At the slowest time of the year for the nation's struggling airlines, one big customer, the Pentagon, wants to give them more business.
According to a government memorandum circulated this week, the Pentagon has increased its spending by 15 percent so far this year on flights by passenger airlines, with the heaviest traffic expected in February and March.
The memo also said that the two dozen airlines, charter companies and cargo carriers that participate in a program, the Civil Reserve Air Fleet, may also be given the opportunity to fly goods and troops to countries in South Asia that were ravaged by the tsunami, supplementing a relief effort by the military.
The memo, dated Jan. 14, summarized a teleconference involving military officials and participants in the air fleet.
In 2005, the government is "buying at a pace about 15 percent above" what it was spending last year, according to the memo. It estimated spending of $315 million on flights during the first quarter of 2005, compared with the $275 million spent in the first quarter last year.
The memo gave no reason for the increase, but it coincides with the third rotation of troops to Iraq since the conflict began nearly two years ago. A spokesman at Scott Air Force Base in Illinois, where the program is based, had no immediate comment.
According to the memo, the Pentagon wants to contract with the airlines to fly 71,600 passengers in February, and 75,300 in March. The transporting of passengers and equipment drops off significantly after that: in April, the air fleet is scheduled to carry 18,200 passengers, and 10,400 passengers in May. In addition, the commercial carriers are supplying one daily flight of 250 military personnel bound for rest and relaxation.
Under military regulations, the commercial carriers do not remain at the bases after landing but immediately depart after unloading. The airlines and cargo carriers supply flight crews.
During the initial deployment in Iraq in 2003, the air fleet program served as a lifeline to airlines as they struggled with a weak economy, the impact of the severe acute respiratory syndrome virus on air travel and the reluctance of travelers to fly.
The government paid $636.2 million to 10 airlines that flew troops to the Middle East during the 131-day mobilization, and another $574 million to 14 cargo carriers to deliver equipment.
All major passenger airlines have participated in the air fleet, although the amount of business each handles varies widely. ATA Airlines has received the most passenger business, while two charter carriers, Omni International and World Airways International, transport both troops and equipment.
ATA filed for bankruptcy protection in October, and reached an agreement last month to sell some assets to Southwest Airlines. Even so, the airline said it planned to keep participating in the military program.
The Pentagon's plans for greater use of the air fleet coincide with efforts by the major airlines to reduce their flights inside the United States and expand international flights. The carriers have been involved in a fare war at home, set off by Delta Air Lines' decision to cut ticket prices by 50 percent and place limits on what it charges for air fares.
In theory, that might limit the number of planes available to the air fleet, since the airlines might prefer to fill them with civilian passengers. But one person involved with the program at a major airline said he thought the government would be able to persuade carriers to bid.
For one thing, airlines will receive slightly more than they received during the early part of the Iraq conflict, when they were paid 8.5 cents per seat mile to transport troops on their biggest planes.
According to government data, the airlines this year will receive 9.149 cents per seat mile for flights involving the biggest jets in the program, like the Boeing 747 and the McDonnell-Douglas DC-10.
The memo said the Pentagon hoped members of the air fleet would soon be able to bid for flights under Operation Unified Assistance, which is sending relief to countries ravaged by the December tsunami. "We hope to soon relieve most of these gray tails and start sending more missions" to commercial participants, the memo said.
Through Jan. 4, military planes based at Scott Air Force Base had transported 1.6 million pounds of cargo and 748 passengers to areas affected by the tsunami, according to a military newsletter posted on the base's Web site. The flights are primarily using Kadena Air Base in Japan as a positioning center.
"The most terrifying words in the Engligh language are, 'I'm from the government and I'm here to help.'"-Ronald Reagan
Uadc8contrail From United States of America, joined Sep 2003, 1782 posts, RR: 10 Reply 1, posted (8 years 10 months 3 weeks 9 hours ago) and read 2164 times:
In the last 30 days i have done 2 craf flts here....starting in feb the base here is sending out 10k troops....7k based here plus another 3k from natl guard....to say its a money maker is a understatement.....you would be shocked at what the airlines make....now i know why the flying is put out for bid....ual even under bidded miami air last month on some flying in here from camp pendelton and 29 palms......
Wjcandee From United States of America, joined Jun 2000, 4787 posts, RR: 17 Reply 2, posted (8 years 10 months 3 weeks 9 hours ago) and read 2162 times:
Not to duplicate my posts on a financial board about this article, but I can't resist. This is not a great article. It is a typically-ignorant NYT article. Here's why:
First, does anyone actually FACT-CHECK NY Times writers? Actually, no. They do it themselves. Hence, factual errors. Omni doesn't do cargo lift anymore. World's cargo fleet is committed on contracts to non-military companies (2 presently to Menlo, one each to 2 asian carriers, and one floater that also does some Menlo, as well as the LH missions, and now the 2 new MD11s will go exclusively to Eva. Menlo will probably eventually go to UPS Airlines, but for now, World is still doing a lot of work for them, probably for a long enough time that they won't get a boatload of Tsunami work.) The actual carriers who will get *cargo* work are Polar, Evergreen, Gemini, and, after them, Atlas, Southern, Kalitta, etc.).
Second, the article never examines whether the core AMC carriers can carry this volume of business, or whether folks like United (whose aircraft is shown in a photo and is one of the financially-strapped carriers that is the focus of the article) will actually be needed in a meaningful way. How about doing some simple division? 75,300 pax divided by average 200 heads per flight (which is low) yields 376 flights. Divide that by 30 days per month. That's 12.55 per day. The combined fleets of Omni (8 pax DC10, 3 pax 757), ATA (5 L1011 and various 757s), World (8 available pax MD11 and 2 pax DC10) and North American (3 767-300) should be able to manage 12 one-way missions a day. Accordingly, the NYT numbers, on their face, suggest that the pax missions could be handled without massive assistance from the non-core carriers, if the missions were spread evenly over 30 days. (The core carriers are essentially ATA, World, Omni, North American.) The missions probably won't be evenly spread, so assistance from the non-core carriers will be needed, as it is today. The big question is whether there will be a CRAF activation or not. The core carriers, I assume, hope not.
Third, how much of an increase is this, really? "Increase" is basically the central premise of the article. The thing that I love about the Times is that absolutely nobody there seems ever to have taken an economics class. The article says that "No reason was given" as to why there was an increase in dollars allocated this year as opposed to last year. Then, nine paragraphs later, it mentions that the per-seat-mile rate had increased. A little division shows that the seat-mile rate alone causes a 7.6% increase in dollars spent. So, half of the total dollar increase is directly the result of paying more per mile than last year's first quarter. Hmmm... 1.076x=1.15. x=1.068. So...we're really looking at an estimated 6.8 percent increase in seat-mile volume over last year. Is that big news? Maybe...as last year's first quarter was pretty darn good. But the real news is that this year's Feb and March will be as good as last year, not that there's some gigantic increase over last year.
Finally, the article ignores the biggest concern, if I were a core carrier: the drop off to 16,000 pax in April and May. That's a STEEP drop. Some have suggested that the crews and aircraft need a break after that. Maybe, but I bet the companies would be happier to have a high level of business, and to staff up to give the existing employees a break, rather than just to slow down.
Anyway, the bottom line for this reader is that the core CRAF carriers can expect a busy Feb and March, and a slower couple of months thereafter. Hopefully, the missions will be spread enough that they'll get that business without having to share too much of it with the financially-strapped majors. Otherwise, we didn't learn much.
Wjcandee From United States of America, joined Jun 2000, 4787 posts, RR: 17 Reply 4, posted (8 years 10 months 3 weeks 9 hours ago) and read 2147 times:
Uadc: While the domestic stuff may be "put out to bid", I believe that the long-range flying *must* be offered first to the core members of the Civil Reserve Air Fleet teams, in proportion to the aircraft committed to the fleet by the entirety of those teams. Compensation is paid at a fixed rate per available seat-mile, based upon a formula similar to that used by the old CAB. That formula determines underlying cost across the entire CRAF fleet, then sets the reimbusement rate based upon cost plus a predetermined percentage. The same reimbursement rate applies regardless of which carrier does the flying. (So...the lower cost carriers make more money.) I believe that there's a widebody and a narrowbody rate, but don't hold me to that. You can find more on this at www.eps.gov. There's also a nice summary of how it all works in the Evergreen International Airlines 10K on file with the SEC.
AeroWesty From United States of America, joined Oct 2004, 20322 posts, RR: 64 Reply 6, posted (8 years 10 months 3 weeks 8 hours ago) and read 2107 times:
There's something I've always wondered about the CRAF fleet, and maybe someone can shed some light on it. I did a Google search, and couldn't find exactly what I was looking for. One definition I found was:
"A program in which the Department of Defense contracts for the services of specific aircraft, owned by a US entity or citizen, during national emergencies and defense-oriented situations when expanded civil augmentation of military airlift activity is required."
Now I remember around the time of the first Gulf War there was something in the news about that these "specific aircraft" are modified and maintained for immediate call-up by the DOD, and even when not in use for military charters, the carriers are reimbursed by the government a certain rate for the extra cost that these modifications add to normal day-to-day operations. What I recall reading about was that a number of Pan Am's 747's were configured for CRAF.
Is that still true, was it ever true, or am I just making something up in my mind that I thought I heard or read that's just bullox?
P.S. In reference to the OP, you can obtain generic log-ins for sites such as nytimes.com at bugmenot.com, then post a link to BugMeNot after your link, if registration is required to view an article.
AeroWeanie From United States of America, joined Dec 2004, 1604 posts, RR: 52 Reply 7, posted (8 years 10 months 3 weeks 7 hours ago) and read 2078 times:
Your memory isn't deluding you - the CRAF configured 747s even have a military designation, C-19. The US government paid to have cargo doors and handling equipment installed in these aircraft. N739PA, Pan Am 103, blown up over Lockerbie Scotland on 12/21/1988 was a CRAF 747.
Wjcandee From United States of America, joined Jun 2000, 4787 posts, RR: 17 Reply 8, posted (8 years 10 months 3 weeks 7 hours ago) and read 2075 times:
I'll give you a simple overview and a link to a really good explanation.
Simple overview: Airlines commit specific aircraft to the CRAF. This means that they commit to provide those aircraft, and sufficient crews, on short notice when demanded by the Department of Defense. Administration of the program is from Scott AFB. The Scott people actually work informally and cooperatively with the airlines, rather than by edict. They like to give the participants updates and guidance as to what to expect. Hence a memo of a conference call like that reported in the Times. The program usually isn't activated (run by edict) so long as sufficient lift can be obtained via volunteered aircraft.
In return for committing aircraft for use in emergencies (wartime), the commercial carriers have an opportunity to receive awards of charter work when the program isn't activated. Most of the carriers that commit planes to the CRAF don't actually want this work most of the time. It's expensive to maintain the infastructure necessary to meet the military's needs on an irregular basis. But they would like to be compensated for their commitment, so here's what happens. The carriers that commit aircraft form "teams" of committed aircraft. The "core" members of these teams are charter carriers like World, ATA and Omni. The other members of the teams are the major carriers that commit aircraft. Right now, there are two primary teams and some carriers that go it alone. The military awards peacetime charter work to the teams in proportion to the lift (measured in 727 equivalents and a widebody equivalent) committed by the team members. The actual flying is done by the core members most of the time, who then *pay commissions* to the team members. The majors make money and do no flying. The awards are to go in proportion (monthly) to the teams and, if the team can't do it, then to another team and then to any qualified carrier who can do it.
When activated, the Scott folks get aircraft by edict. Usually, only certain categories of aircraft are activated. That's been the case in the past. Activation occurs very rarely. When activation takes place, the core carriers do not pay commissions to the team members for the flying they do during the activation. (At least that's my recollection.)
Wjcandee From United States of America, joined Jun 2000, 4787 posts, RR: 17 Reply 9, posted (8 years 10 months 3 weeks 7 hours ago) and read 2059 times:
PS The teams are a little different this year than those described in the Evergreen report. Among other things, the North American team is now called the "Alliance Contractor Team", and some of the participants and level of aircraft committed have changed. But the basic structure is effectively unchanged.
The actual tail numbers of committed aircraft appear on Excel spreadsheets at the following link:
http://www.rspa.dot.gov/oet/craf/ Click on Enclosure 2. Enclosure 1 is a summary by airline and segment, but it's very screwed up. It shows ATA as flying 767s rather than 757s, and lumps World's MD11s with another airline's. And on and on. I sent them an email and they promised to fix it, but they haven't.