POSTED ON AUGUST 21, 2013:
Egg Baskets and Aerospace
T-Town "fly world" is more than American Airlines
There are lots of wheels, deals, wings, and squeals tethered to transportation these days in Oklahoma, and for that matter across the country.
The Oklahoma Department of Transportation is still struggling with what seems to be an eternal conversation about putting a passenger rail line of some kind between Oklahoma City and Tulsa. If it ever gets done, it will mean big economic impacts for both cities.
We are on the tail end of a formal public hearing process about the character and makeup of a $919 million, mostly-transportation-and-capital package that will almost surely go before voters in November. There are millions in play for street maintenance, improving intersections, and some arterial work. And if my last briefing is any indication, a multimillion dollar package to improve our bus system and implement the first element of a nearly revolutionary rapid bus transit component that could change many dimensions of mobility in Tulsa is also in play.
Of course I have got to say something about the extremely exciting "project" that entrepreneurial kingpin/business genius Elon Musk of Tesla Motors and the rapidly evolving Space X private space commercialization project has talked about in recent days. Here is what New York Times tech writer Nick Bilton, said about Musk's new "Jetson-like" concept last week;
"Elon Musk, a serial entrepreneur who was a co-founder of PayPal and the electric car company Tesla Motors, sent people in California into a tizzy on Monday when he released a white paper outlining a hypothetical high-speed transportation system called the Hyperloop.
"There were a number of curious questions about the Hyperloop, which Mr. Musk's white paper claims will be able to travel at up to 800 miles an hour and transport people from San Francisco to Los Angeles in 30 minutes. While physicists agree that technically, on paper, this is possible, economists seem to agree that technically, on paper, the price tag of $6 billion is impossible."
And then there's the Department of Justice intervention in the proposed merger between ailing American Airlines and US Airways. There's a lot of drama in town, because the intervention has waylaid the merger plan, which was apparently within days of completion. Former mayor Kathy Taylor and incumbent mayor Dewey Bartlett have issued statements that go to the destructive local impacts of a merger hold-off. The DOJ has rolled out a nearly 60-page, data-packed brief which I read a few days ago. The thrust of the federal complaint: earlier commercial carrier consolidation efforts fortified fragile legacy airlines and improved America's capacity to continue to use commercial aviation as a jewel-like part of our economy, but we may have come to the end of productive use of such consolidations as a springboard to prop up what's basically been an extremely sick but critical part of America's economic machine.
The brief complains that the proposed American Airlines/US Airways merger might dramatically increase ticket prices on critical routes, diminish the access that people from small- and middle-sized towns have to air transport, and reduce the competitive spirits that are supposedly key to the health of America aviation. Some local folks are complaining that the DOJ action is yet another example of the Obama administration's antibusiness animus, and that it's outrageous. For my part, I'm glad that somebody's paying attention, this time via some pretty sophisticated econometric modeling tools, lots of compelling testimony, and some interesting data sets, on what has actually happened to passenger service, ticket prices, and commercial flight geometries in the wake of several recent airline mergers: and some of the outcomes are not very good from a consumer vantage.
But the bottom line here for Tulsans: an American Airlines that disappears or that continues on its hobbled trajectory could leave thousands of jobs and tens of millions of dollars of vendor revenues in its wake. This is a grim prospect for Metropolitan Tulsa crafting a future consistent with Tulsa's heroic role in the genesis of America's aviation industry.
Some industry analysts see the antitrust gambit as a negotiating tactic. The objective: getting one or more of the parties to divest themselves of services, products, production lines, or facilities that might disadvantage consumers from a pricing or access posture if left in the hands of the parties seeking a consolidation. So if the couple of national-scope folks I've talked to are on the mark, there's a stout prospect that the DOJ intervention is actually a "shout out" to US Airways and American Airlines to do something about "nasties" that aren't fully consistent with better pricing, improved passenger service, or access on the part of people who don't happen to live in a handful of super metro expanses at the core of American Airlines' hub and spoke system, for example.
Last year, there were a number of people who objected to the Chamber's "Vision 2" aerospace package, including this writer. We were opposed not because we are anti-aerospace -- in fact, I'm a fervent proponent of it here and elsewhere -- but because we thought the proposed project lineup was off the mark. Too much stuff, it seemed was going to be handed off to a handful of tenants at our airport campus, too much stuff was going to an existing set of incumbents in aerospace and no discussions, no sidecar investments in smaller, more nimble players was anywhere evident.
I've written about the transformations underway in commercial aviation, in space commercialization, and drones and their commercial applications. I wrote last week about Dr. Jamey Jacob of OSU, who is at the center of a red-hot unmanned aerial vehicle graduate engineering program and some exploratory public/private work underway to use drone-centric tech to recast parts of agriculture, weather forecasting and warning systems, wildlife management, and pieces of public safety and first responder work.
Bottom line: Mayor Bartlett, Kathy Taylor and others in Tulsa who are objecting to the timing and the manner of the Justice Department intervention in the imminent merger of American with US Airways are right to be alarmed and right to emphasize that, this time, a huge antitrust case has not only national implications and impacts but could have local and regional effects that may be extremely disadvantageous to Tulsa.
But we also need to be extremely concerned: it looks as though we have too many eggs in the ailing commercial aviation basket and the whole worker/vendor ecology that surrounds American Airlines. Metro Tulsa has a stout aerospace sector, but it can't be tethered too tightly to the fragile vessel that we call American Airlines. We need to make audacious use of philanthropic funding, our stellar research universities, additional private capital, and appropriately vetted and thought-through local public dollars to craft a diversified, robust local aerospace economy in T-Town.
And we should want to be a part of the next phase of America's engagement with "fly world", the drone/semiautonomous vehicle revolution, and our reignited efforts to become a spacefaring civilization.
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