Bloomberg News

Flying Planes Closer Together Boosts Biggest FedEx Hub: Freight

June 27, 2013

FedEx Avoiding Sideways Twisters Lets Freighters Fly Frequently

FedEx Corp. is in the midst of a $1.7 billion cost-cutting program that includes parking older, fuel-guzzling planes, trimming capacity to Asia and offering employee buyouts. Photographer: SeongJoon Cho/Bloomberg

With a policy change at one airport, FedEx Corp. (FDX:US) went from having to hold up departures at its biggest hub to getting planes out as fast as it could line them up.

The largest air-cargo hauler has increased hourly arrivals in Memphis, Tennessee, by more than 20 percent and cut average taxi times before takeoff by 3 minutes since U.S. regulators decided it was safe for wide-body aircraft to fly closer to each other. The change was the equivalent of adding a runway at the world’s second-busiest freight airport.

A planned expansion to more airports is poised to benefit United Parcel Service Inc. (UPS:US) and passenger airlines. FedEx credits the pilot program in Memphis for 7 percent of its fuel savings this year and improved efficiency in sorting as many as 1.5 million packages a night.

“The result was nothing short of remarkable,” said Dan Allen, senior manager of air traffic operations. “It’s changed our world that dramatically.”

The U.S. Federal Aviation Administration’s move in Memphis, which started Nov. 1, is the agency’s biggest change in more than 40 years to rules designed to keep the biggest jets safe from the hazard known as wake vortex.

Tornado-like spiraling air movements that form off large planes’ wingtips may exceed 200 miles an hour (322 kilometers an hour), powerful enough to turn a smaller plane on its side, according to an FAA training guide. Encounters with wakes were linked to at least 51 accidents with 27 deaths from 1983 to 1993, according to the document.

Shipping Cheaper

Now, spurred by a decade of research using more advanced technology showing that planes may have been separated more than necessary, the FAA is preparing to unveil similar changes at UPS’s hub in Louisville, Kentucky, and delay-prone passenger airports, according to documents.

For FedEx, “it’s another way for them to push down costs within their airline network,” Kevin Sterling, a BB&T Capital Markets analyst, said of the impacts on FedEx in an interview. “You’ve got fuel savings, less taxi time and less pilot hours too.”

FedEx spent $4.75 billion on fuel in the fiscal year ended May 31, or about 11 percent of its total $41.7 billion in operating costs. It’s in the midst of a $1.7 billion cost-cutting program, parking older, less-efficient planes, trimming capacity to Asia and offering employee buyouts.

Net income in the quarter ended May 31 fell 45 percent to $303 million, or 95 cents a share, from $550 million, or $1.73, a year earlier.

Wake Vortex

Savings on routine operations such as taxiing would help FedEx as it adapts to customers’ shifts in shipping preferences to slower, lower-cost options than priority deliveries.

FedEx shares rose (FDX:US) 7.3 percent this year through yesterday, compared with 17.2 percent for UPS and 12.2 percent for the Standard & Poor’s 500 index.

The FAA’s changes in Memphis are part of its $42 billion NextGen air-traffic makeover intended to replace radar with satellite-based tracking. Unlike core NextGen programs, the decrease in separations didn’t require airport construction, new systems or cockpit equipment.

“That single, elegant solution allowed us to increase the number of flights per hour, without a single piece of new technology or foot of pavement,” FAA Administrator Michael Huerta said in an e-mail.

Since 1969, multiaisle aircraft such as the Boeing Co. (BA:US) 747 have been given a wide berth from other large planes because of what was then known about wake vortex.

Aircraft known as “heavy,” including most wide-body planes such as Boeing’s 747 and 767, or the Airbus SAS A330 and A300, have been required to stay at least 4 nautical miles (7.4 kilometers) apart as they arrive or depart.

Database Created

Devices perfected a decade ago could monitor the horizontal twisters with more precision, Mike Margulis of Lockheed Martin Corp. (LMT:US) said in an interview.

Lockheed’s WindTracer sends out laser pulses that reflect off microscopic dust particles, allowing researchers to track wind speed and direction in clear air, said Margulis, who heads the business line.

The FAA used such devices over the past decade to create a database of aircraft wakes, according to a presentation to the WakeNet-Europe Workshop last month in Bonneuil-sur-Marne, France. The group hosts research conferences.

The research showed some of the largest planes could fly as close as 2.5 nautical miles (4 kilometers) behind a similar model without being at risk, according to the presentation by Jeffrey Tittsworth, who heads the FAA program, and Steven Lang, the former program chief who now is a researcher at the U.S.- funded Volpe National Transportation Systems Center in Cambridge, Massachusetts. The two have led the FAA’s effort.

Lining Up

The new standard has been particularly helpful to FedEx. All of its 355 jets are wide-bodies or Boeing 757s, a single-aisle plane that’s been treated similar to a wide-body in the FAA separation rules, according to the company’s website.

While the change has allowed 18 more FedEx arrivals an hour, the biggest impact has been on departing flights, FedEx’s Allen said. Before the program known as Wake Turbulence Recategorization or Recat began, FedEx would hold planes at the terminal to avoid lines waiting to take off, wasting fuel, Allen said.

Now the company struggles to get planes to the runway fast enough to take all available departure slots, he said.

While pilots are pleased with the results in Memphis, they are monitoring incident reports to ensure moving planes closer together at other airports won’t undermine safety, Sean Cassidy, first vice president of the Air Line Pilots Association, said in an interview. ALPA is the largest U.S. pilots’ union and represents FedEx cockpit crews.

‘Showed You’

Spacing rules won’t change between most single-aisle planes, such as the Boeing 737 and the Airbus A320, the two most common airliner model families. They can fly within 3 nautical miles (4.8 kilometers) at most airports and 2.5 nautical miles at busier hubs, according to the FAA standards.

After introducing Recat to Louisville in August, the FAA plans to expand it to San Francisco, Atlanta, Houston, Miami and Philadelphia, said Laura Brown, an agency spokeswoman.

If Recat adds even a handful of landings and takeoffs an hour at busy airports, it may provide an opening for more competition by passenger carriers, George Ferguson, senior analyst for aerospace and airlines at Bloomberg Industries, said in an interview.

“How can you increase capacity without spending millions and millions on new runways?” Scott Pressley, the National Air Traffic Controllers Association union’s representative on the FAA’s program, said in an interview. “We’ve just showed you how.”

To contact the reporter on this story: Alan Levin in Washington at alevin24@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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Companies Mentioned

  • FDX
    (FedEx Corp)
    • $147.88 USD
    • 0.01
    • 0.01%
  • UPS
    (United Parcel Service Inc)
    • $97.33 USD
    • -0.11
    • -0.11%
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