on the service—it is difficult for a high speed rail service to compete with the low price of bus travel and the convenience of automobile travel and, therefore, it is not likely to attract a sufficient number of these travelers to have a significant effect on highway congestion and capacity in a corridor.”
--“High Speed Passenger Rail: Future Development Will Depend on Addressing Financial and Other Challenges and Establishing a Clear Federal Role,” Government Accountability Office, March 2009 (GAO-09-317)

“Under a mammoth carbon-emissions bill now working its way through Congress, 85% of valuable permits to emit carbon dioxide (which might all have been auctioned) will be given away free. This creates a huge new pot of favors for government to hand out, and new incentives for businesses to lobby. It will be costlier to fix climate change, while harder to avoid political favor-trading.”
--“Piling On,” The Economist, May 30, 2009.

“If you didn’t auction the permits, it would represent the largest corporate welfare program that has ever been enacted in the history of the United States.”
--Peter Orszag, Director, Office of Management & Budget, in congressional testimony March 2009, quoted in “The Carbonated Congress,” Wall Street Journal, July 3, 2009.

“The current accepted wisdom about the need for a ‘performance-driven, outcome-oriented’ transportation program brings to mind a piece of advice I once received from a wise colleague: Do not advocate a policy that you could never hope to put into effect. Do not ask policy makers to do something outside the range of practical feasibility. . . . [S]ome of the goals advocated for the surface transportation program reflect more the advocates’ wishful thinking than achievable objectives. For example, the National Transportation Objectives Act of 2009 (HR 2724) proposes as one of its objectives a 16% reduction in per capita vehicle miles and a tripling of ‘walking, biking, and public transportation usage.’ There is no attempt by the authors of that bill to explain how and why they have chosen these particular targets, nor to provide even prima facie evidence of the feasibility of achieving these objectives.”
--C. Kenneth Orski, National Journal Transportation Blog, week of June 15, 2009

“Suppressing travel is not an answer; if your transportation goals can be met by everyone staying home, you have the wrong goals.”
--Alan Pisarski, author of the Commuting in America series, collected wisdom, July 2009.

Airport Policy and Security Newsletter #47

bob.poole@reason.org (Robert Poole) — Sat, 11 Jul 2009 00:00:00 EDT

In this issue:

Mission Creep at TSA
Branson’s Radical Rethink of Airport Business Model
The Collapse of Clear
Follow-Up on Gatwick Airport Privatization
GA Airport Lease
News Notes
Quotable Quote

Mission Creep at the TSA

Two recent court cases have shined a spotlight on very troubling mission creep at the Transportation Security Administration, as pointed out in an excellent Wall Street Journal piece by Scott McCartney (July 2, 2009). Before discussing them, let me provide some context.

In general, law enforcement people cannot search you or your car or your house because you just might be doing something illegal. They either need a warrant or some kind of probable cause during an interaction with you. In responding to the attacks of Sept. 11, 2001, Congress decided that the threat of terrorism to aviation was sufficiently high to justify a narrow exception to that long-established principle. Because the threat was judged (correctly or not) sufficiently great, the newly created TSA was authorized to inspect the luggage of every single air traveler on commercial planes and to require every one of them to pass through a metal detector, as a condition of being allowed to reach the boarding area for flights. That’s a major departure from over 200 years of constitutional principle and legal practice.

But recently the TSA has begun moving beyond those limits. In one case, a passenger at Columbus, Ohio was selected for secondary screening because he’d purchased his ticket just before departure. He had a valid ID, had no weapons or other prohibited items in his luggage, and did not set off the metal detector. Despite the trace-detection swabbing of his carry-on turning up nothing, the officer opened his bag and found envelopes with cash and other envelopes with fake passports. On that basis, he was arrested. On appeal, U.S. District Court Judge Algenon Marbley ruled that TSA’s action violated the passenger’s Fourth Amendment right against unreasonable search and seizure. Prior cases, he said, clearly established that airport security searches are limited to detecting weapons and explosives.

The other case has not yet gone to trial. In this one, an officer of a political organization that evolved from the Ron Paul presidential campaign was detained by TSA at the St. Louis airport because he was carrying a lockbox with $4,700 in cash from the sale of T-shirts, bumper strips, and other political materials. Instead of answering their questions about the cash, he asked them the grounds on which they thought they could require him to answer such questions. He recorded the encounter on his iPhone, and on the basis of that recording, the ACLU has filed suit against Homeland Security Secretary Janet Napolitano. “Whether as a matter of formal policy or widespread practice, TSA now operates on the belief that airport security screening provides a convenient opportunity to fish for evidence of criminal conduct far removed from the agency’s mandate of ensuring flight safety,” says the ACLU.

It looks very much as if this is not a matter of rogue agents, but instead reflects genuine mission creep at TSA. The agency’s recent emphasis on “physical and behavioral screening” was defended by acting TSA Administrator Gale Rossides in congressional testimony just a few weeks ago. And the U.S. Attorney’s Office in Columbus has announced that it will appeal Judge Marbley’s decision.

Congress created the TSA to protect passengers and planes “against an act of criminal violence or aircraft piracy,” and it prohibited passengers from carrying a “weapon, explosive, or incendiary” onto a plane. It said nothing about cash or fake passports, nor did it give TSA the authority to act as police officers. It’s time for Congress to rein in its creation, before it does permanent damage to American liberty.

Branson, Missouri’s New Private Airport

In issue No. 36 (June 2008) I wrote about the successful financing and construction of a brand new airport to serve the country music tourist destination of Branson, MO. The airport opened on schedule this May, with two initial airline customers (AirTran and Sun Country). Because the airport was developed with private capital and no federal grants, it has far more commercial freedom than other airports, since it is not constrained by federal airport grant assurances. (It obviously must comply with all FAA and TSA safety and security requirements.)

So how different is Branson Airport LLC’s business model? An article in the June 2009 issue of Airport Business provides an in-depth look. As has already been fairly widely reported, in the absence of grant agreements, the airport can offer time-limited exclusives to the first airline that establishes service on a route to and from Branson. Instead of charging landing fees, it charges airlines a per-passenger fee that applies to all services—including ground handling. Hence, the airport company is has a financial incentive to expand the number of passengers, and to make sure they have a positive experience. So even though the airport has given an exclusive to Enterprise Rent-a-Car, it has an interest in making sure Enterprise does not charge monopoly rates.

Branson Airport LLC may be the first and only airport in America that paid for its own runway, control tower, instrument landing system, and everything else normally provided either by the FAA or funded largely with Airport Improvement Program grants. The tower is operated by Midwest ATC. The airport company has also created and operates its own fixed-base operator, Branson Jet Center FBO, offering fuel service, deicing, a GA terminal, and hangar space for private plane operators.

How did Branson Airport LLC put the funding together? The company raised a total of $155 million to build the airport. Of that sum, $115 million came from tax-exempt revenue bonds and $40 billion is equity put in by the founders. In order to issue tax-exempt bonds, the company needed a governmental issuer. So it made a deal with Taney County, giving it title to the airport’s land. The county created a transportation development district which issued the bonds and leased the property to the airport company for 50 years. (Had U.S. tax laws been more favorable to private infrastructure, the company would not have had to make this trade-off in order to get lower-cost financing.) One factor that makes the bonds more attractive to investors is an additional revenue stream besides what the company takes in from airlines, passenger retail sales, and its FBO: it has a 30-year deal with the city (which lives on tourism) under which the city pays the airport company $8.24 for every passenger it brings in. To the extent that the airport expands the tourism market, the city will benefit from increased sales tax revenue.

Creating a new airport from scratch is never easy, and places where the Branson model could be adapted may not be plentiful. But Branson Airport LLC is pioneering a dramatic new model of airport development.

Collapse of Clear: What Future for Registered Traveler?

Last month, shortly after the June issue of this newsletter reported passage of a House measure to turn the Registered Traveler program into the risk-based security program that Congress intended it to be, I was shocked to get an email announcing the shut-down of its business. (And this was only a few weeks after I’d renewed my membership for two years!). Evidently, the House action (not yet matched by the Senate) came too late to alter the economics of the business for Clear parent Verified Identity Pass. As the provider of RT services at 18 airports, it had large staffing expenses spread over not enough paying customers. Both new members and renewals were suffering, due to (1) the inability of Clear and other RT providers to offer hassle-free passage through screening checkpoints, and (2) the near-doubling of its membership fee level. For most potential customers, the value proposition just wasn’t there.

I’ve written at length over the last several years about how RT was intended to be a way of permitting the TSA to focus its screening resources on travelers who might actually be a threat to aviation security. As a recent report from the Congressional Research Service explained,
“Within weeks of the 9/11 attacks, the DOT’s Airport Security Rapid Response Team included among its recommendations the urgent need to establish a nationwide program for voluntarily submitting information for vetting passengers who would be issued ‘smart’ credentials, to expedite processing of the vast majority of travelers, thus allowing aviation security resources to be focused most effectively, an idea that became known as the ‘trusted traveler’ concept. The recommendation was reflected in statutory language and was included in the Aviation and Transportation Security Act.” (“Airport Passenger Screening: Background and Issues for Congress,” Congressional Research Service, April 23, 2009.)

But as we know, although the TSA initially performed a perfunctory background check on RT applicants, it never submitted their fingerprints to the FBI for the standard criminal history background check used to grant airport employees access to secure areas at airports. It eventually dropped even its perfunctory check, arbitrarily redefining Registered Traveler as an identification program, not a security program.

So what happens now? Most of the recent media coverage has been a lot of hand-waving about protecting the personal data on about 250,000 Clear members until it can be safely deleted from Lockheed Martin’s central data system. But deleting the data would be hugely premature. If the Senate concurs with the House language in requiring TSA to convert RT to its original purpose as a risk-based security program, that customer database will be a highly valuable asset. Aviation Daily reported on July 1st that Verified Identity Pass was working with secured creditors to assess whether any other companies might be interested in taking over the business. As long as the data are secure in Lockheed Martin’s hands, there is no need for haste. Let’s see if Congress can get RT back on track before deciding the fate of the data.

Reading the Tea Leaves on Gatwick Privatization

When I last reported on the pending sale of BAA’s London Gatwick Airport, BAA had received three bids, the amounts of which were not disclosed but which were rumored to be lower than the airport’s Regulated Asset Base of £1.6 billion ($2.4 billion). What follows comes from several published sources, but much of what they report is informed speculation and/or from unnamed sources.

The Financial Times on May 13th reported that the Lysander consortium, led by Citi Infrastructure Investors (and including Vancouver Airport Services, which had bid with Citi for Chicago Midway Airport) had been dropped, reportedly because its bid (generally estimated at £1.2 billion) was too low. A Citi spokesperson was quoted as objecting because their bid was the only one that was fully funded. A second bidder was later rejected, as well.

A May 25 report from TheDeal.com said that the word on the street was that Citi wanted a second shot, contending that BAA had been biased against it because of two previous deal failures—Midway and the Pennsylvania Turnpike. While the latter was purely political (the legislature failed to approve the needed enabling legislation to permit the Turnpike to be leased, and the Abertis/Citi consortium eventually withdrew their offer), the former was “an unfortunate combination of bad timing and miscalculation on Citi’s part,” said TheDeal.com. Citing unnamed sources, it claimed that the $2.5 billion deal structure for Midway included 40% equity (from Citi, John Hancock, and Vancouver Airport), $700-800 million in debt, and the balance from co-investors that included a Dutch pension fund, an Australian pension fund, and the Alaska State Pension Fund. It was the failure to secure these co-investors that led to the deal’s collapse, according to this report. The pension funds balked at the likely fall in value of the airport between summer 2008 when the bid was prepared and the early-2009 date for financial closing.

The most recent speculations are in a July 3rd article by David Bentley in Airport Business Daily . It cites a number of recent setbacks for the current Labor government—the failure on July 1st of the East Coast rail line, the postponement due to market conditions of a part-privatization of the Royal Mail, and the “survival mode” of the government after a recent drubbing in the elections for the European Parliament. The Royal Mail postponement, Bentley points out, strengthens BAA’s argument that now is not a good time to sell Gatwick, which BAA claims is worth less than half as much as two years ago. As it is, BAA has appealed to the Competition Commission, and the hearing on its appeal is set for October 19th. If it can prevail, on market-conditions grounds, then the remaining bid could be thrown out and a new auction held, perhaps in 2010.

So Citi Infrastructure Investors (which has yet to find a good investment for the estimated $4 billion that it has raised since 2007) and the others may get another shot at Gatwick.

FAA Approves Oceanside Airport Lease

On June 11th, 2009, the FAA approved a 50-year lease of the 50-acre general aviation airport in coastal Oceanside, California. The lessee is Airport Property Ventures, a startup company founded by several former airport managers. APV sees a great future in revamping money-losing GA airports, in effect turning sow’s ears into silk purses.

Under the deal APV reached with the City of Oceanside, the company will pay a flat monthly lease payment plus 40% of net income on all new development. The lease almost came unstuck, when the FAA viewed it as “privatization,” meaning the city would have to apply under the provisions of the Airport Privatization Pilot Program. But according to an article in North County Times, “The parties tweaked the language to get the agency’s consent” for treating it as a simple lease.

The principals of Airport Property Ventures are Jack Driscoll and Lydia Kennard, both former directors of Los Angeles World Airports, and Robert Clifford, a co-founder of American Airports Corporation, an operator of GA airports. In an interview in the January 2009 issue of Airport Business, Driscoll explained APV’s business approach. GA airports are typically a kind of stepchild to the city or county government that owns and runs them. “They are losing propositions for many of these cities.” But because they have received federal grants for many years, they have to remain in service as airports.

APV and its investors see potential in more-intensive development of often-underutilized GA airport land. “We want to maximize the aviation piece of it,” Driscoll said, and if there is excess property, work with the FAA to get permission to develop the rest commercially. And in those cases, rather than leasing that land to an outside developer, APV will develop it themselves.

While contract management of GA airports is not a new idea, it has not caught on as much as I’d thought it would when I first came across it 20+ years ago. I still think it has a lot of potential, and I’m glad to see another promising firm enter the field.

News Notes

Airport Privatization Update
Last December, in Issue No. 40, I wrote about World Airport Privatisation 2008 by David Bentley, the most comprehensive report on this subject in a long time. With the troubled credit market conditions of the last six months (including the collapse of the Midway Airport lease), Bentley decided it was time for an update. His new report, Airport Privatisation Update 2009 has just been released, offering 48 pages on a field that “is not yet down and out.” It’s available for US$100 from DJB Associates (www.djbassociates.webs.com).

MANPADS Defense in Israel
The Israeli government has decided to equip all commercial airliners based in that country with anti-missile defense systems of the directed infrared countermeasures (DIRCM) variety. The Ministry of Transport awarded a $76 million contract to Elbit Systems for a commercial version of the Elbit system used on military helicopters. Similar systems, made by Northrop Grumman and BAE Systems, have been tested on U.S. airliners. This might well be a prudent measure in Israel, considering the threats faced by that country. I don’t see it as setting a precedent for such equipage in this country.

Follow-up on Costs of New York Air Congestion
In the June issue I wrote about the excellent study from the Partnership for New York City, quantifying the cost of airport and airspace congestion and delays. In 2008 the cost to travelers, airlines, and shipping companies was estimated at $2.6 billion. Not included in the report was information on the size of the regional economy, to provide some context for this number. In response to my query, Merrill Pond of PFNYC tells me that the most recent figure they could find is $1.12 trillion, for 2006. So the congestion cost amounts to 0.2% of the regional economy--not as big an impact as you might expect, despite it being in the billions. The report also estimated the cost to users and to the regional economy from 2008 through 2025; that total is $95.6 billion, or an average of $5.6 billion per year or 0.43%. That’s hardly a trivial impact.

Low-Cost Carrier (LCC) Airport Near Paris?
AP reported (June 27, 2009) that low-cost carriers Ryanair and Wizz Air have expressed interest in plans to turn Airport Vatry, 100 miles east of Paris, into a hub serving LCCs. The airport, currently focused on air cargo, is near Reims, which is served by a TGV rail line offering 39-minute trips to Paris. Now dubbing itself “Paris Vatry,” the airport hopes to turn itself into a French analog of London Stansted, which primarily serves LCCs.

Aerobahn Serving Airlines at JFK
The Sensis Corp. Aerobahn system that I reported on last October after it was installed at JFK International in New York is now serving passenger and cargo airlines, as well as the airport operator, the Port Authority of New York and New Jersey. Aerobahn combines airline flight schedule information with real-time data from the airport’s ASDE-X ground surveillance system (which keeps track of aircraft location on the airfield). The aim is to reduce taxi times and surface delays, in addition to the usual ASDE-X function of increasing safety by preventing “runway incursions.”

Quotable Quotes

“[We have] decided to build everything, own everything, and operate like a business, without the restrictions and limitations that exist at other airports. I certainly believe there are things that can be learned from this project that can be applied to other airports. When this project proves itself, many municipalities will have to look at this model; and airlines will be interested in it as well. We strongly believe in the success of this model, and believe we are going to prove to the world that a private entity can run an airport, run it well, and be profitable at the same time.”
--Jeff Bourk, Executive Director, Branson Airport LLC, in Brad McAllister, “A Different Airport Model,” Airport Business, June 2009.

“Despite various efforts to improve checkpoint efficiency and reduce passenger wait times, checkpoint lines remain vulnerable terrorist targets for bombings, shootings, or the potential release of chemical or biological agents because they often consist of large congregations of individuals in the ‘non-sterile’ portion of the airport terminal, that is prior to screening for possible threat items. Inefficiencies at screening checkpoints that result in long screening queues and congestion in airport terminals introduce unique vulnerabilities.”
--Bart Elias, “Airport Passenger Screening: Background and Issues for Congress,” Congressional Research Service, April 23, 2009.

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Air Traffic Control Reform Newsletter #64

bob.poole@reason.org (Robert Poole) — Mon, 22 Jun 2009 00:00:00 EDT

In this issue:

More ATC Micromanagement
How Does European ATC Performance Compare to America’s?
Are Black Boxes Obsolete?
Outrageous Fabrication on ATC User Fees
News Notes
Quotable Quote

Congressional Micromanagement of ATC, Yet Again

On June 17, 2009 the FAA’s Air Traffic Organization switched on its new operation system, ERAM (En-Route Automation Modernization) at the Salt Lake City center. ERAM is the replacement for the obsolescent Host computer system used to control traffic at all 20 en-route centers. After thorough testing at Salt Lake and Seattle centers, the system will be declared operational there, and over the following 18 months will be switched on at the other 18 centers.

ERAM is a $2 billion Lockheed Martin effort that, in contrast to many previous large FAA procurements, is basically on time and on budget. Although conceived prior to NextGen, it is the key software platform on which key NextGen tools such as ADS-B and controller-pilot datalink will rest. Unlike Host, ERAM has an open architecture, which will make it much easier to add to and upgrade.

The Salt Lake debut took place despite a letter to FAA Administrator Randy Babbitt signed by both Utah Senators and two of its three Representatives in Congress. At the behest of controllers union NATCA, the non-expert legislators repeated NATCA assertions about the “stability of the system,”—as if any of them knew what that meant. But to serve their constituent labor union, they tried to insert themselves into a process they knew essentially nothing about.

Unfortunately, this kind of thing happens all too often. Practically any change in procedures, employment, or (especially) facilities leads to someone objecting, and to members of Congress intervening to one degree or another. Just sending a letter is relatively harmless (though such letters always carry the implied threat of legislative prohibitions or budgetary restrictions); sometimes legislators try diligently to block planned ATO decisions and actions (e.g., on outsourcing Flight Service Stations several years ago).

When Congress authorized creation of the ATO in 2000, the idea was to reform the management of the ATC system, allowing it to operate much like the high-tech business that it is. Yet what kind of business can operate with a “board of directors” made up of 535 members, most of whom know next to nothing about ATC but always seek to assist favored interest groups? This kind of continual micromanagement would drive any management team crazy, and I’m sure the dedicated leadership at the ATO is no exception.

And here’s another one to keep your eye on. As part of its process for bringing aviation weather information into the 21st century, the ATO is planning to eliminate on-site meteorologists from the National Weather Service (NWS) who currently staff offices at all 20 en-route centers. Real-time weather information would instead be provided out of two NWS centers, one in College Park, MD and the other in Kansas City, MO. As an ATO spokesman told the Washington Post, the current on-site arrangement is based on technology of the 1970s. Today, every en-route center “has up-to-the-minute weather from a variety of sources,” including Doppler radar and surveillance radar. And after all, one of the key precepts of NextGen is the concept of “system wide information management”—providing the same real-time information to controllers, pilots, and system managers. That includes weather information.

Needless to say, this does not sit well with the National Weather Service Employees Organization. Despite NWS’s no-layoff pledge, the union understandably does not want to see members have to relocate in order to keep their jobs. So they have tried to portray the consolidation plan as jeopardizing safety. Fellow union leader Pat Forrey of NATCA, in solidarity with the NWSEO, calls it “a foolish plan that puts cost savings ahead of safety,” and told the Post reporter that “we cannot believe such a reckless idea has gotten this far.”

I’m not aware of any congressional intervention on this one—yet. But I’m not holding my breath. If we can’t figure out a way to stop this kind of meddling, it will play absolute havoc with timely implementation of the enormously complex and disruptive paradigm shift called NextGen.

Is U.S. Air Traffic Control More Cost-Effective than Europe’s?

It’s quite likely that with 66 en-route centers (compared to our 20), and fragmented airspace, Europe’s ATC “system” (actually a collection of 38 ANSPs) must be less efficient than ours here in the USA. The new “Performance Review Report, 2008,” released in May by Eurocontrol, provides a wealth of information on the comparative performance of Europe’s ANSPs, as well as one chapter comparing some aspects of U.S. and European ATC performance. Alas, the Europe-US comparison does not extend to cost-effectiveness data.

But let’s look at what the data do reveal. One clue that, overall, Europe’s system is less cost-effective is the comparative staffing. While the 38 European ANSPs employ 17,000 controllers, the same as our ATO, total staffing is 56,000 in Europe versus 35,000 in the United States. Even if European unit labor costs are significantly lower, the total cost is almost certainly larger (to control about 55% of the IFR traffic). The United States also has more airspace sectors with high air traffic densities than Europe, though a few of the latter are as dense as our congested Midwestern sectors.

In terms of performance, for the 34 largest airports in each, Europe’s average flight has 94 passengers, vs. 72 in the USA. Runway utilization is about equal, but because our airports average more runways than Europe’s, our airports average 28% more annual passengers and 65% more annual flights than Europe’s. In terms of on-time performance, at the 34 largest airports, arrival delays are about the same, on average, but the USA does better on punctual departures. On the other hand, when delays do happen they are a lot longer in the USA, and the variability in arrival and departure times is larger in the USA.

When it comes to cost-effectiveness comparisons among European ANSPs, there is large variation among the 38 providers. Commercialization, which has been widespread in Europe over the past decade, has probably fostered the ongoing decrease in European ATC en-route cost per kilometer flown—an impressive 3.4% per year from 2003 through 2007. Due to the current recession, the report projects a slowdown in this downtrend, to an estimated further reduction of only 2.2% for the entire three-year period 2008-2010. And remember that this is a 38-company average; the average cost reduction would have been greater, had not one of the five largest ANSPs, Spain’s Aena, experienced a large increase in controller costs that was not offset by increases in productivity.

There are some older data on comparative (Europe/USA) cost-effectiveness, though not in the en-route sector of ATC. Back in Issue No. 28 (July 2005) I reported on the International Terminal Air Traffic Control Benchmark Study, jointly sponsored by Eurocontrol and the FAA. It examined matched pairs of terminal-area ATC facilities in the United States and six countries with commercialized ANSPs—Denmark, Germany, Ireland, Australia, New Zealand, and Canada. On average, the U.S. controllers handled 12.5% more traffic than their overseas counterparts, but at higher cost: $36 per air traffic movement in the USA versus $27 overseas.

I hope Eurocontrol’s next performance report will add cost-effectiveness comparisons for U.S. and European en-route air traffic control. My guess is that the trends will be opposite directions: while commercialized ANSP cost per movement has been declining, it has likely been increasing during the same period in the United States.

Are Airliner Black Boxes Obsolete?

One of the core concepts of the new paradigm for air traffic management, per NextGen and the Single European Sky, is network-centric information management. Aircraft will be equipped to generate and transmit, in real time, a lot more (and better) information than they do today, permitting far more precise tracking of exactly where they are at all times. That is the key to reducing spacing in all three dimensions, thereby making much more efficient use of airspace.

The loss of the Air France A-330 in the South Atlantic and—thus far—the inability to retrieve its cockpit voice recorder and flight data recorder (the black boxes) has led to considerable discussion among aviation experts about a high-tech alternative: real-time streaming of that kind of data to airline control centers on the ground. That way, the data on what happened would not be lost if the black boxes were destroyed or could not be located. Since air safety is generally enhanced by figuring out what went wrong in a crash, the result would be an increase in air safety.

But is it do-able, at an acceptable cost? Well, to begin with, nearly all airline aircraft (at least for major carriers) are already equipped with a system called ACARS, which transmits data about the status of various aircraft systems to its maintenance base. Reports on the Air France crash have recounted the kinds of information received from Flight 447 in its last minutes. But there is a much larger volume of data collected on the two black boxes, so having enough bandwidth to transmit all of that in real time is a potential problem. But data compression techniques exist, and a spokesman for Canada’s Aeromechanical Services has suggested that a system it makes could transmit 10 times as much data per second than the uncompressed data sent via ACARS. And spokesmen for black box makers Honeywell and L-3 Communications agree that this is a realistic prospect.

ACARS was developed by ARINC, and now both ARINC and competitor SITA offer various competing communications services. Given the importance of learning everything we can about the causes of crashes, this kind of real-time data-streaming—either to supplement or replace black boxes—should be seriously explored as part of NextGen.

Outrageous Fabrications on ATC User Fees

Somebody apparently bamboozled well-meaning volunteer pilots at the great organization, Angel Flight, into spouting anti-user-fee propaganda. I only learned about this via the email update service of the Aircraft Owners & Pilots Association (AOPA). I have no direct evidence that AOPA put these ideas into the Angel Flight pilots’ heads, but somebody did, and in an organized manner. Stories taking this line appeared on TV all over the country; I Googled “Angel Flight” and “user fees” and got 724 hits.

The two TV stories that AOPA linked to—one on San Diego’s NBC station and the other on the IndyChannel in Indiana—featured different pilots and medical patients, but had exactly the same story line. Each featured a heart-rending patient with a weak immune system who relies on an Angel’s Flight volunteer pilot with a single-engine plane to fly her to where she can get medical treatment. And in each case the pilot lamented the threat that the FAA will impose user fees on such flights, making them harder for the pilots to afford. The other stories, across the country, were quite similar—as if following a script.

And look at this ominous language from IndyChannel reporter Rafael Sanchez: “Right now, the pilots pay a federal tax on fuel, but the FAA wants to add a list of user fees to pay for air traffic control. They would include charges for every call to the tower for weather reports and during landing and take-off.” I’m sure Sanchez, who is just a reporter (as opposed to an aviation expert) simply took these points from the volunteer pilot that he interviewed. And that pilot evidently got them from some source that disseminated them widely among Angel Flight pilots. And whoever that may be is deliberately spreading falsehoods. As follows:

There is no FAA plan for user fees, only a White House budget proposal almost certainly drafted by OMB. To the best of anyone’s knowledge, so far that “plan” includes only annual revenue totals, aimed at covering the approximate annual budget of the ATO. No ATC user fee plan that has ever been put forward by the DOT or the FAA has ever applied to any general aviation aircraft, and certainly not to single-engine piston planes like those flown by most Angel Flight pilots. And no one, including me, thinks it would make sense to charge private pilots for weather reports or even to charge per-transaction fees of any kinds to the piston-engine segment of general aviation (as opposed to business jets). This kind of deliberate creation of fear and loathing among some of our most honorable private pilots—and the desperate patients--is outrageous and unconscionable.

News Notes

$2.7 Billion for EU ATC Modernization
Europe’s SESAR endeavor (counterpart of the U.S. JPDO) announced in mid-June the award of contracts worth $2.7 billion for initial technologies to modernize European airspace and air traffic management, in pursuit of the Single European Sky goal.

Europe’s First Integrated Airspace Block Announced
The governments of Denmark and Sweden have announced that they will integrate their airspaces in creating the first of a planned set of European Functional Airspace Blocks (FABs). The air navigation service providers (ANSPs) Naviair (Denmark) and LFV/ANS (Sweden) are creating the NUAC Company as a 50/50 joint venture. NUAC will plan and implement the FAB, providing for a single ANSP in one common airspace.

Follow-up on eLoran as GPS Backup
Despite OMB having zeroed out funding for eLoran in the Administration’s proposed FY2010 budget, the Senate Commerce, Science, and Transportation Committee in mid-June voted to restore eLoran funding. It added $37 million to the Coast Guard’s budget to enable the continued modernization of existing Loran stations to eLoran, the designated backup system for GPS.

Mexico’s ANSP Joins CANSO
Servicios a la Navigacion en el Espacio Aereo Mexicano (SENEAM) in June became a full member of the Civil Air Navigation Services Organization (CANSO), the global trade association for ANSPs. SENEAM began life as RAMSA (Radio Aeronautica de Mexico, SA), a nonprofit airline-owned company created following World War II with assistance from ARINC (which pioneered ATC on that basis in the United States in 1935).

Followup on Virtual Tower at Aspen
The FAA has approved the proposal by Aspen-Pitkin County Airport to use closed-circuit video cameras to monitor the south end of its runway, rather than building a much taller control tower when the runway is extended by 1,000 feet. This is an important step in the direction of the “virtual tower” concept, one of the building blocks of NextGen.

No Rate Increase at Nav Canada
As of now, commercialized ANSP Nav Canada can afford to hold off on any increase in user fee rates for the balance of 2009, the company announced on June 17th. Nav Canada has achieved enough operating cost savings--$20 million in fiscal 2009—to preclude the need for a rate increase, despite this year’s decrease in air traffic. The company also reported that it is close to achieving its target of $94 million set aside in its rate stabilization account, a rainy day fund on which it can draw during downturns to minimize the need to increase user-fee rates at times when customers can least afford them. That target represents 7.5% of recurring expenses.

More CDAs, Says IATA
The International Air Transport Association has called for expanded use of Continuous Descent Approach landing procedures in Europe. While only five such airports today can handle CDAs, IATA wants to see this number increased to 29 by year-end, and to 100 by 2012. CDAs rely on advanced technology to permit smooth, continuous descents at minimal power settings, saving time and fuel.

Quotable Quote

“Imagine, for a moment, how our air traffic system might have evolved differently throughout aviation’s first century if pilots were given direct access to highly accurate airborne surveillance of their surrounding traffic, regardless of visibility, range azimuth, or altitude. It raises all sorts of interesting questions on how roles, responsibilities, and even basic procedures might have developed differently. Would controllers still be providing traffic separation as one of their primary functions, or would this function have become merged with pilot responsibilities for flight safety, such as terrain and weather avoidance? Assuming the latter case, the interaction between pilots and controllers could have developed quite differently regarding the basic management of trajectories. Would controllers still be authorizing each change to the trajectory, or would pilots have more authority and operational flexibili ty to make ‘autonomous’ changes within certain limits?”
--David J. Wing, guest editor, “Foreward: Airborne Separation Assistance System,” special issue of Air Traffic Control Quarterly, Vol. 17, No. 1, 2009 (www.atca.org)

Airport Policy and Security Newsletter #46

bob.poole@reason.org (Robert Poole) — Mon, 15 Jun 2009 00:00:00 EDT

In this issue:

Registered Traveler Breakthrough
Airport Parking Privatization
New York Airport Congestion
TSA Backs Off on Private Pilots
New Frontier for U.S. Airports?
News Notes
Quotable Quote

Breakthrough for Registered Traveler Program

The bill the House passed earlier this month to reauthorize the Transportation Security Administration contains big news for the Registered Traveler program. If the Senate follows suit, RT could be turned into what it was originally intended to be—a risk-based program that enables TSA to re-focus its screening resources away from lower-risk travelers. That would mean a faster and less-hassle trip through airport security for potentially millions of RT members like me.

As you may remember, in 2001 when Congress enacted the Aviation & Transportation Security Act creating the TSA, it explicitly called for the new agency to establish a “trusted traveler” program to expedite the screening of those passengers who pass a background check and enroll in such a program. As pointed out in the report on the current bill from the House Committee on Homeland Security, “Congress had intended for such trusted traveler programs to be utilized as a risk-management tool.”

When TSA created the Registered Traveler (RT) program, it initially used the information on people’s application forms to do a “security threat assessment” consisting of checking the applicant’s name against a wants & warrants database, an immigration database, and its own terrorism watch list. It never submitted the applicant’s fingerprints to the FBI, however, for a criminal history background check, which is done routinely for those airport employees who must be cleared via this check in order to have unescorted access to secure portions of the airport at which they work. I pointed out this double standard in Issue No. 40 (Nov./Dec. 2008). TSA actually stopped doing even the wants & warrants and immigration checks in 2007, arguing that RT is merely an identity verification program, not a security program, and rescinding the charge it had levied on RT service providers for that minimal background check. Consequently, RT members must still go t hrough the identical checkpoint screening process as ordinary travelers—which saves TSA no resources that it could apply to beefed-up security elsewhere.

What the House measure does is require the TSA, within 120 days, to convert RT into a risk-management tool by reinstating a threat-assessment program for RT applicants, to be supplemented by private-sector background checks carried out by RT providers. But it also gives the TSA an out, if the Assistant Secretary of DHS determines that the revamped RT program cannot be integrated into risk-based security screening operations. A separate provision of the bill requires TSA to develop alternative screening procedures for those RT members who hold Top Secret security clearances, regardless of the agency’s decision regarding general revamping of the program.

One knowledgeable source tells me that the Senate Commerce Committee has in the past been supportive of RT as a risk-based program, so there is a reasonable likelihood of favorable action in the Senate, now that the House bill including the RT provisions has passed the full House. The only change I would recommend the Senate make is to include submitting RT applicants’ fingerprints to the FBI for the same criminal history background check that applies to airport employees.

As of now, RT is in operation at 21 U.S. airports, and the largest operator—Verified Identity Pass--has 260,000 members in its Clear program. Those numbers could soar if RT members could bypass much of the rigamarole at the security checkpoint.

Airport Parking: Next Up for Privatization?

Pittsburgh International Airport (PIT) has a problem. It put close to $500 million into building a new midfield terminal in the 1990s, mostly to serve US Airways, which maintained a large hub there. But after the 9/11 attacks, the airline downsized that hub, and dropped it as a hub altogether by 2004. That has reduced PIT’s enplanements from a peak of 20.7 million in 1997 to just 8.7 million in 2008. But with most of the bonded indebtedness still to pay off, PIT’s airline cost per enplanement last year was $15.80 (compared with only $5.98 in 2000). That makes it one of the most expensive U.S. airports for airlines to serve.

To get PIT out of this trap, Allegheny County executive Dan Onorato is proposing a long-term lease of the airport’s parking facilities to a private operator—13,200 spaces between garages and lots. His aim is to raise $500 million or more, all of it up-front (as in the City of Chicago’s recent leases of parking garages and parking meters). That would enable the Airport Authority to retire its entire $499 million worth of bonds. Debt service on those bonds is running $62 million per year, compared with about $22 million in annual parking revenue. Thus, the Airport Authority would for many years be saving a lot more in debt service expense than it would be losing in parking revenue.

Whether this would be a genuinely good deal depends on several factors. First is how much the lease would actually generate. An article in the Pittsburgh Post-Gazette quotes Merrill Stabile, president of parking operator Grant Oliver Corp., as saying that investment groups have recently paid 15 to 20 times earnings for parking facilities; he estimated parking at PIT could be worth $440 million. Two factors that would influence that value are (1) the length of the lease, and (2) what controls on parking rate increases would be included in the deal. From the airport’s standpoint, a lease term significantly longer than the term of its existing bonds might not be such a good deal.

Globally, there are well-established procedures for assessing the value of long-term privatization deals. Australia, Britain, and Canada all use a process called the Public Sector Comparator (PSC) to compare, quantitatively, the best-case public-sector model with potential private-sector deals. Chicago’s recent 75-year lease of its parking meter system for $1.2 billion was criticized in a report released this month by the city’s Inspector General Office for not having been analyzed via such a procedure. But the IGO report’s alternative calculation (which suggested that the city could have done better) failed to take into account the value of risk transfer to the private operator. In the case of parking facilities, the longer the lease term the greater the risk assumed by the lessee (e.g. that people will still be using cars and needing to park them in 50 or 75 years). And in the case of PIT, there is an obvious trade-off to be made in terms of making th e airport more attractive to airlines by getting its cost per enplanement way down versus giving up parking revenue for N years.

It’s also interesting to note that at the same time that Allegheny County is trying to lease its airport parking, the City of Los Angeles’s airport department is seeking to buy a 21-acre private parking operation directly east of LAX’s Terminal 1. The Park One property is for sale by AMB Properties Corp., and a Los Angeles Times story quotes one realtor as estimating the price could be in excess of $100 million. The facility has 2,720 spaces and is reportedly highly profitable.

New York Airport Congestion

How bad is congestion at the major New York-area airports? That’s the question the Partnership for New York City set out to answer, in a follow-up to the 2006-07 debates over congestion, delays, runway pricing, and slot auctions. It commissioned HDR Decision Economics to research the question, and the result was released in February 2009 as “Grounded: The High Cost of Air Traffic Congestion.” (www.pfnyc.org)

The report, which appears to be competently done, is something of an eye-opener. New York airport congestion has a number of costs, the principal ones of which are estimated as follows:

Lost time to air travelers was $1.7 billion in 2008, and over the period 2008-2025 will likely total more than $50 billion. Airline costs (wasted fuel and excessive crew time) were $834 million in 2008 and will total $25 billion between now and 2025. Freight shippers lost $136 million in 2008, and will lose a total of $4 billion by 2025. Productivity losses to the regional economy were estimated at $21.5 billion over the 2008-2025 period. And additional emissions generated by planes in long lines waiting to take off are estimated to cause harm estimated at $1.7 billion of this time period. That’s a huge price tag, in anybody’s book. So now that we know how bad the impact is, how should those affected deal with this costly congestion?

The introduction of the report created big expectations for me, saying the Partnership “wanted to determine whether investing in expansion of regional airport capacity and upgrading the air traffic control system to reduce flight delays would pay off for the region and the nation.” It follows this by saying that “The findings of this study clearly show that such investment is more than justified by the cost burdens resulting from inefficient and unpredictable passenger and air freight service due to congestion.”

I read on eagerly, hoping to find conclusions and recommendations calling for bold expansion plans—perhaps terminal expansion at LaGuardia to permit larger passenger volumes that would be consistent with “up-gauging” the average passenger capacity of planes using that airport or possibly the 2008 Reason Foundation proposal for adding a closely spaced parallel runway at JFK (www.reason.org/news/show/1002975.html).

Alas, what I got was a set of very modest incremental improvements: improve ground traffic management, speed up the use of RNAV (area navigation) departures, redesign the region’s airspace (already under way by the FAA), implement NextGen capabilities in the ATC system and on airliners, and (a direct result of the previous measure) reduce excess spacing between aircraft on approaches to the airports.

The report also includes a provocative statement that “All travelers, other things being equal, would prefer to arrive at their destinations more quickly, and almost all would be willing to pay something more to make that happen.” Indeed, the cost of passenger delays in the report was estimated using FAA air-traveler value of time figures. But instead of taking this point to its logical conclusion—runway congestion pricing—the report just drops it.

In fact, as George Donohue and Karla Hoffman found when they ran a strategic simulation game in cooperation with the FAA, airlines, and the Port Authority of New York and New Jersey, runway congestion pricing at LaGuardia would lead to significant up-gauging of aircraft there, making better use of its scarce and valuable runway capacity (www.reason.org/news/show/1002846.html). There is good reason to expect the same to be true of JFK and Newark. Runway pricing would not only reduce delays without reducing passenger throughput; it would also generate additional airport revenue that could help pay for terminal and runway expansions in the Port Authority’s airport system.

TSA Backs Off on Private Pilots

For months, the general aviation (GA) community has been complaining, with some justification, about a TSA security directive (SD-8F) that was going to impose burdensome requirements on private pilots using any of 400-odd commercial airports. In order to have unescorted access to the airfield at such airports, they would have to undergo a background check and obtain and wear an ID badge, just like airport employees. And if those badges were airport-specific (as many feared there would be) this would play havoc with the typically unscheduled nature of most GA activity.

In addition to objecting to the burdensome nature of the proposed requirements, the GA organizations also complained that TSA was issuing a new regulation simply by decree, rather than going through the typical federal procedure of publishing a notice of proposed rulemaking (NPRM) in the Federal Register and inviting comments from interested parties.

Recent weeks have brought two important changes, generally welcomed by the GA community. First, TSA issued a revised directive (SD-8G) easing the burden. As long as a private pilot stays near his/her plane or goes to and from the fixed base operator (FBO) office or the airport exit, no badge or background check is required. This will ease the burden on those flying into airports they are not based at. Those who are based at a commercial airport and lease space there (whether in a hangar or simply a tie-down) will need to get a badge for that airport, but this requirement can be waived if the airport provides an alternative acceptable to the TSA, such as an escort program.

The second change is included in the TSA reauthorization bill passed by the House June 4th. One provision of the bill tells TSA that security directives (like SD-8) should be used only in response to emergencies or immediate threats. New regulations on aircraft operators should be introduced using the normal federal rule-making process.

Controlling access to the airfield has generally been one of the weakest links in TSA’s aviation security program. So while I’m glad that they are taking access control more seriously, I think they’ve made some sensible trade-offs in revising these new regulations.

Houston Pursues A New Frontier for U.S. Airport Operators

Few people were surprised when YVR Airport Services Ltd. turned up as part of the consortium that won the bidding for Chicago’s Midway Airport—or that it was part of a consortium bidding for London Gatwick Airport. Vancouver Airport Authority’s airport consulting and privatization division has become fairly well-known in aviation circles.

Much less visible, until recently, has been a similar U.S. company. Houston Airport System Development Corporation (HASDC) is a nonprofit corporation controlled by the city of Houston’s Houston Airport System, operator of the two commercial airports and one GA airport in Houston. It was set up in 1998 in response to a request from Bechtel for advice on a possible airport privatization deal in Mexico. HAS director Rick Vacar was made its managing director, with two outside directors, one appointed by the Port of Houston and the other by the Greater Houston Partnership. Over the years HASDC has done considerable airport consulting and been involved in consortia managing airports under contract, mostly in Latin America.

Last year, with overseas airport privatization opportunities proliferating, HASDC formed a joint venture with Airport Development Corporation, a for-profit company based in Toronto. HASDC has 51% and ADC has 49% of the new entity, ADC&HAS, Inc. The joint venture evolved out of the two having teamed several years earlier to win a long-term (35-year) concession in Quito, Ecuador. Under that deal, the company has been operating the existing Quito airport since 2002, while it builds the $600 million replacement airport at a lower elevation; the new airport is scheduled to open in 2010. The financing of the project has been provided primarily via loans from the Overseas Private Investment Corporation, though ADC put in $80 million in equity. HASDC gets a 25% stake in the concession as “carried interest,” representing its sweat equity in the deal. ADC&HAS has also joined forces with Canadian pension fund OMERS, which has about a decade of experience i n global infrastructure investing. OMERS has committed to provide up to $150 million in equity as the venture’s funding partner for various airport privatization projects.

In a long article in the January 2009 issue of Airport Business, Vacar discussed how the opportunity for Houston airport employees to be detailed to work on HASDC projects enriches their career experience. “People do it for the experience. They get an opportunity to get involved and show their stuff. It makes a big difference in what you get out of people. We’ve had some wonderful successes here.” HASDC president Gary Lantner added, “In the U.S., Denver is the last new airport built; before that, DFW in 1973. Quito is maybe the first time in this generation of airport people for them to be actually involved in a complete new start-up airport. If you’re an airport junkie, Quito is a heck of an opportunity.” (HASDC reimburses the city at 1.8 times an employee’s salary for time spent on HASDC business.)

Rick Vacar stepped down, unexpectedly, as CEO of Houston Airport System on May 15th. Airportbusiness.com reported (May 19th) City Hall sources as saying there had been friction between Mayor Bill White and Vacar. Whatever the reasons, I doubt we’ve seen the last of Vacar, and we can expect great things from ADC&HAS, Inc.

News Notes

Mechanics Who Can’t Read English
That was the headline on a story on the website of WFAA, Channel 8 in Dallas/Ft. Worth. Byron Harris reported on his investigation of some of the 236 FAA-certified aircraft repair stations in Texas. The May 16, 2009 story claims that “hundreds of the mechanics working in those shops do not speak English and are unable to read repair manuals.” Supervisors, who must be FAA-licensed Airframe and Powerplant (A&P) mechanics, must sign off on the work of non-licensed mechanics. English is the internationally accepted language of aviation, and the story raises serious questions about FAA oversight of repair stations. It also quoted insiders as saying inspectors warn repair stations in advance about inspections, and also cited mechanics being given tests in Spanish, at a facility that the FAA eventually shut down.

Correction re Amtrak Subsidy
In last month’s lead story on potential replacement of short-haul airline service with high-speed rail, I misquoted the net federal subsidy figure for Amtrak service. The correct number, from the 2004 US DOT study, is $186 per thousand passenger-miles. The DOT’s Bureau of Transportation Statistics has not updated its federal subsidy numbers, but a new report from the Heritage Foundation has re-done the analysis, using consistent data for all passenger transport modes covering years from 1990 through 2006. The latest available figure for Amtrak (inter-city passenger rail) is $238 per thousand passenger-miles. That compares with $4.23 for commercial airline service. (www.heritage.org/Research/SmartGrowth/bg2283.cfm)

Airport Privatization in Sweden
As in some other countries, until recently Swedish air traffic control and airports were run by a single government agency, LFV. Now that Sweden has commercialized LFV as the country’s air navigation service provider, it is selling off its airports. First to go was Jonkoping Airport, purchased by the city of Jonkoping. The five other regional airports—Angelholm Helsingborg, Karlstad, Omskoldsvik, Skelleftea, and Sundsvall Haomsand—are to be sold by the end of 2009. The six regional airports combined handled 1.3 million passengers in 2008.

House Bill Would Ban Body Scanning
The TSA reauthorization bill passed by the House in early June would restrict the usage of whole-body image equipment as a replacement for walk-though metal detectors. Responding to privacy complaints, the House voted 310-118 to require the TSA to use the devices only for secondary screening. Therefore, passengers with things like ceramic knives and plastic explosives under their clothing would not be detected when passing through screening checkpoints, unless they had been singled out for secondary screening.

Follow-up on MANPADS
An industry official (who requested that I not use his name) responded to my May issue article on MANPADS making several points. One was that many security officials acknowledge that these shoulder-launched missiles are so small that they cannot realistically be prevented from being smuggled into the country. And if one of those missiles is ever used to attack a U.S. airliner, the political response could be chaotic. He suggested that it would be prudent for the government, therefore, to at least equip several hundred airline aircraft that are enrolled in the Civil Reserve Air Fleet (CRAF) program and are used to ferry troops and cargo to overseas locations. That probably is a prudent measure, and at a cost of about $1 million per plane, would be a trivial addition to the defense budget.

Quotable Quote

“When we began to think of passengers as our customers too, it had a radical impact on our airports in terms of terminal design, investment strategies, our approach to our business partners, colleague engagement, and innovation. It is undoubtedly the key to our future success and that of our partners.”
--Geoff Muirhead, CEO of Manchester Airports Group, quoted in “Terminal Illness,” by Victoria Moores, Airline Business, June 2009.

Surface Transportation Innovations #68

bob.poole@reason.org (Robert Poole) — Thu, 11 Jun 2009 00:00:00 EDT

In this issue:

Performance-Based Transportation?
Learning from Overseas PPPs
Houston’s New Katy Managed Lanes
Fixing Both Highway and Transit Funding
Targeting VMT
Obama vs. the Beach Boys
Upcoming Conferences
News Notes
Quotable Quotes

Performance-Based Transportation?

“U.S. transportation policy needs to be more performance-driven, more directly linked to a set of clearly articulated goals, and more accountable for results.” It’s hard to disagree with these bold opening lines of the report from the Bipartisan Policy Center (BPC) National Transportation Policy Project, released earlier this week. “Performance Driven: A New Vision for U.S. Transportation Policy,” was released June 9th at a news conference in Washington (and is available at: www.bipartisanpolicy.org).

Much of the case it makes is unarguable—the existing federal policy has no focus, our infrastructure is inadequate, the funding is insufficient, there is little or no attempt to achieve positive returns on investment, and there is little or no accountability for results. So I agree that a better approach is called for. Only I don’t think the entire BPC package is it. Yes, I’m all for thorough streamlining of the sprawling federal program, for greater competition for funds, and for focusing on both preserving/rebuilding the existing system and adding capacity where it makes sense to do so. And I also agree that “the performance of the transportation system can be directly influenced by how users pay for it” and that we should “link revenue collection to system use and impacts.”

But a key recommendation of BPC’s package of recommendations is “mode neutrality.” Instead of highway user taxes being used just for highways, these funds would become general-purpose surface transportation money, usable for highways, freeways, urban transit, intercity passenger rail, freight rail, and even short-sea shipping (“all forms of freight transportation”). One of the two major programs would provide mode-neutral funding for urban transportation and the other for long-haul transportation. So the net result of all this is that highway users would be the ones paying the bills for federal funding of all the other modes.

The other problem with mode neutrality is that it is at odds with all BPC’s fine words about pricing and user-pays. The original federal highway program was, indeed, a true user-pays/user-benefits program. In principle, highway users could demand whatever level of highway services they were willing to pay for, via their fuel taxes—which could only be spent, by law, on highways. Thus, both the state and the federal highway programs operated somewhat like network utilities, albeit with indirect user charges rather than direct ones like electricity, gas, phone, and water bills. But once the fuel tax becomes a generalized funding source for all manner of things (as it is gradually turning into at the federal level, with only 60% of federal highway taxes actually spent on highways), the connection between use and payment becomes increasingly tenuous. Opening that pot of m oney to all forms of freight and passenger transportation would be the coup de grace for the user-pays/user-benefits system. And as a practical matter, without a massive increase in the fuel tax level, allocating the relatively fixed pot of fuel tax money among many additional claimants virtually guarantees that much less would be left to rebuild and modernize our vitally important highways.

And that is true regardless of how many clever ideas BPC and other advocates of performance-based transportation put forward—benefit/cost analysis, new performance measures, etc. In the last reauthorization, Congress passed a number of programs that were supposed to fund strategically important projects—and then promptly earmarked every single dollar in those programs to projects of their own political choosing. And how they screamed when the US DOT under Mary Peters scrounged up close to $1 billion (from 13 existing programs) for truly competitive, performance-based Urban Partnership grants!

Needless to say, I am all in favor of performance-based funding, wherever this can possibly be done. But throwing out—rather than strengthening—the user-pays/user-benefits principle is too high a price to pay. A better course would be to shame Congress into creating accountable, performance-based funding within existing modal programs.

Learning from Abroad: Highway PPPs Overseas

Some of the recent U.S. debates about public-private partnerships for highways sound as if the idea was brand new, untried, and hence inherently risky. Yet long-term concession agreements under which the private sector can design, finance, build, operate, and maintain major highways, bridges, and tunnels date back to the 1960s in Europe and the 1990s in Australia. We can learn a tremendous amount from the experiences of our counterparts overseas. At the Transportation Research Board annual meeting in January, I attended a presentation on a study tour on the overseas PPP experience, organized by AASHTO and the FHWA as part of the National Cooperative Highway Research Program. The report on this study tour, “Public-Private Partnerships for Highway Infrastructure: Capitalizing on International Experience,” was published in March 2009 (FHWA-PL-09-010).

The group, representing FHWA and four state DOTs, visited Australia, Portugal, Spain, and the United Kingdom in the summer of 2008. These countries have been doing PPPs long enough that the team was able to learn about second-generation and even a few third-generation projects. Their general findings include the following:

Highway PPPs are used not simply for financial reasons but are selected on a value-for-money feasibility analysis basis.
PPPs are a critically important and growing percentage of national highway networks.
Highway PPPs do not necessarily require tolls; some are based on shadow tolls and/or availability payments.
The public sector mindset and skills for PPPs differ substantially from those needed for conventional project delivery. A successful long-term PPP agreement must balance technical, commercial, and legal considerations. Public agencies recognize that a PPP arrangement is, in fact, a long-term partnership with the private sector founded on a contract.

The descriptions alone of how these four countries have adapted general PPP principles to their circumstances are worth the price of admission. But the report goes on to report numerous useful findings about methodology in selecting, negotiating, and managing long-term PPP arrangements. I should add, because this point is much-argued about in the United States, that the report’s statement that the longest concession term they observed was 50 years, with most running 30 to 40 years, is true of the countries they visited. France, which they did not visit, has a number of bridge and tunnel mega-projects with terms of 70 or more years.

This very brief article cannot begin to do the report justice. If you are involved in any way with policy relating to highway PPPs, this report is must-reading.

The Virtual Exclusive Busway—Not Quite

In April an ambitious Managed Lanes facility opened in the median of the Katy Freeway in Houston. Instead of the previous single-lane reversible HOT lane (under which HOV-3s went free and only HOV-2s were allowed in as paying customers), the newly rebuilt Katy Freeway sports two full MLs in each direction. Single-occupant vehicles pay a variable toll, starting at between 60 cents and $1.60 during peak periods and just 30 to 40 cents off-peak. HOV-2s go free during peak periods, but pay the toll like everyone else off-peak. (Yes, I know that seems backwards, but that’s the policy they’ve adopted.)

Even with these limitations, the Katy MLs represent a net improvement for Houston commuters—yet this project was intended to be more than that. When the Harris County Toll Road Authority (HCTRA) and Houston Metro signed the original Memorandum of Understanding with Texas DOT in 2002, the Katy Managed Lanes were going to be America’s first such facility to use both occupancy levels and variable pricing to ensure uncongested mobility for both transit buses and motorists. The agencies agreed that the Managed Lanes would be operated at Level of Service C (high-volume but uncongested flow). Metro would be guaranteed up to 25% of the facility’s capacity for buses HOV-3s and buses; all other vehicles would pay the variable toll. And to maintain LOS C conditions in the future, Metro and HCTRA each agreed to do its part. If level of service started to decline because Metr o’s users were exceeding 25%, it would increase HOV occupancy requirements. And if LOS declined due to too many paying vehicles, HCTRA would increase the toll rate. I was so impressed by this approach that I described it in detail in a Reason Foundation policy study, dubbing the Katy MLs America’s first “virtual exclusive busway.” (www.reason.org/news/show/127674.html)

Well, between 2002 and 2009 when the lanes were built and ready to begin charging tolls, a long series of public meetings and debates took place. Earlier on, all vehicles were going to be required to have transponders, but eligible HOVs would be charged zero tolls during peak periods. But by January of this year, that provision was dropped. And HCTRA itself—looking at all that new lane capacity—decided that it could at least start off with HOV-2s going free during peak periods. And that’s the form in which the Katy MLs opened to paying customers in April.

With all these changes taking place, I presumed that the original MOU must have been modified. My request for a copy produced instead the “Katy Toll Facility Operating Plan,” dated March 3, 2009. It is duly signed off by all three agencies that agreed to the original MOU. Under “Level of Service,” it spells out HCTRA’s obligation to vary the tolls, per the original MOU provisions. But it is silent on any possible future changes to occupancy requirements, or on any guarantee of 25% of capacity for Metro’s buses and carpools.

So while I congratulate TxDOT, Metro, and HCTRA on the successful completion and start-up operation of an important new Managed Lanes project, I’m disappointed that it did not end up being the virtual exclusive busway breakthrough that I’d been looking forward to.

Fixing Both Highway and Transit Funding

It’s been widely reported that, just like last year, the Federal Highway Trust Fund is going to run out of money before the end of the federal fiscal year. The fix being talked about, like last year, is an emergency infusion from the general fund, thereby adding another $5-7 billion to the federal budget deficit.

The cause of this shortfall is no great mystery. If you’ll recall the last reauthorization debate, the transportation committees in Congress (especially in the House) were determined to greatly increase the size of the program, but the White House had promised to veto any fuel tax increases. So Congress compromised, pushing the promised funding level as high as they possibly could, by making “rosy scenario” assumptions about fuel prices, driving, and the state of the economy. Whoops! Last year’s high oil prices caused people to cut back on driving, meaning fewer gallons were sold than had been projected, and the subsequent recession caused people to economize on driving for a different reason. Both factors translated into lower fuel tax receipts. Meanwhile, the backlog of highway maintenance and repair, let alone long-needed expansions, continues to increase. And the Obama administration has “taken a gas tax increase off the table.”

Meanwhile, transit systems nationwide are making a big push for increased funding, based partly on last year’s ridership increases (which the recession seems to be reversing) and decades of deferred maintenance. With no fuel tax increase in sight, and both highway and transit groups proposing increased funding, how can this circle be squared?

My friend and colleague Alan Pisarski last week proposed what I think is a very promising—if radical—idea. “If we are going to need an infusion from the general fund, and we also need more total funding, why not ‘resolve’ the question of share by avoiding the question? Transfer the transit program 100% to the general fund and use all the Highway Trust Fund for highways. It might be a win-win.”

A few years ago this idea might have been dismissed out of hand, primarily because it would have been considered too risky for the transit community. After all, it took until 1964 to get even general fund money for transit, and it was considered a great breakthrough for transit when a transit account was created as part of the Highway Trust Fund (HTF) in 1982. That permitted highway user-tax money, for the first time, to be spent on transit. Because funding highways was popular, any expansion of the HTF would mean an increase for transit, too. And back then, highways were considered far more popular than transit.

That was then, this is now. In the age of energy insecurity and fear of global warming, transit is the cause du jour for many elected officials. It’s quite possible that transit would fare better if it did not have to fight with highway interests for its portion of HTF funding. A Congress eager to showcase its green credentials might want to re-position transit as an energy/environment/housing program, funded (like those programs) out of general revenues. Currently transit gets about 20% of HTF dollars or around $8 billion. Shifting that amount to highways would more than cover the current shortfall. Yet replacing that $8 billion for transit would be a rounding error in the federal general fund.

Making this change would restore the original user-pays/user-benefits principle to the Highway Trust Fund. And if highway users could be assured that all of their fuel-tax dollars would actually be spent to maintain and improve the highway system, they just might be more comfortable with increasing the fuel tax rate. And by restoring the integrity of the highway fund, this change could help pave the way for eventual transition to a highway VMT fee as the fuel tax’s replacement.

Targeting VMT: A Terrible Idea

One of the most troubling ideas gaining a head of steam as we approach reauthorization is that a key transportation performance measure should be reducing vehicle miles of travel (VMT)—either in toto or per capita. The logic behind this idea is that using petroleum fuel is bad, and emitting CO2 is bad, so transportation funding and programs should deliberately aim to reduce VMT, in order to advance those other goals.

This idea has been percolating at the Brookings Institution and among any number of environmental groups, and it’s also being heavily promoted by the America 2050 project (backed by the Rockefeller Foundation, the Regional Plan Association, and the Lincoln Institute of Land Policy, among others). But what really caused alarm among transportation people was the release last month by Sens. Jay Rockefeller (D, WV) and Frank Lautenberg (D, NJ) of their Federal Surface Transportation Policy and Planning Act of 2009 (S.1036). The first of its major goals for federal transportation policy is “Reduce national per capita vehicle miles traveled on an annual basis.” It also calls for government-set targets for shifting freight from road to rail.

Putting these idea into legislative language has started to arouse transportation interest groups, as well it should. First out of the box was the American Highway Users Alliance, which sent a strong letter of opposition to every member of the Commerce Committt, including Chairman Rockefeller. I’m expecting AAA, ATA, ARTBA, AASHTO, and others to join in the opposition, once they realize the implications of this proposal.

I’ve written about VMT restrictions at greater length in my May column for Public Works Financing (posted at www.reason.org/news/show/1007715.html). Suffice it to say that if the goal is to reduce CO2 or petroleum use, Congress should target those things directly. The idea that reducing Americans’ mobility is a sensible or cost-effective way to reduce greenhouse gases has no empirical support. Indeed, I challenge any proponent of the idea to come up with evidence that it would cost less than the $50/ton of CO2 removed ceiling suggested by McKinsey and many others as a benchmark for “affordable” greenhouse gas reduction measures. (My guess is that it would cost thousands of dollars per ton.)

Mobility is the purpose of transportation. Its benefits, both for individual well-being and the health of the economy, are enormous. Let me once again recommend to you the excellent book, Mobility First, by my Reason colleagues Sam Staley and Adrian Moore (Rowman & Littlefield, 2009), which explores this idea in some detail. As we head into reauthorization, our watchword should be: “Reduce CO2, not mobility.”

“Obama vs. the Beach Boys,” Revisited

As a long-time Beach Boys fan, and as still a bit of a car buff, I was intrigued by this headline on Daniel Henninger’s Wall Street Journal column of May 28, 2009. Basically, the column was a lament for what Henninger sees as the passing of America’s car culture, as most recently epitomized by the idea that the Obama administration’s new 39 mpg CAFÉ standard is an “everybody wins” policy.

Henninger’s reasoning is that the advent of 39 mpg cars means the end of enthusiasm for cars as glamorous, high-performance vehicles—not simply a mundane means of getting from A to B. That car culture was, of course, exemplified by numerous songs, not only by the Beach Boys but by Chuck Berry, Bruce Springsteen, The Who, Deep Purple, and many others.

But are things as bad as all that? I still pick up Car & Driver from time to time, and there is certainly no shortage of exciting, high-performance cars today. Not only expensive Corvettes and BMWs but also sporty roadsters like the Mazda Miata and the new Hyundai Genesis. To be sure, the market for those cars might be reduced once the new CAFÉ standards are fully implemented, but I also question Henninger’s assumption that glamour and performance are inextricably linked with the internal combustion engine.

Way back when, I took a test drive in the ill-fated GM EV-1. Yes, its lead-acid battery pack was ridiculously inadequate for a serious production car. But the high-torque electric motor really peeled out! And take a look at the June 8, 2009 issue of Forbes, with its cover story on forthcoming electric cars, including the stunning high-performance Fisker (on the cover) and Tesla. These entrepreneurs aren’t aiming to build nerdy little econo-boxes; if they live up to their builders’ claims, these will be stylish, high-performance drivers’ cars. (And I can hardly wait till the prices get down to my range!)

I think Henninger greatly underestimates the appeal not only of personal mobility but also of driving a superbly performing vehicle. The internal combustion engine is no longer the be-all and end-all of auto-mobility. But cars—really good cars—will be with us for a long, long time.

Upcoming Conferences

I don’t have space to list all possible transportation conferences of interest; those listed here are only ones that a Reason colleague or I will be speaking at.

The Future of Tolling: ORT and the Path to Interoperability, Tampa, FL, June 14-16, 2009, Grand Hyatt Tampa Bay. Details at: www.ibtta.org/Events/eventdetail.cfm?ItemNumber=3616.

2nd International Symposium on Freeway and Tollway Operations, Honolulu, HI, June 20-24, 2009, Hyatt Regency Waikiki. Details at:
http://2isfo.eng.hawaii.edu/registration.html.

4th U.S. Infrastructure Investment Summit, New York, NY, June 24-25, 2009, Millenium Hotel. Details at: www.iqpc.com/us/infrastructure.

American Legislative Exchange Council (ALEC) Annual Meeting, Atlanta, GA, July 15-18, 2009, Hyatt Regency Atlanta. Details at www.alec.org.

2009 Transportation Research Board Joint Summer Conference, Seattle, WA, July 19-22, 2009, Seattle Sheraton. Details at: www.trb.org/calendar.

News Notes

Correction Re Bingaman-Grassley Bills
I led off last month’s article on the anti-privatization bills filed by Sens. Bingaman and Grassley with the words that they had been introduced “at the behest of the trucking industry.” This brought a sharp retort from an old friend at ATA, who pointed out that the bills stemmed from a Senate Finance Committee hearing on tax aspects of highway privatization held last summer, at which ATA had not even testified. And while ATA is supporting the bills, he denied any involvement in drafting them. I should not have jumped to the conclusion that ATA’s support meant they were the driving force. Moreover, ATA is on record supporting PPPs for new highway capacity, as long as various public-interest protections are included in the long-term concession agreements.

New Value Pricing Grants Announced
The Federal Highway Administration’s Value Pricing Pilot Program last month announced its first grants of 2009. They include support for studies of priced lanes on two more Minnesota highways (I-94 and TH 77), implementation of managed lanes on SR 237 in Silicon Valley, a study of GPS-based truck pricing in the Buffalo, NY area, and a $1.3 million study of a system of express toll lanes in the greater Seattle metro area.

New Book on Traffic & Revenue Forecasting
Former Standard & Poors analyst Robert Bain has produced a very useful short book on the pitfalls in doing (and using) traffic and revenue studies for toll projects. It explains the methods used and the kinds of things that can lead to the forecasts going off-track. Though based on considerable expertise, it’s accessible to the intelligent non-specialist and is not full of equations. Since tolling is an increasingly important force in transportation, this book is recommended for transportation planners as well as financiers. Toll Road Traffic & Revenue Forecasts: An Interpreter’s Guide, by Robert Bain, priced at €29.95. Details at: info@robbain.com.

Equity and Congestion Pricing
As part of its new Congestion Pricing Primer series, the FHWA has released “Income-Based Equity Impacts of Congestion Pricing.” It’s an excellent overview of what we have learned about this issue, from the academic literature as well as the results of projects implemented under FHWA’s Value Pricing Pilot Program, Urban Partnership Agreements, and Congestion Reduction Demonstration Program.
(www.ops.fhwa.dot.gov/publications/fhwahop08040/cp_prim5_00.html)

Updated Federal Subsidy Data
I have several times referred to a landmark Bureau of Transportation Statistics report, “Federal Subsidies to Passenger Transportation,” released by the US DOT in December 2004. It calculated net federal subsidies per thousand passenger miles for automobiles, inter-city buses, airlines, general aviation, urban transit, and Amtrak. Unfortunately, BTS has not updated those numbers. But a new report from the Heritage Foundation does just that, while correcting a methodological error in the original that exaggerated the modest subsidy for inter-city bus. The report is “Federal Transportation Programs Shortchange Motorists: Update of a USDOT Study,” by Wendell Cox and Ronald D. Utt, June 8, 2009, and is available at:
www.heritage.org/Research/SmartGrowth/bg2283.pdf.

Quotable Quotes

“The whole idea of a highway system as a user-financed system gets turned on its head [if highway funds are used for freight rail projects]. We shouldn’t be fighting over that pot of money because they don’t pay into that pot of money. There’s no rail tax that goes into the Highway Trust Fund, so there shouldn’t be a fight about money. We’ve been fairly open about our willingness to be paying additional tax to support the program, but we want to make sure that those revenues are going to addressing highway freight bottlenecks.”
--Timothy Lynch, Senior VP, American Trucking Associations, quoted in “Untangling the Chicago Knot,” The Journal of Commerce, April 20, 2009.

“It must be agreed that the target is fuel use and related emissions, not the existence of transportation services, per se. Therefore, [passenger miles traveled] and ton miles of travel should not be the surrogate targets for reductions. . . . Perhaps transportation, being a means to other ends, makes it easier to be more casual about reductions without a real sense of what is being lost. It may be reflective of other agendas at work. Many of the state pronouncements on GHG targets, specifically VMT, can be seen as mostly aspirational, often with little or no foundation or understanding of the social or economic implications of their actions. It is clear that transportation expertise and experience were not engaged in these expressions of sentiments. The chairman of the President’s Council on Environmental Quality had it right when he stated: ‘There is a stunning degree of innumeracy when it comes to the numbers surrounding climate change legislation.’ An important role for transportation professionals is to replace that innumeracy with something more substantive.”
--Alan Pisarski, “The Nexus of Energy, Environment, and the Economy: A Win, Win, Win Opportunity,” ITE Journal, January 2009.

“At one of our dinners, Milton [Friedman] recalled traveling to an Asian country in the 1960s and visiting a worksite where a new canal was being built. He was shocked to see that, instead of modern tractors and earth movers, the workers had shovels. He asked why there were so few machines. The government bureaucrat explained, ‘You don’t understand. This is a jobs program.’ To which Milton replied, ‘Oh, I thought you were trying to build a canal. If it’s jobs you want, then you should give these workers spoons, not shovels.’ But in the energy industry today, we are trading in shovels for spoons.”
--Stephen Moore, “Missing Milton: Who Will Speak for Free Markets?” Wall Street Journal, May 29, 2009.

Air Traffic Control Reform Newsletter #63

bob.poole@reason.org (Robert Poole) — Tue, 26 May 2009 15:21:00 EDT

In this issue:

GPS backup getting more attention
ATC user fees: one more time?
Steps toward “virtual towers”
ATC modernization progress in Europe
News Notes
Quotable Quotes

GPS Backup Issue Heating Up

In an ironic coincidence, the same day in May that the Government Accountability Office testified about its new report (GAO-09-325) warning of potential gaps in coverage by the GPS satellite-based positioning system, the Obama administration confirmed that it planned to cancel the officially approved backup system for GPS. The proposed budget zeroes out the legacy Loran-C, which the Coast Guard has been upgrading for several years into enhanced-Loran (eLoran), approved in early 2008 as the official backup system. What had been an obscure inside-the-beltway debate over GPS backup suddenly began receiving national attention.

The NextGen revamp of the ATC system depends critically on precise position and timing signals from the constellation of 24 GPS satellites. That's true of ADS-B, RNAV, RNP, and a number of other critical tools. Yet it's well-known that GPS is vulnerable to intentional and unintentional interference. Plus, as the GAO has now pointed out, because of delays in Air Force procurement and launch of its next generation of GPS satellites, there is a non-trivial risk that the number of functioning satellites could decline from the needed 24 to as few as 18 by 2017, then slowly build back to 24 by 2022. While that is a worst-case scenario, it is even more serious if there is no GPS backup in place.

After I last wrote about this issue, I got some flak from airline pilot readers telling me they already have backup capability, provided by triply-redundant on-board inertial navigation systems. Moreover, the FAA maintains a network of ground-based distance-measuring equipment (DME) stations that can assist planes not equipped with inertial nav.

That's true but irrelevant, for two reasons. First, the need for GPS backup extends far beyond aviation: it includes 911 emergency response location, cell phone timing, electronic financial transactions, freight logistics tracking systems, maritime navigation, and (oh, yes) national defense. And that's not counting numerous individual uses. Second, in terms of DME, that is one of the costly-to-maintain legacy systems that NextGen was supposed to permit phasing out; that's part of the business case for Next Gen.

These points were all addressed in a 2007 study commissioned jointly by the Departments of Transportation and Homeland Security to review the case for eLoran as the principal GPS backup. The Institute for Defense Analysis formed an Independent Assessment Team (IAT) for this purpose. They reviewed all prior studies on GPS backup, each of which considered only a single user-group's needs (such as aviation). Their conclusion: "The IAT unanimously recommends that the U.S. Government complete the eLoran upgrade and commit to eLoran as the national backup to GPS for 20 years." (italics in original)

That finding led to an announcement by the Department of Homeland Security on Feb. 7, 2008 stating that as of that date, "[DHS] will begin implementing an independent national positioning, navigation, and timing system that complements" GPS and that this system would be eLoran. But sometime between then and now, I'm told by a well-informed source, a group within the Office of Management & Budget, which has been aiming to de-fund Loran-C for many years, evidently persuaded their higher-ups to zero out Loran in the President's budget proposal, taking eLoran with it.

Everyone with a stake in GPS's ongoing viability should be speaking out and lobbying to reverse this decision. The amount of money is trivial; IAT's worst-case estimate of the cost is the current Coast Guard $37 million/year plus another $20 million/year for five to eight years to complete all upgrades, add new transmitters, and jump-start deferred maintenance. These costs should be split between DOT and DHS. You should read the IAT report yourself, to be well-armed for this debate. Until very recently, it was not available, but a Freedom of Information Act request succeeded in springing it loose, and you can find it at www.loran.org.

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ATC User Fees: Back on the Agenda

"The Obama administration is proposing to cover most of air traffic control system costs with user fees, beginning in Fiscal 2011, a major change from the current excise tax-based system. [That] system generated $12.4 billion in 2008, and one scenario would see $9.6 billion collected in user fees in 2011. Generally, the administration wants funding linked more closely to costs, and costs ‘distributed more equitably.'"
--Aviation Daily, front page, May 11, 2009

Needless to say, I am pleased to see the new administration re-opening this debate. Besides summarizing several key arguments in favor of making this shift, I will also offer some suggestions on "getting to yes" among aviation stakeholders.

The most immediate reason for the aviation community to support this proposal is plummeting revenue for the Aviation Trust Fund, whose source is the "tried and true" aviation excise taxes staunchly defended by our friends in the general (AOPA) and business (NBAA) aviation communities. The big kahuna of those fees is the airline ticket tax. Thanks to decreasing air fares, the average domestic airline "yield" in March 2009 was 13.3 cents per revenue passenger mile—about 14% lower than March 2008. Since ticket tax revenue is a percentage of the ticket price, that equates to considerably less revenue from that source. Vaughn Cordle of Airline Forecasts LLC projects that total 2009 Trust Fund revenue (from all sources) will be lower than last year by 12.5%. The GAO, in testimony on March 10, presented a graph showing a seven-year decline in the Trust Fund's uncommitted balance, and warning that "in the longer run, co ntinued declines in Trust Fund revenue may require Congress to reduce spending on FAA operations and capital projects . . ." (GAO-09-435T).

An ATC funding system in which the revenue from fees closely tracked flight activity (rather than air fares) would be immune to the ups and downs of ticket prices. And on a longer-term basis, that stream of user-fee revenues could readily be bonded, to provide large sums of up-front money for major NextGen capital expenditures. Commercialized air navigation service providers (ANSPs) like DFS in Germany, NATS in the U.K., and Nav Canada all issue revenue bonds based on their user fee revenue streams, and all maintain investment-grade ratings. The Mineta Commission in 1997 recommended giving the ATO bonding authority, based on transaction-based user fees.

The Mineta Commission also explained that ATC fees like those used nearly everywhere else in the world would provide useful incentives for aircraft operators to make more efficient use of the airspace. For example, as Clint Oster and John Strong point out in their book Managing the Skies, under the current U.S. ticket tax system, for a 300-mile flight a 737-300 pays $777 for ATC, while a CRJ-200 regional jet pays only $267. Under Nav Canada's weight-distance user-fee system, the 737 would pay $674 while the CRJ would pay $319. Those would not be huge changes, but they could well make a difference at the margin, leading to some "up-gauging" by airlines (in which one 737 flight might replace several CRJ flights, reducing airspace congestion). The GAO has made the same point. The average number of airline seats per aircraft mile has been in a long decline since1982, and a shift to user fees might arrest th at trend, with positive consequences for congestion.

And transaction-based ATC fees could also help solve one of NextGen's toughest problems: getting aircraft owners to shell out for the needed on-board equipment to enable them to benefit sooner from NextGen (which will permit a lot of ground-based navigation aids to be phased out, resulting in longer-term cost savings). With an ATC fee system, it's feasible to give discounts for properly equipped aircraft, as overseas ANSPs are doing.

OK, you may say, those are legitimate benefits. But the reality is that AOPA and NBAA will fight tooth and nail to prevent such a change, as they always have (and are already doing thanks to the Obama budget announcement). How do we deal with that? I addressed that question in a dinner speech I gave in March at the FAA/NEXTOR NextGen workshop at Asilomar. It will appear late this month in the new issue of the Air Traffic Control Association's Journal of Air Traffic Control. (www.atca.org) The short version goes like this.

Transforming ATC funding should also mean transforming ATC governance—or as they said in Canada in bringing about the transformation to Nav Canada and the concomitant switch from ticket taxes to ATC fees—"user pay means user say." That means aviation customers, who would be expected to pay the fees, need to demand that they have a major say in the structuring of those fees and the uses of the revenue. That means a real board, with more than just advisory power, that fairly represents all customers—airlines of various types, business aviation, and general aviation.

Second, the restructuring needs to create genuinely win-win opportunities for all stakeholders. Because of the long, bitter history surrounding proposals for ATC fees, some hold-harmless principles would need to be set forth at the outset—such as no transaction-based fees for piston planes and an ability-to-pay formula for airlines and business jets, similar to the weight-distance formulas used by most ANSPs worldwide. Some kind of assistance with NextGen equipage could be part of the package, also.

I don't know if the administration realizes what it will take to make this happen, but if they are serious, this reform needs to have visible White House backing, so that Secretary LaHood and Administrator Babbitt can be seen as having marching orders to bring all the parties together to thrash out a workable proposal. As I said in my NEXTOR speech, this administration was elected on a platform of change. And ATC is one area that's desperately in need of change, not just in technology and procedures but also in governance and funding.

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Steps Toward the Virtual Tower

One of the key concepts being developed under the NextGen paradigm shift is the "virtual tower." What this means is that in the future, an airport that needs control tower services might not have to have a tall structure on-site, staffed with air traffic controllers. Instead, thanks to much-improved sensors and communications, those functions could be performed elsewhere, relying on visual and other data from the airport itself. Thus, relatively low-activity tower functions might be provided from one location for multiple smaller airports. Or all tower functions for the airports in a particular region could be co-located in that region's TRACON. Two recent developments suggest movement in those directions.

The first comes from Sweden, courtesy of the March 2009 issue of CANSO News. Swedish ANSP LFV that month carried out the first test of a virtual tower operation, directing the landing of a Swedish Coastguard aircraft at Angelholm airport from a control room at Malmo airport, 100 km. away. The technology, which involves nine high-resolution cameras at the remote airport (including one with zoom capability), was developed for LFV by Saab Group. A planned upgrade will enable the controller to track and label objects on the screen (in addition to having a panoramic visual display). This demonstration was the beginning of a three-year proof-of-concept project on the "remote tower" concept, as it is called in Sweden. LFV is particularly interested in this approach, since the country has a large number of isolated airports, which are costly to staff (and at which the controllers may feel isolated).

Closer to home, a step toward a virtual tower is under review by the FAA for the Aspen-Pitkin County Airport in Colorado. Because of its high altitude and short runway, on hot summer days, planes face weight restrictions that often mean they cannot carry a full passenger load. (In 2008, 11,774 seats could not be sold, due to such restrictions.) Hence, the airport is studying a runway extension, most likely of 1,000 feet. But its current 42-foot control tower is already not in compliance with today's FAA line-of-sight requirements. Building a tower high enough for the longer runway could mean a $20 million project for a tower up to 188 feet tall.

Or—possibly—it could mean equipping the runway with a camera system that permits operations to continue from the existing tower. An early-May story in the Aspen Daily News reported that an FAA decision is expected by June.

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Further Modernization Progress in Europe

While there is still a long way to go in creating a truly "single European sky" equipped with NextGen-type procedures and technology, tangible steps continue to be taken. Late in March, the European Parliament revised and then overwhelmingly adopted package II of the Single European Sky agenda. SES II consists of two sets of regulations, the first dealing with "performance and sustainability of the European aviation system" and the second on "aerodromes, air traffic management, and air navigation services." Among the changes made by the Parliament was to provide for a system coordinator for the Functional Airspace Blocks currently being negotiated among ANSPs and their governments. These new regulations are to be fully implemented by June 2012.

Early in May the 38 member countries of Eurocontrol took the very tangible step of committing €700 million (about $1 billion) to SESAR, the Single European Sky Air Traffic Management research effort. The SESAR Joint Undertaking consists of 16 organizations from both public and private sector—including Eurocontrol and the European Commission, a number of ANSPs, aerospace firms including Airbus, ground equipment makers such as Thales and Frequentis, avionics firms such as Honeywell, and representatives of European airports.

And progress is continuing on the Functional Airspace Blocks. On May 18th, the ANSPs of the U.K. and Ireland (NATS and IAA) published their three-year plan for the UK-Ireland FAB. It will be overseen by an FAB Management Board chaired jointly by the two ANSPs and including airline and military customers from both countries. Three working groups are addressing airspace design, service delivery, and safety. So far, 30 operationally based service improvements have been identified, half of which are to be implemented by the end of 2009.

The real test for the FABs will be whether there is serious consolidation of airspace and facilities independent of national borders. Only in this way can significant cost savings and productivity increases (e.g. air traffic movements per controller) be achieved. I'm a skeptic on this, but would love to be proven wrong.

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News Notes

Congratulations, Randy Babbitt. The FAA finally has its new Administrator, veteran pilot and aviation businessman Randy Babbitt. A Floridian, Babbitt was a long-time pilot for Eastern Airlines and eventually became president of the Air Line Pilots Association. He later founded Eclat Consulting, an aviation research and data firm that was acquired by Oliver Wyman in 2007. I've only met him once, when we both served on the advisory board overseeing a global study on ATC commercialization several years ago. He was also a member of the National Airline Commission (the "Baliles Commission") in 1993 and later of the FAA's Management Advisory Council. This background makes Babbitt highly qualified for his new position as FAA Administrator.

Challenge to Business Jets Community. My article in the March issue of this newsletter challenged the business aviation community to help repair its fat-cat image by supporting the $25/turbine IFR flight NextGen fee proposed by Sen. Rockefeller. Professional Pilot asked me to expand the idea into a two-page commentary, and the resulting piece appears in their May issue. (www.propilotmag.com)

Another Controller Contract Agreement. Airservices Australia and its controllers' union have reached agreement on a new three and a half year contract, ratified by 95% of the membership. The new contract provides for annual pay increases of 4.3%, accompanied by changes in sick leave and rostering arrangements aimed at increasing productivity. Airservices is the commercialized ANSP for Australia.

New Award to Nav Canada CEO. The Canadian Aeronautics and Space Institute (CASI) has announced the recipient of its 2009 C. D. Howe Award for achievements in planning, policymaking, and leadership in Canadian aeronautics and space activities. Nav Canada CEO John Crichton was selected for the award due to two achievements: (1) planning and developing commercial air routes in the Canadian north during the 1980s at First Air, and (2) the creation and growth of Canada's commercialized ANSP, Nav Canada. The award was presented at the CASI Senior Awards Gala Dinner on May 6, 2009.

CANSO Members Win Jane's Awards. Commercialized ANSPs garnered several honors in the Jane's ATC Global Awards, presented in Amsterdam on March 18, 2009. The Service Provision award went to the ASPIRE Partnership of Airservices Australia, Airways New Zealand, and the FAA, which is applying advanced technologies to reduce fuel burn and CO2 emissions on Pacific routes. Kazaeronavigatsia and Lockheed Martin won the Enabling Technology award for modernization of ATC in Kazakhstan. ANS CZ, Austro Control, HungaroControl, LPS, Slovenia Control, and the ANSPs of Bosnia-Herzegovina and Croatia won the Contribution to European ATM award for their work on the Functional Airspace Block for Central Europe. Associate (non-ANSP) members Boeing and QinetiQ Airport Technologies also won awards.

Risk-Based "Global Entry" Expands. In previous issues I have contrasted the TSA's Registered Traveler program with the Customs & Border Protection's Global Entry program. Both are open to people who submit data for a background check, and if passed, receive a biometrically encoded ID card allowing them speedier passage at airports. However, the TSA does not actually do a background check on RT applicants, which is why members must go through exactly the same passenger and baggage screening at airports as non-members. By contrast, CBP's Global Entry is a risk-based program, and those accepted can re-enter the United States from airline trips abroad (at participating airports) via quick-service kiosks, rather than waiting in long lines to show their passports to an Immigration official. And last month the U.S. government signed an agreement with The Netherlands to allow reciprocal privileges between Global Entry and the Dutch equivalent, called Privium. Since TSA and CBP are both under th e new leadership of the Department of Homeland Security, perhaps there's still hope to turn Registered Traveler into the kind of risk-based program it was originally intended to be.

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Quotable Quote

"Aircraft weight is seen as a simple means of approximating value of service. Airlines include value of service in their pricing. A ‘seat is not a seat' even in the same cabin on the same flight, although the airline cost per passenger is essentially the same. Prices can vary depending on time purchased, duration of stay, available ‘seat sales,' and so on. This is ‘yield management.' . . .So why is this so controversial for [ATC] service provision? It has long been crucial at ICAO to encourage countries to develop financially independent entities for [ATC], but some customers argue that since the cost does not change appreciably for the ANSP, all aircraft should pay the same fee, no matter the size of the aircraft. However, service providers worldwide treat cost recovery as meaning that in total, they recover all costs for a given service (e.g., en route and terminal). This is then distributed among users, most using the weight factor as a form of capturing the value of service, i.e., those who derive more value from a flight are asked to pay more."
--Glen McDougall, "Is a Blip Just a Blip?" The Controller, March 2009. (published by the International Federation of Air Traffic Controllers' Associations, www.the-controller.net)

"The development and deployment of NextGen will require a series of incremental changes that must be demonstrated and tested to help ensure that they do not degrade the safety of current systems. Developing the evidence for regulatory bodies and for the public that these incremental changes are safe will be time-consuming, costly, and difficult."
--Gerald Dillingham, Director, Physical Infrastructure Issues, GAO, Responses to Questions for the Record, House Aviation Subcommittee, March 10, 2009.

"[Commercialization of Nav Canada] has had an enormous impact. We are in a much better position to respond quickly to evolving requirements and to support infrastructure enhancements by obtaining the appropriate financing, once viable business cases are made. We had some challenges in the early years, but now we're positioned to make effective change. Through a lot of hard work on the part of employees, we have created a results-driven structure."
--Rudy Keller, Vice President, Operations, Nav Canada, Direct Route, Spring 2009, p. 2.

"The recent trial environmental flights, AIRE and ASPIRE, across the North Atlantic and Pacific, respectively, are also examples of what can be done, and the savings in fuel and CO2 that can be made, using the existing technology. In addition to tailored departures and arrivals, the aircraft taking part in those trials were fed dynamic weather information, allowing them to alter their route to avoid bad weather and take advantage of winds. What is remarkable about that is the realization that this is not the case for all [airline] aircraft today. At the moment, aircraft routinely fly for 14 hours with more than 350 lives at stake with exactly the same weather information that you and I use to decide whether or not to take an umbrella when we go to work. And the information is about as up-to-date. But as the test flights have shown, that need not be the case. And it can be done today. Adopting these sorts o f changes will also have capacity implications. There is no reason to continue to use minima and separation standards from 1950. If we updated the standards to what aircraft can do now, we could significantly increase throughput."
--Andrew Charlton, "ANSPs at the Crossroads: Where to from Here?"Aviation Advocacy, April 2009

Airport Policy and Security Newsletter #45

bob.poole@reason.org (Robert Poole) — Thu, 21 May 2009 14:10:00 EDT

In this issue:

Short-haul flights vs. rail
Airport privatization after Midway
MANPADS defenses—not needed?
Airport landing slots in Europe
The Maginot Line of airport screening
Feedback on FAMs vs. FFDOs
News Notes
Quotable Quote

Replacing Short-Haul Air Travel?

"Let's end air travel of less than 500 miles," proclaimed Pennsylvania Gov. Ed Rendell, speaking at the America 2050 conference in New York City on April 17th. That was just one day after President Barack Obama announced his vision for high speed rail. "Imagine whisking through towns at speeds over 100 miles an hour, walking only a few steps to public transportation, and ending up just blocks from your destination." Such a system, he said would reduce travel times, increase mobility, reduce congestion, boost productivity, reduce destructive emissions, and create jobs. Whew!

Because I research and write about surface transportation policy in addition to aviation policy, I know quite a bit about inter-city rail, high-speed and otherwise. For this brief article, let me confine my comments to two questions. First, could inter-city passenger rail do what Gov. Rendell and President Obama say it could? Second, should we make the attempt?

Let's address the second question first, as a question of broad public policy. Once you dig down into the details of what transportation infrastructure costs and who pays for what, you find a fundamental difference between the currently dominant modes of inter-city travel—driving and air travel—and passenger rail. The infrastructure of the former are paid for almost entirely by their users, via federal and state gasoline taxes (and some other motor vehicle taxes) in the case of highways, and via airline ticket taxes and passenger facility fees in the case of air travel (airports and the air traffic control system). By contrast, for passenger rail, the entire cost of creating the infrastructure is paid for by non-users (general taxpayers), and the rail passengers pay only a portion of the operating costs via their ticket prices.

Therefore, proponents of replacing short-haul airline service with inter-city rail are calling upon general taxpayers to create and continually subsidize a transportation mode that is aimed at taking business away from unsubsidized airlines (and motorists driving their own cars on highways that their user taxes are paying for). As one example of the difference in general taxpayer support for these inter-city passenger modes, consider the following statistics. These come from a report produced by the U.S. DOT's Bureau of Transportation Statistics.

"Federal Subsidies for Passenger Transportation" computed net federal subsidy as total federal outlays for a mode minus federal receipts from transportation taxes and user fees paid by users of that mode. For Amtrak, the subsidy turned out to be $186 per thousand passenger miles. For highways that are part of the federal highways system, the comparable figure was minus $2 (i.e., federal highway user tax receipts totaled slightly more than total federal highway outlays). For airlines, the net subsidy was $6 per thousand passenger miles. So the federal subsidy per passenger mile for inter-city rail was found to be 31 times as much as the subsidy per airline passenger mile.

I think that puts a very heavy burden of proof on passenger rail proponents to justify massively subsidizing a mode of transportation designed to take business away from essentially self-supporting, tax-paying airlines. Now let's briefly address the question of whether new inter-city rail of the kind the new Administration plans to subsidize can do the kinds of things Rendell and Obama implied it would do.

A viable alternative to air travel for 300-500-mile trips? Certainly, in the dense Northeast Corridor for trips that are mostly downtown to downtown. But the geographic reality of most of urban America today is that most jobs are not in traditional central business districts; over the past 40 years jobs have followed residences to the suburbs, in Edge Cities and Edgeless Cities. But rail lines serve stations in central business districts, which is not where most people need to go. That also calls into question the potential travel time savings.

As for emissions, most of the actual rail lines to be aided by the new federal program use (and will continue to use) diesel locomotives, not exactly a low-emission power source. The only current plan for truly high-speed rail—California's—would be electric powered. Yet contrary to early claims of its proponents about huge reductions in greenhouse gases, the actual impact of the proposed system (if it achieves the unbelievably high traffic projections put forth by its proponents) would be to provide just 1.5% of the total GHG reductions in California's ambitious GHG reduction plan (and at a cost/ton of between $2,000 and $10,000, versus the generally accepted ceiling of $50/ton).

I understand that some directors of congested major airports would be happy to see short-haul and commuter flights replaced by more lucrative long-haul flights. But that's unlikely to happen. And it's also worth remembering that for airports that operate as connecting hubs, many short-haul flights feed long-haul flights. So unless the new-rail plans bring high-speed rail directly to airports (which is not in the plans, leaving travelers to take expensive cab rides), that vital feeder function would be lost, to the extent that rail did substitute for air service in 300-500-mile markets.

If you're interested in reading more about the proposed California rail system, take a look at the detailed "due diligence" report Reason Foundation had two rail experts prepare last year. Go to www.reason.org/news/show/1003044.html.

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After Midway Deal Collapse, Whither Airport Privatization?

In the month since the $2.5 billion lease of Midway Airport collapsed, due to the winning bidder's inability to put together the financing package, I've been asked repeatedly what this may portend for the future of U.S. airport privatization. To answer this question, it's important to try to understand what happened between the time the MIDCo team submitted its winning bid last September and mid-April when the plug got pulled. What happened was the credit market collapse.

At the time of MIDCo's bid, I was hardly alone in thinking that $2.5 billion was a very aggressive valuation for an airport with no room to add capacity, albeit classed by the FAA as a "large hub" in a still-growing metro area. In 2007-08, leases of existing transportation infrastructure assets were being financed largely by debt (e.g., the Chicago Skyway and Indiana Toll Road). Deal structures of 15% equity and 85% debt were not uncommon. But when credit suddenly got hard to get, banks and revenue bond providers started requiring a lot more equity. (This is akin to home lenders requiring much larger down payments.) Example: late last year a Spanish company acquired several existing toll roads in Chile, and needed 41% equity to close the deal. MIDCo's dominant member was Citi Infrastructure Investors, an infrastructure equity fund. If it had based its calculations last summer on 15% or 20% equity, with the rest coming from various lenders, it may have b een reluctant to put in 50% or more, if that's what lenders were demanding by this spring.

My suspicions were confirmed when the same MIDCo players (Citi, John Hancock Life Insurance, and Vancouver Airport Services), operating as Lysander Gatwick Investment Group, put in a $1.8 billion bid for London Gatwick Airport this spring. That would have been a better use of a good-sized chunk of the equity in Citi's infrastructure fund, given Gatwick's potential for a second runway and new service thanks to the break-up of BAA's near-monopoly on air service to Southeast England. But alas for the Lysander Group, their bid was rejected earlier this month.

Getting back to what happens post-Midway, there are several implications. First, the other governments contemplating leasing airports under the federal Pilot Program (in Austin, Hartford, Jacksonville, Kansas City, Long Beach, Milwaukee, Minneapolis, New Orleans, Ontario) will now have to consider more realistic valuations as they weigh the trade-offs. Second, unless Chicago comes back to the FAA with a new proposal, it will vacate the one slot in the Pilot Program reserved for large hub airports, potentially opening the door for other large cities. And as long as the fiscal crunch for state and local governments continues, we can expect elected officials to continue eyeing asset sales and leases as potential balance-sheet strengtheners.

I have just completed writing a global wrap-up on airport privatization, for Reason Foundation's annual privatization report for 2009. It is due out by mid-July. When you read that, you will see that the global shift toward commercializing and privatizing airports that began in 1987 continues unabated, in Europe, Asia, and Latin America. That means there are even more qualified global airport companies and no shortage of would-be airport investors, despite tightened credit markets. I can't imagine the United States remaining aloof from this megatrend much longer.

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Defense Against MANPADs Not Needed?

Regular readers of this newsletter know that I've been a skeptic, from the outset, of there being a serious threat to U.S. passenger aircraft from Man-Portable Air Defense Systems (MANPADS)—those nifty shoulder-launched anti-aircraft missiles like the Stingers the CIA gave to the mujahedin fighting to drive the Soviets out of Afghanistan in the 1980s. There has still been no release of the results of DHS's 15-month test of Northrop Grumman's Guardian system on 11 FedEx MD-11s in 2007-08. And congressional advocates of multi-billion-dollar programs to equip every U.S. airliner with something like Guardian have been pretty quiet, of late.

So perhaps I shouldn't have been so surprised by a little item in Aviation Daily last week. Buried in a story headlined "FedEx CEO Says Defense Dept. Should Consider Smaller Cargo Jets" was this very provocative comment. USAF Gen. Duncan McNabb, head of the U.S. Transportation Command, was reported by correspondent John Doyle as telling a House Aviation Subcommittee hearing on CRAF (the Civil Reserve Air Fleet) that "commercial aircraft carrying DOD personnel and cargo into danger zones like Iraq do not need onboard defenses against surface to air missiles." He told them that threat assessment and various other DOD tactics and techniques make it unnecessary for such planes to be equipped with anti-missile defenses. And besides, if they were to be so equipped, that would require a lot of very costly training. There is no significant missile threat to CRAF aircraft, he told the Congress members.

At this point, my only question is this: How do we get General McNabb to testify before the committees dealing not just with aviation but with homeland security? If airborne missile defenses are not justified for airliners going into war zones, how on earth could they be cost-effective here in the United States?

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More Squabbles Over Airport Landing Slots

Last month I reported that legacy airlines in Europe had prevailed on the European Commission to suspend for two seasons the "use it or lose it" rule governing airport slots at major EU airports. Under that rule, airlines must surrender slots if they aren't using them at least 80% of the time. Airports and low-cost carriers protested, but the EC prevailed.

But it turns out there has been a significant backlash. Andrew Charlton of Aviation Advocacy reports in his May newsletter that the European Parliament, which was not consulted about the suspension, has struck back. While consenting to the 2009 suspension, the Parliament has demanded that the slot regulation system come up for a full review, and that future changes be decided jointly by the Parliament and the Commission. There will now be a full study of the issue, with a proposal for a revamped system due by the end of the year. Representatives of airports and low-cost carriers are cautiously optimistic, given that the larger airports have long waiting lists for slots, mostly from LCCs that are eager to expand service. The airports need the revenue, airlines and passengers want more low-fare services, so why on earth is the Commission standing in the way of willing buyers and sellers?

That question has relevance for the congested-airports debate here in the United States. In arguing against any kind of pricing approach for the New York airports, the legacy carriers (represented by the International Air Transport Association—IATA) repeatedly proferred as an alternative to slot auctions the IATA Worldwide Scheduling Guidelines (WSG) for slot allocation. Under this system, widely used in Europe, slots are held in perpetuity by those who got there first (meaning mostly legacy carriers), but any new slots that become available (e.g., if a carrier goes out of business or cuts way back at a particular airport) can be traded or sold on a secondary market. It's a great system for keeping the Ins in and the Outs out. But rest assured, IATA tells us, the "use-it-or-lose-it" rule will prevent slot hoarding.

Uh-huh. We are now getting an object lesson in how that works. When push comes to shove in WSG Europe, out the window goes "use-it-or-lose it." So when Transportation Secretary Ray LaHood announced last week, as expected, that he was terminating the Bush administration's plan to auction off a small portion of the slots at the congested New York-area airports, we can at least breathe a sigh of relief that IATA did not succeed in foisting the Worldwide Scheduling Guidelines on us.

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The Maginot Line of Airport Screening

In a paper I will be presenting later this month at the OECD International Transport Forum's "Transport for a Global Economy" conference in Leipzig, I discuss the creation of static, inflexible "Maginot Line"-like defenses against aviation terrorism, such as large, centralized government airport screening organizations. In comparing the U.S. approach with that of Canada and Europe, I discovered that all of Canada's screening services (and much of Europe's) are provided by private security firms. Unlike the minimum-wage rent-a-cops that staffed screening checkpoints at U.S. airports prior to 9/11, the screening contractors in Europe and Canada must meet tough certification standards and ongoing performance standards. Such a system provides considerable flexibility, as threat levels change or, more commonly, as airline activity increases or decreases at particular airports. RAND Corporation and others have cautioned against building Maginot Line fortresse s at particular target sites—but that is what we've done at U.S. airports.

Some of us urged the performance-contracting approach in autumn 2001, as Congress rushed to enact the Aviation & Transportation Security Act (ATSA), which mandated the "federalization" of airport security. For our troubles, we got a five-airport pilot program to test the idea, and the promise that several years after TSA screening was in place at all 400+ airports, those airports would be free to ask TSA for permission to kick out its screeners and replace them with TSA-certified contractors. Oh, and by the way, TSA is also the aviation security regulator of every airport.

Not surprisingly, not a single airport with TSA screeners has asked to opt out (though likewise, none of the five pilot program airports has asked to kick out its private screeners, either). Instead, the modest growth of the TSA's Screening Partnership Program (SPP) has been at airports reaching the threshold of scheduled airline service, and thereby requiring screening. Thus, as of the first of this month, besides the five original pilot program airports (San Francisco, Kansas City, Rochester, Tupelo, and Jackson Hole), the airports that have been added to SPP are Sioux Falls (SD), Key West (FL), Roswell (NM), Sonoma City (CA), and the 34th Street Heliport (NY). The TSA is in the process of selecting a contractor to serve seven small Montana EAS (Essential Air Services) airports, and Butte (MT) has submitted an application to join the SPP.

One other impending development is likely to further strengthen the Maginot Line nature of TSA-provided airport screening. The Obama administration is widely expected to permit TSA screeners to unionize, as Obama promised on the campaign trail. The legislation (ATSA) creating the TSA left this question to be decided by the agency's Administrator, and as of this writing, no one has been nominated for that position. Unionization will not be the end of the world, but it will make it even harder to downsize airport screening workforces when and where it makes sense to do that.

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Feedback on FAMs vs. FFDOs

My article last month on the very poor cost-effectiveness of Federal Air Marshals (FAMs) compared with armed pilots (under the TSA's Federal Flight Deck Officers [FFDO] program) brought several responses. The most detailed was from Billie Vincent, former director of FAA's Office of Civil Aviation Security. In the 1980s, he tells me, the FAM program was part of his organization, and he beefed it up to several hundred members in response to a Presidential order following the 1985 TWA Flight 847 hijacking out of Athens. But now that FFDO has been implemented, he's become a big fan.

"Since 9/11," he writes, "I have published several articles on the FAM versus the FFDO program and advocated a significant addition to the overall structure in response to an FAA NPRM [Notice of Proposed Rule Making]. My proposals were to go almost exclusively with the FFDO program," as well as adding ballistics protection inside the cockpit and covert CCTV cameras in the cabin, able to be monitored from the cockpit and the ground. He also tells me that to put two FAMs on all US commercial aircraft would require in the neighborhood of 56,000 FAMs at a cost of $5.6 billion per year, which "makes absolutely no sense"—and I heartily agree.

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News Notes

Registered Traveler's Growth Continues. Despite offering only head-of-the-line privileges and an increased annual fee of $199, Verified Identity Pass's Clear program keeps setting records. At the end of April, it recorded the one millionth passenger passing through the Clear lanes at Orlando International Airport, its first installation (since 2005). As of now, there are more than 260,000 members in Registered Traveler programs, with specialized lanes at 22 U.S. airports.

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Quotable Quote

"By mutually recognizing these two programs [Global Entry and Privium], the governments of the United States and the Netherlands will be making travel between our nations more convenient and secure." (emphasis added)
--Janet Napolitano, Secretary, Department of Homeland Security, Aviation Daily, April 27, 2009.

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