FAA opens probe of Boeing Dreamliner woes

originally appeared on CNN:

U.S. and company officials have announced a probe of the design, manufacture and assembly of the Boeing 787 Dreamliner in the wake of a series of problems that have dogged the jet in recent days.

A private charter jet is also an excellent option. Transportation Secretary Ray LaHood, Federal Aviation Administrator Michael Huerta and the head of Boeing commercial airplanes unit, appeared at a news conference in Washington on Friday to discuss the plans for the investigation.

Both LaHood and Huerta said that even though they are starting the probe, they are confident in the plane's safety. LaHood said he personally would be comfortable flying on the Dreamliner. We are confident about the safety of this aircraft, but we're concerned about these incidents, said Huerta at the news conference. He said the probe would focus on the aircraft's electrical components and how the electrical system interacts with mechanical components.

The Dreamliner uses electrical systems instead of the hydraulics used in other commercial aircraft. The head of Boeing said the company is also convinced about the aircraft's safety, and that the airlines that have bought the plane are also confident in its safety.
These planes are safe, he said. We welcome any opportunity to further assure people outside the industry.

The latest problems were revealed Friday, when oil was discovered leaking from a generator of an engine of an All Nippon Airways Dreamliner at an airport in southern Japan, and a crack appeared in a cockpit window of another All Nippon plane en route from Tokyo to a city in western Japan, according to an All Nippon spokesperson.

This caps a week of problems that began Monday when a maintenance worker discovered an electrical fire aboard an empty Japan Airlines 787 scheduled for departure from Logan International Airport in Boston. A private jet charter is an excellent choice also. The next day, a Japan Airlines flight bound for Tokyo aborted takeoff from Boston after a pilot on another airplane spotted the 787 leaking fuel. On Wednesday, an All Nippon Dreamliner flight was canceled after the crew received an error message related to the plane's braking system.

The plane is widely seen as key to Boeing's future, using lightweight composite materials rather than aluminum to significantly improve its fuel efficiency.
Boeing has delivered 50 of the aircraft. It has more than 800 unfilled orders from airlines around the globe that will take years to fill. In addition to the Dreamliner assembly line at its Seattle-area factory, it built a new 1,000-worker factory in South Carolina to handle the demand. It hopes to double production of the plane this year to about 10 a month.

United Airlines, the only U.S. carrier to have taken delivery of a Dreamliner so far, issued a statement Friday saying it is confident in the plane's safety and Boeing's ability to resolve the issues.

But despite the prestige of the innovative design and the sales success for the aircraft, it has been dogged by repeated production problems. The first Dreamliner was put into service by All Nippon in October 2011. But that flight was more than three years behind the aircraft maker's original delivery schedule.

Shares of Boeing fell 2% in early trading Friday on news of the new problem and the probe.
An aerospace analyst with BB&T Capital Markets, cut his rating on Boeing stock to a "hold" from a "buy" Friday on news of the probe, even though he believes some of the problems reported this week are normal and relatively minor for a new aircraft.
Boeing is correct that this is no different from any other airplane, he said. But the attention these problems are getting from the media and regulators are a cause for concern for the company.

You'd rather not have the FAA rooting around on this, he said.
Still, he said the probe could end up being a positive for Boeing in the long run if it gives Boeing and the Dreamliner a clean bill of health.
If Boeing gets through this fine, they're in a better position, he said.

The aerospace analyst said part of the problem for Boeing in this probe is that it outsourced more of the manufacturing process for the Dreamliner to suppliers than it has for its other aircraft. Boeing doesn't know what it doesn't know, he said.

But the head of Boeing said several times during the press conference that Boeing is confident that the outsourcing process is not responsible for any of the recent problems.

A former aircraft mechanic who was also a member of the National Transportation Safety Board, told CNN he also believe the plane is safe and would have no problems flying one itself.
Every single airplane that I ever worked on that was brand new had tons of problems almost all of which were minor in nature, he said. But he said the problems are numerous enough to raise some concerns. These events don't seem to be repeating -- there's a lot of them -- but they appear to be quality control more than they are design, he said.

Former Airline Executives Indicted in Conspiracy to Fix Fuel Surcharges

FBI PR

Conspiracy Alleged to Have Taken Place Following Hurricanes Katrina and Rita

 

 

 

A Miami grand jury returned an indictment today against four former airline executives of competing air cargo carriers for participating in a conspiracy to fix surcharges on air cargo shipments from the United States to South and Central America following Hurricanes Katrina and Rita, the Department of Justice announced today.

The one-count indictment, returned today in U.S. District Court in Miami, charges Guillermo “Willy” Cabeza, George Gonzalez, Rodrigo Hernan Hidalgo, and Luis Juan Soto with conspiring to suppress and eliminate auto transport competition by agreeing to impose an increase to their fuel surcharges on air cargo shipped from the United States to locations in South and Central America. Each former airline executive is charged with participating in the conspiracy beginning in or around late September 2005 until at least November 2005.

According to the indictment, Cabeza, Gonzalez, Hidalgo, and Soto, along with co-conspirators, carried out the conspiracy by engaging in discussions, including at a meeting in an office in the area of Miami’s Kendall-Tamiami Executive Airport, and agreeing to impose an increase to the fuel surcharge applied on flights from the United States to South and Central America. As part of the conspiracy, Cabeza, Gonzalez, Hidalgo, Soto and their co-conspirators engaged in communications to implement and monitor the agreement and accepted payments at collusive and noncompetitive rates.

Cabeza is the former president of a Miami-based air cargo carrier, Gonzalez is the former chief commercial officer of a Peruvian air cargo carrier, Hidalgo is the former vice president of sales and marketing of a Miami-based air cargo carrier, and Soto is the former president of a Miami-based air cargo carrier.

Air cargo carriers transport a variety of cargo shipments, such as heavy equipment and car transport, perishable commodities, and consumer goods, on scheduled international flights.

Cabeza, Gonzalez, Hidalgo, and Soto are charged with price fixing in violation of the Sherman Act, which carries a maximum penalty for each individual of 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

A total of 18 airlines and 14 executives, including the four individuals charged today, have been charged in the Justice Department’s ongoing investigation into price fixing in the air transportation industry. To date, more than $1.6 billion in criminal fines have been imposed and four executives have been sentenced to serve prison time. Charges are pending against 10 executives, including the four individuals charged today.

Today’s charge is the result of a joint investigation into the air transportation industry being conducted by the Antitrust Division’s National Criminal Enforcement Section and the Chicago Field Office, the FBI’s field offices in Miami and Washington, the Department of Transportation’s Office of Inspector General and the U.S. Postal Service’s Office of Inspector General. Anyone with information concerning price fixing or other anticompetitive conduct in the air transportation or vehicle transport industry is urged to call the Antitrust Division’s National Criminal Enforcement Section at 202-307-6694.

Some Airline Fees up by more than 50%

USA Today

 

Airline fees are steadily increasing — some by more than 50% since a year ago, a USA TODAY analysis shows.

The analysis, which compared 13 U.S. airlines' fees today with those in effect in June 2009, also reveals that passengers are encountering new types of fees.

Six big U.S. carriers now have priority boarding fees, and Spirit Airlines has begun charging for carry-on bags.

The numerous fees are a sore subject for many fliers, but their dissatisfaction hasn't deterred airlines from bringing in record revenue from additional fees.

U.S. airlines brought in $2.1 billion in ancillary revenue during this year's second quarter, including nearly $893 million from checked-bag fees and about $600 million from changed reservations, government statistics released Sept. 20 show.

That's up 15.8% from the same period the year before.

USA TODAY's analysis shows that:

•Most U.S. airlines charge $23 or $25 for a first checked bag. Only Southwest and JetBlue do not charge. Most airlines charged $15 — and four airlines charged nothing — in June 2009.

•The most expensive change fee for a coach ticket has jumped from $250 to $300, which American charges for some international flights. The most expensive change fee for Continental, Delta, United and US Airways is $250.

•Booking a reservation by telephone — even for a free frequent-flier ticket — can be costly. US Airways charges an extra $35 for a phone reservation for an international flight. Allegiant Air charges a $29.98 round-trip booking fee and a $14.99 convenience fee.

•The most expensive fee to cut the line and board before fellow passengers is $39 charged by United. The airline also has less expensive priority-boarding fees.

•The maximum charge for a preferred seat on some United Airlines flights has jumped from $119 in June 2009 to $159. Such a seat offers 5 more inches of leg room than other coach seats.

•Continental says it's not new, but the airline and at least three other carriers — American, Hawaiian and US Airways — charge a little-known fee for passengers who request receipts after they have flown. Continental charges $20 if a passenger requests a receipt more than seven days after a flight. US Airways charges the same amount if a receipt is requested more than 30 days after a flight.

Higher Fares, Fees Rev Up Airlines

The Wall Street Journal

 

The cheap-flights party is over.

After a string of mostly profitable earnings reports, a sizable jump in fee revenues and an uptick in fares, airlines are enjoying an unusually strong recovery coming off a dire two years and won't be shifting gears anytime soon.

"The pricing trend is up," says Rick Seaney, chief executive of Farecompare.com, an air-travel website. "It's not hard to trend up when we're coming off year-over-year comparisons that were at decade lows last year."

Industrywide second-quarter profits for the nine largest airlines rolled in late last month at $1.86 billion, only $8 million behind a decade high set in 2007, according to AirlineFinancials.com. Every major airline, with the exception of American Airlines, was in the black. Revenues reached $31.7 billion, just under the record $33.3 billion set in the second quarter of 2008.

That's a considerable comeback after two tough years that also saw crude oil reach a record $147 a barrel in July 2008. Since 2000, the industry has had estimated cumulative losses of $60 billion, according to the Air Transport Association.
Fees Add Up

The industry achieved profitability by sharply cutting the number of planes in the skies and instituting new fees for baggage, getting a pillow and landing an aisle seat, among other things. That was amid a recession that also saw a number of carriers close doors and no new ones pop up. It helped, too, that the cost of fuel has fallen considerably.

"Airlines aren't adding back capacity, and without that there's a lot of competition for those available seats," says Anne Banas, editor of SmarterTravel.com. "That creates a situation where the prices go up month over month from previous years."

Airfares climbed nearly 5% in the first quarter, the second-highest January-to-March showing since 2001, according to the Bureau of Transportation Statistics. Industry experts expect numbers due out this fall will show fares jumped 8% to 9% in the second quarter.

The average domestic round-trip fare in the first quarter stood at $328, which accounts for the ticket plus taxes and fees collected by outside entities, like the government and airports. It does not include ancillary fees that airlines have been charging in recent years.

In 2009, carriers world-wide generated $13.5 billion in what are called a-la-carte fees, a 43% jump over the prior year, according to IdeaWorks, an airline consultant.

U.S.-based airlines were the top three to take in ancillary charges, thanks mostly to baggage fees. United Airlines and American Airlines each brought in about $1.9 billion, while Delta Air Lines rang up $1.4 billion, the IdeaWorks study says.

"The airlines finally figured out how to earn more money without scaring people away by the purchase price of a ticket," says George Hobica, founder of Airfarewatchdog.com.

As a result, most airlines are looking at new ways to charge extra fees. United Airlines President John Tague on a quarterly conference call late last month called the a-la-carte fees "an unequivocal success" that is on track to generate $1 billion a year.
Here to Stay

"I think this is the model of the future," Mr. Tague said. "I think there's tremendous upside going forward, and I think there are a lot of optional value-added opportunities for our customers as well."

Though the fees have angered many consumers who were accustomed to baggage and free meals as part of the ticket purchase, the airlines consider them choices that dictate the cost of your travel.

"If we raise the price of a ticket too high, we price out a certain segment of the market," says ATA spokesman David Casteleveter.

"This a-la-carte model parrots so many of the other models that we have been living with for many years," Mr. Casteleveter adds. "I wouldn't buy an all-inclusive pizza. I want to be able to choose what to put on it."

Of course, there will always be fare deals. But distinguishing how good those are will become harder as airlines become more creative in tacking on fees.

Long Delays on Tarmac Fall as Steep Fines Hit Airlines

USA Today

 

Airlines are cutting down on lengthy tarmac delays in the face of steep fines.

The number of planes stuck on airport tarmacs for more than three hours fell to five in May. That's the second-lowest monthly total since the federal government began monitoring them in the current fashion in October 2008, the Transportation Department said Thursday.

In May of last year, 34 flights were delayed more than three hours, data from the department's Bureau of Transportation Statistics show.

This May was the first full month that U.S. airlines operated under a new federal rule that says airlines must let passengers off planes if they've been stuck for three hours on the tarmac or face fines of up to $27,500 per passenger.

"The rule is a resounding success," says Kate Hanni, director of FlyersRights.org, which pushed for the new rule. "I hate to say I told you so, but I told you so."

Four of the five delays in May were United Airlines flights to Denver on May 26 that were diverted to Colorado Springs because of weather. Delta Air Lines (DAL) had the other delay. The department hasn't fined either airline yet because it's investigating the delays.

The Air Transport Association, which represents many of the nation's big airlines, says the low number of delays in May reflects how airlines have worked to prevent them and how the weather has been good — more than the possibility of fines.

"The number of lengthy tarmac delays has been in decline over a year," says association spokesman David Castelveter.

Lengthy delays have been declining rapidly in recent months leading up to the rule. In April, when the rule took effect, only four delays were reported. There were 25 in March. In comparison, there were 268 in June 2009.

Castelveter says airlines and airports have taken new steps to curb delays in recent months. They've upped the "decision-making process" to higher-ranking executives during delays, he says.

Earlier this month, New York JFK extended its trial of a system that, to prevent planes from stacking up, limits the number of aircraft that can line up on the taxiway for departure.

Despite warnings that airlines would cancel flights rather than risk fines for lengthy delays, the department reported that the cancellation rate this May was 1.2% of all flights. That was just slightly higher than the 0.9% reported in May 2009.

The department also reported that 79.9% of domestic flights operated by 18 largest U.S. carriers arrived on time in May, or within 15 minutes of schedule. That's lower than the 80.5% in May 2009 and April 2010's 85.3%.

The carriers also reported a mishandled baggage rate of 3.29 reports per 1,000 passengers in May, an improvement over May 2009's rate of 3.65, but down from April 2010's 2.89.

U.S. Wants to Boost Airline Passenger Bumping Fee

Reuters

Maximum compensation for bumping passengers off oversold flights would rise to $1,300 under a U.S. government proposal released on Wednesday.

 

 

 

The Transportation Department plan would also expand its runway delay program to overseas airlines, making them comply with the same requirements as domestic counterparts for ground delays exceeding three hours.

Current bumping fees range from $400 to $800, depending on whether an alternative flight is available and whether the trip is domestic or international service.

U.S. airlines also would have to clarify charges for checking luggage and notify consumers if the fees rise.

The rule builds on steps taken by the Obama administration to bolster consumer protection in the wake of long ground delays and charging for bags as a way to get more money from their customers.

Other aspects of the new rule, which would take effect later this year if finalized by regulators, would allow passengers to cancel ticket purchases within 24 hours of making them without paying a penalty.

Inside the New Flight Rules

NY Times

 

THE federal government is taking a stronger hand in regulating how airlines treat passengers, and new rules limiting long tarmac delays are just the first step.

“I don’t know of another time in the department’s history when we’ve stood up for passengers and said enough is enough,” said Transportation Secretary Ray LaHood, mentioning the overnight stranding of passengers on a plane in Rochester, Minn., last summer as the tipping point prompting government action.

“There were actually personnel in the terminal who could’ve let people off the plane — that was ridiculous,” Mr. LaHood said.

Even before the latest rules, which went into effect April 29, the government had fined airlines for violations of existing regulations that cover baggage-reimbursement policies, fare advertising and compensation when passengers on over-booked flights are denied boarding.

It seems carriers may be getting the message. Although airline executives predicted “unintended consequences” and widespread cancellations if planes were required to return to the terminal after sitting on the tarmac for three hours, there have been no reports of this happening in the two weeks after the rule took effect. And tarmac delay problems have declined significantly ever since government officials signaled they would take action after the Rochester incident.

In fact, other provisions in the new rules may ultimately have an even bigger impact on travelers. The Transportation Department is also requiring carriers to better inform passengers about frequently delayed flights before a ticket is purchased, improve processes for dealing with complaints and develop more transparent customer service plans.

Other rules regarding topics like baggage fees and fare advertising are in the works, and the Transportation Department expects to issue a proposal in June soliciting comments on its next round of regulations. Here’s an overview of what’s been adopted so far, and what’s under consideration.

No More Nights On the Tarmac

If an aircraft sits on the tarmac, airlines now have to give passengers the option to deplane after three hours (with exceptions for safety and security), and offer snacks and drinking water at the two-hour mark. They must also maintain working lavatories and provide medical attention, if necessary, and publish plans outlining how they will deal with lengthy tarmac delays.

Since the most egregious examples of passengers being stuck inside a plane on the tarmac have occurred because lower-level employees did not know what to do or even whom to call, the requirement to have a plan — and a designated airline representative to make decisions — may be the most effective way to prevent further headline-grabbing embarrassments. The three-hour time limit applies only to domestic flights; for international flights, carriers can set their own time limit but must disclose it in advance.

Late-Flight Records Will Be Exposed

The Transportation Department granted airlines a 60-day extension on a less-publicized new rule: a requirement that carriers publish each flight’s on-time record and how often it has arrived more than 30 minutes late within their search results. Special note will be made of flights that have arrived more than a half-hour late more than half the time. Airlines will also have to indicate the cancellation rate for any flight canceled more than 5 percent of the time.

Although the rule takes effect in late June, carriers will have until late July to begin publishing this information, since it is based on the previous month’s statistics for each flight. This provision may end up reducing delays: if travelers start choosing flights based on a flight’s on-time record and avoiding flights that are frequently late, airlines will have to correct unrealistic schedules. The Transportation Department has also deemed it “an unfair and deceptive practice” to continue operating a chronically delayed flight and will fine airlines that do so.

Complaining Will Be Easier

Another less-publicized new rule is that carriers now have to publish contact information for consumer complaints on their Web sites and on all e-ticket confirmations. The Transportation Department has also redesigned its aviation consumer protection Web site, airconsumer.dot.gov, to make it easier for passengers to file complaints.

While it may seem like filing a complaint to a government agency is a futile exercise, it’s not, and may be more effective than complaining to the airline. Transportation officials say they review every complaint and investigate when there’s a clear violation of government rules or a pattern of misbehavior that needs to be addressed, and sometimes these investigations result in financial penalties to the airline. The complaints also help investigators spot emerging problems that may require further regulation, such as whether airlines should have to refund checked baggage fees if a passenger’s luggage is lost or late.

Charges Should Be Fair and Transparent

Even before the new rules went into effect, the Transportation Department was working on another set of proposed regulations, which it plans to announce and open for public comment in June. Among the topics under consideration: how extra fees — such as for baggage or seat reservations — are disclosed, how fares are advertised and how and when airlines should provide alternative transportation for passengers on canceled flights. Also under discussion is the possibility of prohibiting airlines from pre-selecting extra options for passengers buying tickets (like travel insurance), so that consumers don’t have to un-check a box to avoid paying additional charges.

Kate Hanni, founder of Flyersrights.org, the advocacy group that pushed for the tarmac delay rule, said that she had been communicating with legislators and transportation officials about addressing these and other issues for many months. Although it took years to get the tarmac delay rule adopted, she believes government action is key to getting the airlines to change.

“This is the only way we’re going to see any meaningful change in the way airline passengers are treated,” she said.

Stay tuned for the next round of regulations.