Archive – Monday Updates – October – December 2015
The Monday Flash – December 28, 2015
Touch ‘N Go
Predictions For 2016…
Next week, we’ll be rattling a few foundations with an outline of our projections for the New Year…
End of Traditional Air Service Development Programs. We’ll be looking at the declining effectiveness of traditional ASD programs in an environment of just nine full-schedule airline brands… whole new paradigms are needed. Heresy, but true…
Reduced Dependence on Lift Outsourcing. The halcyon days of “regional airlines,” a.k.a., lift providers, are over. The declining economics of 50-seat jets, retirements of smaller turboprops and the declining value of the revenues that the equipment at these operators can deliver to their major airline customers, will play hard on some of these operators…
More Retraction of Major Airline Reach. The purpose of “air service” is connectivity with the air transportation system. Too many small communities are being misled with “studies” that promise exposure to “lots” of airlines that either don’t exist, or which any cursory knowledge of airline economics would show zero chance of recruitment of a major brand. Regionalization is here, and it’s consumers driving it… We’ll be discussing it.
Importance of International Connectivity. BGI was at the forefront of assisting communities in maximizing connectivity with the global economy… how this will emerge in 2016 will surprise a lot of airports… positively.
Brand Loyalty & Decline In Global Alliances. We’ll be touching on the decline in consumer value of frequent flyer programs, and the benefits that these will likely deliver to non-hubbing carriers at major airline hubsites… not to mention the decline in cooperation in some global alliances….
Also, Join Us On Thursday, January 28. These will be more deeply covered at our next Aviation Insight Series webinar on January 28th. Don’t miss it… click here to register… 2016 will be a huge year of new dynamics.
Ignoring The Real Cause
Now It’s A “Transformational” Air Traffic Control System
Trying To Not Offend The Offenders. At BGI, we’ve been at the forefront of the air traffic control issue for over two decades, including a study that sparked Congressional hearings in 1994.
If you have the inclination, take a look at the hearings – August, 1994, sub-Committee Chair Colin Petersen (D-CT). There, senior FAA officials performed like trained seals, with demonstrations of the whiz-bang solutions and promises of new ATC solutions in the near term. They had the fix in hand.
In our testimony, we suggested that airline CEOs needed to “form a Conga line through the FAA administrator’s office,” demanding ATC results, because what the FAA presented was pure hot hair.
Heck, the music never started… let alone the Conga line. But the hot air has continued unabated.
That was so long ago that folks born on that day are old enough to vote, and – again, take a look – the ATC solution-dates have year after year extended further into the future. The FAA officials at that 1994 hearing were spitting out a pack of jive – just has they’ve continued to do so right up to today.
NextGen, The Teflon Program. What is amazing is that, despite estimates of $9 billion and higher in unnecessary annual costs foisted on the airline industry due to ATC inefficiencies, there has been zero focus on the FAA as the cause of this mess. Zero.
But, take a gander at some of the recent “articles” and op-ed pieces regarding the deficient US air traffic control system…
“Time for a transformational air traffic control system..”
“America deserves a modern air traffic control system,,:
“Air traffic control needs to be modernized…”
“ATC system overdue for modernization..”
Nice. Thank you, Captains Obvious. Musta done a lot of research, eh? Some “think tank” gets ahold of some veneer information, and voila! they’re experts on ATC.
Funny. This situation has been going on for literally decades, but to read this stuff, one would think that, a) this just popped up, and, when you read each article, b) that the whole problem has been just a matter of funding – or lack of same.
The ATC mess is decades old, and to be blunt, the airline industry has done almost nothing to call the FAA on its failure to address it. Nothing to protest – firmly and bluntly – to the FAA about the billions of dollars in operational waste. Nothing at all that might hold the parade of incompetent FAA administrators accountable. Nothing at all when FAA commitments and deadlines have not been met year after year.
Airlines would never tolerate any vendor with such a sloppy track record. And, that may be part of the problem – the FAA is not properly recognized for what it is. It is a vendor, and it is doing an appallingly slovenly job with ATC reform. But that’s not how airlines seem to view the FAA.
Show Respect To The Godfathers. So, it’s almost as if the airline industry is reticent to anger the FAA Dons in charge of this on-going ATC/NextGen mafia. So the party line is that it’s been “lack of consistent funding” as the reason that the poor FAA has been unable to deliver the magic of NextGen.
Only one problem. It’s not true. Not even close.
Sorry to drop some facts into the political alphabet-group Vegga-Matic, but money isn’t the reason that the FAA has failed. It’s been FAA management incompetence. It’s a proven, documented fact.
But, we’re being told that “everybody knows” it’s just a matter of funding, and the articles above are usually accessorized with great-sounding but factually-dorky comments such as this:
“Today’s system is subject to the unpredictability of federal funding and the persistent budgetary stops and starts that lead to sequestration and furloughs.”
And that is a true statement, per se. The system is indeed subject to unpredictable federal funding.
But to imply that this is why an ATC fix has not been accomplished is flat-out incompetent – in light of 25+ years of failure, these folks have the responsibility to research the subject matter. It is an ignorant and incorrect and misleading statement when used to make excuses as to why we have an out-of-date ATC system.
It is most unfortunate that so many people in aviation just buy this inaccurate garbage, because it completely misses, and in fact is a cover-up for, the real reason – inept planning, inept management, and inept accountability for failure.
Take It Away From FAA. But What’s Being Taken? Here’s more heresy: Just “privatizing” the ATC system is no guarantee that these flaws won’t come right along. After all, the proponents of privatizing ATC seem to be completely uninformed regarding the truth of the ATC mess, and why it may need to be privatized. And, worse, this near-religious love for the FAA NextGen program doesn’t seem to even consider that it itself may be flawed.
Anybody Read Those GAO or OIG Studies? Apparently Not. There has been a blizzard of reports outlining the inability of the FAA to manage and direct ATC reform.
Perhaps the most concise report on the failure of FAA in achieving results in upgrading ATC was one last year from the Office of The Inspector General of the FAA. A link is at the bottom of this Monday Update.
It’s a laundry list of example after example of management screw-ups, missed deadlines, and bogus-results changes in the program. Money was not the issue – bungling incompetence and program problems – which are never mentioned in calls for privatization – are the core stumbling block.
Trendy Solution: Let’s Use The Canadian System – But How, And What Are The Metrics? Okay, whether the aviation industry is or isn’t too politically-timid to tell it like it is in regard to the FAA, the fact still remains that the FAA can’t do the job. In fact, BGI has commented repeatedly in several forums that the FAA is completely irrelevant to an ATC fix, because they’ve proven that they simply can’t do it.
So, it’s logical to consider other alternatives. One – probably the most logical – would be restructuring the FAA into a results-based organization. But within the Washington political realities, that would be akin to asking a hippopotamus to be a participant on Dancing With The Stars.
So, a combination with the bogus “money is the problem” jive are the calls to mimic the Canadian ATC system. Understandable, but usually with not much back-up data or support, by the way. Will it be more cost-efficient? What will be the funding – new fees in addition to what the FAA has in place?
And here’s the equivalent of a lamb chop at a vegan wedding – is NextGen itself (which is not to be questioned) part of the problem?
Before we buy in to this knee-jerk “privatization” stuff, a lot of organizational questions need to be asked and clearly answered.
We are a long way from that.
Take a look at the OIG report by Clicking here. It’s just one of many, but it blows these dishonest and silly “it’s just funding” stories out of the ethical water.
The Monday Flash – December 21, 2015
Aviation Loses A Leader…
It is with sadness that we note the passing of Ray Bishop, former director at Bakersfield and Jackson Hole.
Working with Ray at these airports was always a pleasure, but over the years, we developed a wonderful friendship.
We always enjoyed our opportunities to ski with Ray, particularly in regard to his counsel on doing it better. When you go skiing with a former university ski racer, a former B-52 wing commander, not to mention a client, you pay attention. (Because of Ray’s “advice” – more like insistence – Fischer has sold more than one new set of RC4s. Literally, they remind us of Ray every time we hit the slopes.)
On several occasions over the past two years, we had talked with Ray about tagging up to “make a few turns” after his retirement. We – and the industry – will miss him.
The Cuba Air Service Hysteria
The agreement to allow 110 daily flights between the US and Cuba has the media in a tizzy, predicting a tsunami of traffic between the two nations.
Certainly, there is some new traffic potential, but nowhere near the panting expectations that are splattered all over the media.
It seems nobody has taken a hard look at the real potential – or lack of same – for Cuba air service.
There have been lots of articles from US C-of-C types babbling on, spouting predictions of new business opportunities – blissfully without any discussion of whether there are any entities in Cuba that suddenly would want such cooperation.
Then, there’s the leeetle issue of the fact that the traffic will be virtually all US-originated… the Cuban market is prohibited from leaving this supposed paradise of supposed business opportunity.
Last August, we addressed this issue with a hypothetical discussion between an airline route analyst and his department head. We thought it might be valuable to repeat it, in light of all the frothing expectations of this Cuba opportunity…
August 17, 2015
If It Were Anywhere Else, Havana Would Be A Non-Starter As An Expansion Point
The scene: an airline route analyst goes into the office of the VP-Marketing & Planning…
“… Mr. Skygod, I have a great new market opportunity! It’s a slam-dunk!”
SKYGOD: “Okay, Max, tell me about it.”
MAX: “Well, it has near-zero outbound traffic whatsoever. It has Caribbean beaches, but not much different from other places…
Qualitatively, most of the resorts and hotels make a defrocked Motel 6 in rural Wyoming look like the Waldorf – some of them have a tough time even getting soap for the guests… we probably don’t want our vacation packages department to get near these facilities, let alone try to sell them to our customers…
“… there’s no local outbound traffic, because the locals are broke. They have a monthly average income of less than $200… besides, the government won’t permit it, because once these folks leave the country, the place is such an economic cadaver, they don’t come back…
“… Oh, and there’s no discernable business traffic, either… heck, this destination discourages business development, at least the kind that generates any air traffic. Then there are the costs of airport operations. From what I can find, they make fees at JFK look like a Muni airport… they’ll hose us good for every flight like a con man at a retirees’ convention in Boca…
“…The local government has no intention of doing much to encourage any type of development that would indicate near term or even-long-term growth. Sure, the local people might like us, but the government thinks we are all evil Americans…
“…So, Let’s schedule daily flights from all three of our hubs!”
SKYGOD: “… Max, did they lose the chain of custody on your last drug test? This sounds like a loser big-time…”
MAX: “No, sir! I’m talkin’ about flying to Havana!”
SKYGOD: “Oh! Super thinking, Max! Let me call a meeting to get this rolling…”
Yup. In light of all the sunshine, poorly-researched media stories, this is heresy.
Honest forecasting sometimes is, even if “everybody knows” that Cuba is a huge new traffic opportunity. It’s not.
The reality is that with this latest deal, most of the traffic will simply be charter traffic shifting to scheduled flights. But as for the flood of new traffic – the scenario above is accurate.
The Aviation Insight Series™ Kicks Off
We want to thank the dozens of aviation leaders who joined us for the first webinar in the 2016 Aviation Insight Series™ from Boyd Group International.
- – Our expectation of growth in business aviation being significantly higher than other sources are forecasting…
- The potential for growth of “Alaska bush” flying coming to rural areas of the lower 48, as the economics of scheduled passenger service increasingly result in recession of airline route systems;
- The new realities of an airline industry with just nine full-schedule airline brands, and the need to go beyond blind studies to “lure” airline service;
- The new opportunities of US airports as logistical centers;
- The pitfalls of blind reliance on BTS and other data sources;
- And a lot more…
The webinar will be available for download to the attendees shortly.
Clear Your Calendar For January 28th. The plan is for the AIS to deliver a cutting-edge webinar on the fourth Thursday of each month. The topic matter will focus on current, hot-button issues.
The next Aviation Insight Series™ webinar will be January 28th, at 12:30 PM. We’ll be exploring the Top Aviation Trends For 2016, so prepare for some challenging data and business intelligence.
The goal of the Aviation Insight Series™ is to deliver new concepts, new perspectives, and the forecast expertise of Boyd Group International. And it includes an aggressive Q&A segment.
You can log on now for this next webinar, by clicking here.
Monday Flash – December 14, 2015
Touch ‘n Go
Congratulations to client Norfolk, with the announcement of new AA service to Chicago…
Lincoln has announced near-record traffic. We are honored to have assisted the airport in recruiting the Delta-Atlanta service that helped make this possible.
Interline Agreements – Gone Like The DoDo
American and Delta recently cancelled their interline agreements. Most major carriers have already done so with ULCCs Frontier and Spirit – if they actually had them in the first place.
Now it’s going global. Delta is cancelling interline agreements with several Chinese carriers – and focusing on its relationship with China Eastern.
The days of airline cooperation are over. This may also portend a further lessening of the importance of global alliances. Contrary to the way things looked just five years ago, it’s more and more every carrier for itself.
New Community Air Access Realities To
Be Discussed This Thursday
The year 2016 will be one of realities hitting home for airport planning… and some of those realities represent new business opportunities.
Regardless of hype, the US airline industry is shifting in terms of reach, fleets, and strategies.
Dependence on outside companies (a.k.a. “regional airlines”) is going to start to decline, right along with the economics of such relationships. Larger single-aisle jets are replacing 50-seaters. Plan on what turboprops that are left to get pink slips in the next 36 months. And regionalization of air access will continue, regardless of how many “studies” are foisted on small communities.
But at the same time, US airports of all sizes are facing strong new opportunities for non-airline growth within the global economy.
We’re going to be touching on these new dynamics at the first Aviation Insight Series webinar this Thursday at 12:30PM.
If you’re interested in new perspectives for the future, log on an join your colleagues. It’s 25 – 30 minutes of solid information. Click here for more information.
The Monday Update – December 7, 2015
Touch ‘N Go
Congratulations To Royal Air Maroc
Royal Air Maroc has announced that it will implement service to Washington/Dulles starting next year with Boeing 787 aircraft.
We are honored to have worked with the carrier in analyzing new gateway airports in the US from its hub at Casablanca.
Critical Intelligence For Air Access Planning
At Boyd Group International, we bring a multi-dimensional approach to our client projects. That’s because, unlike any other aviation consultant, we are focused on being at the cutting edge of industry-wide forecasts and trends.
One of these advantages is our Global Airliner Fleet Trend & Demand Forecast. What other “planning” entities completely miss is that today, fleet decisions and strategies often determine an airline’s route strategies. In short, air traffic growth or decline is now affected by fleet decisions – not the other way around.
One Airline’s Capacity “Shrink” Is Another’s “Growth.” One of the trends that will fundamentally – and we do mean fundamentally – change air service access for many smaller communities is the evolution of network airline single-aisle fleet mixes into larger average size aircraft. This includes everything from 50-seat jets up through the now-disappearing 757-200 category.
At BGI we watch this literally on a daily basis, because it has a direct bearing on airline route and market capabilities.
In the coming year, United will be taking delivery of 17 A-319’s – currently operated by Spirit. This tells us a lot about both carriers and their evolving strategies.
First, Spirit is clearly moving its fleet into larger units. The United deal will leave Spirit with just 12 -319s, which would indicate more may be removed as larger -321s are delivered from Airbus. This in turn points to Spirit focusing on larger density markets in the future, possibly at the expense of some of the smaller ones it now serves, or may have considered serving in the future.
At United, the -319 acquisition is clearly part of a future fleet mix with much fewer insourced 50-seat (and ultimately, 70-seat) “RJ” units. This does not mean “replace” – it means that United will be looking hard at what fleet mix it needs in the future and the markets which that fleet can serve optimally.
The writing in the sky is that communities which cannot support larger than 50-seat aircraft will see scheduled flights reduced and possibly disappear from the local airport.
Decline of “Regional Airlines.” Another very clear message of this fleet shift (as was the Delta -717 move) is that the misnamed “regional airline” sector is in line for some serious shrinking. Even a cursory look at the entire original raison d’être for these lift providers will indicate that this is a sector of the air transportation business that is going to see increasing shrinkage. Heresy? Yes. Factual truth – yes, too.
Airline Strategies & Fleet Decisions Drive Market Decisions – Not “Market Studies.” The misconception – one that’s certainly understandable within the general population, which typically doesn’t understand the airline industry – is that communities need only to “prove” they have lots of demand, and, wow! the data in the “true market study” or a “leakage analysis” or a consumer survey will get airlines to come a runnin’.
Not even close. Pointing to the messages sent from the fleet shifts at airlines such as Spirit and United, the reality is that the starting point of any professional “market study” for a small community must be honest review of the airline industry first – i.e., defining if there’s an airline with the equipment, corporate strategies, hub system and the interest in serving the local airport.
There are just nine full-schedule jet-operating airlines left, and each has its own defined strategy. A blind study that assumes that there are mystery airlines to be discovered is just that – blind to realities.
Hard fact: any “studies” aimed at “luring” new but unnamed “airlines” to town are misguided and typically just waste money. The airline targets are obvious (or sometimes, non-existent) from the start.
Point: a lot of communities need to re-think their air service programs. Part of this is keeping a close watch on airline system fleet decisions.
Trying to “develop” more service at a local airport, when inevitable fleet changes will undermine the viability of existing service (for example, that with 50-seat jets that may be garnering less than 75% load factors) is not good planning.
Worse, there actually are small unserved communities today that are literally being fed the misinformation (putting it nicely) that they can attract a mainline network carrier, based on all the great data that can be ginned up. Ginned up outside of an airline’s fleet plan, too.
While this may rain on some ASD parades, it’s fleets and corporate strategies, not ARC data, leakage studies and the local “need” for air service, that drive where airlines will fly.
Looking for “more nonstop routes” without first analyzing if there are any airlines that have any earthly chance of serving them, is a waste of time and money. Sure, these projects can produce really colorful documents, replete with the perfunctory heat maps and charts and line graphs. But they won’t do diddly to change an airline’s strategy.
Big Changes – Is Your Community Prepared? In the next 36 months, the whole economic underpinning of the economics of small and mid-size community air service will change. This must be the #1 focus – not blindly chasing after “more routes” or assuming that another “market study” will change airline strategies.
Building Community Support In The New Airline Environment will be a fast 25-30 minutes going over the key areas of change that airports and communities need to plan for in the future.
The webinar is complimentary. We’ll be delivering some well-aimed bullet-points for airport and community planners to consider as we move into the New Year.
The Monday Flash – November 30, 2015
Touch ‘n Go
Second Quarter DOT O&D Data Is Issued… But…
The DOT has finally released 2Q 2015 O&D data, but with the caveat that it may be re-issued due to reporting issues at some carriers.
For the folks who ordered our complimentary Second Quarter Traffic Report & Insights, we will be reviewing the data for any problems, and will have the document out early next week.
If you haven’t requested your copy, click here. It will have traffic and trend insight not available anywhere else… which is the norm with Aviation DataMiner™.
When The Headline Hijacks The Story
There was an AP article several days ago, illuminating the fact that on-to-off and on-and-in times at some airports have increased by a few minutes in recent years
BGI contributed with the writer to the story. It is a solid piece – at least outside of the violence done to it by headline editors – who’ve shaken it like a dead chicken with lead-ins that imply that airports across the nation are becoming winged gulags.
Operative terms that have been skipped over: “some airports,” and “a few minutes.” It’s not an across-the-system issue, and it isn’t gridlocking the national air transportation system. It’s a trend at some large airports for a variety of reasons specific to each.
But that’s a far cry from the bogus headlines brain-dead editors are slapping on the article…
“Ground delays up at US airports…” “…Airline delays up due to taxiing…” “Delayed: Airlines take longer to reach runways for take-off…” “Stuck waiting: ground delays at US airports on the rise…”
The fact is that the taxi times are up by minutes at some large airports. But that’s not what these sloppy and misleading headlines would indicate. Some reporters added to the fun, adding in the factoid that the scheduled time between SFO and Washington is up 11 minutes from a few years ago. That’s not a delay – that’s accommodation for the continuing inept air traffic control system.
The tone of the headlines imply that it’s the airlines that are the culprits in this supposed new delay scandal. Youbetcha, airlines just love having their aircraft spend more time on the ground, burning fuel, component time, and crew costs.
The article competently illuminated a core challenge – yet a lot of inhabitants in the editors’ cubicles didn’t bother to pursue it.
US Airports –
A Giant Wasteland of Old Facilities And Crumbling Infrastructure
Speaking of examples of garbage journalism, this headline fits. But it’s starting to appear again, implying that airports in America are sinking into an abyss.
They’re Baaaak. Anybody remember the gutter-level stories that circulated last year, describing US airports? The gadflies had a field day, comparing US airports to new ones elsewhere in the world. One international news magazine described them as “long lines and soggy pizza.” Real scientific data, eh? No wonder magazines are failing as a medium.
Well, it’s again become the issue du jour among some in the Fifth Estate… broad-brushing the US airport system as being a national embarrassment. And, LaGuardia is the accepted poster-child “example” – mainly because these monkey-hear-monkey-write journalists say so.
Enter The Clowns. Before some dingbat politician – who wouldn’t know an airport from an ATM machine – referred to LGA as “Third World,” most of these reporters didn’t have a clue. And the implication is that airports across the nation are in deep trouble due to lack of investment.
It’s patently false, but it gets great attention.
It’s one of those things like “climate change”- don’t dare question or ask for hard data, lest you be haughtily relegated to the dunce corner of intelligentsia. Just take what’s generally believed, facts notwithstanding.
There was one post from one of those sad Walter Mitty-esque random-thoughts-from-the-non-informed blogs that actually was taken as fact and reported in the media:
“… with scattered exceptions major airports in the US are incredibly noisy, dirty, and just generally user-unfriendly….”
Really? Noisy? Dirty? User-Unfriendly? Most big airports? Must be, since it came off an internet blog.
Any journalist who quotes stuff without any hard examples (like explain what are “most airports?” and just what is the db standard to be “incredibly noisy?”) is only looking for cheap impact. O’Hare is crowded to be sure – but that is why it’s there– to process high volumes. And it’s not “dirty.” Ditto for SFO or SLC.
Big airports are going to get people-crowded at peak periods. By intelligent and professional design. It’s the same concept of designing a highway to be LOS D at peak traffic, and wide open the rest of the day. (Look it up, if you need,)
Gee-Gaws & Civic Hubris: Dangerous Planning Factors. Typically these types of stories are accessorized with the revelation that Airport XXX in China or the EU or wherever has a skating rink, or massage parlor, or a movie theater – all of which are confidently represented to the reader as being qualitative factors for “World Class” airports.
It’s an outrage… think of all those passengers at ATL who are deprived of being able to practice their triple toe loop before boarding for Omaha.
Yup, getting around JFK can be a magical mystery tour. A few other airports, too, are movement-problematic, too. But DFW? Or Denver? Take a gander at the top five enplanement airports, and make your own determination – without the babble from the cognoscenti.
And remember, run from the stories that babble on with great planning and vision cudos for Beijing when it gets compared to, say, Newark. EWR was planned when an 80-seat “all-coach” DC-6 was a big airplane. Back then, not much was going on in China, give or take a cultural revolution or two.
Ever Taken Honest Stock of US Airports? Despite the accepted lore, the hard fact is that the US airport system as a whole is indeed World Class, and has experienced enormous infrastructure investment. While these veneer story-writers focus on security lines at LGA, they have intentionally – intentionally – tried not to investigate the rest of the system. It would destroy the core foundation of their “story” – that the US is falling behind.
Let’s take stock… Flint. Springfield (SGF), Norfolk, Bloomington (BMI), Sarasota-Bradenton, Colorado Springs, Harlingen, Manchester, just for starters. They are facilities the equal of any in the world when it comes to quality and functionality. None have ice rinks, and the movie theaters are not likely in the Master Plan. But they are emblematic of what is happening in the US.
Cut The Gadflies Out of The Planning. Airports are complex facilities, and not facilities where social agendas or amateur planning should be allowed. Commercially-served airports have one and only one function – to safely move passengers and goods in and out efficiently. As for gee-gaws, what counts is maybe a second coat of latex, and skip the art work.
In any case, this airportaphobia will pass when some other cause celebre comes along. In the meantime, regardless of the drivel implied by the media, the US airport system is not the dying hodge-podge that’s often described.
As a system, it is World Class.
Now, if the Washington aviation alphabet groups would stop their love affair with the FAA, maybe we’d get some action on the ATC system – the one that really causes delays.
Is Your Community On-Board With The Future?
A lot of this issue involves community awarness of airport and airline realities. An informed public can be a huge asset for the local airport.
So, we’d invite you to join your colleagues December 17 at 12:30PM ET for the first in our 2016 Aviation Insight Series of webinars,
Building Community Support In The New Aviation/Airline Environment
Clear 25-30 minutes for some important insights on what to expect in regard to Community involvement in the coming year. Click here for more information and to register.
The Monday Flash – November 23, 2015
The Thanksgiving “Rush” –
It’s Not Due To More Flights – Or More Seats
It’s the annual rites of November…
The stores have big sales, an overdose of TV football, there’s bad news for turkeys, people rush to see relatives.
And every year the news media goes into a frenzy with panting stories about airport congestion and the expectation of huge delays due to crowded skies.
Somehow, the general media think that because I-95 and the rest of the highway system get extra traffic volume during holiday periods, the airways will be much the same, with carriers tossing more flying machines into the wild blue. This, then, leads to the painfully-vapid reporter-on-the-airport-scene stories, discussing how flights may be delayed.
The fact is that over certain holidays, there are only marginal increases in flights in the skies, and only marginal increases in total seats offered. This year is no different.
Wednesday of this week, compared to a “normal” Wednesday, in this case, last week…
Here’s a fact: three of the four network carriers are actually going to be operating zero more flights. Only Southwest will see increases – of @ 5.8%. Overall, there will be less than 1.5% more flight departures, and just 1.6% more seats offered.
As such, gridlock in the skies is not indicated.
What this data doesn’t show, however, is the difference in clientele that are heading to airports over the holiday. There aren’t any hard data or studies on the subject, but when there’s an influx of less-experienced travelers, plus (likely) an increase in family travel, the airport processing is going to be a lot slower.
But that dynamic – gummed up processing – no longer is a major factor in “delays.” Generally, airlines don’t hold flights due to back-ups at the (supposed) security check point. There are no longer processing delays at departure gates, as it was 20 years ago. Passengers are processed completely by the time they get to there.
A4A estimates 3% more passengers over the holiday period than last year. Maybe – but it won’t be due to airlines tossing a lot more airplanes in the skies.
New Boyd Group International Webinar
Enhancing Community Support For Your Airport
On December 17th, Boyd Group International is introducing an intensive webinar series for 2016, aimed at exploring the new aviation environment, and the trends that will be evolving in the future.
The first webinar will be covering the issue of community support for local airports.
Building Community Support In The New Airline/Aviation Environment
Airports are more than just runways and terminals and hangars. More correctly, they are important economic generators for their region – and this goes way beyond the issue of scheduled air service.
Here’s what we’ll be covering:
A View of The Core Trends Affecting US Airports.
The Future Realities of The Airline Industry.
The Airport As Economic Generator.
Working With The Local Media.
Identifying Clouds On The Horizon.
Knowledge Is Power – Hard Data, Not Wishful Thinking
Aviation leaders are busy, so the program is engineered to be rapid-fire and deliver concepts that are of value to futurist planning. No droning presentations. Just facts and dynamics that are the basis of further exploration.
Join us and your colleagues at 12:30PM Eastern time. We look forward to your participation & input! CLICK HERE To Register.
The Monday Flash – November 16, 2015
A Webinar Program That You Don’t Want To Miss
The Aviation Insight Series
Starting December 17, we’re implementing a new, monthly webinar series that will hit the hot button issues facing airports, airlines, OEMs, financial institutions – just about everybody in aviation.
If you’re up to wrestling some future aviation-issue crocodiles, join us on December 17 for the first Aviation Insight webinar.
The kickoff webinar will be tackling The New Challenges In Building Community Support for airports in this new world of consolidated airlines and shrinking fleets. This will be covering tactics to assure that the community understands the whole airport picture.
Getting past long-held beliefs about air service will be a real challenge in the future. Click here for details on the Series and to reserve your space for December 17.
Touch ‘n Go…
Security: Points For Your Consideration…
– The terrorist events in Paris… And threats (promises) for more…
– The terrorist downing of Metrojet 9268… a security failure on the ramp at the airport
– Back home, the TSA has failed 80% – 95% of bag screening tests…
– There are reports of poorly-vetted non-citizens working on airport ramps
– This report today, from the New York Post:
“Security screeners at Kennedy and Newark airports have consistently failed to find weapons and bombs being smuggled by undercover operatives posing as airline passengers…”
– And from congress: Senator Ben Nelson (D-FL) is up in arms to protect the consumer… from bag fees.
– Fact: Not one member of this august collection of distinguished politicians sitting in the Marble Playpen, a.k.a. Congress, has made a peep about sacking and replacing the sloppy management at the TSA.
Think about it.
A Loosening of Brand-Imperative At Hubsites?
Frequent Flyer Programs: Becoming Less Frequent
Frequent Flyer Programs are slowly declining in value. To airlines, that is.
So watch for more announcements of “exciting changes” in FF programs that, when translated into English, basically tell the great unwashed that getting that dream trip to Hawaii is increasingly just that – a long shot dream.
Mission Accomplished. The fact is that these FF mechanisms have long since outlived their initial objectives… or, more accurately, outlived the airline industry in which they were first conceived.
This isn’t news to anybody that has a gazillion frequent flyer miles piled up. Using them in some cases can result in a magical mystery tour of an airline’s route system just to get to Maui. And the number needed to cash in for a flight is way up from ten years ago… sometimes even including a co-pay.
The fact is that, unlike long, long ago in an airline galaxy far, far away – a.k.a the 1970s – airlines today don’t need to give away seats they can now sell. And they don’t have anywhere near the competition, either.
Back then, a 60% load factor was gangbusters. Today, with system load factors at well over 80% – 85%, it’s just not good business to turn away a paying reservation because the seat’s saved for a frequent flyer redemption. So, that’s why the seats for this purpose are tight, and what’s available might be a three-stop, double-connection over Fresno to get to the destination desired.
For airlines, it’s simply good business, in the best interest of shareholders and employees.
Priority Boarding? Yup. And Half The Plane Is Included. Then there’s the dilution in elite status. You don’t need to fly 60K miles to get “priority” boarding, anymore. Between elite FFP members and throngs of folks who simply have an affinity credit card, there are a lot these folks on every flight.
There’s one otherwise-very-service-savvy airline where the so-called “priority boarding” looks like a soup line from the Great Depression, at every departure gate. Fearful-looking people thinking they must line up 20, even 30 minutes early, praying that they will find a place for their carry-on. And that’s the “priority’ passengers.
At a major connecting bank, the “priority lines” make every gate on the concourse look like the DMV at rush hour. People snaking out into the concourse – or, worse, routed into lining up right in the gate seating area, stomping on people who had the good sense to stay seated. Priority, see. Your gold FF status is right up there with the family of four that fly once a year, and have that airline credit card.
Please Take Your Assigned Seat. First class upgrades? Perish the thought. Today even “platinum” level members have decreasing odds. If you’re “gold,” don’t get your hopes up. That’s because most airlines now have the good business sense to sell these seats on an upgrade basis. Plenty of $150 upgrade money out there.
The Elite Will Get Eliter. The original reason for FF programs progressively went away with Ozark, TWA, Braniff, Northwest, Republic, America West, US Airways, Piedmont, Air Florida, PSA, Air Cal, et al. Face it – competing on perks for the economy passenger doesn’t make much sense when the flights are full.
In the next five years, watch for FF programs evolve more into perk programs for the top 5% of customers and the requirements to get to an elite status going up like a moon launch. There’s no reason – indeed, it is bad business – for airlines to give product away they can otherwise sell, or offer perks when the customer will probably fly, anyway.
The Good News. Give Up & Spread The Business Around. What this means is that it will be more and more difficult for even many frequent business travelers to reach “elite” status. That’s great competitive news, particularly for airports that are airline hubsites.
As it becomes increasingly clear that the bar for such status is getting out of reach, a lot of consumers will just accept reality and stop trying. They will spread their business to other carriers at key fortress hub airports.
At least theoretically…
Monday Update, November 9, 2015
Touch ‘n Go
US Fleet Notes…
From Russia With Capacity. And From Other Places, Too. Southwest has just leased-in six more 737-700s, these from Transaero and Aeromexico. These are in addition to -700s coming to the carrier from airlines from China and elsewhere, and are critical to the carrier’s expansion plans, especially in light of the parking of the 717s inherited from AirTran, as well as to replace the nine remaining active 737-500s in the fleet, not to mention retirement of older -300s.
The upshot of this, to the dismay of some communities still being misled to believe it’s just a matter of another study and a task force meeting to get Southwest to come to town, is that the airline will not be expanding much domestically in terms of adding new mid-size airports to its route system. In the cards: more redistribution of airplane time at existing cities.
Attendees at the 20th Boyd Group International Aviation Forecast Summit received a briefing from Southwest’s Andrew Watterson – SVP, Network & Revenue Planning regarding the carrier’s expansion program. He noted that -700s are not in high demand elsewhere in the world, and as good ones come off lease they are candidates for Southwest.
B-717s – The Fleet’s In. The 89 ex-AirTran 717s inherited by Southwest (and which initially WN intended to retain, contrary to reports from lightweights in the financial industry) are now almost entirely in Delta colors. There are eight more to enter service in the coming weeks.
The 717 platform was a market dud. Originally planned as the DC-9-95, really just an upgraded DC-9-30, McDonnell-Douglas dithered with the airplane for years, and by the time it was market-ready, it was essentially a model-orphan. Boeing 737s offered a range of variants. The MD-95 was a one-off. The failure of the MD-11 and MD-90 to gain much sales traction also didn’t help the company’s market presence, either.
Subsequent to its acquisition of Douglas Aircraft, the now-renamed -717 was direct competition with the -737.
Largely for the purpose of keeping Southern California politicians at bay from opposing the merger, Boeing went through the motions of trying to re-position the -717 as a “regional jet” – which didn’t convince anybody. Particularly since there were no “regional airlines” with a prayer of a chance buying and operating an aircraft of that size. The last five came off the production line in 2006.
But, of the 156 B-717s built, only two are presently inactive, and only the prototype (a hybrid DC-9-30) has been scrapped.
More 757s To The Desert – And Maybe Eventually To The Freight Dock. In the last month, nine more 757s have been pulled from Delta and AA fleets. There is some second-tier demand for freighter conversion, based on airframe time. But this will not absorb all of the 283 757s still operated by AA, DL, and UA that will be retired in the next 36-60 months. In addition, one of Allegiant’s 757s has also recently been scrapped, too. (For idle cocktail party repartee, the CIA operates two civilian 757-200s. Probably not a good idea to ask where.)
While B-757s are excellent candidates for freighter conversion, there are clouds on the market horizon with 737-800s coming off lease. They have fewer pallet positions than 757s, but the -800s will be newer and likely less maintenance intensive. At least fifteen used -800s have been recently acquired for freighter conversion.
Need fleet, OEM or component forecasts? Boyd Group International’s extensive Global Airliner Fleet Trend & Demand Forecasts are the only truly independent predictive sources in the industry. So if your firm needs futurist fleet-related data, give us a call.
Aviation Security –
Only The Gullible Can Take This Seriously
“The challenge can be succinctly described as a set of multi-dimensional factors that have influenced the conduct of screening operations, creating a disproportionate focus on screening operations efficiency rather than security effectiveness…”
– The TSA Administrator, Explaining To Congress The Reasons The TSA Still Is Failing The Vast Majority of Screening Tests
The façade is collapsing.
We’re talking about the pretension that our air transportation system is safer than before 9/11 – back when it was tragically demonstrated that that we weren’t safe at all, even after repeated warning signs – just like we have today.
Last week there were three events that again proved to anybody awake and sober that the management of the TSA is an incontrovertible gong show, and there is no question about our vulnerability to professional terrorist attacks.
Event One: Congressional hearings again revealed that airport security is a fraud. After billions spent, and over 60,000 people hired, the data again shows that security at airports across the nation fails tests consistently. There are no “layers” of security, which has been the TSA’s PR excuse-mantra every time some major failure is discovered.
That’s a scandal – particularly when the TSA management vowed to supposedly fix things after last June’s revelation that screening failed 96% of the time in tests. If you read the “oh, don’t-worry-we’re-on-it” responses from the incompetents running the TSA, they are identical in substance to what a parade of past TSA management has said over the past decade. Nothing changes – because congress doesn’t care.
Take another gander at the gobbledy-gook, buzz-word explanation the TSA gave congress last week to explain away the TSA’s Swiss-cheese security. Keep in mind that this more than a decade into the existence of the TSA. This kind of excuse is a call for congress to abolish this bureaucratic failure and have experts develop a professional – instead of political – security system.
Read it again. For crying out loud, the guy is telling us that the TSA doesn’t know how to accomplish adequate aviation security – this is after billions of dollars, 60,000 employees, and several dozen similar excuses over the last 12 years.
But do remember the definition of “congressional hearings” – it’s where people usually testify saying nothing of substance, and even when they do, nobody much listens, anyway. A suburban condo association meeting gets more done.
Fact: our airport security is poor. Substandard. Ineffective. Sloppily managed. Bad. That’s regardless of the shoddy reporting done by some network correspondents who go out of their way to be mouth pieces for the TSA. And remember, nobody at the top of Homeland Security ever – ever – gets fired. Congress is quite comfortable with incompetence. It’s their natural habitat.
Event Two: A Russian airliner was blown out of the sky by an explosive device planted inside. Sure, the Russians and the Egyptians all claim there was no bomb, but they’ve got political dogs in this fight. Take it to the bank, the security at Sharm el-Sheikh was garbage. (Wonder if that security system failed 96% of tests, like in the US…)
Anyone who thinks this was just an airline accident has to have just fallen off a turnip truck. Same with folks who may maintain that sloppy security isn’t the case at dozens of airports – including in the US, where at some large airports, back door access is almost an invitation to terrorists.
Event Three: The head of Homeland Security – a political appointee with less security sense than a retired lobby guard at small town bank – has grandly come out and promised to tighten security at foreign airports that have flights coming into the US.
Wonderful! We have dangerously bad security at US airports, and this guy is going to charge off and fix airports in other countries. He’s banking on the American public being as irresponsible and gullible as the clowns in Congress who repeatedly find these TSA failures and do nothing.
Absolutely nothing. At one recent hearing a hack with an “R” after his name demanded to the TSA leaders that they get those airport screeners to do their jobs right. That’s like blaming the victim for the mugging. The folks in the blue shirts are doing what they are instructed to do, and with poor oversight, the problem lies in the front TSA offices in Washington, not at the screening checkpoint at Omaha.
Consumer Protection Doesn’t Include Airport Security, Apparently. Do a search… congressional cave-dwellers have made more noise about bag fees than whether the bags involved are screened properly – which they are not. They have squawked more about the size of airline seats than the fact that the people sitting in them are not screened properly.
Here’s the truth, something that’s in very short supply in congress: Our current AVSEC is no more effective than before 9/11. That’s proven by 96% testing failures. Our AVSEC planning is somewhere off in space – they just now are re-visiting security at foreign airports that have flights to the US, while US airports are at risk. That should be an on-going, aggressive part of their program. It’s not.
And much of the media? Do another search – they’re running off filing great stories fed to them by the TSA about how many guns have been found. All that means is that screening has caught bozos not having a clue, packing an easily-found Glock-40 in their carry-on. That’s not stopping or anticipating terrorism. Yet the media gives these stories more attention than the findings that the TSA system fails 96% of the time.
The Threat Is Still There. In 1997, we made the observation in the Wall Street Journal that to professional terrorists, US airports had less security than a Laundromat. That was four years before 9/11, and based on 96% failure rates, and a Homeland Security that’s more concerned with fixing Cairo than Chicago, it is still a valid description.
Anybody who says we are safer than before 9/11 is not only off-base, but is misleading the American public. Before 9/11, extensive warnings from Red Team inspectors were ignored by FAA management, just as Homeland Security is doing today. The truth – proven time and again – is that the TSA is a failure, but congress is doing nothing about it.
Until another event takes place.
The Monday Flash – November 2, 2015
Touch ‘N Go…
With Regret… It is with sadness that we note the passing of Scott Tyra. Scott was one of our friends at Allegiant in years past, and one of the most engaging people in the business. He and his sense of humor will be sorely missed.
Manila Passengers Are Finding Themselves Not Bullet-Proof. If we think we have airport security issues, take a look at Manila. There are reports that security people have been slipping bullets into luggage, and then shaking down the owners for a “fine.” A whole new dynamic in security-terrorism.
“Tarmac” Reaction…We were honored to get a lot of e-mails regarding last week’s review of terms the media uses to impress readers, even when they have little use in the airline business itself. A lot of airport folks agreed that the word “tarmac” might as well be Swahili in regard to aviation planning. We appreciate the feedback.
The Monday Update…
Southwest Route Re-Organization…
It’s A Harbinger of New Across-The-Board Airline Economics
Sometimes, the truth can be unsettling. In some corners, it’s downright unwelcome.
This is often the situation when a community is honestly and factually advised that some of their air service goals are simply out of reach. While the future is not at all dim, the strategic direction of the airline industry has shifted fundamentally, and air service access planning must shift as well.
Often, that means what could be accomplished ten years ago is impossible today, because the airline industry has whole new cost and revenue imperatives. This is the reason we find that traditional “air service development” is outdated, because it assumes an airline industry that’s long gone.
And it’s particularly true in the case of small and mid-size airports misbelieving (or in some cases, outright misled into believing) that getting a “low cost carrier” is just a matter of dogged determination, a mayor’s task force, and several thousand dollars spent on another “market study.” All that sounds great, but it has no bearing on changing core airline strategies.
It often applies, also, to doomed-to-fail efforts to attract network carrier service to small airports that simply can’t generate traffic to support today’s – and tomorrow’s – airline fleets.
The Past Is Gone. No Amount of ASD Voodoo Will Bring It Back. The foundation of these “we’ll get a carrier” beliefs is an absence of knowledge of the realities of today’s airline industry. It’s natural and understandable for civic leaders not to have a grasp of these issues. But it’s another matter when these misbeliefs are encouraged by outside advisors. And that, unfortunately, is happening across the nation.
The emerging truth is that air transportation is a mode that increasingly does not have the economics to be profitable in low-volume missions. Period. End of discussion. In stone.
Time to wake up and smell the jet-A, or in this case, the lack of it. Last week, the raw economics of the airline industry sent another unsettling message. The major route changes announced by Southwest are more indicators that many communities will need to give up the traditional fantasy “air service development” planning and deal with the new airline industry realities. That doesn’t mean total or even partial loss of air access – it just means that the fantasy needs to get replaced with reality-planning.
Let’s take the Southwest changes at Wichita – an airport that serves one of the most globally-focused regions in the nation. Even it could not generate enough traffic to feed Southwest’s giant hub at MDW, even with a subsidy.
Other examples are Richmond, Greenville-Spartanburg, Akron-Canton, Flint and Grand Rapids. The WN point-to-point flying to Florida is history, and the future of the carrier at these airports will be based the levels to which they can feed a Southwest connecting hub – usually in competition with service from United, or American or Delta. Or a combination of these.
The point is this: Southwest – like the rest of the airline industry – is in a completely different economic and competitive world than it was ten years ago, and it is clearly adjusting to take advantage of it. They need to focus on strong revenue streams, and do not have the resources or the necessity of grabbing feed by adding more smaller or even mid-size communities to their route map that in any case cannot begin to fill five or six daily 143-seat 737-700s.
As for Southwest, they are scrambling to add aircraft – literally from all over the world -to fund expansion to major points in the Caribbean, as well as take advantage of expansion at Dallas/Love. It’s important that small and mid-size communities looking to get WN into town understand this before tossing another 20 large at another “market analysis” to “lure” them into town.
Professional. But Still A Business. Southwest has a well-earned reputation for showing the utmost kindness and respect to communities that come knocking at their door. They even take on the expense of sending staff to speed-date meetings, to do 20-minutes with small airport service-supplicants.
But take a look at where the carrier has cut back, and the message is clear for a lot of communities that have been praying for the low-fare WN cavalry to come over the hill. That message is that it’s time to focus on other air service access options. They are not coming.
They are going to San Juan, Cancun, and Belize – as well as other, much larger places, instead. This is not just at Southwest – it’s across the airline industry.
Business Means Understanding The New Airline Industry. The structure of the airline industry, and its direction are very clear. The need is for air service planning to adjust to these dynamics. For a sad example, there are stories all the time, where an airport has “met with eight airlines to pitch service.”
The fact is that there aren’t eight airlines that are potential new entrants at any airport in the US. That’s a fact – and it’s unfortunate that communities can be so badly misled, and waste time and money being fed this stuff. Heck, we even came across a small unserved airport in the southwestern US that got set up to meet with Alaska Airlines to “pitch” service. Pluheeze…
If You Want Workable Futurist Air Access Planning, Give Us A Call. In our air service consulting work, we are direct and blunt about these new realities, and the opportunities they represent. That’s the reason we can be more effective.
Airline targets and their strategies are clear and obvious, and if they don’t fit a specific client’s situation, we say so upfront.
Understandably, that’s resulted occasionally in ruffled feathers at some clients. But the entire US airline industry has evolved. The bottom line is that it’s time that airports and communities realized that traditional “air service development” approaches are based on the false belief that getting more air service is a simple matter of just tossing out data, and the airlines will come running.
A targeted, surgical approach is needed.
At BGI, we apply our industry-leading forecasts and trend analyses to guide our airport clients to focus on objectives that are consistent with emerging airline strategies. Our Airports:USA® system is the most comprehensive and advanced enplanement forecast system in the industry, and our Aviation DataMiner™ program delivers more accurate industry analytics than any other source.
Plus, our unrivaled respect at the senior levels of airlines has been earned by dealing straight and always being at the forefront of aviation issues. Just take a look at the senior executives and CEOs who participate in our annual International Aviation Forecast Summit. No other consultant can match this level of respect from the global industry.
So, for communities who are looking to build truly futurist air service access planning – including international channels of access – we’d invite you to give us a call at (303) 674-2000, or drop us an e-mail by clicking here. Our approach is very different from other consultants. You’ll like the fresh air.
In any case, this past week should be a watershed in the ASD sector. There are more changes to come. Airports that anticipate them – instead of hoping to ignore them – will prosper.
The Monday Flash – October 26, 2015
Aviation Reporting: Consider With Caution
In all fairness, for the media, it’s tough to cover the airline industry.
It’s complex, rapidly evolving, and involves emerging dynamics that challenge a lot of the accepted historical norms that once applied to air transportation.
Admittedly, too, for a rational-thinking reporter, some of the occasional wacky and doomed-to-fail schemes conjured up inside the industry – “Ted” and “Skybus” come to mind – would make one wonder if some of the business is getting its planning direction from a day care center on a sugar high.
For media folks not involved in aviation on a daily basis, it can be very confusing to report on. Very tough to get intellectual and factual bearings. So it’s understandable that sometimes mistakes and mis-conclusions can be made.
One of the obvious outcomes of this confusion is in regard to some of the terms that the media uses to describe the aviation industry. We hear them all the time, in confidently-reported news stories.
Yup, some of these terms sound so, well, erudite. But they’re terms that the airline industry just doesn’t use.
Here’s a couple:
Tarmac. Sounds like a celestial destination from the 1950s movie Forbidden Planet. But today it isn’t an airline or airport term, even though it’s frequently tossed out in stories on the 6PM Teleprompter readings.
According to the media, this term is the acres of paved space where airplanes park and taxi and romp around. But it’s their term – it’s never used strictly within the airline industry, the airport industry, or the airport engineering sector.
The fact is that “tarmac” isn’t a facility, but just a type of paving material, and, again, it is never used within the airline or airport industries to describe airport areas. Message to the media – in the airport business, it’s a ramp or apron or taxiway.
The term “tarmac” comes from “tarmacadam” which was a paving material patented two years before the Wright Brothers, and one that’s not particularly well-suited to any airside application, anyway. This is absolutely true for jet operations, as “tarmac” material is made up of small, crushed rock, perfect for causing FOD. (We’ll let the usual suspects in the media figure that one out.)
The only time airlines use the word is in reference to the consumer-averse DOT “tarmac delay rule” – which continues to keep this myth alive. But this rule coming from then-Secretary of Transportation Ray LaHood, is completely consistent with his level of aviation expertise.
Layover. This, apparently, is the media’s in-term for what the airline industry calls a “connection.” And given the fact that a lot of airline-published connect times are less than 60 minutes, most passengers don’t do much laying around in between flights.
Direct Flight. In the airline scheduling game, this traditionally is a flight between two airports on the same airliner, with a stop at an intermediate point. In the veneer-expert sector of the media, it is used to describe a nonstop flight. It’s a media term, not an airline term.
Don’t Assume The Writer Has A Clue. But there’s a limit to how much slack can be given to those who report on aviation. They still have the responsibility to do some research. The public needs to understand that some reporting today is misleading gobbledy-gook, not facts.
Sometimes, it’s embarrassing – or should be – for whoever edits this stuff.
In one very amateur-act example last week, a giant cable news network published a confident story on the passing of the famous TWA World Port Terminal at JFK.
Only problem is that there never was any terminal at JFK known as the “TWA World Port.”
It gets worse. From what is self-described as a “trusted news source,” the picture in the article purporting to be the “TWA World Port” was also a bit off – like by maybe half a mile down the JFK ramp from the real TWA terminal, not to mention two calendar years too late.
The picture was actually of the former PanAm terminal, which that airline, and not TWA, did label as World Port. And, contrary to the ”trusted news source’s” reporting, that facility isn’t about to be a turned into anything. It’s gone. It was demolished in 2013.
The article, replete with all this sorry misinformation, got a lot of national distribution. As of this date, it’s still on line. The “World Port” in the text was corrected, but the picture was still the PanAm terminal. The point is that the writer apparently didn’t know the difference when the story was filed.
Point: between inept terms like “tarmac,” “layovers,” and mis-identifying big, obvious things like old terminals that no longer exist, there’s a clear message for the public when it comes to aviation reporting
The Monday Flash – October 19, 2015
Aviation Security: The 9/11 Debacle Continues
One of the tragedies of 9/11 is that nobody has been held to account for the biggest security defeat in US history – one that was immediately fatal to 3,000 people.
The outcome of this is an aviation security system that today results in 95% failure to screen for test items. But, still, “nobody” is responsible – and that started immediately after the hijackings on 9/11 and it continues today.
The buck-passing has been appalling. Now, some erstwhile presidential candidates have gotten into a snit, debating whether George W. Bush “kept us safe,” while some are maintaining he actually had no responsibility for the events surrounding the aviation security failures that led to 9/11 in the first place.
Denial Is The Name of The Game. By and large, belief seems to be that 9/11 was just some unforeseen event that nobody is really responsible for.
It’s sickening. We knew of the threat. We failed to stop it due to major AVSEC incompetence. The most powerful nation in the world got sent into an economic storm due to an attack from 19 religious bozos.
Aviation security was indeed the responsibility of the man in charge. His team. His appointees. And it was a failure both before 9/11 and under Bush’s watch afterwards regardless of what some veneer politicians might try to claim. Let’s look at some facts:
Clear Prior Warnings – All Ignored. The FAA was warned repeatedly – during the Bush administration – that AVSEC was a sorry, sloppy mess. As just one telling example, there was a serious report by an FAA Red Team Inspector in May, 2001 that Boston could be vulnerable to multiple hijackings. It was ignored.
Public Kudos To Those In Charge of Failure. After the worst security failure in US history, instead of moving to clean out the incompetents at the FAA, Bush instead praised them for their fine work.
Bureaucratic Bungling. The TSA – a national embarrassment – was the brain child of George W. Bush. Under his watch, the TSA went totally out of control.
Near-Zero Improvements In Airport Security. The TSA – Bush’s creation – has repeatedly been found to be terribly mismanaged, and has a long track record of failures. The latest is a report outlining a 95% failure in screening tests.
What led us to 9/11 was total disregard to holding incompetent federal officials accountable. Bush was responsible for that – before and after. No matter what else he may have done as president, or the type of guy he is, the truth is that aviation security was one of his responsibilities. And he failed miserably.
He kept us safe? That’s like claiming that Captain Smith was an innocent bystander on the Titanic. After all, he wasn’t on the bridge when it slammed into an iceberg, right?
President Truman claimed that the buck stopped at the Oval Office. As for Bush, it just kept on going.
BGI Airliner Demand Forecast:
“Regional Airline” Fleets To Shrink By 300+ In Next Five Years
Now that the US/AA merger is complete, it’s generally concluded that the era of airline consolidation is over. Not exactly.
True, combinations of airline brands may be over, but consolidation of operators is going to be in full swing.
We’re talking about what are still mislabeled as “regional airlines” – the entities that provide contract capacity to major airlines. These entities shed all vestiges of being independent airlines more than two decades ago, and are now in the tough and demanding business of leasing out aircraft and crews to major airline customers.
As we’ll see, it’s also a shrinking business.
It’s Now A Segment of The Aircraft Leasing Business. Message to the media (including some in the aviation media who should know better): these companies are neither “regional” nor are they “airlines.” They don’t sell seats, don’t book passengers, don’t fully determine where and when their aircraft are scheduled, and they don’t operate under their own market identity.
They are simply operators providing aircraft and crews to major airlines – generally under a variety of fixed-price mechanisms. Not noticed by many is that nearly half of more of the departures under the brands of American, Delta and United are outsourced to these contract capacity providers. That is fixin’ to change.
Shedding Less Cost-Effective Revenue Channels. Due to airline strategies and economics, the role and the need for contracted lift at major airlines are changing. Small units of capacity – particularly 50-seat jets and also turboprop lift – are becoming expensive revenue channels for major carriers. Combine this with issues such as tight hubsite real estate, plus high system load factors and less need for incremental feed, and the picture is clear: “regional airlines” are in a shrinking sector of the business.
Back in 1999, Boyd Group International was the first to analyze and identify the brick wall that demand for 50-seat RJs would experience. Today, our Global Fleet Trend & Demand Forecast indicates another challenge to the “regional airline” sector: they have far more aircraft than the major airline system will need or want by 2020.
Like, in the neighborhood of 300 too many. Most will be in the 50-seat category, but it’s near certain that the remaining 37-seat D-8-100/200 turboprops still in major airline livery will be headed to the desert, too.
Pilot Shortage? How ‘Bout An Aircraft Economic Shortage? Regardless of a “pilot shortage,” the reduction in local air service at smaller communities will be primarily driven by the changes in air transportation economics and the resulting fleet changes they will cause. It’s the amount of revenue they can capture, compared to the costs of capturing it.
The point that a lot of communities is missing (and in some cases, being encouraged to miss) is that scheduled air transportation no longer works in low-density missions. Whether it’s United using a 50-seater to fill in frequency at low-traffic times between Denver and Phoenix, or serving a small airport that doesn’t have enough traffic to fill a 4-door Yugo, the result is the same. The flights won’t be there – because the aircraft are no longer economic.
Replacements – Bigger & Fewer. The re-fleeting into larger 70-76 seat jets such as the E-175 is well under way at these contract lift providers. But it’s clear that it won’t be a one-to-one replacement for retired RJs.
Here’s an eye-opener. BGI analyses of current and expected fleet orders indicate approximately 350 additional 70-76 seat jets – mainly E-175 variants – will enter service with contract lift providers (nee, “regional airlines”) by 2020.
But more than 600 – count them 600 – 50-seat RJs are heading for the scrapper in that same time period. That’s almost ten percent of the current jet fleets in North America. The math is clear: around 250 fewer jets in the “regional airline” fleets. Toss in the turboprop reductions, and that totals to around 300 less units that will be needed.
Point: the “regional airline” space is going to be a lot smaller. The US airline industry will be stronger, but the reach of scheduled service will be to fewer points.
Air Service Access – Plan Accordingly. Another reality that a lot of communities miss – or are being encouraged to miss – is that this is a fundamental and permanent shift. There is no airline cavalry coming to “save” the local airport. There will be fewer aircraft with the economics to serve small airports. Regionalization into fewer airports with network carrier access isn’t coming – it’s already here, and it’s consumers driving it. (Literally.)
As for having connectivity to the national and global air transportation systems, by 2020 the unit capacity floor will be 70 seats. Unless an airport can support at least three flights a day with these machines, it won’t have network, connective air service. That’s a proven consumer reality.
In our dealings with small community clients, we do not dance around this issue. We outline these realities up front. No amount of studies, discussion sessions, market analyses, surveys, ARC data, speed-date meetings, late-night séances, animal sacrifices or cocktail-party rituals (which a lot of current ASD schemes seem to resemble) will alter the hard fleet realities facing US airlines.
Naturally, that doesn’t always sit well. But it is the truth, and trying to recreate the past will successfully lead one there.
The fact is that there will be 300 fewer small airliners in the skies by 2020. The fallout from that dynamic should be a fundamental part of the air service access planning at every community.
Planning For The Future? Give Us A Call. This forecast of US regional airlines is just a part of the research and predictive analytics that set Boyd Group International ahead of other consultants.
Our Global Fleet Trend & Demand Forecast is just part of our analytical capabilities. Combined with Aviation DataMiner™ and our Airports:USA® forecasts, we can deliver enormous predictive analytics for airports, airlines, and financial institutions.
Give us a call.
The Monday Flash – October 12, 2015
Delta Fleet Shifts – Being Asia-Dominant
Delta has signed on to bring in eleven 777-200ERs, formerly operated by Singapore/Scoot. This adds to the 18 current 777-200ER/LRs in the Delta fleet. A largely unnoticed but significant fleet addition.
Tie this to Delta’s mentioned intention to feed China Eastern’s hub at Shanghai, along with their recent request to get back an Haneda slot recently released to American, and there is no question that Delta is going to continue to double-down on Asian growth. Given the expected growth – particularly in China-US traffic – it’s solid strategy.
Delta’s fleet planning bears watching. They have 12 remaining 747-400s, which is a number similar to the 777s just acquired. There’s a good chance that within the next 18 months, there will no longer be any 747s in US scheduled passenger fleets. United is the only other operator, and neither it nor Delta have shown any public interest in the 747-8.
Unlike American and United, Delta apparently is not a big proponent of the 787. It still has 20 787-8s on the books at Boeing, but given that the deliveries are not scheduled for another 4-5 years, it’s not real likely that these may see Delta colors. Certainly, it’s not likely that -8s are in the cards.
On the other hand Delta may be waiting to get performance numbers from the 787-10 and could switch orders. Or, it’s possible that Airbus has already filled that need with the A-350s that Delta has coming..
The US Airline Industry -2020. A Futurist Glance –
Get With The Trends, Or Get Left Behind
Since 1984, Boyd Group International has set itself apart as the leading source of aviation trend and data forecasts.
Our projections have sometimes been counter to at-the-time consensus, and that occasionally tended to draw fire from various corners of the industry – which is always welcome, it tends to bring discussion and further illumination to the subject. A couple examples:
In 1986, in one of our first industry White Papers, we correctly pointed out that code-sharing would be the end of the line for what was then a robustly-growing independent regional airline sector.
Now, that wasn’t real popular with some regional airline presidents who were at the time all enamored with the A-1 or C1R first-class, positive space pass cards they just got from their new major airline partner. But not to worry, most of them were gone in a couple of years. Some just went away, Some sold out to the major. Others, like Trans-Colorado and Rio, simply got kicked out the door, pass cards and all, when the major decided to replace them with another lift-provider.
A few very successfully transitioned into being contract lift providers. But code-sharing eliminated what was once an entire independent airline industry. BGI was the only consulting firm to forecast this outcome from the start.
In 1989, we alone published a White Paper that indicated the value of the then-planned “regional jet.” Although the “regional airlines,” which were the initial customer targets for the airplane, were by then gone, subsumed into major airline systems, our analyses went counter to then-ambient thinking that similar-size turboprops has much better economics.
True, but we noted that an RJ could cover twice the ground in a two-hour segment, opening a new hub-feed opportunities for major airlines. After a slow sales start, the rest is history.
Ten years later, when “everybody” was predicting near=]-unending demand for these machines, our fleet projections showed that the market demand for 50-seat jets was essentially fully met, and in fact the current orders and options far exceeded what the market could absorb. (The Delta system carriers at the time had something like 1,000 of these machines in service, on order, or on option. Never happened.)
Our OEM clients weren’t too excited at the time. But here we are, with he desert filling with run-out small jets.
The 20th International Aviation Forecast Summit – More Insight
At this year’s IAFS™ we again covered a wide range of issues and explored areas that no other event even gets near. We thought we might boil down a few of the issues we covered, and how they will manifest in the next few years.
US Air Transportation Route Structure: More – much more – regionalization of air service access into fewer commercially-served airports.
As we’ll point out, there are three main drivers of this trend: fleet changes, economics of hub feed, and highest and best use of connecting hub real estate.
Besides, despite voodoo-like studies and mystical programs to “lure” scheduled flights to small airports, there simply are no longer the airline economics in existence – or the airlines themselves – to make that happen. Gone.
That means a lot of smaller local airports will lose service in the next five years. It doesn’t mean the community will be cut off, just that consumers will be driving longer distances to access the system. Actually, in many regions, that’s already the case.
Airline Fleets: Write this down: by 2020, virtually all 50-seat jets, all current-generation turboprops in major airline service, and a goodly portion of today’s 70-seat jets will be retired. Gone. Not there. Vamoosed.
For communities that can’t support larger units of capacity, the writing is in the sky, and regional planning approaches are in order.
No, it cannot be reversed. That’s because , as we noted above, it will be the local consumer that’s part of the driving force. When there’s an airport 90 minutes away (more, even) with dozens of flight options, the two or three branded flights at the local airport are non-competitive. Frequency and alternative options in the event of off-schedule operations are foundational consumer requirements.
And if the local flights are with a non-major brand airline with a single-seat airplane, it’s just placebo service – almost nobody will use it, because it typically is non-connective, and non-attractive to consumers.
Again, the only way this dynamic can be ignored is in the fantasy that there are lots of airlines “out there” that can be brought into town, if only the right mystical data can be ginned up to convince the assumedly-nebbish airline planner to see the light. Long before 2020, this fantasy will be replaced with reality.
Yes, there is a global market for new-technology turboprops, but in any case they won’t be in production by 2020.
Airline Strategies. The focus will be on system revenues v cost. Period.
Passenger volume and market share will be secondary to maximizing return on investment. Feed-contribution at connecting hubs will be analyzed more closely. The revenue-value of every gate will be a metric – which means less focus on route-spokes to smaller airports. Point: airlines won’t need that incremental feed if it spills traffic at the hub from larger commercial points.
Alliances: The aggressive independent strategies of carriers such as Delta and Korean indicate that the expected consolidation into three global alliances isn’t in the cards anymore. That would also point to continued and robust global competition.
Domestically, however, as noted, air transportation will continue to be focused at fewer de facto regional points.
Perks: Consumer incentives have value only when an airline has incremental extra product it cannot sell otherwise. That was the case in the 1980s, but with 85%+ load factors and much-reduced competition, the need to give things away free has long since vaporized.
There is no longer a system-wide pool of non-sold seats at any airline. Based on fleet strategies forecast in the 2015 – 2024 Boyd Group International Fleet Trend & Demand Forecast, there are no areas of the globe that are in much danger of getting into an over-capacity situation. That means the need to offer perks will be focused on recruiting specific high-yield consumer segments.
There is no longer the need for frequent flyer programs to ensure brand-loyalty, particularly among any but the highest-yield traffic sectors. Therefore, it makes no sense for airlines to give seats away under FF programs, when they can sell them outright.
We’re seeing it today, with first class upgrades. Major carriers are offering these seats for sale to just about any passenger, for an up-charge. The platinum-diamond-iridium level frequent flyer can just board with their economy seat, because a free upgrade is not in the cards.
International Access. As we’ve predicted, the need for EU carriers to access large non-hubsite airports to feed their own hubs will be a major dynamic. The recent move by Delta to operate RDU-CDG is part of this dynamic – substantial traffic will be flowed to other SkyTeam partners at Paris.
Targets to watch: CVG, MEM, IND, MSY. The particular criteria are strong local traffic and strong road-hub access from industrial regions.
Distribution Channels, The recent move by Lufthansa to add an $18 surcharge on booking from independent OTAs (On-line travel agents) has been misunderstood. It’s not a fee, per se, but is a cost-recovery charge. (We covered this in a session with Larry Ryan of Lufthansa at the IAFS™, by the way.)
This is just the harbinger of a move toward direct airline retailing, as the OTA channel will increasingly be less cost-effective. Just as the need and utility for travel agencies as main retail outlets evaporated 20 years ago, the time may be coming for OTAs as well.
Final Point: the basics of air transportation economics are fundamentally changing. Airports and communities need to identify new trends and plan accordingly. In a future update, we’ll cover the non-airline opportunities that airports will see in the coming decade.
In the meantime, trying to reconstruct the past will successfully got one there.
Monday Flash – October 5, 2015
Some Fleet Notes
The Boyd Group International Global Fleet Trend & Demand forecast is updated on an on-going basis, and is the foundation of several areas of predictive analytical projects we accomplish for our OEM and financial clients. We just thought we’d pass on a couple of emerging fleet trends
- Delta is gravitating to be the sole global operator of this aircraft. Last week, it brought in another MD-90, from Uni Air. Globally, there are less than 7 MD-90s still operating that would appear to be Delta acquisition candidates. The attraction for Delta is that the MD-90 has approximately the operating expense of a 737-800, but with reportedly only 25% of the ownership costs. Since Delta was an original launch customer for the MD-90, it makes sense to bring more into the fleet.
- CRJ-700s are starting to see the same dynamic as the -200 and the ERJ-145 fleets. Lufthansa has pulled down several units – at least two of which have been scrapped. Great aircraft, but time and economics factor into airline fleet decisions. One of the economics – covered below – are the revenue contribution of smaller aircraft.
- The order book for the -700 is now essentially empty, with only one unit apparently on order for an Asian operator. While there is some secondary market demand for -700s, it is very specific and limited. Globally, the secondary market for 50-70 seat jets in airline fleets is equivalent to a litter of kittens. Cute, but not much interest
For companies that seek independent and accurate projections of fleet-related metrics, BGI stands ready to assist. Just give us a call.
More Airline Consolidation On The Way
But It’s Not Brand Mergers
Let’s grab another third rail forecast.
Forecast Prediction: In the next 18 months, the airline industry will see more consolidation.
But it won’t be mergers.
It will be a reduction in major airlines outsourcing flying to small lift providers, a.k.a. “regional airlines.” Majors will be re-thinking their fleet plans and their route systems, and consolidating more flying back in-house from “regional airline” vendors.
There will be enormous fallout on airports, suppliers, and consumers. In some cases, more than what was seen with actual corporate airline mergers.
Tough Times Ahead For “Regional Airlines.” Despite the rosy appearances of future growth, the long-term horizon for small lift providers – typically still mislabeled as “regional airlines,” is getting increasingly cloudy.
We’re seeing a situation where outsourcing of flying will have a declining value to US major airlines. That decline may be a lot closer than a lot of folks might think.
The air transportation system evolves based on economic determinants. Unfortunately, most aviation and financial analysts tend to miss these trends, even though they are sometimes as obvious as a blemish on prom night. The fact is that most of these folks don’t want to look beyond consensus thinking. It’s too risky – they might be wrong.
Here’s a futurist indicator that’s been missed: Take note of the deafening silence from the Delta system in regard to additions & shifts in “regional” fleets.
AA and UA are actively bringing in more 76-seat units to lease to their outsourced lift providers. On the other side, there is a very strong indication that Delta is not following the fleet and operator strategies seen at AA and United. Delta may see the future more clearly than the competition.
Point: The Delta Air Lines 717 program may be the start of an industry trend toward reduction in dependence on outsourced flying. Now, the 717 isn’t anything vaguely related to what are commonly and inaccurately still described as “regional jets,” such as the CRJ and ERJ platforms – but neither is the Embraer 175, which American and United are buying and lease to their outsourced partners.
But that’s just the point: small capacity aircraft are on the way out.
With emerging and evolving airline economics, larger units of capacity are the future of air access across the USA. That erodes the cost-advantage of outsourcing the flying.
Consider some of the factors:
Cost per seat v revenue per seat. As BGI first predicted, the 50-seat jet is economic toast within major airline systems. Costs of operation are a factor, but more importantly – and missed in the miasma of consensus analyst thinking – they increasingly are less and less revenue-effective. What they can deliver to the major airline system is being eclipsed by expense factors beyond just flying the plane from A to B.
End of the incremental feed era. The cost of revenue-capture will be an increasing determinant factor in major airline route decisions, both in-house and with outsourced lift. The once-accurate belief that major airlines need the feed from smaller airports is now myth. In fact, in some cases such feed is just too costly to go after, and too costly to gum up scarce hub resources.
Major airlines today are at over 80% load factors. That means at a connecting hub, with limited gates, the feed from a small community has declining value, particularly when the cost of getting that feed entails spilling traffic from more lucrative destinations.
In regard to the spill-and-recapture issue, we’re actually seeing a distant variant of this dynamic at DFW International. Whatever traffic that’s being diverted to Dallas/Love due to Southwest expansion, it’s being immediately replaced by connecting passengers that were previously spilled due to high load factors at DFW.
In the same way, the “loss” of high-cost feed at a connecting hub from a small airport can easily be replaced with traffic that’s being choked off from another point on the route system.
Outsourced flying will be brought back in-house. Today, with over 50% of United and American flights operated by small lift providers, it’s no longer just a matter of “regional” flying. It’s simply use of smaller units of capacity where they make economic sense.
Despite the lightweights who still cling to the concept that “regional airlines” are just flying to small markets, the hard fact is that an increasing amount of this flying simply is major airlines outsourcing a lot of core-market flying to entities that can do it cheaper than in-house. Or more directly, could in the past do it cheaper.
This is particularly true in light of the fact that a lot of the flying will be in mainline-cabin aircraft such as the E-175 – which isn’t a “regional jet” in configuration or mission application, and since many of them are actually owned by the major partner, they can be taken back.
This is not to imply that all current small lift providers are heading to the happy hunting ground. But the US airline industry by 2020 will be able to support probably less than half the number of outsourced aircraft they lease in today.
Forecast Conclusion: as economics of smaller airliners continue to deteriorate, there will be consolidation of now-outsourced flying back to the major carrier. That’s not going to be pleasant for some “regional airlines.”
Fallout For Airports: Let’s recap the realities: the value of smaller community feed is declining. Major airline systems have less need for it, particularly when the costs of flying small units of capacity are increasing. Fleets will gravitate along these dynamics.
So, for some smaller communities, it may mean loss of service at the local airport. Advice: don’t get scammed by proposals to do jive studies or surveys to “find more airlines.” Taking a hard realistic look at keeping the region connected to the global air transportation system will be far more valuable that chasing off to speed-date meetings to “lure more service” – which is like forming a lifeboat-selection committee on the Titanic. There aren’t any hidden airlines out there. So deal with it and start thinking of air access as regional, not local.
But for many airports, these changes will open new capacity, seats, and access. There are a lot of airports where the current lift is insufficient to meet demand, and a shift from 50-seat flights to 76, 100 and larger seats per flight will be an economic bonanza.
One thing is certain: the structure of the US airline industry as we know it today will be very different in five years. The brands will likely be the same, but the operators will be fewer. It’s consolidation that consumers won’t see in terms of brand-choice, but they will see it in the structure and reach of airline route systems.
Monday Flash, September 28. 2015
The Cuba Air Service Sideshow.
Just Don’t Ask Any Hard Questions.
Talks are scheduled this week between the US & Cuba regarding regular air service.
The media is abuzz, with how much traffic this will be… the tourists, and wow! all the business people rushing down to set up offices on the island.
Of course, few of these stories have even bothered to look at hard facts… like that all the traffic will be US-originated – Cubans at a $200 monthly income generally don’t have the pesos or the permission to leave town.
Business? They Can Do It With The Rest of The World, But Don’t. Then, the stuff about how US businesses will come down in droves. Nobody asked the Cuban government about this… there is no business in Cuba, they don’t want lots of US businesses to come down, and they’ve made that clear. Some journalists can’t hear thunder.
Beyond The Hype… Facts. As has been our tradition, Boyd Group International has taken a hard look, and we’ve come up with facts that tend to deliver a hard downpour of reality on this subject.
When the data is reviewed in light of Cuban government realities, it’s a whole different picture. As for US airlines, beyond more charters, regularly scheduled, open-booked flights are years away. As a normal, scheduled destination – leisure or business, Cuba for the foreseeable future is a dog.
We covered this earlier, but for those who missed it, Click here for some reality.
The “Crush” That Won’t Be There
We thought it might be an idea to check and see what airlines are planning for the US Thanksgiving “travel crush” – the one that tends to fill endless minutes on news shows on the days surrounding this annual holiday.
Typically, most of the media assumes that air transportation is just like the highway system at holiday periods. The roads see enormous increases in volumes of automobiles, so, therefore, according to the usual talking heads in some corners of the media, the skies will also be “jam-packed.”
Which is pure fantasy. Fact: there are only miniscule increases – if that – in the number of flights in the sky only during the two peak days of this holiday, Wednesday and the following Sunday.
Actually the Thanksgiving holiday is a down period, over all. Here’s what airlines are planning for the two weeks surrounding the holiday, compared to the two week period prior…
Over the entire period, there will be fewer airplanes launched – and while the day before the holiday and the Sunday after have very marginal increases – well under 2% – this is not the latter-day airborne Exodus the media tends to describe.
Ignore The Data! Full Speed Ahead. Every year, there are the fill-up-the-minutes stories live from the local airport, documenting the hordes of eager travelers to get on airplanes to see the family. “There will likely be delays,” the reporters tend to parrot, “due to all the extra volume of flights…”
Even some national networks tumble to this. A few years ago, one actually posted a correspondent at the FAA facility in Virginia the day before the holiday, to “monitor and report” immediately as delays began to develop. Didn’t do much for their credibility.
A Great Soapbox For Half-Informed Politicians. The Thanksgiving period is a great opportunity for politicians to get some air time, usually making fools of themselves in the process.
Anybody remember the silly charade put on by the Bush Administration in 2007? “By, golly,” the president read off of cue cards supplied by uninformed staffers, “there weren’t going to be any delays this Thanksgiving.” He took bold steps. None of which made any sense at all, but made great news-bites.
One was increasing the denied boarding penalties – as if that would do anything to clear up the supposed congestion in the skies. Dimbulb. Then, he announced grandly that military air space would be opened for the crush of holiday airliners crowding the skies. His staffers never bothered to note that this space was usually open, anyway.
Another point his staffers – and much of the media – missed then, and still miss today – there is no material “crush” of additional airplanes in the sky around Thanksgiving.
For example, on the Wednesday before Thanksgiving, v other Wednesdays, there will be approximately 1.7% more departures. Like, 400 more across the entire system out of a usual 23,000. A crush this doesn’t make.
Some Airline Industry Realities. One question these veneer media stories never get to is where will all these additional airplanes come from for this supposed Wednesday derby in the sky?
Airlines fully utilize their $40 to $100 million airplane assets throughout the year-they don’t have lots of extra airplanes hanging around. So, when holidays arrive, except for a few extra sections, it’s business as usual. And for the “jam packed” airplanes described in airhead media stories – they’re that way year round, anyway.
No Holiday At All Would Be Great News To Air Carriers. The hit to airlines is not the very marginal increase in passengers on that Wednesday before and the Sunday after, but the days in between – when revenue drops off big time.
Point: Thanksgiving is a period that airlines probably would prefer to do without. But do expect great entertainment from media types that don’t bother too much with digging into hard facts.
Monday Update – September 21, 2015
Small Jet Retirements Accelerating
Over just the past month, 20 additional 50-seat jets have been stricken off US airline fleets.
Analyses of airline trends in the 2015-2024 Boyd Group Global Fleet Trend & Demand Forecast show that this category of airliner may well be mostly out of fleets by the end of 2017.
The Controversy Regarding Government Subsidies To Foreign Carriers
Facts, Not Gadfly Hyperbole
When one side or the other relies on obfuscation to buttress their points, it’s a pretty good indication their position is weak.
That’s pretty much the case with the controversy regarding whether carriers from the UAE are receiving unfair government support, which isn’t allowed under Open Skies Agreements.
A while back there was an idiotic report that announced that it had uncovered US government data “proving” that US carriers were hypocrites and had received billions in government subsidies. Therefore, the complaints from AA, US, and Delta were simply bogus, and were thinly-veiled attempts to torpedo competition. Unfortunately, the “report” was concocted nonsense. It went back to 1918 and counted in things like mail contracts in the 1920s to airlines that no longer exist.
That did not bolster the credibility of the UAE carriers, which by the way, did not make the mistake of actively embracing the silly report.
Then there are the claims that US carriers want to cut UAE carriers out of the US market to eliminate competition. This is often accessorized by the claim that since UAE carriers’ service is so customer superior, US airlines are losing traffic and want to engineer this issue to just cut out pesky airlines that supposedly have more lavish food and in-flight service. That sounds nice, but whether the appetizer on board is Beluga caviar, or something that looks like it came from a can of Alpo, has nothing to do with this issue.
It simply and clearly is whether these UAE carriers are getting government support, directly or laundered, which in turn allows them unfair advantage in flowing traffic to and from the US.
The issue is simple: If these UAE airlines are getting unfair government support, then they should not be granted full Open Skies access to US points. It’s not about these US carriers trying to do away with Open Skies, which they actively have supported. It’s simply whether these carriers in this specific case, are getting unfair subsidies. Period.
And, all the US carriers are asking for is that this matter be officially considered and investigated. One might think the UAE carriers would welcome this, simply and directly.
At the 20th Boyd Group International Aviation Forecast Summit, this subject was explored in an incisive discussion session with Ben Hirst, Delta’s EVP Corporate Affairs & Legal Counsel. The intent was to clear the air for the hundreds of aviation leaders in attendance. The arguments – and the actions requested by Delta and its airline colleagues are clear, well-supported, and rational. It’s more than a difference of opinion – it clearly appears that there are mechanisms used by these carriers’ respective governments that translate into financial support.
Now to be clear, there is nothing wrong with a government financially-supporting the national flag carrier. It’s just that in such case, it makes the playing field unlevel for US airlines, and that would indicate that the Open Skies agreement should be modified or cancelled, and revert to bi-lateral negotiation to fly to points in the US.
By the way, invitations were sent to all three of the UAE carriers involved to join us at the Summit. All three declined to participate.
This Week’s Update
Hot-Button Aviation Issues…
At the 20th Annual Boyd Group International Aviation Forecast Summit, attended by over 400 industry leaders, a series of pre-event workshops were held, covering key hot button topics that will be increasingly front and center to aviation planning.
While the actual presentations at these Workshops will be available shortly to attendees, we thought for the next couple of weeks it would be an idea to discuss the issues these topics represent.
Privatization of ATC… Not So Fast
Exactly What’s Being Privatized?
Recent suggestions to move the air traffic control system out of the bungling hands of the FAA and into a semi-private management structure have made headlines.
But as outlined – or, non-outlined, it’s a bad idea. For now.
The major reason is that it hasn’t been thought out. And the real problems have not been addressed. The calls for privatization assume that a quasi-public, non-profit structure will be more efficient, particularly, according to the media – in implementing “NextGen.”
That’s exactly why, as proposed, this is dimbulb. It doesn’t address the real issue, which is a 1960s mentality and approach to managing flights across the skies.
Makes A Good Sound Bite. But It’s A Long Way From A Meal. Rep. Bill Schuster (R-PA) is the congressional sparkplug for privatization. Here’s what he said last June:
“This will insulate the ATC operator from events like sequestration, agency closures and government shutdowns…Taxpayers will benefit from the operating efficiencies created, and I believe annual savings will be in the billions of dollars. And we’ll stop wasting billions more on failed modernization efforts that have over promised and are over budget.”
This rationale is exactly the reason that the current proposal needs a lot more meat on the bone than just getting ATC out from under direction by incompetent political appointees.
First, what exactly are the “operating efficiencies?” To be certain, just about any system would tend to be better, but without specifics on the mechanics, just assuming more efficiencies isn’t enough. Specifics, Congressman. The management structure… the qualifications of staff, etc. Funding – more taxes on the consumer. Costs?
And it sounds great about the “waste of billions of dollars” on failed modernization efforts. That is a true statement. But unless there are clear, new and aggressive programs ready to replace the failed and politically-fraudulent “NextGen” fiasco, you can bet that it will remain as the goal of a privatized ATC system.
Another problem is that the privatization as outlined doesn’t solve the #1 reason for off-schedule flights – and that’s the lack of airline control over its production lines. Today, with the current system, it’s mostly “fire and forget” – between the time the plane leaves the departure gate until it parks at the arrival destination, the airline cedes control to the FAA – which we know is not competent to direct it efficiently.
As was pointed out at the ATC Workshop at the 20th Annual International Forecast Summit, the technology and equipment exist today – right now – for a true Free Flight system where airlines make the decisions about how their flights get through the sky.
‘Course, that brings up the usual gadflies that will immediately counter that Free Flight will be a recipe for disaster. Wrong. Again, the technology is there, and a true Free Flight system (not the jive that the FAA has been passing off as free flight, by the way) can be accomplished safely.
And all that points to one thing: as proposed, privatization is not the solution. Unless the problems of the FAA’s klutzy management are clearly identified, and new management mechanics clearly developed, all privatization will do is change the name on employees’ pay checks.
About NextGen. This has become a modern-day Emperor-Has-No-Clothes dynamic. Ya see, “everybody knows” NextGen is “the solution,” and anybody that doesn’t see that is a dunce. That’s what the cognoscenti will tell you, as well as the here-and-there usual suspect wind-up toy national reporters the FAA can rely on to spout the party line.
But “it’s satellite-based,” the medial parrots, without a clue about what that means. “It’s a whole new approach,” they tell us, repeating like good little followers exactly what the FAA PR hacks have told them to say. “Planes will fly more efficiently,” they trumpet, with zero data or other proof. Then there’s the best one of all: “NextGen will give airlines smoother landings…”
All that notwithstanding the fact that the NextGen emperor is buck-naked when it comes to things like deadlines missed, costs escalating, and things like GAO reports pointing out that NextGen, if it ever does get done, is “non transformational” – read: more of the same, not a breakthrough.
But none of the media entities that go groupie for the FAA ever – ever – check to see whether their source, the FAA – is accurate. Of course, the fact that between 2007 and 2014, airline flights decreased by 15% annually, yet delay performance hardly moved the needle is not to be discussed. See, for a lot of the media, if they get an audience with the FAA Administer, do some walk-and-talk B-roll, that’s all that’s needed for the sunshine to flow on the evening news, although the public is being fed inaccurate garbage.
Note that while Congressman Schuster mentioned failed programs and wasted money, he didn’t repudiate the FAA’s incompetent NextGen bungling. And neither has the airline industry, either.
Privatization at this stage of the discussion isn’t going to fix the real problems.
Monday Flash September 14, 2015
Filling The Cockpits of The Future – The Pilot Shortage
The accident in Buffalo a few years ago set in motion changes in pilot training requirements that have had severe unintended consequences in several areas of the airline industry.
Communities are – repeat are – losing air service. But it ‘s not just rural EAS airports – most of which don’t generate enough traffic to affect the nation – that are victims. Mid-size communities are losing some or even all of access to carriers’ connecting hubs. That means less access at the local airport.
The Incentive Was Job Advancement. Historically, the potential to build hours at a small airline at low pay meant that eventually there would be an opening at a major airline. This in effect “subsidized” the operations of small lift providers. The reward of an entry to a major carrier was what made up for the low entry pay.
Entry salaries were and are clearly low, but increasing them would make small lift providers (often still inaccurately referred to as “regional airlines”) less able to meet the financial needs of their customers, the major airline systems.
That begs the point of whether the US airline system can deliver the reach and capacity it currently does. If pilot pay were high enough to recompense prospective pilots for the enormous extra costs of building 1,500 plus hours, the question is whether that torpedos the economic viability of key sectors of airline service.
The core reality is that, while there could be better ways of both assuring more competence in the cockpit, along with assuring that the pilot profession is financially attainable, the current 1,500 hour rule will not be changed.
Indeed, it cannot be questioned. Any suggestions regarding other approaches are met with FAA silence, and angry attacks from certain quarters hovering around the industry. Those who may raise questions have even been referred to as “snakes in the grass” – which gives a good indication of the intellectual level of the discussion.
Therefore, we likely will be seeing structural changes in the scope of US airline domestic networks over the next five years.
The realities are these: Historically, entry level compensation in the pilot profession has never been particularly lucrative. But the potential for advancement was strong, making the “investment” in low initial income attractive.
Today, this has changed. The ill-imposed and poorly thought-out 1,500 hour rules make qualifying for jobs at least a quarter million dollars more expensive, yet entry compensation is still low, and the “regional carriers” that are now the main entry point to the profession do not have the revenue streams to up salaries. Their business model just cannot support it.
This means that the services these “regional airlines” – small lift lessors – provide to major carriers would need to be much more expensive to the major airline customer, which in many of the applications of their product will eclipse their economic value.
Simply stated: in many cases, the costs of providing the lift for major airline customers will exceed the economic value of what it can produce.
Conclusion: The air transportation system in he US will undergo a major change in its structure and in the networks operated. The bar for air service at mid-size airports will go up, and some of that service will simply go away.
Mostly, it will be in the form of frequency. But for small communities trying to re-establish or build viable scheduled network-carrier access at the local airport, the game is over.
The Topekas, Chicos, Muskegons, St. Clouds of the world will need to accept that the automobile is now a more important part of accessing air transportation to and from the rest of the world. Network carriers in the future simply will not have aircraft resources that can fit the market.
Communities will need to re-visit their transportation planning, because air service at the local airports in many cases is going to be a thing of the past.
Regardless of any speed-date meetings, ARC data or ASD voodoo, the economic realities will prevail.
Next Week: Why Air Traffic Control Should NOT Be Privatized. Yet.
Summit Update: Presentations will be posted for attendees next week. In the meantime, the opening Forecast Mapping Session can be viewed by clicking here.
Monday Flash – September 7, 2015
In Observance of US Labor Day, this week’s Flash is posted September 8.
The 20th International Aviation Forecast Summit
The Biggest & Most Comprehensive Yet!
We outlined some of the excitement of the 2015 IAFS on the Home page, but we again want to thank our hosts, the Las Vegas Convention & Visitors Authority, and McCarran International Airport – as well as the over 400 attendees, speakers and sponsors, for making this the most exciting International Aviation Forecast Summit in our 20 year history.
We want to also express our deepest appreciation to Clark County, Nevada for the honor of the Proclamation of August 31 as Boyd Group International Day In Southern Nevada, in recognition of our 20th Summit.
Over the next few weeks, we will be posting key forecast findings from the Summit. Traditionally, we start the Summit by outlining the dynamics and trends that the Summit will be exploring at the various sessions.
While we sort through the enormous amount of data and information, we’ve in the meantime posted this Opening Forecast Mapping Session. It’ll give a good idea of what this year’s Summit was all about. Click here to download.
More in the coming weeks – and there is a whole lot more.
China Visitors – The New Opportunity For US Airports
The first China-US Aviation Opportunities Symposium in Las Vegas spent whole afternoon of August 29th exploring the future for Chinese visitation to the US and what airports and communities need to do to assure their share of this huge market.
The Symposium Team was comprised of Chris Spring of China NiHao, Mary Kane of Sister Cities, Ed Fuller of the US Travel Association, and Michael Boyd of Boyd Group International.
This sector is not just more tourists from afar.
The size and financial scope is every bit as important to mid-size and small communities – and their airports – as is recruiting more air service. That’s because it can represent enormous new revenue opportunities for incumbent carriers, and enormous new economic impact as well.
Let’s Look At Some of The Data Points From The Symposium…
– Two hundred percent in the next 60 months. Seven hundred percent by 2025.
Those are the growth rates forecast for Chinese visitors to the US – in raw numbers, that’s from 2.2 million in 2014 to 6.6 million in 2020, to a whopping 16.8 million in 2015. And these forecasts, developed by BGI and its partner China NiHao, are felt to be conservative – for some of the reasons below.
– Thirteen Billion Dollars. Thirty Billion Dollars.
That is the “spend” of Chinese visitors to the US in 2014, and the estimate of what it will be annually by 2020. No foreign visitor group spends more per person.
That’s the estimated consumer spend of a single 50-member tour group from China.
– Elmira. Buffalo. Mystic. Hershey. Bozeman.
These are places that currently have substantial Chinese visitation – they’re eager to see a lot more than just Disneyland. In the case of Elmira, one third of all visitors to the Corning facilities are from China.
The point is that while today most Chinese visitors tour the interior US by motorcoach direct from the nonstop gateway, increasingly they will make up substantial connecting traffic to secondary US cities.
– 44,000 In. Only 25,000 Out
That’s the number of China-generated arrivals at Boston in 2014, and the number that returned to China from that airport. See, Chinese visitors are not “O&D” traffic. They tend to travel within the US, and depart from airports other than where they arrived.
– Eighty Percent, Two China Gateway Airports
That’s the current percentage of Chinese visitors that are from just two airports – Beijing and Shanghai. This means as nonstops increase from other large cities in China, the number of visitors will skyrocket. Nonstops, by he way, have been added in the last year from four other cities.
– Fifty-One Percent. Sixteen
That’s the percentage of visitors from China that are now arriving on B-registered airliners – i.e., Chinese carriers. That number will grow in the future, but the number of US nonstop gateways will likely stay at around just 16, due to local population and airline structure.
Remember, Chinese carriers have US code-share airline partners. Monitoring schedule connectivity at the nonstop Tier-One hub with your airport will be critical as a part of efforts to attract Chinese visitors to use a regional airport as their tour gateway.
– Looking For Love In All The Right Places. Get Related With A City In China
Mary Kane, CEO of Sister Cities, discussed how Chinese cities are eager to build relationships with US communities. In fact, Sister Cities can set a US community up with a compatible partner in China, comparing economics and demographics and other metrics. As one example, President Xi of China, on his last visit to the US (when he was still VP) adjusted his itinerary to include a small town in rural Iowa. A little known fact is that the top leader of China was once an exchange student in the US Midwest. It is this type of one-on-one outreach that will build travel and business relationships between our two nations.
– Lexington, Bangor, Colorado Springs, Tucson, New Orleans
These are just a few of the airports identified by BGI and China NiHao as being emerging connect air gateways as Chinese visitation increases. Today, the typical model is group movements into the nonstop-served hub, and then motorcoach touring from there.
Analyses of key tour regions in the US have identified a number of secondary airports where Chinese travelers will air connect into. Example: Bangor accesses Acadia National Park and the Maine coast. Lexington is a strong leisure gateway due to the horse industry and distilleries. (These are not hypothetical – they are examples of destinations that tour operators are pursuing.)
There are a number of cultural planning issues that must be addressed at these smaller airports to make this happen, but that can be addressed cost-effectively with a professional China-Welcome™ program.
– Outreach Is Welcomed At Chinese Tour Companies
Chinese tour operators and travel companies are eager to develop new travel venues and travel patterns as products to sell to eager Chinese consumers.
That means that a clear and professional analysis of the potential leisure points in an airport’s region, and an organized approach to these travel-aggregators can put a community well ahead of the competition.
Chinese visitors have specific travel expectations, and tend to go to destinations that meet these convenience and cultural expectations. This is critical in developing a China Plan for communities and the airports that serve the region.
At the Symposium, Ed Fuller, former president of Marriott Hotels, outlined a range of these modifications to the hospitality product. None are expensive, but the availability of things such as tea and slippers are huge items. (Slippers are not a luxury item. Chinese do not walk around barefoot – it has to do with traditional Chinese medical philosophy. Therefore, these are one of the must-have items for hotels to be China-Welcome.)
Chris Spring of China NiHao discussed other aspects of being China-Welcome™ such as acceptance of UnionPay – the largest credit card in China. Mike Boyd outlined how airports and communities can anticipate and inexpensively modify facilities to make visitors from the Middle Kingdom feel welcome and anxiety-free.
Point: if the destination and the airport are not China-Welcome™, the travel aggregators and tour operators that make the decisions will book their clients elsewhere.
It’s what is now possible for any – repeat, any – US airport and community, without the need for a bond issue to pay for it. BGI and China NiHao have developed a range of cost effective China-Kits™ that are tailored to the specific types and levels of expected and planned Chinese visitors.
Looking To The Future – Then Give Us A Call
As the potential for recruiting more air service continues to decline at many airports – not a popular comment, but we don’t hesitate to state the facts – the need is to pursue new and innovative revenue streams.
Boyd Group International has an unrivaled track record of identifying emerging aviation trends. The opportunity for entire regions of the US and the airports that serve them should not be underestimated. Remember, in 1960, nobody expected that Japanese cars would dominate the auto industry, or that Brazil would host one of the four largest aircraft manufacturers in the world. Or that there would be over two million Chinese visiting America.
BGI and China NiHao have crafted a range of programs that can assist in turning this emerging opportunity into economic impact for communities and airports across the US. So, if you’re interested in getting ahead of the competition for this business, give us a call.
Finally.. 14 Years After 9/11…
This Week, We Remember The Victims of 9/11…
Clearly, The Politicians Don’t
This week, we’ll be seeing the 14th anniversary of one of the most egregious government failures in American history.
And we’ll see the stories in the media, too many lauding how far we’ve come, with the one or two usual-suspect network correspondents (they stick out like hookers at a Baptist picnic) reporting on-camera about how much safer we all are. Soviet-era Pravda would have been proud to have these sycophants on payroll.
Today Is A Mirror Image of September 2001. The fact is that today, airport security is almost a dead-ringer repeat of the months before 9/11.
Brian Sullivan – who was an FAA security Red Team member in 2001, and who repeatedly warned FAA management about sloppy screening at Boston before 9/11 – has published a narrative of where we were then, and where we are today – and particularly how the 9/11 Commission was careful to cherry-pick the facts.
Read Brian’s Article, and anyone who isn’t disgusted and angry had better take some time off to review their value system – including the folks in the media who might be right now polishing up their sunshine pieces on the management of the TSA.
Monday Update Archives May – August 2015