This will be a year of uncertainty caused by expected changes in the federal hours of service rule, the Comprehensive Safety Analysis 2010, a proposed new flight and duty-time rule in the airline industry, the implementation of health care legislation, and financial reforms. These and other government actions add costs and place additional reporting and administrative requirements on the industry.
About 50,000 U.S. military forces will remain in Iraq through 2011, requiring commercial sealift and airlift of passengers and cargo, support for sustainment and then redeployment of these forces during the latter part of the year. With NATO establishing 2014 as the target date for the transfer of security responsibility in Afghanistan, it appears any reductions in U.S. forces in 2011 will be small. Companies providing “end-to-end” capability to meet defense requirements should have opportunities sustaining the current force levels in Iraq and Afghanistan or redeploying forces and their equipment.
Longer term, the Defense Department’s focus will be on cutting costs, meeting a goal of finding $100 billion in savings over five years and improving efficiency. The savings will go toward modernizing and recapitalizing military equipment and sustaining troops.
The strategy includes five major components:
- Target affordability and control growth of costs.
- Create incentives for productivity and innovation in industry.
- Promote real competition.
- Improve trade craft in services acquisition.
- Reduce nonproductive processes and bureaucracy.
Our executive and legislative branches of government also should start to focus on our nation’s transportation infrastructure and on reducing the uncertainty caused by government rule-making and regulatory actions.