After a quick glance at the chart on the left, one could quickly figure out why a road trip could potentially cost less than a flight.  Oil prices have been on the rise for many years, and airlines have failed to adjust their prices accordingly.  Scott McCartney of the Wall Street Journal reported that in 1958 a round trip airline ticket from New York to Los Angeles was $208.  I could fly this same route in late October 2012 for $280.  Fifty-four years have passed, and the price of the ticket has barely changed.  If the 1958 price was adjusted for inflation, the ticket price today would be $1570.  The price of oil has changed dramatically and heavily influences the price of gasoline.  The price of gasoline in the 1950s was $0.27 per gallon according to CNN.  Our national average is currently $3.79 per gallon.  Oil companies are posting huge profits year after year.  They continue to raise their prices, and WE continue to pay them.  The cost of driving to a destination is sometimes more than flying to that destination because of the increase in fuel for our cars.  Airlines have not followed the same business model.  Instead, airline ticket prices remain low, not reflecting the price of fuel.  I feel the airlines could raise their prices without making flying commercially less accessible to the general public.  Increasing airfare 20%-30% would probably not change the plans of many people.  However, if only one airline changed it's prices, it would probably go out of business unless it found a way to offer a unique or special service.

It is difficult trying to answer the following questions:  "Should the ability to take a commercial flight on an airline to get from point A to point B be affordable to most of the public? Or, should it be a luxury?"  An airline ticket should cost what it costs....  What in the world does that mean?

Businesses are able to charge whatever they want for a service.  If the prices for a service are unreasonable, people will do without or buy those services from a different business.  A reputable company will charge enough for a service to cover its expenses and produce a profit.  If a company is purposely pricing a service to discriminate against people with lower income, the company is not breaking any laws, but is acting extremely unethically.  This applies even more to the topic of air travel.  This is an industry that relies heavily on tax money, and that tax money doesn't only come from airline tickets.  Portions of property tax, income tax, and sales tax all help fund aviation.  Even though airlines are private companies, they could not operate without the public support.

Fortunately this has not become a problem.  The airlines have done the opposite, and priced airfare low.  They should increase their prices enough to consistently make a profit.  If there is ever a day where airfare is grossly overpriced, intentionally making it too expensive for the general public, the industry would be very different.  There would be negative feelings from the public, wondering why they help pay for a system they could not afford to use.  There would probably be hatred for the airlines from the public, and the lack of volume would eventually put more airlines out of business.

The industry is currently heading in a good direction.  There is variety to choose from when looking for air travel.  People can pay the price they want to make the trip what they want it to be.  Both low cost carriers, such as Spirit Airlines, and airlines that offer a bit more, such as Delta Airlines, are able to run a successful business.  This is a great direction for the industry.

Preparing For Change

The aviation industry is constantly changing, just like most complex industries are.  The US government plays a large role in shaping this industry, most effectively by passing laws.  The most talked about new law is PL 111-216.  This law addresses an array of topics that include amendments to aviation funding, handling of the FAA pilot records database, regulations for airlines, and changes to the way airline pilots are trained and licensed.  This law is mainly a response to the Colgan Air Accident of Flight 3407.  Aviation businesses that run 121 operations will feel the biggest impact, but it affects 91 and 135 operations as well.  People who have dreams of becoming an airline pilot should be concerned with a few of the law's key changes.  The FAA will now be required to keep a pilot records database.  It will be regulatory to include certain aspects of a pilot's training and employment history.  It will also be regulatory for an air carrier to access and evaluate that information before hiring a pilot.  The National Business Aviation Association has a short discussion about how that will affect 91, 121, and 135 operations.  Perhaps the most controversial change is the requirement that flight crew members for a part 121 air carrier be required to have an airline transport pilot certificate.

The requirement for a flight crew member of a part 121 air carrier to have an ATP certificate has the potential to affect students at EMU more than other changes resulting from this law.  Previously, first officers were only required to have a commercial license.  A commercial license can be obtained after 250 total flight hours.  Once the proposed change takes affect, first officers would be required to have an ATP certificate.  Currently 1500 hours are required for an ATP certificate.  Under the new proposed law, there would be only one option to obtain a restricted ATP certificate with fewer flight hours.  Candidates that were to receive an aviation degree and flight training from an accredited 4-year institution could obtain a restricted ATP certificate with 1000 flight hours.  This would greatly affect EMU students that were hoping to quickly begin careers as airline pilots.  These students may need an extra stepping stone before obtaining their final career goal.

The same part of this law could also affect EMU's future in flight training.  There is not a current degree requirement for an ATP certificate.  Under the proposed change, a restricted ATP certificate could be obtained if the candidate had earned an aviation degree and received flight training from an accredited 4-year institution.  This would affect EMU because more people than before may pursue an aviation degree from a 4-year institution. An aviation degree program is not very common, and EMU could possibly benefit with increased enrollment.

The intended benefits of these changes include having more competent pilots, and safer airlines.  Established programs such as EMU could benefit financially from increased enrollment and longer training.  These are just theories, and I don't personally agree with the changes being made.  The captain of flight 3407 had 3,379 flight hours, and the first officer had 2, 244 flight hours.  The first officer did not have an ATP certificate, but certainly had enough flight hours.  I do not think the proposed changes properly address current flight training issues.  I think one of the simplest changes that should be made is a requirement for a significant amount of actual instrument time required for a commercial license.

The FAA has mandated changes in airlines' safety cultures, and encourages a preventative approach to safety instead of a reactive approach.  In all fairness to the FAA, they are being mandated by Congress to make changes.  Unfortunately, these changes show what a lack of aviation education Congress has.  The FAA is now forced to violate their own safety culture, and make reactive and hasty regulation.  On the other side, we also have human nature at its finest.  Humans are sometimes best at being negative and complaining.  Many of the flight instructors at Eagle Flight Centre do not leave for airline jobs until after they have 1000 flight hours.  Airlines have "rarely" hired commercial pilots with 250 hours.  The minimum hiring requirements of the airlines have generally been above the FAA's minimums. I feel there will be an impact on the supply of airline pilots, but I do not feel it will have a long lasting affect on the industry.

OIL SPECULATION

Oil speculation is a very interesting topic that relates to more than just aviation.  It affects the cost of heating many homes, and more importantly, the cost of transportation.  Of course transportation doesn't only include the population driving or flying, but the shipping of goods.

This post will try to explain what oil speculation is for those who may not know.  There is an article by Money Magazine that really does a nice job.

Oil speculation is the process of purchasing oil futures with the intent of making a profit.  This is usually done by people or investment companies that have very little to do with the oil industry.  Oil is a commodity that can be purchased just like grain or livestock.  When an investor purchases a commodity at a certain price, they are hoping the market price increases so they can eventually sell at a higher price.

The Commodity Futures Trading Commission (CFTC) was established by Congress in 1974.  Their purpose was to regulate the trading of commodities.  Enron, as well as others, lobbied Congress in 2000 to help reduce CFTC's powers.  Enron created specialized software for oil futures to be traded.  In the same year, a group of oil companies and financial institutions, headquartered in Atlanta Georgia, created the Intercontinental Exchange (ICE) in London.  It was an exchange set up to trade European oil futures, and since it was in London, CFTC did not have any regulatory power.

After this groundwork was done, investment companies and financial institutions heavily increased their oil futures trading.  Their buying and selling created a "false market" that was no longer dependent upon supply and demand.  Oil companies enjoy this type of trading.  As the price of oil futures increases, oil companies recognize that they can charge in elevated price regardless of supply.  They will stock pile oil and gasoline anywhere they can if production is higher than demand.  I have personally known gasoline distributors that fill empty tanks at gas stations that were closed in order to store some of the excess gasoline. 

Money Magazine featured a different article that discussed airlines' fuel consumption.  They estimated that fuel can consume up to 40% of an airline's budget.  It is easy to see how falsely elevated fuel prices can affect the airlines.  Fuel costs alone can determine if an airline makes a profit or not.

So what is the difference between oil speculation and fuel hedging?  Southwest Airlines has arguably had one of the best fuel hedging programs since the 1990's.  It has been the biggest reason for their financial success (unless you think people actually enjoy lining up like cattle to board without an assigned seat).  The biggest difference between Southwest Airlines pre-buying fuel, and an investment company buying oil futures is that Southwest Airlines will be using that fuel themselves.  An investment company is only hoping the price of oil increases so that they can sell for a profit.  It is now estimated that 60% of what is paid for fuel is due to oil futures trading!

It is very difficult for me to express how I feel about this topic.  I HATE paying the current prices for gasoline, and I would love to be able to purchase cheaper airline tickets.  I would also like to know that the airlines in this country could compete better in the global market.  However, I am an advocate of living in a free country.  I do not always think that more regulation is the answer.  I think that the free market should be allowed to work itself out.  The airlines continue to find new ways to earn income.  Delta has a large maintenance program (which performs maintenance on more than just Delta airplanes) that produces a nice profit for them.  UPS has become a large player in small business loan lending.  Maybe the airlines could create an organization that is somehow involved in the oil industry.  In my opinion there are many options to explore before trying to have the government pass more regulation and have more control.

There is a current bill that was assigned to a congressional committee on September 21, 2011.  Click here for a discussion about the bill, or to track its progress.  The part of the bill that could most impact the airlines would be the limit on any single trader to only be able to hold 5% of the oil futures.  This would prevent some of the excessive prices, but I do not feel it would eliminate the problem completely.  Investment firms will always find loopholes, and creative ways to get what they want.  In addition, every company involved in futures trading is attempting to make money, and can easily coordinate with other companies to continue making money.

I would predict that I have the least amount of aviation knowledge of anyone involved in aviation!  I am behind the curve and have a lot of ground to cover.  With that being said, it is one of the reasons for my involvement in and fascination of aviation.  

Prior to 2010, I had flown commercially many times, but I had only participated in General Aviation once.  I was 8 years old and traveling on a road trip with my mother and older sister.  While we were driving, we passed a sign that said, "Airplane rides - $50."  I went for a 30 minute flight, and had a wonderful time.  

Fast forward life into 2010....  I was working on a project in Salt Lake City, Utah, and developed a friendship with the person I was working for.  His son is an instrument rated private pilot, and his good friend is an instrument rated, multi-engine private pilot.  His son flies a Cessna 182, and his friend flies his Cessna 310.  During that year, I was able to fly with each of them a few times.  One of my favorite trips was to Driggs, Idaho, to a place called Warbirds Cafe.  It made me realize that there was a whole new world just waiting to be discovered.

So, why Eastern Michigan University?  I did not get involved at Eastern because I was looking for a career change.  The brief introduction I had with aviation made me realize I wanted to inquire into a new hobby.  I thought that one day, it would be fun to have my own airplane, and I would want to be as safe as possible.  There are more cost effective ways to get a private pilot's license than while earning a degree at EMU in Aviation Flight Technology.  I have chosen this route to become the safest and best pilot I can.

I returned to Michigan on Thanksgiving, 2010.  I had applied to EMU that summer, and started classes in January, 2011.  My flying began in March, 2011.  The title to this blog sums up my life since January, 2011.  I have learned an incredible amount since then, and it is just the start!!  The time has FLOWN by, and I am in my last semester of classes.  I will have some flight training to finish up before I finish my degree; however, I will be finished with required classes on campus.

My future goals have not changed much while attending EMU.  I did not intend to change careers, as I have maintained working full-time while taking classes.  I am always open to new ideas, so if something interesting comes up, I will evaluate it at that time.  I would, however, like to work part-time as a flight instructor when the time comes.  This would allow me to keep my skills sharp.

The day I earned my private pilot license, Bill Clark told me he was issuing my "license to learn."  He couldn't be more correct, and that learning will continue for the rest of my life.

Here are a few pictures taken during my time in Utah