CNS ATM Focused Team Meeting
Dallas, TX USA
October 1, 1997
Opening Comments:
Robert Baker, Vice President of Operations, American Airlines
Mr. Baker briefly talked about the Free Flight Implementation Committeemeeting in London, hosted by British Airways.
PHARE program in Europe
What they have done so far is not perfect, but they have clearly shown thatit can be done. We saw it operate using the test bed vehicle. What was mostdisturbing is that what they are doing in Europe is years ahead of what we aredoing in the US. They are most likely going to achieve a higher level offunctionality with GPS, ATS datalink, etc., than we are going to achieve givenour current course. If we are not proactive, we will not have a worldwidesystem, but a system of pockets.
There are three things that are unique to the airline industry:
First, the airline business is an industry that is heavily dependent onlarge chunks of investment. We are very dependent on our ability to raisecapital. Almost every decision comes in bite size pieces of $1 million.
The 2nd uniqueness is that we have lots of people involved. It is a veryhuman intensive industry. Not only a lot of people, but also very highlycompensated, both salary and benefits. The airline industry has a high portionof organized labor.
Third, the airline industry is almost a perfect competitive business. Youhave almost immediate access to information regarding availability and cost ofour product. There is almost no revenue advantage with the traditionalmarketing tools.
What we have is an industry that competes with each other on costs. Ourproducts that we offer are interchangeable with our competitors. Therefore,anything that suggests cost increases gets us really excited. Any proposal orsuggestion, regardless of where it comes from, that suggests that I will havehigher unit costs than our competitors, will be viewed skeptically. It isalmost impossible to just pass along these increased costs to our customers. Inthe short run, we have to take these costs out of our margin.
With this in mind, this is how we will approach the CNS/ATM scenario.
We all agree that we are on the doorstep of deep trouble in the Air TrafficManagement, worldwide. AAL studies, MITRE, the Europeans all agree on thissubject. An ATC shortage will effect each of us differently based on our routestructures. There lies one of the challenges as we start to understand how theATC shortages effect each of our companies.
For my dollar, the Free Flight concept is clearly an umbrella that has themost promise. Whether it is Free Flight or another concept, it is going torequire large investments. No one will invest the large amounts of moneywithout clearly stated benefits. That is where the value of the C/AFT groupcomes in. You are creating tools that will allow us to help make thesedecisions. What you are doing is critical. You will help define the problemsand do the analysis to help make these decisions. Reaching consensus among theworldwide airlines is also key. You need to work toward that point ofconsensus. Consensus is needed before we can make these type of investmentdecisions.
This group is doing something very important to help move the ball forward.