5 New Year's Resolutions for Air Transport Leaders

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CHARLOTTE, N.C. (MainStreet) -- The U.S. airline industry carried more than 700 million passengers in 2011, and the vast majority reached their destinations on time.

Moreover, the industry was profitable despite high fuel prices and a slow economy, and it maintained an exemplary safety record, so commercial air travel in the U.S. remains probably the safest form of transportation in the history of the world.

Still, there is always room for improvement, not just in commercial aviation but also at suppliers such as Boeing (Stock Quote: BA), which in 2011 delivered the first model of a technological marvel, the Dreamliner, and operators of all-cargo fleets such as FedEx (Stock Quote: FDX) and UPS (Stock Quote: UPS), which continued to print money despite a slowing economy.

All of us need to be improving, or else we are standing still.

These five New Year's resolutions should help make airlines and key air transportation companies even better in 2012.

We will charge for drinks

Nobody except for airlines gives away soda these days. Not movie theaters. Not sports teams. Not hospitals. Not only does everybody else charge for soda, but also nobody else must pay the cost of lifting 400 cans of soda -- enough to provision an Airbus A320 -- six miles into the sky and flying them around before giving them away.

Actually, US Airways (Stock Quote: LCC) tried to end free drinks in 2008, but media hysteria forced an end to the effort.

At a 2008 investor conference, President Scott Kirby noted that without free drinks, "the cabin environment is much calmer and more efficient." Consumption diminished, because in the past, nearly every passenger claimed a free drink. The charge also meant that carts no longer clogged the aisles, restroom lines diminished, less trash was left on board and aircraft catering was required less frequently.

By the way, if this works, we have four more fees airlines should also charge. Our country does not benefit when an industry so critical to our infrastructure is unable to make a profit.

US Airways: We will get it over with

I have been covering US Airways in Charlotte, now its busiest hub, since 1996. Management has been talking about a merger with a larger carrier for almost the entire time.

A 2005 merger with a smaller carrier, America West, was successful, even if the headquarters did move to Tempe, Ariz., but it didn't solve the problem: US Airways is neither a low-fare, low-cost carrier, nor is it an international carrier with a vast global network. Little has changed since one-time CEO Stephen Wolf conveyed this information to Congress in 2000 when appearing in support of a merger with United (Stock Quote: UAL). That failed. US Airways tried again in 2008 and 2010. Those failed too.

Another failure was a 2006 effort to merge with bankrupt Delta (Stock Quote: DAL). But US Airways CEO Doug Parker has never stopped saying that US Airways wants to participate in a merger and that the best place to do a merger is in bankruptcy court.

So all we can say to US Airways about its New Year's resolution is this: Look around, and, ahem, if you happen to see any big airlines that have filed for bankruptcy, go for it.

 

Congress: We will butt out of the airline industry

U.S. airlines are among the world's most heavily taxed industries.

On United's third-quarter conference call, CEO Jeff Smisek noted that about 20% of the cost of a typical airline ticket goes to taxes. He said that airlines paid 17 different fees totaling $16.5 billion in 2010. He said that some in Washington are proposing $35 billion in new taxes over 10 years, "attempting to make U.S. airlines its piggy bank once again." He said that airlines are taxed more heavily than alcohol and cigarettes. "We are taxed as a sin," he said. "We are not a sin."

Was anybody listening to that particular call? Certainly Sen. Mary Landrieu (D.-La.) was not. She is proposing legislation that would mandate one free checked bag for each passengers, even though it is safe to say that the major reason why airlines are reporting profits instead of losses this year is bag fees.

After years of losing money, the airline industry has finally figured out how to be marginally profitable, earning about a penny in profit for every dollar of revenue.

If Congress wants to fix financial problems, we have a suggestion as to where it should start. And it isn't at the airlines.

Boeing: We will fix our labor problems

Actually, upon further review, Boeing already has fixed its labor problems through negotiations with its largest union, the International Association of Machinists.

In fact, the two parties reached a deal in November after just six weeks of talks in which both sides agreed to make major compromises.

In listening to the rhetoric in Congress, we could not have imagined a settlement was possible. Congress sought to get involved in Boeing's labor issues in April after the general counsel for the National Labor Relations Board issued a complaint against the company for an unfair labor practice.

The NLRB urged a settlement, but Congress saw a chance to go to war against federal labor laws.

The thirst for battle was particularly high among representatives and senators from South Carolina, which just 150 years ago declared war on the U.S. That war brought no benefits to the state's inhabitants, and yet South Carolina politicians are at it again. Some back a bill disingenuously called the "Protecting Jobs from Government Interference Act," which would limit the NLRB's powers. Some are refusing to approve President Barack Obama's nominees to the five-member board, hoping that without a quorum to enforce labor laws, our country won't have any.

So forgive us for thinking Boeing needs a New Year's resolution to end its labor problems. Rather, members of Congress need to recognize that sometimes, problems can be settled amicably through negotiations.

In fact, they should try it sometime.

 

FedEx and UPS: We will fix the U.S. Postal Service

FedEx and UPS helped break the U.S. Postal Service, taking away most of the premium business, and now they should fix it.

They clearly have an interest. FedEx is the largest postal service customer, because the post office delivers its SmartPost product. It is also the largest postal service contractor, hauling its priority mail. UPS also does hundreds of millions of dollars worth of business with the postal service each year.

The principal problem with the service -- no surprise here -- is that Congress oversees it. Congress made it liable for pension payments far exceeding what private companies pay and won't let it raise prices quickly enough or set wages and benefits it can afford or close facilities it doesn't need.

To its credit, Congress does recognize the unique importance of rural post offices that also function as community centers and ought to be preserved, even if they must be subsidized. It does, we hope, recognize that this is a bad time to fire 100,000 postal workers. It clearly does not recognize that businesses generally ought to perform tasks at a rate that enables a profit and pay wages and benefits that do not overwhelm that profit.

In any case, FedEx and UPS print money because they were able to devise systems that deliver high-margin letters and packages around the world. UPS, it should be noted, is able to do this and also to pay union wages to most of its workers.

So in 2012, let's ask these two corporate leaders, rather than Congress, to devise a plan for a post office that works.

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