This Is Only Temporary

By NATA President James Coyne

Hurricane Katrina has totally transformed the political agenda in Washington and these unforeseen winds will provide both opportunities and challenges for pilots and aircraft operators across the nation. Every American, hopefully, will find a way to help those who are suffering from this terrible catastrophe, whether it's through a cash donation or by pitching in with more direct material assistance. Public and private aviation resources have already been called upon for unprecedented relief efforts (Wisconsin Aviation's Jeff Baum was among the first to fly supplies into the region) and much more will be required in the days and weeks ahead.

Perhaps the greatest need at airports in the stricken region is for relief crews to give those who have worked around the clock for the past week some rest. I spoke on Friday with Beth Haskins, CEO of Signature, who described the incredible challenge of keeping their New Orleans facility on line in the days immediately after Katrina struck. Their operations manager, Steve Summers, worked single-handedly for three days fueling emergency aircraft in the midst of a city in chaos. Finally, on Friday, a relief manager was flown in and he was airlifted to Texas for some well-deserved R&R.

I also spoke with DOT Secretary Norman Mineta and offered to assist with their emergency transportation requirements. Over the weekend, FEMA and DHS command center personnel asked us to help find large charter aircraft to move evacuees out of New Orleans. At this point, however, we are told that further emergency transport needs are being adequately fulfilled, although I suspect that private air charter into and out of the devastated coastal areas will continue at unprecedented levels for weeks. In addition, scores of airports throughout the region are in use as staging areas for Red Cross, FEMA, and utility company supplies and equipment.

There's been a lot of hand-wringing about how or even if the Gulf Coast communities devastated by Katrina will ever recover, but my experience with America's response to crises like this suggests a much more sanguine outcome. Don't be surprised to read next month about how remarkable the recovery has been. American generosity, not to mention our ingenuity and know-how, will rebuild needed infrastructure and bring billions of dollars of relief to our fellow citizens. Also, free market capitalism quickly attracts ambitious problem solvers to any problem, and Katrina is no exception.

One consequence of this horrible catastrophe is already benefiting from the nimble dynamics of our free market economy: The nation's economic response to the sudden shortage of fuels and other commodities dependent on the Port of New Orleans and the surrounding industrial corridor. For a few days it was feared that closed pipelines and shut in refineries would lead to a gasoline crisis like we faced after the Arab oil embargo of the seventies. But this time the marketplace, aided by timely releases of crude oil from the Strategic Petroleum Reserve, has responded with a textbook example of supply and demand forces reacting to restore equilibrium.

But as we all learned in Economics 101, the new equilibrium point in the supply and demand for petroleum is one with a higher price and somewhat less consumption, and the ramifications of this new reality, no matter how long it persists, will be especially profound for our industry – and are likely to resonate in the halls of Congress, as well. Many factors beside the impact of Katrina have affected fuel prices over the past year, from war and political tensions in the Middle East to the robust economic activity around the world, especially in the Far East. Some of the pressure on prices comes from speculators, but most of it is based on the law of supply and demand in a world where there is little slack in the global system of producing, refining, and distributing petroleum products.

Aviation fuel prices in many markets are nearly double what they were two years ago and there is no doubt that this causes consumption to be less than it would otherwise be. Still, most of the aviation fuel experts I've spoken with in the past week don't foresee a dramatic drop in volume, although some are worried that panic-buying in auto gas markets could cause avgas production and sales to drop significantly.  Jet A, of course, is one of the most essential fuels in our modern economy, and there is, at least so far, no evidence that expected inventory levels will not meet our national requirements, notwithstanding the impact these high prices will have on struggling legacy airlines.

NATA members, of course, will be on the front lines of these supply/demand struggles -– and some may find temporary supply difficulties in the weeks ahead, but the long-term picture appears more stable. Some customers will complain, for sure, but most people sophisticated enough to use private aviation are sophisticated enough to understand the post-Katrina supply difficulties we face. Many of them have already told me how grateful they are that we're here at a time when our efforts and products are so critical to the recovery effort.

Still, this is an especially good time to stay close to your fuel supplier and be as professional as you can in dealing with your customers. No one likes surcharges and higher fuel costs, but in today's world that is the price we have to pay to recover from what is probably the worst natural catastrophe America has ever experienced. In the big picture, especially when compared with the terrible suffering borne by so many of our fellow citizens, our individual hardships should prove relatively easy to bear.

FMI: www.nata.aero