For this blog discussion, I will choose a topic that has major impact on Part 121 operations and my career in aviation management, crew flight time limitations. If you go to the previous link, you will find the 314 page final rule on crew rest requirements for Part 121 operations, that's right 314 pages. When the FAA does a study, publishes a Notice of Proposed Rule Making (NPRM), and adopts a final rule, they kill a few trees. This final rule applies only to passenger carrying operations in an attempt to reduce accidents caused by fatigue where a risk for greater loss of life exists. It does not apply to cargo operations which has the Airline Pilots Association very upset, as if cargo pilots are not allowed to use fatigue as cause for not being fit to fly. As if the cargo crews lives are not as valuable as the passengers in other operations. The FAA is attempting to make aviation safer for all but often doesn't take into account all of the side effects or missed opportunities for safety as with the cargo operations. As with many previous regulations this one is said to be written in blood. A handful of accidents where fatigue as cited as a contributing factor or probable cause has urged the FAA to make changes to policies relating to crew rest and on duty limitations.
The issue now lies in the hands of the Part 121 passenger carrying operators to make sure their flight crews are fit for duty and not fatigued. Operators must ensure crews meet specific off duty time rest requirements between operations. The cargo crews are still fighting for the FAA to make it a rule that includes them but has not happened yet. This rule has created a need to utilize more crews in 121 operations to conduct the same number of flights. The economic impact is increased pilot wages and decreased gross profits for 121 operators. Where ten crews may have flown 60 legs in a week prior to the rule change, it may now require twelve crews to fly the same 60 legs. The rule is in affect and Part 121 operators have to deal with the extra crew resource requirements and the financial impact it will have on them. They will either choose to higher more pilots and bare the cost or reduce the number of operations dropping the least profitable routes.
The issue of crew rest requirements will impact my future career in management because I will have to find more ways to be profitable on flights. With the increased need for flight crews to conduct the same number of operations, margins will be down. The way airlines are operating slim right now, this could be a major impact to some, enough so that it will make them cease operations. I will have a tough time trying to tell pilots I need to pay them less because I need more of them for the same number of flights. I will have to convince them that because they are flying less hours, they are less productive to me and thus will require a lower wage. This will not be an easy task, but it is that or tell them to look else where for employment because I will be cutting routes and have no need for excess crews. Either way the Part 121 operator will have less revenue in which to operate and may need to seek government bailouts to continue to exist.....
Sunday, April 13, 2014
Wednesday, April 2, 2014
The Export-Import Bank
The Export-Import Bank of the U.S. provides financing for the export of U.S. goods to International markets. The Ex-Im bank attempts to give U.S. producers of goods a fair rate on financing exports in order to be competitive in the world market.
How it works, the Ex-Im bank doesn't compete with traditional lending institutions to finance the production of goods but rather takes on the risk of financing the exchange of goods in the export industry where there is a chance a U.S. supplier won't be paid. The Ex-Im bank provides rates competitive to other governments which is a large barrier to entry for companies wanting to export U.S. produced goods. The Ex-Im bank attempts to create jobs by providing some security in the foreign trades market, thus allowing U.S. companies to produce more goods and contributing to the overall Gross Domestic Product. The Ex-Im bank also provides financing to international buyers of U.S. goods to help pursuade them to purchase imported goods. So the Ex-Im bank provides both the exporter and importer of U.S. made goods financing and some security for the exchange of U.S. goods.
Historically, U.S. aviation component companies were unable to utilize Ex-Im bank financing for parts used on large commercial aircraft because of competition between Boeing and Airbus stemming back to 1972. At that time, they were the only two manufacturers of large commercial aircraft in the world that could sustain production and provide airplanes to all airlines, the Ex-Im bank did not want to finance the competition. In recent years, there have been many requests by aviation component producers to get export financing from the Ex-Im bank and they are obliging. As of May 25th, 2012 the Ex-Im bank expanded its aviation industry export policy to allow for export financing of U.S. made aviation components. One catch is that the company must be listed as an SBA small business in order to secure fininacing from the Ex-Im bank to service large aircraft manufacturers directly. Although U.S. producers can provide goods to international airlines and foreign users of large aircraft, only SBA approved small business can provide products to large aircraft manufacturers which is where most of the product utilization and profits are.
I feel the Ex-Im bank has many well thought out and utilized funding resources to help U.S. producers export goods. The savvy aviation component manufacturer will produce products for the global economy and not limit themselves to only providing equipment for Boeing aircraft which will be sold globally anyway. The key to any producer of goods is to maximize marketshare and the Ex-Im bank helps facilitate that by providing financing and some security for these transactions.
How it works, the Ex-Im bank doesn't compete with traditional lending institutions to finance the production of goods but rather takes on the risk of financing the exchange of goods in the export industry where there is a chance a U.S. supplier won't be paid. The Ex-Im bank provides rates competitive to other governments which is a large barrier to entry for companies wanting to export U.S. produced goods. The Ex-Im bank attempts to create jobs by providing some security in the foreign trades market, thus allowing U.S. companies to produce more goods and contributing to the overall Gross Domestic Product. The Ex-Im bank also provides financing to international buyers of U.S. goods to help pursuade them to purchase imported goods. So the Ex-Im bank provides both the exporter and importer of U.S. made goods financing and some security for the exchange of U.S. goods.
Historically, U.S. aviation component companies were unable to utilize Ex-Im bank financing for parts used on large commercial aircraft because of competition between Boeing and Airbus stemming back to 1972. At that time, they were the only two manufacturers of large commercial aircraft in the world that could sustain production and provide airplanes to all airlines, the Ex-Im bank did not want to finance the competition. In recent years, there have been many requests by aviation component producers to get export financing from the Ex-Im bank and they are obliging. As of May 25th, 2012 the Ex-Im bank expanded its aviation industry export policy to allow for export financing of U.S. made aviation components. One catch is that the company must be listed as an SBA small business in order to secure fininacing from the Ex-Im bank to service large aircraft manufacturers directly. Although U.S. producers can provide goods to international airlines and foreign users of large aircraft, only SBA approved small business can provide products to large aircraft manufacturers which is where most of the product utilization and profits are.
I feel the Ex-Im bank has many well thought out and utilized funding resources to help U.S. producers export goods. The savvy aviation component manufacturer will produce products for the global economy and not limit themselves to only providing equipment for Boeing aircraft which will be sold globally anyway. The key to any producer of goods is to maximize marketshare and the Ex-Im bank helps facilitate that by providing financing and some security for these transactions.
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