FAA's Dan Elwell discusses airline cutbacks, impact of high fuel prices on industry

As oil and gas prices continue to climb, airlines in the United States are making cutbacks to help reduce fuel use. During today's OnPoint, Dan Elwell, associate administrator for policy, planning and the environment at the Federal Aviation Administration, gives his take on how the airline industry may be affected by international and domestic caps on emissions. He discusses plans for a "next generation transportation system" that would reduce the amount of time airplanes spent in the air and make flying more efficient. Elwell gives the short-term outlook for airlines and consumers as gas prices continue to rise. He also addresses the disparity between fuel efficiency of U.S. fleets and European fleets.


Monica Trauzzi: Welcome to OnPoint. I'm Monica Trauzzi. Joining me today is Dan Elwell, associate administrator for Policy, Planning, and the Environment at the Federal Aviation Administration. Dan, thanks coming on the show.

Dan Elwell: My pleasure, Monica.

Monica Trauzzi: Dan, airlines in the United States have received a lot of negative attention recently in the mainstream media. They're all making major cutbacks, forcing passengers to pay for checked baggage, paying for beverages now as well. Tell us the other side of the story though here. How severely are the airlines being hit by high fuel prices at this point?

Dan Elwell: Well, I think it's a tremendous hit right now. I think you had Jim May on the program not too long ago talking about part of that. Basically, the industry, at 130 plus dollars per barrel of oil, is not sustainable under the current model. So, clearly, something is going to have to break for them. You're seeing it in part as they do everything they can to increase revenue, but unless something fundamental, some game changer happens either in the alternate fuel world or some other sort of unforeseen helper here, I don't think that the airlines are going to be able to continue paying that much for fuel.

Monica Trauzzi: And do you see something happening in the alternative fuel world in the near term or is this sort of something that's down the line?

Dan Elwell: Well, there are some real interesting things being done right now in the biofuel sector. There's a lot being looked at with regard to blending biofuels and fossil fuels. We said, for many years, or the alternate fuel communities said for many years that if fuel got up above $60 a barrel, then you could have economically viable alternative fuels. Well, clearly, we're well above that. And we have, the FAA and a number of manufacturers and associations and international representatives, have formed the Commercial Aviation Alternate Fuel Initiative, CAFFI. They've had a number of meetings and there's something on the order of 143 members who are aggressively pursuing research and ideas and alternatives to fossil fuel.

Monica Trauzzi: One of your jobs at the FAA is to make sure that the skies are safe and some of the actions that the airlines are taking are more extreme than others. So, at what point you say enough is enough; this is now impacting the safety of these flights? And have you heard of any suggestions of how to sort of reduce costs that you thought were maybe not so safe?

Dan Elwell: I have not. And having been an airline pilot myself for about 15 years, I can tell you unequivocally, both on the airline side and certainly on the FAA side, safety is paramount. An airline will close its doors before it ever does anything to compromise safety. And having said that, are there things that they're doing currently to be more fuel efficient? Absolutely. They're reducing weight on all of their airplanes, they're single-engine taxi from the gate to take off, as opposed to using two engines, minimizing the use of the ancillary power unit that most airplanes have is that runs on fuel and powers the airplane when it's on the gate. Most airplanes at major airports are plugging, literally plugging their airplanes into the power source at the gate, rather than run that engine.

Monica Trauzzi: So, once the plane is in the air though, are things relatively the same as they were before?

Dan Elwell: Absolutely, but that doesn't mean that we're not aggressively pursuing ways that aircraft in the air can be more efficient. And we're doing that, obviously, through the implementation of our next-generation air transportation system, which I'm sure you and many of your watchers have heard about.

Monica Trauzzi: Yes and I definitely want to get into that in just a moment. First, I want to get your take on the current state of talks on climate change in the U.S. and internationally and how that's going to impact the aviation industry. We might have a cap in 2009, 2010. How is that going to impact your industry?

Dan Elwell: Obviously, in the U.S. you're talking about the recently shelved in Lieberman-Warner bill and, of course, there are others in the works. We are also in discussions with the European Union. They, as you know, have an emissions trading scheme in place and have recently been talking about introducing international aviation into their emissions trading scheme. That proposal, mostly for its unilateral nature, has sparked quite a bit of objection around the world, as you might guess. And so, in part to answer your question, a group was formed by the International Civil Aviation Organization, IKO, a group was formed of 15 nations to sit down and try to hammer out a way to reach a global framework for environmental emissions mitigation and not go the route of contentious debate and possible legal action with the EU on their emissions trading scheme. So, that group, the group on international aviation and climate change, will have its second meeting in Montreal and I'm the U.S. rep. So we will meet in Montreal in July. And all of the countries, I must say, all of the countries who were there, including European members are really keen on getting some sort of framework, some sort of international framework on fuel-efficiency measures that we can all, in a consensus basis, go after.

Monica Trauzzi: And for our viewers that might not be familiar, you're referring to the European Union's suggestion that all flights that come in to EU member state airports should be required to purchase emissions offsets for the fuel that they use to fly those planes. You're obviously very opposed to that.

Dan Elwell: Yeah, I mean aside from the unilateral nature of it, which contravenes the Chicago convention, which is the sort of umbrella set of regulations that international aviation falls under and adheres to, it also violates some have the very specific restrictions in bilateral aviation negotiations or bilateral aviation services agreements. But just common sense tells you that it's inherently unfair to expect, for instance, Japan Airlines to take off from Tokyo, fly to Heathrow, and pay the Europeans for every pound of carbon they burn from the ramp at Tokyo all the way to Heathrow. I think it would be a much different story if they were talking about the fuel burned within the EU's borders. But to charge other countries for the carbon that they produce over their own countries, their countries and in international waters, we do have a problem with that.

Monica Trauzzi: All right, let's talk about the next-generation transportation system. It would essentially modernize the nation's airspace system. What are the key initiatives behind this program?

Dan Elwell: First, let me say I like the word transform. Modernize sort of suggests you're upgrading your PC. We're not. I mean we are going on the path of a 15-year complete transformation of how aircraft are moved in the sky. Currently, aircraft are controlled by World War II, 50s era radar technology. It worked very well, obviously, for many years, but it's antiquated. Aircraft are moved today very, very safely, but with less precision than the GPS device you have in your car. So, what we're going to move to is a satellite-based navigation system far, far more accurate. And we're going to have all of the aircraft in the system share their individual information with the controllers on the ground, so that we can move airplanes in a much more direct fashion, safer, more efficiently and use more airspace. So that will enable carriers to use optimal wind routes, wind and temperature routes, and burn less gas over the same route that they're burning gas today.

Monica Trauzzi: OK and that's where the environmental benefits command, because planes will be able to get to where they're going in a faster way.

Dan Elwell: Right. What we plan to do is, this system, it starts at the gate and it's a gate-to-gate system. And what we will do is reduce fuel burn on the ground because aircraft won't sit for 30, 40 minutes burning fuel. We're using approaches today at a number of airports that enable a pilot, from altitude, we're talking 35,000 feet, pull its throttles to idle and literally glide to the runway edge before bringing in the power and landing. Today, the current aviation structure has airplanes, from altitude, leveling off half a dozen times. And every time an airplane levels off it brings the power in, puts the nose up. So we're doing a lot of exciting new stuff in the system too.

Monica Trauzzi: How far off are we from implementation though?

Dan Elwell: It's going to be iterative and it's going to be incremental, but full-blown implementation of the entire country's airspace being monitored by the satellite system with full equipage, and that's very important, the equipage side of it for the users of the system, is 2025. But we recently made a list of items that we think we can accelerate and we're busy working on that.

Monica Trauzzi: Can the airlines afford this though? I mean how do you pay for this program?

Dan Elwell: Really, I think they might even say how can they not afford to do it, because the benefits on the backend of full implementation of next-gen, is billions of dollars. And when you're talking about hundreds of thousands and thousands and thousands of flights a day, just reducing the five-minute in-route time, 10 minutes on the ground, would pay for itself with within years. And these aren't huge equipage costs. Commercial aircraft, per aircraft, is a wide range right now, because manufacturers aren't putting them in yet, but 50 to 100,000 per copy. It's a lot, but it will absolutely pays for itself once we get this system in place.

Monica Trauzzi: You mentioned 2025 as a target year for implementation on a wide scale. What do we do in the interim?

Dan Elwell: Well, in interim, I'm glad you asked Monica because we have a plan, we have what we refer to as the five-pillar plan, with regard to aviation and the environment. First of all, we'd need to get a lot smarter on the science of aviation's emissions. We know a lot about CO2 and how much CO2 we're producing and its effects. But what we know a little bit less, or significantly less, is what is contrail formation? What is that doing to global warming? What are the secondary and tertiary effects of some of the particulate matter? We're not as solid on that. So, first and foremost, we need to get the science a lot better on aviation emissions. And while not waiting for that, we then need to go after our operational procedures, which I just talked to you about, with next-gen, aggressively pursuing better more efficient operational procedures. And, on the R&D side, we've got to get better airframe and engine technology. And there's some exciting things going on in that regime, I mean the Pratt & Whitney Geared Turbofan engine that they're introducing, I know GE is introducing some really new, exciting stuff. So, technological improvements, airframe improvements, operational improvements, these are things we can do now. The New York, New Jersey, Philadelphia airspace redesign that we just signed a record of decision, back in September, when that's fully implemented in five years, 20 percent reduction in the New York area of current delays. So that means a lot. We're going to ...

Monica Trauzzi: But near-term, next couple of years, airlines are still going to be feeling the squeeze?

Dan Elwell: Yes, they are. I mean absolutely and you're seeing it in their actions, what the airlines are doing right now.

Monica Trauzzi: The Europeans, they really seem to be ahead of the game here. Their fleets are more modern, they're more fuel-efficient. Why haven't the U.S. airlines been as forward about purchasing new fleets and becoming more fuel efficient?

Dan Elwell: Well, fleet transition is a slow process and there's a long lead time to it. This rise in the price of fuel has been a rather sudden and precipitous one and they're reacting. But the way the airlines react today for survival is to just reduce capacity. Airlines made decisions back in the late 90s and at the turn of the millennium, some of them chose to hold on to old airplanes and work their network that way. That's not going to be viable going forward. So, I think one of the biggest reasons that European industry has a more modern fleet is because they tend to have more, long-range flights and activity. And they also have started much later than we did on the low-cost carrier model. That started around 2000. And those are mostly new aircraft.

Monica Trauzzi: OK, Dan, we're going to end it right there on that note. I thank you for coming on the show.

Dan Elwell: My pleasure, thank you.

Monica Trauzzi: This is OnPoint. I'm Monica Trauzzi. Thanks for watching.

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