Sunday, December 15, 2013

Please Fasten Your Seatbelt (Update)

We hate to point out that our predictions made recently were scarily accurate (not really), but here goes:

New pilot rest rules are now waiting in the wings and ready for implementation on January 1st. Having to assign flight duty to pilots a month in advance, the new schedules are available and the trend is clear. Due to the hard limits of the new rules, airlines are preemptively scheduling pilots for days with less flying and longer overnights. This if you remember, is due to the new rules not allowing pilots to finish a trip that they were legal to start but due to delays exceeded hard duty limits. Therefore, should a pilot start a trip but become delayed due to say air traffic or other cause and are projected to exceed the time limit, the aircraft must taxi back to the gate and is not permitted to depart regardless of how the pilots may feel.

Airlines, as we predicted, will need to increase staffing to cover the same amount of flying. And as day follows night, our airline recently announced the hiring of several hundred pilots to cover an essentially flat flying schedule. Some of this was attributed to increased vacation time due to longevity, but the rest was laid directly at the feet of the new Part 117 rest rules. So now the airline's pilot staffing costs rise and pilots themselves, who are paid by the hour, will have to spend more days at work on balance to make the same income. And all for negligible safety benefits. Well done, morons.

Ok, our next topic was how the TSA is helping to systematically kill the short haul airline market. Well, the news just broke that the TSA security fee was raised 124% from $2.50 to $5.60 per flight segment as part of the recent budget deal. Almost on cue, Southwest, our favorite airline announced the termination of service to three smaller market airports, Jackson MS, Key West FL, and Branson, Mo. In a cogent analysis, Motley Fool explains that with rising costs driving break even load factors into the 70+ percent ranges, airlines need to fly airplanes full of full fare paying customers. Southwest also recently picked up more slots at LaGuardia and will be bidding on slots at Reagan which American was required to divest as a condition of their merger with USAir.

So to our great relief, fliers departing from New York and DC (anyone you know?) will benefit from the increased presence of a low cost carrier (which isn't really so low cost anymore) but folks in Branson and Jackson and Key West may be driving more.

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Capt Rob