MONDAY FLASH – INSIGHTS AND PERSPECTIVES
February 20, 2017
First Off This Week…
Congratulations To St. Vincent & The Grenadines!
Argyle International Airport Is Now Open!
– A New Model For Infrastructure Development
It’s a nation of just 105,000 people – Toledo, Ohio is more than twice that size. But this small nation has just set a new model for building much-needed infrastructure in developing nations.
It was also an economic imperative. The lack of an intercontinental airport put this nation of 32 islands behind the curve in attracting tourism and economic investment.
From scratch, it meant tearing down mountains, levelling valleys, and constructing a state-of-the-art terminal and a 2,740 meter (9,000 ft.) runway. Even a time-consuming project to preserve some ancient petroglyphs discovered in the earth moving was part of what airport planners faced.
A daunting project. But Argyle International Airport is a reality.
Aircraft from Toronto, New York and from within the region set down on February 14 for the operational opening of the world’s newest airport.
A New Model For Infrastructure Planning. The nation of St. Vincent & The Grenadines set a new model for infrastructure expansion. As a small nation, it had limited resources. So it built a coalition of countries – from Taiwan to Venezuela – to participate in the project. They even had assistance from Argentina and Egypt in regard to preserving the petroglyphs.
At Boyd Group International, we are proud to have worked with St. Vincent & The Grenadines in areas from market planning to developing budgets and financial projections. And, we’ll be continuing to work with this innovative nation in facilitating additional air access in the future.
Trend: London To Be Next “Core” Hub
For Large US Non-Hubsite Airports…
… & Whole Regions, Too
One of the dynamics we’ve seen over the last three years is the opening new long-haul markets made possible by new generation airliners, particularly the 787.
United, as one prime example, has been able to access feed for its SFO hub from second-tier cities in China, using 787-8 and -9 aircraft.
The Invasion Is Coming. Now, that same dynamic will be coming to America. Over the next 36-60 months, large US non-hubsite airports will increasingly be in the cross-hairs of EU carriers looking for additional feed for their connecting hubs in the EU and the UK.
At BGI we outlined this trend four years ago. Since that time, we’ve seen British Airways add Austin and New Orleans to their route map, with more in the pipeline.
Whole New International Travel Patterns: So Tune Up The Chevy. At the International Aviation Forecast Summit, August 26-29 in Las Vegas, we’ll be covering the factors that carriers such as BA, as well as US members of alliances look at when considering a US spoke city to feed traffic to hub across the Pond.
These are a whole lot more than just population and local demographics. They involve factors pertinent to the logistics of the global economy. Traditional ASD forecasting methodologies, miss these entirely.
Speed. And It’s Not Always Using The Local Airport. A key factor in the global economy is speed of communication. That includes the communication modality of air service, based on total travel time. In many cases, the entry of nonstop access to a UK or EU hub will change international travel patterns in entire regions. Domestic won’t be affected, but when going international, the time and convenience factors will shift.
Hint: A two hour drive to New Orleans to take the BA nonstop to Heathrow is likely more time-efficient than the local airport to utilize a connecting flight through ATL or DFW or IAD.
Smaller Airports: The Key Is Harmonization With The New Dynamic. In effect, the de facto international gateway for many smaller communities will be at these larger points – such as New Orleans, Indianapolis, Memphis, and Columbus.
This will have a shadow effect on regional airport traffic – one that communities need to prepare for, and develop strategies to make this new and somewhat distant international service compatible with their air access planning.
Point: the time-efficiency of the automobile will be a factor in where consumers chose to start an international journey.
Join Us For A Grasp of The Air Service Future. This, along with other dynamics we’ll be covering at the Summit, will be a core factor in the changes in international travel patterns and modality in regions across the US, but particularly in the industrial Midwest.
Early registration rates are in effect – and they represent greater value than any other event. So click here for more information and to reserve your space.
February 13, 2017
The Future of ATC:
Time For Some Facts… Instead of FAA & Media Lore
As BGI has done for the past 22 years, we’re going to talk heresy about the air traffic control system.
Yes, we know that “everybody” is supporting the FAA’s program – one that’s been in a mud-wallow for 20 years, and has been re-monikered as “NextGen. All the media and Washington cognoscenti supports the new, satellite-based NextGen. It’s the future, see?
Despite the fact is has a rap sheet of failure longer than I-95.
Another Presidential Meeting… Will This Time Be Different? Last week, airline executives met with President Trump. The ATC system was a key subject.
Today, the outdated air traffic control system is a major cost factor for the air transportation system… without question, it is a stealth barrier to air service in the US.
So the outcome of this meeting will be important to airports across the country.
The grand upshots of the meeting, at least so far: Yup the system is obsolete. Yup, it needs to be fixed.
So Far, So Good. This was the same stuff that came out of photo-op meetings during both the Clinton and the Bush administrations. When the cameras stopped rolling, it was back to business as usual at the FAA.
What was not clear this time was whether anybody in the room clearly understands how the air traffic control system got into this mess.
What is apparently clear, however, is that at least now there is a President who understands business, and understands and can recognize management incompetence. The program is the varsity team of performance failure. And excuses.
We can hope.
Attention Media… Okay. Time To Pop The NextGen Bubble.
Please do the flying public a favor and get some background before filing the story on the glowing wonders of NextGen.
Here are some factoids regarding the ATC system that folks in aviation need to understand.
No, The Skies Are Not Increasingly Crowded. The assumption is that the workload is going up at the FAA. Not so.
Here’s another fact that gets lost in the expensive PR put out by the FAA. In 2016, there were 1.52 million fewer flights in the sky than in 2007. That’s almost 16% down.
So, despite all the money spent, as well as a huge reduction in the number of airliners hurled across the sky, NextGen hasn’t delivered results.
Even With Fewer Flights, There Hasn’t Been Real Progress. To be sure, some equipment has been replaced. Some new procedures have been implemented. But here’s a fact that swooning network correspondents may want to consider… the rate of “on schedule” arrivals today is no better than it was in 2008.
DOT IG And GAO Studies Tell A Different Story. Repeated documents from these offices reveal that the NextGen program has poor leadership, unclear goals, and does not represent a sysem that’s transformative compared to that of today.
No, It’s Not A Funding Problem. It could be at some point, but the reasons that NextGen is so devoid of results and a champion of missing deadlines is due to management indirection, according to the GAO. Folks spouting that it’s only a matter of funding don’t know what they are talking about.
Privatization Isn’t The Silver Bullet. The core of the calls for “privatization” are based on the false assumption that freedom from the cloak of government will unleash the wonders of NextGen. It might. But not if the same senior management now in place are retained.
Satellite v Radar Based. This is a comment tossed out to the media, who jump at it like trained seals going for a dead fish. Somehow, this calms the reporters into believing that this is the core part of the solution. It’s not. It’s the communication link. Not the management system.
No, NextGen Isn’t “The” Answer. When repeated GAO reports tell us that it’s a management and planning problem, why would any reporter do a sunshine walk-and-talk B-roll with the FAA Administrator, instead of getting more than pap to report? And how come so many people are still bamboozled into thinking that NextGen and ATC modernization are the same thing?
The truth is that NextGen is a program that the FAA has monkeyed with for the last 20 years, and has been proven to be one that’s mismanaged, and as mentioned above, isn’t “Next” anything.
NextGen is a scandal… but one that has immunity from any hard scrutiny. The group-think in the Washington Alphabet groups needs to be brought into reality.
Maybe this will change under Trump. A clear indication will be the actions of the new Secretary of Transportation. She needs to enter the building with a clear plan, not an “open mind.”
This situation needs immediate action, not discussion.
February 6, 2017
Let’s Talk International This Week
As our Airports:USA® forecasts have indicated, internationally-generated travel, direct and indirect, accounts for over 30% of US airport enplanements. And it is growing.
Every region of the United States is dependent on the global economy, and the #1 regional objective should be enhancing access from the rest of the globe.
Today, we’re going to cover a couple of emerging issues that will affect airport strategic business planning.
The IAFS – Get Ready To Do A Captain Kirk
We can’t talk about international without bringing up the #1 annual aviation event – the International Aviation Forecast Summit.
Every year, we go where no other conference dares to go.
When we use the term “international” it’s not just about aviation trends outside of the US. That’s because the US is part of the global economy.
That means communities such as Mobile, Charleston, Saginaw, Golden Triangle, MS, just for starters are part of the international aviation picture. Even places like Kerrville, in the beautiful Texas hill country, is now a part of the global economy, with an Asian owner resuscitating Mooney Aircraft.
And the international aviation economy isn’t like our host, Las Vegas, where what happens there, stays there. What happens in Frankfurt and Sao Paulo and Guangzhou doesn’t stay there – it can reverberate across the American aviation economy.
This year, the IAFS™ will be looking at the following trends, among others. The format is one where we discuss these threads individually with aviation leaders from all industry corners.
Issue: A Consolidated Air Transportation System – the US air transportation system will continue to shrink in “reach” with other modalities taking up most of the vacuum. Longer ground access modalities to air gateways are just one factor. In many cases other forms of communication will fill in for air access – yes there are places where air service at the local airport won’t work..
Issue: New Fleets. The fleets of 50-seat jets are continuing to be retired. In markets where they are replaced by larger aircraft the trend has generally been to generate more traffic volume. But they are not one for one replacements… which will again lead to more regionalization of air access.
Issue: Airport Strategic Planning. There’s a whole lot more to airports than just air service. Airports will need to accelerate long-term economic growth planning – and in the global economy, that means looking international as well as local for investment.
Issue: The Emerging Parallel Airline Industry. The model used by Frontier, Spirit and increasingly, Allegiant have essentially created a new utilization of airliners. Instead of flying to meet market demand, the application is to offer air transportation as a new alternative to other modes of discretionary spending. How AA, UA and DL will respond to this will affect yields, traffic levels, and – watch, earnings.
At the IAFS, we’ll be getting the perspectives of individual airline CEOs and senior executives on these and a lot more trends facing all areas of the industry.
Real Data. Real Forecasts. Our repeat attendees at the IAFS™ will support our contention that if you can attend just one industry event this year the Summit should be your choice. Issues such as these are not addressed within the usual politically-correct manner… we take them apart and explore how – and if – they work.
So clear your calendar for August 26-29, and join industry leaders from around the globe at the Wynn Las Vegas. Early registration is now in process.
China Airports: Heading For A Billion Passengers.
And It Will Affect Heartland America.
We are now in the process of revising our Airports:China™ data for 2016, and generating a forecast for China-US traffic demand in 2017.
Official CAAC data will not be published for the next several weeks, but our analyses indicate that between 2014 and 2016, airport volume was up nearly 20%. There is a message here for futurist planners at US airports and communities.
The logical question is, simply how does airport growth in China affect any US airport?
The answer is that China-US travel will be the single strongest new set of traffic flows into American in the next five years, and many of these airports in the Middle Kingdom will be supporting additional air access to points across the US.
Our forecasts indicate at least half a dozen additional Chinese cities can and will be able to support nonstops to the US in the next 36-48 months.
Just looking at the top 10 Chinese airports for 2016 – there are several take-aways that are important to airport strategic planning in the US – from large hubs on down to regional gateways. The growth is phenomenal in many cases… Kunming, for example has exploded over 25% since 2014.
Getting Toward The Billion Mark. First, our data indicate that China’s airports will handle between 988 and 996 million passengers in 2016. As with US airport data, these are basically enplanements and include connecting traffic. However, the current structure of the Chinese air transportation network is very highly focused on point-to-point travel.
That’s the nature the demand base in China – the population centroids are so large, there is strong demand that doesn’t require the level of traffic aggregation that is seen at the majority of US markets. It also contributes to high levels of airside congestion.
Volume. Volume. And More Volume. Indeed, Beijing alone has approximately the same passenger volume as ATL and LAX combined – 92 million, and again a much higher percentage at PEK is local traffic. From there, the next six Chinese airports handle more passengers than any US facility.
Capacity – Not Just Airports, But Seats. The Airports:China™ data indicate that the top 50 Chinese airports – which account for 92% of all traffic – had an average of an 86% load factor in 2016. Indication: plenty of demand for more seats and more aircraft… particularly to the US and the EU.
Year 2017 is unclear, with the expansion of several Chinese airlines into international markets coming into play, particularly at Tier Two airports.
Boyd Group International, in its consulting work assisting airports and communities in competitively preparing to attract service from emerging international Chinese airlines, has identified at least half a dozen potential new nonstop-US destinations in China. The good news is that they’re are all in the Second Tier category, which makes route approvals much less of a barrier compared to PEK, PVG and CAN.
Don’t Get Sidetracked By Political Posturing. Sorting through the new trans-Pacific political rhetoric, the fact is that the economies of both the US and China are now joined at the hip. They need our markets, and we need their goods. That won’t change. Nor will the enormous demand generated in China to visit the USA.
China respects strength. What is being developed, despite the political dancing, is a new framework for the US-China relationship.
Plan For More Chinese Carriers Landing In The USA. As was forecast at the first China-US Aviation Opportunities Symposium in 2015, more the 50% of all traffic between the US and China is now on B-registered carriers.
Plus, there are at least six more domestic Chinese carriers that are planning on international growth. And the A-330s on order won’t be just for tourists to Taipei, either. The US is the prime market, and the emerging trend is for Chinese visitors to air-connect from the gateway to interior US cities.
Chinese Visitors & Business Will Be Headed For The Interior. These carriers will be accomplishing more code-sharing agreements with US airlines, both within and outside of alliance partners. This means more access to secondary US points.
As just one example, our forecasts indicate that the code-share between Alaska and Hainan will feed as many as 400 additional Chinese visitors to Spokane.
Not a lot of people, but a whole lot of economic impact for the Spokane-Coeur d’Alene region – the average Chinese “spend” on a US trip is over $8,000. If they stay in the region just three days – which is likely – that’s a direct spend of nearly half a million dollars to the local economy.
The Traffic’s A Jump Ball. Needless to say, it will be the airports and communities that prepare and have surgical outreach to the China market.
BGI and its partner China NiHao, LLC are working with a number of clients to craft China-Welcome™ programs tailored to their specific situation.
Chinese Don’t Cotton To Amateur Acts. A boiler-plate-appearance airport website (and that’s what seems to be the new trend) with a mechanically-generated Chinese language button is a superb way to tell the prospective Chinese visitor that the community doesn’t care. That’s because these translations tend to be amateur, and unfocused.
Indeed, one of our partners at China NiHao is the #1 generator of Chinese tours to the US, and this – a mechanically, or heaven forbid, a Yahoo Chinese-translated website – is a red flag when planning itineraries to points across America.
Putting In Context. This is not hypothetical. It is not a passing phase. There will be over 4 million Chinese coming to visit America in 2017, and it’s all of America they will be seeking to see.
Not only is attracting Chinese leisure traffic important, but communities and their airports that prepare will have the competitive edge in attracting burgeoning Chinese business investment.
For more information on how your region and airport can get a higher profile for this traffic, check out the China NiHao site for more information.
Finally, Cuba. Again In Aviation News
A Trump Policy Change Might Represent A Temporary Relief
There’s concern that the Trump Administration may be looking at altering the US-Cuba policy inherited from the prior administration, including, probably, air access agreements.
As Boyd Group International has pointed out – within the vacuum of intelligent media reporting on the subject – the travel bonanza between the US and Cuba is years away. Years, even if the current regime goes out of business right now.
While it’s not politically correct to state the truth about the island nation, the fact is that the place is still a worker’s paradise of a trashed economy, near zero business base, and even less attention to free speech.
This doesn’t mean that Cuba route authority isn’t valuable for the future. But the babble from the travel industry about “pent up demand” is nonsense. One word: infrastructure.
Once Again: A Reality Check. Truly amazing in their breath of non-information on the subject are the airhead articles on the huge flow of American products that will be on the way to Cuba as soon as the US embargo is lifted.
Really? If Cuba can’t afford to buy much from Korea, Canada, China, France and the UK, what leads anybody who’s awake and sober to think that they’ll suddenly have the money to by US goods?
Point: Cuba is not yet travel-ripe.
In fact, by the third quarter of this year, plan on a lot of the awarded capacity to be in line for cutbacks.
To be clear, it’s important for US carriers to be in place for when Cuba shifts into an economic system the generates economic growth, a fee economy, and can generate traffic from both directions.
But in the meantime, we’ll say it again. If an airline planner suggested a domestic route with the characteristics of places like Santiago, Holguin and Santa Clara, his or her next career move would be out the front door.
So, maybe a Trump slowdown of the air service process might be a blessing in disguise for some US carriers.
January 30, 2017
Air Service Access…
It’s A Whole Lot More Than A 737 At The Gate
At BGI, we have been pointing out that a lot of the avenues pursued in traditional “air service development” approaches are not only obsolete, but they are founded on airline and air transportation systems that don’t exist.
The point is this. Today, we have a very defined and very clear air transportation system. The players that may be interested – or not interested – in a given market are not a mystery. But much of the ASD programs are based on the belief that there are unnamed airlines that can bring service to a community, if only the right data is developed.
Furthermore, they assume that “scheduled flights” are the same as “air service.” They are not, unless they provide air access to and from the rest of the air transportation system. As we’ve noted before, a couple of flights on a Cessna 208 to Nashville, operated by an independent operator isn’t access. It’s usually an effort to carry mostly sailboat fuel.
At the 21st Annual International Aviation Forecast Summit last September, we held a Workshop on Patton-like Air Access Planning.
The point was the same as the General’s: make plans to fit the circumstances, instead of trying to ignore circumstances. In war and in air access planning, to do otherwise won’t lead to success.
We’ve just witnessed the fallout from one such attempt.
Emotional Planning = Expensive Outcomes. According to press reports, Newport News International Airport just got hooked to pay off a $4.5 million defaulted loan from the defunct PeoplExpress fiasco.
That’s $4.5 million bucks. All for a couple of weeks of sloppy service to places without much traffic demand, on a leased-in operator that had the reliability of a ’54 Nash.
The shame is that Ray Charles could have seen this coming.
The airport’s guarantee for the loan was made in spite of the fact that the “airline” was reportedly in arrears to the IRS, and had several other financial issues in progress at the time. Apparently the term “due diligence” wasn’t in the vocabulary.
Not only did this PeoplExpress entity itself send up enough red flags to decorate Moscow on Mayday, but the realities of the air transportation system doomed the proposed route system from the start.
The real circumstances were clouded by the promise of “low fare service” – particularly from some entity named as a successor to an “iconic” (according to media stories) prior airline. This obviously clouded any hard look at whether this scheme had a snowball’s chance in Tahiti of success.
It’s entirely likely that any potential concessionaire or FBO seeking to do business at PHF would have been given more scrutiny than this PeoplExpress scheme.
Keeping Airports In The ASD Dark. But it’s not always entirely the airport’s fault. Some just get bad advice. One of the keys to a lot of “air service development” programs today apparently is to make sure the airport is kept as far away as possible from airline industry and air transportation realities.
Because with full understanding of how airlines are structured today, many airports would be taking different paths to business planning.
Newport News isn’t alone. They just paid a lot more for the vapor promise than most places do. It appears that some communities simply lose direction when it comes to air service. And unfortunately, they are too often given advice that rarely covers the downsides and the financial risks
It’s fairly common. Recently, we’ve seen some small, un-served airports getting led way into the weeds, with promises of “studies” to find all that new demand that will bring flights to the local airport. And, often, there is the hint that, lo!, there are “airlines interested” – only “we can’t reveal their identity, yet.” Sure.
And whatever operator that might actually be there – which is usually unlikely – is in almost all cases non-connective to the rest of the air transportation system. Then there’s the line about making “business cases” for airlines, but somehow not getting too deep into whether the airline (which is often not ever identified) has a business strategy that has any potential relationship with the community.
That’s the typical financial quicksand that’s dumped on unsuspecting communities and small airports. Never is there an initial and blunt discussion of airline strategies, fleets, or route system compatibility.
No, sir. That might torpedo the whole project, and send the airport into other business strategies for the future.
And that’s the problem with a lot of ASD programs. Too many small communities are not first given an honest and forthright knowledge of the emerging trends in air transportation – before the glowing “study” is completed, and which always comes up with a rosy answer.
Then, of course, the recommendation will be to go to a “speed date” event to “find more airlines.”
Airlines, that truth be known, don’t exist in regard to any potential of flying to small, un-served or barely-served airports.
Beyond Hubris, The Consumer Aspect Is Typically Ignored. Usually, a hard analysis of alternative consumer options isn’t in the program, either. Beyond silly “surveys” asking if they’d use the local airport, there is usually no study of whether the proposed local service is consumer-competitive with existing air service channels.
In other words, many traditional ASD approaches tend to be the equivalent of taking a blindfolded whack at a Pinata that doesn’t exist.
This ethically-questionable nonsense tends to permeate whole sections of the foundation of traditional “air service development.” Instead of blunt business knowledge, there is the distant promise of “getting that service we need,” supported by massive reports and mushy analyses that intentionally relate not at all to air transportation realities.
Due Dilligence. A Little Can Go A Long Way. Outlining all the realities can be a real project-killer, so it seems to be important not to reveal all the facts up front. Make the opportunity look real exciting, even if it’s a dead end. A little ego-puffing seems to be okay.
Heck, we’ve even found consultants that can’t even tell their address without puffing the truth. One listed a fancy street address, indicating a several-floors-up suite. Turns out, it’s the address of the local post office, and the “office suite” is just a PO box. Interesting.
There Are Better Approaches. At Boyd Group International, we have had strong successes in enhancing our clients’ air access from the rest of the globe. But we’ve also not shied away from telling clients what won’t work. Telling a client “no” is part of the business.
We also turn down any project that isn’t consistent with future airline economic trends, and we always keep our clients aware of how airline strategies – not community “need” – are the first foundation in these endeavors.
We covered this at the Air Access Workshop at the 21st International Aviation Forecast Summit last September in Reno/Tahoe. We’ll be updating it at the 22nd IAFS™ this August in Las Vegas.
Airport planning goes way beyond just scheduled air service. For a wider view of the future, give us a call, or click here for more information on how we help our clients avoid financial mistakes.
Particularly the $4.5 million variety.
January 23, 2017
Our China-Welcome Program Brings Global Focus On McCarran
On the heels of being named one of the 8 most important airport amenities of 2016, Las Vegas McCarran International’s China-Welcome program is now being showcased as a model for airports across the globe.
The latest is an in-depth review by Turkish National Television.
BGI and its partner, China Ni Hao, LLC have developed tailored China-Welcome programs for airports, communities and venues such as winter resorts, seeking to capture more of the growing Chinese leisure travel. Despite much of the hoopla regarding China-US relations, these visitors are still coming, and it’s a jump ball regarding where they will visit in the US.
Check out the home page for more information on this latest coverage of LAS, and for more information on China Ni Hao’s programs, click here.
Fixing, Not Feeding, Obsolete Programs
Essential Air Service & Small Community Air Service Grants
They’re Political Footballs, Not Community Programs
Fact: air transportation as a modality today represents hard realities that both the EAS and SCASD programs – not to mention dozens of “air service development” programs – completely ignore.
Let’s take a look:
Reality One: The Airline System Is Not A Mystery. It’s Transparent
In 99% of cases, with the consolidated system of 2017, it isn’t necessary to inflict “market studies” on communities to identify potential carriers – or, in many instances, the non-existence of a potential carrier.
What this means is that in most cases it’s an outreach to the obvious carrier, comparing its strategies and fleets with what the community can deliver. Then should come any further analyses – if the carrier is interested, that is.
Recently, a small airport in the Midwest announced that they were seeking to “lure” carriers – apparently any carriers – to operate flights to Denver and Dallas-Ft. Worth. That certainly doesn’t take a study to identify the targets, although they were probably convinced otherwise.
For a small community, the only option to DFW is the AA system, and to Denver it’s United. End of search.
That’s it, because the local O&D isn’t enough to support nonstops without connect traffic, and – something apparently not disclosed to the airport – there are no other carriers in existence with the fleets, the strategy, or the network that would chase after such a route.
But, if the community is advised of these facts right up front, it would shortstop a lot of study revenue.
The same is with the application of EAS and SCASD dollars – it is the responsibility of the DOT to assure that the intended application has a reasonable chance of success, within the realities of the airline industry, instead of outdated assumptions of an airline system that no longer exists.
Reality Two: The Goal Is Not Scheduled Service. It’s Global Access
The assumption is made, both within the foundation of EAS and SCASD programs and in many ASD adventures, that having scheduled flights at the local airport is the goal. Wrong.
What missing with this belief is the entire objective for air service in the first place: a transportation option that gets consumers to and from the rest of the globe.
For example, a couple of Cessna Caravans to Nashville might satisfy the local politicians, but it isn’t “air service” because it can transparently connect to nothing – WN doesn’t interline, and no carrier banks flights for connectivity there.
Therefore, most of the EAS program is geared to deliver “flights” and not air access. That must change. If there isn’t an entity that can provide meaningful connectivity, an EAS subsidy is a giant waste of money, and should not be awarded.
This means the criteria for EAS service needs to change from just “flights” to “access.”
Reality Three: Air Travel Is Multi-Modal. And It’s Often More Efficient Than Local Service
Today, the EAS and SCASD programs are based on the assumption that service at the local airport is always more consumer-preferred and consumer-efficient than other options, such as a 60-90 minute drive to another airport.
Flat out wrong – and an assumption that inflicts millions of wasted dollars on the taxpayer.
It’s amazing to see communities convinced to do unscientific “surveys” that generally only ask the question “Would you use the local airport” and then trumpet the results as proof that United or American or Delta, or one of those mythical “other airlines,” should come to town.
Of course there’s nothing in the survey regarding things like schedules, airline brands, type of service v other options, etc., making the whole survey useless.
It’s also a de facto disservice to small communities not to fully disclose what the competitive options are compared to any proposed local service, before doing an “air service development” project. In fact, this should be a prime new criterion for the award of any EAS or SCASD dollars.
In our Air Service Access Workshop presented at the 22nd International Aviation Forecast Summit, we used Topeka as an example. A SCASD grant was used to support the implementation of two United flights to that carrier’s global connecting hub at ORD.
Unfortunately, the superior air service options open to consumers at MCI effectively rendered the FOE-ORD program DOA. To virtually any destination, the 60-75 minute drive still represented more time-effective transportation than consumers trying to shoehorn their travel to fit the two connecting flights over Chicago.
Apparently, this reality was overshadowed by the obsolete notion that local air service is always preferable. Message to the DOT and to ASD providers: that’s yesterday’s thinking.
Where From Here – Essential Air Service
In the Lower 48, the DOT must immediately re-structure the EAS program to assure that it delivers connectivity, not just scheduled flights. (Alaska is an entirely different situation and should be taken separately from the current EAS program.)
Twenty years ago, at an early BGI Aviation Summit, the point was made that EAS should be for flights to a connecting carrier’s hubsite, on the brand of that carrier.
Today, the only EAS markets that are even vaguely successful are those that meet that very set of criteria.
However, there are clouds even in these cases.
Typically, where there is AA or UA-branded EAS service, it is made possible only by the fact that the operator has some 50-seaters that are excess to their fleet needs and which will be coming off lease. When that happens, these airports are back to the pool of independent, mostly turboprop “hunter-gatherer” operators who are in the business of simply taking on subsidy flying.
What we are ultimately facing is that the EAS program is becoming a financial millstone on the DOT, fully unable to deliver core air service access.
Rural areas need to get prepared now for what is already a reality in many places: other modes of transportation will need to be relied upon. Air transportation does not work, anymore.
For places where EAS money is being wasted due to other and better regional options that consumers are now actually using, such as Muskegon and Pueblo, the hit of losing EAS funding won’t be a hit at all. It’s already been experienced. Consumers are happily driving to Grand Rapids from MKG and to COS from Pueblo.
But for communities that are truly isolated, such as regions of Wyoming, Montana, Kansas and Colorado, there is a bullet that needs to get chomped on very soon: The air service cavalry is not coming. That means reliance on ground transportation will be the future norm.
Where From Here – Small Community Air Service Grant Program
There have been demonstrable successes with the SCASD program, and Boyd Group International is proud to have assisted clients in gaining over $24 million since the program’s inception in 2002.
However, the SCASD program has never been funded properly, and it is still based on the fundamentally-flawed assumption that every small airport should have scheduled flights. Furthermore, the basic qualifications for submitting a grant are out of date, based on airport passenger rankings of 20 years ago.
Let’s cut to the chase. The ability of a $500K to $1.5 million grant attracting viable air service into a small rural community that has very low population is zero. Zero.
To begin with, there are no airliners that can make it work, anymore. Secondly, as noted with the EAS program, as well as the SCASD experience in places like Topeka demonstrate that the potential for meaningful improvement at rural airports is overshadowed by the realities of the economics of airline operations.
But where the SCASD program has shown success has been at mid-size, relatively well-served airports that have been allowed into the program. Spokane has flights to Los Angeles today because of the SCASD program. Charleston, WV received nonstops to Houston, etc. Here, SCASD has been a success, albeit not for small rural airports.
Therefore the SCASD program should be widened to be one that can be applied for by a wider range of communities. We’ll be blunt: No SCASD grant is going to bring viable scheduled service to Sand Point. But it has opened Bangor to access to United’s hub at Chicago.
That is he lesson from almost two decades of the SCASD program. As a vehicle to get more service to small rural airports, it’s largely been a dud. But for a bit larger, currently-served airports within a shrinking airline system, it’s done well.
Direction: Forget the intention of bringing service to small airports where nobody can use it and where economically-viable connectivity is not possible.
In effect, with past grant awards at places such as BGR, GEG, and CRW, SCASD awards have been consistent with the #1 trend in air service access: regionalization.
January 9, 2017
Overview of Trends For 2017
We look at several emerging aspects & trends.
Traffic growth, but also traffic redistribution. A new airline “parallel universe.” Potential confusion between airport infrastructure and air service. Reality Collides With ASD Programs. The New DOT Secretary. And more.
Click here for details.
Drone-Airliner Mid-Air Event? – Maybe. Maybe Not.
The Maybe Is Good Enough To Send A Message
It was reported last week that a 737-700 on approach to a remote airport in Mozambique collided with a drone, doing damage to the aircraft’s radome.
The message is a wake-up call to aviation planning. New technologies are important – but must have corollary systems in place to assure they are used properly.
In this latest incident, while there are allegations that this could have been from other causes – such as being a story to cover up damage done by ground equipment after arrival – the message is still there: unless there are major advances in the ability to track drones and the operators, in the event of one major tragedy they may eventually be prohibited.
Take that to the bank: one accident or terrorist act with a drone, and all of the potential benefits of this new logistics channel shifts into good-bye gear.
Drone technology will be a whole new dynamic in communication. But until the use – and the user – of these machines can be safely determined, they represent a major opportunity for disaster – not to mention intentional misuse. These are flying machines the use of which must be controlled.
Saccharine actions from the FAA, which have done nothing much more than require that some of these devices be registered, are laughable, particularly in light of how they can be misused unless more tracking technology can be developed..
One Event, And you Can Park Them All. As the attendees at the 20th International Aviation Forecast Summit were advised at a special UAS Workshop, the drone industry itself has been working hard to address these issues. We also were briefed on the enormous future applications of this technology.
But all it’s going to take is one nasty event, and Realtors can plan on going back to surface photos, and Amazon can forget about any thought of drone delivery. The agriculture industry will forgo the enormous value of drones in several applications.
And the enormous value of drones in airport applications, such as more cost-effective ALP development, are out the door.
Point: one of the top priorities of the new DOT secretary should be drone tracking programs.
Unfortunately, some of the initial reports covering the Secretary-appointee are not encouraging in regard to making any major changes needed at the FAA.
It looks like we may be in for four more years of non-leadership. And the UAS industry could be one of the first victims should an event that goes beyond a damaged 737 radome takes place.
Join Us In Las Vegas For More. Hard reviews of issues such as the UAS conundrum are the core of the International Aviation Forecast Summit. We explore these and other trends without regard for political correctness or ambient thinking.
This year, one of the focuses of the Summit will be the coming changes that technology will be bringing to all areas of aviation. Human contact is being replaced by A.I. and robotic technologies, and these will have transformative effects on how airports and aviation infrastructure will need to change.
Special New Year’s Registration rates are in effect until January 15. Click here to see why the IAFS is the #1 event in aviation.
January 2, 2017
For BGI Clients…
2016 Was A Year of Solid Achievements.
But Standby For More In 2017…
All of us at Boyd Group International are excited about our client successes in 2016.
To start off, we note our most recent success at Las Vegas McCarran International Airport, where our China-Welcome program, developed with our partner, China Ni Hao, LLC., has been named by USA Today as one of the eight notable airport amenities programs of 2016.
And that’s after less than a month in operation! If you didn’t see it, we’ve covered it on the home page.
This is just the capping event of a great 2016. So, If you’re looking for aviation planning and consulting assistance, take a look at our achievements in 2016, and let us give you the competitive advantage in 2017.
As we enter our 33rd year in business, we’ve never seen this level of opportunities and challenges facing aviation. We look forward to working with our current clients and those who will join us in the coming year.
We’ll be publishing our 2017 Aviation Predictions shortly. As usual, get prepared for some hefty heresy compared to consensus thinking.
In the meantime, here’s some of what we accomplished in 2016…
2016: Air Service Access Programs – Moving Our Clients Beyond ASD
As we’ve pointed out in the past, most traditional “air service development” approaches are intrinsically obsolete.
In most cases, they start with a complete misunderstanding of the current structure of the airline industry. In fact, most of these ASD programs start out without any recognition of the realities of the airline industry.
Typically, they assume that there are lots of airlines in existence, and just tossing the right data will have them come running.
Today, the truth is that there isn’t an airport in the nation where the potential targets for entry aren’t readily obvious. Most ASD programs are structured on the belief that studies and surveys and leakage analyses and other voodoo are absolutely needed to identify Mr. RightAirline.
The point is that traditional ASD programs today are mostly the equivalent of convincing a community to study a freeway interchange without first checking if there’s a freeway there in the first place.
Just take a look at the number of small and often unserved airports that are being sold blind “studies” to “find more airlines” when the truth is that finding and identifying an airline is the easiest and most obvious part of the process. The professional responsibility is to recognize from the start which of the few airlines left would find it beneficial and appropriate to expand at that airport.
Sometimes, the answer – which comes from obvious consumer patterns as well as the obvious structure of the US airline system – is none, and with ethical and professional analyses, this can be ascertained before the airport needs to spend $20K on a “market study.”
At Boyd Group International, we take our clients to the cutting edge of emerging airline strategies and fleet capabilities.
Matching The Airport To The Airline Strategy Is The Key. As our clients know, BGI does not beat around the bush with massive boilerplate-appearance “market studies” that are blissfully disconnected from the world of future reality. The US has only a few airlines left, and there is little need to do a lot of research on “finding” which ones have potential for a specific airport.
This is how we keep our clients ahead of the planning curve. This past year, some of the highlights…
- New Orleans. We are excited about all of the increases in air service access we helped New Orleans achieve. These include new service on Allegiant and Southwest, plus international flights to Panama, London and Frankfurt.
- Bozeman – BGI assisted the community in recruiting the first nonstops to American’s global hub at DFW.
- Bangor – The region now has nonstops restored to New York, with United service to its global hub at Newark, plus American flights to LaGuardia.
- Santa Fe – Boyd Group International assisted the airport in crafting a successful Small Community Air Service Grant, which assisted Airplanners, LLC to bring home new access to American’s Phoenix hub.
- Springfield: This airport’s position as the main regional gateway to Missouri was strengthened by the maturation of new service to the American hub at Charlotte, initiated in late 2015.
- Colorado Springs: Frontier Airlines is back at COS, with the assistance of BGI. Today, the ULCC serves Phoenix, Las Vegas and Orlando from this #2 gateway to the Colorado Corridor.
- Traverse City: BGI research and forecasts were instrumental in recruiting access from the New York metro, via seasonal service from the United global hub at Newark.
These are just some of the highlights of how we’ve assisted airports in enhancing access from the rest of the global economy.
In the next three weeks, we’re anticipating some more exciting news regarding our air access programs – domestically and internationally, too.
2016: Industry Thought Leadership
Following “the consensus” and “what everybody knows” is a great way to end up behind the planning curve. No leader in any industry ever was a follower of the consensus.
2016: Participation In Industry Forums. In the past year, Boyd Group International participated and contributed to the US Travel Association’s Annual CEO Roundtable.
The event was comprised of eleven CEOs from the top hotel/hospitality companies, and garnered aviation industry input from executives across the industry, including BGI president Michael Boyd.
In addition, Boyd Group International accomplished a comprehensive review of air service industry realities and future direction for the USTA. The report illuminated the hard realities of air service access in the US, and the need to address them in the context of the future and evolving economics of air transportation, outside of past assumptions and past structure of the air transportation system.
2016: The BGI Cuba Forecasts Were Validated. BGI was the first to review the potential for air traffic between the US and Cuba. “Between” is probably the wrong word, as for our friends living in Cuba, the number of flights offered is a complete non-sequitur. They can’t leave town.
Our analyses, first in 2009, and in updates since then, ran completely counter to “the consensus.” There isn’t any “pent up demand” for destinations that are all one-way originations and where things like hotels and ground infrastructure are sub-Third World.
This will turn around, when there’s a major government change in Havana. But for now the travel boom is a bust, and recent pull backs by American, Silver and Sun Country validate our forecasts. We’ll see more in 2017.
2016: China Outreach Programs
Boyd Group International was pleased to be part of the team that has established China Ni Hao, LLC., the first company that is focused on making US airports and venues functionally welcoming to the close to 4 million annual visitors from the Middle Kingdom.
The Las Vegas McCarran International Airport is the first gateway in the nation to establish a multi-level China-Welcome™ program, with the assistance of BGI and China Ni Hao. The program is engineered to provide Chinese guests with comfortable wayfinding into, through and when departing McCarran.
In its first month of implementation the China-Welcome™ program at LAS was recognized by USA Today as being one of 2016’s eight most important airport amenities.
But the China traffic opportunity is not just at large airports. We’re in the process of implementing opportunity-tailored China-Welcome programs at a number of communities, airports, and tourist venues across the USA.
2016: China Air Service Planning, In addition, Boyd Group International has been selected as the China Air Service Access Consultant for a major West Coast airport.
In this role, we’ll be developing the first comprehensive China Air Service Blueprint accomplished at any US airport, and developing relations with emerging Chinese carriers as well as second-tier airports across the Middle Kingdom.
2016: Aviation DataMiner™ Expansion
We were honored to welcome a major increase in subscribers to our Aviation DataMiner™ system – the most in any single year since 2008, when the program was launched.
The DataMiner system welcomes subscriber input, and generally we develop specific reports on request. In 2017, we’ll be introducing more features to the system, without adding more user complexity. In regard to the output, Aviation DataMiner addresses major shortfalls in raw BTS data, such as reporting by certificated carrier instead of airline system brand.
In 2016, we have been working to upgrade AirlineFinancials to be more incisive and valuable to the very specific subscribers who make use of this exclusive business intelligence asset.
The 2016 International Aviation Forecast Summit
Thanks to the enthusiastic support, assistance and innovative thinking at Reno-Tahoe International Airport, the 21st annual IAFS was the most successful in our history in bringing in international participation.
In addition to RNO CEO Marily Mora and her team, we also want to thank the RNO Board Chairman, Andy Wirth, for his aggressive assistance in bringing the magic of Squaw Valley to the event.
Clear your calendar for August 26-29, 2017. It’s when the 22nd IASF takes off, in Las Vegas, at the fabulous Wynn Resort. Click Here for details.
In conclusion, if you’re looking for new approaches and may be looking to engage a consultant – or move from another one to the fresh perspectives of Boyd Group International – let us know by clicking here, or give us a call at (303) 674-2000.
December 26, 2016
The Higher Perspective:
Trump Administration China Policy:
Heading For A Stronger Trade Relationship
Half a trillion dollars.
That’s hardly chump change. It’s the value of what China is selling to the USA annually.
It’s incredibly important to the Chinese economy. Critically important, because there are no alternative markets for most of this trade, and a lot of the Chinese economy depends on people in New York and Omaha and Pasco buying goods made in China.
Boeing & The Trump Factor. Aviation in particular is part of this relationship. In fact, it’s usually the focus of the panting media stories about President-Elect Trump’s hard statements about trade relationships with China. Yikes! If Trump upsets the apple cart, Boeing would be zapped from selling airplanes in China.
It could be catastrophic – in fact this would mean massive unemployment.
What’s missed is something called the intertwined global economy. What the media misses is that it’s not just the Boeing airplanes that Chinese airlines are buying, it’s also the intrinsic role that Chinese components play in the manufacturing track of airliners Boeing sells around the rest of the world.
The factories in places like Shenyang need the business from the components that Boeing buys from them.
For Aviation, The Relationship Will Get Stronger, Not Weaker. Point: This is not a two way street. It’s a complex, omni-dimensional intrinsic relationship that involves China, the US and there entire global economy. The US is part of the Chinese economy, and China is part of the US economy. Both are part of the global economy that has no real borders.
Trade-War? Not Likely. President-elect Trump has made it clear that he intends to make major changes in how US-China trade is operated. The consensus in the media seems to conclude that unless Trump changes his tune, we may be in for a trade war with China.
The reality will likely be the opposite. Looking at the trends in place in regard to future changes in the economic base of both nations, the relationship will be stronger in the future..
Plan on some public posturing and on-the-surface acrimony, to be sure. But it is clear that there will be a much more defined and focused policy in regard to Chinese trade.
What US-China Policy? That’s probably going to be welcomed in Beijing – over the past 25 years, the Chinese haven’t really had much to deal with, when it comes to a concrete US trade policy.
The US position on trade with China has been sloppy, unfocused, and clearly not engineered based on mutual strength. There truly are imbalances in the relationship – virtually all due to US non-policies.
For example, some US commodities such as fish have a 30%+ tariff applied by China, while the same commodity coming from China suffers no tariff-increased price at the supermarket checkout. That’s not something the Chinese created – incompetent US policies have allowed it to continue.
The China Manufacturing Advantage Is Eroding. Let’s repeat the bedrock reality that much of the media reporting has missed: China also needs the US market – but truth be known, the dependence on China for manufactured goods is going to decline in the future.
One of the futurist trends that were outlined at the 1st Annual China-US Aviation Opportunities Symposium, held by Boyd Group International in 2015, was that the main advantage of the Chinese manufacturing industry – low labor cost – is being rapidly eroded.
Chinese companies are shifting to high-efficiency robotics, which are not labor-intensive. The products are cheaper to produce, and defects drop materially. That’s great.
But a robotic factory in Guangzhou has no cost advantage compered to one in Columbus, Mississippi. One latest example is the decision by the largest manufacturer of auto glass moving a factory from Guangdong to Ohio. That wasn’t done just as a gesture to Trump: it was based on solid business realities.
Point: the trade relationship with China has been officially back-burnered for years. Now, with major technological shifts facing the Chinese manufacturing industry, and the implementation of a focused US policy, the outcome will be a much stronger China-US trade relationship.
Trump has made it clear that the US will look to level the playing field. The fact is that China in its own best interests has naturally taken advantage of a system that the US has limply allowed.
China respects strength – and that’s been missing over the last four Administrations.
US aviation and airports have nothing to worry about.
China Will Be An Increasing Part of US Aviation. Tapping into the growth of the US-China market is important to all sectors of aviation.
…For airports, the flow of Chinese visitors into the US represents enormous new enplanement flows…
…Also for airports, the investment potential of Chinese companies is enormous, too. Get that ALP updated… Chinese money is coming…
…For communities, Chinese investment and leisure traffic will be an important addition to the local economy.
This is the reason that you should consider attending the 3rd Annual China-US Aviation Opportunities Symposium, August 26, at the Wynn Resort in Las Vegas. It’s an event that brings to the table the trends and opportunities that China represents to all sectors of communities and airports.
It’s in conjunction with the 22nd Annual International Aviation Forecast Summit, which kicks off August 27-29. Special early registration rates are now in place for both events.
December 19, 2016
We want to thank Justin Bachman of Bloomberg for his insightful coverage of the China-Welcome system installed at Las Vegas in conjunction with our partner China Ni Hao, LLC.
We’re now working with a number of clients across the airport and travel sectors in tailoring programs to gain more of this new business.
Trump & Airport Infrastructure –
Time To Move From Third World Planning Concepts
As we move into the next Administration, it will be interesting to see how the promised trillion-dollar investment in new infrastructure pans out in regard to aviation investment.
Past history does not give much comfort.
The airline industry’s opposition to an increase in the Passenger Facility Charge – the only government fees probably in existence that can’t be hijacked into other uses – is not encouraging.
Then there’s the pesky and obsolete assumption that just building new facilities will increase air traffic.
Last fall, Elmira got a state grant for $40M to build a new terminal and other facilities, ostensibly with the promise this would help bring more air service.
United and American didn’t get the memo – they’re out of ELM. It’s due to traffic issues, not gate space. This isn’t to imply that there aren’t opportunities for Elmira, or that the $40 million isn’t a great win for the community. It’s just that the future isn’t in more scheduled service – Ithaca is now the emerging air gateway to the Southern Tier. But as an economic generator, ELM has a role as a part of the region’s business base… planning needs to recognize this.
Relying On Goose-Chase Data Is Third World. Another challenge for the future of US aviation is the need for professional planning and forecasting. Air access is both regionalizing and co-terminalizing… trying to recapture scheduled service where it structurally can’t be supported isn’t productive.
Today, it’s open season on a lot of smaller communities, getting guided down into dead ends with air service “studies” that deliver data that sound real good, but don’t mean anything within the context of the air transportation system.
Examples are the “ticket source” studies that purport to illuminate the number of air consumers within a radius of an unserved rural airport, and then try to represent it as “proof” airlines would be interested in flying locally. Typically, this excites the community into thinking it’s possible, when it’s simply wishful conclusions fed to unknowing civic groups. This is typically without any discussion of the need to aggregate sufficient passengers at one of the network carriers’ hubsites.
Usually these “reports” confidently list “top consumer-desired destinations” as weather vanes pointing to the great opportunity. These studies tend to always leave out things like a profile and analysis of the levels of service that would be required to divert consumers from current travel patterns, such as the airline brand, comparative fare levels, frequency needed for consumer support, and whether there is any carrier with a fleet that can deliver this.
But they almost always conclude that more exploration is needed, and an application for a SCASD grant is imperative. However, recent experience in places like Bowling Green, Youngstown and Topeka prove that consumers tend to have different conclusions than what’s in lovely, heat-map rich studies.
But these are just a couple of small examples of tossing money at the past instead of the future.
We have what should be the poster child for the Trump Administration on what not to do in regard to new airport infrastructure.
Build It And They Won’t Come. Mid-America Airport. It’s probably the closest thing in North America to Third World planning.
Sort of a modern-day Cargo Cult. Build it and it will magically attract big metal birds to come and land there.
It was conceived in 1995 as a solution looking for a problem. They haven’t found it yet, but they’re still diligently trying. Beyond Allegiant travel-company service, none of the assumed air service ever came to the facility.
Creativity They Are Not Short On. There is no telling how much consultant voodoo has been expended on this tax-eating facility over the last 20 years.
First, it was to be a much-needed passenger reliever for St. Louis/Lambert. Certainly, there must have been some encouraging “studies” back then supporting this projection in glowing terms. But, nothing doing.
Then came a string of really embarrassing, supposedly surefire alternative uses.
There was the plan to make Mid America the transfer point for flowers from Latin America. They even reportedly put in refrigeration facilities, before the scheme collapsed under the weight of reality.
That, too, was probably a bonanza for some “advisor” showing how posies and Johnny-jump-ups would do better if trans-shipped over southern Illinois.
Then there was the grand plan to make Mid-America the US cargo gateway from China. Despite the fact that Mid-America airport is possibly one of the least competitive and least well-sited facilities for that purpose, it appears that a lot of money was spent hyping the scheme.
They even reportedly paid a Chinese cargo carrier to do a placebo flight into the place, so stuff could then be expensively trans-shipped on trucks to distant places like Chicago and New York – cities that somehow it was assumed had no air cargo access.
It made for great, swooning press stories, albeit a total waste of money.
Then it got worse. And even more embarrassing.
Let’s not forget the plan to use Mid-America to ship Asian carp back to China. Or, the grand plan to import seeds from Indonesia. All of this being several thought-galaxies away from the 1995 dire necessity to relieve future passenger congestion at STL.
Marco Polo – In Reverse, But With A Load of Strawberries. Now, we’re back to an air cargo scheme – but with a lot more flash. This time it’s to create Mid America as the lynchpin in a new “trade route” to transship fruit between Latin America and China.
One has to wonder if any credible analyses have been done on the current channels moving these vittles between the two continents. Or a competitive analysis regarding the distribution and collection systems at both ends.
Oh, of course. There’s probably another in-depth “study” that proves that for this application, Mid-America will be the savior of the global fruit industry.
A Beacon of What Not To Do. Hope springs eternal. As a point for passenger charter or impulse-demand traffic such as Allegiant, Mid-America has some usage. But the local taxpayers have footed the bill.
Trump: Take Notice. The airport infrastructure in the US is a huge opportunity for economic growth. We do need innovative planning and investment.
But it has to be accomplished within the context of the reality, not politicians’ pipe dreams.
December 12, 2016
Congratulations To Santa Fe On AA Expansion
New AA nonstops to Phoenix start this week from SAF. Congratulations to Cameron Humphres and his team.
Also credit to Kent Myers and AirPlanners, LLC, who were instrumental in bringing this new service to town. At BGI we were honored to craft the SCASD grant that was a factor in making this new service possible.
Trump & Aviation: Looking Positive –
Even Before The First 100 Days
At least, the pre-60 days of the Trump Administration is looking positive for aviation.
To the shrieks of shock from the usual kibitzers on the sidelines of the industry, Trump has openly questioned the costs of the next Air Force One set of aircraft.
Regardless of the nonsense from the Peanut Gallery, that is a very positive move. For the taxpayer, it’s only good business – something that’s traditionally not been anywhere near the White House.
Now, he’s pointing out the cost overruns with the F-35 program, and doing the unthinkable – criticizing the cronyism that has riddled defense and other government programs. It’s “out of control,” according to Trump.
Great start – he’s questioning things that were off limits. He’s the only one in years – probably in history – that sees that a whole parade of sacred-cow emperors is buck naked. He’s calling it like it is, instead of being politically-correct.
Let’s start with NextGen. As a fraudulent boondoggle, it makes the F-35 and AF-1 programs look like financial misdemeanors.
Yikes! Heresy! Yes, we are fully aware that NextGen is the unquestioned solution to making the skies more efficient, thereby opening a torrent of new, cheap and widespread air service across America. Yes, we know that just about the entire aviation cognoscenti are four-square behind the great progress made by NextGen.
And, of course, we fully know that all the “experts” and their media groupies support and downright worship the NextGen program. See, it’s just been lack of consistent funding over the years that have kept the FAA from implementing the next big thing.
And what we also know is that all that stuff is flat out garbage. The facts and the past 25 years prove it.
“Reform:” Side-Tracking Assignment of Responsibility.What we need, the official line goes, is “air traffic control reform” – which in its current form is a dodge to make sure that we have no one daring to illuminate that it’s 30 years of consistent FAA mis-management, not funding, that’s the reason that our skies are inefficiently managed.
We need to install absolute accountability for results – and that’s not what’s being suggested with “reform.”
The problem is just what Trump is pointing out in the F-35 mess – there’s too much political influence. Nobody in the airline industry is willing to take on NextGen, because it would mean offending the political-appointee hacks at the top of the DOT. And, truth be known, within the current crony-at-the-top-system, that’s not good business.
Here’s a hard fact – in contrast to some of the semi-ethical network “correspondents” who simply go on the 6PM news and confidently regurgitate the FAA party line like a penguin feeding its young – the ATC system is at the bottom line no more efficient in getting flights across the skies than it was a decade ago. There are over 14% fewer airline flights than in 2007, yet on-schedule performance is essentially no better.
That’s called failure. That’s called incompetence. That’s just another federal overrun program.
If Trump is serious about ending waste, dismantling the NextGen mess, and installing whole new management and an absolute focus on commitments and accountability should be at the top of the aviation list.
The Airline Industry: Stop Cheerleading NextGen – It’s Costing You $12 Billion. There are two immediate moves that must be made if Trump is serious about ending waste in aviation policy:
Step One: De-stealth the Next Gen mess. Bring it out in the open. Recognize (as report after GAO report has done) that it’s been management incompetence – not just funding – that is the core reason that NextGen is a failure.
Here’s the statement that causes the in-the-know aviation groupies to get all indignant: NextGen needs to be torn down and a new approach implemented.
Step Two: Let the airline industry know that it’s time they better managed their own production lines. The fire-and-forget operational systems need to be replaced by more hands-on management of the machines they hurl across the skies.
It’s fully understood that this will run counter to what the “experts” will be spouting… but the same denizens of the mushroom gardens of Washington thinking have been babbling about the “success” of NextGen like groupies at a rock concert.
The Proof Will Be In The First 100 Days. Let’s see what the new DOT secretary does… if she takes office and has to “learn” about NextGen from the installed base of bureaucrats already there, we’ve got another LaHood on our hands.
But, the initial moves by Trump in regard to aviation are positive.
December 5, 2016
McCarran International: The New China Gateway
Las Vegas McCarran International is the nation’s first fully-functional China-Welcome airport.
Not just “China ready” but instead China-functional. Visitors from the Middle Kingdom arrive in an environment that is welcoming and shows respect for their business.
Innovation In Outreach & Customer Service. The McCarran program, engineered by China Ni Hao and Boyd Group International, was tailored specifically to the air travel experience – which is a whole lot more than just being “ready.” It means being pro-active.
From even before they left China, McCarran was “there” – literally in their pockets – with the most comprehensive and interactive WeChat page of any US airport – one that sets the standard for functionality and user-friendliness – developed from the ground up in Chinese by China Ni Hao/BGI – not translated from English.
Then, from the opening of the airplane door, through Customs and Immigration, all the way to curbside – and beyond – the special communication and customer service needs of these Chinese guests were accommodated seamlessly, unobtrusively and proactively.
At all critical communication touch points, professionally-accomplished Chinese signage met these guests, and special Mandarin-speaking Huanying (Welcome) Ambassadors were there in bright red sweaters to direct, welcome and assist.
The McCarran International China-Welcome(tm) program, designed and delivered by China Ni Hao and Boyd Group International, now puts Las Vegas a step ahead of other airports in substantive and innovative positioning for more Chinese airline entry.
More Chinese Are Coming. From More Places, To More US Places. Boyd Group International has identified at least four more, now-domestic Chinese carriers which will be looking to expand with new fleets of long-range airliners from more than a dozen second and third tier airports in China. Having a full program to welcome these potential visitors is a huge advantage.
As Predicted – US-Cuba Traffic Is Not Developing
As we noted last week, the levels of planned capacity from the US to Cuba simply cannot be supported in the near term.
Now, American is cutting 25% of its previously-planned capacity, and seeking to replace some flying with code-share partners instead of mainline metal.
Barring a major change in government policy in Cuba – which could take place in the foreseeable future – there is very little traffic demand to most places on the island.
It was announced that AA is cutting one of its two flights into Santa Clara. The hard fact is that there’s not much in this community of just 275,000 people. Outside of some clapped-out 1960s hippies doing pilgrimage trips the Che Guevara tomb, there simply isn’t enough US traffic – and probably won’t be for several years.
Standby for more cutbacks. At some point in the near future, the usual suspects in the financial world will notice and start squawking confidently about how airlines need to pull back.
If you haven’t seen it yet, scroll down to last week’s Update and download our report on Cuba realities.
More Reasons To Take Media Stories With A Grain of Salt. Or, Maybe The Whole Shaker. A month ago, no major media source had tumbled to the obvious. It’s amazing how just now the media is “reporting” on how “capacity is outrunning demand’ – when this situation was clearly obvious long before the first US flight took off for Cuba.
But, why bother to do any fact checking? Heck, “everybody knew” Cuba would just be a tsunami as soon as the first 737 touched down at Santiago, right?
Now that the data and facts are obvious, watch for the panting media stories trying to the first in ink with this breaking news – which, if these supposed journalistic sources had bothered to check the facts, would have been reported from the start.
It’s unfortunate that so much of what we read in the media is just me-too reporting with almost zilch background research… keep that in mind.
November 28, 2016…
Cuba – The Only Thing Certain Is Uncertainty
The not-much-lamented passing of Fidel Castro, along with a new administration in Washington, has fueled speculation regarding the future of scheduled passenger air service between the US and Cuba.
Since the changes in air service policy were the result of a presidential executive order – a modality that incoming President Trump has decried – there are some who are predicting that Cuba authorities for US carriers will be revoked.
That’s not likely.
But a pull-back in currently-planned capacity is very likely by the end of 2017.
As BGI has pointed out in its independent analyses of the market, Cuba represents probably the biggest potential bonanza in the history of US airlines.
Any cursory review of what Cuba can represent for the US travel market is mind-boggling. Start in western Cuba and move east toward Santiago, and the range of tourist opportunities are incredible.
But the operative word is “potential.”
The future notwithstanding, Cuba today is largely a dog market, regardless of the panting stories from the travel industry. Tourist infrastructure is limited outside of large resorts. Travel through the island is iffy. And business investment is still years and a major government change away.
What is unknown is whether there’s enough traffic in the near-to-mid term to support the high levels of capacity that are being tossed into Cuba, particularly to secondary destinations. What some of the travel industry “experts” are predicting simply doesn’t track with reality.
If there are insufficient hotels, and there is near-zero business – not to mention near-zero consumers in Cuba that can even leave the place – it doesn’t take another market study to figure out the challenge US carriers will be facing with the number of seats being tossed south.
At the 21st International Aviation Forecast Summit last September, hosted by Reno-Tahoe International Airport, BGI presented a special Workshop that candidly addressed the realities of US-Cuba air traffic potential.
For a hard look at facts and reality – instead of the fluff much of the media is issuing, Click Here to review and download the Workshop.
Nobody knows where Cuba will go when the other Castro – Raul – moves on to the celestial worker’s paradise in the sky. But a major change in Cuba is possible in the next 3-5 years, depending on who replaces him.
The question in the meantime is whether there’s anywhere near enough traffic to support the capacity that US carriers are now putting into Cuba. The first T-100 data should be very interesting.
November 21, 2016
Moving From Ambient Thinking To Futurist Planning
On November 15, 2016, the expected and accepted future of intercontinental air transportation got torpedoed.
Not necessarily a surprising event, particularly for the attendees at the 21st Boyd Group International Aviation Forecast Summit last September, where Boom Technologies outlined the next step in air transportation.
Last week, the future started to arrive. Boom Technologies rolled out the full-scale model of its XB-1 supersonic demonstrator. It’s a one-third scale of its planned 45-50 seat Boom Airliner that is well under development.
The concept is a 2.2 Mach intercontinental airliner that will carry what is today front-cabin passengers across the Atlantic and Pacific in less than half the time of current airliners – and do so at fare levels commensurate with today’s business class prices.
The potential viability of the Boom concept was underscored by the range of leading aviation entities in attendance. General Electric, Honeywell, Rolls-Royce, NASA. Everyone was also honored to have the presence of some of the original engineers who actually were on the Concorde project many years ago.
Think of It Like The Front Cabin of A 777 That Flies Supersonic. Unlike the Concorde, the Boom Airliner is not envisioned to be one that will cater only to thin layers of high-roller traffic, paying an astronomical fare. Instead, the Boom Airliner simply will capture existing front-cabin traffic, at ambient premium fare levels.
There won’t be time for these amenities – which are there only because the consumer is trapped in the 777 for eight hours. Lovely, lush, and comfortable. But there are two considerations: first, it costs the airline tens of millions to develop and deliver these amenities, and second, the time in the air allows this “entertainment.”
The Boom Airliner will not inflict the need to have seating that takes up the space of a suburban Japanese garden, and chairs that cost as much as a small tract house in rural Ohio. The need to stock several phases of gourmet food into galleys with the complexity of a McDonalds, will be an expense that also won’t be necessary.
With a just over three hours between New York and London, the service will be more like domestic first class.
The Passenger Segment Already Exists. The Boom Airliner will simply capture the current folks sitting in the front end of 777s, A-330s, and 767s. The premium customer will have two choices – ride an extra three or four hours and get a four-course meal finished off with creame brulee en crute, or be in London to do business three hours earlier.
It’s a no brainer. This airliner is going to change how premium customers fly. It will be a challenge to future airline strategies.
It also means that the intercontinental airlines that are first-to-market with this new airliner, will drain this premium traffic from competitors – regardless of frequent flyer loyalty. And by the way, that first-to-market carrier is already on the horizon: Virgin Atlantic has an option for the first ten Boom Airliners, expected to come off the assembly line starting in 2023.
The Concorde Experience Is Ancient History. And Ancient Technology. It’s understandable that a lot of folks in aviation are commenting that the Boom project is just another pipe dream. After all, they point out, the Concorde was a financial fiasco. In point of fact, this observation regarding the British-French product is entirely accurate.
Here’s fact: next year will mark the 50th anniversary of the roll-out of the Concorde. It didn’t fly for another 18 months, but the fact remains that the airplane against which some people are measuring the Boom Airliner is approaching senior citizen status.
While Concorde was a techno-marvel for its time, it stands as an example to incredibly closed-minded and poor market planning. In fact, it’s earned a place in a great book titled World’s Greatest Planning Disasters.
The Boom aircraft is different from the Concorde: it is based on solid market vision, solid planning, and solid assumptions. And there is no government hubris involved – which was a major factor in the Concorde program. It’s all about business, not misguided national pride.
Re-Thinking Reheat. In addition, the comment also is made that there is no existing power plant adaptable to the Boom Airliner. Some of the folks parroting this nonsense couldn’t tell the difference between a jet engine and a Studebaker V-8.
One of the key advantages of the Boom Airliner is that it does encompass an existing engine core, and can attain 2.2 Mach without use of an afterburner – also referred to as “reheat” by engineers in the Mother Country. Here’s an ice-breaker conversation starter for the next boring cocktail party: when in afterburner, Concorde burned 78% more fuel, and for all that it gained just 17% more thrust.
So to compare the Boom Airliner to the Concorde is flat ridiculous. To maintain that the Concorde proved “it couldn’t be done” is akin to the folks who probably told Lindbergh not to take off, because so many others had splattered themselves trying to cross the Atlantic.
As an aside, one of BGI’s colleagues, Fred Johnson, was a trained mechanic instructor on the Concorde, when Braniff operated the aircraft in 1978-80. His take on the Concorde was that it was some of the finest examples of the best of 1960s technology.
Point: In September, at the IAFS, the world got a glimpse of the future of intercontinental air travel.
On November 15, it became official: Supersonic is the future.
November 14, 2016…
Aviation: What President Trump Should Tackle First
Air Traffic Control – Kick Some FAA Butt
Let’s not hold back here.
NextGen is a failure. A fraud, and a sham. The new President needs to be aware of it.
Yes, we know that this is heresy, and apparently every sector of the industry endorses and swoons over it. That doesn’t change the hard truth. Or the data behind it.
And he’d best not take the word of the FAA Administrator.
The term “reform” is now tossed around, as if it’s some sacred solution just belched up at Delphi. But here are the facts: after years of promises and billions spent and lots of new equipment installed, airline on-time performance is not materially better. Somehow, this is missed by all the folks touting NextGen as the next coming of the technology Messiah. What they miss is the fact that the arrival keeps getting pushed back.
Another fact: the problems with the FAA not being able to get anything done – as demonstrated by the “on-time” data – are not due to inadequate funding. That’s jive. Yes, there are issues with reliable funding of the FAA, but that’s not why NextGen is a boondoggle. The funding problem has been eclipsed by a klutz management problem.
It’s unfortunate that the aviation media cognoscenti don’t bother to read repeated GAO and DOT IG reports – most of which illuminate the fact that the upgrade program has had dimbulb management and fundamental lack of clear direction. Instead, they regurgitate FAA propaganda in the finest style of a cowed third-world media.
“Reform” seems to be a euphemism for “privatization.”
That’s great. Let’s take the same system, the same structure, the same lack of direction, and the same management staff, and “reform” them into a privatized system. Yup, that’ll fix things.
Unfortunately, “reform” seems to be aimed at assuring that the incompetent leadership at the FAA is absolved of the fact that they are blithering failures, the latest in a gaggle of gumball leaders over the last 20 years.
Trump is a businessman, not a politician, and one can assume he focuses on getting results, not PR dispensed from jive-time promotional kiosks the FAA sprinkles around airports to tout the NextGen program. We must hope he doesn’t buy into the FAA party line.
Recommendation: get rid of the senior management at the FAA, and replace with subject-matter experts who are accountable for clearly outlined results.
If the current FAA Administrator still has time on his appointment, no problem. Funny-box the guy – i.e., kick him upstairs to occupy an office and stay out of the way, maybe give him a yo-yo to play with, while real managers are put to work finding measurable solutions to replace this sacred NextGen mess.
Recommendation: Trump seems to be a leader who does not tolerate acceptance of failure. As we brought out at the 21st International Aviation Forecast Summit, it’s time for the airline industry to take full responsibility for not being able to adhere to the schedules they publish.
“Fire and forget” operations need to be replaced by airlines actively managing their production lines, from the time the flight leaves until it gets to the destination. Trump needs to do a finger in the chest meeting with airline leaders in this regard. Bluntly, touting a situation where 20% of flights are more than 15 minutes beyond airline-developed schedules as “excellence” is hogwash.
The TSA – Rebuild It From The Airport Back Door Up
There’s no argument that the TSA is one of the great legacies of the Bush administration.
And, it’s consistent with most of that legacy. At least this was one that didn’t involve hurling F-16s in all directions.
No hard planning, no direction, just a flurry of smoke and mirrors run at the top by a parade of patronage appointees who are not competent to secure a Slurpee machine at the local 7-11, let alone our transportation system.
Nothing wrong with the TSA rank-and-file. While the interactions are short and simple, they still tend to be the most polite folks at the airport. But the system they’re stuck in isn’t security, it’s kabuki theater to make us feel safer. From the very beginning, when the first actions of the first TSA administrator appointed by Bush was to re-decorate his office to the tune of $400K, right up to now, this whole program has been the equivalent of trying to prevent a forest fire with an empty squirt gun.
Recommendations: The immediate need is to install a team of qualified experts – not politicians – to transform this pointy-object patrol into a professional and pro-active security apparatus. What’s there today is a world-recognized joke. But even the congressional hot-air types who have railed against it have done zip.
In addition, the new TSA must have a fully proactive event anticipation plan for each airport, well beyond the willy-nilly run-for-your-lives-we-found-a-funny-suitcase evacuations. That means a complete program to review things with the mind of a terrorist.
It also means having well-developed event-mitigation plans to assure clear lines of communication and management if a terrorist act is accomplished. How about access and egress for emergency vehicles? Crowd management and protection? Communication channels and clear, pre-determined delineation of various law-enforcement agencies? And a lot more that may as well be a primer in advanced Yiddish as far as Jeh Johnson is concerned.
Because President Trump is not beholdin’ to the Washington elite, he has the opportunity of eliminating two of the most egregious and dishonest misfires in US government history.
A lot is on his plate. We can hope he makes these two issues a side-dish.
Monday Update…November 7, 2016…
Touch ‘N Go…
China-Welcome Program Progressing At LAS
The process of making McCarran International Airport the first truly China-Welcome US gateway is moving on target to be ready for the first Hainan Airlines arrival on December 2.
Over the next five years, BGI forecasts more than 23 million visitors will come to the US from the Middle Kingdom. Chinese airlines will be looking at gateways that are truly ready and functionally-prepared. Our partners at China Ni Hao, LLC. are making sure that Las Vegas will be the standout as more carriers look at accessing the US market.
For more information on how BGI and China Ni Hao are preparing communities and airports for this exciting new travel wave, click here.
Year 2016: Changes In Air Access Patterns
It’s where the capacity is being applied
Enplanements nationally are tracking generally with the increase in airline seat capacity… about 4% year to date. Departures are up just 1.1% over last year.
But for communities working on their air access planning (as opposed to blind ASD schemes) the real data in in the four network carriers – the ones that deliver access from the rest of the world.
For these four core carriers, schedules are absolutely flat, and capacity increases are under 2.5%. This indicates that much of the nation-wide 4% growth is driven by carriers other than the full-schedule, full-network airlines. Point: this means that it’s in price-driven and leisure markets where the growth is occurring.
This clearly is another indication that in the future, quality of traffic, not necessarily volume, will be the determining factor as full-network carriers adjust their route systems.
Something to consider in air access planning…
The 2017 International Aviation Forecast Summit…
We are planning for a very exciting and new-format Summit next year… the venue and dates will be announced in the next four weeks.
Hint: clear your calendar for late August.
October 31, 2016
Congratulations To Ontario!
Tomorrow ONT enters a whole new phase as a gateway to Southern California, independent from Los Angeles World Airports.
At a time when the entire global air transportations system is dealing with new traffic flows, the future for Ontario is exciting… to say the least.
Our congratulations to Kelly Fredericks and his team!
Coming – Re-thinking Cabin Safety Instruction
The American Airlines incident at ORD, where (apparently) a catastrophic engine failure caused an aborted take-off, is likely to change the approach to in-cabin safety announcements.
Take a look at the pictures – passengers were taking their carry-on luggage with them – stopping to take it out of the overhead, through the cabin, and down the emergency slide… some clowns in the cabin of the burning aircraft were actually taking phone-videos.
All while the right wing was engulfed in flames and half of the emergency exits were blocked.
It’s clear that passengers are not taking these instructions seriously – regardless of comedic approaches to getting the information across. The subject matter is dry and airlines have correctly attempted to get passenger attention with innovative approaches to demonstrating safety.
But in light of the Chicago incident – it’s clear that even on AA – which at least historically has pretty much kept the videos more straight forward – passengers just don’t get it.
Point: it’s likely that any safety videos in the future will be given a lot more pre-installed scrutiny in regard to effectiveness to getting the message across.
Second Quarter 2016 Data:
What The Numbers Really Illuminate
The challenge with any sets of data is not reading the numbers, but ascertaining their value in determining current and future trends.
That’s the foundation of Aviation DataMiner™ – and what sets this business intelligence platform apart from other sources. The 2nd quarter 2016 DOT data is out, and, as usual, the media is abuzz making vapor-brained comparisons between numbers they don’t understand in the first place.
There are the perfunctory stories – put out by reporters who are clueless about what they’re writing about – that compare one airport’s fares against the “national average” – which is about as meaningful as comparing the performance of the Chicago Cubs to the Chicago Bears.
Using The Data, Not Just Parroting Them. At BGI, we help our clients see the future, not read tables of numbers from the DOT.
Here are the key metrics to monitor in this data. (The first requirement, however, is to have a professional knowledge of the data and the system that delivers it.)
- Airline Trends: It’s more than raw ASM/ASK production – it’s where it takes place, and the number of flights that are generating it. Plus, this is not a product-cohesive industry – if Spirit has a 20% increase in departure production, and United has -5% decrease, the average is not a valid metric.
- Fleet Trends: In the 2nd quarter, the continued move toward larger units of capacity was demonstrated. For those playing the ASD home game, without any understanding the airline strategies, they miss the fundamental issues of fleet changes by airline brand. For just one example, we’ve seen both United and American start to re-plan for a world without 37-seat turboprops… this needs to be a message in regard to future air access planning.
- Airline Corporate Strategies: Understanding what airlines are announcing from the front office can help determine the value of reported data. For example, the attendees at the 21st International Aviation Forecast Summit this year got insights on the very different fleet planning strategies at Frontier v Spirit. They do factor into airport access planning.
- Capacity Trends: To start with, the US air transportation system is not growing… like, not at all. The number of departures in the 1Q of 2016 was up just 1% – which is statistical noise. The message is which airlines added departures – regardless of the fact that the industry as a whole added just 1%. Seats were up about 3.5%, but that’s not to accommodate more demand, but simply due to the increasing size of the average aircraft in major brand fleets. And, again, it’s who is shifting capacity that tells the story.
- Revenue Trends: The take-away here for airport planners is that in a shrinking airline industry, with larger average aircraft, the name of the game will be revenue-quality, and not just traffic volume. … this needs to be another message in regard to future air access.
These are important factors – ones not even vaguely addressed in stock ASD “studies” and “consumer surveys” that are semi-ethically foisted on airports containing veneer gotcha questions (“will you use the local airport if we have flights to Newark?“) – without any further discussion of what that service will be.
For aviation planning professionals, we’d recommend a review of Aviation DataMiner™ as your source of industry business intelligence. The range of reports and the flexibility of DataMiner™ delivers strategic planning – not just tables. Click here for more information & a free trial subscription.
October 24, 2016
Touch ‘N Go – Air Access Update
Congratulations to New Orleans on recruiting British Airways flights to London, starting next March. BGI is proud to have worked with MSY in these efforts.
This international service joins Condor, which will be operating to Germany from New Orleans this summer, another project in which Boyd Group International was involved. Our advanced forecast and strategic planning expertise, such as the concept of illuminating the “road-hubbing” dynamic that nonstop international service generates, was a core reason for these successes.
Our client Ithaca will be seeing larger American Airlines aircraft this spring, as the carrier concentrates Southern Tier service into that airport. We are honored to have worked with ITH in its strategic air service planning.
These events join our successful efforts that have led to air service access improvements in the past few months, including implementation of highly-successful AA service between DFW and Bozeman, and a SCASD grant that’s made access to AA/Phoenix possible from Santa Fe.
And as we noted last week, working with entities in Colorado Springs helped attract Frontier back into town, now with flights to Orlando, Phoenix and Las Vegas.
This is what sets Boyd Group International apart from other consultants. We are experts on airline strategies, and we have the respect of airline industry leaders. Plus, we have better data – including the only airport traffic and trend forecasts accomplished in the private sector.
If your community is focused on results, not endless “studies,” give BGI a call to discuss your air access issues. As our clients will tell you, we will give you the facts as-is and where is.
The Administration’s New “Competition” Directives
Just a little bait-and-switch…. But at least this time the switch had some value.
Last week, we all waited to hear about the carefully media-packaged directives that would be coming out from the depths of the Obama Administration to enhance airline competition for consumers.
What finally oozed out, in a shower of high-sounding, empty-suit press releases, was basically a requirement for airlines to refund bag fees when they screw up, for airlines to report on-time data for all of their branded flights, and some gobbledy-gook about making total cost of air travel transparent.
Nothing about competition, but at least it was generally positive.
As for the bag fee refunds, it should be embarrassing to the airline industry that the DOT filled this regulatory gap. To take money in exchange for handling a passenger’s Samsonite would imply a commitment and a de facto contract to do what is expected when a bag is checked – to get it to the customer at the other end of the flight. If that fails, the airline should refund the dough.
Whether or not some airlines may have already been doing this is not the issue. The DOT saw a chance to regulate, and they jumped at it.
Data Not Understood. The biggie, however, that has the lightweight media all in a dither, is the requirement for airlines to report “on-time” performance for all of their flights, not just the ones operated under the brand-name operator’s certificate. Because of the DOT’s 19th century reporting system, they still think “certificated carrier” is the same as “airline.” (So does most of the media as well as the academics that churn out “quality” reports every year.)
The media saw the term “regional airlines” in the directive and proceeded to charge off into the weeds, with lush stories about how this will reveal the sorry state of schedule performance in “regional” markets. That’s because, as we all know, that these “regional airlines” just fly to “regional” markets.
Silly Headlines…We’ve been regaled with misleading headlines, like “Airline On-Time About To Get Worse” – clearly demonstrating that knowledge of the subject matter is not a job requirement. Since these reporters are clueless of how and where these “regional airline” assets are used, to make such as statement again cautions us to be suspect of much of the veneer stuff that gets onto the wire. The fact is that they have no idea regarding what the actual numbers might be, but they see “regional” and assume that it’s all small airports, and all substandard performance.
Point: the on-time performance of the industry won’t change. It’s just that more of it will be reported. But to read these dimbulb headlines, one would think that we’re about to see more and more delayed flights because of new disclosure requirement.
It’s another reason that much of what’s regurgitated by the media is about as reliable as the information from a third-rate used car lot. What these writers – many from big-name news sources – don’t know is that these “regional airlines” are neither regional nor airlines, and they provide lift that is used in markets such as Denver-Phoenix, Chicago-Atlanta, and Denver-DFW. Real “regional” cities.
But nonetheless, knowledge of the subject matter isn’t much of a requirement, anymore.
By the way, subscribers to Aviation DataMiner™ have always had more accurate on-time data, because we re-map the information to reflect where “regionals” are flying for majors. Unfortunately, much of the “regional airline” data doesn’t exist, because operators of 50-seat and smaller airliners up until now have not reported any such data. The academics that slush out airline reports and the see-it-and-regurgitate-it media don’t bother with this bit of information.
As for the gobbledy-gook from the DOT about full transparency of the cost of travel, the fat is in the fire for the airline industry. Regardless of any philosophical concepts about “re-regulation” it is clear that the DOT is going to do something in this area unless the industry jumps to it first. Consumers don’t always have a clear idea of the cost of a flight, and even if it’s just 1% of customers, it’s an opportunity for the feds to get involved.
And that’s usually not good for anybody.
LAS: The First China-Welcome US Gateway
BGI and its partners at China Ni Hao are honored to be assisting Las Vegas McCarran International Airport in implementing a comprehensive program to become America’s first China-Welcome gateway.
When passengers from Beijing deplane from Hainan Airlines this December, they will discover an experience that will be the standard for other US airports to follow. Today, visitors from China find US facilities informationally-foreboding and unfriendly. LAS will be just the opposite, with a program that starts before the visitor leaves China and goes all the way to the curbside at LAS.
Of course, just about every large airport will claim they have some type of “China ready” program, but they are typically just cultural, not functional, activities. Las Vegas McCarran is the first to actually implement a comprehensive pro-active functional approach.
For more information on how LAS is moving into the future, click here.
October 17, 2016
Touch ‘N Go…
Congratulations to Colorado Springs, which now has gained Frontier service to both Phoenix and Orlando, joining initial service to Las Vegas. We are honored to have worked with the airport and community entities in starting this air service ball rolling.
China – It’s Not Far Away, Anymore.
As Network Carriers Re-Think Route Systems, China’s A Strategic Opportunity For Regional Airports
At a secondary US airport, gaining another 500 – 1000 or so annual passengers may not sound like much.
But if they’re connecting to and from international flights – like, from China, airline planners would sit up and take notice
It’s Revenue-Quality, Not Just Load Factors. It’s not a distant fantasy – outreach to capture more China traffic is right now an opportunity that virtually every non-hubsite airport in America can pursue. We’re working with some that already are.
In an environment where network carriers are looking to shift resources to higher-and-better use, the addition of strong new international traffic capture at a small or mid-size airport could be the difference between getting an E-175 upgrade on the next schedule, or a red-line through the entire schedule. (Which we just witnessed at Elmira and Binghamton, where both American and United have announced that they’re leaving town. One reason may be that the third airport in the Southern Tier – Ithaca – likely has more ambient international traffic, due to the presence of two major universities.)
Another ARC Study Or Leakage Analysis Both Miss The Future. This is another indication of how traditional “air service development” programs miss the mark. That’s because they usually are trying to recreate the past, in a near-total vacuum of futurist planning. Almost consistently, they focus on the local, instead of the global.
Chinese Consumers Are Actually Looking For You. But Can They Find You? Traditionally, the approach to getting Chinese business has been having exorbitantly-expensive “representation” with a surrogate office in China. The idea was to have local assistance in getting your airport or community in front of Chinese consumers. For corporate clients, having that access could be important.
But when it comes to attracting Chinese leisure traffic, that’s not the case anymore… these consumers are actually looking for you, and they aren’t making telephone calls to that expensive representative office located on Shanghai’s Waitan.
According to a new survey of subscribers from Travelzoo, over 70% of all international trips from China initiate with research and booking via their smartphones. When you consider that Chinese visitors to the US will exceed 23 million over the next five years, and the fact that this is a segment that’s focused on seeing all of America – particularly rural America – it’s a clear sign of opportunity for airports and communities across the US.
The question is – is your airport (and its region) accessible to the 300+ million Chinese consumers who are, right now, exploring the cyber world to plan their next vacation? The 70% that are using their smartphones to find out about America, is it there?
Your airport can be. More cogently, it should be.
They Spend A Lot – But Only In Places They Know About Before They Arrive. As we’ve covered in our China-Welcome™ programs, presented with our partner, China Ni Hao, the high-spending leisure market (over $8,000 on average per visitor) from Middle Kingdom will represent the #1 international growth market, and unlike other nationalities, they are focused on seeing secondary America, often places Americans don’t even know about.
Today, the format is to fly to a US gateway, and then use motor coaches to tour the countryside. But increasingly, the propensity in the future will be to connect onward into US markets, instead of starting from the air gateway city.
This is particularly true with the emerging Chinese millennial consumers, which have very different and more demanding demographics compared to current waves of visitors from China. They will be seeking to fly into interior cities to start their US itinerary, and will be seeking higher levels of service at these points. They want to be assured that they are welcomed.
Furthermore, they’ll only be going to go to secondary airports and venues that they can learn about before they leave home.
Are Your Venues Accessible On Baidu? What this means is that US airports and venues that are accessible on their smartphones in China and on the web have the competitive edge. Furthermore, US venues that are accessible on Chinese OTAs such as CTrip, Qunar and Tuniu are ahead of the game – because US OTA’s are not widely used in China.
Getting into the pockets of hundreds of thousands Chinese consumers – literally – is the key to getting more of this traffic into town. China Ni Hao has cost-effective programs to get your airport and community up and profiled in China with a business-authorized WeChat app that can proactively give you the competitive edge, from just informational sites, to fully-interactive features that engage the consumer. We can also help get your destinations accessible on Chinese OTAs, too.
Respect Is Reaching Out – Even Locally. Chinese consumers surf the web probably more than any other nationality. So having the basics of your airport and region showcased in Chinese – even on your current US website – is a huge advantage.
It needs not all the bells and whistles on the English pages, but instead a professional page for your current US website that Chinese netizens can see and become familiar with your airport and community, as a starting point for more research.
It’s not complicated – if done right: Keep it simple… Illuminate the ease of connecting from China. The levels of air access. Ground transportation. A brief review of the sights and venues. Information about having brochures and directions ready and available for Chinese guests. (You do, don’t you?)
The point is that they do surf the web, and airports that show the respect and desire to reach out to them have the advantage.
Doing It On The Cheap – A Great “Keep-Away” Sign. To be clear, nothing, be it a web page or a brochure outlining rental car options, or a list of nearby attractions, should ever be “translated” into Chinese – ever.
There are lots of quick-on-the-web translation services, but they don’t have a clue about travel or airports. Or about terminology. They just take the English and change it to Chinese. That can be a huge turn-off due to the near-certainty of laughable and sometimes insulting copy. Heck, expressing air transportation and air travel to folks who speak English can be a challenge.
Our partners – familiar with the air travel industry on both sides of the Pacific – trans-create the message to get your image across – and in Chinese web format, which visually is very different than US sites.
Showing Incumbent Carriers You’re On The Team. Getting China-Welcome™ and China-Visible is not an expensive process. But it is one that displays your airport and region as one that wants the business. It’s also a vehicle to show incumbent carriers that you’re working to bring them more long-haul international traffic. American, Delta and United all have new reach into China, and they would be excited to find their domestic airports reaching out to get better known in the Middle Kingdom.
Our partners at China Ni Hao can deliver a program tailored to your airport. We’re in that process now for several clients, including building a comprehensive China-Welcome™ system for Las Vegas McCarran International Airport in preparation for their first nonstops from Beijing this December.
Check It Out – It Will Get The Attention of Incumbent Airlines. Whether it’s a deployable China-Kit™ to welcome episodic passenger movements, to developing on-hand Chinese language brochures, to developing your own website in China or just a local page on your current site, or a fully-interactive business WeChat app, CNH has the tools and professional expertise to put your airport ahead of the competition, and to show incumbent carriers you’re working to build their international traffic.
For more information, click here to get a view of how we can get your airport on the consumer map in China.
Without the need for an expensive trade office in Beijing.
October 10, 2016
Looking At 2016 Traffic…
Fleet Shifts & Low Departure Growth
Entering the fourth quarter, Airports:USA® traffic data indicate enplanements are up approximately 4.1%. However, this will moderate in the next three months as carriers slow departure expansion.
This tracks almost exactly with the increase in scheduled capacity – 4.0% – for the same time period. However, total flight departures were only up 1.3%, reflecting airline fleet shifts into larger units of capacity.
Fleet Changes Will Continue To Alter Air Access Patterns. This points again to the need for airport strategic planning to focus on the fact that the evolution of fleet capacity and fleet capability will be a key driver in how air access evolves across the US. It gets back to the new imperative in air access planning – the first step for communities, before any money is tossed at more “studies,” is to get a full understanding of the realities of the airline industry, as they relate to the local airport.
As we pointed out at the Air Access Workshop at the 21st International Aviation Forecast Summit, the economic capabilities of new fleets – demonstrated by the retirement of 50-seat jets – is changing how regions will be accessed in the future.
Poster-Children. As just one example, we analyzed Topeka’s 2014 failed experience with United flights to ORD, We demonstrated the hard economic reality that some local airports can no longer support consumer-competitive air service, when better and more travel-time efficient options exist. In the case of Topeka, the air access options at Kansas City in all regards – travel time, schedules, and consumer choices – made the service at the local airport consumer-DOA. That’s not anything that related to Topeka – but its geographic location and airline industry realities rule out full-schedule service from a network carrier.
It makes little difference how many tickets and bookings are made in the local area – the 80 departures per day at MCI represents superior air access to what can be supported at Topeka, and that’s where consumers are going. The same dynamic applies to several other points in the nation.
Flat Fourth Quarter. Looking at the rest of 2016, it appears that the airline industry in general will not be adding any material additional flying, although this varies between carriers….
Note that the main full-network carriers, AA, DL, and UA are as a group not adding more departures in the 4th quarter, and the capacity increase is only due to larger average aircraft size. Point: the carriers that can deliver the globe are not in an expansion mode, and will be even more focused on highest and best use of resources in the coming year.
China-Welcome Program Delivered At Harrisburg
BGI and its partner China Ni Hao, LLC., last week delivered a comprehensive workshop regarding the potential for attracting additional Chinese visitors to the region in 2017.
Hosted by Harrisburg International Airport, the event gathered representatives from the wide range of tourist attractions in the region. Currently, Chinese visitation generates over 40,000 annual hotel nights in the region, with guests visiting venues such as Hershey Chocolate World and Pennsylvania’s Amish country.
The workshop concentrated on the evolving nature of the Chinese leisure visitor, and the fact that the competition from other US points to capture this traffic is increasing. China Ni Hao principal Jack Lok, owner of the largest generator of China-US tours (over 500,000 in 2015) outlined how innovative marketing and more aggressive programs to accommodate Chinese visitors has paid off for venues across the East Coast.
Boyd Group International and China Ni Hao are now working with a number of community and airport clients to craft outreach programs that can capture more of this very high-spend travel sector. This spans the spectrum from a large international gateway just getting China flights, to smaller communities as exampled by Harrisburg. It’s more than Broadway they want to see.
For more information on how we can craft a China-Welcome program for your airport and region, click here.
October 3, 2016
US Major Airline Turboprop Fleets – Time Is Running Out
Last week, a leasing company took four Bombardier Dash-8s to the scrapper. This may be a harbinger of some future fleet changes in the US.
The airplanes involved were very early models – among the first 20 to be built in 1985, and had been out of service for more than three years. But the reality is that at some point, the remaining <50 seat turboprops operating under major airline brands will – write this down – will – get retired.
Sooner, probably, than later.
Tie this with the declining economics of 50-seat jets, and the writing is in the sky regarding the future of air access levels at several US airports. This will be a real challenge crisis for a few communities – it will be time-zero to face the fact that the concept of air access needs to shift to regional from “local.”
More jive-time “market studies” or rap sessions between airports or speed-date events won’t change it.
ASD Programs: Start With The Truth, First. As we noted last week, it’s critical that small communities and their airports are fully advised on airline industry realities before they get sold a bill-of-goods consulting project to “find more airlines.” In many cases, there aren’t any.
Today, not to do so is as questionably unethical as a casino claiming that playing at a blackjack table isn’t a game of chance.
The Singapore A-380 Lease Return
Singapore Airlines has decided to turn back to lessors its first-received A-380.
As might be expected, this has the usual suspects in the media buzzing about this being another nail in the jet’s coffin. Makes a great story.
But it’s off base. While sales of the A-380 have ground almost to a halt, this move by Singapore is completely unrelated to the market for the aircraft itself.
The unique attribute of Singapore Airlines is that they keep a very young fleet, and Singapore as a nation has very favorable financial regulations allowing this. One article covering the matter noted that the airplane was being returned “after just ten years of service.”
Here’s a flash: That A-380 was ready for retirement, based on the airline’s traditional fleet plan. The average age of Singapore’s fleet is just 7.3 years, and when the 787s operated by Scoot are factored in, it’s more like six years.
So, as Simon Pickup, VP-Airbus outlined at the 21st Boyd Group International Aviation Forecast Summit, this fleet move by Singapore is consistent with their traditional fleet planning, and not a factor in the A-380 market, per se.
The Issue of US “Third World Airports” –
Unfortunately, It Depends On Definition – And The Politics of The Source
Remember when Joe Biden – who, let’s face it, wouldn’t know the qualities of an airport from an ATM machine – said LGA was an example of the “third world airports” in the US?
Got lots of press. He was lauded for his vision, with “uh-huhs” of agreement from across the media, along with articles depicting how we’ve fallen behind the rest of the world. Not much substance in these stories, which usually focused on large new facilities in Asia. It was truly a cause celebre.
But when Donald Trump says it, well, you’d think it’s a whole ‘nother country, with transparently-vapid media articles about how he’s flat wrong. Intelligenct people, they point out, should question this allegation – something they forgot to do when Biden blathered on about the same subject.
Intelligent people should question the credentials of the media types putting this stuff out.
It’s The Vision And Planning That’s Third World. To be clear, most of our airport facilities are certainly not “Third World.” Take a gander at Springfield, Mo, or Bloomington/Normal, or Sarasota, and one cannot call them anything but first rate.
Yes, LGA, which was the airport wonder of the world in 1939, is a tough facility. When it was built (much of it on land fill in Flushing Bay), the largest aircraft was 21 seats. The passenger terminals were rebuilt from the ground up in 1964, and there’s a plan in motion to rebuild it again.
But, at the risk of being politically incorrect, our airport planning and priorities are shamefully third rate. And, in particular, our international arrival gateways are in many cases an embarrassment.
There is a valid point to be made regarding our government finding it more important to toss $130+ billion at Iran, which openly wants us dead – literally wants to kill us, than having adequate aviation infrastructure. Then there are the pallets of cash delivered in the night to Iran, like a smarmy drug deal. Yet our airports can’t get a $3 increase in the PFC through Congress. If that isn’t Third World thinking, Third World planning, and Third World government sleaze, nothing is.
Every American should be embarrassed.
Our airport system as a whole faces huge shortfalls in finding the upgrades and expansion it will need in the next 20 years. Worse, our hub gateways are effectively “keep out” signs for foreign visitors trying to access secondary US cities.
As just one example, we pointed out at the International Aviation Forecast Summit that, because of the fact that our international hub gateways are poorly designed to handle the current and coming tsunami of Chinese tourists, instead of connecting on to secondary cities, they opt for bus tours from the gateway city. Across the nation, that costs regional airports hundreds of thousands of annual passengers. That’s Third World planning and Third World Thinking.
Taking Matters Local – The Feds Can’t Do It. BGI partners at China Ni Hao, LLC., are now working with a number of client airports to address this…. as well as with key tourist venues as well. From a major international gateway airport, to regional communities seeking to build more of these high-spend consumers, we are developing tailored China-Welcome programs that entail both local activities as well as digital outreach in China. Actiuvities and programs that recognize that the future is in accommodating world, not just US travelers.
We’re working to counteract the effects of myopic federal airport policy in the US. If your community is interested in joining the advanced-thinking airports that are taking the initiative to international-related traffic, take a look at our services by clicking here.
September 26, 2016
Air Service Access Planning…
For Small Communities, It’s Time For Some Reality…
….And Much Higher Standards of Analysis
At the 21st Boyd Group International Aviation Forecast Summit, a lot of cutting-edge concepts were discussed. As usual, we made no attempt at being politically-correct, or giving much attention to consensus thinking.
One of the pre-Summit Workshops took direct aim at some of the misconceptions that small communities have – or in some cases, have been misled into believing – regarding air access from the global economy.
The Goal Is Achieving Air Access, Not Just “Flights.” Putting the situation in context, we focused on the thinking of America’s greatest combat strategist – General George W. Patton.
His mantra was to never try to make circumstances fit your plans, because it can’t be done, and leads to certain failure. Instead, plans must be crafted to fit the circumstances.
In that regard, if the good general were around today, he’d take a bazooka to many of the “air service development” programs being pawned off on unsuspecting small communities.
Ignoring Unpleasant Battlefield Realities. Take a look – there are only a few airline systems today and they are all easily identified. Each has a firm tactical plan on how and where they operate. These are the “circumstances.”
When it comes to small communities finding access to the rest of the globe, the issue of “finding the right airline” is usually not a mystery. It’s AA, DL, and UA, and in some regions, AS.
Yet a lot of ASD programs, such as some “market studies” and “consumer surveys” completely ignore this . They purport to represent that just tossing “data” at an airline will get them to see the light. They often fail to disclose the limited airline options, and instead tend to imply that there are lots of options. There aren’t.
It’s all too common for a community to get a “study” that glowingly describes all the wonders of the passenger demand in the region. Jobs are growing. The economy is booming. The ARC data shows lots of tickets sold in the region. The circumstances are perfect for air service, right?.
Nope. Unless these are related to the total battlefield circumstances, they are useless.
A lot of these “studies” are a one-sided view of the battlefield, with wishful thinking and amateur assumptions. No hard intelligence is developed regarding the two core battlefield fundamentals in air access planning.
These are: the consumer, and – critically, the airline industry. Almost universally, these are not included in the analyses. That’s because in many cases, they torpedo the whole argument that air service – or additional air service – is economically possible at the local airport.
Regardless of Civic Pride, Consumers Make Rational Choices. Most ASD approaches simply assume that the local consumer will flock to service at the local airport, with near-zero analysis of the comparative strengths and advantages of alternative options.
Worse, most small community ASD “studies” and “analyses” and “leakage projections” completely ignore another major circumstance – the structure, strategies and fleets of the airline industry. They assume that there are lots of airlines out there, and just showing “demand” will get “scheduled flights” at the local airport.
The Unshakable Reality – Regardless of Wishful Thinking. The global economy is a logistics economy, one where the resources will naturally flow to where they are most efficiently utilized. That is a solid reality too often ignored in some of the ASD programs pawned off on small communities.
Let’s be blunt – these are misconceptions that are often encouraged. If many of these small communities were informed honestly and directly of the airline industry “circumstances” there would be a lot fewer “market studies” that magically conclude that service is possible, but only with more expensive consulting voodoo.
The Air Service Value-Equation. Regardless of how many “studies” are done, or how many task forces are created in the community, at the end of the day, successful air service must – must – conform to a clear “Value-Equation” for the consumer. These are the attributes that drive consumer choices – and without any one of them, service at the local airport is dead on arrival.
At the Workshop, we outlined the five absolutely-necessary value-equation attributes that must be in place to support connective scheduled service. These are the circumstances necessary for any successful air service. This is regardless of jive charts depicting “how many tickets are bought” in the region, or how many respondents in non-scientific surveys claim that they’ll use the local airport,
The Value Equation consists of Access, Speed, Convenience, Cost-Effectiveness, and Market-Competitiveness. They are not difficult to analyze for a given market. The sad fact is that many ASD programs ignore them completely.
There is nothing pejorative regarding a local airport not being able to meet the consumer air service value equation.
It is just an economic fact of life that must be accommodated in the airport’s long-term strategic planning.
We’ve seen it at St. Cloud. At Youngstown. At Chico. At Modesto. At Topeka… The Value-Equation, within the economic realities of air service, simply could not be accomplished at these local airports. Other consumer options are superior to the air service levels that can be supported at the local airport.
As a poster-child example, in the Workshop we looked at the 2014 experience with Topeka’s ill-fated attempt at re-establishing air service at the local airport. Two United Express flights instituted to Chicago. Lasted for nine months.
The main problem: the air service options at nearby Kansas City International were far superior to what could be offered at Topeka.
The name of the game is access – and the two flights at Topeka offered woefully inferior access to the drive to access flights at MCI. For passengers connecting beyond Chicago, MCI offered more convenience, less travel time, and dozens of alternative options.
For example, the local service offered only one viable connection to LGA within a 90-minute connect window. Consumers could drive to MCI, and access four nonstops to LGA, and have less travel time, including the drive. Plus, there were 17 other viable connect opportunities to LGA at MCI.
This is just one example. Underscoring this is the trip originations were predominantly outbound – the service was not convenient for inbound travelers.
Even the demographics were a problem, with much of the Topeka catchment area being east of the city, and even more convenient to MCI.
This represents the reality circumstances of Topeka. Airline and consumer circumstances result in MCI being the global access point for the region.
The planning did not consider the full competitive Value Equation with MCI… a situation that, in light of fleet changes at the three main network carriers – AA, DL, UA – is essentially now permanent, at least for fully-connective local air service.
The point we made in the Workshop: planning must fit the circumstances, and at Topeka, the “circumstances” of the consumer superiority of having MCI within easy drive distance were ignored.
This is not to imply that Topeka can’t support some forms of scheduled service. Allegiant came and went, but could be back, for example. But in regard to fully-connective air service from the rest of the globe, MCI is now the access point for Topeka.
That is not an economic detriment – it is one that should be accepted and incorporated into the region’s economic planning – because it is not going to change.
This is part of the new dimensions needed in airport strategic planning. Trying to recruit “scheduled” flights per se is not a sound or even focused objective.
The name of the global game is access – and that’s what we have seen at Topeka – where access is MCI, or at YNG, where access is Pittsburgh, or at St. Cloud, where the 500 departures per day at MSP deliver global connectivity. More ASD voodoo, or more speed-date meetings won’t alter this reality.
The New Dimension In Airport Strategic Planning. At BGI, we are working with our airport clients to take advantage of the total opportunities represented by the global economy.
This includes futurist tactical analyses, strategic visioning, and logistical positioning. Air access is a key part of this, but we don’t mislead clients into assuming airline industry circumstances are anything but what they are.
If your community and airport are looking for planning to optimize the future, give us a call.
We focus on the future. And the circumstances that will shape it.
(The presentation from the Patton Air Service Workshop – which covers the current and future issues regarding ASD, can be requested by clicking here.)
Monday Update – September 19, 2016
The Updates are live this week at the IAFS!
Monday Update – September 12, 2016
US Airline Fleet To Expand 20% In Next Ten Years…
But It’s The Mix That Tells The Airport Planning Story
When it comes to turbojet airliners, small is going away.
Big isn’t growing much, either.
That’s a quick synopsis of where US airline fleets are going in the next ten years. The economics of air travel and the realities of the airframe business point to a very different air transportation system. The upshot is that lot of smaller communities seeing scheduled passenger service evaporate from the local airport.
This doesn’t mean most will lose air service access.
The reason is simple: the economics of jet airliners under 70 seats – mainly 50-seaters – are heading south. There are no replacements, and that means the structure of air transportation system in the US will also evolve.
New Fleets – New Strategic Imperatives. Part of that evolution may well include the re-introduction of large turboprops to the US airline system. That’s heresy at the moment, but a dynamic that may come into play. Large turboprops – 65 – 70 seats & up. The days of 15, 19, 30 seat airliners in mainline scheduled service are over. Gone.
The Boyd Group International 2017-2026 Global Fleet Trend & Demand Forecast will be unveiled next week at the International Aviation Forecast Summit in Lake Tahoe. In addition, all the major aircraft manufacturers will be discussing their views of the future as well. It will be fleets that determine how airlines plan for the future, and this dictates how airports and communities must also plan.
Globally – Need For 17,000 New Units Through 2026. The demand for new airliners is going to be very robust over the next ten years, due largely to the competitive imperative for carriers to re-fleet with up-generation airliners. North America will need almost 3,600 units to accommodate increased demand as well as retirements of older aircraft.
Every aircraft manufacturer now has product lines that are materially more efficient that current-generation models. The Neo, the Max, the E-2, the MRJ, and the CSeries all represent major improvements in fuel, maintenance and other operating costs. For airlines, it’s a competitive imperative to re-fleet. Not quite the same imperative as piston-to-jet, as was seen in the 1960s, but probably a distant second.
What isn’t changing is the fact that small jets are going away. Here is a fleet mix comparison.
Source: Boyd Group International Global Fleet Trend & Demand Forecast 2017-2026
Note that <75 seat jets are declining to barely 10% of the fleet. That, even, may be optimistic. New aircraft in the 75 to 125 seat categories will replace them in many applications. But where an airport can barely support 50-seaters today, that’s a call to re-think the region’s air access planning. The economics of air service are changing because fleets are evolving. The “production line” demands more revenue to work.
Uncertain: The Shakeout In Small Lift Providers. Major airlines will need a lot fewer 50-seaters in the coming years. That puts some question regarding further consolidation of the industry segment that provides these operations – what are still called “regional airlines.” although they are neither regional nor airlines. Even in the higher capacity applications, there are no sure things. For example, Republic put 12 E-175s in storage last week. Expensive machinery to park.
The Next 50-Seat Jet Is Coming… But It’s Anything But Regional. More heresy. Here’s a sleeper. The next big thing in airliner evolution will probably be in the sky by 2023. At the IAFS, we’ll be covering it.
At the IAFS™ we’ll be exploring what all this represents to airport planning.
Planning With Blueprints For An Airline System That No Longer Exists. One thing is certain – with the retirement of 50-seat “regional” jets, the air service planning picture will change materially. The days of traditional “air service development” – do a study, meet with airlines, toss a grant in their lap and then, voila! get flights, are over.
New planning – air access planning – will be the future. The evolving mix of airline fleets is a factor that most of these endeavors ignore completely.
Strategic Planning Is Like Warfare – Understand The Terrain or Lose. In this regard, we’re also holding a special pre-Summit workshop, The Imperatives of Patton-Like Airport Planning. We thought this would be an interesting and informative model to look at what’s going on today with air access planning in the US.
If the good general were around today, he’d take a bazooka to most traditional ASD approaches, because they are aimed at objectives that either don’t exist, or cannot be attained. And they waste a lot of resources.
It’ll be a fun session – as will all of the pre-Summit Workshops.
Looking Forward To Next Week. We are excited to welcome the hundreds of aviation leaders to the 21st International Aviation Forecast Summit. We want to thank our hosts, Reno-Tahoe International Airport, whose staff has worked with us literally seven days a week to make the event a success.
Our venue, the Resort at Squaw Creek, is now fully booked for the Summit. However, if you have not yet registered for the IAFS, give us a call or click here and we will assist in finding alternative accommodations.
Monday Flash – September 5, 2016
To Start, Speaking About Air Access Planning..
Congratulations to Santa Fe in recruiting American Airlines service to Phoenix.
Boyd Group International is honored to have crafted the successful SCASD grant that made this possible. We were also delighted to work with Kent Myers of Airplanners, LLC and various area stakeholders in developing the grant strategy.
This SCASD grant was one of just nine awarded in 2016, and the first to produce air service results.
AVSEC Fifteen Years After 9/11
96% Failure Rates. Management Incompetence
No Accountability. But A Happy Congress.
It’s like going back in time.
Aviation security today is uptight and keeping us safe, we’re told – just like we would have been told back on Monday September 10, 2001.
Just ask some of the pandering network reporters who will no doubt be doing retrospectives this week, probably with the sycophantic B-roll walk-and-talk pieces with Jeh Johnson.
Nobody responsible got fired after 9/11 – indeed, Bush lauded those responsible.
Later, the 9/11 Commission doctored out the testimony from Red Team Inspectors regarding the corruption and cover-ups in Jane Garvey’s FAA security mess. Might be embarrassing to one Party or the other… or both. Can’t have that.
Today, we’ve seen 96% screening test failure rates. Just like before 9/11 – maybe worse. Today, there is no contingency or event-mitigation planning, as witnessed at recent terminal evacuations at JFK and LAX, where our Homeland Security procedure is to have people run from a noise in all directions, like gazelles in a thunderstorm. No plan. No anticipation. Sorta like pre 9/11.
Yet, we’re told that we are safe… just like 15 years ago. And nobody is held accountable for sloppy work. Just like the day before 9/11.
And, just like on September 10, 2001, Congress is quite satisfied.
What’s wrong with this picture?
Disruptive Prediction: $30 Oil – And Lower Jet Fuel, Too
At Boyd Group International, we assist clients in planning for the future, with cutting-edge forecast expertise that focuses on independent research, not the “consensus.”
In these endeavors, we interact with some of the most “disruptive” colleagues in aviation.
The “consensus” today is that oil prices, and hence jet-A, will be going up in the next 12 months.
As usual, this may be mostly group-think. Not always wrong, but it can simply represent repetition of what becomes things that “everybody knows” and therefore aren’t questioned.
Oil prices are a critical part of forecasting aviation activity. So this past week we’ve spoken with Ben Brockwell, CEO of Opis, a leading analyst in the global petroleum business to get some professional insight.
Some might remember that at our International Aviation Forecast Summit five years ago, at a time when the consensus concluded that $80 was the new floor for oil, Ben presented data to show that oil would likely drop below $40 within the year.
This was heresy. All the experts disagreed
But Ben’s data and forecast were accurate. (That tends to be a common thread among presentations at the Boyd Group International Aviation Forecast Summit. Group think is not allowed in the door.)
More Disruptive Predictions. Currently the consensus is that airlines are in for some strong upward pressure on fuel prices. So, here are the points Ben made:
- For two years now oil supplies both for jet fuel, diesel, gasoline and crude oil have been exceeding demand, so global supplies have been growing.
- As recently as end-August 2016 U.S. oil supplies were at an all-time record of some 1.3 billion barrels (combined crude and finished products)
- There are those who believe – and you can see this from many forecasters whether they are banks, IEA, or EIA – that oil supplies are tightening and oil demand is rising so that the big oil surpluses that have driven prices down will clear up and prices will rise – to $55 to $60 by end year and 2017.
Don’t bet on any of that happening, for some very cogent analytical reasons…
- Crude oil production in Russia, the Middle East, Africa, and elsewhere is rising and will rise through the next few months and into 2017.
- It will take a consumption increase of 1.4 to 1.5 million barrels per day in 2017 to clear up the surplus. However, demand projections are running to be just 1.2 million barrels per day.
So that is a potential 300,000 b/d supply expansion on top of already high inventories.
Going forward the equation is not likely to change – in other words oil supplies will continue to exceed oil demand and oil demand growth projections.
- All of this will keep a lid on prices and could even push prices back into the 30s in the fourth quarter.
- Not until oil supplies start to shrink and oil demand rises at a faster pace will prices go back up. That will not be in 2016 and early 2017 and may not be until 2018 now.
So oil prices have a better chance of being in the 30s and 40s later this year than the 50s or 60s. That’s going to have an effect on airline strategies in the next 18 months.
Leaders Don’t Follow The Pack. That’s Why They’ll Be At The IAFS. Note that this is the type of independent, futurist business intelligence that is delivered every year at the International Aviation Forecast Summit. Ben can’t join us this year, but we will be discussing the future with the executives making the decisions in aviation.
- Airline & Air Service Trends. We’ll be talking with CEOs and senior executives from American, United, Delta, Frontier, and more. Interactive discussions, not just presentations.
- International Interaction. We’ll be exploring how the global economy will affect airports, communities and all areas of aviation, again, one-on-one with industry leaders from around the world.
- China – The Global Mover – Even In Rural America. We’ll be outlining how China and the Chinese economy represents opportunities for US airports and communities. We’re presenting the first Airports:China™ air traffic forecast, and, along with experts from China Ni Hao, we’re holding an exciting pre-Summit Symposium on how communities can develop this new revenue source. This is in addition to discussion with senior executives of Air China and Hainan Airlines.
- Get Ready For The Next Disruptive Airliner Platform. And speaking of heresy, we’ll be looking at how supersonic airliners will be changing international air transportation in the next ten years. Boom Technologies will be at the Summit, and it will be eye-opening.
If you haven’t registered yet, click here for more information and take a look at the exciting agenda. Join your colleagues September 17-20 at Squaw Valley and get a jump on the future.
Monday Flash – August 29, 2016
Coming Soon To An Airport Near You…
Or, Yours, If You’re Prepared
Xiamen Airlines announced last week that they will be starting nonstop service to New York/JFK… from Fuzhou.
Now, think about it – how many folks in the US have a clue who Xiamen Airlines is, not to mention where Fuzhou is. (Or even how to pronounce the name. It’s Fu-Joe, by the way.)
But next year, they will have flights to the Big Apple. Similar to new flights initiated in the last two years by Hainan Airlines, the prospects for Xiamen in the Fuzhou-JFK market are incredibly strong,
Of note is that Fuzhou is not one of the largest airports in China – far from it. But Xiamen Airlines has ascertained that there is strong traffic potential from this provincial capital across the strait from Taiwan. And there are a lot of airports higher up the list that have US traffic potential, too.
Source: CAAC Data Analyzed By Aviation DataMiner
This is just another example of how Chinese tourism and Chinese investment will re-shape international travel patterns in the US.
BGI and our partners at China Ni Hao, LLC are now working with a number of airports in preparing their China outreach and air service strategies. Being China-Welcome(TM) will be critical as more and more of these visitors opt to connect to secondary airports to start their US itinerary. Plus, carriers such as Xiamen, China Eastern, Beijing Capital, Spring, and others will be looking beyond LAX, SFO, JFK, DFW, etc. as access points.
Forget the saber-rattling in the South China Sea – Chinese love the USA. They love the Thousand Islands of New York… Yellowstone… Pennsylvania Amish Land… Bar Harbor… Milwaukee and Harley-Davidson… And they are big spenders, too – over $400 per day, exclusive of travel. Big time economic impact.
We’ll emphasize it again: in the future an increasing percentage of these folks will be connecting to secondary US airports, instead of the traditional motor coach from the gateway city. This is an opportunity for airports that get not only prepared, but have an aggressive, but cost-effective presence in front of Chinese consumers. It’s what we do for our clients.
Join Us At The Summit & Get The Edge On The Competition. On September 17th, BGI and its partners from China Ni Hao, LLC will be presenting a special Workshop that outlines the scope of the opportunity and the importance of implementing a China-Welcome™ program. We’ll talk about things like communication touch points (CTPs) and deployable China-Kits™ to welcome episodic group movements.
The experts from China Ni Hao will be outlining how a cost-effective WeChat presence in China can not only showcase your airport and community – right in the pockets of millions of consumers – but could be a revenue source, too.
Plus, we are honored to have Mr. Hou Wei, Vice President of Hainan Airlines at the event to outline what his airline looks for in expansion markets.
The Workshop is part of the optional pre-Summit events on September 17 and 18.
In addition, we’ll also be unveiling the first Airports:China forecast of air traffic from key points in the Middle Kingdom to destinations in the US.
If you haven’t reserved you space yet, click here for more information on the Summit.
Monday Flash – August 22, 2016
The Changing Utility of Air Travel…
One of the more unfortunate aspects of many traditional ASD approaches is that they ignore the fact that the utility value of air transportation is changing.
As a mode of communication, scheduled flights have a different role in the mix compared to ten years ago.
The Track Record Is Clear. But Ignored In ASD Schemes. We could point to airports that have lost scheduled service not because of lack of community involvement, but because of changes in the air transportation system itself, compared to other communication options.
The truth is that at many smaller communities, scheduled air service at the local airport is simply not as time-effective or consumer-acceptable as the drive to a distant airport and boarding a better-timed flight.
So, that’s why traditional ASD schemes to revive or retain local air service at small local airports often fall flat on their faces – because the effectiveness of the two flights at the local airport as a channel of communication with the rest of the world is inferior to other options.
We’ve seen it at Topeka, at Chico, at Modesto, at St. Cloud. And other places. All that’s happened is that the consumer is using other airports – or other communication modes outside of air travel.
It’s Economic Gravity. Most recently we’ve seen it at Youngstown, where service with an independent-brand operator to ORD – scheduled (incredibly) some days with a single flight- cratered in six weeks, with the community out $120K. Consumers had more convenient and wider options by driving to Pittsburgh, compared to one independent-carrier flight a day.
The point is that air access is not about local flights. It’s about the utility value of the air service.
Big Markets – Value Shifts Here, Too. But this dynamic – the change in the value of air travel v other communication options is in play even in big markets.
Using Aviation DataMiner, we took a look at three traditional air commuter markets, and the traffic changes between year 2000 and the year ending 1Q 2016…
Let’s start with LGA-BOS – the poster child for air shuttle markets.
To be sure, the improvements in Amtrak have taken some of this, particularly in light of the dimbulb management of the TSA process at airports. But it makes the point: air travel is not as viable as a communication tool.
But it’s the same in other markets, too. We looked at two traditional commuter markets from the DFW Metroplex, and the trend us the same…
Austin-Dallas (both airports) has lost 40% of its traffic… SAT isn’t far off, either.
Several reasons for this – the time and hassle of the (supposed) security process at airports, increased cost of using air travel, and alternative communication channels, such as electronic meeting capabilities.
The point is this – and it’s one that traditional ASD approaches miss entirely – the utility of air transportation has changed, and the airline systems that deliver it have materially evolved, too.
Intra-Regional Service: Challenged. In our presentations, we use Albany International as an example of the shifts in the structure of the airline industry.
In 1981, ALB had @800K passengers. Lots of regional service to places such as Boston, Islip and Buffalo. The longest flight was to Washington.
Today, ALB has almost 3 million passengers. But the mix of air service is entirely different – while there are flights to many more destinations, the ability to get to Buffalo is now focused on the New York Thruway.
What’s changed? The entire air transportation structure.
More to Come… If you’re interested in exploring more of what we can expect in regard to air service access, join your colleagues at the Boyd Group International Aviation Forecast Summit, September 17-20 in Lake Tahoe.
In addition to the great line up of airline CEOs and executives, we also have a pre-Summit Workshop, The Importance of Patton-Style Airport Strategic Planning. It cuts to the chase regarding air service access planning for the future.
General Patton demanded that plans always fit the circumstances at hand, and adjust constantly. Toss out “the book” and pre-conceived notions. It will cut new territory – and take no prisoners.
Click here for more information and to register.
Monday Flash – August 15, 2016
Global Carriers – Breaking News:
Your Premium Passengers Are Up For Grabs
There’s a disruptive technology advancement coming that will materially alter how intercontinental airlines structure their product and their fleet configurations.
Front-End Traffic May Not Stay There. Today, global carriers depend heavily on high-yield “front cabin” traffic as a major part of the revenue streams that support long-haul transcontinental routes.
These customers sitting up front are the people who disproportionately pay the freight.
Front-Cabin Is Where The Revenue Is. Call it what they will, there is a declining differentiation at airlines between “business” and “first” class airline products. Basically, the distinction has disappeared. The battle for “business” class has stumbled carriers into upgrading these cabins to a product basically parallel to what was “first” class.
It’s pretty obvious how important these customers are to major airlines. They want to keep them coming back. Therefore, gee-gaws and fancy service is important to these folks, who pay between four times and eight times as much as the great unwashed sitting in economy on the same flight.
So, they luxuriate in whiz-bang, lie-flat seats that have more electronics than a Best Buy store at Christmastime, and each can cost as much as a tract home in rural Ohio. Those seats also gobble up a lot of cabin real estate, reducing capacity, making each seat more critical to sell.
The vittles and hooch served on a trans-Atlantic flight can cost as much as $100 a passenger, all-up. Other competitive amenities, such as dedicated airport lounges, add to the expense of attracting and keeping these customers loyal to the airline.
After all, the business class honchos will be sitting on board for 7 to 10 hours, so there’s plenty of time to lavish fine wines and culinary delights on them. But the fares more than make up for these expenses.
Critical To Airline Sector And System Revenues. Whatever the moniker – first, business, or whatever –the high yields this segment delivers are critical to the revenue mix that supports the 200 or so folks sitting in 17-inch wide seats behind the curtain, and, partially thanks to the customers up front swilling down French wine, lobster and Cointreau, they enjoy fares that might be much higher than otherwise.
It’s a balance. The front cabin helps make the economy section more affordable on many intercontinental routes.
That’s the status-quo of current long-haul flying at major global airlines. It’s fixin’ to change.
Vulnerability: Emptying The Front End of The 777. But what if there were new fleet entrants that diverted these front-cabin passengers? Took them away. Offered a superior product at the same fare?
What if today’s front-cabin traffic had a superior alternative compared to riding in today’s opulent 777s and A-350s for the equivalent of the better part of a whole work day? An alternative that deliver a superior product in the one factor most important to high-yield business-class passengers.
That factor is not a soft duvet on the lie-flat. It’s not the three-course meal. It’s not early boarding and a welcome cocktail. It’s time.
That’s what we’re going to be exploring at the 21st Boyd Group International Aviation Forecast Summit.
Within ten years, we can expect new-technology supersonic jetliners that will slice travel times in half or more, and deliver performance that will allow whole new market expansion. For business class passengers, it will be the choice, and global airlines will find themselves losing this segment unless they have these new airliners in their fleets.
Join Your Colleagues For Some Facts & Revolution. Boom Technology has an airliner that airlines, airports, suppliers and financial institutions will be following in the immediate future. A design that will shift airline fleet strategies.
It already has ten options from Virgin… and, based on its cabin, speed, and economics, will be the new “front cabin’ for major international carriers.
For attendees at the Summit, we’re going to be exploring this new disruptive entrant – one that the rest of the analyst category will be “discovering” months or years from now.
‘Nuff said. The Supersonic Revolution will be part of the IAFS™ and our attendee will be the first to get an in-depth discussion of this coming dynamic in air travel.
Register By August 20 & Be Part of This New Future. By the way, IAFS™ paid attendees who are registered by August 20, will be eligible for a drawing to win a model of the Boom airliner, and an invitation to the roll-out/early flight of the airplane. It means clearing your calendar for some time in 2020, but it will be worth the wait.
To register for the Summit, and reserve you space at the Resort at Squaw Creek, click here.
August 1, 2016
IAFS Forecast Flashes…
At the International Aviation Forecast Summit, September 18-20, we will be reviewing the latest revisions to the Airports:USA® enplanement forecasts.
Not just numbers, but the trends that are driving them.
Among the many forecast points that will be covered…
US-EU Traffic: On The Precipice. Big Time.
Paris. Brussels. Frankfurt. Saint-Etienne-du-Rouvray.
Sites of terrorist attacks.
It’s the last one – Saint-Etienne-du-Rouvray – that’s the alarm bell in regard to future trans-Atlantic traffic shifts. A small town in Normandy. At a church, not a metro downtown area or a major crowded shopping center.
Accomplished by a person who had actually passed a background check to work at the local airport.
If It’s Tuesday, It Might Not Be Belgium. What all this points to is that there will likely be a lot of second-thoughts among consumers looking to take the family on a European vacation.
As it stands, this could slam trans-Atlantic leisure traffic in 2017. The Airports:USA® data indicate that it’s possible that this sector could be hit by 25% or more. Since international traffic is directly or indirectly the driver for 29% of US airport enplanements, the effects of this will be felt across the US.
We will be reviewing which airports should be ready for this dynamic, and which airlines and alliances could be slashing capacity.
New Fleets – New Opportunities For Mid-Size US Airports
On the domestic side, the Airports:USA® forecast indicates enormous new potential for air service expansion at mid-size US airports in he post-2018 period.
It’s More Than Loss of RJs. New fleets are being introduced, delivering major changes in capacity mixes and airline strategies. Yes, smaller jets and turboprops are heading for the desert.
That’s true. The “floor” in regard to departure capacity is gravitating toward 75+ seats. This has set up the din about smaller communities losing flights at the local airport. And all manner of useless tail-chasing locally and nationally to reverse the trend – which is like trying to reverse gravity.
Circumstances Change. Planning Must Change. True enough, this is going to accelerate. But as we’ll be covering in the pre-Summit Workshop on the need for Patton-like air access planning, future circumstances won’t be anything like today’s.
These changes in fleet mix will also be positive for communities that address the future, instead of trying to re-create the past.
At the Summit, we’ll be forecasting the real effects of new fleets – and they are strongly positive for growth and expansion in mid-size airport service.
What most analysts focus on are things like the great economies airlines will get with new-generation aircraft such as the A-320NEO, the 737MAX, the CSeries, the Embraer E2s, and the Mitsubishi MRJ.
They are missing the main benefit and the main outcome when higher efficiency flying machines take to the skies.
It’s After 2017-2018, But It’s Coming. History is being ignored. The opportunity is being ignored. So, anybody want to take a guess at what this all represents for air access in the US?
Not to worry, we’ll be covering this – and which airports are in line for new air service opportunities in the future – at the Airports:USA® session of the IAFS™.
This will also be touched on during the Global Airliner Demand sessions, where Embraer, Airbus, Boeing, Bombardier and Mitsubishi will be presenting their product forecasts. We’ll cover it, too, in the Boyd Group International Fleet Trend & Demand Forecast.
The IASF™ App Is Now Up And Available
We have an exciting – and useful – new app for the 2016 International Aviation Forecast Summit.
Yes, it covers the latest information on the Summit, including the agenda, and the free transportation from RNO to the Squaw Valley Resort, provided by our hosts, the Reno-Tahoe International Airport.
But it’s also now a functional forecast app, too.
Check out the Updates tab on the app, which will provide insights on the forecast trends that are emerging in aviation. This week, we touch on the potential plunge in US-EU traffic. Throughout the week, it will be updated with other aviation forecast flashes.
So download the app via the QR code, and move into the future. It can also be accessed at the Apple app store.
It’s your glimpse into the future – and the pulse of the industry’s #1 event! Register now!