Regular Cranky readers know that Indianapolis is an airport that matters to me a lot. Since that’s where my in-laws live, I go out at least a couple times a year, so I pay close attention to what happens there. Indianapolis has also been a poster-child for overspending. The new terminal, though nice, was overbuilt and cost too much. The airlines had to absorb the burden and that has hampered growth. But things are changing, and now there’s good news. The airport and airlines just came to a new agreement that will end up lowering costs fairly significantly over the next five years. That being said, there is a lot that has to go right for this deal to work.

This year, airline costs per departing passenger (CPE) are set to be around $10.50. That was supposed to climb as high as $13 in the current ten year agreement. In a place like Indianapolis, that’s a lot of money. Much of this is because of the enormous new terminal which though nice and functional was also overbuilt and very costly. But that mistake has already been made and it can’t be changed now. Those airport costs made growth in Indianapolis a non-starter for many, and to its credit, the airport has, under new management, finally made an effort to tackle those costs directly.

The new Airline Use Agreement (PDF) is a five year agreement that will now see CPE drop down to $8.86 by the end of the now-five year term. That’s a huge improvement over the projected $13, but, how are they going to do this? They can’t just magically lower costs when their own costs aren’t going anywhere, right? I spoke with the airports Director of Communications Susan Sullivan about it.

The first big piece of good news is that the airport is refinancing its debt at lower rates and that will help take a big chunk out of the substantial debt service costs. There is also a commitment that the airport will not seek new debt during the agreement period. Operating and maintenance costs are being cut $65 million over the lifetime of the agreement as well. This is really just an effort to do things more efficiently, something you don’t often see at airports, which many cities end up viewing as jobs programs.

But the biggest piece of the long term project here is the effort to turn Indianapolis into an “Aerotropolis.” Yeah, I know. I hate the term. It sounds like something a consultant made up to sell the concept to the locals (what’s it called? monorail!). But the basic idea is a sound one in theory. It’s to make Indianapolis Airport a center for commerce surrounded by business, industry, and more. Every airport likes to talk about this concept, but I actually think Indianapolis is better equipped to make it a reality than most. Here’s why.

• Indianapolis is already a major hub operation for FedEx, so commerce flows through this airport. Under this agreement, cargo fees will also be dropping, good news for FedEx.
• Indianapolis has a ton of land. The airport is working on a land use study right now, but there is a lot of land with opportunity to develop as it sees fit.
• Indianapolis (the metro area) is cheap. It has one of the lowest costs of living in the country, and that’s good for business.
• Indianapolis is in a great, central location that makes sense for logistics.

Let’s talk more about that last point. There’s a reason they call Indianapolis the cross-roads of America. Look at this map:

When the interstate highway system was built, Indianapolis was built as a hub. It’s an easy ride in six different directions with straight shots to places like St Louis, Louisville, Cincinnati, Columbus, and the all-important Chicago, the hub of rail transportation in the US. From a logistics perspective, Indianapolis is a great place to locate. If you can co-locate with an airport as well where rents are low and cost of living is cheap, it’s a very compelling case all around. But admittedly, this idea is the weakest link in the agreement. Airlines are still pretty happy.

The airport has to be particularly concerned about its relationship with Southwest right now since it will be taking over AirTran, which has a large presence in the city. Southwest sent the airport director John Clark a letter saying that it “is pleased with the new lease at IND. We appreciate you partnering with the airlines to create such a realistic and business-minded deal.” Southwest continued, “Prior to your tenure, the project and its related business deal caused a great deal of tension between the Authority and the airlines.”

So, now we have a good framework in place for making Indianapolis a much more airline-friendly airport, but is it realistic? The airport expects a 1.5 percent increase in passengers with non-airline (of which land use is a big piece) revenue increasing 2.2 percent. That seems relatively modest, but if it doesn’t materialize, then costs will go up for the airlines again. But I give Indianapolis credit for really trying to work with the airlines. This is a big change for the airport, and it’s welcome.

I know that I said I wouldn’t bother writing about ground delays again until some new, interesting data came out, and now, we have some. The funny thing is that I didn’t even see it. It was only brought to my attention by the DOT as part of the agency’s campaign to convince the world that the ground delay rule is having no ill effects, but clearly we read the data differently. While the DOT sent this data to me as proof in its favor, what I saw was a doubling of the rate of cancellations when flights were held on the ground for more than two hours.

Here’s the chart with the data that DOT spokesperson Jill Zuckman sent me:

It really shows how data interpretation can vary widely. According to Jill, “the data shows that there were fewer cancellations involving flights that experienced tarmac delays of more than 2 hours during May-August 2010 when compared to the same period in 2009.” Well yeah, that’s true, but more importantly, it shows that when airplanes were delayed for two hours on the ground, they were twice as likely to cancel this year than last. Now that to me seems like proof that the ground delay rule is causing cancellations, no? I mean, without the rule, you would assume that the historical percentage would still be the rate we’d see today.

But let’s go back to the aggregate number. Jill and the DOT look at this and say that the “decline can be attributed to the fact that the average number of 2+ hour tarmac delays was much lower in the first 4 months of the post rule period than in the same 4 month period in 2009.” Yes, that’s true. But why is that the case? Airlines have probably started canceling flights further in advance. Or maybe the weather just wasn’t as bad this summer as it was last. (I already dug in and showed that earlier this summer.) There are a lot of reasons why cancellations numbers can fluctuate, but in general it’s been hard to pin down the reasons on a single event until this nugget of data was brought to my attention.

Let’s think about this. It’s no surprise that the number of 2 hour ground delays is down year over year, right? I mean, when you have harsh penalties kicking in at 3 hours, of course you’re going to make changes to prevent anything staying out there over 3 hours. We knew that, but my hypothesis has been that it will negatively impact cancellations. That seems to be the case here. It looks like once airplanes are sitting on the ground for over two hours, it means there’s probably a weather problem or some other operational event that’s preventing airplanes from getting to the gate. Last year, of those flights, 4 to 8 percent were canceled in any given month. But this year, it’s 10 to 14 percent. Why would that be? Because the 3 hour rule is forcing airplanes to come back and cancel.

Without having the airlines give us specific numbers, this is the closest I’ve seen to something showing that there without a doubt have been more cancels this year because of the rule.

Why Arguments Against Airline Foreign Ownership Are Bogus – BNET Headwinds
There are plenty of arguments against allowing foreign ownership of US airlines, but I don’t buy any of them.

How Airlines Battled Through the September Traffic Blues – BNET Headwinds
September is a four-letter word in the airline industry because it’s a terrible month for demand. So far, it looks like the airlines did a decent job of fighting through it this year.

Drop in ONT flights bodes ill – San Bernardino Sun
All the newspapers serving the area around Ontario Airport are running stories on the airport’s problems, and this one quoted me.

Allegiant Rebrands to Make You Forget It’s an Airline – BNET Headwinds
Allegiant has been focusing on packaging for ages, but now it’s trying to make that a stronger sell to customers.

Southwest Pilots Have Tentative Deal to Fly Larger Airplanes – BNET Headwinds
Southwest pilots have tentatively agreed to fly the 737-800. I still can’t figure out why this is being discussed publicly when no order has been announced.

Southwest Ads Shift From Bag Fees to Change Fees, and Face a Tougher Sell – BNET Headwinds
Southwest is looking to pimp its no change fee policy now. It’s a tougher sell, but it’s a good idea if the airline is going to continue to avoid having them.

I thought it would be good to end the week on a happy note. Cathay Pacific has apparently decided to replace its torturous coach seats. I’ve never flown in these seats, but I don’t recall ever seeing such backlash at a simple coach seat.

I first wrote about these seats way back in September 2006. At the time, I said “These have some great new features that could help make flying economy much more bearable.” It appears that I couldn’t have been more wrong.

These were some of the first seats to recline into themselves. In other words, instead of the seat reclining backwards, it had the front slide forward to create the recline. That reduced legroom a little, but it also meant that the person behind you wouldn’t feel the pain of your recline. To make up for the legroom loss, Cathay relocated the seatback pocket to be under the seat so that gave back some legroom.

Great, right? Not so much. In fact, I continued to get about a comment a month on the blog about how horrible these seats are with the most recent one coming in earlier this week. Here are some of the highlights of the pain these seats have caused.

It doesn’t recline – it slides you into the seat in front. Since my knees are touching teh seat in front to start with, this leaves me with nowhere to go – other than the chiropractor when I get off.

The new seat is terrible: the seat recline, but not the headset!!!
So your head stays vertical all along.
Which means that your head falls forwards when you fall asleep.

Really ergonomically speaking, it just forces you into a slouch, with your spine bending into itself. This might be bearable for a short flight but is unforgivable for these long hauls.

It’s been since says since I got back from my HKG to NYC flight and my BACK STILL HURTS.

But then as the flight progressed the 10mm of padding on the seats became the real problem and I had very uncomfortable pressure points on my back.

I will be increasing my travel to Asia (3-4 times per year) and I will NEVER fly Cathay again unless/until these seats are recognized for the huge mistake they are and are removed. This fiasco is worthy of a case study in business school on the same bonehead level as “New Coke”

Seen enough? These seats appear to be the worst things ever invented, according to those who flew in them. And now, they’re finally, mercifully going to be put out to pasture. Actually, maybe some of the torture museums around the world can get some copies to scare tall people. In reality, they’ll just be going into shorter haul aircraft, so the pain won’t be nearly as noticeable.

This will also result in a new premium economy cabin as well as a refresh to the fancy pants seats at the pointy-end of the plane. Kudos to Cathay for listening. Let’s hope they get better info from focus groups this time so they don’t have to replace the seats again in another couple years.

[Original Photo via Flickr user kevingessner]

Pop quiz. Which major airport had the worst on time performance in August? JFK? Nah. Newark? Nope. Chicago? Bzzt. Atlanta? Nyet. Give up? It’s San Francisco. Really.

You would think that the airports that get pounded by thunderstorms all summer would be the ones that rank at the bottom, so it’s even more surprising that San Francisco sits below everyone else by a fair margin. There wasn’t a single drop of rain the entire month at the airport. San Francisco saw only 70.2 percent of flights arrive within 15 minutes of schedule in August. The next worst was Miami at 75.9 percent and then LaGuardia at 76.4 percent. So what gives?

Those of you who live in the Bay Area or fly there frequently are probably shaking your heads right now because you know the pain all too well. The problem? It’s too foggy at the airport by the Bay and the runways are too close together to operate at full capacity in the fog. In a city that loves the environment more than just about anything, this isn’t likely to get fixed any time soon.

But before we dig into the reasons, I’ll put up a virtual layout of the Bay Area for those who don’t know it. (Before you jump on me with hate-spewing comments, realize that I absolutely love it up there, so this map was drawn with love. Well, except for that part about Berkeley. As a Stanford grad, I have no love for you weenies in the East Bay.)

As you can see, SFO sticks out into the Bay from the peninsula, just south of the city of San Francisco itself. In case you were wondering, much of the peninsula there is made up of mountains and the area between the mountains and the Bay is filled with people. The airport has nowhere to go. Now let’s look at the airport in greater detail.

Here you can see the airport up close. It has two sets of parallel runways that are perpendicular to each other. When the winds allow, the airplanes come in from the east and land over the Bay. Departures go to the north. (Yes, some long haul departures use the same runways as arrivals because the runways are so much longer.) But it’s not shifting winds that cause the airport to back up. The problem actually usually happens when airplanes are using this preferred configuration.

On a beautiful sunny day, the controllers can line up airplanes to land simultaneously. The runways are only 750 feet apart (centerline to centerline) but when the airplanes can see each other, that’s ok. When airplanes can’t see each other and they need to do instrument landings, the required distance between runways goes up a lot. You need 2,500 feet to do staggered approaches and 4,300 feet to do approaches exactly parallel to each other. SFO isn’t even close.

There are two ways to solve this problem. One is the technological way – get more accurate systems that allow for airplanes to be much closer to each other even when they can’t see each other. That has happened to some extent as airlines have worked with the airport and the feds to come up with ways to increase the throughput when visibility drops. The other way is to physically move the runways. The only real option there is to push one runway further out to the north into the Bay. I think we all know that in a place like San Francisco, that’s not going to happen. Environmentalists will win that battle every time.

So instead, air travelers just end up suffering any time the visibility goes down. What’s most frustrating about that is it’s very often a beautiful sunny day until the last few miles of the approach when that fog messes things up. In August, that happens a fair bit, and it’s why SFO had the worst on time performance despite not having a drop of rain.

The strangest thing about all this is when flying to San Francisco, you should throw all other advice out the window. What do people usually tell you? Fly in the morning to avoid delays, right? Not to San Francisco. As you might imagine, fog is worse in the morning and will often clear out by afternoon. So the afternoon arrivals are in better shape than the morning ones. Here’s the chart.

Definitely not what you’d expect to see at most airports, right? So next time you’re flying into SFO, keep that in mind. Afternoon flights might work out better, or if you really don’t want to take chances, there’s always Oakland . . .