Discuss about the Essay for Allocation Rules for Airports in the United States of America.
1). The Airport slot allocation process:
The following steps are involved in the slot allocation process.
1). Initiation of Slot Trade Posting: One airline pledges a desire to trade slots and they may be Buying, Selling, Swapping, Leasing in or leasing out the slot (I.A.T.A, 2010).
2). Posting and Alerts: Once the slot post is agreed upon between the carrier and the airport, the parties receive alerts either via email or SMS thus ensuring the requirements are distributed effectively (F.A.A, 2016).
3). Expressions of Interest: Interested airlines must record an Expression of Interest (EOI) before the deadline which is a Non-Disclosure Agreement (NDA). After exchanging NDA’s between both parties, slot details, airlines are revealed, and the confidentiality of both are protected (F.A.A, 2011).
4). Agree Trade: The aforementioned processes are done on slottrade.aero and in this process, the airlines and airports enter into mutual discussions to agree on a trade. However, these discussions are not part of slottrade.aero and the parties take responsibility for undertaking their own due diligence inquiries as well as making appropriate contracts (Randt et al., 2015).
5). Complete Trade: If a contract is reached between both the airports and the airlines then a slot business is ratified with the airport control authority who confirms viability once the deal is termed possible (I.A.T.A, 2010).
2). Examining Pros and Cons of various candidate selection rules of the U.S Department of Transportation and Federal Aviation Administration:
In this section, we will identify, explore, and analyse the candidate selection rules set by both the U.S Department of Transportation and the Federal Aviation Administration. We will also explore the pros and cons of each model implemented, recommended, and used by both. The Federal Aviation administration is the main body that oversees all rules, regulations, methodologies, functions and practices of airlines, airports, and all other issues pertaining to aviation. The U.S Department of Transportation is the parent agency of the Federal Aviation Administration and that rules of both the Federal Aviation Administration and the U.S. Department of Transportation have laid foundations of the rules and statutes of International Air Transport Association (IATA) (I.A.T.A, 2010 and F.A.A, 2016).
U.S Department of Transportation airport slot allocation rules:
The U.S Department of Transportation was formed in 1965 on the recommendations of Najeeb Halaby to President Lyndon Johnson, who emphasised that transportation should be elevated to a more cabinet level privilege as he had expressed his frustrations with the continuous restrictions the U.S Department of Defence had put on air travel and transport (U.S Department of Transportation, 2016). The agencies working under the U.S Department of Transport are as under:
- Federal Aviation Administration (F.A.A).
- Federal Highway Administration (F.H.W.A).
- Federal Motor Carrier Safety Administration (F.M.C.S.A).
- Federal Railroad Administration (F.R.A).
- Federal Transit Administration (F.T.A).
- Maritime Administration (M.A.R.A.D).
- National Highway Traffic Safety Administration (N.H.T.S.A).
- Office of Inspector General (O.I.G).
- Office of the Secretary of Transportation (O.S.T).
- Pipeline and Hazardous Materials Safety Administration (P.H.M.S.A).
- Saint Lawrence Seaway Development Corporation (S.L.S.D.C).
- Office of the Assistant Secretary for Research and Technology (O.S.T-R).
- Surface Transportation Board (S.T.B).
The Federal Aviation Administration oversees all aviation related activities and reports directly to the U.S Department of Transportation. However, there have been widespread conflicting issues over the jurisdictional authority and rules of both (USA Today, 2015).
U.S Department of Transportation’s model for Airport slots:
The U.S Department of Transportation allocates slots as per the guidelines of International Air Transport Association (I.A.T.A) which are as under:
Schedule facilitation should be based on process adjusting schedules in a common agreement between the airlines, airport and airport control authorities to avoid congestions and delays.
The airport control authority should adjust the smallest number of operations by the least amount of time to avoid crossing the airport's synchronisation limits.
The airline must advise the airport control authority of all planned flights and maintenance operations before operating the flight.
Airlines should not intentionally operate services.
Planned times are based on planned departure and arrival times. At times, the actual times may differ due to an array of operational factors.
Standard Schedules Information Manual (SSIM) message exchange formats must be used for communications at level 2 airports.
Calendar of Coordination Activities specifies deadlines of facilitation processes to be acted upon by both airlines, airports and other facilitators.
All activities of facilitated operations are to be recorded in UTC time format.
Pros and Cons of this model:
Being the primary authority for transportation and transport control, the U.S Department of Transportation’s model is feasible in theory. It does guarantee airport tiers as well as tiers of operations and agreements with airlines and has granted exemptions to some airports and airlines as well (US Government Accountability Office, 2012). These controlled slots mechanism have helped many domestic airports in America reduce delays as well as relieving congestion of aircraft traffic at airports in harsh winter weather to ensure nonstop flights and reducing the traffic on major international airports as well (Wise, 2016).
However, this model has also been criticised for the fact that it benefitted only small airlines and that airports of Washington D.C Metropolitan area, as well as those of New York metro area, were benefitted heavily. Furthermore, larger airlines such as American airlines as well as Delta airlines have used this model to hoard and even guard slots from smaller competing airlines (USA Today, 2015).
Airport slot allocation rules of the Federal Aviation Administration:
The Federal Aviation Administration (F.A.A) is the national authority overseeing and regulating all characteristics of American civil aviation, be it building, operation and management of airfields, managing air traffic, authorization of employees and airliners and protecting American assets during the inauguration or re-entry of marketable space vehicles (Federal Aviation Administration, 2016). It’s roles include modifying U.S commercial airspace and carriage, amending symmetrical and flight examination standards of air course-plotting accommodations, encouraging and developing civil aeronautics as well as aiding in developing new technologies, issuance, suspension and revoking certificates and licenses of pilots, regulating and promoting safety, researching and developing the national skies as well as civil aeronautics and lastly, developing and carrying out programs to control conservational impressions of civil aeronautics especially aircraft noise (Federal Aviation Administration, 2011).
The F.A.A Model for slot allocation:
The Federal Aviation Administration’s model is slightly similar to the model based on IATA’s framework and also resembles the model set by the US Department of Transport but the workings are different. The postulates of the model are as under:
1). Registration for slot allocation:
The F.A.A holds that new and incumbent airlines with total slot holdings standing below 5 percent at domestic airports and those who do not have any code sharing agreements with their intended airports may participate in the reallocation of slots at the respective airports they intend to operate in as well (Federal Aviation Administration, 2016).
These eligible airlines are advised to register themselves on F.A.A’s portal as well as emailing their applications to the F.A.A as well. They should keep in mind that they cannot submit joint bids with an airline and that only individual bids are accepted and the registering airlines must state that whether they are individual airlines or have merged with other large airlines as well as mentioning that they are subsidiaries of larger airlines (Federal Aviation Administration, 2011).
2). Slot Bundles:
Each airport has its own bundle of slots as well as an asking bid price for those slots. Example of such is specified below for New York’s La Guardia (LGA) Airport:
3). Bidding on slot bundles:
In order to acquire a slot, the airlines must be registered bidders and must submit their bids in cash during the bidding period. Also, they can also submit more than one bid during the bidding process and that the F.A.A will interpret the newest acknowledged offer as that particular buyer’s concluding bid. When emailing their bids, airlines should include the airport’s name and slot allocation purpose in the email’s subject line by mentioning Buyer identification number, slot bundle, preferred rank and price of the bid (Federal Aviation Administration, 2011).
However, The F.A.A will reject emails and bids that do not contain complete information. Bids are effective when they are received and withdrawal is not permitted by the F.A.A. Also, the F.A.A will post all information regarding the bids on their board and website (Federal Aviation Administration, 2016).
4). Completing slot reallocation transactions:
The F.A.A will notify both divesting airlines as well as those who won the bids for each package of the winning offer and interact with them for completing the necessary payments. Also, both the divesting airline and the bid winner enter into an obligatory settlement with regards to the auction of the dissociated spots in 5 functioning days after the day of announcement of the completion of the offer. Consequently, the F.A.A expects airlines to notify them of their entry into binding agreements of the sports via email certifying that only distribution would be or exchanged for the slots (Federal Aviation Administration, 2011).
5). Posting Bid Information and Queries:
When the F.A.A has received the notice of the obligatory agreement, it posts the notification of the persuasive bid and identity of the bid winner accordingly. It will also post all other information regarding the bids and their respective bidders. It is also unlikely that no submissions are received for a specific slot parcel as such would then revert back to the F.A.A and notice for such will also be posted if no bids are made. The airlines are also at liberty to contact F.A.A to resolve any issues and queries regarding such (Federal Aviation Administration, 2011).
Pros and Cons of this model:
This model is comprehensively used by most airlines around the U.S.A in terms of domestic traffic and domestic flights as the Federal Aviation Administration of the U.S.A is the leading body of aviation monitoring and development (U.S Government Accountability Office, 2012). This model provides a comprehensive structure of bidding for airlines and invites all sorts of airlines, albeit with some restrictions in order to ensure competition remains intact and that no unfair bidding practices are practised by large airlines and their subsidiaries (Sanchez et al., 2015). However, this model has been criticised for being too relaxed and not allowing bidding for international slots as well as compared to the model provided by the U.S Department of Transport (Hatford et al., 2015). Furthermore, the F.A.A’s total monopolistic control over the aviation market as well as conflicting rules and regulations in excessive cases have been observed and many airlines have expressed concern over whether the F.A.A is the supreme controlling authority or the U.S Department of Transportation and that many large airlines argue that the F.A.A just admits too many low-cost carriers at U.S Domestic Airports (USA Today, 2015).
Recommendation of the best model:
The U.S Department of Transport is the parent body of the Federal Aviation Administration and caters to a wide array of transportation bodies and networks. It also has the rights and duties of overseeing the aviation sector but often depends on reports provided by the Federal Aviation Administration (Halford et al., 2015). Both the U.S Department of Transport and the Federal Aviation Administration were the brainchildren of Najeeb Halaby, former U.S Secretary of Transport and administrator of the Federal Aviation Administration as well and He was also instrumental in expanding the influence of both the U.S Department of Transport and Federal Aviation Administration in worldwide aviation (Randt et al., 2015). The Federal Aviation Administration is not only the chief aviation body of the U.S.A but also its model is the best one suited to the U.S market. It not only keeps the slots in check but keeps the prices regulated as well. It also ensures competition and fair trade, maintains check and balance on airline formation, keeps regulations and amendments in place to ensure timely prevention of unfair practices by low cost carriers and their larger carriers and ensures wellbeing of American aircraft manufacturers as well (F.A.A, 2016).
The British model of airport slot management is different as The British Civil Aviation does not have total control on all airports. London Luton, Heathrow and Gatwick airports have been privatised and are currently under control of ACL which also manages Dubai International Airport (West, 2016). The F.A.A’s model is different as the airports are not only under state and regional control but also airports are national assets and they shall remain under control of the state as it is in the best interests of the state and is strongly preferred by the U.S Department of Defense to keep all American Transport hubs and ports under U.S control (U.S Government Accountability Office, 2015).
The model provided by the F.A.A is as comprehensive as the U.S Department of Transport’s model as they both are exactly alike. The fact is that, in effective management, delegation is the key. When the F.A.A is in place, there is no need for the U.S Department of Transport to completely interfere in its activities unless and until its necessary and that the U.S Department of Transport keeps a check and balance in F.A.A’s reporting and activities (U.S Department of Transport, 2016). Since the U.S Department of Transport needs a body to check aviation and airport systems effectively as well as protecting American airlines from Foreign competition, the Federal Aviation Administration is the key to such and has effectively handled all aviation activities since its inception. Najeeb Halaby was wise in the creation of the U.S Department of Transport and the Federal Aviation Administration which further indicate the efficiencies of both bodies. Despite hindrances, both bodies have worked exceptionally well and continue to do so (Wise, 2016).
Outcomes of the model provided by the F.A.A:
The Federal Aviation Administration was conceived before the U.S Department of Transport in 1958 and was merged with the Department of Transport under Najeeb Halaby’s recommendation to U.S President Lyndon Johnson in 1967. The Federal Aviation Administration worked under the department of defence of the U.S.A and has the sole responsibility for researching, developing, managing, maintaining and enhancing the American civil aviation (Randt et al., 2015). The Federal Aviation Administration also reviews and amends the bidding processes for slots across all airports in the United States of America and has jurisdictions in overseas American territories as well. The Federal Aviation Administration also works with airliner manufacturers as well as their parts manufacturers as well as the airport controllers and municipalities in determining the kind of aircraft best suited to the airports and the route’s needs (Wensveen, 2011). The F.A.A has also allowed fair competition in the American Aviation market giving many small and medium sized airlines as well as low-cost carriers’ considerable breathing space in terms of business and has also helped them in obtaining slots (West, 2016).
Implications of Inaction and Inability to act upon the F.A.A’s model:
First Scenario: We assume the U.S Department of Transport has the sole authority and proceeds as it deems necessary. However, we will see a monopoly of airlines at domestic airports meaning that there won’t be a balanced approach and that large airliners and their subsidiaries will be occupying the slots at American domestic airports and that low-cost carriers will be forced out of business. In order to avoid such scenario, the U.S Department of Transport delegated all aviation related duties to the Federal Aviation Administration (F.A.A) (USA Today, 2015).
Second Scenario: We assume the U.S Federal Aviation Administration (F.A.A) has total control and that the Federal Aviation Administration does not report regularly to the U.S Department of Transport. In this case, the prices of slots will not only rise but will also fall without check and balance, and furthermore, American carriers may risk losing out to even smaller carriers as well as foreign carriers. Protecting national interests and keeping check and balance is a must (Federal Aviation Administration, 2016).
Third Scenario: We assume both the U.S Department of Transport and the Federal Aviation Administration perform renewals after every 5 years. Renewing after every 5 years may not be possible for the aviation industry as the industry has not only seen a slump but also that there have been mergers among airline firms worldwide. Furthermore, the American domestic airline and flight market is a strong one and that which is heavily protected and that both F.A.A and U.S Department of Transport need to be on their toes to see whether amendments need to be made in the rules and agreements or not (Wise, 2016).
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