AirportWire

Morning Sweep

Houston Intercontinental Stolen Baggage Found in Dumpster From 9 Airlines (Houston Chronicle); Miami Airport, NTSB Say Runway Markings Were Fine In Tony Blair Overrun (CBC); Frustrated Passengers Storm Runway at Sao Paulo Airport (AP/IHT); Groundbreaking For New Berlin Brandeburg International (UPI); Precision Landing Installation Delays at Gary/Chicago Airport (nwitimes.com); Detained Muslim Couple Detained at Cardiff Will Sue (icwales.co.uk)

Virgin America: First Step To Approval Is Rejection

DOT issued a tentative show-cause order rejecting Virgin America's application to operate in the U.S., citing foreign-control issues, prompting the startup to define stiff upper lip:

"The Department of Transportation’s Show Cause Order is a long awaited step in our certification process," said Virgin America spokesman Gareth Edmondson-Jones. "While we disagree with this tentative Order, we respect the Department's decision and intend to use the Order as a roadmap to address the issues raised and to demonstrate to the DOT that Virgin America will meet all ownership and control requirements. "Accordingly, we plan to respond to the Department as requested on January 10 so that we may move forward with DOT certification, launch our airline, and bring new high-quality service and much-needed competition to the marketplace. We remain committed to getting our wings."

The order itself is here, a 27-page .pdf under docket OST-2005-23307; here's the gist from public affairs:

Under the Federal Aviation Act, to be certificated as a U.S. airline, a company must first show that it is actually controlled by U.S. citizens, that the president and two-thirds of the board of directors are U.S. citizens, and that at least 75 percent of the voting interest is owned or controlled by U.S. citizens. The Department recently withdrew a proposed rule that would have amended its interpretation of the statute’s “actual control” requirement so as to allow additional foreign investment.

In its show-cause order, the Department tentatively concludes that Virgin America’s close relationship with the U.K.-based Virgin Group indicates that the carrier is not under the actual control of U.S. citizens. The order cites the Virgin Group’s and its executives’ pervasive involvement in the creation of Virgin America, the funding Virgin Group provided to the carrier, various interlocking financial agreements, and the Virgin Group’s ability to influence decisions of the carrier’s board. The Department also said that the restrictive name-brand licensing agreement between Virgin Group and the airline impedes the carrier’s independent decision-making authority. However, the Department’s tentative decision reflects its review of the specific terms of the Virgin America licensing agreement, and DOT emphasized that properly structured licensing or franchise agreements between U.S. and international carriers are now, and will continue to be, permissible.

The Department also tentatively found that less than the required 75 percent of voting interest in Virgin America is owned or controlled by U.S. citizens, with most of its voting equity held by companies that are majority-owned by non-U.S. citizens.

Airports interested in Virgin America's fate include the following, from the company's website:

Our first route is from San Francisco to New York-round trip, of course. Beyond that, we're thinking initially about cities like Seattle, Portland, Los Angeles, San Diego, Phoenix, Las Vegas, Salt Lake City, Denver, St. Louis, Minneapolis, Chicago, Detroit, Indianapolis, Dallas, Austin, Houston, New Orleans, Tampa, Ft. Lauderdale, Miami, Orlando, Atlanta, Washington, Baltimore, Philadelphia and Boston....

Stories available include those by Bloomberg, The Washington Times and Aviation Daily.

Hearing Aid Boost At Grand Rapids Gerald Ford Airport

How odd that on this day there'd be a story about "loop" technology being adopted at Grand Rapids Gerald R. Ford International, unless it had been out there for awhile and the death of the former president nudged somebody into writing about it. From AP via MSNBC:

GRAND RAPIDS, Mich. - Air travelers who use hearing aids will find it easier to learn what's going on at Gerald R. Ford International Airport, beginning next year.

Improvements to the public address system will add technology that lets flight announcements be transmitted directly into hearing aids with a special receiver....

Common in British airports, apparently. No info that I can find at the airport's website, but they do have a special intro homepage set up to mark Ford's passing (image). Rest in peace.

American: Fares, Loads, Aircraft Refute FAA On LaGuardia

New York LaGuardia's average aircraft size, load factor and fares show the FAA's proposed rules for managing access there are unfounded, according to American Airlines' filing on the issue (32-page pdf) from a few days ago. The document includes brief tables on all three of those claims. The one I'm showing here plants LaGuardia's average aircraft size, measured by seats, in the middle of large and variously congested airports.

American views the FAA scheme as fundamentally incompatible with airline deregulation itself: "Delay reduction and congestion management  do not require the FAA to replace competition with central planning." This is a reference to acts that include imposing an average aircraft size--larger than what's in place today--and taking 10% of an airline's slots for redistribution every year. FAA wants larger aircraft to increase the number of passengers that can use the chronically congested airport, and the slot reallocation to give non-dominant carriers a chance to serve it. But smaller communities as a rule can't support large aircraft operations, and entrenched carriers regard the forced reallocation of slots as "confiscation."

That's the short version.

Here's the Air Transport Association's media brief on the issue, a good quick review as seen by its member carriers including American. Here's a (pdf) filing by the Air Carrier Association of America, which provides a glimpse into the battle by small airlines that fly larger aircraft, though the meat of that filing concerns the earlier request for an extension on the comment deadline.   (docket number 25709)

Morning Sweep

Denver Post Writes 'Airport Must Do Better' Editorial after 3-foot blizzard; DIA Defends Response (Rocky Mountain News); Luggage Backlog Remains (MSNBC/AP); Centennial Airport Lauded For Snow Recovery (Rocky Mountain News); British Airways Blames Poor Runway Markings For Overrun of Tony Blair Plane in Miami (Reuters); Two Southwest Aircraft Bump Tails At San Diego (LATimes/AP); New Thai Suvarnabhumi Airport Needs $41 Million Fix (Xinhua); and while I was away, Muslim Women Wearing Full Veil Will Now Have To Remove Them On Demand After Murder Suspect Flees Under Cover (Zeenews.com)

Denver Back Up

But don't get too excited. With just two runways open now, the FAA flight status page  says some arriving flights [are being] delayed an average of 3 hours and 35 minutes.

They've got quite a backlog to clear away--this Denver Post story quotes a gentleman who can't board anything until Dec. 27. When he looked into a car rental, National was happy to oblige, at over $800.

Merry Christmas!

Update: Green!  Situation back to normal, O'Hare, LaGuardia backed up.

Bankrupt Northwest Might Acquire Bankrupt Mesaba

Timothy Hannan at the MSP Update blog wrote on Wednesday that "Northwest announced it is in talks to acquire its regional partner Mesaba Airlines," though I can't find any info on the Northwest media site--maybe they announced it to him! Hannan mentions the unusual move of funds from Mesaba to parent MAIR just before the bankruptcy filing; in any case it sounds like he thinks the acquisition is being welcomed at Mesaba. ATW Online confirmed the action today. At left is a route map that provides a sense of Mesaba's reach as a Northwest Airlink partner, though it's somewhat dated since Mesaba recently stopped flying its RJ-85s (click to enlarge).

Route map source: Excerpt from MAIR Holdings 2006 Annual Report (pdf)

Delta Reorganization: How Badly Would The Airports Be Damaged

Presumably less than if Delta completely disappeared, which is the justification for shedding tens of millions in debt.

Yvette Shields at The Bond Buyer filed a superb story this week about how airports may fare under the carrier's USAirways-free reorganization plan:

Delta Air Lines Inc. filed a Chapter 11 reorganization plan with the bankruptcy court yesterday that anticipates the elimination of at least $1.2 billion of its $1.7 billion of municipal debt while providing a payout of between 63% and 80% for bondholders reduced to the category of unsecured claimants. ...

The airline entered bankruptcy with $1.8 billion of special facilities revenue bonds issued for projects at airports in Boston, Chicago, Dallas-Fort Worth, Atlanta, Salt Lake City, San Francisco, Los Angeles, and certain other locations.; A total of $18.7 million in unpaid interest has accrued since the bankruptcy filing...

The story has a detailed breakdown of how the classification of different leases and bonds could affect those airports financially. If you want to read Delta's own explanation, it starts on page 46 of the 183-page disclosure statement (or page 67 if you go by the Adobe count). Here's the link to that pdf file; and don't say I didn't warn you it's 183 pages.  I've excerpted that section--click on "Continue reading..." to pull it up. The first item concerns Delta's agreement with Massport for Boston Logan, up for court approval next month. The others on the list are Cincinnati, Atlanta, Dallas, Tampa, Portland and Los Angeles.

n. Airports/Facilities Restructuring

As of the Petition Date, the Debtors were party to hundreds of leases and other agreements governing the Debtors use and occupancy rights at airport and other facilities throughout the United States. During the Chapter 11 Cases, the Debtors have undertaken various initiatives to restructure their operations and obligations at many of those facilities in order to reduce costs and to establish an airport footprint that serves the Debtors future network plans. If the initiatives described below are successfully completed, they are projected to generate approximately $120 million per year in annual savings and eliminate approximately $1.2 billion in debt (approximately $600,000 of which is currently classified as obligations under operating leases.)

1. Airport Revenue Bond Facilities
Delta leases a number of airport facilities financed, in whole or in part, by tax-exempt special facilities bonds issued on behalf of Delta. Pursuant to the agreements governing these special facility bonds, Delta is required, among other things, to fund amounts sufficient to cover interest payments, premiums (if any) and principal payable at maturity on such bonds. During the Chapter 11 Cases, Delta was able to substantially reduce its obligations with respect to various special facility bonds and bond-financed facilities.

Boston/Logan. Delta has been working with the Massachusetts Port Authority ( Massport ), the Bank of New York as indenture trustee (the Massport Trustee ) for three series of revenue bonds in the aggregate principal amount of $497,585,000 (the $497,585,000 Massachusetts Port Authority Special Facilities Revenue Bonds (Delta Air Lines, Inc. Project), Series 2001A, 2001B and 2001C) issued by Massport (the Massport Bonds )) and Ambac Assurance Corporation ( Ambac ), as insurer of the Massport Bonds, to restructure Delta's Terminal A Lease and related agreements and obligations at Logan.

Delta, Massport, the Massport Trustee and Ambac have entered into a settlement agreement, providing, among other things, for a reduction in Delta's leasehold premises to a level more appropriate for Delta s operations, the ability of Delta to return some additional space in 2007 and 2011 and the reduction of Delta s lease term to ten years. The settlement agreement, assumption of the amended Terminal A Lease and restructuring of related agreements is subject to Bankruptcy Court approval. If the restructuring is approved by the Bankruptcy Court, the savings to Delta are expected to be substantial. The motion has been set for hearing in January 2007.

Cincinnati. Delta has been working with the Kenton County Airport Board ( KCAB ) and UMB Bank, N.A. as indenture trustee ( KCAB Trustee ) for two series of revenue bonds in the aggregate original principal amount of $438,000,000 (the $419,000,000 Kenton County Airport Board Special Facilities Revenue Bonds 1992 Series A (Delta Air Lines, Inc. Project) and $19,000,000 Kenton County Airport Board Special Facilities Revenue Bonds 1992 Series B, (Delta Air Lines, Inc. Project)) issued by the KCAB (the KCAB Series 1992 Bonds ) to restructure Delta s obligations related to Terminal 3, Concourse B and certain other facilities and improvements constructed with the proceeds of such bonds. Currently, the amount outstanding under the KCAB Series 1992 Bonds is $413,570,000.

In July 2006, Delta reached an agreement in principle with KCAB and the KCAB Trustee concerning settling various matters related to the KCAB Series 1992 Bonds and Delta s continued use of most of the facilities constructed with the proceeds of such bonds after Delta rejects the related 1992 Facilities Agreement and certain other agreements. Recently, negotiations to finalize the settlement appear to have reached an impasse and there is no assurance that a settlement is still possible.

Atlanta. Delta has not made any of the semi-annual interest payments since the Petition Date on (i) the $29,900,000 Development Authority of Fulton County (Georgia) Special Facilities Revenue Bonds (Delta Air Lines, Inc. Project), Series 1992 or (ii) the $124,770,000 Development Authority of Fulton County (Georgia) Special Facilities Revenue Bonds (Delta Air Lines, Inc. Project), Series 1998 (collectively, the Fulton County Bonds ). Because Delta considers its obligations with respect to the Fulton County Bonds to be pre-petition unsecured obligations, Delta intends to discharge the debt through the Plan.

Dallas. Delta has not made any of the semi-annual interest payments due since the Petition Date on (i) the $116,500,000 Dallas-Fort Worth International Airport Facility Improvement Corporation, Delta Air Lines, Inc. Revenue Bonds, Series 1991 (of which $108,935,000 was outstanding on the Petition Date) or (ii) the $25,870,000 Dallas-Fort Worth International Airport Facility Improvement Corporation, Delta Air Lines, Inc. Revenue Refunding Bonds, Series 1993 (collectively, the DFW Bonds ). Because Delta considers its obligations with respect to the DFW Bonds to be pre-petition unsecured obligations, Delta
intends to discharge the debt through the Plan.

Tampa. In order to streamline Delta s maintenance operations, Delta closed its Tampa maintenance base and rejected the lease for this facility effective June 30, 2006. In connection with that rejection, a draw on a GE letter of credit paid off the $16,495,000 Hillsborough County Aviation Authority Special Purpose Revenue Refunding Bonds (Delta Air Lines, Inc. Project), Series 2000 secured by that letter of credit, with Delta remaining obligated to reimburse GE under the terms of a loan arrangement with GE. Additionally, Delta s view is that the $8,000,000 in Hillsborough County Aviation Authority Special Purpose Revenue Refunding Bonds (Delta Air Lines, Inc. Maintenance Base Facility Project), Series 1993, not secured by the GE letter of credit is an unsecured obligation subject to the appropriate limitation on lease rejection damages provided in section 502(b)(6) of the Bankruptcy Code.

Portland. Delta rejected three leases of surplus air freight, cabin service and ground equipment maintenance facilities at Portland International Airport effective April 1, 2006. The facilities lease that covered debt service on the $8,545,000 Port of Portland Special Obligation Revenue Bonds, Series 1992 (Delta Air Lines, Inc. Project) was rejected together with the two associated ground leases. Delta s view is that this unsecured obligation is subject to the limitation on lease rejection damages provided in the Bankruptcy Code section 502(b)(6).

Los Angeles Shortly after the inception of the Chapter 11 Cases, Delta initiated an adversary proceeding against the City of Los Angeles, the relevant regional airport authority and the trustee for its Los Angeles Terminal 5 bond issuance, seeking to recharacterize the lease payments associated with the debt service on the bonds. The Bankruptcy Court stayed the litigation pending a ruling in a similar litigation involving United Airlines. The United Airlines decision has since been issued, but the Delta recharacterization litigation remains voluntarily stayed.

Denver Updates

As noted in today's Morning Sweep, Denver International is working to open two runways by noon local time today. Snow stories include Unhappy Record at Down-and-Out DIA (Rocky Mountain News); Breakdown of Breakdown at Airport (Rocky Mountain News);Colorado Springs Airport Tries To Get Moving After Bilzzard (KRDO); and this excellent slideshow of photos from the airport by the Denver Post. The first shot has two stranded passengers relaxing, if that's the word, in a luggage transport.

This was a majorly serious event, with 4,700 passengers stranded at the airport and the Red Cross and National Guard bringing in supplies including bottled water. Best quote is from airport spokesman Chuck Cannon in the Rocky Mountain News:

"I would frankly like to strangle the person who came up with the term that this is an all-weather airport," Cannon said.

Don't feel bad; you probably can't operate through plagues of locusts or volcano eruptions either. 

Morning Sweep

Denver International Aiming For Two Runways By Noon (FlyDenver.com); 100,000 Blocked From Christmas Arrival (Denver Post); Fog Still A Problem At Heathrow (Washington Post); Metropolitan Washington Airports Authority Agrees on Toll Road, Rail Project Control (Washington Post);
Jakarta Airport Using Iris Scanner (Reuters); Canadian Officials Downplay Reports of Thousands of Unscreened Passengers in Labor Dispute (Globe and Mail); Gary Airport Says Sky Value USA Not Leaving (Post-Tribune); Comair Starts Boston Logan-Trenton Route (Trentonian.com); S.C. Governor To Ask State Lawmakers For $10 Million for Myrtle Beach, S.C.; Ferrovial, Abertis Eye Privatization Bid For Chicago Midway (AFX); ATC Union Faults Dulles Managers For Deep-Fryer (Washington Post)