Professional Aviation Organizations

As an aviation industry professional it is important to belong to a professional association within your profession. Whether you are a pilot, mechanic, air traffic controller, management, or any other aviation professional there are different professional associations that you can belong to.

As a pilot there are many associations with a variety of different missions and functions that one can belong to.  Although there are many others, some popular ones associations include: Aircraft Owners and Pilots Association, Experimental Aircraft Association, Regional Airline Association, Air Line Pilots Association, and the National Business Aviation Association.

Since I have not yet fully committed to whether I want to pursue a career as an airline pilot or a corporate pilot, I have chosen the Air Line Pilots Association (ALPA) and the National Business Aviation Association (NBAA).

The ALPA describes in their mission statement that they represent over 51,000 airline pilots of both U.S. and Canada airlines, making them the world’s largest union for airline pilots. As described in their mission statement, they promote safety, assist in collective bargaining for their pilots, and also defend their pilot’s rights by representing pilot when negotiating their contracts. ALPA represents pilots with legislation in both the U.S. and Canada in the form of lobbying. They also provide insurance for pilots and their families ("ALPA Member Insurance > Home," n.d.). Some of the Airlines that ALPA represents include Delta, United, Spirit, Alaska, and ExpressJet. Last year, Jet Blue, who was previously a non-union airline voted to become part of the ALPA union and it passed with 71% of the vote (Mouawad, 2014).

The NBAA’s mission statement is short and to the point, “To foster an environment that allows business aviation to thrive in the United States and around the world” ("About NBAA," n.d.).  As we discussed in a previous blog post, business aviation is a vitally important aspect of the aviation industry and for the corporate business world as well. NBAA represents large flight departments down to individual single-engine pilots that use their plane for business. In the past several years, the Obama administration has been trying to implement “user fees” of $100 per IFR flight in a turbine driven. This would affect the business aviation world most significantly. The NBAA fought back by joining 26 other associations and basically told the Obama administration to give up on implementing this tax and that it would hurt the industry (Spruce, 2011). It seems to have worked. The administration recently repealed their decision to try to push these “user fees” for the fiscal year of 2016 (Lynch, 2015).

As an aviation professional, it is important to be in one or multiple aviation associations.  The benefits range widely from organization to organization but the missions are almost always to promote safety in aviation. The more members these organizations have, the more powerful they can be when under attack from legislation or other agencies.

References

About NBAA. (n.d.). Retrieved April 11, 2015, from http://www.nbaa.org/about/

Alpa About ALPA Who We Are. (n.d.). Retrieved April 11, 2015, from http://www.alpa.org/AboutALPA/WhoWeAre/tabid/2030/Default.aspx

ALPA Member Insurance Home. (n.d.). Retrieved April 11, 2015, from http://memberinsurance.alpa.org/

Lynch, K. (2015, February 02). White House Scraps Aviation User Fee Push For FY2016. Retrieved April 11, 2015, from http://www.ainonline.com/aviation-news/business-aviation/2015-02-02/white-house-scraps-aviation-user-fee-push-fy2016

Mouawad, J. (2014, April 22). JetBlue Airways’ Pilots Vote to Join Union. Retrieved April 11, 2015, from http://www.nytimes.com/2014/04/23/business/pilots-at-jetblue-vote-to-join-a-union.html?_r=0

NBAA - National Business Aviation Association. (n.d.). Retrieved April 11, 2015, from http://www.nbaa.org/

Pope, S. (2013, April 11). President Obama's $100 User Fee Plan is DOA: Here's Why. Retrieved April 11, 2015, from http://www.flyingmag.com/blogs/fly-wire/president-obamas-100-user-fee-plan-doa-heres-why

Spruce, T. (2011, September 22). NBAA joins other industry groups opposing new taxes and user fees - Corporate Jet Investor. Retrieved April 12, 2015, from http://corporatejetinvestor.com/articles/nbaa_joins_other_indutry_groups_opposing_new_taxes_and_user_fees_258/

The Business of Aviation

Many people in the airline industry have heard of the common cliché “how do you make a small fortune joke.  This cliché exists in the airline industry as well, probably because it holds a lot of truth to it. Almost every at least knows someone who owns a business or maybe even own a business themselves, but you never hear of anyone starting up an airline.

In order for airlines to succeed, they must constantly be adapting to change. Airlines also offer rewards and specials that capture customers and give them an incentive to choose their airline and stay with them.  Southwest Airlines, a successful budget airline has formed a business model that is catered toward the business travelers (Bhaskara, 2014) Southwest offers Business Select, which lets members earn twice as many rewards points and priority check-in.  Another big incentive that attracts customers to Southwest Airlines is that they don’t charge baggage fees ("The Secrets of Southwest's Continued Success," 2012). 

Another thing that airlines have to deal with is their small profit margins.  Since the Profit margins of airlines are small mistakes can be costly.  Tony Tyler, CEO of International Air Transport Association explained that the average airline profit margin is around 2.4%. That comes out to be around $4 - $5 per passenger.  When considering how much ticket prices are, five dollars seem very small. With the slim profit margins and the cyclical nature of the industry, timing can be crucial when it comes to starting a new airline.

Fuel hedging is another vitally important factor that can make or break an airline’s quarter or year.  In the fourth quarter of 2014, Delta Airlines reported a $712 million loss due to fuel hedging.  They did not think that fuel prices were going to drop the way they did.  Delta reported that a 1-cent drop in fuel prices coverts to a 40 million dollar loss ("Delta Posts Fourth-quarter Loss after Fuel Hedging," 2015). 

The airline industry is a very volatile industry and there seems to always be a merger or a bankruptcy going on.  Over the past 12 years, 10 major airlines shrunk down to 4 major airlines through bankruptcies and mergers.  Southwest bought Air Tran, United and Continental merged, Delta bought Northwest Airlines, and US Airways, TWA, and America West all eventually were bought by American Airlines (Yellin & CNN Money, n.d.).

The Airline industry is constantly changing and adapting. It is important that like most business the airlines are constantly staying on top of the changing world in order to survive.

 

References

Bhaskara, V. (2014, April 22). Southwest Airlines Opens for Business - Customers. Retrieved March 28, 2015, from http://www.forbes.com/sites/airchive/2014/04/22/southwest-airlines-opens-for-business-customers/

Delta posts fourth-quarter loss after fuel hedging. (2015, January 20). Retrieved March 20, 2015, from http://www.cnbc.com/id/102345098

El-Erian, M. A. (2014, June 13). The Secret to Southwest's Success. Retrieved March 19, 2015, from http://www.bloombergview.com/articles/2014-06-13/the-secret-to-southwest-s-success

Irvine, D. (2014, June 03). How airlines make 'less than $6 per passenger' - CNN.com. Retrieved March 19, 2015, from http://www.cnn.com/2014/06/03/travel/how-airlines-make-less-than-6/

N. (2012, June 18). The secrets of Southwest's continued success. Retrieved March 19, 2015, from http://www.economist.com/blogs/gulliver/2012/06/southwest-airlines

Yellin, T., & CNN Money. (n.d.). The runway to the final four. Retrieved April 30, 2015, from http://money.cnn.com/infographic/news/companies/airline-merger/

Global Aviation

As with all businesses, the airlines are no different in that they need to stay competitive or they risk going under.  With global business it is important to stay competitive against other countries and the airlines are currently facing threats from emerging foreign airlines.

Because the United States is and has always had one of the world’s strongest global economies, we are threatened by the increasing globalization of other nations. Naturally, this is affecting the airlines as well.  An example of foreign airline competition would be Etihad. Etihad is a rapidly growing airline out of the Persian Gulf that is taking full advantage of the "open skies" agreement made by the United States many years ago. The "open skies" agreement is an international policy that promotes liberalization among international air travel. Therefore, allowing commercial airlines and cargo to travel freely between the United States and those countries that are partnered with the United States in this agreement increases globalization between countries. But now that Etihad is proving to be rather successful and is growing so rapidly that it has multiplied its daily flights to the U.S. by six in the last six years, the United States airlines are being threatened (Mouawad, 2015).

The major three United States airlines have recently released evidence that the three major Persian Gulf airlines have received $42 Billion in the past decade in subsidies from the U.S. government (Carey, 2015). This would allow these foreign airlines to expand their businesses globally and at a faster rate than they would without the funding. 

Fuel is the leading industry expense in the airlines. Fuel costs the airlines more than labor costs. This means that in order to continue to be a sustainable industry, the airlines will have to reconfigure labor negotiations. Paying employee's less will likely decrease productivity.  The airline industry is already in a shortage of not only pilots but mechanics too and many people consider this an effect of low wages.

The airlines ticket prices are the highest they have ever been at the same time they are making record profits and oil prices are the lowest they have been in years.  American Airlines CEO Doug Parker stated that they would basically act as though the fuels prices had never dropped and continue operating as they were before the oil prices fell, rather than pay their employees more or lowering ticket prices (Frank, 2015).

As globalization increases with other countries, U.S. airlines will be faced to adapt and compete with emerging foreign airlines in order to survive.  As with any business it is important to stay ahead of the game and it will be interesting to see how domestic airlines adapt and move forward from here.

References

 Airline industry overview. (n.d.). Retrieved March 13, 2015, from http://web.mit.edu/airlines/analysis/analysis_airline_industry.html

Carey, S. (2015, March 05). U.S. Airlines Detail Claims of Subsidies to Persian Gulf Rivals. Retrieved March 14, 2015, from http://www.wsj.com/articles/u-s-airlines-detail-claims-of-subsidies-to-persian-gulf-rivals-1425570104

Frank, T. (2015, January 27). Airline profit soar yet no relief for passengers. Retrieved March 12, 2015, from http%3A%2F%2Fwww.usatoday.com%2Fstory%2Fnews%2F2015%2F01%2F27%2Fairline-profits-soar-passengers-fuel%2F22395509%2F

Mouawad, J. (2015, March 02). Etihad Airways’ Rapid Growth Frustrates Rivals. Retrieved March 11, 20, from http://www.nytimes.com/2015/03/03/business/etihad-airways-rapid-growth-frustrates-rivals.html

Unmanned Aerial Vehicles

Unmanned Ariel Vehicles (UAVs) are gaining more and more attention. Currently they are mostly used by the military and by hobbyists but the FAA has been slowly making progress in integrating them into the National Airspace System (NAS) since 2008.

There are three categories of operations with UAVs in the United States. The three are Public (governmental), Civil (non-governmental), and Model aircraft, which is hobby and recreational use only.  In order for a government agency to conduct UAV operations in the United States, they must first obtain a Certificate of Authorization (COA) from the FAA.  Some examples of public uses for UAVs include law enforcement agencies, border patrol, firefighting, and search and rescue ("Fact Sheet – Unmanned Aircraft Systems (UAS)," 2014).  For use of civil UAVs, you must first get an Exemption or a Special Airworthiness Certificate from the FAA. This is the only way civilians can conduct operations other than for recreational use.  For recreational use of remote control aircraft, the following regulations are in place by the FAA ("Model Aircraft Operations," n.d.):

·       Fly below 400 feet and remain clear of surrounding obstacles

·       Keep the aircraft within visual line of sight at all times

·       Remain well clear of and do not interfere with manned aircraft operations

·       Don't fly within 5 miles of an airport unless you contact the airport and control tower before flying

·       Don't fly near people or stadiums

·       Don't fly an aircraft that weighs more than 55 lbs.

·       Don't be careless or reckless with your unmanned aircraft – you could be fined for endangering people or other aircraft

A company called Lepton produces small UAVs with cameras that are being used today in a variety of ways that make life easier. They are currently being used in the real estate, construction, and agriculture fields.  Another company called Precision Hawk is creating drones for 3D mapping and surveying of terrain, primarily in the agriculture industry.  The drone is used to map land and so for example, farmers can get a birds-eye view and survey their entire property in a short amount of time.  This allows them to see if there are any problems with their crops without having to walk through the fields themselves.

I do see the use of UAVs being integrating into the NAS in the near future. The FAA is currently working on this as part of the implementation of NexGen ("Fact Sheet – Unmanned Aircraft Systems (UAS)," 2014).  The FAA recently released a Notice of Proposed Rulemaking (NPRM) that would get rid of the need for an Airworthiness Certificate and allow for UAVs to be used in the civilian world in many different ways.

The public seems to be a bit afraid of drone implementation into the NAS and pilots feel that drones will one day take their jobs, and maybe for good reason.  Last month a drone landed on the White House’s lawn and although nothing happened, it shows how vulnerable we can be if terrorists used drones as a tool to harm people.  I think that another reason why the public perception is the way it is has to do with the fact that the majority of drones are currently being used to drone bombs, which is proof that drones are replacing pilots. Many people also believe that the use of drones may take away from their privacy and that the drones can act as an “eye in the sky”.

In the military, drones have been a major part of fighting the war on terrorism and have transformed our military strategy. Although it is safer to send a drone into a combat zone rather than sending a pilot, some people believe that it is unethical.

Overall, I believe that it is just a matter of time before UAVs are completely integrated into the NAS and delivering packages to your front door.  

References

Better Data For Smarter Business Decisions. (n.d.). Retrieved February 20, 2015, from http://precisionhawk.com/index.html

Civilian Applications : Leptron Industrial Helicopter UAVs and Power Cell Technologies. (n.d.). Retrieved February 20, 2015, from https://www.leptron.com/corporate/apps/

Fact Sheet – Unmanned Aircraft Systems (UAS). (2014, January 6). Retrieved February 20, 2015, from http://www.faa.gov/news/fact_sheets/news_story.cfm?newsId=14153

Man Comes Forward in Drone Crash on White House Grounds. (2015, January 26). Retrieved February 20, 2015, from http://www.nbcwashington.com/news/local/Device-Found-on-White-House-Grounds-289756051.html

Model Aircraft Operations. (n.d.). Retrieved February 20, 2015, from https://www.faa.gov/uas/model_aircraft/

United States, Department of Transportation, Federal Aviation Administration. (n.d.). Operation and Certification of Small Unmanned Aircraft Systems.

Unmanned Aircraft Systems. (n.d.). Retrieved February 20, 2015, from https://www.faa.gov/uas/