Congestion costs billions, but airlines show little concern

Discussion
A big, hairy beast

Countless variables affect air traffic operations. There are equipment, weather and volume, among others, to consider. Then there are the endless out-of-system variables that can influence how smoothly things run. A crash on a highway can delay the flight crew from getting to the airport on time.

“Whether the mobile steps are working in Memphis that night could become a variable,” noted David Greenberg, a former vice president for flight operations at Delta Air Lines and executive vice president of operations for Korean Air.

Greenberg helped improve operations management at Delta in the 1990s. His performance there led to Korean Air bringing him in in 2004 to help turn around its operations.

With any solution, “it’s not how many variables, but if there are more variables than you can handle,” he said.

The industry has signed on for NextGen, which is a huge, complex solution to a huge, complex problem. Whether they want to or not, most carriers likely feel like they must participate in NextGen, he said.

Two current senior managers at two major U.S. carriers both said they see ambivalence within their own companies about NextGen. Regardless, both carriers have publicly supported NextGen and spent money on investments so far.

Both managers spoke on condition that they not be named as they are not allowed to speak publicly.

Complexity complicates solutions

Air navigation systems are so complex that only now do we have the big data tools capable of really analyzing their complexity, according to a 2018 article in the Journal of Air Transport Management.

Given that complexity, airlines have ceded control of flight optimization to air traffic control, which is strictly concerned with safety, not system efficiency, argues Michael Baiada, a former United Air Lines pilot and advocate for optimizing air traffic management.

Baiada’s company, ATH Group, offers an ATM solution called Business-Base Flow Management (BBFM). Its proprietary product is called Atilla. It was deployed with Delta and US Air, and showed significant benefits in real-world tests conducted by the FAA with help from Embry-Riddle Aeronautical University. Yet despite showing that it saved the two airlines millions of dollars, Baiada has largely met skepticism from air carriers.

“I was a skeptic at first,” Tom Hendricks said. Hendricks was director of line operations for Delta from 2005 through 2010.

It was hard to grasp the systems-approach that BBFM is based on, he said.

After going back and forth with Baiada for months, “I just ran out of reasons to say this doesn’t make sense,” he said.

Delta integrated the approach in its operations for several years, and saw real improvements through decreased flight times and increased operational efficiency.

Nonetheless, “it was very difficult to sell that to management,” Hendricks said.

Tough times

Delta’s reluctance to follow up on the benefits from BBFM were due in no small part to the time period. The airline industry was still recovering from the post-9/11 shock. The U.S. airline industry was undergoing major consolidation and restructuring as many carriers desperately fought for survival. Even in the best years, profit margins were slim, and it has only been in recent years that the industry turned a net profit.

Senior management was not interested in the late 2000s in making a substantial investment in a new system that didn’t promise immediate return, Hendricks said.

Delta was not unique in that regard. Further, many airline executives were skeptical about investments promising to improve fight operations. The industry already had made substantial early investments in NextGen that failed to deliver as promised. That bred skepticism, noted Greenberg and Hendricks.

Who benefits?

Given how competitive the airline industry is and has been, airlines are wary of changes that could favor competitors or weaken their own relative competitive advantage, noted Bijan Vasigh, an economist at Embry-Riddle Aeronautical University in Daytona Beach, Fla.

Congestion pricing at busy airports could encourage traffic to move away from the busiest hours, but US airlines don’t want it, Vasigh said.

The approach is more widely used in Europe, where airlines have less lobbying power, he said.

“Reducing cost is not the objective for an airline, increasing revenue is not the objective,” Vasigh said. “Increasing the difference between the two is the goal.”

Decreasing congestion benefits the industry, but it doesn’t necessarily benefit an individual airline. To some degree, a major airline that dominates a busy urban airport could see decreasing congestion as benefitting competition, he said.

“Some of these air traffic congestion problems, from my point-of-view, we are creating ourselves,” Vasigh said.

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