Inspector General On Airlines, FAA

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Aid Yes, Subsidies No...

The Department of Transportation's Inspector General says federal aid for the airlines shouldn't allow them to keep digging their own graves. Ken Mead testified before appropriations hearings last week just before Congress agreed to $3 billion in bailouts to the airlines to help cover war-related losses. Travel bookings have plummeted since the war in Iraq began, concerns about SARS have not helped, and both add to an already desperate situation for many airlines. But Mead told Congress that any relief should not "provide a cash subsidy that allows a way for airlines to avoid making the hard calls necessary to become sustainable ..." Mead said the carriers must cut labor costs (including the six-figure salaries and seven-figure bonuses of some management staff), generally get their financial houses in order, and not look for government handouts. In the next breath he was warning the hearings that the favorite targets of airline cutbacks are the less-productive routes to small and medium-sized cities. He said the government will inevitably be called upon to (you guessed it) subsidize service on some of those routes as part of the Essential Air Service Program.

...FAA Finances, Management A Mess...

Now, if the FAA were an airline, how would it fare under Mead's scrutiny? Apparently, not very well. In fact, according to Mead's testimony to the committee, the agency suffers many of the same problems as the airlines it oversees -- to wit, bloated labor costs, horrible cost control and management disarray. "Just as the airlines have had to rethink the basics of their business, FAA also must re-examine how it does business and redouble its efforts to become performance-based in deed and not just in word," he said. And, like the airlines, if it doesn't get its fiscal act together, it will be tapping the taxpayer for more ... and more. Mead noted that the FAA's budget has ballooned from $8.2 billion in 1996 to $14 billion for fiscal year 2004. He said much of that increase is due to wages, which, since the FAA implemented a new pay system in 1998, have increased 41 percent compared to 30 percent for the rest of government. Some of those employees have overseen programs that might have driven private-sector companies to the poorhouse. Mead noted that five of the agency's 20 major acquisition programs are a total of $3 billion over budget and years behind schedule. He notes that the $3 billion in overruns are equal to the agency's entire technology budget for a year.

...Controller Shortage Ahead?

And it's against that gloomy backdrop that air traffic controllers are calling for the agency to triple its hiring projections for their sector. Over the next four years, according to the National Air Traffic Controllers Association (NATCA), more than 5,000 air traffic controllers will be eligible to retire. But the spending plan before the appropriations committee includes funding to hire just 302 new controllers next year. Considering it takes about five years of training and on-the-job experience to create a fully-qualified controller, well, you do the math. NATCA President John Carr told the hearings controllers have already taken on more work and streamlined their operations to make the system work better. He also noted workloads in the New York and Washington areas have increased dramatically because of the air defense identification zones imposed there. The people that fix the increasingly antiquated equipment (see above) for the agency are also going to be in short supply. Michael Fanfalone, president of the Professional Airways Systems Specialists, said 1,000 of his members will be hanging up the needle nose pliers in the next few years.