The Monday Flash – November 2,2015
Touch ‘N Go…

With Regret… It is with sadness that we note the passing of Scott Tyra. Scott was one of our friends at Allegiant in years past, and one of the most engaging people in the business. He and his sense of humor will be sorely missed.

Manila Passengers Are Finding Themselves Not Bullet-Proof. If we think we have airport security issues, take a look at Manila. There are reports that security people have been slipping bullets into luggage, and then shaking down the owners for a “fine.” A whole new dynamic in security-terrorism.

“Tarmac” Reaction…We were honored to get a lot of e-mails regarding last week’s review of terms the media uses to impress readers, even when they have little use in the airline business itself. A lot of airport folks agreed that the word “tarmac” might as well be Swahili in regard to aviation planning. We appreciate the feedback.

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The Monday Update…

Southwest Route Re-Organization…

It’s A Harbinger of New Across-The-Board Airline Economics

Sometimes, the truth can be unsettling. In some corners, it’s downright unwelcome.

This is often the situation when a community is honestly and factually advised that some of their air service goals are simply out of reach. While the future is not at all dim, the strategic direction of the airline industry has shifted fundamentally, and air service access planning must shift as well.

Often, that means what could be accomplished ten years ago is impossible today, because the airline industry has whole new cost and revenue imperatives. This is the reason we find that traditional “air service development” is outdated, because it assumes an airline industry that’s long gone.

And it’s particularly true in the case of small and mid-size airports misbelieving (or in some cases, outright misled into believing) that getting a “low cost carrier” is just a matter of dogged determination, a mayor’s task force, and several thousand dollars spent on another “market study.” All that sounds great, but it has no bearing on changing core airline strategies.

It often applies, also, to doomed-to-fail efforts to attract network carrier service to small airports that simply can’t generate traffic to support today’s – and tomorrow’s – airline fleets.

The Past Is Gone. No Amount of ASD Voodoo Will Bring It Back. The foundation of these “we’ll get a carrier” beliefs is an absence of knowledge of the realities of today’s airline industry. It’s natural and understandable for civic leaders not to have a grasp of these issues. But it’s another matter when these misbeliefs are encouraged by outside advisors. And that, unfortunately, is happening across the nation.

The emerging truth is that air transportation is a mode that increasingly does not have the economics to be profitable in low-volume missions. Period. End of discussion. In stone.

Time to wake up and smell the jet-A, or in this case, the lack of it. Last week, the raw economics of the airline industry sent another unsettling message. The major route changes announced by Southwest are more indicators that many communities will need to give up the traditional fantasy “air service development” planning and deal with the new airline industry realities. That doesn’t mean total or even partial loss of air access – it just means that the fantasy needs to get replaced with reality-planning.

Let’s take the Southwest changes at Wichita – an airport that serves one of the most globally-focused regions in the nation. Even it could not generate enough traffic to feed Southwest’s giant hub at MDW, even with a subsidy.

Other examples are Richmond, Greenville-Spartanburg, Akron-Canton, Flint and Grand Rapids. The WN point-to-point flying to Florida is history, and the future of the carrier at these airports will be based the levels to which they can feed a Southwest connecting hub – usually in competition with service from United, or American or Delta. Or a combination of these.

The point is this: Southwest – like the rest of the airline industry – is in a completely different economic and competitive world than it was ten years ago, and it is clearly adjusting to take advantage of it. They need to focus on strong revenue streams, and do not have the resources or the necessity of grabbing feed by adding more smaller or even mid-size communities to their route map that in any case cannot begin to fill five or six daily 143-seat 737-700s.

This applies also to any of the eight other full-schedule airline brands in the US. They don’t need – and can’t afford – to add more small communities to their route map.

As for Southwest, they are scrambling to add aircraft – literally from all over the world -to fund expansion to major points in the Caribbean, as well as take advantage of expansion at Dallas/Love. It’s important that small and mid-size communities looking to get WN into town understand this before tossing another 20 large at another “market analysis” to “lure” them into town.

Professional. But Still A Business. Southwest has a well-earned reputation for showing the utmost kindness and respect to communities that come knocking at their door. They even take on the expense of sending staff to speed-date meetings, to do 20-minutes with small airport service-supplicants.

But take a look at where the carrier has cut back, and the message is clear for a lot of communities that have been praying for the low-fare WN cavalry to come over the hill. That message is that it’s time to focus on other air service access options. They are not coming.

They are going to San Juan, Cancun, and Belize – as well as other, much larger places, instead. This is not just at Southwest – it’s across the airline industry.

Business Means Understanding The New Airline Industry. The structure of the airline industry, and its direction are very clear. The need is for air service planning to adjust to these dynamics. For a sad example, there are stories all the time, where an airport has “met with eight airlines to pitch service.”

The fact is that there aren’t eight airlines that are potential new entrants at any airport in the US. That’s a fact – and it’s unfortunate that communities can be so badly misled, and waste time and money being fed this stuff. Heck, we even came across a small unserved airport in the southwestern US that got set up to meet with Alaska Airlines to “pitch” service. Pluheeze…

If You Want Workable Futurist Air Access Planning, Give Us A Call. In our air service consulting work, we are direct and blunt about these new realities, and the opportunities they represent. That’s the reason we can be more effective.

Airline targets and their strategies are clear and obvious, and if they don’t fit a specific client’s situation, we say so upfront.

Understandably, that’s resulted occasionally in ruffled feathers at some clients. But the entire US airline industry has evolved. The bottom line is that it’s time that airports and communities realized that traditional “air service development” approaches are based on the false belief that getting more air service is a simple matter of just tossing out data, and the airlines will come running.

A targeted, surgical approach is needed.

At BGI, we apply our industry-leading forecasts and trend analyses to guide our airport clients to focus on objectives that are consistent with emerging airline strategies. Our Airports:USA® system is the most comprehensive and advanced enplanement forecast system in the industry, and our Aviation DataMiner™ program delivers more accurate industry analytics than any other source.

Plus, our unrivaled respect at the senior levels of airlines has been earned by dealing straight and always being at the forefront of aviation issues. Just take a look at the senior executives and CEOs who participate in our annual International Aviation Forecast Summit. No other consultant can match this level of respect from the global industry.

So, for communities who are looking to build truly futurist air service access planning – including international channels of access – we’d invite you to give us a call at (303) 674-2000, or drop us an e-mail by clicking here. Our approach is very different from other consultants. You’ll like the fresh air.

In any case, this past week should be a watershed in the ASD sector. There are more changes to come. Airports that anticipate them – instead of hoping to ignore them – will prosper.