(Source: Autoblog, Washington Post,  Detroit Free Press, AFP via Google)

Image Courtesy: Jalopnik

Clears Senate

After narrowly surviving an attempt by Sen. Judd Gregg, R-N.H. to strip it from a war-spending bill, the Cash for Clunkers program passed the Senate yesterday evening. Well, the $106 billion war-spending bill passed the Senate on a 91-5 vote, but the $1 billion scrapping program earlier survived Sen. Gregg’s attempt to have it removed and thus passed, as well. Now the bill makes its way to President Obama, who is expected to sign the bill into law, after which the U.S. Transportation Department reportedly has one month to figure out how the Cash for Clunkers program will be run. Since Congress reduced funding for the program from $4 billion to just $1 billion, it’s expected that the money will run out long before the program is scheduled to end on November 1.

“We are gratified that the Congress delivered on this administration priority, and President Obama looks forward to signing it into law,” according to an administration statement.

Details, Details, Details,

Vehicles purchased after July 1 will be eligible for the refund vouchers worth as much as $4,500 to turn in gas guzzlers and buy new cars that are more fuel efficient.

The agency in charge of administering the program, the National Highway Traffic Safety Administration, will work out all the details within 30 days of enactment, according to Rae Tyson, spokesman for NHTSA.

Congress predicts this will result in the sale of about 250,000 new vehicles. The funding is good only until Nov. 1 and could run out before that. In that case, the voucher pro gram — unless Congress ap propriates more — would end.

Consumers would be able to start using the vouchers as soon as the National Highway Traffic Safety Administration finalizes the rules — a process that must conclude within 30 days of the president’s approval.

Under the program, trade-in vehicles, 1984 models or newer, must have average fuel economy of no more than 18 miles per gallon. And the new car or truck must get better gas mileage than the one that was scrapped.

The payoff grows depending on the difference in the fuel efficiencies of the old and new cars. For instance, a new car getting at least 4 more miles per gallon than the old car will be eligible for a $3,500 voucher. A new car getting at least 10 more miles per gallon would get a $4,500 voucher.

To guarantee vehicles are actually roadworthy — and not just sitting on cinder blocks — trade-ins must be registered and insured to the same owner for at least a year.

Kudos & Pats in the Backs

Image Courtesy: Apture

Cash for clunkers proponents in Congress said the subsidies will spur sales.”The simple fact is that we need to get Americans into car showrooms and this is the bill that will do it,” said Rep. Candice Miller, R-Mich., in a statement.

Sen. Debbie Stabenow, D-Mich., said the program will boost jobs in auto states. “This program will provide an economic stimulus at a time when hardworking families need it most,” Stabenow said in a statement.

GM said it had decided to keep 60 of the more than 1,000 dealers with whom it had sought to terminate agreements. The reversals were made after the automaker corrected financial information that was used to evaluate which stores to keep.  Dealers applauded the Senate’s action yesterday, and some got additional good news.  John McEleney, chairman of the National Automobile Dealers Association, hailed the measure, saying it “will boost consumer confidence, get the economy going again and reduce our dependence on foreign oil. Congress is giving consumers a strong incentive to replace their older vehicles with new, more fuel efficient cars and trucks.”

Transportation Secretary Ray LaHood said “The program is an important step forward for America. “It provides incentives for consumers to buy new, more fuel-efficient cars and trucks, providing a boost to the auto industry and protecting jobs, while limiting fuel use and greenhouse gas emissions.”

The legislation comes with number-one US automaker General Motors in bankruptcy and Chrysler emerging from court protection under a government-backed alliance with Italy’s Fiat in the face of plunging auto sales.

Cash for Clunkers Update from Europe (Channel 4 via Autobloggreen)

Several other countries, such as China and Italy, have offered similar trade-in vouchers. And lawmakers point to the success of Germany’s program as indication that vouchers can turn dismal auto sales around.  At the end of the program’s first month, sales in Germany were up 21 percent from a year before. During the same period, U.S. sales slumped 41 percent. Now,  a leading provider of automotive data and intelligence says the European motor industry is showing signs of recovery following the introduction of scrappage schemes on the continent.  According to a new study by Jato Dynamics, the European automotive market may be rebounding ever so slightly from its alarming lows of early 2009.

Though new car purchases are down by just over 13 percent year-on-year, there was actually a mild 2.4 percent improvement in May over April. The German market is now 39.7% up on May 2008 – a 20.3% improvement over last month’s figures. France, meanwhile, is up 11.8% over the figures for April.  “If Germany provides a template for the other markets where scrappage schemes have been introduced, we may be at the very beginning of a period of recovery in Europe. It’s far too early to know what the sustained effects of the incentives will be, but at a time when the industry needs to see some rays of hope, it’s encouraging to witness some improvement ” says David Di Girolamo, Head of Jato Consult. Interestingly, small, fuel efficient hatchbacks are performing better than the rest of the market, which is thought to be due to the various scrapping schemes in Europe.

The US market has steadied somewhat from lows earlier this year but the sales pace in May remained 33.7 percent below that of one year ago.  Let’s hope the American consumers will follow their European counterparts in boosting the vehicle market> Eeven if it is only a liitle, the market can use any push to build its recovery.

(Source: Washington Post & Reuters)

General Motors executives will now fly commercial.

Image Courtesy: Autoblog

In a move that reflects the leaner company GM is seeking to become, the automaker on Thursday sought approval from a federal bankruptcy judge to terminate leases for all seven of its corporate aircraft, plus a hangar at a Detroit airport. Facing no objections, Judge Robert Gerber granted the request during a hearing in a Lower Manhattan courtroom that lasted less than 10 minutes.

“The new GM will have no jets — we’re all flying Delta,” GM spokesman Tom Wilkinson said in an interview.

The planes are leased from a division of General Electric and include five mid-range Gulfstream G350 business jets and two ultra-long Gulfstream GV jets, according to court documents.

Then-GM chief executive G. Richard Wagoner Jr. had been assailed by lawmakers at a hearing in November when he and other auto executives flew to Washington on private jets to ask for government funds. In March, Wagoner was pushed out by the Obama administration, which has pumped billions of dollars into GM and Chrysler.

In a recent court filing, GM said it was exercising “sound business judgment” in seeking to end the contracts. “The leases are not necessary or valuable to [GM’s] business activities,” the automaker said in the filing.

Corporate America has long argued that using private jets is a safety precaution and a way to maximize busy executives’ time by allowing them to avoid delays at crowded airports.

Chrysler also recently terminated its two aircraft leases. A spokesman for Ford, the only one of the Big Three Detroit automakers that hasn’t taken taxpayer funds, said the company is seeking to sell its five jets, which have been grounded since late last year. Ford’s chairman and chief executive have been chartering flights on an as-needed basis, the company said.

Click here to read the entire article.

Kingfisher Airlines of India promised passengers the royal treatment — flight attendants so comely they were called “flying models,” full meals even on short flights and curbside valets to carry their bags.

Image Courtesy: Apture - Kingfisher's Vijay Mallya

But how the mighty have fallen.

Short of cash and unable to pay its bills, the company has had to take on debt from India’s government-owned banks, pledge assets in exchange for loan guarantees, postpone delivery of new planes and search for a foreign investor.   Most symbolic, perhaps, instead of starting nonstop flights from India to California — as envisioned by the company’s flamboyant founder, Vijay Mallya — the airline last added a route from Calcutta to Dhaka, the capital city of Bangladesh.

Known as the “King of Good Times,” Mr. Mallya pursues a lavish lifestyle that includes a collection of hundreds of sports cars and a villa on the French Riviera. He built Kingfisher as a “premium” airline and, when passenger numbers were growing, placed big orders for planes, including five of the A380 superjumbo jets from Airbus, even though Kingfisher had never turned a profit.

Kingfisher lost 10.5 billion rupees, or $219 million, in the nine months that ended in December, the most recent figures available. India’s other large private airline, Jet Airways, reported a slight profit for the first quarter of this year, in part because of one-time tax credits. Kingfisher still owes $100 million to oil companies for jet fuel it bought in 2008, Mr. Mallya said. Those payments will be made by November.

Sorry State of India’s Aviation Business

Airlines around the world are suffering as businesses and individuals cut back on travel, but in India, by some measures, they are suffering more. And analysts say that in the months to come, Kingfisher, one of India’s top domestic carriers and one of the country’s most recognized brands, may be in for more pain than any other airline here.

Kingfisher’s troubles present a cautionary tale for investors and suppliers eager to do business in one of the few major economies still experiencing significant growth. Even as incomes and consumption continue to rise in India, success is not guaranteed — nor is a smooth ride.

Of the $9 billion that the International Air Transport Association estimates the global airline industry will lose in 2009, nearly a quarter will be lost by Indian airlines, which fly just 2 percent of the world’s passengers.

For India’s private airlines, “the next six to nine months are about survival,” said Kapil Arora, a partner with Ernst & Young’s aviation practice. To make it, they will have to cut costs relentlessly in marketing, technology and payroll, he said.

Even that may not be enough. After resisting for years, the Indian government is considering letting foreign airlines take a 25 percent stake in Indian carriers. But the rest of the world’s airlines are short of cash as well. “It’s going to take active government involvement” to keep India’s airlines in business, Mr. Arora said.

Image Courtesy: Extra Mirchi - A Kingfisher Promise

In an e-mail interview, Mr. Mallya brushed off suggestions that the company was struggling for survival. It will turn a profit in the next fiscal year, he said, and a $500 million loan, recently arranged by the State Bank of India and sold to an alliance of banks, is sufficient to keep the company going this year.

If that’s not enough, Mallya wants to proceed with his fleet expansion plans. Miranda Mills, vice president at Airbus, said the manufacturer had been in regular conversation with its Indian customers and was not worried about any of Kingfisher’s orders, including those for the A380.  “We work a long-term game,” Ms. Mills said. In the airline business, companies do not place an “order for the next year or two and then change your business model totally,” she said.

Unfortunately, that is just what the Indian government is encouraging airlines to do. “Individual customers have been thoroughly pampered all these years,” Praful Patel, the Indian civil aviation minister, said. Airlines need to redefine their business model, he said, and emulate no-frills carriers that are close to breaking even, like IndiGo and SpiceJet.

Indian airlines grew too much, too quickly during the recent boom, analysts say. At its zenith, the industry was adding six planes a month, when there was demand for only half that number, according to the New Delhi office of the Center for Asia Pacific Aviation, a consulting and research firm. To gain market share and attract customers who may never have flown before, airlines were pricing tickets way below cost.

Adding to their problems, Jet and Kingfisher made expensive acquisitions in 2007 — Jet Airways bought Air Sahara and Kingfisher Airlines bought Air Deccan. Analysts say that the airlines paid too much for the acquisitions and have taken too long to absorb the operations they acquired.

Next, surging fuel prices forced up ticket prices just as the global slowdown cut business and leisure travel. To make things worse, Indian airlines face much higher fixed costs than carriers in many other countries, like fuel taxes that can be five times the global average.

In India, “the big boys today have huge debts, massive fleets, are confronted with a marked slowdown in domestic and on the international side,” said Kapil Kaul, chief executive for the Center for Asia Pacific Aviation in India. And, he said, “there are virtually no funds available.”

While Mr. Patel, the civil aviation minister, would not comment on individual airlines, he did say that the government would not block further consolidation or prevent a carrier from closing. Many airlines should have been better prepared, he added. “Some of these guys in the best days didn’t go big time to the markets and raise money,” he said.

But the latest Indian Government statistics show the country’s domestic passenger market shrunk 11% in May. The civil aviation minstry statement says India’s airlines carried 3.9 million passengers, up from 3.3 million passengers carried in April.  Kingfisher retained the number one position it assumed in April, carrying 1 million passengers for 26% marketshare. Characteristically, Mr. Mallya is undeterred. Kingfisher Airlines “enjoys business from both” low-fare and premium passengers, he said, “which is one of the reasons why Kingfisher Airlines flew more than a million passengers in May 2009.”  But recent attritition of the top management team indicate there maybe some cause for concern.  Ramki Sundaram, executive vice-president at Kingfisher Airlines Ltd and former chief executive officer of Deccan Aviation Ltd, has resigned. Sundaram has been an investment banker in the aviation industry for at least a decade. He was instrumental in structuring aircraft sales and lease-back deals for Deccan Aviation, which ran Air Deccan, the country’s first low-fare airline, till it was acquired by and later merged with Kingfisher Airlines. Kingfisher Airlines’ vice-president, operations, D.D. Gandhi, one of the carrier’s first employees, left the company earlier in June.  Gandhi had joined Kingfisher in 2005 after a year with Deccan Aviation to head the airline’s domestic and international expansion.

To stem the tide, last week, Kingfisher hiked its fuel surcharge on tickets by 400 rupees across both long and short haul domestic routes. The company is reportedly looking to rollover around Rs 800 crore of its short term debt. It is also learnt to be finalizing the paper work for borrowing an additional Rs 1,500 crore from Indian public sector banks.  Kingfisher has also started exploring other ways to increase the traffic on its network. As of June 1, Kingfisher joined the Global Explorer, which features all members of the oneworld® alliance and some selected other airlines, which offers round-the-world fares. Members of oneworld alliance and some other non-member airlines which are part of the Global Explorer programme will now be able to offer fares for the Indian domestic network. Members of oneworld alliance serve five points in India but the addition of Kingfisher Airlines’ domestic network from today expands that to a further 62 getaways across the country. This is the first time an Indian domestic network is being offered for round-the-world fare programme.

(Source: New York Times, LiveMint.com, TravelbizMonitor)

A power struggle between Volkswagen chairman Ferdinand Piëch and Porsche’s management continued to intensify on Friday, just as the company announced that sales had crashed 15 percent.

Image Courtesy: Apture

Sales Tsunami

Friday’s numbers are creating a Tsunami of sorts at the German automaker. Bloomberg reports that Porsche SE’s sales for the period through April 30 declined to 4.64 billion euros ($6.46 billion) from 5.46 billion euros a year earlier, Stuttgart, Germany-based Porsche said today in a statement. The company reiterated that revenue and earnings will fall this fiscal year, based on “extremely poor business” in the first three months of 2009. Porsche’s nine-month vehicle deliveries fell 28 percent to 53,635 cars and SUVs, as Cayenne sales dropped 25 percent to 24,689 units. Deliveries of the 911 fell 18 percent to 20,254 cars. Sales of the less-costly Boxster model, including the Cayman version, fell 47 percent to 8,692 cars.

Changing Partners

The drop in sales will reduce Porsche’s options for paying back more than 9 billion euros of debt stemming from its purchase of a majority stake in Volkswagen AG, Europe’s biggest carmaker.   The sports car maker has entered exclusive talks with the Qatar Investment Authority, the sovereign wealth fund of the energy-rich Persian Gulf emirate. It could acquire as much as 25 percent of Porsche’s voting shares, which have long kept the Porsche family firmly in charge. The Qataris, who would get a seat on Porsche’s supervisory board, may also purchase the options Porsche has on VW shares.  Qatar could bring as much as €5 billion into the company, analysts estimate, helping to relieve the €9 billion debt load that Porsche incurred to acquire 50.76 percent of Volkswagen.

To tide it over, Porsche has applied for a loan of €1.75 billion from a fund the German government set up in March to help companies through the financial crisis. The request is being reviewed in Berlin, with a response expected in the coming days or weeks.

Dream Turned NightMare

Interestingly, the New York Times has a wonderful article explaining how Porsche’s top enchilada reacted to this reversal of fortunes.  When Wolfgang Porsche learned that his family’s sports-car maker, once bent on taking over Volkswagen, now had to beg its giant rival for money, he looked as if he were going to faint.  “He went absolutely white,” said one person briefed on that secret meeting, which involved executives from both companies. “It was as though he’d heard someone died.” A day later, on March 23, fax machines around Germany spit out a piece of paper for Volkswagen’s board members to sign: an emergency loan of €700 million, or $977 million, for Porsche from its former prey — Volkswagen.

Mr. Porsche is now on the verge of accepting Porsche’s integration into Volkswagen, rather than the hoped-for David-versus-Goliath takeover. On top of that embarrassment, Porsche also is seeking outside investors and a government bailout.

“This is becoming a reverse takeover on a financial level,” said Arndt Ellinghorst, head of automotive research at Credit Suisse in London. “Porsche has debt and VW has the luxury of cash.”

The company has responded to the sales drop by periodically suspending production. Porsche will halt work for two days between now and the end of July for a total cutback of 21 days for the fiscal year, Albrecht Bamler, a spokesman, said today.

Controlled by the Porsche and Piech families, the sports- car maker dropped its Volkswagen takeover plans on May 6, saying it will seek talks on creating an “integrated” company that would put Porsche alongside Volkswagen’s nine brands, which also include luxury unit Audi and mass-market manufacturer Skoda. Porsche said today that “there is a consensus” among family members to continue with creating an integrated group.

Arrival of Mr. McNasty & Blame Game

This change in fortunes has brewed a nastiness at the top levels of Porsche’s management that’s unseen in the history of the carmarker.  Controlled by the Porsche and Piech families, the sports- car maker dropped its Volkswagen takeover plans on May 6, saying it will seek talks on creating an “integrated” company that would put Porsche alongside Volkswagen’s nine brands, which also include luxury unit Audi and mass-market manufacturer Skoda. Porsche said today that “there is a consensus” among family members to continue with creating an integrated group.

Porsche CEO Wendelin Wiedeking and Piëch have been exchanging increasingly nasty words in recent days, the daily Süddeutsche Zeitung reported Friday. Piëch blames Wiedeking for increasing the company’s mountain of debt, now around €9 billion, in a failed attempt to take over Volkswagen.

Wiedeking, in turn, has said Piëch has harmed the company with his public criticisms at a sensitive time when the two companies are discussing a merger. Piëch is the grandson of Porsche founder Ferdinand Porsche and left a career at the company to work for Volkswagen in the 1990s.

In a letter to Piëch dated May 13, cited by the newspaper, Wiedeking warned Piëch that he would be help “personally responsible” if Porsche were harmed by Piëch’s verbal assaults. In the rarified world of German boardrooms, such strong language is almost unheard of and reflects the complex pressures brought on by rivalries between the Piëch and Porsche clans, collapsing car sales, industry consolidation and a credit crunch brought on by the financial crisis.

If this is not enough drama wait till you see what happens in the months ahead.  Looking ahead, the company declined to give a precise forecast but said sales were likely to fall below the level in its previous fiscal year.

(Source: The Local, New York Times, Bloomberg)

(Source: Detroit Free Press, The Detroit News, The Auto Channel, The Examiner, EEtimes.com)

Cash for Clunkers hit a speed bump Tuesday, June 16, 2009, in the U.S. Senate. It appears some Senators have “bailout fatigue” in general and “auto industry bailout fatigue” in particular. According to The Detroit News, Republican Senators are pushing back, citing the $85 billion in aid already provided to prop up ailing and bankrupt GM and Chrysler.

Image Courtesy: Apture

Some Democrats, including Diane Feinstien (D-California) also oppose the bill in its current form because they think it does not go far enough to improve fuel economy of vehicles on American Roads (there are, of course, Republicans in the opposition, but they oppose the measure because they think we’ve already spent too much money on the auto industry). As reported earlier, a Cash for Clunkers provision was added last week to a $106 billion bill to fund the wars in Iraq and Afghanistan. The idea was to attach a Cash for Clunkers provision to an existing bill already moving through the Senate so quick passage could be assured. Wrong.

Senators who support Cash for Clunkers need 60 votes to keep the Cash for Clunkers provision from being removed from the wartime funding bill. That could prove to be a problem.

Just hours after Sen. Judd Gregg, a New Hampshire Republican, denounced the inclusion of the cash-for-clunkers amendment as “unfunded baggage” on the war spending bill this evening, Senate Majority Leader Harry Reid delayed a vote until Thursday.

“It passes on new debt. Why would we do that?” Gregg asked in a floor speech. He said he would challenge the measure “at the appropriate time.” Senate Majority Leader Harry Reid delayed voting on the bill until Thursday.

Democrats control 58 seats in the Senate. But two — Edward Kennedy of Massachusetts and Robert Byrd of West Virginia — are ill. And Democrats led by Diane Feinstein of California have opposed the legislation as it stands, saying it does not do enough to boost fuel efficiency.

The legislation narrowly survived in the House, but for reasons mostly unrelated to the car-sales measure. Republicans were near unanimous in opposing the spending bill, objecting mostly to a provision that would boost International Monetary Fund lending.

“This bad legislation runs a con game on the American taxpayers and America’s military men and women,” said Rep. Mike Rogers, R-Brighton. He and five other Michigan Republicans voted no.

Michigan Democrat Debbie Stabenow urged quick passage of the stimulus.

“It will not help as a stimulus if it is done six months or a year from now,” she said.

If the Senate approves it, the measure will go to President Barack Obama for his signature. Then the National Highway Traffic Safety Administration will have 30 days to put regulations in place for the program which – under the war spending provision – will expire on Nov. 1.

In a related news item from across the Atlantic, Phakamisa Ndzamela writing for Reuters reported that South Korea’s Hyundai Motor Company has so far received the lion’s share of new car orders under the British government’s vehicle scrappage scheme, with sales boosted by an interest in smaller cars, according to figures obtained by Reuters.

The 300 million-pound ($491.9 million) scheme invites motorists to trade in cars more than 10 years old in return for a 2,000 pound subsidy to buy a new vehicle, in an effort to help an industry which has been severely dented by the recession.

The government earlier in the week said the scrappage scheme had resulted in 60,000 new orders in the period from April 22 to June 7.  Out of the 15 car companies in the UK that Reuters contacted, Hyundai was in pole position, stating that its latest figures, which covered the period from April 23 to June 7, amounted to 8,246 new orders

Ford came second in the number of car orders at 8,050 followed by Toyota at about 7,800 vehicles.  Following are company estimates of scrappage scheme new car orders covering the period April 22 to June 17:

• Hyundai 8,246
• Ford Motor Company 8,050
• Toyota Motor Corp 7,800
• Kia Motors UK 7,300
• Volkswagen 4,591
• Vauxhall 3,909
• Nissan 3,202
• Renault 2,600
• Peugeot 2,500
• Citroen 2,500
• Honda 2,335
• BMW and MINI 1,722
• Mazda 1,355
• Volvo 1,161
• Chevrolet 950

EETimes.com reports thatcrisis in the global automotive market is far from over. In May, the European market fell by 5 percent against the same month last year. Nevertheless, within the region, local markets developed extremely different, with Germany adding 40 percent (in terms of units) and Russia declining 57 percent. The reason for the hefty differences were the public incentives for buyers who scrapped their old car and bought a new one in some countries.  The US market has declined by 37 percent over the first five months this year. In may, sales for light vehicles declined by almost 34 percent to 923.000 units.  In contrast to other countries, the incentives in the United States will be connected to the fuel efficiency difference between old and new car.  Japan also fared weak, with sales declining 17 percent in May and 22 percent for the first five months.  the emerging markets, the crisis was far less pronounced. Brazil added 3 percent, boosted by an incentive program. India declined 1 percent in May, but over the first five months the market developed slightly positive with a plus of 2 percent. In China, the economic stimulus package and the reduction of sales tax on cars led to an increase by 55 percent in May. In that month, in China 728.000 light vehicles were sold. Thus, the Chinese market has become extremely relevant for European and Japanese car exporters. As a comparison: The entire European market (not restricted to EC countries) had a volume of 1.3 million units.

In light of all that’s reported, it seems the U.S. politicans needs to do everything to promote Automobile sales, including the passage of this Cash for Clunkers bill.  Wrangling over the details of a bill that can spur auto sales could have some severe consequences on the economy.  Will they do it?  Let’s hope so!

(Source: Wall Street Journal, T4America@twitter)

Sec. LaHood proposes 18-month extension for SAFEAT-LU  and shortly thereafter Rep. Oberstar says delay is unacceptable (via T4America@Twitter & WSJ)

Image Courtesy: Apture - Transportation Secretary Ray LaHood

USDOT published a news release this afternoon offering Sec. Ray LaHood’s proposed extension:

“This morning, I went to Capitol Hill to brief members of Congress on the situation with the Highway Trust Fund. I am proposing an immediate 18-month highway reauthorization that will replenish the Highway Trust Fund. If this step is not taken the trust fund will run out of money as soon as late August and states will be in danger of losing the vital transportation funding they need and expect.

“As part of this, I am proposing that we enact critical reforms to help us make better investment decisions with cost-benefit analysis, focus on more investments in metropolitan areas and promote the concept of livability to more closely link home and work. The Administration opposes a gas tax increase during this challenging, recessionary period, which has hit consumers and businesses hard across our country.

“I recognize that there will be concerns raised about this approach. However, with the reality of our fiscal environment and the critical demand to address our infrastructure investments in a smarter, more focused approach, we should not rush legislation. We should work together on a full reauthorization that best meets the demands of the country. The first step is making sure that the Highway Trust Fund is solvent. The next step is addressing our transportation priorities over the long term.”

Shortwhile ago, WSJ published an article covering today’s development, which featured Secrtary’s proposal to delay the reauthorization.  This aricle also captured an interesting response from Rep. Oberstar, delivered his press conference Wednesday.  It notes that Rep. Oberstar was adamant that Congress must pass a new law before the current one expires.

“Extension of current law is unacceptable,” Mr. Oberstar said. “Now is the time to move.”

Bill in the Works at Congress (via WSJ)

House Democrats are busy crafting a transportation spending bill that would cost roughly $450 billion over six years, but no consensus has emerged on how to fund it, reports WSJ citing familiar sources.

The bill for the first time would establish standards — like reducing oil consumption and spurring economic growth — that would influence which highway and transit projects get federal funding. It would also consolidate to six or fewer the number of Transportation Department programs used to channel money to states, giving local officials more flexibility to combat their transportation challenges.

Image Courtesy: Apture

The legislation is being drafted by House Transportation and Infrastructure Committee Chairman James Oberstar (D., Minn.), who plans to release a blueprint of his bill tomorrow at a press conference starting at 11:00AM.  Since this is the internet age, there will be a live webcast of the news conference (an invitation-only press conference). Transportation for America informs that Chairman Oberstar is releasing a 12-page paper and a 100-page outline of the bill and it’s likely that at least one of those — probably the shorter white paper — will be released the first press conference.

The current system relies heavily on taxes from gasoline and vehicle purchases. Revenue from these sources is dropping as Americans drive less and opt for more fuel-efficient cars and trucks. Meanwhile, states are encountering similar funding problems due to declines in tax revenue. The result is a growing gap between the nation’s infrastructure needs and what is being spent to maintain and upgrade it.

The Obama administration has opposed any gas-tax increase. The White House also opposes any quick transition to a new system, which has been tested in Oregon, where drivers are taxed based on the miles they drive rather than the number of gallons they pump into their gas tanks.

People familiar with the matter say Mr. Oberstar hasn’t come up with a funding solution, and the task of writing the bill’s funding component will fall to the Ways and Means Committee. Things may proceed even slower in the Senate. That makes it unlikely Congress will pass a new bill by the time the old one expires at the end of September.

Meanwhile, states may be forced to further curb their transportation spending if Congress doesn’t come up with more money soon. Last year, Congress opted to transfer $8 billion from the Treasury’s general fund into the Highway Trust Fund to prevent last-minute cutbacks.   Click here to read the entire article.

Grading the Transportation Bill (via T4America)

To help us all judge whether the bill delivers the promised transformation, Transportation for America has developed this scorecard (see below) laying out the changes that must be included to clear the bar. When the bill is released, we can begin using this as our measuring stick. Click here to download the PDF version of this awesome scorecard.

(Source: Streetsblog)

The federal DOT has just released its guidance for states seeking a share of its $8 billion in high-speed rail funding — and tucked in the rules are standards that could prove crucial to the project’s success.

The definition of high-speed rail can vary depending on the source. The original White House outline cited a top speed of 150 mph, while European and Asian networks can go as high as 200 mph.  Today’s DOT guidance uses the same standard that was outlined in last year’s Amtrak reauthorization bill: high-speed trains are those “reasonably expected to reach speeds of at least 110 mph.”

That standard appears flexible enough to include most regional rail plans. California’s high-speed authority believes the state’s service can reach a top speed of 220pm. The states working on a midwestern rail network with Chicago at the center, however, envision their trains achieving an average of 67 mph for local service and 78 mph for express rides.

Secretary LaHood observed the following on his blog:

“And now, the time has finally come for the United States to get serious about building a national network of high-speed rail corridors we can all be proud of.  A robust 21st Century economy requires efficient transportation of people from urban center to urban center. And, the guidance we publish today will evaluate proposals for their ability to:

• Make trips quicker and more convenient;
• Reduce congestion on highways and at airports; and
• Meet other environmental, energy and safety goals.

So, today the guidance; in mid-September we’ll be back with the first round of grant awards. I am proud to say the DOT is meeting its ARRA commitments and meeting them responsibly.

High-speed rail can reduce traffic congestion on the roads and in the skies, and it links conveniently with light rail, subways and buses for competitive door-to-door travel times. It will encourage economic growth and create new domestic jobs even as it makes our communities more livable.

The guidelines require rigorous financial and environmental planning to make sure projects are worthy of investment and likely to be successful. Both planning and construction are eligible, so states can apply for funds no matter what stage of development their project is in. ”

Click here to read the entire Streetsblog post.

(Source: RAND & Progressive Railroading.com)

The U.S. freight transportation system’s long-term efficiency and effectiveness is “threatened” by capacity bottlenecks, inefficient use of some components of the freight infrastructure, interference with passenger transport, the system’s vulnerability to disruption, and the need to address important emission and energy constraints, according to a study recently released by RAND Corp.

Despite the global financial crisis, experts continue to estimate that there will be increased demand for freight transportation in the future, even as the capacity of the nation’s highways, port and railroads are nearing their limits in key urban areas and transportation corridors.  The annual average road delay in the United States for rush hour travelers increased from 14 hours per year in 1982 to 38 hours per year in 2005. And the Association of American Railroads predicts that by 2035, more than half of the national rail network will be operating near or above capacity, resulting in significant travel delays and limiting the ability to maintain tracks and equipment. This would limit the opportunity to increase rail’s share of freight, which could help tackle environmental concerns and road congestion.

Titled “Fast Forward: Key Issues in Modernizing the U.S. Freight Transportation System for Future Economic Growth,” the study was supported by the Dow Chemical Co., U.S. Chamber of Commerce, Port Authority of New York and New Jersey, ports of Los Angeles and Long Beach, and Union Pacific Railroad.  The authors provide a broad overview of U.S. freight transportation, discuss its role in the supply chains of various types of businesses, and provide data about its capacity in relation to demand for goods movement. They conclude with a discussion of the need to modernize the freight-transportation system and the overarching issues this involves: increasing capacity through operational improvements and infrastructure enhancement, making the system more adaptable and less vulnerable to disruption, addressing the energy and environmental concerns associated with freight transportation, and building support for public and private investment in the system.

The report description on RAND’s website offers the following: Efficient movement of freight within the United States and across its borders is a critical enabler of future U.S. economic growth and competitiveness.

Freight transportation system delays and “uncertainty in the performance of the system” have meant higher prices for consumers and reduced productivity, according to the study.

RAND researchers determined there are four freight transportation and infrastructure issues that need to be addressed:

• increasing national and international freight system capacity through a combination of operational improvements and selected infrastructure enhancements;

• creation of an adaptable, less-vulnerable and more-resilient freight transportation system;

• critical energy and environmental issues associated with freight transportation; and

• the pursuit of public and private investments in supply-chain infrastructure, and sustainable funding priorities.

The study also recommends that “responsible” agencies conduct system-level modeling of the freight transportation system to determine where bottlenecks occur and to understand vulnerabilities, and shippers be encouraged to use alternative ports to reduce strain on the system.

Increasing the nation’s freight transportation capacity can be done by using a variety of strategies, not just through a massive program of adding new roads or rail lines. Suggested strategies include regulations, pricing, technology, improved operating practices and selective infrastructure investments. Examples of these improvements include adopting congestion pricing to promote more highway transportation during non-peak hours, encouraging more goods to be shipped by rail instead of truck and expanding some port operations to run 24 hours a day, seven days a week.

To make the system more flexible and less vulnerable to disruption, the report recommends that responsible agencies conduct system-level modeling of the freight transportation system to determine where bottlenecks occur and to understand its vulnerabilities. Encourage shippers to use alternative ports, instead of relying on just the largest, also would reduce strain on the system.

Transportation accounts for 25 percent of the nation’s hydrocarbon fuel use; of that amount, about 25 percent is freight transportation. So while passenger vehicles are the primary energy users and emitters of pollution, the freight transportation industry also must consider environmental effects as it develops expansion plans. Methods to reduce pollution include increasing the operational efficiency of freight transportation (which also increases capacity) and such direct mitigation measures as cleaner fuel, better engines and more-aerodynamic vehicles.

Finally, the report suggests that a greater effort needs to be focused on developing sustainable priorities for public investment in the freight transportation system.

Click here to access the PDF version of the Full Report or the Executive Summary.

(Source:Autobloggreen & Wired)

Image Courtesy: Wired - Wired's Editor-in-Chief Chris Anderson (L) talks with Tesla's Elon Musk (R)

Elon Musk, the CEO of Tesla Motors, is no stranger to controversy and has proved it time and again.  Be it labelling a poor reporter “douchebag” or calling the Toyota Prius “not a true hybrid,” he has always had a way to get into controversies. Appearing at WIRED’s business conference, Disruptive by Design, in Manhattan yesterday and said the following while declaring that he’d like a chance to run Detroit:

It’s not out of the question to have unions, but if there’s going to be a union, they’d better understand that they’re on the same side as the company. I’m against having a two-class system where you’ve got the workers and then the managers, sort of like nobles and peasants […] Most of our experienced factory workers come from unionized environments, and we asked them what benefit did they see in unions. They said, ‘Well, if their boss was an asshole, they had recourse.’ “I said, ‘Let’s make a rule: There will be no assholes.’ I fired someone for being an asshole. And I only had to do that once, actually.