Aviation Policy News: Vertiports for regional air mobility, Congress oblivious to changing airline competition, and more
Photo 165627914 / Airline © Andreistanescu | Dreamstime.com

Aviation Policy Newsletter

Aviation Policy News: Vertiports for regional air mobility, Congress oblivious to changing airline competition, and more

Plus: Rethinking airport charges and regulation, from bad to worse on 5G and U.S. aviation, and more.

In this issue:

Vertiports and Regional Air Mobility

During the first nine months of 2021, three of the largest eVTOL startup companies (Archer, Joby, and Lilium) spent $326 million on development, as they aim for certification by 2024. Graham Warwick reported this in “AAM Leaders Ramp Up Development Spending on eVTOL Air Taxis,” Aviation Week, Nov. 22-Dec. 5, 2021. But while well-funded eVTOL development continues, investor skepticism is growing.

Clean Technica’s Michael Barnard notes in a recent article that eVTOL developer stocks have lost over $16 billion in 2021, with aggregate market value declining from a peak of $27.92 billion to $11.82 billion in late November. As Aviation Intelligence Reporter’s Andrew Charlton summed up Barnard’s message to investors: “If you are . . . engaged with Urban Air Mobility, be aware that the bloom is off this rose, cut your losses, and pivot to Regional Air Mobility.”

That’s in line with skepticism I’ve expressed in recent issues of this newsletter, expecting that eVTOL air taxis will be too costly for the kinds of commuting and short-haul trips envisioned by many devotees, but that a more viable market may be regional air mobility (RAM): larger vehicles with longer range, able to connect cities over distances of 100 to 200 miles or so. While  I have yet to see a business model put forth for either UAM or RAM, several eVTOL companies appear to be focusing more on RAM than on urban air-taxi service: Vertical, Lilium, Eve, and Blade.

Spanish infrastructure giant Ferrovial has been in the news recently, thanks to opening a new division, Ferrovial Vertiports. It has made a deal with Lilium to develop a set of 10 vertiports in Florida, with the first location secured via a lease agreement with the Palm Beach County government. The company also has an agreement with Vertical Aerospace and Lilium to develop a 25-vertiport network in the U.K.

I spoke with Ferrovial Vertiports CEO Kevin Cox earlier this month to get a better understanding of their view of the eVTOL market. He told me they have spent several years developing a comprehensive demand model to help them make decisions on eVTOL companies to work with and where to focus their vertiport investments.

A competitor to Ferrovial Vertiports was announced in October. Urban Blue was created by Italian and French airport companies (Aeroporti de Roma, Aeroporto di Venzia, Aeroporto Guglielmo Marconi di Bologna, and Aeroports de Cote d’Azur). They are working with Volocopter to develop vertiports for its planned system linking Nice, Rome, and Venice—again regional air mobility. In addition, vertiport developer Skyports is partnering with Milan airport operator SEA Group for a network linking key Italian cities.

These remain early days in the eVTOL and vertiports business. But I’m glad to see the focus starting to shift to regional air mobility as likely to be a more viable business than urban air taxis.

» return to top

Congress Oblivious to Changing Airline Competition

Aviation leaders in the House and Senate are beating up on legacy carriers, basically calling them on the carpet for scheduling mishaps and flight cancellations earlier this fall, despite the airlines’ smooth handling of pandemic-record travel over the Thanksgiving weekend. The essential message seemed to be: “We gave you all this money last year; how can you possibly be understaffed?”

I don’t envy the task facing airline planners and schedulers, dealing with the not-really-predictable path of emerging Covid-19 variants, shifting government policies on travel, and trying to estimate how air travelers will respond. But to the extent that legacy carriers are not meeting politicians’ expectations, the best remedy is increasing competition. Fortunately, a sea change is taking place worldwide, as low-cost carriers generally recover more quickly than the legacy airlines.

A recent headline underscores what’s going on. As Aviation Daily reported on November 16, “Indigo Partners, ULCCs Stun Dubai Airshow with 255-Aircraft Deal.” Indigo is a private equity fund that owns majority stakes in four ultra-low-cost carriers (ULCCs): Frontier (U.S.), JetSMART (Chile), Volaris (Hungary) and Wizz Air (Hungary). The massive order is for Airbus A321neo and A321XLR aircraft to be divvied up among these four ULCCs. In recent years, Indigo has ordered a total of 1,145 A320-family aircraft for its four airlines.

In another stunning announcement, highly successful ULCC Allegiant Air announced a planned joint venture with Mexican LCC Viva Aerobus. The JV is subject to antitrust approvals from both governments. Both airlines envision the JV as far less costly than each developing its own large trans-border route system. Allegiant points out that there are about 239 routes that have no nonstop service between U.S. airports it now serves and leisure destinations in Mexico.

Also of interest is the potential success of the two newest low-cost carriers, Avelo and Breeze. Avelo’s east coast base at Tweed New Haven Airport (HVN) has previously lost the small amounts of service it used to have from American, United, and U.S. Airways, thus offering Avelo an open airport in a region with poor service. Its initial flights focus on Florida, offering Connecticut residents new nonstop flights to Ft. Lauderdale, Ft. Myers, Orlando, Sarasota, Tampa, and West Palm Beach. The airline’s west coast base, operating separately, is Burbank (BUR), with routes primarily to northern California and the Pacific Northwest, some of which have legacy-carrier competition.

Much larger and better-funded startup Breeze Airways is already operating a number of short/medium routes using Embraer E-jets, and thus far it is the sole airline offering nonstop service on 98% of those routes. Once its larger and longer-range Airbus A220s start arriving, Breeze will begin serving longer routes with them. As of early December it had not announced any A220 routes, but founder David Neeleman noted that the aircraft has 6.5-hour endurance with a full passenger load, opening the door for service to much of Latin America from Florida, as well as long-distance routes within the continental United States. Breeze has 80 A220-300 series on order, with five expected to be in service by the second quarter of next year.

The benefits of airline deregulation continue to be realized. New airlines and new approaches offering numerous routes that bypass hubs seem poised to change U.S. aviation, offering lower fares and more choices for air travelers. Congress should leave well enough alone.

» return to top

From Bad to Worse on 5G and U.S. Aviation

Developments since last month’s story about potential interference between new 5G telecommunications activity in the C band (3.7 – 4.2 MHz) and aircraft radar altimeters have not led to a resolution. Spectrum auction winners AT&T and Verizon postponed their date for turning on the new system for only one month, to January 5. And with no sign of any action by either the Federal Communications Commission (FCC) or the 5G companies, on December 7th FAA issued airworthiness directives requiring aircraft operators to prohibit flight activity that relies on radar altimeters when in the presence of 5G wireless transmissions.

After back and forth mitigation proposals between aviation and telecommunications groups, a coalition of aviation groups, led by the Aerospace Industries Association, called for a further delay in turning on 5G transmission in the vicinity of airports. The coalition warned of delayed or cancelled flights and cargo shipments due to aircraft being unable to operate legally in potentially many situations. Former DOT official Diana Furchtgott-Roth reported in a recent Forbes.com column that Canada’s Department of Innovation, Science, and Economic Development is restricting 5G services in exclusion zones around 26 airports. The restrictions will be in effect until both domestic and international studies reach a definite conclusion about the scope of the problem.

So what do we actually know about the likelihood of 5G interference with radar altimeters? The most definitive study was organized by RTCA (the nonprofit that advises FAA on technical and communications issues). In 2020 it convened a six-month stakeholder group from both industries “to examine spectrum spectrum coexistence issues with radar altimeters.” As RTCA letters transmitting the study to both FAA and FCC last year explained, thanks to detailed information provided by both industries, it was “able to examine issues of compatibility more thoroughly . . . than were the earlier preliminary analyses submitted to the [FCC].” And the primary finding was as follows:

“The analysis found serious threats of harmful interference to today’s installed radar altimeters from anticipated flexible use licensed deployments, including from spurious emissions into the radar altimeter band.”

The report, with a cover letter from which the above-quoted material is taken, was submitted to both FAA and FCC on Oct. 8, 2020—more than a year ago. My engineering degrees are not in electrical engineering, so I have not attempted to read the RTCA report. But if you are interested, you can find it here.

As far as I can tell, FCC did not pay serious attention to this report. It went ahead with its spectrum auction, not informing potential bidders of the potential problem. FAA and DOT did, as I noted last month, send a letter about the problem to the National Telecommunications Information Administration (part of the Commerce Department), but it apparently did not get transmitted from NTIA to the FCC.

The RTCA report’s finding of a serious potential threat to aviation should have led to postponement of the spectrum auction. That it did not raises serious questions about the inability of our federal government to respond to a serious air safety problem before the only responsible alternative left was for FAA to restrict flying.  

» return to top

Rethinking Airport Charges and Regulation

Airports Council International (ACI) is fighting back against allegations from airline trade organization IATA that planned increases in airport charges are unwarranted (see “IATA Berates Airport and ANSP Fee Increases,” Aviation Policy News, October 2021). Last month ACI released “Beyond the Rhetoric: Some Hard Facts on Airport Charges and the Industry

ACI’s Patrick Lucas begins by reminding the airlines that “airports are businesses in their own right,” and in fact are infrastructure-intensive businesses. When demand shrinks, as it has during the pandemic, although a large airport may be able to reduce operating expenses by shutting down one of several terminals, its capital costs must continue to be paid, mostly in the form of maintaining debt service payments on airport revenue bonds.

For all IATA’s complaints about rising airport charges to airlines, Lucas draws on data from IATA’s own World Air Transport Statistics showing that charges to airlines represent just 4 to 5% of airline operating budgets, and that percentage has actually been trending downward in recent years. On the other hand, these data show that “24% of all airport revenues come from charges that are levied on airlines,” and I will add that this fraction is much higher in the United States, where airports on average lag behind world airports on commercial revenues.

Building on this information, on November 23, speaking at the ACI World general assembly in Cancun, ACI Director General Luis Felipe de Oliveira argued that the time has come for a fundamental rethinking of airport charges to airlines. Given projected capacity needs as air traffic resumes, “airports need to be able to set charges with a commercial focus to attract the level of investment needed and to signal whether users are willing to pay for these investments,” as David Casey reported in Aviation Daily (November 25). Elaborating further, de Oliveira stated that:

“Where there is excess demand for airport capacity and expansion is difficult [e.g., London Heathrow], airport charges should play a critical role in signaling which airline operations would make the best use of the scarce capacity. Charges should signal the scarcity and whether the market is willing to pay for capacity expansion. Where there is a willingness, scarcity-based charges can be used to prefund much [capital expenditure]. On the other hand, where airport capacity is underutilized, there is a role for airport charges to provide incentives for new services to increase regional connectivity and hence maximize the economic and social benefits of air transport.”

This approach would overturn the widespread practice, especially in Europe, of cost-based regulation. It would be replaced by “commercial agreements between airports and airlines,” and even more radically, perhaps by “light-handed regulation,” as has been the mode of regulation in Australia since its major airports were privatized two decades ago.

In the December 2021-January 2022 issue of Aviation Intelligence Reporter, Andrew Charlton calls attention to a report prepared for ACI Europe by Harry Bush and Warren Mundy, “Lessons for Europe from Australia: A Review of Australian Airport Economic Regulation.” The regulatory approach in Australia is based on consumer welfare. If airport behavior is alleged to be anti-competitive (i.e, harming customers—airlines or passengers), government will review the situation to see if any action is warranted. While airlines oppose the policy, it seems to have worked well. Bush and Mundy sum up the lessons for Europe as follows:

“Regulators should avoid being distracted by surface turbulence and focus instead on the underlying economics and incentives influencing the parties. For the airport sector, the Productivity Commission finds that the light-handed monitoring regime (and potential for regulatory intervention if things go awry) is sufficient to safeguard the public and consumer interest, and has indeed delivered good outcomes.”

While European governments have generally accepted the idea that airports and ANSPs are businesses, and that their customers should pay for their services (as with any other utility), they have still imposed cost-based regulation, which is often at odds with sound economic management. Australia represents a working model of a better approach.

» return to top

Business Jet Travel Is Booming—and Subsidized

The Wall Street Journal’s Jon Sindreu reported on December 4 that “Plane Rentals Are Really Taking Off.” For example, “Business jet traffic is now up 45% worldwide relative to the start of 2019, compared with a 24% drop in commercial traffic,” per data from FlightAware. In response, “private-aircraft makers’ order backlogs are swelling, and used jet inventories are at record lows.”

Sindreu also reports that companies like Net Jets and Wheels Up are increasingly popular, because they allow corporate moguls and other wealthy people to fly in bizjets with no logos, making their luxury travel less visible. Demand for their business is more than these companies’ capacity, with many such companies putting people on waiting lists rather than signing them up immediately.

There are also pricing innovations. Fractional ownership (the Net Jets model) requires advance commitment for a minimum number of flight hours (say, $500,000 for 50 flight hours). So Wheels Up is now offering a three-hour flight for just $17,000—that’s only $5,667 per hour versus $10,000/hour under fractional ownership.

Sindreu notes that biz-jet travel is starting to come under the same kind of carbon-footprint scrutiny as airline travel. He notes that private jets account for only 4% of passenger air travel, whose global carbon emissions he puts at 2.4% of the global total. That means biz-jets account for less than a tenth of 1% of passenger aviation emissions. But when it comes to emissions per person, a Gulfstream G650 emits 244 kg per hour per passenger—about four times more than a Boeing 787. This is leading to discussions in Europe of per-passenger taxes which, to be fair, would need to be several times higher for business jet passengers.

Of course, when it comes to paying for aviation infrastructure, business jets nowhere pay their fair share. In the vast majority of the world, they pay weight-distance user fees for air traffic control services and weight-based landing fees. This is despite each bizjet requiring just as much ATC service and runway occupancy as a jet airliner. It’s even worse in the United States, where bizjets pay a tiny fuel tax that is half or less than half of what an efficient air navigation service provider charges (see my 2006 Reason policy study, “Business Jets and ATC User Fees: Taking a Closer Look”.

These below-market taxes and charges should be on the agenda for rethinking, as aviation policy makers consider dealing with the industry’s carbon footprint. One step in the right direction would be to scrap the ICAO-blessed weight and weight-distance methods of airport and ATC charges. Airports should charge for both landings and takeoffs, with variable rates as necessary to match demand with capacity. And air traffic control should shift to mileage-based rates that recover the full costs of providing ATC services. Any new carbon-related taxes should be considered only after the cross-subsidies inherent in current charging systems are removed.

» return to top

New Space Stations Will Increase Space Launch and Recovery Traffic

For most of the space age, the vast majority of space traffic was one-way: launches to orbit. Only when humans were occasionally on board (as in the Apollo and Space Shuttle flights) were there return trips to terra firma. Two developments are changing that. The first is reusable human-rated launch vehicles, which have dramatically reduced the cost of getting payloads into orbit. And the second, soon to come, will be a proliferation of space stations.

The International Space Station (ISS) is nearing the end of its useful life. It was originally intended to be shut down and de-orbited by 2024, but NASA now hopes to keep it in operation until about 2028. To its credit, the space agency has not proposed spending another $150 billion on a replacement. Rather, it is encouraging the growing space private sector to develop multiple commercial outposts in earth orbit, on which NASA will lease space. The new program is called the Commercial Low-Earth-Orbit Destinations (CLD) program.

In a recent report, “Private Space Stations: Placing Perches in the Sky,” The Economist provided an overview of what is going on. Blue Origin, for example, has announced plans for an outpost called Orbital Reef, to be developed in partnership with Boeing and Sierra Space. Lockheed Martin unveiled a plan for a permanently staffed station called Starlab, that it hopes to launch in 2027. Axiom has a smaller station under development, to be initially attached to ISS in 2024, and after several other modules are launched and added, the plan is to separate Axiom Station into a free-flying habitat with double the volume of ISS (which will then be de-orbited). The project’s estimated cost is $3 billion, not the $150 billion it cost taxpayers to build ISS.

These three are far from the only plans for permanently occupied orbital habitats. They will require far more launches and landings than ISS, and those launches will be carried out by a number of companies using mostly re-usable vehicles, as pioneered by SpaceX. This makes it all the more important for FAA to get its Space Data Integrator and Aircraft Hazard Area Generator fully operational, so as to minimize the aviation delays and flight detours currently required during space launches and recoveries.

» return to top

News Notes

Frankfurt-Hahn Airport Open for Bids  
The secondary airport 75 miles from Frankfurt, Germany, entered insolvency proceedings in October. The insolvency administrator last month issued a request for expressions of interest to investors interested in acquiring the airport or various of its assets. The airport is 82.5% owned by bankrupt Chinese firm HNA Group. It served 1.5 million passengers in 2019; Ryanair opened a base there in 1999, but passenger numbers have declined from a peak of 4 million in 2007.

Miami International Gets $1.1 Billion Cargo P3 Proposal
Debtwire reported last month that MIA received an unsolicited public-private partnership (P3) proposal to double the airport’s cargo capacity, consistent with the airport’s 2019 capital improvement objectives. The proposal came from Brazilian infrastructure investor CCR and aviation facility developer Airis. Cargo operations currently use 35% of MIA’s acreage but account for only 6.6% of total airport revenue.

Remote Tower Project Under Way for Budapest Airport
Indra and Micro Nav are joining forces, under a contract with HungaroControl, to develop a digital remote tower for Budapest Ferenc Liszt International Airport. While Indra is the prime contractor, Micro Nav will use its Beginning to End Simulation and Training (BEST) technology to create a complete simulation of the remote tower’s operation to train the controllers who will staff the new facility. When operational, Budapest will be one of the largest airports to date with a remote tower.

Amazon Air Beats Environmental Lawsuit Over San Bernardino Facility
The 9th Circuit Court of Appeals rejected a legal challenge to FAA’s 2019 approval of a 660,000 sq. ft. cargo sorting facility located at San Bernardino International Airport in southern California. The suit had been filed by former State Attorney General Xavier Becerra and local “environmental justice” groups, arguing that increased aircraft emissions due to the facility would be harmful, and were not adequately evaluated by FAA prior to its approval of the project. Plaintiffs argued that locating the facility at this airport constituted “environmental racism.” The court judged that FAA’s environmental review was acceptable.

Federal TIFIA Loan Program Expands Airport Coverage
Though used most commonly for surface transportation projects, the low-interest-rate TIFIA loan program has included some airport landside airport improvements. The new Bipartisan Infrastructure Law expands the definition of eligible projects to terminals, gates, noise compatibility, and conversion of service vehicles to low emission standards. Airport projects can account for up to 15% of TIFIA budget authorizations. Eligible project financing must have an investment-grade rating apart from any TIFIA loan.

Airport Authority May Take Over Bridgeport, CT Airport
The City of Bridgeport and the Connecticut Airport Authority (CAA) are discussing the possible takeover of money-losing Sikorsky Memorial Airport. The airport authority was created a decade ago to take several smaller airports off the books of Connecticut DOT. Possibilities include assisting with the airport’s planning or operating it under a lease. The CAA’s executive director was quoted in a news story saying that “commercial [air] service is within reach at Sikorsky Airport.”

Amsterdam Schiphol Plans Electric Tugs
As the first step in a long-term sustainability plan, Schiphol Airport will begin using electric tugs to taxi airliners to and from its newest (of six) runways. The pilot project will use two TaxiBot semi-robotic electric tugs, with the plane’s engines not running during most of the taxi-out time. The project requires new pavement for the tugs to drive back from the runway after towing a plane out and to travel to the runway to connect with an arriving plane. The overall aim is to achieve low-emission taxiing for all six runways by 2030.

Resilient Backup for GPS: Locata and UrsaNav
GPS World (Dec. 8, 2021) reports that two U.S. companies—Locata Corp. and Ursa Navigation Solutions—have joined forces to offer a resilient position, navigation, and timing (PNT) alternative to the GPS system that is vulnerable to interference, jamming, and anti-satellite attacks. Locata has been providing the U.S Air Force, NASA, and commercial firms with precise positioning and timing. UrsaNav offers electronic Loran positioning and timing information in an entirely different frequency band than GPS. The article points out that the recent European MarRINav Report recommended this Locata/UrsaNav combination to protect UK shipping, ports, and other key infrastructure sectors.

Progress on Preventing Contrails in Europe
The first live trial aimed at shifting flights to altitudes with atmospheric conditions less likely to lead to contrails has been completed after 10 months by the Maastricht Upper Area Control Center (MUAC) and German aerospace research center DLR. MUAC and DLR interpreted weather forecasts for ice-super-saturated regions and rerouted 209 flights to avoid them. Among the practical concerns were controller actions, the precision of meteorological tools, and the effectiveness of real-time feedback. The results are still being analyzed, and may lead to somewhat different approaches in the future. Separately, Etihad Airways announced a pilot project on contrail avoidance with atmospheric science firm Satavia.

Electric Aircraft Will Need Better Batteries
A white paper from the U.S. Department of Energy and NASA was released in October, addressing R&D needs for the growth of electric-powered aircraft. As summarized by Graham Warwick in Aviation Week (Oct. 11-24, 2021), a main finding of the study is that to move beyond small, light aircraft will require much better batteries than the automotive batteries being used thus far. The underlying problem is electricity output per pound of battery weight, which is not much of a problem in passenger cars but is a major problem for aircraft, where heavy batteries reduce payload and/or range. One cited example of progress is eVTOL startup Lilium partnering with Porsche-backed Customcells, which is developing “energy-dense silicon-anode batteries” that Lilium hopes to use in its aircraft.

New Terminal Planned for Phoenix Mesa Airport
The secondary airport for the Phoenix metro area now has nonstop jet service to 60 U.S. and Canadian destinations on five airlines. Officials think it’s time to replace the temporary four-gate terminal erected years ago when the airport was converted to passenger service. Plans call for adding a five-gate state-of-the-art terminal, though no cost estimate is currently available. Nor is there a financing plan, but local boosters hope that some of the $25 billion in new federal airport funding (in the Bipartisan Infrastructure Law) will be available for this project.

New Airport Operations Center at Rome’s Largest Airport
Aeroporti di Roma (ADR), owner of Rome Fiumicino Airport (among others), last month opened a new Airport Operations Center at Fiumicino. The 1900 sq. meters facility includes 112 workstations, so that airlines, airport, and terminal ATC people can interact directly in daily airport operations. The systems have been designed as part of the EU-wide SESAR program to improve air traffic management across Europe.

Miami International to Retain Limits on Retail Prices
After back and forth debate, the Miami-Dade County Commission voted on December 1st to retain limits on the prices of food and other retail offerings at Miami International Airport. The pricing rules require that retail prices at MIA’s various concessions be no more than 10 to 15% more than the same goods or services cost at non-airport locations. Commissioners had been told, incorrectly, that few airports impose such limits. Finding out that this is often common practice appeared to change the vote to favor retaining the limits.

Aviation Week Details Swiss Virtual Centers Plan
Last month’s issue of this newsletter included a News Note about Swiss ANSP Skyguide’s plan to shift to a single “virtual” air traffic center for the whole country, with controllers still reporting to work at the existing Geneva and Zurich locations. A detailed report on this important change is “The Long Winding Road” by Thierry Dubois in the Nov. 22-Dec. 5 issue of Aviation Week.

» return to top

Quotable Quotes

“Climate change should be fought with a price for carbon, research and development subsidies, and highly scrutinized public investments; not by rationing flights, promoting green national champions, or enlisting central banks to distort financial markets.”
—Editorial, “The Triumph of Big Government,” The Economist, Nov. 20, 2021

“I spoke with one of the managers from Jacksonville Center recently. He told me that during the pandemic, controllers have been working there only three days/week. The other two normal workdays are administrative (at home with duties, but available to come to work to cover for sick call-ins). He said when called to cover for sick controllers, those on administrative duties usually advised that they are sick as well. He said this arrangement is resulting in extraordinary amounts of overtime.”
—Ed Drury (retired FAA manager), email to Robert Poole, Dec. 7, 2021 (used with permission)

“European governments, unlike governments in most other parts of the world, decided that the users of airports and ANSPs should pay for those [facilities]. From the societal perspective, this is fair. The wealthier in the population, who can afford to fly regularly, should pay for the use of the infrastructure, rather than impose the cost on all of society through general taxation. Running an ANSP or an airport is expensive. A slab of concrete four kilometers long and 50 meters wide, and a building that sees millions of pairs of shoes crossing its thresholds every year, need to be renovated from time-to-time. Nonetheless, at many airports, airlines have managed to pull a quick one on their regulators. They have convinced governments that airport charges should be ‘cost-related’ but then they [airlines] pocket the value of the airport slot. That topic, fascinating and unending, needs to be addressed as a matter of some urgency.”
—Andrew Charlton, “Charges! Knights-Errant Airlines Attack Airport Windmills,” Aviation Intelligence Reporter, December 2021-January 2022

» return to top