The Airline Handbook

Chapter 1: Brief History of Aviation Chapter 2: Deregulation Chapter 3: Structure of the Industry Chapter 4: Airline Economics Chapter 5: How Aircraft Fly Chapter 6: Safety Chapter 7: Airports Chapter 8: Air Traffic Control Chapter 9: Airlines and the Environment Airline Handbook Glossary

Chapter 1: Brief History of Aviation First Flights On December 17, 1903, Orville and Wilbur Wright capped four years of research and design efforts with a 120-foot, 12-second flight at Kitty Hawk, North Carolina - the first powered flight in a heavier-than-air machine. Prior to that, people had flown only in balloons and gliders. The first person to fly as a passenger was Leon Delagrange, who rode with French pilot Henri Farman from a meadow outside of Paris in 1908. Charles Furnas became the first American airplane passenger when he flew with Orville Wright at Kitty Hawk later that year. The first scheduled air service began in Florida on January 1, 1914. Glenn Curtiss had designed a plane that could take off and land on water and thus could be built larger than any plane to date, because it did not need the heavy undercarriage required for landing on hard ground. Thomas Benoist, an autoparts maker, decided to build such a flying boat, or seaplane, for a service across Tampa Bay called the St. Petersburg - Tampa Air Boat Line. His first passenger was ex-St. Petersburg Mayor A.C. Pheil, who made the 18-mile trip in 23 minutes, a considerable improvement over the two-hour trip by boat. The single-plane service accommodated one passenger at a time, and the company charged a one-way fare of $5. After operating two flights a day for four months, the company folded with the end of the winter tourist season. World War I These and other early flights were headline events, but commercial aviation was very slow to catch on with the general public, most of whom were afraid to ride in the new flying machines. Improvements in aircraft design also were slow. However, with the advent of World War I, the military value of aircraft was quickly recognized and production increased significantly to meet the soaring demand for planes from governments on both sides of the Atlantic. Most significant was the development of more powerful motors, enabling aircraft to reach speeds of up to 130 miles per hour, more than twice the speed of pre-war aircraft. Increased power also made larger aircraft possible. At the same time, the war was bad for commercial aviation in several respects. It focused all design and production efforts on building military aircraft. In the publics mind, flying became associated with bombing

runs, surveillance and aerial dogfights. In addition, there was such a large surplus of planes at the end of the war that the demand for new production was almost nonexistent for several years - and many aircraft builders went bankrupt. Some European countries, such as Great Britain and France, nurtured commercial aviation by starting air service over the English Channel. However, nothing similar occurred in the United States, where there were no such natural obstacles isolating major cities and where railroads could transport people almost as fast as an airplane, and in considerably more comfort. The salvation of the U.S. commercial aviation industry following World War I was a government program, but one that had nothing to do with the transportation of people. Airmail By 1917, the U.S. government felt enough progress had been made in the development of planes to warrant something totally new - the transport of mail by air. That year, Congress appropriated $100,000 for an experimental airmail service to be conducted jointly by the Army and the Post Office between Washington and New York, with an intermediate stop in Philadelphia. The first flight left Belmont Park, Long Island for Philadelphia on May 14, 1918 and the next day continued on to Washington, where it was met by President Woodrow Wilson. With a large number of war-surplus aircraft in hand, the Post Office set its sights on a far more ambitious goal - transcontinental air service. It opened the first segment, between Chicago and Cleveland, on May 15, 1919 and completed the air route on September 8, 1920, when the most difficult part of the route, the Rocky Mountains, was spanned. Airplanes still could not fly at night when the service first began, so the mail was handed off to trains at the end of each day. Nonetheless, by using airplanes the Post Office was able to shave 22 hours off coast-to-coast mail deliveries. Beacons In 1921, the Army deployed rotating beacons in a line between Columbus and Dayton, Ohio, a distance of about 80 miles. The beacons, visible to pilots at 10-second intervals, made it possible to fly the route at night. The Post Office took over the operation of the guidance system the following year, and by the end of 1923, constructed similar beacons between Chicago and Cheyenne, Wyoming, a line later extended coast-to-coast at a cost of $550,000. Mail then could be delivered across the continent in as little as 29 hours eastbound and 34 hours westbound - prevailing winds from west to east accounted for the difference which was at least two days less than it took by train. The Contract Air Mail Act of 1925 By the mid-1920s, the Post Office mail fleet was flying 2.5 million miles and delivering 14 million letters annually. However, the government had no intention of continuing airmail service on its own. Traditionally, the Post Office had used private companies for the transportation of mail. So, once the feasibility of airmail was firmly established and airline facilities were in place, the government moved to transfer airmail service to the private sector, by way of competitive bids. The legislative authority for the move was the Contract Air Mail Act of 1925, commonly referred to as the Kelly Act after its chief sponsor, Rep. Clyde Kelly of Pennsylvania. This was the first major step toward the creation of a private U.S. airline industry. Winners of the initial five contracts were National Air Transport (owned by the Curtiss Aeroplane Co.), Varney Air Lines, Western Air Express, Colonial Air Transport and Robertson Aircraft Corporation. National and Varney would later become important parts of United Air Lines (originally a joint venture of the Boeing Airplane Company and Pratt & Whitney). Western would merge with Transcontinental Air Transport (TAT), another Curtiss subsidiary, to form Transcontinental and Western Air (TWA). Robertson would become part of the Universal Aviation Corporation, which in turn would merge with Colonial, Southern Air Transport and others, to form American Airways, predecessor of American Airlines. Juan Trippe, one of the original partners in Colonial, later pioneered international air travel with Pan Am - a carrier he founded in 1927 to transport mail between Key West, Florida, and Havana, Cuba. Pitcairn Aviation, yet another Curtiss subsidiary that got its start transporting mail, would become Eastern Air Transport, predecessor of Eastern Air Lines.

The Morrow Board

The same year Congress passed the Contract Air Mail Act, President Calvin Coolidge appointed a board to recommend a national aviation policy (a much-sought-after goal of then Secretary of Commerce Herbert Hoover). Dwight Morrow, a senior partner in J.P. Morgans bank, and later the father-in-law of Charles Lindbergh, was named chairman. The board heard testimony from 99 people, and on November 30, 1925, submitted its report to President Coolidge. The report was wide-ranging, but its key recommendation was that the government should set standards for civil aviation and that the standards should be set outside of the military. The Air Commerce Act of 1926 Congress adopted the recommendations of the Morrow Board almost to the letter in the Air Commerce Act of 1926. The legislation authorized the Secretary of Commerce to designate air routes, to develop air navigation systems, to license pilots and aircraft, and to investigate accidents. The act brought the government into commercial aviation as regulator of the private airlines spawned by the Kelly Act of the previous year. Congress also adopted the boards recommendation for airmail contracting, by amending the Kelly Act to change the method of compensation for airmail services. Instead of paying carriers a percentage of the postage paid, the government would pay them according to the weight of the mail. This simplified payments, and proved highly advantageous to the carriers, which collected $48 million from the government for the carriage of mail between 1926 and 1931. Ford's Tin Goose Henry Ford, the automobile manufacturer, was also among the early successful bidders for airmail contracts, winning the right, in 1925, to carry mail from Chicago to Detroit and Cleveland aboard planes his company already was using to transport spare parts for his automobile assembly plants. More importantly, he jumped into aircraft manufacturing, and in 1927, produced the Ford Trimotor, commonly referred to as the Tin Goose. It was one of the first all-metal planes, made of a new material, duralumin, which was almost as light as aluminum but twice as strong. It also was the first plane designed primarily to carry passengers rather than mail. The Ford Trimotor had 12 passenger seats; a cabin high enough for a passenger to walk down the aisle without stooping; and room for a "stewardess," or flight attendant, the first of whom were nurses, hired by United in 1930 to serve meals and assist airsick passengers. The Tin Gooses three engines made it possible to fly higher and faster (up to 130 miles per hour), and its sturdy appearance, combined with the Ford name, had a reassuring effect on the publics perception of flying. However, it was another event, in 1927, that brought unprecedented public attention to aviation and helped secure the industrys future as a major mode of transportation. Charles Lindbergh At 7:52 a.m. on May 20, 1927, a young pilot named Charles Lindbergh set out on an historic flight across the Atlantic Ocean, from New York to Paris. It was the first trans-Atlantic non-stop flight in an airplane, and its effect on both Lindbergh and aviation was enormous. Lindbergh became an instant American hero. Aviation became a more established industry, attracting millions of private investment dollars almost overnight, as well as the support of millions of Americans. The pilot who sparked all of this attention had dropped out of engineering school at the University of Wisconsin to learn how to fly. He became a barnstormer, doing aerial shows across the country, and eventually joined the Robertson Aircraft Corporation, to transport mail between St. Louis and Chicago. In planning his trans-Atlantic voyage, Lindbergh daringly decided to fly by himself, without a navigator, so he could carry more fuel. His plane, the Spirit of St. Louis, was slightly less than 28 feet in length, with a wingspan of 46 feet. It carried 450 gallons of gasoline, which comprised half its takeoff weight. There was too little room in the cramped cockpit for navigating by the stars, so Lindbergh flew by dead reckoning. He divided maps from his local library into thirty-three 100-mile segments, noting the heading he would follow as he flew each segment. When he first sighted the coast of Ireland, he was almost exactly on the route he had plotted, and he landed several hours later, with 80 gallons of fuel to spare. Lindberghs greatest enemy on his journey was fatigue. The trip took an exhausting 33 hours, 29 minutes and 30 seconds, but he managed to keep awake by sticking his head out the window to inhale cold air, by holding

his eyelids open, and by constantly reminding himself that if he fell asleep he would perish. In addition, he had a slight instability built into his airplane that helped keep him focused and awake. Lindbergh landed at Le Bourget Field, outside of Paris, at 10:24 p.m. Paris time on May 21. Word of his flight preceded him and a large crowd of Parisians rushed out to the airfield to see him and his little plane. There was no question about the magnitude of what he had accomplished. The Air Age had arrived. The Watres Act and the Spoils Conference In 1930, Postmaster General Walter Brown pushed for legislation that would have another major impact on the development of commercial aviation. Known as the Watres Act (after one of its chief sponsors, Rep. Laurence H. Watres of Pennsylvania), it authorized the Post Office to enter into longer-term contracts for airmail, with rates based on space or volume, rather than weight. In addition, the act authorized the Post Office to consolidate airmail routes, where it was in the national interest to do so. Brown believed the changes would promote larger, stronger airlines, as well as more coast-to-coast and nighttime service. Immediately after Congress approved the act, Brown held a series of meetings in Washington to discuss the new contracts. The meetings were later dubbed the Spoils Conference because Brown gave them little publicity and directly invited only a handful of people from the larger airlines. He designated three transcontinental mail routes and made it clear that he wanted only one company operating each service rather than a number of small airlines handing the mail off to one another. His actions brought political trouble that resulted in major changes to the system two years later. Scandal and the Air Mail Act of 1934 Following the Democratic landslide in the election of 1932, some of the smaller airlines began complaining to news reporters and politicians that they had been unfairly denied airmail contracts by Brown. One reporter discovered that a major contract had been awarded to an airline whose bid was three times higher than a rival bid from a smaller airline. Congressional hearings followed, chaired by Sen. Hugo Black of Alabama, and by 1934 the scandal had reached such proportions as to prompt President Franklin Roosevelt to cancel all mail contracts and turn mail deliveries over to the Army. The decision was a mistake. The Army pilots were unfamiliar with the mail routes, and the weather at the time they took over the deliveries, February 1934, was terrible. There were a number of accidents as the pilots flew practice runs and began carrying the mail, leading to newspaper headlines that forced President Roosevelt to retreat from his plan only a month after he had turned the mail over to the Army By means of the Air Mail Act of 1934, the government once again returned airmail transportation to the private sector, but it did so under a new set of rules that would have a significant impact on the industry. Bidding was structured to be more competitive, and former contract holders were not allowed to bid at all, so many companies were reorganized. The result was a more even distribution of the governments mail business and lower mail rates that forced airlines and aircraft manufacturers to pay more attention to the development of the passenger side of the business. In another major change, the government forced the dismantling of the vertical holding companies common up to that time in the industry, sending aircraft manufacturers and airline operators (most notably Boeing, Pratt & Whitney, and United Air Lines) their separate ways. The entire industry was now reorganized and refocused. Aircraft Innovations For the airlines to attract passengers away from the railroads, they needed both larger and faster airplanes. They also needed safer airplanes. Accidents, such as the one in 1931 that killed Notre Dame Football Coach Knute Rockne along with six others, kept people from flying Aircraft manufacturers responded to the challenge. There were so many improvements to aircraft in the 1930s that many believe it was the most innovative period in aviation history. Air-cooled engines replaced water-cooled engines, reducing weight and making larger and faster planes possible. Cockpit instruments also improved, with better altimeters, airspeed indicators, rate-of-climb indicators, compasses, and the

introduction of artificial horizon, which showed pilots the attitude of the aircraft relative to the ground important for flying in reduced visibility Radio Another development of enormous importance to aviation was radio. Aviation and radio developed almost in lock step. Marconi sent his first message across the Atlantic on the airwaves just two years before the Wright Brothers first flight at Kitty Hawk. By World War I, some pilots were taking radios up in the air with them so they could communicate with people on the ground. The airlines followed suit after the war, using radio to transmit weather information from the ground to their pilots, so they could avoid storms An even more significant development, however, was the realization that radio could be used as an aid to navigation when visibility was poor and visual navigation aids, such as beacons, were useless. Once technical problems were worked out, the Department of Commerce constructed 83 radio beacons across the country. They became fully operational in 1932, automatically transmitting directional beams, or tracks, that pilots could follow to their destination. Marker beacons came next, allowing pilots to locate airports in poor visibility. The first air traffic control tower was established in 1935 at what is now Newark International Airport in New Jersey The First Modern Airliners Boeing built what generally is considered the first modern passenger airliner, the Boeing 247. It was unveiled in 1933, and United Air Lines promptly bought 60 of them. Based on a low-wing, twin-engine bomber with retractable landing gear built for the military, the 247 accommodated 10 passengers and cruised at 155 miles per hour. Its cabin was insulated, to reduce engine noise levels inside the plane, and it featured such amenities as upholstered seats and a hot water heater to make flying more comfortable to passengers. Eventually, Boeing also gave the 247 variable-pitch propellers, that reduced takeoff distances, increased the rate of climb, and boosted cruising speeds Not to be outdone by United, TWA went searching for an alternative to the 247 and eventually found what it wanted from the Douglas Aircraft Company. Its DC-1 incorporated Boeings innovations and improved upon many of them. The DC-1 had a more powerful engine and accommodations for two more passengers than did the 247. More importantly, the airframe was designed so that the skin of the aircraft bore most of the stress on the plane during flight. There was no interior skeleton of metal spars, thus giving passengers more room than they had in the 247. The DC-1 also was easier to fly. It was equipped with the first automatic pilot and the first efficient wing flaps, for added lift during takeoff. However, for all its advancements, only one DC-1 was ever built. Douglas decided almost immediately to alter its design, adding 18 inches to its length so it could accommodate two more passengers. The new, longer version was called the DC-2 and it was a big success, but the best was still to come The DC-3 Called the plane that changed the world, the DC-3 was the first aircraft to enable airlines to make money-carrying passengers. As a result, it quickly became the dominant aircraft in the United States, following its debut in 1936 with American Airlines (which played a key role in its design). The DC-3 had 50 percent greater passenger capacity than the DC-2 (21 seats versus 14), yet cost only ten percent more to operate. It also was considered a safer plane, built of an aluminum alloy stronger than materials previously used in aircraft construction. It had more powerful engines (1,000 horsepower versus 710 horsepower for the DC-2), and it could travel coast to coast in only 16 hours - a fast trip for that time. Another important improvement was the use of a hydraulic pump to lower and raise the landing gear. This freed pilots from having to crank the gear up and down during takeoffs and landings. For greater passenger comfort, the DC-3 had a noise-deadening plastic insulation, and seats set in rubber to minimize vibrations. It was a fantastically popular airplane, and it helped attract many new travelers to flying.

Pressurized Cabins Although planes such as the Boeing 247 and the DC-3 represented significant advances in aircraft design, they had a major drawback. They could fly no higher than 10,000 feet, because people became dizzy and even fainted, due to the reduced levels of oxygen at higher altitudes. The airlines wanted to fly higher, to get above the air turbulence and storms common at lower altitudes. Motion sickness was a problem for many airline passengers, and an inhibiting factor to the industrys growth. The breakthrough came at Boeing with the Stratoliner, a derivation of the B-17 bomber introduced in 1940 and first flown by TWA. It was the first pressurized aircraft, meaning that air was pumped into the aircraft as it gained altitude to maintain an atmosphere inside the cabin similar to the atmosphere that occurs naturally at lower altitudes. With its regulated air compressor, the 33-seat Stratoliner could fly as high as 20,000 feet and reach speeds of 200 miles per hour. The Civil Aeronautics Act of 1938 Government decisions continued to prove as important to aviations future as technological breakthroughs, and one of the most important aviation bills ever enacted by Congress was the Civil Aeronautics Act of 1938. Until that time, numerous government agencies and departments had a hand in aviation policy. Airlines sometimes were pushed and pulled in several directions, and there was no central agency working for the long-term development of the industry. All the airlines had been losing money, since the postal reforms in 1934 significantly reduced the amount they were paid for carrying the mail. The airlines wanted more rationalized government regulation, through an independent agency, and the Civil Aeronautics Act gave them what they needed. It created the Civil Aeronautics Authority (CAA) and gave the new agency power to regulate airline fares, airmail rates, interline agreements, mergers and routes. Its mission was to preserve order in the industry, holding rates to reasonable levels while, at the same time nurturing the still financially-shaky airline industry, thereby encouraging the development of commercial air transportation. Congress created a separate agency - the Air Safety Board - to investigate accidents. In 1940, however, President Roosevelt convinced Congress to transfer the accident investigation function to the CAA, which was then renamed the Civil Aeronautics Board (CAB). These moves, coupled with the tremendous progress made on the technological side, put the industry on the road to success. World War II Aviation had an enormous impact on the course of World War II and the war had just as significant an impact on aviation. There were fewer than 300 air transport aircraft in the United States when Hitler marched into Poland in 1939. By the end of the war, U.S. aircraft manufacturers were producing 50,000 planes a year. Most of the planes, of course, were fighters and bombers, but the importance of air transports to the war effort quickly became apparent as well. Throughout the war, the airlines provided much needed airlift to keep troops and supplies moving, to the front and throughout the production chain back home. For the first time in their history, the airlines had far more business - for passengers as well as freight - than they could handle. Many of them also had opportunities to pioneer new routes, gaining an exposure that would give them a decidedly broader outlook at wars end. While there were numerous advances in U.S. aircraft design during the war, that enabled planes to go faster, higher, and farther than ever before, mass production was the chief goal of the United States. The major innovations of the wartime period - radar and jet engines - occurred in Europe. The Jet Engine Isaac Newton was the first to theorize, in the 18th century, that a rearward-channeled explosion could propel a machine forward at a great rate of speed. However, no one found a practical application for the theory until Frank Whittle, a British pilot, designed the first jet engine in 1930. Even then, widespread skepticism about the commercial viability of a jet prevented Whittles design from being tested for several years.

The Germans were the first to build and test a jet aircraft. Based on a design by Hans von Ohain, a student whose work was independent of Whittles, it flew in 1939, although not as well as the Germans had hoped. It would take another five years for German scientists to perfect the design, by which time it was, fortunately, too late to affect the outcome of the war. Whittle also improved his jet engine during the war, and in 1942 he shipped an engine prototype to General Electric in the United States. Americas first jet plane - the Bell P-59 - was built the following year. Radar Another technological development with a much greater impact on the wars outcome (and later on commercial aviation) was radar. British scientists had been working on a device that could give them early warning of approaching enemy aircraft even before the war began, and by 1940 Britain had a line of radar transceivers along its east coast that could detect German aircraft the moment they took off from the Continent. British scientists also perfected the cathode ray oscilloscope, which produced map-type outlines of surrounding countryside and showed aircraft as a pulsing light. Americans, meanwhile, found a way to distinguish between enemy aircraft and allied aircraft by installing transponders aboard the latter that signaled their identity to radar operators. Dawn of the Jet Age Aviation was poised to advance rapidly following the war, in large part because of the development of jets, but there still were significant problems to overcome. In 1952, a 36-seat British-made jet, the Comet, flew from London to Johannesburg, South Africa, at speeds as high as 500 miles per hour. Two years later, the Comets career ended abruptly following two back-to-back accidents in which the fuselage burst apart during flight - the result of metal fatigue. The Cold War between the Soviet Union and the United States, following World War II, helped secure the funding needed to solve such problems and advance the jets development. Most of the breakthroughs related to military aircraft that later were applied to the commercial sector. For example, Boeing employed a swept-back wing design for its B-47 and B-52 bombers to reduce drag and increase speed. Later, the design was incorporated into commercial jets, making them faster and thus more attractive to passengers. The best example of military - civilian technology transfer was the jet tanker Boeing designed for the Air Force to refuel bombers in flight. The tanker, the KC-135, was a huge success as a military plane, but even more successful when revamped and introduced, in 1958, as the first U.S. passenger jet, the Boeing 707. With a length of 125 feet and four engines with 17,000 pounds of thrust each, the 707 could carry up to 181 passengers and travel at speeds of 550 miles per hour. Its engines proved more reliable than piston-driven engines - producing less vibration, putting less stress on the planes airframe and reducing maintenance expenses. They also burned kerosene, which cost half as much as the high-octane gasoline used in more traditional planes. With the 707, first ordered and operated by Pan Am, all questions about the commercial feasibility of jets were answered. The Jet Age had arrived, and other airlines soon were lining up to buy the new aircraft. The Federal Aviation Act of 1958 Following World War II, air travel soared, but with the industrys growth came new problems. In 1956 two aircraft collided over the Grand Canyon, killing 128 people. The skies were getting too crowded for existing systems of aircraft separation, and Congress responded by passing the Federal Aviation Act of 1958. The legislation created a new safety regulatory agency, the Federal Aviation Agency, later called the Federal Aviation Administration (FAA) when Congress created the Department of Transportation (DOT) in 1967. The agency was charged with establishing and running a broad air traffic control system, to maintain safe separation of all commercial aircraft through all phases of flight. In addition, it assumed jurisdiction over all other aviation safety matters, such as the certification of aircraft designs, and airline training and maintenance programs. The Civil Aeronautics Board retained jurisdiction over economic matters, such as airline routes and rates.

Widebodies and Supersonics 1969 marked the debut of another revolutionary aircraft, the Boeing 747, which, again, Pan Am was the first to purchase and fly in commercial service. It was the first widebody jet, with two aisles, a distinctive upper deck over the front section of the fuselage, and four engines. With seating for as many as 450 passengers, it was twice as big as any other Boeing jet and 80 percent bigger than the largest jet up until that time, the DC8. Recognizing the economies of scale to be gained from larger jets, other aircraft manufacturers quickly followed suit. Douglas built its first widebody, the DC-10, in 1970, and only a month later, Lockheed flew its contender in the widebody market, the L-1011. Both of these jets had three engines (one under each wing and one on the tail) and were smaller than the 747, seating about 250 passengers. During the same period of time, efforts were underway in both the United States and Europe to build a supersonic commercial aircraft. The Soviet Union was the first to succeed, testing the Tupolev 144 in December of 1968. A consortium of West European aircraft manufacturers first flew the Concorde two months later and eventually produced a number of those fast, but small, jets for commercial service. U.S. efforts to produce a supersonic passenger jet, on the other hand, stalled in 1971 due to public concern about its expense and the sonic boom produced by such aircraft. Airline Handbook Chapter 2: Deregulation The Airline Deregulation Act Today's airline industry is radically different from what it was prior to 1978. At that time, the industry resembled a public utility, with a government agency, the Civil Aeronautics Board (CAB), determining the routes each airline flew and overseeing the prices they charged. Today, it is a market-driven industry, with customer demand determining the levels of service and price. The turning point was the Airline Deregulation Act, approved by Congress on October 24, 1978 and signed into law four days later by President Jimmy Carter. Pressure for airline deregulation had been building for many years, particularly among economists who pointed out, in numerous studies, that unregulated intrastate airfares were substantially lower than fares for interstate flights of comparable distances. However, it was a series of developments in the mid-1970s that intensified the pressure and brought the issue to a head. Events Leading to Deregulation One of those developments was the advent of widebody aircraft, which significantly boosted airline capacity on many routes. Another was the Middle Eastern oil embargo in 1973, which led to skyrocketing fuel costs and contributed generally to price inflation. Both coincided with an economic downturn that put severe strain on the airlines. Business was falling at the same time that capacity and fuel prices were rising. In line with its mandate to ensure a reasonable rate of return for the carriers, the CAB responded to this crisis by allowing carriers to increase fares. It also embarked on a four-year moratorium on authorizing new services and approved a series of agreements among the carriers to limit capacity on major routes. None of these moves were popular with the public. It cost more to fly. Furthermore, the CAB action did little to improve the carriers' financial picture. Earnings were poor throughout the mid-70s, despite these fare increases and capacity constraints. In 1974, the Ford Administration began to press for government regulatory reforms, in response to a growing public sentiment that government regulations were overly burdensome to U.S. industry and were contributing significantly to inflation. Shortly thereafter, Sen. Edward Kennedy chaired hearings of the Senate Subcommittee on Administrative Practice and Procedure that concluded airline prices in particular would fall automatically if government constraints on competition were lifted. The staff of the CAB reached the same conclusion in a report issued in 1975. The report said the industry was "naturally competitive, not monopolistic," and that the CAB itself could no longer justify entry controls or

public utility-type pricing. On its own, the board began to loosen its grip on the industry, acting at first under the leadership of John E. Robson, and later under Alfred E. Kahn, who became CAB chairman in 1977. Mr. Kahn, an economist, was persuasive in arguing that the board should give the airlines greater pricing freedom and easier access to routes. Air Cargo Deregulation Congress took the first legislative steps toward airline economic deregulation in November of 1977, when it gave cargo carriers freedom to operate on any domestic route and charge whatever the market would bear. Congress also declared that one year following enactment of the bill, the CAB could certify new domestic cargo carriers as long as they were found "fit, willing, and able." No longer would there have to be the more demanding, and therefore restrictive, finding of public convenience and necessity, as there had been in the past. Express Package Delivery There was another important development following cargo deregulation - the rapid expansion of overnight delivery of documents and small packages. Deregulation produced dramatic results for all aspects of the cargo business, but particularly express package delivery. Overnight delivery of high-value and time-sensitive packages and documents began in the early 1970s. However, it was deregulation that really opened the door to success for such services. Deregulation gave express carriers the operating freedom such high-quality services demand, and the result was outstanding growth for that segment of the aviation industry over the next decade. In 1994, Congress further encouraged the development of this part of the airline industry by preempting state efforts to regulate intrastate air/truck freight and air express package shipments. Passenger Deregulation The same principle of free-market competition was next applied to the passenger side of the business in the Airline Deregulation Act of 1978. Restrictions on domestic routes and schedules were eliminated along with government controls over domestic rates. Eventually, the CAB itself was disbanded. Congress mandated that domestic route and rate restrictions be phased out over four years. It provided for complete elimination of restrictions on routes and new services by December 31, 1981, and the end of all rate regulation by January 1, 1983. The CAB actually moved much more quickly than that. It began granting new route authority so readily that within a year of the law's passage carriers were able to launch virtually any domestic service they wanted. The CAB ceased to exist on January 1, 1985, although several board functions shifted to other government agencies, primarily the Department of Transportation. What Remains Regulated International Among the CAB functions shifted to other parts of the government were the responsibility for awarding landing rights and other privileges in foreign countries to U.S. carriers. International air services are usually governed by air-transport service agreements, referred to as bilaterals, between two nations. These agreements specify such things as the cities each nations' airlines may serve, the number of flights they may operate, and how much regulatory authority the governments will exercise over fares. Bilateral negotiations involving the United States are led by the State Department, with active DOT policy input and participation. In the 1990s, the United States made a concerted effort to liberalize its international aviation markets, in view of strong airline traffic growth, more liberal trade policies by many partners and the increasing importance of global airline alliances. This effort has been very successful, and as of April 2000, the U.S. had concluded 45 "Open Skies" agreements, which exchange traffic rights, without any limitation on routes, the number of

carriers or capacity; and provide liberal regimes for pricing, charters, cooperative marketing agreements and other commercial opportunities. In cases where the agreements are less liberal and some restrictions exist, it is the tasks of the DOT to decide which U.S. airlines get those rights through traditional administrative processes. Antitrust Exemption The CAB, because of its comprehensive regulatory jurisdiction over the airline industry, had the authority to approve agreements between airlines and to grant antitrust immunity to those transactions that it approved. With the sunset of the CAB, DOT received authority to approve and immunize agreements affecting international air transportation; however, the authority over domestic transactions lapsed. Essential Air Service Another function assigned to DOT with the demise of the CAB was the responsibility for maintaining air service to small communities. With carriers free to go wherever they want, Congress anticipated that some of the lightly traveled routes would lose service. To assure appropriate service, it established the Essential Air Service program, which provides subsidies to carriers willing to serve domestic locations that otherwise would be economically infeasible to serve. DOT administers the program, determining subsidy levels and soliciting bids from carriers. Safety As Chapter 6 explains in greater detail, the government continues to regulate the airlines on all matters affecting safety. The government has performed this regulatory role since 1926, and continues to do so through the Federal Aviation Administration. The Airline Deregulation Act ended government economic regulation of airline routes and rates, but not airline safety. Effects of Deregulation Hub and Spoke A major development that followed deregulation was the widespread development of hub-and-spoke networks, which existed on a more limited basis prior to 1978. Hubs are strategically located airports used as transfer points for passengers and cargo traveling from one community to another. They are also collection points for passengers and cargo traveling to and from the immediate region to other parts of the country or points overseas. Airlines schedule banks of flights into and out of their hubs several times a day. Each bank includes dozens of planes arriving within minutes of each other. Once on the ground, the arriving passengers and cargo from those flights are transferred conveniently to other planes, that will take them to their final destinations. Airlines developed hub-and-spoke systems because they enable them to serve far more markets than they could with the same size fleet, if they offered only direct, point-to-point service. At a hub, travelers can connect to dozens, sometime hundreds, of flights to different cities, and often can do so several times of day. An airline with a hub-and-spoke system, thus, has a better chance of keeping its passengers all the way to their final destination, rather than handing them off to other carriers. Travelers enjoy the advantage of staying with a single airline. The carriers also found that with hub-and-spoke systems they could achieve higher load factors (percentage of seats filled) on flights to and from small cities, which in turn lowered unit operating costs and enabled them to offer lower fares. A city of 100,000 residents, for example, is unlikely to generate enough passengers to any single destination to fill more than a handful of seats aboard a commercial jet. However, it may very well generate passengers going to a number of different destinations. Operating a jet into a hub, where passengers can connect to dozens of different cities, therefore, makes economic sense for small-city markets. Most of the major airlines maintain hub-and-spoke systems, with hubs in several locations across the United States. Geographic location, of course, is a prime consideration in deciding where to put a hub. Another is the

size of the local market. Airlines prefer to locate their hub airports at cities where there already is significant "origin and destination" traffic to help support their flights. New Carriers Deregulation did more than prompt a major reshuffling of service by existing carriers. It opened the airline business to newcomers just as Congress intended. In 1978, there were 43 carriers certified for scheduled service with large aircraft. Today, the number of carriers has doubled. The number has fluctuated over the years, with changing market conditions. By 1998, however, the number again was on the rise as new airlines offering direct, low-cost, no-frills service began to emerge. The new airlines were a result of several factors, most notably low prices for used aircraft and the availability of pilots, mechanics and other airline professionals. Increased Competition The appearance of new airlines, combined with the rapid expansion into new markets by many of the established airlines, resulted in unprecedented competition in the airline industry. Today, 85 percent of airline passengers have a choice of two or more carriers, compared with only two-thirds in 1978. The airlines compete intensely with one another in virtually all major markets. The growth of hub-and-spoke systems resulted in increasing competition in small markets that would not normally support competitive service with a linear route system. Proportionately, the biggest increase in competition occurred in the small- and mediumsized markets. Discount Fares Increased competition spawned discount fares, and from the traveler's perspective, the discounts are the most important result of airline deregulation. Fares have declined more than 35 percent in real terms since deregulation in 1978. They have become so low, in fact, that interstate bus and rail service has been hard pressed to compete with the airlines, which today provide the primary means of public transportation between cities in the United States. The Brookings Institute, in 1999, estimated that the traveling public was saving in excess of $20 billion a year as a result of deregulation. Fifty-five percent of the savings resulted from lower fares; 45 percent from increased service frequency, which helps reduce the number of nights travelers must spend on the road. More than 90 percent of air travel today involves a discount, with discounts averaging two-thirds off full fare. Growth in Air Travel With greater competition on the vast majority of routes, extensive discounting, and more available flights, air travel has grown rapidly since deregulation. In 1977, the last full year of government regulation of the airline industry, U.S. airlines carried 240 million passengers. By 1999 they were carrying nearly 640 million. A recent Gallup survey revealed that 80 percent of the U.S. adult population had flown at least once, more than onethird of them in the previous 12 months. Frequent Flyer Programs Deregulation also sparked marketing innovations, the most noteworthy being frequent flyer programs, which reward repeat customers with free tickets and other benefits. Most major airlines have such a program, and many small carriers have their own programs, as well as tie-ins to larger programs. While the programs vary, the essential elements are the same. Once a customer enrolls, he or she is credited with points for every mile flown with the sponsoring carrier or with other airlines tied into the sponsor's program. The rewards (free tickets and upgrades that convert coach tickets to first class or business class tickets) are pegged to certain point totals. A more recent development has been the marriage of frequent flyer programs with promotions in other industries in general, and the credit card industry in particular. It is now possible to build up frequent flyer points by purchasing things other than airline tickets, and in some cases to exchange miles for other goods and services.

Programs Computer Reservation System (CRS) Another important development following deregulation was the advent of computer reservation systems. These systems help airlines and travel agents keep track of fare and service changes, which occur very rapidly today. The systems also enable airlines and travel agents to efficiently process the millions of passengers who fly each day. Several major airlines developed their own systems and later sold partnerships in their systems to other airlines. The systems list not only the schedules and fares of their airline owners, but also those of any other airline willing to pay a fee to have their flights listed. Travel agents using the systems to check schedules and fares for clients, as well as to print tickets, also pay various fees for those conveniences. Codesharing Another innovation has been the development of codesharing agreements. These agreements enable a ticketing airline to issue tickets on the operating airline and to use that operating airline's two-letter code when doing so. Codesharing agreements can be between a larger airline and a regional airline or between a U.S. airline and a foreign airline. Codesharing agreements allow two different airlines to offer better coordinated services to their customers. The codesharing agreements also usually tie each airline's marketing and frequent flyer programs, provide for schedule coordination for convenient connections between carriers, and in most cases, permit smaller airlines to paint their planes with markings similar to those used by their larger partners. All the major airlines have codesharing agreements with regional carriers; in most cases with several regionals and also with other nationals and majors. Some also own regional carriers outright, giving them greater control over these important services that feed traffic from outlying areas into the major hubs. Codesharing also applies to international routes. Many U.S. and foreign airlines now have codesharing agreements that essentially enable those airlines to expand their global reach through the services operated by their partners. Codesharing differs from interlining, a much older industry practice in which a carrier simply hands off a passenger to another carrier to get the passenger to a destination the first carrier does not serve directly. In such situations, the passenger buys a single ticket, and the airline issuing the ticket makes the arrangements for the traveler on the second carrier. However, schedules are not necessarily coordinated, there are no frequent flyer tie-ins, and there is no sharing of codes in computer reservation systems. The flights of each carrier appear independently in the CRSs. Airline Handbook Chapter 3: Structure of the Industry Types of Airline Certification U.S. scheduled airlines are classified by the government on the basis of the amount of revenue generated from operations. These classifications are major, national and regional. All airlines hold two certificates from the federal government: a fitness certificate and an operating certificate. The Department of Transportation (DOT) issues fitness certificates - called certificates of public convenience and necessity - under it's statutory authority. Basically, the certificate establishes that the carrier has the financing and the management in place to provide scheduled service. The certificate typically authorizes both passenger and cargo service. Some airlines, however, obtain only cargo-service authority. Commuter airlines that use aircraft with a seating capacity of 60 or fewer seats or a maximum payload capacity of no more than 18,000 pounds can operate under the alternative authority of Part 298 of DOTs economic regulations. Operating certificates, on the other hand, are issued by the Federal Aviation Administration (FAA) under Part 121 of the Federal Aviation Regulations (FARs), which spell out numerous requirements for operating aircraft

with 10 or more seats. The requirements cover such things as the training of flight crews and aircraft maintenance programs. All majors, nationals and regionals operate with a Part 121 certificate. Majors Major airlines generate operating revenues of more than $1 billion annually. Previously called trunk carriers, they generally provide nationwide, and in some cases, worldwide service. There were 12 major U.S. passenger airlines in 2000: Alaska, America West, American, American Eagle, American Trans Air, Continental, Delta, Northwest, Southwest, Trans World, United and US Airways. In addition, three all-cargo airlines were classified as majors: DHL Airways, FedEx and United Parcel Service. Nationals National carriers are scheduled airlines with annual operating revenues between $100 million and $1 billion. Many of the airlines in this category serve particular regions of the country, although some provide long-haul and even international service. Among the nationals are some of the former local service lines that, prior to deregulation, were licensed by the Civil Aeronautics Board (CAB) to operate between major cities and smaller communities surrounding them. Also in this category are some of the former supplemental carriers, previously licensed by the CAB to operate unscheduled charter service, which supplemented the capacity of the trunk carriers. Like the majors, nationals operate mostly medium- and large-sized jets. They are subject to DOT fitness requirements, as well as the FAA Part 121 operating requirements. Among todays nationals are Aloha, Atlas Air, Emery Worldwide, Evergreen, Hawaiian, Midwest Express and Polar Air Cargo. Regionals As their name implies, regional carriers are airlines whose service, for the most part, is limited to a single region of the country, transporting travelers between the major cities of their region and smaller, surrounding communities. This has been one of the fastest growing and most profitable segments of the industry since deregulation. Regional carriers are divided into three sub-groups: large, medium and small. Large regionals are scheduled carriers with operating revenues of $20 million to $100 million. Most of their aircraft seat more than 60 passengers, so they hold DOT fitness certificates from DOT and must comply with FAA Part 121 operating requirements. Medium regionals follow the same market-niche strategy as the large regionals and operate many of the same type aircraft. Their distinction is simply that they operate on a smaller scale, with operating revenues under $20 million. Small regionals, sometimes called commuters, represent the largest segment of the regional airline business. There is no official revenue definition of a small regional. What distinguishes them as a group, more than anything else, is the size of the aircraft they operate. All have less than 61 seats, which means they do not require a fitness certificate from DOT; DOT only requires that they register their service and make certain annual reports to the department under Section 298 of the DOT economic regulations. Cargo Carriers Within the categories of major, national and regional airlines are, not only passenger carriers, but cargo carriers as well. While much of the cargo that moves by air is carried in the bellies of passenger jets or in combination aircraft where the main deck is divided into two sections, one for cargo and one for passengers; other aircraft in use by principally all cargo carriers, called freighters, carry nothing but freight. Freighters are, most often, passenger jets that have been stripped of their seats to maximize cargo-carrying capacity. In addition, their decks are reinforced to accommodate heavier loads, and they typically have other cargo-handling features, such as rollers, built into the floors, extra-large doors, and hinged nose and tail sections.

DOT has a special fitness review procedure for all-cargo carriers, but most of the large ones hold a certificate of public convenience and necessity. Among the largest cargo carriers are companies that began in the small package and overnight document-delivery business. These are the integrated carriers, so called because they offer door-to-door service, combining the services of the traditional airline and the freight forwarder. How Major Airlines are structured Line Personnel These include everyone directly involved in producing or selling an airlines services - the mechanics, who maintain the planes; the pilots, who fly them; the flight attendants, who serve passengers and perform various inflight safety functions; the reservation clerks, airport check-in and gate personnel, who book and process the passengers; ramp-service agents, security guards, etc. Line personnel generally fall into three broad categories: engineering and maintenance, flight operations, and sales and marketing. These three divisions form the heart of an airline and generally account for 85 percent of an airlines employees. Operations This department is responsible for operating an airlines fleet of aircraft safely and efficiently. It schedules the aircraft and flight crews and it develops and administers all policies and procedures necessary to maintain safety and meet all FAA operating requirements. It is in charge of all flight-crew training; both initial and recurrent training for pilots and flight attendants, and it establishes the procedures crews are to follow before, during and after each flight to ensure safety. Dispatchers also are part of flight operations. Their job is to release flights for takeoff, following a review of all factors affecting a flight. These include the weather, routes the flight may follow, fuel requirements and both the amount and distribution of weight onboard the aircraft. Weight must be distributed evenly aboard an aircraft for it to fly safely. Maintenance Maintenance accounts for approximately 11 percent of an airlines employees and 10-15 percent of its operating expenses. Maintenance programs keep aircraft in safe, working order; ensure passenger comfort; preserve the airlines valuable physical assets (its aircraft); and ensure maximum utilization of those assets, by keeping planes in excellent condition. An airplane costs its owner money every minute of every day, but makes money only when it is flying with freight and/or passengers aboard. Therefore, it is vital to an airlines financial success that aircraft are properly maintained Airlines typically have one facility for major maintenance work and aircraft modifications, called the maintenance base; larger airlines sometimes have more than one maintenance base. Smaller maintenance facilities are maintained at an airlines hubs or primary airports, where aircraft are likely to be parked overnight. Called major maintenance stations, these facilities perform routine maintenance and stock a large supply of spare parts. A third level of inspection and repair capability is maintained at airports, where a carrier has extensive operations, although less than at its hubs. These maintenance facilities generally are called maintenance stations. Sales and Marketing This division encompasses such activities as pricing, scheduling, advertising, ticket and cargo sales, reservations and customer service, including food service. While all of them are important, pricing and scheduling in particular can make or break an airline, and both have become more complicated since deregulation. As explained in the next chapter, airline prices change frequently in response to supply and demand and to changes in the prices of competitors fares. Schedules change less often, but far more often than when the government regulated the industry. Airlines use sophisticated computer reservation systems to advertise their own fares and schedules to travel agents and to keep track of the fares and schedules of competitors. Travel agents, who sell approximately 80 percent of all airline tickets, use the same systems to

book reservations and print tickets for travelers. More information about airline pricing and scheduling can be found in Chapter 4. Reservations and Ticketing There are major changes in air transportation, which simplify the process for airline passengers to make a reservation and to purchase a ticket. Electronic commerce is playing a significant part in the airline industry. In addition to the paper tickets issued in the past, all of the major airlines are now offering electronic ticketing for domestic and international air travel. Electronic ticketing allows an airline to document the sale and track the usage of transportation. Passengers no longer worry about carrying flight coupons or losing their tickets. Passengers have the ability to shop for the lowest priced transportation, make or change a reservation, request refunds etc., not only from their travel agent but from their own personal home computer or from a telephone, on the way to the airport. A boarding pass is issued at the airport in exchange for proof of a reservation (an airline confirmation number) and payment (cash or a major credit card). The number of air travelers shopping, making reservations and purchasing electronic tickets using the Internet is increasing daily. Self-service automated ticketing machines are also widely available at major airports around the country. The next step for airlines will be to automate the check-in procedure. Electronic self-service check-in computer kiosks at major airports will soon be available for most passengers using electronic tickets. Selfservice machines will enable passengers to verify their itinerary, obtain class of service upgrades, select specific seat assignments, check baggage with bar-coded baggage tags and obtain their own boarding passes. Staff Personnel These include specialists in such fields as law, accounting, finance, employee relations and public relations. Their function is to support the work of the line personnel, so that the airline runs efficiently and earns a profit. For the most part, staff personnel work out of corporate headquarters and fall into seven broad job categories typical of major corporations: finance & property, information services, personnel, medical, legal, public relations and planning. Finance & property handles company revenues and finances. In addition, it oversees all company property and the purchase of food, fuel, aircraft parts and other supplies needed to run an airline. Information services designs and maintains the company's internal computer systems, used to store and analyze data needed for operations and planning. At an airline, this includes the important function of fleet planning, explained in greater detail in the next chapter. Subcontractors While major airlines typically do most of their own work, it is common for them to farm out certain tasks to other companies. These tasks could include aircraft cleaning, fueling, airport security, food service and in some instances, maintenance work. Airlines might contract out for all of this work or just a portion of it, keeping the jobs in house at their hubs and other key stations. However, whether an airline does the work itself or relies on outside vendors, the carrier remains responsible for meeting all applicable federal safety standards. Airline Handbook Chapter 4: Airline Economics Chief Characteristics of the Airline Business Service Industry Because of all of the equipment and facilities involved in air transportation, it is easy to lose sight of the fact that this is, fundamentally, a service industry. Airlines perform a service for their customers - transporting them and their belongings (or their products, in the case of cargo customers) from one point to another for an agreed price. In that sense, the airline business is similar to other service businesses like banks, insurance

companies or even barbershops. There is no physical product given in return for the money paid by the customer, nor inventory created and stored for sale at some later date. Capital Intensive Unlike many service businesses, airlines need more than storefronts and telephones to get started. They need an enormous range of expensive equipment and facilities, from airplanes to flight simulators to maintenance hangars. As a result, the airline industry is a capital-intensive business, requiring large sums of money to operate effectively. Most equipment is financed through loans or the issuance of stock. Increasingly, airlines are also leasing equipment, including equipment they owned previously but sold to someone else and leased back. Whatever arrangements an airline chooses to pursue, its capital needs require consistent profitability. High Cash Flow Because airlines own large fleets of expensive aircraft, which depreciate in value over time, they typically generate a substantial positive cash flow (profits plus depreciation). Most airlines use their cash flow to repay debt or acquire new aircraft. When profits and cash flow decline, an airline's ability to repay debt and acquire new aircraft is jeopardized. Labor Intensive Airlines also are labor intensive. Each major airline employs a virtual army of pilots, flight attendants, mechanics, baggage handlers, reservation agents, gate agents, security personnel, cooks, cleaners, managers, accountants, lawyers, etc. Computers have enabled airlines to automate many tasks, but there is no changing the fact that they are a service business, where customers require personal attention. More than one-third of the revenue generated each day by the airlines goes to pay its workforce. Labor costs per employee are among the highest of any industry. Highly Unionized In part because of its long history as a regulated industry, the airline industry is highly unionized. Thin Profit Margins The bottom line result of all of this is thin profit margins, even in the best of times. Airlines, through the years, have earned a net profit between one and two percent, compared to an average of above five percent for U.S. industry as a whole. Seasonal The airline business historically has been very seasonal. The summer months were extremely busy, as many people took vacations at that time of the year. Winter, on the other hand, was slower, with the exception of the holidays. The result of such peaks and valleys in travel patterns was that airline revenues also rose and fell significantly through the course of the year. This pattern continues today, although it is less pronounced than in the past. The growth in the demand for air transportation since deregulation has substantially lessened the valleys. Airline Revenue - Where the Money Comes From About 75 percent of the U.S. airline industry's revenue comes from passengers; about 15 percent from cargo shippers, the largest of which is the U.S. Postal Service. The remaining 10 percent comes from other transport-related services. For the all-cargo carriers, of course, cargo is the sole source of transportation revenue. For the major passenger airlines which also carry cargo in the bellies of their planes, less than 10 percent of revenue comes from cargo (in many cases far less). Most of the passenger revenue (nearly 80 percent) comes from domestic travel, while 20 percent comes from travel to and from destinations in other countries. More than 90 percent of the tickets sold by U.S. airlines are discounted, with discounts averaging two-thirds off full fare. Fewer than 10 percent pay full fare, most of them

last-minute business travelers. The majority of business travelers, however, receive discounts when they travel. A relatively small group of travelers (the frequent flyers who take more than 10 trips a year) account for a significant portion of air travel. While these flyers represent only eight percent of the total number of passengers flying in a given year, they make about 40 percent of the trips. Travel agencies play an important role in airline ticket sales. Eighty percent of the industry's tickets are sold by agents, most of who use airline-owned computer reservation systems to keep track of schedules and fares, to book reservations, and to print tickets for customers. Airlines pay travel agents a commission for each ticket sold. There are more than 40,000 travel agents in the United States, providing a vast network of retail outlets for air transportation. Similarly, freight forwarders book the majority of air-cargo space. Like travel agents, freight forwarders are an independent sales force for airline services, in their case working for shippers. Airline Costs - Where the Money Goes According to reports filed with the Department of Transportation in 1999, airline costs were as follows: Flying Operations - essentially any cost associated with the operation of aircraft, such as fuel and pilot salaries - 27 percent; Maintenance - both parts and labor - 13 percent;

Aircraft and Traffic Service - basically the cost of handling passengers, cargo and aircraft on the ground and including such things as the salaries of baggage handlers, dispatchers and airline gate agents - 16 percent; Promotion/Sales - including advertising, reservations and travel agent commissions - 13 percent; Passenger Service - mostly inflight service and including such things as food and flight attendant salaries - 9 percent; Transport Related - delivery trucks and inflight sales - 10 percent; Administrative - 6 percent; Depreciation/Amortization - equipment and plants - 6 percent.

Labor costs are common to nearly all of those categories. When looked at as a whole, labor accounts for 35 percent of the airlines' operating expenses and 75 percent of controllable costs. Fuel is the airlines' second largest cost (about 10 to 12 percent of total expenses), and travel-agent commission is third (about 6 percent). Commission costs, as a percent of total costs, have recently been declining, as more sales are now made directly to the customer through electronic commerce. Another rapidly rising cost has been airport landing fees and terminal rents. Break-Even Load Factors Every airline has what is called a break-even load factor. That is the percentage of the seats the airline has in service that it must sell at a given yield, or price level, to cover its costs. Since revenue and costs vary from one airline to another, so does the break-even load factor. Escalating costs push up the break-even load factor, while increasing prices for airline services have just the opposite effect, pushing it lower. Overall, the break-even load factor for the industry in recent years has been approximately 66 percent. Airlines typically operate very close to their break-even load factor. The sale of just one or two more seats on each flight can mean the difference between profit and loss for an airline.

Seat Configurations Adding seats to an aircraft increases its revenue-generating power, without adding proportionately to its costs. However, the total number of seats aboard an aircraft depends on the operator's marketing strategy. If low prices are what an airline's customers favor, it will seek to maximize the number of seats to keep prices as low as possible. On the other hand, a carrier with a strong following in the business community may opt for a large business-class section, with fewer, larger seats, because it knows that its business customers are willing to pay premium prices for the added comfort and workspace. The key for most airlines is to strike the right balance to satisfy its mix of customers and thereby maintain profitability. Overbooking Airlines occasionally overbook flights, meaning that they book more passengers for a flight than they have seats on the same flight. The practice is rooted in careful analysis of historic demand for a flight, economics and human behavior. Historically, many travelers, especially business travelers buying unrestricted, full-fare tickets, have not traveled on the flights for which they have a reservation. Changes in their own schedules may have made it necessary for them to take a different flight, maybe with a different airline, or to cancel their travel plans altogether, often with little or no notice to the airline. Some travelers, unfortunately, reserve seats on more than one flight. Both airlines and customers are advantaged when airlines sell all the seats for which they have received reservations. An airline's inventory is comprised of the seats that it has on each flight. If a customer does not fly on the flight which he or she has a reservation, his or her seat is unused and cannot be returned to inventory for future use as in other industries. This undermines the productivity of an airline's operations; it is increasing productivity, of course, that contributes to lower airfares and expanded service. Consequently, airlines sometimes overbook flights. Importantly for travelers, airlines do not overbook haphazardly. They examine the history of particular flights, in the process determining how many no-shows typically occur, and then decide how much to overbook that particular flight. The goal is to have the overbooking match the number of no-shows. In most cases the practice works effectively. Occasionally, however, when more people show up for a flight than there are seats available, airlines offer incentives to get people to give up their seats. Free tickets are the usual incentive; those volunteering are booked on another flight. Normally, there are more volunteers than the airlines need, but when there are not enough volunteers, airlines must bump passengers involuntarily. In the rare cases where this occurs, federal regulations require the airlines to compensate passengers for their trouble and help them make alternative travel arrangements. The amount of compensation is determined by government regulation. Pricing Since deregulation, airlines have had the same pricing freedom as companies in other industries. They set fares and freight rates in response to both customer demand and the prices of competitors. As a result, fares change much more rapidly than they used to, and passengers sitting in the same section on the same flight often are paying different prices for their seats. Although this may be difficult to understand for some travelers, it makes perfect sense, considering that a seat on a particular flight is of different value to different people. It is far more valuable, for instance, to a salesperson who suddenly has an opportunity to visit an important client than it is to someone contemplating a visit to a friend. The pleasure traveler likely will make the trip only if the fare is relatively low. The salesperson, on the other hand, likely will pay a higher premium in order to make the appointment. For the airlines, the chief objective in setting fares is to maximize the revenue from each flight, by offering the right mix of full-fare tickets and various discounted tickets. Too little discounting in the face of weak demand

for the flight, and the plane will leave the ground with a large number of empty seats, and revenue-generating opportunities will be lost forever. On the other hand, too much discounting can sell out a flight far in advance and preclude the airline from booking last-minute passengers that might be willing to pay higher fares (another lost-revenue opportunity). The process of finding the right mix of fares for each flight is called yield, inventory or revenue management. It is a complex process, requiring sophisticated computer software that helps an airline estimate the demand for seats on a particular flight, so it can price the seats accordingly. And, it is an ongoing process, requiring continual adjustments as market conditions change. Unexpected discounting in a particular market by a competitor, for instance, can leave an airline with too many unsold seats if they do not match the discounts. Scheduling Since deregulation, airlines have been free to serve whatever domestic markets they feel warrant their service, and they adjust their schedules often, in response to market opportunities and competitive pressures. Along with price, schedule is an important consideration for air travelers. For business travelers, schedule is often more important than price. Business travelers like to see alternative flights they may take on the same airline if, for instance, a meeting runs longer or shorter than they anticipate. A carrier that has several flights a day between two cities has a competitive advantage over carriers that serve the market less frequently, or less directly. Airlines establish their schedules in accordance with demand for their services and their marketing objectives. Scheduling, however, can be extraordinarily complex and must take into account aircraft and crew availability, maintenance needs and airport operating restrictions. Contrary to popular myth, airlines do not cancel flights because they have too few passengers for the flight. The nature of scheduled service is such that aircraft move throughout an airline's system during the course of each day. A flight cancellation at one airport, therefore, means the airline will be short an aircraft someplace else later in the day, and another flight will have to be canceled. If an airline must cancel a flight because of a mechanical problem, it may choose to cancel the flight with the fewest number of passengers and utilize that aircraft for a flight with more passengers. While it may appear to be a cancellation for economic reasons, it is not. The substitution was made in order to inconvenience the fewest number of passengers. Fleet Planning Selecting the right aircraft for the markets an airline wants to serve is vitally important to its financial success. As a result, the selection and purchase of new aircraft is usually directed by an airline's top officials, although it involves personnel from many other divisions such as maintenance and engineering, finance, marketing and flight operations. There are numerous factors to consider when planning new aircraft purchases, beginning with the composition of an airline's existing fleet. Do existing aircraft need to be replaced, what plans does the airline have to expand service, how much fuel do they burn per mile, how much are maintenance costs, and how many people are needed to fly them. These are the type of questions that must be answered. In general, newer aircraft are more efficient and cost less to operate than older aircraft. A Boeing 727, for example, is less fuel efficient than the 757 that Boeing designed to replace it. In addition, the larger 757 requires only a two-person flight crew, versus three for the 727. As planes get older, maintenance costs can also rise appreciably. However, such productivity gains must be weighed against the cost of acquiring a new aircraft. Can the airline afford to take on more debt? What does that do to profits? What is the company's credit rating, and what must it pay to borrow money? What are investors willing to pay for stock in the company if additional shares are floated? A company's finances, like those of an individual considering the purchase of a house or new car, play a key role in the aircraft acquisition process. Marketing strategies are important, too. An airline considering expansion into international markets, for example, typically cannot pursue that goal without long-range, widebody aircraft. If it has been largely a domestic carrier, it may not have that type of aircraft in its fleet. What's more, changes in markets already

served may require an airline to reconfigure its fleet. Having the right-sized aircraft for the market is vitally important. Too large an aircraft can mean that a large number of unsold seats will be moved back and forth within a market each day. Too small an aircraft can mean lost revenue opportunities. Since aircraft purchases take time (often two or three years, if there is a production backlog), airlines also must do some economic forecasting before placing new aircraft orders. This is perhaps the most difficult part of the planning process, because no one knows for certain what economic conditions will be like many months, or even years, into the future. An economic downturn coinciding with the delivery of a large number of expensive new aircraft can cause major financial losses. Conversely, an unanticipated boom in the travel market can mean lost market share for an airline that held back on aircraft purchases while competitors were moving ahead. Sometimes, airline planners determine their company needs an aircraft that does not yet exist. In such cases, they approach the aircraft manufacturers about developing a new model, if the manufacturers have not already anticipated their needs. Typically, new aircraft reflect the needs of several major airlines, because start-up costs for the production of a new aircraft are enormous, manufacturers must sell substantial numbers of a new model just to break even. They usually will not proceed with a new aircraft unless they have a launch customer, meaning an airline willing to step forward with a large order for the plane, plus smaller purchase commitments from several other airlines. There have been several important trends in aircraft acquisition since deregulation. One is the increased popularity of leasing versus ownership. Leasing reduces some of the risks involved in purchasing new technology. It also can be a less expensive way to acquire aircraft, since high-income leasing companies can take advantage of tax credits. In such cases, the tax savings to a lessor can be reflected in the lessor's price. Some carriers also use the leasing option to safeguard against hostile takeovers. Leasing leaves a carrier with fewer tangible assets that a corporate raider can sell to reduce debt incurred in the takeover. A second trend, since 1978, relates to the size of the aircraft ordered. The development of hub-and-spoke networks, as described in Chapter 2, resulted in airlines adding flights to small cities around their hubs. In addition, deregulation has enabled airlines to respond more effectively to consumer demand. In larger markets, this often means more frequent service. These considerations, in turn, increased the demand for small- and medium-sized aircraft to feed the hubs. Larger aircraft remain important for the more heavily traveled routes, but the ordering trend is toward smaller aircraft. The third trend is toward increased fuel efficiency. As the price of fuel rose rapidly in the 1970s and early 1980s, the airlines gave top priority to increasing the fuel efficiency of their fleets. That led to numerous design innovations on the part of the manufacturers. Airlines, today, average about 40 passenger miles per gallon - a statistic that compares favorably with even the most efficient autos. Similarly, the fourth trend has been in response to airline and public concerns about aircraft noise and engine emissions. Technological developments have produced quieter and cleaner-burning jets, and Congress has produced timetables for the airlines to retire or update their older jets. A ban on the operation of Stage 1 jets, such as the Boeing 707 and DC-8, has been in effect since January 1, 1985. In 1989, Congress dictated that all Stage 2 jets, such as 727s and DC-9s, were to be phased out by the year 2000. Today, Stage 3 jets, taking their place, include the Boeing 757 and the MD-80. Hush kits are also available for older engines, and some airlines have chosen to pursue this option rather than make the much greater financial commitment necessary to buy new airplanes. Others have chosen to re-engine, or replace their older, noisier engines with new ones that meet Stage 3 standards. While more expensive than hush kits, new engines have operatingcost advantages that make them the preferred option for some carriers. Airline Handbook Chapter 5: How Aircraft Fly The Bernoulli Principle Airplanes fly when the movement of air across their wings creates an upward force on the wings (and thus the rest of the plane) that is greater than the force of gravity pulling the plane toward the earth.

Daniel Bernoulli, an 18th century Swiss mathematician and scientist who studied the movement of fluids, first described the physics behind this phenomenon. Bernoulli discovered that the pressure exerted by a moving fluid is inversely proportional to the speed of the fluid. In other words, fluid pressure decreases as fluid speed increases, and vice versa. The same principle applies to moving air. The faster that air moves through a space, the lower the air pressure; the slower it moves, the higher the pressure. Aircraft wings are designed to take advantage of that fact and create the lift force necessary to overcome the weight of the aircraft, and get airplanes off the ground. The undersides of wings are more or less flat, while their tops are curved. In addition, wings are slanted slightly downward from front to back, so air moving around a wing has a longer way to travel over the top than it does underneath. The air going over the top moves faster than the air going underneath, and the air pressure above the wing thus is lower than it is under the wing, where slower moving air molecules bunch together. The pressure differential creates lift, and the faster the wing moves through the air, the greater the lift becomes, eventually overcoming the force of gravity upon the aircraft. The Phases of Flight Push-Back and Taxi-Out This first phase of flight, after all doors have been secured, involves the movement of the aircraft away from the terminal jetway and along taxiways to a runway. A motorized vehicle called a tug sometimes is used to push the aircraft back from its gate. At some airports, certain aircraft are permitted to power back. This means that following engine start at the gate, the thrust reversers are used to literally back the aircraft away from the gate. The aircraft then moves under its own power along the taxiways. Since aircraft are designed primarily for flight, and are not ground vehicles, they are taxied at very low speeds. Push-back occurs only when the pilot has clearance to do so from Air Traffic Control, which monitors all aircraft movements during taxi. Takeoff and Climb When ready for takeoff, and cleared by Air Traffic Control to proceed, the pilot or first officer of an aircraft releases the brakes and advances the throttle to increase engine power to accelerate down the runway. Once aligned on the runway, steering the aircraft is normally accomplished by using foot pedals that manipulate the nose wheel until the speed is sufficient enough that wind rushing by the rudder on the aircraft tail makes nose wheel steering unnecessary. As the aircraft gains speed, air passes faster and faster over its wings and lift is created. Instruments onboard the aircraft display this airspeed, which equals not only the speed of the plane relative to the ground, but also the speed of any wind that may be blowing toward the aircraft (aircraft normally take off headed into the wind). When the airspeed reaches a certain predetermined point known as rotation speed, the pilot manipulates panels on the tail of the aircraft to rotate the nose of the plane upward. This creates even stronger lift and the plane leaves the ground. Rotation speed, abbreviated VR, is one of three important airspeed settings calculated before every flight. The others are V1 - the speed beyond which a safe stop on a runway is no longer possible; and V2 - the minimum speed needed to keep a plane flying should an engine fail after the aircraft surpasses V1. Some of the factors affecting VR and V2 are the weight of the aircraft, the air temperature and the altitude of the airport. The heavier the aircraft, the more lift, and thus speed is needed to get it off the ground. Aircraft also need to go faster to fly on a hot day than on a cool day. Hot air is less dense than cool air and less density produces less lift for the same speed. Similarly, the higher the altitude, the less dense the air. Aircraft need more speed to leave the ground at a place like Denver than at a place like New York, with all other factors such as weight being equal. Some of these factors also are important in calculating V1, although the key factor is the length of the runway that is being used. Most large jets leave the ground at about 160 miles per hour and initially climb at an angle in excess of 15 degrees. The angle of a plane's wings to the air flowing around them is extremely important to maintaining lift. If the so-called angle of attack is too severe, the flow of air around the wings becomes disrupted and the plane loses lift.

To make an aircraft more aerodynamically efficient, the wheels on which an aircraft rolls when it is on the ground are retracted into a cavity in the belly of the plane after it is airborne. There is less drag (wind resistance), and an aircraft can fly faster when its landing gear is retracted. Cruise Once a plane is in the air, it continues to climb until it reaches its cruising altitude, which is determined by the pilot and must be approved by Air Traffic Control. At this point, power is reduced from the setting that was needed to climb, and the aircraft maintains a consistent, level altitude. To fly level, the weight of the aircraft and the lifting force generated by the wings are exactly equal. There is no standard altitude for cruising. Generally, it is around 35,000 feet, but that can vary considerably depending on length of flight, weather conditions, air turbulence and the location of other planes in the sky. Cruising speeds are at a constant mach number, about 82 percent of the speed of sound. This translates to a groundspeed of about 550 miles per hour, although that too can vary considerably with headwinds, tailwinds and other factors. During flight, pilots normally follow designated airways, or highways in the sky, that are marked on flight maps and are defined by their relationship to radio navigation beacons, whose signals are picked up by the aircraft. Some jets also have inertial navigation systems onboard to help pilots find their way. These computer-based systems calculate the plane's position from its point of departure, by closely tracking its heading, speed and other factors after it leaves the gate. Some aircraft also are capable of using signals from a constellation of satellites to pinpoint their position. This is known as the Global Positioning System. Commercial aircraft are increasingly using it. GPS enables aircraft to operate, with the permission of Air Traffic Control, to operate safely off predetermined airways. This capability makes for more efficient operations and adds capacity to the aviation system. Pilots control and steer aircraft in flight by manipulating panels on the aircraft wings and tail. Those control surfaces are described in greater detail later in this chapter. Descent and Landing In this phase of a flight, the pilot gradually brings the aircraft back toward the ground, by reducing engine power and speed, and thus the force of the lift. The so-called final approach begins several miles from the airport. By this point, Air Traffic Control has put the aircraft in a sequence to land, carefully separating it from all other aircraft headed for, or leaving, the same airport. The landing gear is lowered, slowing the plane further. In addition, panels at the trailing edge of the aircraft's wings, known as flaps, are manipulated to increase drag and thus reduce speed and altitude. Other panels, known as elevators, and the rudder are used (as they are throughout the flight) to steer the plane and keep it on the localizer (heading) and glide slope (glide path), the continuous radio signals the flight crew will follow to the end of the runway. Airline aircraft generally are traveling at about 120 miles per hour relative to the ground when they touch down. The flight crew then slows the aircraft quickly with several actions: pulling back on the throttles, raising yet another set of panels on the top of the wings, called spoilers, that disrupt airflow and increase wind resistance, reversing the thrust of the engines, and, of course, applying the brakes. Taxi-In and Parking The final phase of a flight is a reverse of the first phase. The aircraft is driven at slow speed under its own power onto the taxiway and from there to a gate. Since most gates are equipped with moveable jet ways, or covered ramps, aircraft generally are parked under their own power.

Major Parts of an Aircraft Fuselage This is the main body of an aircraft, exclusive of its tail assembly, wings and engines. The term derives from a French word, fusele, meaning tapered, because the fuselage is the shape of a long cylinder with tapered ends. It is made of aluminum sections that are riveted together, and inside are three primary sections: the cockpit, the cabin (which often is subdivided into two or three sections with different seating arrangements and different classes of service) and the cargo hold. Cockpit The cockpit is the most forward part of the fuselage and contains all the instruments needed to fly the plane. Sometimes referred to as the flight deck, the cockpit has seats for the pilot and co-pilot; a flight engineer, on some planes; and seats for one or two observers that could be from the airline itself, or from FAA. The cockpit is off limits to passengers during flight and to flight attendants during takeoffs and landings. Cabin The cabin is the section of the fuselage behind (and below in the case of the double-deck Boeing 747) the cockpit, where an airline carries passengers, freight, or both, in the case of a combination carrier. A typical passenger cabin has galleys for food preparation; lavatories; one or more seating compartments, closets and overhead bins, for stowing baggage, coats, and other things carried onto the plane by passengers; and several doors to the outside, most of which are used only for emergency evacuations. The number of exits is determined by the number of seats. Small jets carry about 60 passengers, the larger ones like the Boeing 747 can carry more than 400. Cargo Hold This is the area of the fuselage below the passenger deck where cargo and baggage are carried. It is basically the lower half of the fuselage cylinder. It is pressurized, along with the rest of the fuselage, and has heating systems for areas designated for the carriage of live animals. Aircraft also have ventilation systems that force air into these areas. Access to the cargo holds is through doors in the belly of the aircraft. There is no access from the cabin area. Wings The wings are the airfoil that generates the lift necessary to get and keep, an aircraft off the ground. Like the fuselage to which they are attached, they are made of aluminum alloy panels riveted together. The point of attachment is the aircraft's center of gravity, or balance point. Most jet aircraft have swept wings, meaning the wings are angled back toward the rear of the plane. Swept wings produce less lift than perpendicular wings, but they are more efficient at high speeds because they create less drag. Wings are mostly hollow inside, with large compartments for fuel. On most of the aircraft in service today, the wings also support the engines, which are attached to pylons hung beneath the wings.

Wings are designed and constructed with meticulous attention to shape, contour, length, width and depth, and they are fitted with many different kinds of control surfaces, which are described below. Empennage The empennage is the tail assembly of an aircraft, consisting of large fins that extend both vertically and horizontally from the rear of the fuselage. Their primary purpose is to help stabilize the aircraft, much like the keel of a boat. In addition, they also have control surfaces built into them that help the pilots steer the aircraft. Control Surfaces The control surfaces attached to an aircraft's wings and tail alter the equilibrium of straight and level flight when moved up and down or left and right. They are manipulated from controls in the cockpit. In some planes, hydraulic lines connect the cockpit controls with these various exterior panels. In others, the connection is electronic. The rudder is a large panel attached to the trailing edge of a plane's vertical stabilizer in the rear of the plane. It is used to control yaw, which is the movement of the nose left or right. The rudder is used mostly during takeoffs and landings to keep the nose of an aircraft on the centerline of the runway. It is manipulated via foot pedals in the cockpit. Jet aircraft also have automatic yaw dampers that function at all times, to ensure a comfortable ride. The elevators are panels attached to the trailing edge of an aircraft's two horizontal stabilizers, also part of the tail assembly, or empennage. The elevators control the pitch of an aircraft, which is the movement of the nose up or down. They are used during flight and are manipulated by pulling or pushing on the control wheel or side-stick controller in the cockpit. The ailerons are panels built into the trailing edge of the wings. Like the elevators, they are used during flight to steer an aircraft and are manipulated by turning the control wheel or side-stick controller in the cockpit to the left or right. These steering motions deflect the ailerons up or down, which in turn affect the relative lift of the wings. An aileron deflected down increases the lift of the wing to which it is attached, while an aileron deflected up decreases the lift of its wing. Thus, if a pilot deflects downward the aileron on the left wing of the aircraft, and defects upward the aileron on the right wing, the aircraft will roll, or bank, to the right. Spoilers are panels built into the top surfaces of the wings and mostly are used during landings to spoil the lift of the wings and thus keep the aircraft firmly planted on the ground once it touches down. They also can be used during flight to expedite a descent. The other major control surfaces are the flaps and slats, both designed primarily to increase the lift of the wings at the slow speeds used during takeoffs and landings. Flaps are mounted on the trailing edge of the wings, slats on the leading edge. When extended, they increase lift because they make the surface area of the wings larger and accentuate the curve of the wings. Flaps also are commonly deployed during final approach to increase lift, which provides control and stability at slower speeds. Flap and slat settings are controlled by the pilots, although automatic extension/retraction systems are sometimes provided to protect flight and structural integrity. Landing Gear The landing gear is the undercarriage assembly that supports an aircraft when it is on the ground and consists of wheels, tires, brakes, shocks, axles and other support structures. Virtually all jet aircraft have a nose wheel with two tires, plus two or more main gear assemblies with as many as 16 tires. The landing gear is usually raised and lowered hydraulically and fits completely within the lower fuselage when retracted. Aircraft tires are filled with nitrogen rather than air because nitrogen does not expand or contract as much as air during extreme temperature changes, thus reducing the chances of a tire blowout. Engines The exact number of engines on an airplane is determined by the power and performance requirements of the aircraft. Most jet airplanes have two, three or four engines, depending on aircraft size. Some have the engines attached to the rear of the fuselage. Many have them mounted on pylons, hanging below the wings.

Some have a combination of both, with an engine under each wing and one on top of the fuselage at the rear of the plane. The pilots control the power produced by the engines, either directly or indirectly, through computerized controls. All large airliners are designed to fly safely on fewer than all engines. In other words, the remaining engine or engines have enough power to keep the aircraft airborne. Jet Propulsion As mentioned above, some form of propulsion is required to move an aircraft through the air and generate sufficient lift for it to fly. The earliest forms of propulsion were simple gasoline engines that turned propellers. Most modern airliners are equipped with jet engines, which are more powerful and mechanically simpler and more reliable than piston engines. Jet engines first entered commercial service in the late 1950s and were in widespread use by the mid-1960s. A jet engine takes in air at the front, compresses it into smaller and smaller spaces, by pulling it through a series of compressor blades. Then fuel is added to the hot, compressed air and ignites the mixture in a combustion chamber. This produces an explosion of extremely hot gases out the rear of the engine and creates a force known as thrust, which propels the engine (and thus the aircraft) forward. It is the same principle that propels a balloon forward when blown up with air and released. The air escaping from both a balloon and a jet engine creates a pressure differential between the front and back of the enclosed space that results in forward movement. Importantly, as the hot gases explode out the back of a jet, they turn a wheel known as a turbine. The turbine is connected by a center shaft to the compressor blades at the front of the engine and thus keeps the compressor spinning while the engine is on. As with all combustion engines, power is increased by adding more fuel to the combustion chamber. Today's most powerful jet engines can produce more than 90,000 pounds of thrust. Expressed another way, each of these giant engines can lift 90,000 pounds straight up off the ground. Since aircraft rely on their wings for vertical lift and engines only for horizontal movement, these large engines can lift enormous amounts of weight off the ground and power aircraft at great speeds. Types of Jets There are three basic types of jet engines. Turbojets are engines that use exhaust thrust alone to propel an aircraft forward, as just described. Turbofans, or fanjets, are an improved version of the turbojet. With a larger fan at the front, the turbofan pulls in more air. It also diverts some of the incoming air around the combustion chamber and later mixes it with the hot exhaust gases escaping out the back. This lowers the temperature and speed of the exhaust, increasing thrust at lower speeds and making the engine quieter. The third type is the turboprop, or propjet. It uses a jet engine to turn a propeller. Thrust is generated by both the propeller and the exhaust gases of the jet itself. Turboprops are used on small, short-range aircraft such as those often operated by commuter and regional airlines. They are efficient in these types of operations, but less so at the high speeds and high altitudes flown by the large commercial jets. Airline Handbook Chapter 6: Safety The Record The National Transportation Safety Board (NTSB) investigates transportation accidents. It also publishes transportation safety statistics. As part of its accident investigation function, NTSB gathers facts about the accident and seeks to determine the reasons for it. If appropriate, it can also make recommendations to regulatory bodies for safety improvements. NTSB statistics show that the U.S. airlines' safety record has improved steadily through the years, most notably including the years since deregulation. In 1999, the U.S. scheduled airlines averaged .3 fatal

accidents per one billion aircraft miles flown. This compares with two fatal accidents per one billion miles flown in 1978, the year that Congress enacted the legislation to deregulate aviation rates and routes. The airline safety record also compares very favorably with many other everyday activities. Since 1938, when the government began keeping records of aviation accidents, the very worst year for airline fatalities was 1974, with 460 deaths. By contrast, more than 40,000 people die each year in highway accidents. Sadly, in a typical three-month period, more people die on the nation's highways than have died in all airline accidents since the advent of commercial aviation. The National Safety Council publishes an annual report on accidental deaths in the United States that also helps put the U.S. airline safety record into perspective. According to the council's 1999 report for 1998, 16,600 people died that year in accidental falls, 9,000 from poisoning, 4,100 from drowning, 3,700 from burns, 3,200 from suffocation brought on by ingestion or inhalation of food and other objects, and 900 from guns fired accidentally. The Government's Safety Role The federal government plays an important role in assuring the safety of air travel. It has done so since the enactment of the Air Commerce Act of 1926, and it continues to play a leading role in aviation safety today. Although the Airline Deregulation Act of 1978 ended all domestic economic regulation of the airlines, it did not end government regulation of safety. All safety requirements and programs in place at that time are still in force, and many new regulations have been added. The Federal Aviation Administration (FAA) The primary responsibility for airline safety regulation lies with the Federal Aviation Administration. Congress established the FAA as an agency of the Department of Transportation when it created the department in 1967. It is the successor to the Federal Aviation Agency, an independent agency created by the Federal Aviation Act of 1958. The FAA is also responsible for developing, maintaining and operating the nation's Air Traffic Control (ATC) system, which is described in Chapter 8. Nearly three-fourths of the FAA's almost 50,000 employees are involved in some aspect of ATC. Their mission is to ensure the safe separation of aircraft during flight and to sequence aircraft for taxiing, takeoff and landing. FAA's other major functions include reviewing the design, manufacture and maintenance of aircraft, setting minimum standards for crew training, establishing operational requirements for airlines and airports, and conducting safety-related research and development work. In short, it sets the minimum safety standards for the airlines and acts as the public's watchdog for safety. Aircraft Certification Federal law requires that all civil aircraft operating in the United States be certified as airworthy by the FAA. There are well over 200,000 licensed civil aircraft in the United States, the vast majority of them privately owned general-aviation aircraft (small planes used primarily for pleasure flying, training, corporate travel and agricultural purposes like crop spraying). FAA's certification process begins with the design of an aircraft. FAA aeronautical engineers participate in the design process. They also oversee the construction and flight testing of the prototype. If all tests are successfully completed, FAA issues a type certificate for the new aircraft, followed by a production certificate, once FAA is satisfied that the manufacturer has everything in place to properly duplicate the prototype. The final step in aircraft certification is the issuance of an airworthiness certificate, which essentially is FAA's stamp of approval for each aircraft coming off the assembly line. It attests to the fact that the plane has been properly built, according to an approved design, and that it is safe for commercial service. The FAA requires that all commercial transport aircraft be designed with built-in redundancies, so they can fly even when a structural element fails. For example, there is more than one way to lower the landing gear, more than one way to communicate with the ground and more than one way to control the aircraft.

Design problems, discovered after a plane is in service, that result in a possible unsafe condition, are addressed through airworthiness directives, or ADs. Through these directives the FAA informs all operators of the aircraft or engine type of the repairs or modifications needed to correct the problem. Usually, ADs are written in consultation with the manufacturer, but unlike manufacturer-generated service bulletins, ADs carry the force of law and airlines must comply with them. If the problem poses an immediate safety hazard, the FAA will direct the airlines to complete the work quickly, sometimes even before further flight. In most situations, however, there is no immediate safety hazard and the airlines are given a specified amount of time to complete the ADs. Operating Certificates Federal aviation regulations (FARs) require FAA certification of all airline companies, as well as the equipment they use. Every airline therefore is issued an operating certificate by the FAA. FARs spell out the requirements for engaging in large-plane service. These are operating requirements. The Department of Transportation mandates that financial, insurance and citizenship requirements be complied with before it issues to the airline a second, separate certificate known as the certificate of public convenience and necessity. Among other things, a commercial operator must have FAA-approved training and maintenance programs, as well as comply with airworthiness certificates for each aircraft. The maintenance program must specify the intervals at which certain aircraft and engine parts will be inspected and, in some cases, replaced. In addition, the maintenance shops the airline intends to use (both its own shops and those of subcontractors) must be certified by FAA and open to inspection, on demand. Records of all maintenance work must be kept and also must be open to FAA inspection. Other requirements address such things as: Certification of Airline Personnel As with aircraft and airlines, the people who work on, fly or manage airplanes must be personally licensed by the FAA and have minimum levels of training and experience. These certification requirements apply to aircraft mechanics, pilots, flight engineers, aircraft dispatchers and the FAA's own air traffic controllers. The schools where these aviation professionals get their training, as well as the teachers in those schools, also require an FAA license. Large aircraft airline pilots must have a minimum of 1,500 hours of flight time, including at least 250 hours flying as a pilot in command of an aircraft. They must pass a written exam testing their knowledge of aircraft operations, meteorology, navigation, radio communication and other subjects important to flying aircraft in commercial service. They must demonstrate their flying skills to an FAA examiner (or FAA-designated examiner), performing various types of takeoffs and landings, inflight maneuvers, and emergency procedures, either in an airplane or a simulator. They also must pass a medical exam, both pre-employment and every year after they are hired. Recurrent training also is required. FAA Flight Standards Service establishes all training and operating requirements for the airlines. the equipment a carrier must have aboard each aircraft; flammability standards for cabin materials; floor lighting for emergency evacuation; onboard smoking rules; the number of flight attendants that must be aboard; the content of pre-flight announcements; rules for carry-on baggage; security procedures; aircraft de-icing procedures.

Airport Certification FAA also regulates airports, although to a lesser extent than pilots, airlines and aircraft. It was empowered to do so by the Airport and Airway Development Act of 1970, with a primary purpose of promoting the development of new aviation infrastructure. The act states that all airports with commercial service must be certified by the FAA and that certification will be granted only if the airport complies with certain safety criteria set by the FAA. Among those criteria are ones dealing with the number and type of fire-fighting vehicles at the airport, runway lighting and storage facilities for fuel. The FAA also issues advisory circulars to airport operators on such topics as runway paving, drainage and apron design. FAA also provides grants for airport projects that enhance safety and increase the capacity and efficiency of the airport. Industry Safety Programs Although the FAA is charged with the responsibility for setting and enforcing minimum safety standards, the ultimate and primary responsibility for safety rests with the airlines themselves. The Federal Aviation Act that established the FAA's predecessor agency stated that every license holder assumes "private sector responsibilities for maintaining the highest degree of safety." Of course, it also makes good business sense for the airlines to do everything they can to ensure safety. To airlines, safety is a top priority, and every year they work jointly through the Air Transport Association on an agenda of safety-related programs. Aircraft Maintenance The airlines always have practiced a sophisticated and comprehensive form of preventive medicine when it comes to maintenance. The nature of the airline industry leaves no choice but to make sure that essential equipment is in good working order before an aircraft goes into service. Every airline has a maintenance program for each type of aircraft it operates. The programs are developed jointly with the manufacturers of the equipment and, as mentioned earlier, must be approved by the FAA. Each involves a series of increasingly complex inspection and maintenance steps pegged to an aircraft's flying time, calendar time, or number of landings and takeoffs. With each step, maintenance personnel probe the aircraft, taking apart more and more components for closer and closer inspection. Among the many inspection and maintenance procedures, a typical program involves: a visual "walk around" inspection of an aircraft's exterior, several times each day, to look for leaks, worn tires, cracks, dents and other surface damage; important systems inside the airplane also are checked; an inspection, every three to five days, of the aircraft's landing gear, control surfaces such as flaps and rudders, fluid levels, oxygen systems, lighting and auxiliary power systems; an inspection, every six to none months, of all of the above, plus internal control systems, hydraulic systems, and cockpit and cabin emergency equipment; a check, every 12-17 months, during which aircraft are opened up extensively, so inspectors can use sophisticated devices to look for wear, corrosion and cracks invisible to the human eye; a major check, every three to a half to five years, in which aircraft are essentially taken apart and put back together again, with landing gear and many other components replaced. In between these scheduled maintenance checks, computers onboard the aircraft monitor the performance of aircraft systems and record such things as abnormal temperatures and fuel and oil consumption. In the newest aircraft, this information is even transmitted to ground stations while the plane is in flight.

All of the major U.S. airlines have extensive maintenance facilities and do most of their own maintenance work. Some tasks, however, are contracted to independent shops, both domestic and foreign, since many airlines now operate globally. As mentioned, all of the repair stations the airlines use must be FAA-approved, and no matter where the work is done, the airline itself retains ultimate responsibility for the quality of the work. The airlines also have ultimate responsibility for all of the parts they buy. To ensure that parts meet original manufacturer specifications, airlines have rigorous purchasing procedures and quality-control programs that test parts when they are delivered. Aircraft manufacturers provide considerable product support to their airline customers. In effect, the manufacturers stand behind each of their aircraft for as long as they are in service. If a problem develops, it is immediately reported back to the manufacturer who, in turn, alerts other owners of the aircraft model through service bulletins about the problem and the steps that need to be taken. The FAA also gets the bulletins, and if the problem poses a serious safety hazard, FAA converts the bulletin into an airworthiness directive mandating inspections, modifications, repairs, or whatever else is necessary to maintain safety. The FAA permits airlines to temporarily operate aircraft with certain items inoperative, but only if adequate back-up systems are available, or if the item is optional or installed solely for passenger convenience. Airlines are given a specified period of time to repair or replace these items. They may not postpone repairs that relate to the safe operation of the aircraft. Items affecting safety or airworthiness must be repaired prior to further flight. Training Airline employees in general receive an extensive amount of training, but especially those who work aboard the aircraft and whose performance directly affects safety. Pilots are among the most highly trained individuals in any field. Applicants for jobs with a major airline must go through several steps just to get into a training program, then several more steps before they actually begin to fly. Although airline hiring procedures may differ, those accepted for an interview are judged by many of the same criteria used to judge applicants for any job, including experience and professionalism. The second step is a screening process involving psychological and aptitude tests and a stringent medical examination. Step three usually is a test in a flight simulator that evaluates an applicant's flying skills. Between 10 and 15 percent of an airline's applicants typically make it through this process to gain acceptance to an airline's training program. Programs vary, but as mentioned, all must meet certain standards established by the FAA, and all must be individually approved by the FAA. Proficiency is the common goal of today's training programs. In many areas, the FAA and the airlines no longer require a set number of hours of training at various tasks as they did in the past. Instead, they require whatever training is necessary for trainees to become proficient at the required tasks. The process recognizes the fact that applicants with different prior experiences enter training programs with different skills and abilities. The airlines use various training methods, depending on subject matter. The methods include classroom instruction, training in simulators, hands-on equipment training, and the use of self-pacing, self-testing, computerized video presentations. In all cases, the training exercises conclude with exams, drills or flight checks to ensure understanding and competence. Airline pilots and flight engineers also are required to complete certain recurrent training each year. Normally, recurrent training is done in an advanced simulator and takes from two to four days, depending on the type of airplane the pilot flies. Pilots in command, or captains, must complete some elements of recurrent training every six months. Security

The U.S. airline industry began security screening of passengers and their baggage in 1973, following a rash of aircraft hijackings. Passengers were required to be screened via metal detector prior to entering the concourse leading to their gate area, to prevent weapons from being carried aboard an aircraft. Subsequently, airlines began to screen carry-on baggage by x-ray machine. This screening system has been in place for over 25 years and it has been extremely successful in preventing hijackings. During the 1980s, a new and much more serious threat emerged - the threat of sabotage and terrorist acts of aggression, particularly against U.S. flag carriers' originating flights from overseas locations. FAA and the airlines, working closely together in 1985, took steps to significantly increase and add new aviation security measures. In the 1990s, measures were once again enhanced to include the following steps for certain international flights: guarding aircraft at all times while they are on the ground and parking them in secure areas overnight; flight of the day; searching aircraft cabins, cockpits and cargo holds prior to their first

inspecting the property of all people who service aircraft, such as cleaning personnel, mechanics, caterers, and cargo and baggage handlers; counters inside an airport; accepting baggage only from ticketed passengers and only at ticket hand searching or x-raying all checked luggage;

matching checked baggage against the names of people who have boarded a flight and pulling bags from the baggage compartment for further inspection if they do not match a passenger aboard the flight; questioning passengers before each flight to make sure they have not accepted gifts or packages from people they do not know. In 1993, terrorism struck the United States directly with the World Trade Center bombing, followed by the bombing of the federal building in Oklahoma City, Oklahoma. Once again, security was increased at U.S. airports. As a result of the recommendations of the Vice President's Commission on Aviation Safety and Security, published in February 1997, the FAA is purchasing and deploying sophisticated explosive- detection screening equipment at certain U.S. airports for use by the airlines. U.S. airlines are also employing a government required and approved Computerized Passenger Screening System (CAPS), which automatically determines, using government-approved, objective criteria, which passengers require additional security scrutiny. Enhancements are taking place in passenger screening procedures and training. Also, mandatory background checks are now required for airline screening personnel. Various improvements in cargo screening procedures are also being implemented. All aviation security measures are designed to be flexible. The airlines work closely with the FAA to increase security with additional procedures and personnel when the need arises. FAA security personnel work closely with law enforcement and intelligence officials worldwide and advise the airlines of any information that could affect their flight operations. A credible threat against a specific flight could result in that flight being canceled, if the threat cannot be resolved. Aviation security is a fluid process requiring continuing analysis and review by the law enforcement and intelligence communities, as well as both the FAA and the airlines to ensure the highest level of protection for the traveling public. Joint Efforts

Government and industry officials commonly work together to address recognized safety problems, usually through committees or task forces comprised of representatives of equipment manufacturers, airlines, pilots, mechanics, FAA and the National Aeronautic and Space Administration. Examples of recent efforts are: Aging Aircraft Following a highly unusual fuselage failure, a major effort was undertaken to re-examine and revise maintenance and modification procedures for older aircraft. Now, as aircraft age, many components are automatically replaced at specified intervals, well ahead of the time they would be expected to fail. Collision Avoidance Years of joint research between government and industry resulted in the development and deployment of the Traffic Alert and Collision Avoidance System (TCAS), which warns pilots when aircraft are getting too close and tells them what they should do to maintain adequate separation. TCAS is now in all commercial jets with 10 or more seats. Windshear As with TCAS, government and industry jointly developed warning devices for aircraft that alert pilots to windshear conditions so they can take appropriate action to avoid these dangerous downdrafts of air. De-icing Following an accident attributed to ice on the wings of the aircraft (a condition that disrupts airflow over the wings and makes it difficult for aircraft to fly), government and industry officials conceived and implemented new procedures for pilots to follow in icy conditions. After de-icing (a process in which a fluid that melts ice is sprayed on an aircraft exterior), pilots have a specific amount of time to take off, depending on weather conditions, and must be de-iced a second time if they exceed the allotted time. Flammability In a series of steps, airlines and government officials have upgraded aircraft interiors with more fire-resistant materials for seats, cabin sidewalls, overhead bins, and other cabin and cargo bay materials. Human Factors Recognizing that most accidents are caused by human error, industry and government alike have focused resources, in recent years, on studying human-factor issues. While ongoing, these efforts already have produced improvements in training and in the management of tasks in the cockpit. Accident Investigations The NTSB, mentioned earlier, is responsible for investigating all transportation accidents, including all civil aviation accidents. Congress created the board under the same legislation that created the Department of Transportation in 1967. Prior to that time, the Civil Aeronautics Board handled accident investigations. Initially, the five-member NTSB was an autonomous agency within the DOT, which was used for administrative support only. It became a completely independent federal agency, outside the DOT, through the 1974 Transportation Act. The President appoints the members of the board, with confirmation by the Senate. Terms of service are five years. The Board Chairman and Vice Chairman, are appointed from among the members and serve terms of two years each. NTSB investigations have two goals - to determine the cause of an accident and to serve as the basis for recommendations that enhance safety. The board does not have the authority to impose new aviation regulations. Only the FAA has that power. Many of the board's recommendations through the years, however, have been implemented as new regulations, and are always carefully examined by the FAA, as well as the aviation industry.

When an airline accident occurs, the board dispatches a go team of experts in various phases of accident investigations. The teams typically consist of one member of the board and specialists in air traffic control, aircraft maintenance, aircraft operations, and someone trained in witness interrogation. The team spends whatever time is necessary at the crash scene. Attention then shifts to the NTSB laboratory where, among other things, the aircraft's cockpit voice recorder and flight data recorder (the so-called black boxes) are deciphered. The cockpit voice recorder continuously records the last 30 minutes of cockpit conversation, both in the cockpit and between the cockpit and people in other aircraft, or on the ground. The flight data recorder maintains a continuous record of an aircraft's operating parameters, including altitude, speed and the position of key controls. Typically, the NTSB holds a public hearing to collect additional information through witness testimony and various aviation experts. Hearings also permit the board to raise safety issues publicly. A final report, stating the probable cause of the accident, is presented to the full board at a public meeting in Washington, D.C. This normally occurs several months after the accident. However, safety recommendations stemming from the accident sometimes precede the final report. Airline Handbook Chapter 7: Airports The United States possesses the largest, most extensive aviation system in the world with more than 18,000 airports, ranging from large commercial transportation centers enplaning more than 30 million passengers annually, to small grass strips serving only a few aircraft each year. Of these, 3,304 are designated as part of the national airport system and are therefore eligible for federal assistance. The federal interest in capital investment for airports is guided by several objectives, most notably ensuring safety and security, preserving and enhancing the system's capacity, helping small commercial and general aviation airports, funding noise mitigation and protecting the environment. NATIONAL SYSTEM AIRPORTS (3,304 airports) General Aviation Airports (2,764 airports) Commercial Service Airports (540 airports) or non-hub Ownership Although all commercial airports in the United States are publicly owned, the private sector plays a significant role in their operations and financing. Employees of private companies - airlines, concessionaires and contractors - account for 90 percent of all employees at the nation's airports. The largest source of capital for airport development is tax-exempt bonds, secured by future airport revenue and subject to the scrutiny of credit-rating agencies. In other countries, most airports are owned and operated by national governments. Privatization The possible sale or lease of commercial airports in the United States to private companies has generated considerable attention in recent years. Several factors, such as providing additional private capital for development, have motivated greater interest in airport privatization. Concerns over the possible abuse of the monopoly power of an airport, along with long-established legal and regulatory protections for existing airport investments and their revenue streams, however, have held back wholesale airport privatization in the United States. Even if a sale or lease transfer could overcome legal obstacles, the ability of a private airport to operate profitably is uncertain. A privately owned airport would not be eligible for tax-exempt debt financing, federal airport grants or passenger facility charges (PFCs). Since these sources constitute the majority of capital funding at most airports, financing costs would rise significantly. more than 400 primary airports designated as large, medium, small other airports

As part of the Federal Aviation Reauthorization Act of 1996, Congress established an airport privatization pilot program that exempted up to five airports from legal requirements that limit their sale or lease to private entities. As of December 1999, only one commercial service passenger airport (Stewart/Newburgh, New York) had submitted a final application to participate in the pilot program. While national governments of many foreign countries have historically owned and operated airports, in recent years some countries have begun to privatize all or parts of their nation's aviation system. The United Kingdom, which sold its major commercial airports in 1987, is one of the few countries where airports have generated profits for their shareholders. Organization Because airports resemble small cities, they are organized like a small city, with departments for purchasing, engineering, finance, legal, operations, personnel, administration, security, public relations, etc. They also have fire and police departments and must handle such typical municipal duties as trash and snow removal. Many of an airport's departments deal with one, or both, of the two sides of an airport - groundside and airside. Groundside includes an airport's roads, parking lots, passenger drop-off and pick-up points, check-in areas, baggage-claim areas, restaurants and shops. Airside includes aircraft gates, loading ramps, taxiways and runways. Groundside is geared toward the movement of ground traffic into and out of the airport, and airside to the movement of air traffic into and out of the airport. Financing Airports, contrary to popular misconception, are not funded by government general fund tax dollars - federal, state or local. Rather, airports are funded either directly or indirectly out of aviation revenue generated by airlines, their passengers, or airport vendors in the form of direct payments or through earmarked taxes collected from aviation system users. Airports rely on a variety of public and private funding sources to finance their capital development, including airport bonds, federal and state grants, passenger facility charges (PFCs), and airport-generated income. Airport Improvement Program (AIP) Airport grant programs are funded from taxes and fees specifically collected for that purpose. As of January 2000, these included a 7.5 percent domestic ticket tax and a $2.50 per-person per-flight-segment fee for all flights, except to certain rural airports. A $12.00 international arrival tax and a $12.00 international departure tax (both adjusted for the annual rate of inflation, beginning January 1, 1999), a 6.25 percent tax on domestic air freight, a 4.3 cents-per-gallon domestic air fuel tax, and taxes on the fuel used in small planes and for noncommercial purposes also fund the grant programs. These revenues are credited to the Aviation Trust Fund, created by Congress in 1970 to fund improvements to airports and the nation's air traffic control system. The FAA dispenses grants to airports out of the trust fund for projects under the Airport Improvement Program, which had total outlays of $1.6 billion in FY99. Passenger Facility Charge (PFC) Since 1992, many airports have also been charging airline passengers a $3.00 fee, known as a passenger facility charge, which the airlines collect as an add-on to the airfare. Beginning in 2000, Congress authorized an increase in the maximum PFC rate that airports can charge passengers - $4.50 per segment, with a cap of $18.00 for a roundtrip. These taxes must be pledged to specific capital improvements that will: (1) preserve or enhance safety, capacity or security of the national air transportation system; (2) reduce noise; or (3) enhance competition between or among air carriers. Every PFC is tied to specific capital improvement projects that have been approved by the FAA, and the fee expires when all of the money needed for the approved projects has been raised (unless new projects have been approved under a separate application). More than 300 airports had received federal government approval to levy this tax. Currently, more than $1.5 billion in PFCs are collected each year, and the FAA has already authorized the collection of more than $25 billion. However, even though one of the main objectives of the PFC program is to increase airport safety and capacity, only 19 percent of collected funds have been used for airfield safety and capacity improvements. In

fact, more PFC funds are now being spent on interest for capital projects (29 percent) than are being spent on airfield safety and capacity. Passenger facility charges, when used wisely, have been a useful tool in meeting aviation infrastructure needs. Revenue Bonds More than 95 percent of all airport debt, or about $53.6 billion, issued since 1982 has been in the form of general airport revenue bonds (GARBs), which are secured by an airport's future revenue. Roughly $17.3 billion, or one-third of this total, was to refinance existing debt, while the other $36.3 billion, or two-thirds, was new financing for airport capital development. Because airport revenue has kept pace with increased debtservice costs, the capacity to issue new debt has not been harmed. The top 71 airports, which account for almost 90 percent of all passenger traffic, obtain 79 percent of all capital funding, while the 3,233 other national system airports account for the remaining 21 percent of the funding. These airports also rely most heavily on private airport bonds, which constitute roughly 65 percent of their total funding, while the other airports rely more heavily on federal and state grants for their funding. Capital improvements such as the construction of a new terminal or parking garage are sometimes funded privately (for example, by an airline if the new facility is for its own exclusive use), but more often through the sale of revenue bonds by the airport operator. Revenue bonds are repaid, with interest, from the future revenue the new facility generates. For example, revenue bonds sold for a new terminal would be repaid with the rent the airport collects from the airlines using the terminal. Usually, the airport owns all the facilities built on its property, regardless of how their construction was financed. Facilities built for exclusive use of a tenant, however, are sometimes leased to that tenant for a long period of time. Years ago, general obligation bonds, which are backed by the taxing power of a governmental unit, were far more common because of their stronger credit standing and, therefore, lower financing costs. The decline in general obligation bonds reflects the improved acceptance of GARBs by investors. Today, general aviation airports have been the most common issuers of general obligation bonds for airport development. Airport Costs With the exception of a few small airports that receive subsidies from their municipality, U.S. airports are selfsustaining. The revenue collected from businesses, passengers and shippers using the airport covers most of the operating expenses associated with operating the airport. Typically, companies doing business at an airport (airlines, car rental companies, restaurants, stores, etc.) pay rents for the space they occupy. Many businesses also pay a gross-receipts fee based on the total value of their business at the airport. Airlines do not pay gross-receipts fees, but pay flight fees, based on the weight of each aircraft that lands or departs. In some instances, they also pay aircraft parking and fueling fees, or make direct payments on long-term airport debt. Rate-Making Concepts There are two common methods for computing air-carrier fees: residual and compensatory. In a residual agreement, the signatory airlines accept the financial risk and guarantee the airport sufficient revenues to meet its operating costs and debt-service costs. Under the residual method, after an airport deducts all nonairline revenue from its total annual expenses, the airlines are responsible for the remaining (residual) amount, and rates are set accordingly. Compensatory agreements are generally found at mature airports that have realized successful revenue generation. The airport undertakes the risk of meeting costs, but also receives all the upside advantage. Under the compensatory method, an airport is divided into various cost centers (airfield, terminals, parking areas, etc.), and airlines pay a share of those costs, based on the amount of space they occupy, planes they land/depart and other measures of airline use.

While the fees airlines pay to airports represent a small portion of overall airline operating costs (approximately 5 percent), they have been one of the industry's fastest-rising costs. Between 1992 and 1999, airport costs exclusive of PFCs, rose 35 percent. Including PFCs, they rose 70 percent. In contrast, the producer price index over that same period of time increased less than eight percent and airline prices rose less than four percent. Revenue Diversion Of increasing concern to airlines (and many airport operators) has been local political interest in siphoning money away from airports for other non-aviation purposes. This activity, known as revenue diversion, is prohibited by federal law, but is allowed, in a few instances, under special arrangements that were "grandfathered" in the federal statutes addressing this issue. Regulation of Airports As mentioned in Chapter 6, airports that receive scheduled air service by carriers must be certified by the FAA as operating within strict federal safety guidelines for design and operation. This certificate is known as a Part 139 certificate after the section of the federal air regulations (FARs) dealing with airport safety. Part 139 certificates are the equivalent of the Part 121 certificates for airline operations. Airports also may have to comply with state and local regulations, although these usually deal with environmental or administrative matters rather than strictly with safety. Airport Capacity Airports have two capacities - one for groundside and one for airside. Groundside capacity is the number of passengers per year the airport's roads, parking lots and terminals can handle. Airside capacity, on the other hand, is the number of aircraft operations the airport's runways, taxiways and gates can accommodate safely. The FAA calculates an airport's airside capacity using an engineering formula that takes into account the various ways an airport's runways are used, or not used, in different wind and weather conditions. Known as an Engineered Performance Standard (EPS), it is expressed in aircraft operations per hour. Decisions that FAA's air traffic control division makes about the flight paths carriers will follow in and out of an airport also affect airside capacity. Airport capacity, or lack of it, is one of the most significant issues facing civil aviation. A great deal of attention has been focused in recent years on getting more capacity out of airports that already exist. This can be done by adding runways, taxiways, and landing aids, or perhaps, by changing departure and approach patterns. These and other capacity enhancements, however, often face stiff opposition from residents of surrounding communities, who often want to see airport operations scaled back to reduce noise and pollution. Building entirely new airports in less densely populated areas, on the other hand, is a more expensive option to expanding existing facilities, and often less convenient for most travelers. Airline Handbook Chapter 8: Air Traffic Control ATC Facilities The Air Traffic Control (ATC) system is run by the Federal Aviation Administration, an agency of the U.S. Department of Transportation. The government developed the system primarily to maintain safe separation of aircraft flying over the United States and in and out of U.S. airports. Secondarily, it is ATC's job to keep aircraft traffic moving as efficiently as possible throughout the system. In short, ATC is aviation's traffic cop, working to ensure that aircraft do not run into each other and that traffic moves in an orderly fashion with minimum delays. There are several types of ATC facilities. These include the airport towers familiar to most travelers, terminal radar approach control facilities (TRACONs), en route centers and flight service stations.

The airport towers control aircraft while they taxi to and from runways and during takeoffs and landings. The FAA bases its decision to build and operate a tower on the number and type of aircraft operations at a given airport. More than 450 U.S. airports currently have such towers. TRACONs control the aircraft immediately prior to and after landings and takeoffs, or during the climb and descent phases of flight. There are 236 TRACONs, less than the number of towers because some TRACONs handle more than one airport. For example, a single TRACON handles the traffic approaching and departing from all three New York-area major airports. The 21 ATC centers cover even broader areas. Their job is to keep track of aircraft while they are en route or during the high-altitude cruise phase of their flights. They are located in Albuquerque, Anchorage, Atlanta, Boston, Chicago (the busiest center), Cleveland, Denver, Fort Worth, Houston, Indianapolis, Jacksonville, Kansas City, Los Angeles, Memphis, Miami, Minneapolis, New York, Oakland, Salt Lake City, Seattle and Washington, D.C. Flight service stations are information centers for pilots flying in and out of small cities and rural areas. Currently, there are 68 of these stations providing such things as weather reports and route and terrain information. In addition, flight service stations assist in emergency situations, initiating and coordinating searches for missing or overdue aircraft. Central Flow Control Another key facility, overseeing the entire ATC system, is FAA's Air Traffic Control System Command Center (ATCSCC), also known as central flow control and located in Herndon, Virginia. Its job is to look for situations that will create bottlenecks or other problems in the system, then respond with a management plan for traffic into and out of the troubled sector. For example, if bad weather develops or a runway is closed for repairs, ATCSCC will manage the number of aircraft operations into and out of the affected area. The objective is to keep traffic levels in the trouble spots manageable for the controllers. Tracking Systems ATC primarily uses radar to keep track of aircraft flying over the United States. Radar transmits radio waves of ultra-high frequency that bounce back to their source when they hit something solid. The return signal, or radar echo, is then analyzed by the receiver to determine both the distance and direction of the object hit. In the case of airplanes, a transponder aboard the plane senses the radar signal and responds with an amplified radio signal directed toward the source of the signal received. The return signal not only is stronger, but contains a discreet four-digit code that identifies the aircraft to a ground radar station. A type of transponder known as Mode C, which is used aboard all commercial jets, also is capable of encoding the aircraft's altitude onto the return signal. Controllers on the ground then know how far away the aircraft is, how high it is, the direction it is headed, the airline operating the flight, and the type of aircraft at which they are looking. In the future, satellites are expected to supplant ground-based radar as the primary means for keeping track of airplanes. Communications Flight crews and air traffic controllers communicate by radio using VHF frequencies between 118 and 136 megahertz. Pilots tune to the frequency of the controller tracking their flight, and switch frequencies, as they move through the system and are handed off from one controller to another. A Typical Flight From the standpoint of ATC, all airline flights begin with the flight plan, which spells out the route the flight crew plans to follow, alternative airports the crew would use in the event of an aircraft emergency or a problem at the intended destination, as well as the amount of fuel onboard the aircraft. For some flights, the pilot puts together the flight plan and submits it to ATC, via their dispatcher, just prior to flight. Many airlines which fly the same routes every day, however, keep flight plans stored in the FAA's computer and merely activate them through their dispatch system prior to flight. In any event, a flight plan provides crucial information to ATC about what a particular crew intends to do.

Once the pilots have completed their pre-flight planning and aircraft inspections and have settled into the cockpit, they make their first call to ATC. Typically, this call is made to clearance delivery, which goes over the ATC routes and instructions the crew can expect from takeoff to landing. Ideally, this information matches the route requested in the flight plan, but that is not always the case. ATC sometimes has other ideas, and may give pilots new instructions before and even during a flight. When a crew is ready to depart, it contacts ground control for permission to leave the gate. Airlines sometimes conduct their own ground control at their hubs, but only in the immediate area of their gates. Once an aircraft leaves a gate area and begins to taxi toward a runway, it comes under the jurisdiction of FAA ground control, which governs the movement of all vehicles around an airfield. Since aircraft must occasionally taxi across an active runway, ground control coordinates its instructions with tower control, which oversees all movements across or along runways. The tower assumes full control of the aircraft as soon as it reaches the end of the runway it will use for takeoff. When the runway is clear, the tower grants permission for takeoff. It also instructs the crew on the heading, or direction, it should follow immediately after takeoff. When safely airborne, tower control hands off the aircraft to departure control, which oversees the flight as it climbs away from the airport and enters the en route airspace. Given the speed and climb capabilities of modern jets, this may only take a few minutes. Departure control then turns over the flight to an en route center. All of these and subsequent handoffs are accomplished by radio. The controller who is handing off the flight instructs the crew to contact the next level of ATC surveillance, and gives them the radio frequency they need to do that. Once contacted, a receiving controller acknowledges radar contact with the plane and issues instructions for heading and altitude. Depending on where the plane is going, it may be handed off many times, from one en route controller to another, during the course of its flight. En route controllers are assigned to specific geographic areas, and they work to maintain the safe separation of aircraft only in their sector of airspace. Aircraft separation standards vary according to circumstances. Above 29,000 feet, when aircraft are cruising at high speeds in the en route airspace, the standard is five miles of horizontal radar separation or 2,000 feet of vertical separation. Below 29,000 feet in the en route airspace, the vertical separation is reduced to 1,000 feet while the horizontal radar separation remains at five miles. When aircraft are moving at much slower speeds as they depart or approach an airport, the standard is three miles of horizontal radar separation or 1,000 feet of vertical separation. In certain oceanic airspace, vertical separation has been reduced to 1,000 feet at altitudes above 29,000 feet. Eventually, this reduction will follow in domestic airspace as well. As a flight crew approaches its destination airport and begins its descent, it is instructed to contact approach control. An approach controller will issue maneuver instructions to the crew to integrate the aircraft into the flow of other aircraft arriving at the airport. As soon as the crew is on its final, straight-in approach, the approach controller hands the aircraft off to the airport tower, which grants final clearance to land and monitors the aircraft until it completes its landing and exits the runway. A ground controller then directs the aircraft to its gate. While all commercial airline aircraft are controlled every step of the way, the same level of positive control does not always extend to general aviation aircraft. These aircraft can, and often do, fly in uncontrolled airspace, outside the ATC system. In general, these uncontrolled spaces are areas below the cruise lanes used by commercial airline aircraft, and outside the airspace the airlines use on takeoff and approach to landing at the 450 plus airports with FAA control towers. Since aircraft climb and descend at an angle, the controlled airspace above an airport resembles the conical shape of a giant, upside down wedding cake over the airport property. General aviation aircraft are allowed to fly under visual flight rules, or VFR, when weather and visibility are good. They do not have to file a flight plan, and they do not have to be in touch with air traffic control, unless they choose to operate in or out of an airport with a control tower. Under VFR, pilots are responsible for

maintaining adequate separation from other aircraft, which is why these rules sometimes are called the see and be seen rules. Instrument flight rules, or IFR, on the other hand, are the rules under which general aviation aircraft must fly in bad weather and low visibility. Pilots must be in contact with ATC and must file a flight plan. They also must be instrument rated, meaning they are proficient at navigating and flying their aircraft using cockpit instruments only, without benefit of good visibility out of the cockpit windows. Commercial airline flights always operate under instrument flight rules, regardless of weather, since they operate solely within the ATC system. Controller Training All air traffic controllers work for the FAA and all must go through a screening process and rigorous training before they are certified to control airplanes. Typically, applicants who pass through initial screening, go first to the FAA training academy in Oklahoma City. On completion of that program, they are assigned to an actual ATC station where they receive extensive on-the-job training. Among other things, controllers must master traffic management techniques, communication skills, and knowledge of the specific area they are overseeing. Airport and Airway Trust Fund In 1970, Congress created the Aviation Trust Fund to pay for improvements to airports and the ATC system, such as new runways and taxiways, control towers, landing aids, radar systems, etc. In the years since, Congress also has authorized the use of trust fund money for FAA operating costs, such as the salaries of controllers. The money in the fund comes from taxes and fees paid by users of the aviation system, primarily air travelers and shippers. Congress has raised the taxes several times. By 1994, travelers were paying a tax on all domestic tickets and shippers were paying a tax on their freight bills. Altogether, these and related aviation taxes and fees collected from U.S. airlines in FY99 totaled $21 billion. Delays, Modernization and Corporatization Because ATC is involved in the movement of all commercial airline aircraft, the capabilities and efficiencies of ATC has a direct bearing on the schedule performance of the airlines. An equipment glitch or personnel shortage at an ATC facility, for example, usually means that the flights it handles will be delayed because the controllers get behind in their work. They cannot process the flights fast enough to prevent a backup of traffic on the taxiways or at the airport gates. Bad weather, of course, is the primary cause of most back-ups, but deficiencies in the ATC system itself also play a major role in airline delays. In recent years, there have been an average 900 daily flight delays of 15 minutes or more. The cost of these delays to the airlines and their customers is estimated at more than $5 billion annually. That is the estimated cost of the extra fuel that aircraft have burned waiting their turn to take off, the extra crew costs incurred from delayed flights, the cost of buying or leasing the additional planes needed to maintain service in a congested system that reduces equipment utilization, the cost to passengers of extra nights on the road due to missed connections, and many other costs related to the delay problem. When air travel and service soared following deregulation, the FAA began a massive modernization effort intended to bring the ATC system up to where it needed to be, in order to handle air traffic efficiently. However, the effort quickly bogged down and remains troubled, with little to show in terms of reducing airline delays. The concept of a federal corporation to run ATC, more along the lines of a modern business, was advanced by the airlines in the mid-1980s. However, the idea met considerable opposition at that time, and again in 1994, when the Clinton Administration advanced its own version of the concept. Airline Handbook Chapter 9: Airlines and the Environment

Fuel Efficiency Fuel is the airline industry's second largest expense, exceeded only by labor. The major U.S. airlines spend more than $10 billion a year on fuel, which is approximately 10 percent of total operating expenses. As a result, increased fuel efficiency has been a top industry priority for many years, and the industry has made giant strides in that regard. Since deregulation, U.S. airlines have increased fuel efficiency nearly 65 percent by: investing in new, environmentally efficient aircraft and engines; lowering cruising speeds;

using computers to determine optimum fuel loads and to select altitudes and routes that minimize fuel burn; using flight simulators rather than real aircraft for pilot training;

holding aircraft at gates, with engines shut down, when weather or other problems delay takeoff, when appropriate; using only one engine to taxi; keeping aircraft exteriors clean to minimize aerodynamic drag.

Most important, the airlines have invested, and continue to invest, billions of dollars in new aircraft and engines that are far more efficient than the models they replace. The Airbus A320 and Boeing 737-300, for example, transport twice as many revenue passenger miles per gallon of fuel than the DC-9 and earlier versions of the 737. In addition, they emit smaller amounts of the gases of concern to scientists studying global warming and other environmental issues. The airlines, through international aviation planning groups, participate in various working groups on aviation environmental protection. These groups are looking at many options for the reduction of aviation emissions, including operational measures and market mechanisms. Airline representatives also have participated in the development of the United Nations' Intergovernmental Panel on Climate Change (IPCC) report on aviation's contribution to the atmosphere, the first international environmental examination of any sector. Further, U.S. airlines are participating in a voluntary EPA/FAA effort to study options for the reduction of NOx emissions below 3,000 feet. Aircraft Emissions Airline efforts to reduce emissions date back to the 1960s, with the earliest efforts focused on reducing the highly visible smoke emitted from jet engines. By the late 1960s, engine manufacturers developed cleanerburning combustion chambers, and the dark streaks of smoke produced by the first generation of jets all but disappeared from view. Rising fuel prices in the 1970s led to further reductions in emissions as airlines demanded (and got) more fuel-efficient cleaner engines and aircraft from the manufacturers. A study by the General Accounting Office, published in 1992, found that aircraft emissions of hydrocarbons and carbon monoxide declined 85 percent and 70 percent, respectively, between 1976 and 1988, as more fuel-efficient aircraft entered the fleet. Emissions of nitrogen oxide rose slightly during the period studied, by about 12 percent, because of the higher engine temperatures required to increase fuel efficiency and reduce other emissions. Compared with the first generation of jets, however, today's aircraft produce less than one-quarter of the total amount of these three pollutants (HC, CO and NOx) per landing and takeoff cycle. Hydrocarbon and carbon monoxide emissions result from incomplete combustion at the lower power settings used for descent, or when idling or taxiing on the ground. NOx, on the other hand, is produced when engines are at their hottest, such as during takeoffs and, to a lesser extent, during cruise, when jet engines also produce carbon dioxide (CO2) and water vapor (H2O).

While the increase in nitrogen oxide is a concern, it is important to note that aircraft emit small amounts of NOx relative to other sources - about 2-4 percent of total man-made NOx emissions. What's more, the engine manufacturers, the airlines, and the government are actively looking for ways to significantly reduce those emissions in the future. Since NOx results from burning petroleum products at very high temperatures, researchers are studying ways to lower the temperature inside a jet engine during high-power operations, without jeopardizing the fuel-efficiency gains and the reductions in other emissions achieved with the hotter engines. That is a real challenge, but several ideas appear promising, including new combustion chamber designs with features that lower peak temperatures at high power settings. Aircraft emissions of carbon dioxide - the gas some scientists believe may cause global warming - also are minuscule compared to other man-made sources of CO2. Airlines account for less than 3 percent of total CO2 emissions from the burning of fossil fuels such as wood, gas and oil. To cut aircraft emissions of CO2 further, airlines would have to find a way to power their aircraft without burning fossil fuels, which appears impossible at this time, or make further gains in fuel efficiency, which is where they continue to focus their efforts. As engines become more efficient, they use less fuel and emit less carbon dioxide for every mile flown. Aircraft Noise Although many people do not associate noise with pollution, the noise produced by jets has been one of the airlines' biggest environmental challenges - one they have spent billions of dollars to address. Key to their noise-reduction efforts has been the development and introduction of new technology over the past 25 years. Through various design changes, airframe manufacturers have successfully reduced the noise created by the displacement of air as jets move through the sky at high speeds. In addition, engine manufacturers have made great strides in reducing noise by reducing the velocity of engine exhaust. As technological breakthroughs have occurred, airlines have replaced the oldest, noisiest jets with new ones that incorporate the new, quieter technology. The first generation of jets, such as the Boeing 707, were replaced during the 1970s with quieter, Stage 2 aircraft, such as the 727. Now, Stage 2 aircraft have been replaced with even quieter Stage 3 planes, such as the 757. Today, only Stage 3 aircraft are flying. In 1990, Congress adopted a plan for phasing out Stage 2 operations by 2000. Airlines responded, meeting and even exceeding, the timetable for quieting the fleet to Stage 3 standards. As a result, according to FAA calculations, the number of the U.S. population exposed to unacceptable levels of aircraft noise declined from 7 million in 1975 to 600,000 in 2000. The phase-out was an enormous undertaking, involving some 2,000 jets and more than $100 billion covering fleet replacement, retrofitting and growth. Reducing noise at its source is important, but it is not the only way to lessen the impact of jet noise on communities around airports. Airlines, airports and the FAA are simultaneously pursuing other strategies. For example, the FAA with airline support, provides grants to airports for soundproofing homes, schools, churches and other structures near airports. In some cases, airport operators are using federal grants to buy homes outright, then selling the property for commercial redevelopment that is more compatible with the airport. Airlines, airports and the FAA also work together to route aircraft away from residential areas as much as possible when flying near the ground. Takeoffs and landings are routed over large bodies of water or industrial areas, for instance, if such areas are adjacent to an airport. In some cases, pilots also are instructed to adjust their power settings on takeoff - applying maximum power, to climb quickly while flying over non-residential areas near the airport, then reducing power and noise, when passing over residential areas further away. Of course, all such efforts can be canceled out by poor planning and zoning decisions. If airports are to peacefully co-exist with their communities, it is essential that certain types of development, particularly houses, be separated from airports.

Airport/Maintenance-Base Emissions The airlines have taken steps to eliminate or reduce emissions into the air and water from their activities at airports and maintenance bases. Among the most significant steps have been: construction of drainage systems and holding ponds to capture the fluids used to de-ice aircraft so that those fluids can be treated before they seep into the ground or flow into streams, revers, lakes and other bodies of water near airports; greater use of electric (rather than petroleum-powered) vehicles for towing aircraft and baggage carts around airport terminals; greater use of trucks powered by less-polluting alternative fuels, such as compressed natural gas for delivering overnight packages and letters to and from airports; removal, or reconstruction, of underground fuel tanks to prevent leakage into ground water, construction of facilities for the treatment of waste water at maintenance hangars; use of new, more environmentally-sensitive methods for stripping paint from aircraft; implementation of new programs to better manage the disposal of toxic substances generated by maintenance bases; use of smaller solvent containers, so that maintenance workers use no more solvent than necessary to perform their tasks; adoption of new citrus-based and alkaline-based solvents and aqueous cleaners that pose less environmental risk than chlorinated solvents.

Recycling The airlines have implemented a wide array of recycling programs to reduce the amount of solid waste they send to landfills and to conserve trees and other natural resources. Recycling activities include: aluminum can recycling by flight attendants and caterers; greater use of metal utensils and ceramic dishes (rather than plastic and paper) aboard aircraft; paper recycling at airline offices; use of engine oil from ground vehicles to heat maintenance shops; recycling of old newspapers and magazines left aboard aircraft; reclamation of glycol, the fluid used to de-ice aircraft, for re-use as a runway de-icer or as antifreeze for automobiles; recycling of batteries, scrap metal and used aircraft parts at maintenance bases; donations of unwanted, shelf-stable foods such as cereal and crackers to food banks for the poor; donations to homeless shelters of partially used hotel soap and toiletries saved by flight attendants; recycling of laser printer cartridges, video tapes and other used and unwanted office supplies.

Fuel Management and Clean-Up The airlines have taken steps to better minimize releases of fuel into the environment and to cleanup historic fuel contamination. These steps include:

 removal or reconstruction of underground fuel tanks, to prevent leakage into ground water; in conjunction with the American Petroleum Institute, conducted an airport hydrant fuel system leakdetection technologies in the airport environment; developed an airport-specific risk-based corrective action protocol to clean up historic airport contamination. De-icing Fluid Management The airlines have been developing a variety of methods to manage the environmental impacts of aircraft deicing/anti-icing practices, which include: where appropriate, construction of drainage systems and holding ponds to capture the fluids used to deice aircraft, so that those fluids can be treated before they seep into the ground or flow into streams, rivers, lakes and other bodies of water near airports; development of best management practices to limit the amount of de-icing/anti-icing fluid used, consistent with safety concerns; development of new de-icing procedures and products to limit the amount of de-icing/anti-icing fluid released into the environment; factoring environmental considerations into purchasing decisions; exploring ways to reduce environmentally harmful aspects of de-icing/anti-icing products.

Airline Handbook Glossary Aileron A control surface located on the trailing edge of each wing tip. Deflection of these surfaces controls the roll or bank angle of the aircraft. Airfoil Any surface such as an airplane wing, aileron, or rudder designed to obtain a useful reaction from the air moving past it. Airworthiness A term used to describe both the legal and mechanical status of an aircraft with regard to its readiness for flight. Altimeter An instrument which displays the altitude above mean sea level (MSL) of an aircraft. Artificial Horizon An instrument which enables a pilot to determine the attitude of the aircraft in relation to the horizon, i.e. whether the aircraft is nose-up, nose-down, or banking left or right. Available Seat Mile (ASM) One seat flown one mile. An airliner with 100 passenger seats, flown a distance of 100 miles, represents 10,000 available seat miles (ASMs). Aviation Trust Fund Fund established by Congress to pay for improvements to the nation's airports and air traffic control system. Money in the fund comes solely from users of the system - primarily a tax on domestic airline tickets.

Cargo Anything other than passengers, carried for hire, including both mail and freight. Cockpit Voice Recorder (CVR) A device that records the sounds audible in the cockpit, as well as all radio transmissions made and received by the aircraft, and all intercom and public address announcements made in the aircraft. It generally is a continuous loop recorder that retains the sounds of the last 30 minutes. Codesharing A marketing practice in which two airlines share the same two-letter code used to identify carriers in the computer reservation systems used by travel agents. Combi A type of aircraft whose main deck is divided into two sections, one of which is fitted with seats and one which is used for cargo. Compressor A fan-like disk, or several disks, at the front end of a jet engine that draws air into the engine and compresses the air. The compressed air is then passed into a combustion chamber where it is mixed with fuel and burned, producing thermodynamic energy. Computer Reservation System (CRS) A system for reserving seats on commercial flights electronically. Several airlines own and market such systems, which are used by travel agents. Connecting Flight A flight requiring passengers to change aircraft and/or airlines at an intermediate stop. Deregulation The term commonly used in referring to the Airlines Deregulation Act of 1978, which ended government regulation of airline routes and rates. Direct Flight A flight with one or more intermediate stops, but no change of aircraft. Dispatcher An airline employee who is responsible for authorizing the departure of an aircraft. The dispatcher must ensure, among other things, that the aircraft's crew have all the proper information necessary for their flight and that the aircraft is in proper mechanical condition. Elevator A control surface, usually on the trailing edge of the horizontal stabilizer, which is used to control the pitch attitude of an aircraft. Movement of the elevator will force the nose of an aircraft up or down. Empennage A collective term that refers to all of the various tail surfaces of an aircraft, i,e., the vertical and horizontal stabilizers. Enplanements The number of passengers boarding a flight, including origination, stopovers and connections. En Route Center Formally known as an Air Route Traffic Control Center (ARTCC), it houses the air traffic controllers and equipment needed to identify and direct aircraft, primarily during the en route portion of their flights. Essential Air Service Government subsidized airline service to rural areas of the United States, which continued after the Airline Deregulation Act of 1978.

Federal Aviation Administration (FAA) The government agency responsible for air safety and operation of the air traffic control system. The FAA also administers a program which provides grants from the Airport and Airway Trust Fund for airport development. Flaps Control surfaces installed on the trailing edge of a wing and used to increase the amount of lift generated by the wing at slower speeds. Flaps also have the effect of slowing an aircraft during its landing approach. Flight Data Recorder (FDR) Records pertinent technical information about a flight. An FDR will record information about the performance of various aircraft systems, as well as the aircraft's speed, altitude, heading and other flight parameters. Like a cockpit voice recorder (CVR), a flight data recorder is designed to withstand the forces of a crash so that its information may be used to reconstruct the circumstances leading up to the accident (in some cases, a digital flight data recorder, or DFDR). Flight Deck Also called the cockpit, it the section of an aircraft where pilots sit and control the aircraft. Flight Plan A required planning document that covers the expected operational details of a flight such as destination, route, fuel on board, etc. It is filed with the appropriate FAA air traffic control facility. There are both VFR and IFR flight plans. VFR plans are not mandatory. Flight Service Station (FSS) An FAA facility that provides specialized flight-related services to pilots. It can provide weather briefings and en route advisories, among other things. Freight All air cargo excluding mail. Freight-Ton Mile A ton of freight moved one mile. It is the standard measure of air freight activity. Frequent-Flyer Programs Airline marketing programs designed to win customer loyalty by giving them "points" for each mile flown. Points can be cashed in later for free flights or upgrades in cabin service, or in some instances, non-airline services or items. Fuselage The main body of an aircraft, cylindrical in shape. It contains the cockpit, main cabin and cargo compartments. Glideslope The ideal descent path to a runway. It can be electronically defined by radio signals transmitted from the ground. An aircraft carrying a special radio receiver can detect this electronic glidepath and follow it down to the runway. Horizontal Stabilizer The small wings at the rear of an aircraft's fuselage that balance the lift forces generated by the main wings farther forward on the fuselage. The stabilizer also usually contains the elevator. Hub and Spoke A system for deploying aircraft that enables a carrier to increase service options at all airports encompassed by the system. It entails the use of a strategically located airport (the hub) as a passenger exchange point for flights to and from outlying towns and cities (the spokes). Hypersonic Flight Flight conducted at speeds greater than Mach 5, or five times the speed of sound.

Instrument Flight Rules (IFR) Rules governing flight in certain limited visibility and cloud conditions. Under IFR, an aircraft is required to be in contact with air traffic control facilities and is separated by ATC from all other IFR aircraft. Instrument Landing System (ILS) Provides radio-based horizontal and vertical guidance to an aircraft approaching a runway. It is used to guide landing aircraft during conditions of low visibility. Jetway A registered trademark for a certain kind of aircraft loading bridge which allows passengers direct, protected access to an aircraft from the terminal. Knot An abbreviation for one nautical mile per hour. Since a nautical mile is 15 percent longer than a statute mile, a speed expressed in knots is 15% higher than it would be if expressed in miles per hour. Lift The force generated by the movement of air across the wings of an aircraft. When enough lift is generated to overcome the weight of an aircraft, the aircraft rises. Load Factor The percentage of available seats that are filled with paying passengers, or the percent of freight capacity that is utilized. Technically, revenue passenger miles divided by available seat miles or cargo ton miles divided by available cargo ton miles. Major Carrier An airline with annual revenue of more than $1 billion. Minimum Equipment List (MEL) A list of aircraft equipment that must be in good working order before an aircraft may legally take off with passengers. Repairs to some items not essential to an aircraft's airworthiness may be deferred for limited periods of time approved by the FAA. National Carrier An airline with annual revenues of between $100 million and $1 billion. Nonstop Flight A flight with no intermediate stops. Part 121 of the Federal Aviation Regulations The FAA safety regulations covering operators of aircraft with 10 or more seats. Part 135 of the Federal Aviation Regulations The FAA safety regulations covering operators of aircraft with fewer than 10 seats. PFC A tax authorized by Congress, approved by the Federal Aviation Administration, assessed by airports, and collected by airlines as an add-on to the passenger airfare. It is designed to help pay for airport improvements that enhance safety and capacity and is not revenue for airlines. Pitch A description of the movement of the nose of an aircraft up or down, in relation to its previous altitude. Pressurized Aircraft An aircraft that is kept at a designated atmospheric pressure so passengers and crew can breath normally. Propfan One of several terms used to describe new generations of jet engines which typically turn very large, multibladed propeller-like fans in order to produce the thrust needed for flight.

Pylon The part of an aircraft's structure which connects an engine to either a wing or the fuselage. Radar Term coined from the phrase "Radio Detecting and Ranging." It is based on the principle that ultra-high frequency radio waves travel at a precise speed and are reflected from objects they strike. It is used to determine an object's direction and distance. Ramp The aircraft parking area at an airport, usually adjacent to a terminal. Regional Carrier An airline with annual revenues of less than $100 million whose service generally is limited to a particular geographic region. Revenue Passenger Mile (RPM) One paying passenger flown one mile. It is the principal measure of airline passenger traffic. Rudder A control surface, usually installed on the trailing edge of the vertical stabilizer, which controls the yaw motion of the aircraft - that is, the motion of the nose of the aircraft left and right. Seat Pitch The distance between seats in an aircraft's passenger cabin as measured from any point on a given seat to the corresponding point on the seat in front of or behind it. Simulator A ground-based device used to train pilots which simulates flight scenarios, including emergency situations. Slats Special surfaces attached to or actually part of the leading edge of the wing. During takeoff and landing, they are extended to produce extra lift. Speed Brakes Also known as air brakes, they are surfaces that are normally flush with the wing or fuselage in which they are mounted, but which can be extended into the airflow to create more drag and slow the aircraft. Spoilers Special panels built into the upper surface of the wing that, when raised, "spoil" the flow of air across the wing and thereby reduce the amount of lift generated. They are useful for expediting a descent. Stage 2 Aircraft Term used to describe jets which meet Stage 2 Federal Aviation Regulation (FAR) Part 36 noise parameters on takeoff and landing. Stage 3 Aircraft Term used to describe aircraft that meet quieter Stage 3 noise requirements under FAR Part 36. Stall Results when a wing exceeds its angle of attack (angle between airfoil and relative flow of wind), the airflow is disrupted, and the wing no longer produces lift, with sudden drop and possible loss of control. Supersonic Flight Flight at speeds greater than the speed of sound, which varies according to altitude but which is more than 700 miles per hour at sea level. Terminal Control Area (TCA) A designated zone around and above the busiest airports. A flight in TCAs carries stringent requirements for pilot experience, aircraft equipment and communications capability.

Terminal Radar Approach Control Facility (TRACON) Controls aircraft immediately after and prior to landings and takeoffs, or during the climb and approach phases of flight. Thrust The force produced by a jet engine or propeller. As defined by Newtonian physics, it is the forward reaction to the rearward movement of a jet exhaust. Traffic Alert and Collision Avoidance System (TCAS) Installed in commercial jets to search for and alert pilots to the presence of other aircraft. Enhanced versions of TCAS also advise pilots on actions to take to avoid aircraft that are getting too close. Transponder An electronic device that "responds" to interrogation by ground-based radar with a special four-digit code that specifically identifies the aircraft on which it is located. Certain transponders have the ability to transmit automatically the altitude of the aircraft in addition to the special code. Turbofan A type of jet engine in which a certain portion of the engine's airflow bypasses the combustion chamber. Turbojet The original designation for a "pure" jet engine whose power is solely the result of its jet exhaust. Turboprop A type of engine that uses a jet engine to turn a propeller. Turboprops are often used on regional and business aircraft because of their relative efficiency at speeds slower than, and altitudes lower than, those of a typical jet. Unducted Fan A kind of engine that uses the basic core of a jet engine to drive large, fan-like blades which produce the major thrust component of the engine. A propfan is one kind of unducted fan. Vertical Stabilizer The large "tail" surface normally found on top of the rear of the fuselage. The rudder is usually installed at the trailing edge of the vertical stabilizer. Visual Flight Rules (VFR) Rules governing flight during periods of generally good visibility and limited cloud cover. Aircraft flying under VFR are not required to be in contact with air traffic controllers and are responsible for their own separation from other aircraft. Widebody Aircraft Generally considered to be any airliner with more than one aisle in the passenger cabin. Examples of widebody aircraft include the Boeing 747 767, and 777, the Lockheed L-1011, the McDonnell Douglas DC-10, and Airbus Industries' A300 and A310. Technically, any aircraft with a fuselage diameter in excess of 200 inches may be considered a widebody. Wind shear Weather phenomenon entailing a strong downdraft of air that can result in the loss of lift for an aircraft passing through it. Yaw A description of the movement of the nose of an aircraft from side to side, or left and right. Yaw motion is controlled by the vertical stabilizer and the rudder. Yield Average revenue per revenue passenger mile or revenue ton mile, expressed in cents per mile.

Yield Management Also known as revenue management, the process airlines use to set prices for a flight. The goal is to find the mix of seat prices that produces the most revenue.