Monday Insights: Ahead of The Curve

Monday, November 18, 2024

Pre-Observations For 2025

Some Random Points To Ponder.

An Airline Sector Constricts. The (former) ULCC segment will continue to shrink capacity. The main foundation of this sector – “ultra low” costs – is evaporating rapidly. That means the ability to further mine discretionary leisure traffic will continue to atrophy. Attempts to break out into mainline traffic capture are iffy at best due to low frequency and low brand identity. The NK bankruptcy is not in a market bubble.

Warning: International Upheavals. While the industry may be focused on the effects of what’s going on in the Middle East and in the Ukraine, the real lit-fuse to chaos is in China. Or, the potential for military action initiated by the criminals running China. Some reading of the tea leaves indicates that the current leader, Xi Jinping, is losing grip on some sectors of his Mafia-like party. Military action, even if just at Nationalist-held (Taiwan) Kinmen (Google it, if you must) will shatter Trans-Pac air demand.

“Regional Airline” Sector: Shrinking. These entities, which are mostly in the business of leasing small lift to major carriers, can be expected to restructure. It is cautioned that the move to introduce 50-seat CRJ-700s (“CRJ-550s”) may not be the long-term program it now appears to be.

Air Service Development: The Fantasies Evaporate. In 2025, reality begins to hit small community airport air access. It’s logical to believe that a lot if the on-going waves of efforts to resuscitate scheduled service at small local airports will eventually get illuminated as mostly snake oil. The economics no longer work in a lot (but not all) of cases.

More Airline Competition?  The economics don’t point there. The logical solution poised is a need to open gates and operating slots at large airports to let smaller airlines (like, who?) to come in and give majors a run for their passenger revenue.

That means more service from secondary and smaller cities to big metros. Here’s a cloudburst on that parade: the vast majority of small and mid-size communities cannot by themselves support O&D traffic nonstops with any level of frequency, even to huge metros.

Take a look at markets like GRR-ORD, or FWA-DFW, or even TUL-IAH. The O&D segment is supported and made possible by the connecting flows.

The only way that this type of increased competition can have a snowball’s chance in Miami would be if there were regulations and a system back in place that allowed/required interline connectivity.

Not going to happen.

More Trans-Atlantic Nonstops. Holy Hindsight, Batman! The new A321XLR can economically operate from a lot of major metros to/from the EU! Like, now that it’s obvious, the usual veneer analysts are predicting how cities in the USA could get nonstops over the pond. BGI has consistently outlined this dynamic starting over five years ago, amid skepticism from some in the financial media.

 “The 321XLR is a cramped, single-aisle airliner! No way consumers will want it!” ‘Course the fact that economy seats in the XLR are over an inch wider wasn’t considered. Earth to Wall Street: the presence of a coach-class lounge on widebodies where passengers could wander to over the Atlantic were remove 40 years ago. The fact is that the XLR would be more comfortable.

Watch for – actually airports need to market to – secondary EU airlines with strong hubs of their own. LOT. SAS. Etc.

Advance Air Mobility. Reality sinking in? The companies developing small eVTOL aircraft are vacuuming up investment money by the truckload. At least one has gone 86 in the last few weeks, and Tecnam has dropped its battery airplane program, albeit one larger than most of the eVTOL models.

We can maybe look forward to some hard financial and market analyses of these machines in 2025.

Maybe.

Standby for other shifts. Just remember that aviation planning is predicated on hard data and futurist thinking.

Not much of that comes from what is today the aviation media. One source just came out declaring that Delta could find CVG to be a great connecting hub location. Or maybe Tampa, which has an almost zilch location for accessing feed.

Yikes.

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Monday, October 28, 2024

Getting Straight Aviation News

Just in passing, take a search of aviation media reporting. It’s pretty revealing.

Last week, Spirit Aerosystems, a core part of Boeing’s infrastructure, was reported to being almost out of money, and could go glub-glub as a result.

That would be catastrophic to the entire USA economy, and hamstring air transportation across the globe. Spirit is an indispensable part of the Boeing commercial airliner production chain.

But, Holy Fourth Estate, Batman, not much can be found on-line about this story that goes to the heart of aviation.

 Instead, the media is rife with dozens of stories about  how a single racoon fell from the ceiling over the Spirit Airlines counter at LGA. Hilarious! Great news! Spirit Airlines staff probably chased him for trying to jump in front of the check-in line. Everybody is picking it up. Read all about it.

Oh, then there’s the flood of stories about how American Airlines will now call out evil “gate lice” passengers who dare to board before their number is called. To read these stories, “gate lice” has been a major malady to air travel for years (?), and AA adding a simple filter to the boarding pass is postured to be right up there with the development of the reclining seat. Read these reports. A major breakthrough for bedraggled airline passengers.

So, the majority of what is passed off as the “aviation media” is more focused on some rodent at LaGuardia, or stopping a group #4 passenger from boarding early,  than the threat of a collapse at Boeing. Geek-level reporting. Not serious information.

Says it all. Caveat reader.

This, apparently, is one reason our Aviation Humpday videos became as popular as they did in just a couple of weeks of initiation.

Something that Bill Swelbar and I are thinking about.

Maybe

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Monday, October 28, 2024

The Second-Level International Expansion Is On

Aer Lingus has announced nonstop service to Dublin from Indianapolis.

As we’ve predicted, the introduction of the game-changing A321XLR is just starting to be seen East of the Mississippi. Indianapolis is just the latest.

The name of the game is not just local O&D, but the connections that IND can feed over the airline’s hub at Dublin.

It’s positive for the region, but it is also a factor that will change regional air service demand.

The higher profile of IND having trans-Atlantic flights will – write this down – increase the strength of the airport to attract more passengers from smaller airports. Road hubbing will increase.

That means the level of Interstate highway access to growth corridors will be a critical market factor. In the USA midwest, several of these examples exist.

There is the issue of CBP availability. Markets with pre-clearance have the upper hand. A complete CBP facility at a secondary USA airport is a major financial barrier for a few flights per week. However, should the trend toward adding more pre-cleared EU airports take off again, every one of the airports on the Treasure Map are in the play.

Note that this is Aer Lingus, not a larger EU carrier. That means these markets are potentially great targets for other secondary national carriers in Europe. LOT? SAS?

This is specifically a trans-Atlantic trend. The potential for Asia or LatAm is near zero.

Interested in exploring this new dynamic? BGI is at the forefront of futurist forecasting. Hit the contact button and we can talk!

English, and maybe Mandarin. The latter one not really too important right now.

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Monday, October 21, 2024

Southwest Will Evolve.
But It Means Letting Go of The Past.

In the latest Touch & Go Vision Letter, we dug a bit deeper into what Southwest needs to do to evolve into the future. It is not minor changes that it faces.

To be clear, this is all opinion only.  But when one looks at the competition – like, the airlines out there hankerin’ to take away Southwest’s passengers – this is not a matter of tweaking the system. It would appear that the air transportation system has evolved into a situation where some of the very strengths that were once accorded to Southwest may start to become weaknesses.

I thought for the folks who are not subscribers to the T&G, it might be of interest to take a look at the last issue, outlining some perhaps iconoclastic projections of what Southwest faces. This is in no way meant as criticism of the current management, and is totally independent of anything the airline may now be planning.

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Okay. What Must Southwest Do To Prosper?

First, Retire Herb Kelleher.

Then Refocus.

Summary: Southwest is at an opportunity crossroads. It needs to rebuild and re-think its service and strategy, without damaging its core foundational values. It will take some tough decisions to depart from the past.

On our weekly Aviation Humpday podcasts, Bill Swelbar and I have been outspoken about where we see Southwest today. There’s a link below to the podcasts. The reality is that Southwest is facing a situation where it evolves to access new opportunities, or stays with an increasingly vulnerable product and market strategy.

No question that there are changes and evolution in the air transportation industry to which the airline must adapt and take advantage of. Soon.

“We’re #1-itus.” The Leading Killer of Leading Companies. History is littered with companies who innovatively led their industry, only to get trampled by new competition to which they did not or could not compete. Like Sears. Or A&P.

The logical question is whether Southwest is in danger of this dynamic.

Let’s put it on the table: the successful “Southwest Model” is facing a different air transportation system. A lot of the basics from the Herb Kelleher days are no longer competitive. They need to go.

Some thoughts.

“De-Shrine” The Sacred WN Model. There are a number of canards that get repeated about how the “Southwest model” is so rock-solid bulletproof. It’s not.

Like “only one airliner type in the fleet.” Or, “strictly point-to-point” flying. Or super low costs.

None of these is accurate about Southwest.

The “Only One Airliner” Myth. There is this continuing babble that because Southwest only flies Boeing 737s, it gives the airline enormous operational efficiencies.

Pure nonsense. Southwest has now and in the past operated fleets that were de facto made up of different airliners.

At one time, Southwest operated -200s, -300/500s and -700s, all at the same time. Today, it’s 700/800s and MAX versions. The differences between these variants in many ways represent different airliners.

Just take a gander at things like engines, landing gear, parts inventory, maintenance programs, and hundreds of other areas.

Adding another airliner to the fleet would not torpedo the airline’s cost base. But it would increase Southwest’s revenue access potential. (Heresy, I know. Forgive me, Herb, wherever you are. But you’re there and we’re all still in the real world.)

Airliners Fit Markets. Not Lore. Southwest today has only two cabin configurations. The -700s have 143 seats and there are roughly 179 on the 800 and MAX aircraft. That in itself largely limits the market scope of the airline. There are markets where the -700 doesn’t fit and a lot of markets that can represent opportunities for more than what the MAX can carry.

Point: the limited capacity span could make it difficult to take advantage of emerging markets. Remember, Southwest is not a ULCC impulse market airline like Spirit or Frontier. It’s a comprehensive network airline, and increasingly that means having a fleet mix that doesn’t box them into a corner.

The “Only Point-To-Point” Nonsense. No, Southwest is not and for years has not been a point-to-point airline. At MDW, connect passengers are around 40% of enplanements. This plus the connectivity over DEN, HOU, BNA, PHX are essential parts of Southwest’s revenues. Again, however, the limited capacity flexibility represented by just two airliner variants also constricts the scope of markets WN can access. Not an inconsequential issue for the future.

(Actually, an analysis we did recently illuminated that a higher percentage of Delta passengers are point-to-point compared to Southwest. Now, that is skewed by a different route system, but it brings some scope into the picture.)

The Product May Be Falling Behind. This also means that Southwest is now facing competition, which is developing customer service products that can better win customer loyalty.

Take a look at what United is implementing, which is a system that keeps the customer informed from booking to arrival. No uncertainty. Plus a customer contact system that really works. Regardless of whether WN allows advanced seat selection or not, the name of the game is constant contact. The competition is moving in that direction.

The Low-Cost Myth. Anybody notice? Southwest is neither low cost nor particularly lower fare than the competition. It’s not a player that has a huge advantage in these areas any longer.

Now, toss in the straightjacket of having only two capacity variants, and its three colleague network competitors – AA, UA, and DL –  have fleets with far more capability to adjust to varying size markets. Scope of system access will be increasingly important in the future. The “Southwest effect” no longer is due to low fares.

Sticking To The Past Will Leave Southwest There. All this said, it is a fact that Southwest is indeed working to evolve. The main overall advice would be to retain religiously the spirit of Herb Kelleher, but remember that the air transportation system and the competition today is vastly different from thirty years ago, and the models that worked then won’t work in the future.

Other than the customer philosophy, it’s time to let go of a lot of the service approaches that Herb implemented. He did know that the key to success was keeping the customer. Today, Southwest’s network carrier competition is well aware of that, too, and are leapfrogging WN.

Just a couple of observations. They just touch the surface.

The main issue here is that WN has an opportunity to build on its corporate and employee culture. But it will require recognizing that the air transportation system has evolved.

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Published October 18, 2024. If you are not on the subscriber list to the weekly Touch & Go, hit the contact tab, and just give us your name, title and organization, and we’ll get you on he list for this coming Saturday.
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Monday, October 14, 2024

“Sustainable” Aviation Fuel:
An Industry Leader Asks Verboten Questions.

It’s not real safe to go counter to the consensus, particularly when discussing the environment.

Oops, David Neeleman just did. At an event last week, he stated this about “sustainable” aviation fuel, SAF:

“… SAF interrupts with the food supply. It does all sorts of stuff, and doesn’t really solve the problem. I just think it’s a complete waste of money. And I think there are ways to handle climate change, to help, that actually makes economic sense where in an airplane SAF makes no economic sense whatsoever…”

Wow, just wait until the environmental posse gets wind of this. To arms! We must not tolerate this type of heresy!

Cut The Virtue-Signaling. How ‘Bout Defining SAF.  The trendy consensus – ably informed by an echo chamber media – has made a final determination. SAF (whatever it is, whatever chemical formulation, whatever it comes from, whatever unintended environmental consequences, and whatever facts to the contrary) is the future. Period.

There’s lots of airline virtue-signaling going on to show allegiance to the consensus. Maybe, an airline flew an airplane with one engine guzzling some SAF concoction. Or they did a PR stunt tossing an entirely empty widebody across the Atlantic. Or how they’ve partnered with a university to develop new airplane go-juice that won’t cause melting of the Arctic ice shelf. The signal is “See us, we’re saving the planet! We’re loyally with the program!”

Hyperbole As Environmental Science. The point here is that Mr. Neeleman speaks the truth. Do all the research you want, and what you’ll discover is that the various SAF programs are mostly laser-focused on just replacing jet-A, with not a lot of consideration for other issues.  The costs and the formulas and the availability are not focused on.

There is almost zero discussion if the SAF cocktail that one airline or another is using can actually be produced. No hard reviews of the cost projections. No discussion of the effects on other key supply areas.

Nope. “The science has been decided” that jet-A must go, and that means by any approach necessary.

This is an example of when hard business sense is replaced by trendy dogma. As far as SAF goes, the first issue is whether it is economically possible. The fact some of these potions can burn in a jet engine is secondary.

Mr. Neeleman is a tornado of fresh air in a dank mushroom garden of intellectual me-to-ism.

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Monday, October 7, 2024

Advanced Air Mobility.
Airports Need To Prepare. But For What?

Just came across an article covering six airports in the Northwest filing for federal funds to install charging stations in anticipation of the introduction of these machines in the next few years.

The article gushed,

… The managers of half a dozen Washington airports see a future where you could hop across Puget Sound or the Cascade Mountains in minutes on a non-polluting electric commuter plane or air taxi…

I surely don’t want to discourage innovative thought, or futurist thinking. But since it’s tax money that’s in play, questions need to be asked. Indeed, must be asked.

It’s super to have a vision of new transportation modalities and new applications of air travel. Federal Express was an untried idea in 1973. There was no such thing as an overnight package industry. No really hard projections of the size and scope of the business, since there was no such modality. Fred Smith was pretty much a loner in that proposal.

It is exciting to ponder the opportunities with availability of small, quiet, economical and environmentally friendly flying machines such as being developed by a dizzying number of companies across the globe. The overnight package industry changed communication channels. These AAM-focused aircraft could do the same at many levels.

But it is of concern that AAM has  taken on a near cult-like energy. And since it involves a whole lot more infrastructure and public investment, these pat comments such as above tend to come across like promotional babble passed off in a peddle-the-soap convention.

Regarding the article above, just want to ask: specifically, who is the “you” that will be hopping across Puget Sound? It is likely that some form of air transportation would save a lot of time. But is there a demand that would erupt as did with FedEx? How much will it cost? What would be the payload? What are the markets and stage lengths? How about the air traffic control issue?

And on the more positive side, the AAM concept represents potential for rapid movement of people and goods. In that regard, what are the real applications that can be utilized, other than what are immediately obvious?

None of the AAM techno-challenges are insurmountable for the future. But it seems that the general consensus is that there are no real challenges.

I would respectfully point to the failure of the NASA E-Transport last year, after years of experimentation and millions of dollars. The agency concluded that the safety factors (not fully identified) were the reason.

Then there is the Tecnam 9-seater that was also cancelled, even with orders on the books. The company determined that with current and foreseeable battery technology, the machine could not be profitable.

Not to blatantly rain on what seems to be modern aviation’s version of the Children’s Crusade, but in light of what we know and don’t know, is anybody asking hard questions about the market viability of these small, 4-6 seat electric airplanes that companies from major airlines to Toyota are investing in.

Aviation is an industry dependent on numbers that add up.

When it comes to the metrics of cost, value and market viability, it seems to be just assumed that they will.

Even if there are none, yet.

Just some thoughts to consider.

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Monday, September 23, 2024

Remotely-Activated Explosive Hand-Helds.
Airport Management: You Gotta Plan?

By now, the reports of beepers and walkie-talkies reaching out and touching their Hezbollah owners is pretty widely known.

It seems that the secret access system set up by the terrorists acquire untraceable communication devices must have been breached along the line by somebody – Israelis, or Klingons, or renegade cub scouts, whoever – allowing explosives to be installed before the being delivered to the happy users.

Nasty stuff. Having a peaceful chat with fellow terrorists to discuss blowing up a school or hospital being interrupted by having one’s hand blown off is really cheeky. (Don’t laugh. There are bits of protoplasm wandering in congress actually defending these animals.)

Nevertheless, the message is sent. These devices – including cell telephones – can be used as Trojan Horses to inject explosives almost anywhere. One iPhone goes boom as a plane is being fueled, and one need not do any visuals.

What is the threat level in regard to passenger airport security? Can what happened to the primates at Hezbollah be repeated on unwary citizens?

Unknown threat level.

So, the ball is now at the TSA’s 50-yard line. Unfortunately, as far as security planning goes, the TSA isn’t even up to Pop Warner standards.

Add this to other discouraging news on the national security front, and, as I have recently pointed out, it would be remiss for airport authorities to assume that something like Mayorkas would have any understanding of proactive aviation security.

Just spend a couple minutes watching this guy’s congressional testimony, and it’s clear he’s a seat warmer, not a security expert. It is sad that political realities preclude industry organizations from calling this guy out. Instead, they have to play nice.

Prevention Begins With Thinking Like A Terrorist. Nevertheless, airport management has the responsibility to assure to the extent possible adequate security, even if the people running TSA at the top are mostly political appointees.

Here are just a couple of passing considerations for USA airports, particularly in light of the fact that Homeland Security has no idea of the number of bad actors the administration is welcoming across the Southern Border daily. Then take a look at reports where local authorities report that they were strong-armed by the administration not to report such information.

So, it’s up to airports to assure they anticipate as much as possible:

Has a true vulnerability analysis been considered? It doesn’t take a million-dollar study to review this at any facility. Think. Do some what-ifs. Think like a terrorist without a beeper.

What about post-event mitigation and occupant security? Not going to go into details here. That’s the responsibility of airport management to anticipate how to respond in a set of scenarios.

Post-event remediation? Following up after an event. Security is not just shortstopping bad guys. It is protecting our way of life, and that includes assuring airports can rebound quickly as possible in any event.

The Threat Is Clear. Bottom line: the clear facts are that just about every honcho around AVSEC is admitting that the threat levels are as high as before 9/11.

The question is whether those warnings are being taken seriously. Or are we complete nebbishes assuming the TSA has a plan?

This isn’t business as usual.

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Monday, September 16, 2024

Airliner “Storage:”
The New Application of Essential Air Service?

When traditional markets aren’t there, EAS may be a safe port in the storm for excess aircraft.

The Evaporating (U)LCC Model: Players Looking For Escape. More indications that the (U)LCC model is in decline came several days ago, when Breeze issued a proposal for the EAS designation at Pueblo, Colorado. This follows the Breeze interest in filing for the EAS at Ogdensburg, New York.

Great! A220 or E190 service. A real catch for the airports involved.

Regardless of the fact that the routes proposed really don’t do much for the communities’ air access. But that’s not a real consideration in the EAS program. The shiny objects the community wants are the main factor. And a couple of jets a day, operated by one of the USA’s top customer service airlines, do qualify as shiny objects.

Fly Them EAS – A Sure Thing.  Clearly, Breeze is thinking well in advance. In the midst of a constriction of new opportunities in the traditional (U)LCC model, they  are essentially looking to install a couple of airliners in missions where they can “store” the machines inside the EAS system, cover the costs, and deliver a jet product to a community that otherwise has dim prospects of viable air connectivity.

Now, let’s be clear. The EAS program is perhaps nowhere more illuminated as a bizzare waste of money than at Pueblo. The only – only – true air service connectivity option for the market is Denver, either on a UA-branded flight, or a carrier like Southern (now out of the bidding) which has extensive interline agreements with UA and other carriers at Denver.

Any other options are totally non-competitive with the service at Colorado Springs.

The EAS system that lets the community decide is nonsense. The city fathers generally don’t understand the air transportation system and can get (and do) easily hornswaggled by civic hubris, often accessorized by pandering outside “advisors.” There is no other option that won’t be a waste of money, not withstanding the reality that the presence of Colorado Springs less than an hour away makes the couple flights a day at PUB totally non-consumer competitive even with flights to the UA hubsite at Denver.

The PUB proposal is for flights to LAS and/or PHX. While the carrier has committed to having interline agreements should the award be made, neither of these markets make sense for PUB connectivity. Nor for any system synergies for Breeze.

But the program would support at least one airliner profitably for the EAS term at PUB. Remember, the DOT provides no guidance to the community. If the powers that be are intent upon a jet to LAS, so be it. It’s not the responsibility of Breeze to analyze the PUB market beyond what makes the most sense for Breeze.

Ogdensburg is more than just an airport in the sparsely-populated North Country of New York. Look at a map. Smell the obscene taxes on passenger fares in Canada. So, Ogdensburg can – theoretically at least – essentially be a second gateway for Canada’s Ottawa/Gatineau metro.

Breeze proposed flights to Washington/Dulles, which might have some potential capital-to-capital traffic, particularly in light of Canada’s punishing taxes on air transportation. Not a lot of extensive connectivity for Breeze (or the North Country), however.

The (U)LCC Model Is Shrinking. EAS Is A Port In The Storm. The message here is that Breeze is proposing to apply aircraft assets worth $75 to $80 million into subsidized markets that have little or no alternative immediate contributive value to the carrier’s route system. Applying these resources for a guaranteed three-year contract would indicate that the low-hanging expansion markets for Breeze may be already harvested for the time being.

Let’s be clear. This is one more indication of the ineffectiveness of the EAS program. But from the airline’s perspective, these proposals are brilliant.

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Monday, September 9, 2024

9-11: A Couple of Points, 23 Years Later.
The Terrorists Have Achieved Their Ultimate Objectives.

It’s been more than two decades since the 9/11 attacks.

There will be lots of solemn remembrances and memorials to the victims, both who died on that day and those who lost their lives in the ensuing and colossally-incompetent military events in the years since.

But there will also likely be politicians proudly announcing how we’ve struck back and “won” simply on the basis that there’s been no security events such as 9-11 since three administrations have been vigilant. Watch for the usual suspects at big networks doing suck-up interviews with TSA officials.

All of this is a disgusting falsehood. What 19 scummy terrorists set in motion, beyond making global fools of the USA’s supposed aviation security system, is now a 23-year cavalcade of clear federal incompetence that’s been consistent in stumbling and failing. Keystone Kops armed with advanced weapons.

A couple of points that are universally left out should be touched upon.

Pre-Event Airport Security Lapses. It was no secret on 9/10/2001 that the threat was real. Yet the powers that be made sure that nothing substantive was done to address the threat. The Red Team Security inspectors were consistently interfered with regarding inspections of airport security. They were harassed and ignored by the top honchos at the FAA security section.

In fact, one inspector filed a report that there could be multiple hijackings at Boston/Logan Airport. That was in May, 2001. His report was ignored by Jane Garvey, the FAA administrator, and blown completely off by politicians such as John Kerry. These politicians have blood on their hands. Garvey, apparently, has gone on to a successful career of being a doorway mannequin for pandering consulting firms, among other things.

The 9/11 Commission. This was a kangaroo coffeeklatch where proponents of the Clinton and Bush administrations fought hard not to get splattered with any responsibility for the 9/11 attack. In fact, the core findings of the FAA Red Team inspectors that were reported in May, 2001 were ignored, down to maybe a footnote, with none of the political hacks allowing the clear truth into the final report.

And the the media never bothered to investigate, making them part of the scandal. The 9-11 commission report is now referred to in some circles as the “omission” report.

The TSA Fiasco. The Bush Administration did absolutely nothing to address the failures or assign responsibility for the attack. In fact, W actually thanked the FAA for their fine work right after the attack.

This was the biggest security failure since Pearl Harbor, and the guy in the White House weaseled out by not even trying to regain control of aviation security. Not one federal person was reprimanded or canned for the 9/11 scandal. In hard fact, most of those responsible went on to cushy jobs at the Transportation Security Administration.

Remember when Bush announced he was sending the National Guard to protect airports? Right. They placed a soldier with a (hopefully unloaded) automatic weapon to stand on a mat at the entrance to the security check points. Not a security-trained staff, just a part-time guardsman looking tough, and doing nothing to enhance the security of the facility. Like most of the actions after 9/11, it was a scam.

That summarizes the incompetence and showboating after 9/11. Yet the media never, never called W out on this stupid stunt.

Political Hacks In Charge. Now we have the giant TSA as part of a new Homeland Security Administration. The current secretary of HSA has been proven to be incompetent, at the least. Take a gander at his various testimony in Congress. This incredible biomass has admitted that they have no idea how many terrorists and bad actors have come through the open southern border. He is a political placeholder that is a threat to security. Media, you guys too afraid to report on it?

Heck, one town in Ohio just reported that law and order is rapidly declining due to 20,000 illegal immigrants – imported with the approval of the HSA – running wild in town. That is a security failure facilitated by the organization that W claimed would make us safe. The “Homeland” in Springfield, Ohio might take issues with this. (Deal with it.)

The fallout from the core security incompetence seen on 9-11 is now reaching rural America. Which was an objective of the terrorists on 9/11.

Post 9/11 Deadly Fiascos. Subsequent to 9/11, untold billions have been squandered on high-profile military actions in Iraq and Afghanistan supposedly to shortstop future terrorism.

Thousands of US military members  have been killed, wounded and maimed for life. And they then had to witness the incompetent and cowardly sight when all of this collapsed with a giant Taliban parade in Afghanistan, showcasing the billions of dollars worth of USA military supplies left behind as US forces were run out of town.

Make no mistake, this was a bigger defeat than any in USA history. A defeat that started with the political incompetence that allowed 9/11 to take place.

Aviation Security No Better. Let’s stop the babble. With the bureaucratic mess covering Homeland Security, a TSA with no real accountability, and the hard fact that incompetent senile leadership in the White House let a rag-tag pack of terrorists drive the USA out of Afghanistan, the nation has failed the victims of 9/11.

That should be the focus of 9/11, not the disgusting babble that we’re safer than ever.

We are not.

Message to USA airports. Reliance on the TSA is foolish.

The responsibility for security is in your court.

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Monday, September 2, 2024

Fallacy: Small Airports Confusing An MRG With Magic

This headline is not too different from at least the sentiments expressed at Dubuque, or Dayton, or Charlottesville, or Binghamton, or Kalamazoo, or Lansing.

Deals were cut with Avelo, offering a range of financial incentives to begin service, typically to Florida. After the incentives ran their course, the carrier left town.

In some instances, there is outright outrage, as expressed by the headline above. “They took our money, and then when it was gone stopped service!”  tends to be the righteously tinged reaction.

This expresses the misconceptions of many minimum revenue guarantee programs. Just give the airline the dough to enter the market, and that’ll be all that’s necessary. Usually, the potential of the marketplace itself is not really mentioned.

Plus, in most cases, the service was aimed at a single Florida market with day-of-week schedules. Not connective service, a market sector Avelo does not serve. Just Florida service.

It says a lot about Avelo that they have agreed to these deals at airports across the USA. From the gitgo, it was clear that it was just service to a leisure destination, not enhancement of air access for the community.

The issue is that many of these communities have been misled or want to be misled into believing that a couple weekly flights to Florida, which directly serve a miniscule portion of the regions’ air service needs, somehow make up for the loss of network service.

Another overarching issue is that the dollars going into the MRG are in many cases – let’s be blunt – wasted on the outdated fantasy that “flights” – any flights to anywhere – are worth the money.

To the average consumer and the entry-level media people at small communities, they see the announcement for 737 flights and assume it’s “air service.” They don’t know that it will enhance the access to just one place the majority of people generally won’t go to very much..

The open question – and it’s really a rhetorical one – is whether those hundreds of thousands of dollars tossed at an MRG for service that does nothing to enhance the community are well spent.

We’ve talked about this in our weekly Touch & Go™ vision letters, and Bill Swelbar and I have discussed it on our Wednesday Humpday Aviation Podcasts. In many cases, the future for small airports is to aggressively look at leveraging the facility for economic development, instead of chasing air service that the consumer can’t or won’t use.

Regarding Avelo, the impassioned pleas from the airports getting the pink slips is to point out that local load factors were high, so there was no reason to pull out. What they miss is the fact that Avelo is increasingly coming across other markets – like the Caribbean – where the 737 can generate more revenue. It’s called competition for limited aircraft.

Bottom line: airports need to get a clear long-term plan regarding the highest and best used of their facilities – in the context of the future, not of the past.

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Monday, August 26, 2024

NYC Flight Restrictions: A Sham
After Nearly A Decade And A Half, They Are The Norm

FAA ATC Incompetence Continues To Choke NYC Metro

Once again, the Federal Aviation Administration has imposed flight operations restrictions this year on JFK, EWR and LGA.

The reason is that the feds simply don’t have the ATC staffing to handle the real demand. They are fully responsible for the economic damage this is causing.

It would be okay, if it were due to a situation being addressed. But the sham of this is that these are not temporary restrictions but are in reality determinations of the maximum operations the airports will be allowed permanently. Tell the truth, FAA. You are years away from addressing this.

See, these supposed ad hoc restrictions have been in place since 2008. All that time, the political hacks at the top of the FAA have been making promises to address the ATC issue. That’s like for a decade and a half.

It’s clear that congress doesn’t care. They view the FAA more as a side show than the mess that it really is. While it’s not politically correct, the attempted appointment of Phil Washington as FAA Administrator is proof enough.

“Cleared for take-off with Phil Washington!” was the way that Senator Schumer gurgled about the proposed candidate. It was a political human sacrifice in the Senate hearings. Washington pranced in, apparently assuming it was a cake walk, and was entirely unprepared. It wasn’t the absence of aviation expertise – which is important, but not the core competence needed.

It was that the candidate made no effort to determine what the FAA needed to do, what it’s core problems were and his ideas on how to address the future. And his handlers, Schumer et al, didn’t bother to guide or assist Washington for the hearings. He got clobbered. Looked like a 90-minute version of the last scene in Bonnie and Clyde.

He sat there with no effort and with no concepts to address the job itself. The scandal here is that the likes of Schumer and company look at the FAA as a political patronage playpen. Question: how many other officials are in the FAA due to this system?

While the current FAA administrator may be better able to handle the job, what is disturbing is that when the agency again imposes flight restrictions on the New York Metro, there is no comment whatsoever from the Administrator’s office.

No announcements of what he plans to do fix it.

That means it is not a top priority and the conclusion is that the FAA and the parent DOT do not owe any explanation to the communities and people being adversely affected.

The aviation industry apparently is stricken with a bad case of the Stockholm syndrome.

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Monday, August 19, 2024

Some hard facts regarding Southwest that aren’t being mentioned in the coverage of the Elliott proposed take over.

Elliott Management has declared it has the candidates of a dream board of directors that will turn Southwest around.

Seems that they’ve announced that an airline needs lots of airline expertise on its BOD, and Southwest, has only one such member, and he just got there. So, according to these financial gurus, they intend to put a new slate at the table, at least five of which are past C-level airline executives.

Gotta have airline expertise on the board for the airline to prosper, they claim.

Yikes! Elliott has now revealed that most large airlines are in deep yogurt, as they don’t have sufficient airline expertise on their boards. American, Delta, United – guys, you are in deep trouble!

I’ve checked – which, by the way most of the parrot media have failed to do – and found that based on the Elliott declaration, all three of the big network carriers have failed to populate their board rooms with sufficient airline industry expertise.

Yessir, other than the airline CEO and/or president, and in some cases appointed members of the carrier’s labor unions, the scorecard for airline boards of directors would indicate that several of these companies are falling way short of Elliott’s stellar requirements for high level  “airline expertise.”

American Airlines – one – Doug Steenland

United Airlines – one – James Whitehurst

Delta Airlines – none.

Now, that’s exactly the situation that will lead to corporate destruction, according the Elliott.

We checked WN:

Southwest Airlines – one – Rakesh Gangwal

The clear point here is that there are lots of questions about this entire Elliott program. They apparently really don’t have grasp of the airline industry, and are confused regarding the role of airline boards of directors and airline management.

Log On This Wednesday For Some Insight That Cuts To The Chase. On this week’s coming Aviation Humpday Podcast, Bill Swelbar and I go into aspects where there is massive confusion about not only Southwest governance, but it’s future strategic challenges.

We talk about how the traditional “grow or else” assumption for airlines is a financial venus fly trap imposed by the financial sectors that are always hankering for “enhanced shareholder value.”

We go into other key aspects of the over-capacity facing airlines, including WN, where we opine that the carrier may do best in the near term by cutting back, consolidating and then building on its strengths. We commit WN heresy by pointing out that a single type of airliner may not be the future for WN, and clearly point out that it has often in its history flown 737 variants that may have well been different aircraft in regard to maintenance and operations.

We’ll be posting our Wednesday Humpday podcast on 21 August. In the meantime, log on and book mark our channel by clicking here and taking a look at our latest podcasts.

We look forward to having you aboard this Wednesday – it’s insight that’s way outside the consensus.

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Monday, August 5, 2024

From Air New Zealand:
Reality v The Trendy Environmental Narrative

Consensus Narratives Are Fine. Until They Hit Reality.

From The BBC, This Just In:

“…Air New Zealand has abandoned a 2030 goal to cut its carbon emissions, blaming difficulties securing more efficient planes and sustainable jet fuel.

The move makes it the first major carrier to back away from such a climate target…”

That’s not the  real message. It’s the rationale for the decision.

It seems that Air New Zealand took its head out of the virtue-signaling skies and got a hard look at reality. They determined that the basic materials and technologies to achieve zero-carbon (or whatever the latest trendy goal seems to be) simply won’t be there. So, let’s stop this charade.

Oops, they tumbled to the evil of investigating reality. The evil of not buying into what “everybody knows.”

That brings into the picture a much wider planning imperative: taking stock of what the new technologies will be for air transportation over the next twenty years, regardless of blood oaths to slay the carbon dragon.

What comes to mind is more than whiz-bang “sustainable” fuels, but also the machinery that would be using it. Like, engines and airliners.

The assumption is generally made that the march of technology will naturally bring us whole new concepts in powerplant technology, in aerodynamic design, in new airliners that will move into the next new future for air transportation, with pristine cleanliness and no impact of the environment, however that is defined.

It also assumes that the economics will work. It assumes that the investment in the billions necessary to develop engines that will burn less “stuff” will be there. It assumes that the raw billions needed to design and produce new airliners will naturally be there.

But nobody seems to investigate whether the value proposition for these new approaches will make economic sense, based on the costs v the potential revenue. Will the costs of development of new machines simply eclipse the market demand?

This is not a hypothetical question. The jive reporting around the progress of electric airliner programs is starting to illuminate the situation.

In regard to the grand future for advanced air mobility (AAM) – read: electric air transportation – I cannot find a single hard, independent, professional set of cost v revenue projections. No hard numbers regarding the market demand for 4-seat eVTOL aircraft operating in new transportation applications.  Just a lot of glowing stock recommendations from various financial institutions.

It’s assumed – and the consensus agrees – that the skies will soon be blackened with electric flying machines. On a wider level, the true cost of what is described as “sustainable” aviation fuel isn’t fully determined. I am not sure any analyses have been done of the complete environmental-effect chain of producing such fuel.

An open and important question for aviation – for those who are interested in the environment instead of just righteous value-signaling – is whether the “goals” regarding carbon reduction are, a) economically viable, and b) environmentally positive.

At risk of offending the ambient thinking crowd, it is imperative that all sectors of aviation take a hard analytical evaluation of any of these proposed and generally accepted environmental solutions.

We’re already into a head-over-heels stumble regarding electric automobiles. It’s becoming more and more obvious that the technology and the production processes that go into those flashy EVs are essentially exporting pollution and damage. Just take a gander, from the clean cars dashing across town in the USA, to the filthy global process of producing lithium-ion batteries in third world countries and finished off in near slave-labor factories run by the Chinese Communist Party.

Point: Air New Zealand’s revelation may be just the start of the realization that aviation is buying into policies and objectives that are pipe dreams at best, and environmental disasters at worst.

Just saying.

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Monday, July 28, 2024

Southwest Seating: The Media Is Clueless.
WN: Potential For New Competitive Advantage

The Aviation Earthquake That Isn’t.

It’s like a pack of teenage groupies quacking about a change in hairstyle by their rock idol.

Like, a lot of giddy babble. Like, meaningless and often stupid.

We’re talking about grown people holding forth on the announcement that Southwest Airlines is going to move from open seating to consumer-optioned pre-selection of seats, a.k.a. “seat assignment.”

“The end of the people’s airline,” moaned the Washington Post. Seems giving consumers their own choice ahead of time – before the flight is already boarded – is very anti-social.

And from the reliably fact-challenged New York Times: “Passengers loved open seating. Now what?” Needless to say, and typical of that channel, they had no data to back up the headline. Nothing to support the stupid implication that all customers revered the ability to board in the C-60 group and have the grand choice of middle seats in the rear of the cabin. The option of selecting where they wanted to sit a month before when they made the reservation, is much less fun, according to the Times.

The Associated Press, another channel with occasional blank-outs in factual journalism, supposedly had a poll, asking if passengers would accept not being able to pick their own seats.

‘Course, that’s exactly what WN is intending to do – let passengers pick their own seats. The clowns at the AP are assuming that the airline will arbitrarily assign seats. Hey, guys: It’s really seat selection. Before the consumer gets into the cabin to “choose” whatever is left. Sloppy reporting. Learn a bit about the subject matter before doing “polls.”

Danger. What Southwest Needs To Avoid. The airline now has the opportunity to implement a seat-selection process that leapfrogs the competition. It’s by NOT copying the way AA, DL, UA does it.

It’s one thing to sell “premium” seating that offers a “premium” – like, extra legroom, or maybe a beverage coupon.

But it’s entirely another matter when extra fees are tossed on to selecting economy seats that are no different than others, except for the carrier’s representation that they are “choice” simply because they are in what the airline contends are better locations. Like, closer to the front door. These seats offer no more comfort, and they aren’t “choice” (or whatever term the airline uses) in any sense of the term.

This is a system that Southwest needs to avoid if it wants to be service superior to the competition.

To be clear, these fees are entirely legal, and it is the airline’s right to apply them. But in reality, they are “fear fees” not service fees.

Fact: These fees deliver nothing to the consumer except the expectation that they won’t be in a middle seat or won’t be separated when traveling together. Yup, you can pay another $20 bucks or even a lot more to be in a seat that might represent four minutes less in getting off the plane.

Here is a side-by-side look at economy rows 22 t0 37 on an actual network carrier flight, scheduled over one month away, in late August. The seats are exactly alike, but the airline has made the determination to add a fee to the ones closer to the front door. In the case of the cabin on this airplane, that $20+ (or much more in some cases) a passenger would need to cough up at best would deliver him at least 22 rows from the front of the airplane, instead of another eight.

In this case, as with most such flights, if Mr. & Mrs Mertz want to sit together on their way to the destination, they must pony up some extra dough. A fear fee. Otherwise, they can sit in middle seats in the free section, or not choose anything, with the bet that the airline might assign them together at departure time. A fear fee, indeed.

When the rest of the no-extra-fee seats in the cabin are selected, the consumer has the conundrum to choose an extra-fee “choice” seat when he or she books, or let it be done later by the airline at the gate, from whatever inventory is left. Plus, a seat number in hand is a guarantee that the passenger won’t be left oversold at the gate.

And if it’s a party of two or more, if there are no available adjacent seats left in the “free” section, the near certainty is that they will be scattered across various parts of the cabin, unless the “choice” option is taken. (This is how the dishonest claims of “family fees” got traction with the Buttigieg crowd.)

The hard truth is that these “choice” fees are really there to let the customer pay more or roll the dice when the no-fee economy seats are already sold, or only have middle chairs left available.

Yes, this is a big revenue generator, and the PR departments will grandly claim this just another area offering passenger “choice.”  They have the right to do it, but at the bottom line, it’s like paying the “insurance” fee at the blackjack table.

We can only hope that Southwest doesn’t go that route. It’s their opportunity to again be consumer superior to the competition.

Or just be like the competition. Warts and all.

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Monday, July 21, 2024

New Analysis of ULCC Future

Just want to make a couple notes in regard to ULCC carriers.

In the last two weeks it’s again been noted by the CEOs at Delta and at United that the ULCC model is on a death watch. To be very blunt, these gentlemen did not just fall off a turnip truck. Their observations are clear and accurate.

This is not to say that entities such as Frontier or Spirit or Sun Country or Avello are doomed. It simply means that the current ULCC model, the traditional model, no longer works as well as it did. As I posted in the latest Touch & Go™ vision letter, it is becoming clear that the traditional revenue sources for ULCC’s are drying up.

Based on numbers from our friends at Airline Data, the the depth of the revenue well once drilled in Florida markets is getting harder and harder to access. Looking only at the third quarter of 2024 versus the same quarter a year ago, it’s very clear that ULCC’s are pulling down capacity into and out of Florida.

As I pointed out in this week’s T&G, just looking at three ULCC’s – Spirit, Allegiant, and Frontier, these companies represent a solid core of approximately 400 airliners, taking out those that we believe will probably be retired in the next 18 months.

Based on our fleet forecast, these three carriers have approximately another 400 airliners on order. To be clear,  those are deliveries over several years going forward, but they do not appear to be units intended to replace current aircraft. Net new flying machines.

What all that means is that these three entities will in the next 18 months need to find profitable applications for at least 10% of their current fleets, and new markets or new demand in current markets for deliveries from Boeing and Airbus. That won’t be possible without invading major airline turf.

What all this points out is that the ULCCs as well as network airlines are facing some real challenges over the next 24 to 36 months. The entry of ULCCs into core hubsite O&D routes will be more than a little disruptive to all concerned.

Traditional airport air service planning will get tossed on its ear in some regions – take it to the bank.

In this regard, we are issuing a new research paper titled ULCC’s a declining model at the tipping point.

We’re diving into several aspects of how changes in the ULCC model will affect the air transportation system as carriers such as these three continue to attempt to breach the walls at major airline fortress hub sites.

Could be messy to the P&L at a number of carriers.

The research paper will be out on August 15, and can be ordered by using our e-mail contact page. I suggest are you take a look, as what we are covering outlines an air transportation system that will demand major planning shifts in the next 18 to 36 months.

In the mean time if you are not on our distribution list for the Touch & Go™ vision letter, drop us an e-mail and we’ll get you on. Join the over 500 aviation professionals who get these insights every Saturday, when email clutter is way down.

And by the way if you have not bookmarked the Monday Insight, please go ahead and do so. This is the oldest continuous aviation blog, published every week since 1997. So join us!

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Monday, July 15, 2024

Breaking: A Lot of New Airline Competition
May Be In The Works.

Headline from Mr. Ted Christie, May 7, 2024.

Mr. Christie was referring to the near-total ignorance of the US DOJ in turning down the JetBlue acquisition of his airline.

The deal would have spiked competition, yet the lightweights in Washington went the safe political route. With, as was pointed out, negative effects on the consumer.

What’s changed since that headline is that there may be a real airline competition battle shaping up. One that is based on air transportation market dynamics that are entirely different from those we traditionally assume that are in concrete.

Cornered creatures tend to come out fighting. ULCCs are increasingly cornered by the system Mr. Christie refers to.

Here’s a bit of heresy: The NK/B6 decision may have forced the competition genie out of the bottle.

ULCCs may well be the next wave of “new entrants” to the national air transportation system. Breaking out of the impulse traffic chase, they are poised to give major carriers a run for their money. It won’t be in low-traffic routes, but smack in the middle of assumed-safe high-density O&D markets at major airline hubsites.

The most recent Touch & Go™ vision letter notes the changes in the core marketing M.O. for ultra-low-cost carriers, a.k.a. ULCCs.

In short, they face a major decline in cost advantages over majors and a softening in the future potential of creating demand based on offering low-fare impulse leisure service.

They’re looking at new applications. And finding them increasingly in major airline markets.

Historically, ULCCs didn’t generally go after these passenger stratas. No need, as the lure of a low-cost trip to Orlando or ‘Vegas generated their core demand. Today, they are entering what were until now the exclusive realm of major network airlines.

As noted in the T&G, based on current strategic belief, seeing Frontier jump into CLT is akin to Southern Baptists trying to open a chapel at the Vatican. Charlotte  traffic is essentially American Airlines traffic. With 70% of the local O&D and 90% of the total enplanements (flow traffic) there apparently is no earthly way that Frontier could make a go of CLT.

Spirit has done the same. Take a look at markets like DFW-LGA, or DFW-MIA, or DFW-MCO, etc. These are core AA routes.

Using traditional thinking, this is sheer nonsense. AA can squash these ULCCs like a bug, right?

Maybe not. Take a look at each of these markets. Consider the load factors AA has, which includes valuable system connect feed. Analyze the local/flow revenue streams.

This may constrict the options open to counter local O&D incursions by Spirit or Frontier.

Without getting too much wrapped around the data axle, the fact is that the sheer market load factor dominance that majors have at their own hubsites may well be points of competitive vulnerability.

Now, this does not mean that the attacking ULCCs are without their own vulnerabilities. They have leveled some of the playing field by reducing or eliminating some of the fees for things like cancellations and reservations changes. But they have a long way to go. Particularly in customer service image.

Hardly a week goes by without some story of a gate fight or similar incident at a ULCC. There are lots of reasons – the former complexity of fare rules, the gestapo-like implementation of carry-on size, the lack of alternative options for cancellations in day-of-week flights, etc.

But the most pressing need, if these ULCCs are to succeed in this strategy, is to re-focus on airport customer service. Continuing to hire lowest-bid mercenary contractors to work gates and other public contact points will torpedo any chance of establishing a market beach head at DFW or ATL or CLT or wherever.

Fact is that these are the points where the airline “product” and consumer image are most vulnerable. Putting it into the control of low-paid staff that have no intrinsic loyalty and know their “career” is only until the contract is re-bid in a year or two, is, to be blunt, stupid.

But if that’s fixed – to the point where the customer really doesn’t note any difference from America and Spirt or Frontier – the game is on.

We are now looking at every major airline hubsite. ULCCs are also.

Developing… Click here for the latest Touch & Go.

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Monday July 8, 2024

Boeing’s Criminal Conviction:
Corporate Version of A Shoplifting Fine.

Note: I switched the subject of the Monday Update at the last minute this morning to take a look at the Kabuki Theater represented by the “criminal conviction” of Boeing.

Or at least the company copping a plea.

Let’s get this into simple bullet points.

• Boeing admits to breaking the deal they got three years ago giving them immunity for the MAX outrage that killed 346 people.
• Boeing will cough up another $283 million in fines. That could be roughly the price of maybe one well-equipped 777 coming off the factory floor.
• Boeing is now admitting that they broke that original agreement, in the face of an increasing blizzard of indications that they have basically blown off the entire affair. The investigation of the Alaska Airlines door plug accident indicated major systemic shortfalls in production and maintenance quality at Boeing.
• Boeing, for its part, has been egregious in regard to addressing the issues at hand. One is that they still reportedly cannot identify the Boeing mechanics that worked on the Alaska 737 door plug. That means the idiots that did the job are still on the loose in the Boeing factory.
• The paperwork on the repair – and apparently on other 737s found defective in the same area – is missing at Boeing. At an airline, this type of system would be a shut-down event.
• Boeing has issued enormous amounts of media pablum, claiming devotion to safety and quality and other fine objectives. Like a script.
• One network reporter asked the Boeing SR. VP of Safety why the company should have any credibility. He noted that the devotion to safety she spouts now is essentially the same as three years ago. He asked her why anyone should believe her now.
• She responded with a catechism-like response, once again babbling the same doggerel as in the past.
• The current management in the front office – the ones responsible for the bungling – stay there, well paid and secure, with the full support of the Boeing rubber stamp gaggle they pass off as a Board of Directors.

There’s more:

• There is a major nacelle de-icing issue with current 737 Max airliners. Today, airline pilots are placing sticky notes on the instrument panel to remind them when the specific system needs to be turned off, lest damage or failure of the nacelle structure could occur.
• On a $20 million plus airliner, supposedly the latest technology at Boeing comes from 3M via a yellow hand-written post-it note.
• Go into the future of Boeing. The stock-price focused management has left the company with almost zero investment in follow on products, specifically in the single aisle category. The 737 is a cadaver for future improvement. Airbus has opportunities with the A320 platform plus the potential of the A220 platform acquired from Bombardier.
• The criminal agreement provides for outside oversight of Boeing’s production and safety. Unfortunately, that is exactly what was supposed to be in place with the FAA. Both before the Max mess and up to today.
• That means this “oversight” is likely to be nothing more than a new czar appointed by Buttigieg, the DOT secretary who is responsible for the incompetent oversight in the past.

Go back to sleep folks. Nothing new to see here.

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Monday July 1, 2024

More On The Pilot Shortage That Isn’t.
Time To Stop Ignoring Future Trends.

Mesa Airlines just issued pink slips to 53 pilots.

Add this to the news at American, Delta, Federal Express and other operators, and the folks running around assuring small communities that loss of service is due to a pilot shortage start to look like pandering amateurs. Or, worse.

The pilot cavalry is not coming over the hill to start flying the fantasy fleet of hundreds of small jets supposedly waiting to get back into the skies. This story is fed to small communities like a bedtime story to little kids. And has about as much relationship to the real world.

While You Were Studying The Catchment Area, The Airlines Have Changed. This brings us to the need for ethical ASD consulting. Constantly studying and re-studying the same factors won’t change them. Ignoring the fact – which we’ll be getting into in the weeks ahead – that the massive increase in airline labor costs will push out a lot of applications of small jets, won’t relieve communities from planning for major air access shifts.

We had some refreshing news this past week. Newport News received the results of a comprehensive air service analysis accomplished by Swelbar-Zhong Consultants.

Instead of the usual “we’ll take this data to airlines” the honest conclusion was that it’s time PHF stop the fantasy that they can “lure” more airlines to town. The changes in airline fleets and economics, the wide consumer access at nearby Norfolk, the financial situation at the airport concluded that Newport News actually has air access, but just not at the local airport.

There are a number of PHF-type airports across the nation, which for years have been pouring dollars into lost-cause projects to recruit air service that either is impossible to attract, or which could never compete with existing consumer options.

When we consider all of the known and expected shifts in the underpinning of airline service, the hard truth is that there needs to be whole new perspectives in regard to regional air access.

Regardless of the catchment area, or the leakage levels, or the number of true market studies done. Or other shiny object efforts that often mislead civic leaders.

It’s about where airlines can make the most money, and skyrocketing operational costs make these types of efforts at some communities mostly filler for the local land fill. The approach at PHF should be a harbinger for the future of ASD.

It’s called the truth.

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Boeing Criminal Charges
Perry Mason Won’t Be Involved

The DOJ is expected to file criminal charges against Boeing regarding the 737Max fiasco and subsequent failures in safety at the manufacturer.

They are going to do big show of it: Boeing can plead guilty or go to trial. Tough stuff.

The outcome of this will may well have CEO David Calhoun packing his office stuff into a banker’s box and loading the trunk of his car. Beyond an empty space in the parking lot, not much else can be expected. (Actually, not even that. Calhoun is known to work out of his digs somewhere in New Hampshire.)

But, not much else. The hard truth is that one of the perpetrators responsible for the mess at Boeing is getting a free walk. Essentially, there is no guarantee that a fiasco such as this could be brewing across the aviation industry. Big companies and little ones.

Fool Me Once, Fool Me Lots. Just how gullible is the media?

The feds filing charges on Boeing. This is like the fire alarm company suing a building for having had a fire.

Yes, Boeing may be as guilty as the fox caught in the hen house, but also guilty is the entity that was responsible for protecting the chickens. The FAA. They need to be in dock along with Boeing.

Like, the incompetents at the FAA who for years played rhythm guitar for Boeing, instead of accomplishing oversight.

First, there was near-criminal failure to monitor and oversee Boeing’s botched 737 upgrade that resulted in the Max. That was completely ignored. No investigation of the failure of the FAA to provide oversight, particularly when the scope of the Max mess is considered.

Nobody in the media – nobody – tumbled to the truth that the entire event laid bare the fact that the FAA didn’t do its job.

Boeing then agreed to a settlement where it committed to improving its manufacturing and safety procedures. Now, many, many months later and an Alaska Airlines near disaster, it’s found that they really didn’t bother.

Question: where was Buttigieg’s FAA during this time? Why did Boeing get away with it again?

Get this: the failed safety system at the FAA is a threat to the flying public. There is a new FAA administrator, and the onus is on him to come clean and fix the Agency.

Now.

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Get Ready. Aviation Humpday Coming Soon

Sources of real aviation insight are getting so, well, ho-hum.

Getting bugged driving up and down the same old strip?

Gotta find a new place where the kids are hip? It’s coming.

.

But maybe not kids.

We’ve been around the block a lot, sometimes trashing consensus-thinking property values.

Bill Swelbar and I – maybe along with a helper – will be delivering an iconoclastic review of issues that are front and center in the industry. Not what they are, but what they represent to airports, communities, consumers. Perceptions most people miss. Tentatively, as an example, the first show will cover…

 

And some surprises – at least what we can fit into about 20-25 minutes of iconoclasity. (If that’s a word.)

We have a track record, don’t ya know. In any case, join us on our You Tube channel on Humpday, Wednesday July 10.  We had planned to launch on the 3^rd, but the Fourth of July Holiday sort of gets in the way.

Information on accessing the Aviation Humpday Video Channel will be sent out shortly.

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Monday June 24, 2024

More Future Airport Planning Fodder

Autonomous Intra-Urban Air Systems
Great Concept. Lots of Questions

Getting on an unattended elevator generates no fear.

But what about an airplane?

Wisk Aerospace, owned by Boeing, has entered into an agreement with Houston to implement connecting flights between Hobby, Intercontinental and Ellington airports and suburban locations using autonomous 6-seat eVTOL aircraft.

DFW International has also been exploring the concept. Nobody on the flight deck. As a matter of fact, there will be no flight deck. Sort of a horizontal elevator, except it’s not physically connected to anything.

See, “autonomous” means controlled from the ground. No pilot on board.

And What Will The Fare Be? Lots of enthusiasm, but still, I can find no hard projections of cost. Cost of operations, cost of facilities, fare levels, etc.

No hard projections of capital investment requirements.

No projections – just assumptions – about the consumer demand – particularly in regard to getting on a flying machine with no pilot on board. Gotta wonder if they’ve considered the consumer.

Got to wonder if any business sense has entered the picture.

The Forbidden Zone – Reality. Virtue Signaling Is Expected. These are questions nobody wants to explore, apparently. AAM has become a cult – like electric automobiles – where almost any discussion is discouraged.

Take a look – every automaker is advertising the wonders of their EV offerings, which in the context of the market demand is just virtue signaling to the powers that be. Pandering to trendy political pablum.

In the meantime, these contraptions are piling up at dealers. Ford has actually told dealers to stand down on EV facility investment, and a recent poll indicated that almost 50% of current EV owners won’ t buy another one. Sure wouldn’t get that feeling watching the ads on TV.

The legitimate fear is that the AAM program – which is drenched in trendy rah-rah from high levels – is headed in the same direction. This has been covered over and over, but the dogma is that anything powered by a battery will save the rain forests, cut the heat wave in Maine, and make polar bears happy.

All fantasy. For anybody who has bothered to do even a cursory look, the opposite is closer to the truth.

As for Wisk, do take a gander at their website. One hoot is that it claims that this concept will eliminate pilot error, ‘cause there won’t be one.

This may be a factor that the public will embrace. One thing that they might not embrace is what that all-up cost might be for airports, metro infrastructure, and cost of these flying machines.

Never in the history of aviation has there been a Children’s Crusade like this. (Google it, if you must.)

As it stands today, this will be one incredible dance show in the world of financial analysts when this circus hits hard reality. The finger-pointing could be a national pastime.

Yikes.

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Monday June 17, 2024

AAM Conferences –
Be Sure To Bring Your Light Saber & Obi Wan Costume

Lead in: Yes, I am aware that there’s been a lot of commentary here on the AAM concept. That’s because it is becoming a major issue in aviation – to the point that nobody dares to question any foundatonal assumptions. That is dangerous in light of near fanatism it has taken on.

I just read about a recent European Business Aviation Conference and Exhibition (EBACE) in Geneva that was focused on the future wonders of the application of Advanced Air Mobility.

Salvation From Carbon! The day is at hand when electric air transportation will strike a fatal blow to fossil-fuel travel, according to the cheering masses at the event.

Bring Your Light Sabers And Obe Wan Costumes. They Fit Here.  Apparently, this entire conference seemed to be at the level of a Star Wars convention. The only things missing were people dressed like Luke Skywalker and Princess Leya. For all we know, Master Yoda could have done the keynote speech.

Point: Reality didn’t seem to be too much of an impediment to the celebrations. Get ready for rapture – the Evil Fossil Fuel Empire is about to feel the righteous sting of electrical power.

In about ten years, the panting claim was made, that there will be around 40,000 such machines in the global skies, vanquishing the Carbon Death Star.

Strike Down Supporters of the Empire! Yup, it is true that in the context of today’s trendy thinking, any criticism of AAM is considered as an attack directly from Planet Luddite. We all know, and we are not to question, that electric aircraft are going to change air transportation.

We all know, and are not to question, that USA airports have the obligation and responsibility to assure the right investments are made now in anticipation of the electric/battery future.

Do not ever – ever – mention anything that might bring the downpour of reality to the situation. Like, ask for hard analytical estimates of per seat costs. Or, anything about the expense and maintenance of the necessary infrastructure.

It’s Just A Matter of Making Most of The Opportunity. And now with that vision of small electric flying machines firmly in place, it’s the debate about which usage – Urban Air Mobility (UAM) or Regional Air Mobility (RAM) – will be the biggest application.

The first is within urban areas. The second is getting a network of robust air service between rural or not so rural airports.

Rain Drops: Neither of these applications are supported by any hard demand data. None is needed. The dogma is that we go along with these prognostications or be rustled out of the room.

USA Airports: Don’t Get Left Behind & Unplugged From The Future. Dig this. The imperative message of AAM aficionados to USA airports and communities is to get out that Master Plan and start revising your ALP to accommodate lots and lots of battery-powered airplanes. Get those recharging contraptions ready. Start re-designing your ramp space for lots and lots of little electric birds shuttling people all over the region.

That’s because the consensus seems to indicate that it will be regional transportation – described as connecting small, “underserved” airports  – that will be the real bread and butter, with the following reasoning given:

“the near-term urban air mobility market will take time to mature and scale, with a range of hard-to-solve obstacles including infrastructure, regulations and community acceptance.”

Oh, you betcha! Hard to solve obstacles, like whether anybody will use it. But  It went on:

“Regional air mobility startups believe they can stimulate new point-to-point demand at underserved airports and airfields, improving the convenience of regional travel while potentially decarbonizing a considerable portion of commercial air traffic.

That’s it! Just assume that tossing an electric buzz bird between, say, Waco and Dallas or Poukeepsie and Bridgeport will generate lots of new travelers, even if the actual costs are completely unknown.

Anybody Have The Guts To Point Out This Emperor Is Buck Naked? This fundamentally is at the level of the nonsense spouted by shoddy used car salesmen, trying to sell an old Yugo with a bad transmission.

Not one of these claims come with any attendant cost and risk analyses. Yet hundreds of airports will be urgently advised to start preparing for lots and lots of “regional connectivity.”

Yup. Just launch that 4-seater between Burbank and Anaheim, (assuming it has the range) and watch the consumers come a’runnin’ to get on board. Cost of operation? Fares needed? Expense for new facilities? Ground access to airports?

We don’t need no stinkin’ research. This is about killing off carbon, regardless of the truth that no credible studies have been seen.  Regardless of the fact that most of these new applications do not supplant any material use of fossil fuels.

This whole gospel tent babble can be described as a new definition of “artificial intelligence.”

Staying Politically Silent Is Dishonest. It’s time that aviation leaders start to rationally question a lot of the foundational AAM assumptions that are being tossed around and repeated verbatim in the media. This dogma must be questioned, not blindly followed.

I am well aware of the vested interests and the groupie-like following that are involved in this takeover of the AAM concept. But that is a non sequitur to finding facts.

Anyone in aviation planning whose head isn’t chasing cumulus formations needs to have hard facts, not hyperbole. The danger now is the near-total lack of questioning any of the accepted assumptions, or demanding hard projections related to air transportation.

In the case of UAM, one issue is “community acceptance.” Read into that the uncertainty whether there is demand. The idea is that we’ll toss these new birds in the sky and the consumer will certainly see the light and accept them. Let’s not dare bring into the equation the level and cost of necessary airport infrastructure.

Then we must not ask about the per-seat cost, or fares, or necessary investment in facilities which support air service for which there is no clear demand.

For Heaven’s Sake, Don’t Ask For Professional Data. In regard to regional air mobility (RAM), the concept is based on “stimulating” demand at “underserved airports” and “decarbonizing … commercial air traffic.”

What “underserved airports?”

Here’s a rap-stopper: airports are not underserved. It’s whether the population bases nearby have a demonstrable need for the service that these future machines may be able to provide.

The weak assumption is that just having a flight between “underserved” airports will “stimulate” traffic. And if there isn’t any fossil-fueled transportation between these airports today, a battery-powered airplane isn’t going to “decarbonize” anything.

To the honest contrary, they will contribute to the environmental disaster related to battery manufacture to power these wonderous electric airplanes.

Let Me Rain On This Children’s Crusade. Okay, here’s the Luddite and unwelcome questions, at least within the context of this EBACE event.

What really is the “demand” in the specific regions where RAM is to rescue consumers supposedly clogging the roads and slobbering their carbon footprints all over the environment?

The truth is that this is a desperate bromide tossed out to mislead the public into believing that the electric planes under development will cleanse the planet of carbon. That is a prima face lie.

What will be per-seat cost be of transporting these huddled masses of consumers yearning to be carbon-free traveling between “underserved” airports? Or in the case of UAM, between downtown Burbank and LAX?

The new trendy answer is “it’ll be like Uber executive.” I am going to be blunt in the vernacular that everybody can understand: That is complete el toro doo-doo. Since we have no idea of the cost basis of AAM applications, the aviation media needs to question such claims, not just repeat them.

What – in detail – is the scope of the facilities needed to accommodate these machines, particularly at airports? The facilities, the CFR issues, the ramp space, etc.

No answers. Just arrogant hype.

Until these points can be demonstrably and professionally answered with hard data, the folks clamoring at these types of conventions are no more credible than teeny boppers clad like Empire Storm Troopers and hoping for a date with Luke Skywalker.

This is not to imply that there aren’t applications for electric micro-planes, or even the larger ones that are being planned.

But the complete reticence to address the two issues above, not to mention the messages from the red-flag failures at Tecnam and NASA, tends to shatter any veneer of business sense at rah-rah gatherings like the one just now at Geneva.

At least at Star Wars events most of the attendees know it’s fantasy.

Wholesale stampedes into trendy programs are nothing new. As I’ve noted, 20 years ago, every large airport was factoring into their planning that very large airliners such as the A380 were no-questions-asked future certainties.

The AAM/RAM concept may be headed in the same direction. Except today, it is tens of billions of dollars being tossed into these sure-thing programs.

The bottom line is that these types of get-togethers are not a lot different than hordes of teeny-bopper fans of Luke Skywalker waving around made-in-China toy light sabers.

At least these kids know it’s all fantasy. It’s not that AAM is a fantasy, but the official packaging of it, as indicated by this gospel-tent meeting in Geneva certainly points in that direction.

Is anybody thinking? Heck if you have some perspectives on this, or disagree, please, please send me an email about what we are missing.

May the Force be with you. As it stands today, AAM applications might not be.

 

______

 

Monday June 10, 2024

This Fall, Just Try To Get To Presque Isle.

The EAS Presque Isle Decision
Perfect For The 1980s.
And Great For Isolating “The County.”

As was covered in this week’s Touch & Go™ vision letter, the DOT’s award to JetBlue for essential air service at Presque Isle, Maine is proof positive that the entire EAS program is like installing a dial telephone in a computerized system.

This represents more than just an EAS award. It is something that represents what is terribly wrong with DOT aviation policy. Every EAS-eligible airport in America should take note. More than ever, it is the responsibility of airport management to know and understand the structure of the air transportation system.

Key points:

The is no such thing as interlining between USA carriers to any real extent. The brand you depart on is the one that can or cannot get you to the final destination;

Defining one destination as the main objective for EAS service is incredibly short-visioned and short changes the community in regard to air service access.

In reviewing the award – one flight a day to Boston, with the first mainline-cabin jet since Delta pulled DC-9-30s out forty years ago, to a non-connecting operation at Boston – I think it is important to recognize that this really is a watershed in bad aviation policy.

A Big Jet Is Back! And Boston Too. It’s 1979 Again! It’s not a minor thing. One flight a day, with very low connecting access to the rest of the nation, is essentially cutting PQI out of the air transportation system. The current multi-flights on the United system to their Newark hub offered connectivity to and from the world. The replacement offers pretty much just access to Boston.

Back in the 1980s, before lots of airline consolidation and when inter-lining was the name of the game, PQI-BOS was a major gateway route. Consumers to and from PQI could connect from Bar Harbor Airlines with joint fares and baggage transfer to American, United, Continental, TWA, Northwest, USAir, Ozark, Piedmont and a few others.

Today, that air transportation system is long gone. And as good a business decision this is for JetBlue, it will now render PQI more air service more isolated from the nation and world than at any time in the past. Any time. (Yup, folks can go on line and book on flights at Boston to and from other destinations. But that is a hassle, and for carriers with no baggage agreements with JetBlue, that means re-checking.)

It seems nobody apprised the folks in the County of this.

Yup, that promise of an E190, and later an A220 jet which are in fact better than what Delta was flying, really looks great.

But when the consumer-dust settles, PQI is in air service access trouble. It is something that the DOT should be ashamed of. A decision that fits the letter of the EAS program.

Which is based on an airline system that existed forty years ago. Not today.

If you are not on the Touch & Go™ list, click here for this week’s issue. And while you’re there, click on the subscribe button to get it delivered each Saturday.

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Monday June 3, 2024

Air Passengers Will Expand Massively.
But Fleet Mix Will Change
Where They Will Get On The Plane

There is a new emerging dynamic that will structurally reshape air transportation in the USA. Actually, the entire globe.

Today, the assumption is that air service demand will be addressed with airliners appropriate to the demand and within the strategies of individual airlines.

But by 2030, those criteria may not matter. The cost of airliners will be much higher. The range of options for airlines will be tighter. That means whole new metrics regarding airline route systems.

Let’s just explore for a moment:

The reporting on the hoedown going on at Boeing has mostly been focused on the travails and misfires surrounding the Max mess and the giant administrative swamp that caused production issues that have been illuminated with the Alaska door event.

But what has not really come to the front and center is the long-term dynamics that are unfolding in the global airliner industry.

Let me jump to the hard reality that is now shaping up: in 15 years, maybe sooner, airlines across the globe may find selecting future fleet options far easier than today. There is a distant possibility there won’t be a lot of options. Airbus could be the only game in town.

Yes, this is a really distant situation. But the economic realities of airliner design, development and manufacturing point to some logical concern for the future.

The point is that when it comes to airliners in the future, market needs will be secondary to the airliners that are being produced. Given the state of the airliner manufacturing business, that means a shrinking of fleet options in the future.

It all centers on product lines. The #1 demand area will be for multi-mission-capable narrowbody jets. Like the A321 platform. And the 737 platform. And that runs the table.

On the surface, it is natural to assume that with all the demand now forecasted due to global air traffic growth, there will be lots of potential for new entrant single-aisle airliner platforms beyond these two. But that’s not necessarily so.

Embraer may come out with a true competitor, but it will entail getting through a lot of economic, political and market-related minefields. And billions of dollars that will take years to recover.

It’s no secret that there’s nothing coming from China. The C919 offers inferior performance, an incompetent manufacturer, and no price advantage. It’s been out of the running for years.

Russia? Not happening. Big talk and no action on a range of dog-planes like the MC-21.

So, we are back to Airbus and Boeing. The A320/321 has the lead, particularly with the LR and XLR versions. Plus, the A220 platform represents a lot of potential expansion, including even being a follow-on replacement for the 320 program.

Boeing is another story. The 737 is at its end. The 737 Max 10 is the competitor for the A321XLR. But it is still many months (years) late and is losing orders.

Boeing has nothing – zero, zip, nada – as a follow-on. Unlike Airbus, they have no equivalent to the A220. Apparently the current regime in the front office made the decision not to invest in the future, opting for short term returns on the P&L and satisfaction from the Wall Street crowd.

So, there is the scenario that Boeing’s current troubles – no next-market airliners, future-blind management, major financial hits, and a shaky orderbook – could result in the company shrinking into a very secondary player. That leaves Airbus as the number to call after 2030.

Unless things change materially at Boeing, that is not out of the realm of possibility.

This will affect airline fleet composition. That will affect where they serve.

Put that into the planning mix.

___________

May 27, 2024

The Monday Update will be back next week, in observance of USA Memorial Day

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May 20, 2024

ULCC Sector: Morphing Into Mainline Markets
It’s A Uncertain Outcome.

This past week, both Spirit and Frontier eliminated a whole passel of ancillary passenger fees.

Frontier returned to its past bundled fare levels, where the customer knows right up front what is included and what’s going to generate a fee.

That is a about as transparent to the customer as possible. Instead of a menu of add-ons, the services are made clear as part of the fare paid.

There are naturally some thoughts out there that this is directly the result of the Emmy-nominated show put on last week by Buttigieg and the DOT, denouncing what they call “junk fees.” Indeed, the chairman of the Council of Economic Advisors, who are mostly script readers from the administration, actually lauded the occupant of 1600 Pennsylvania for doing away with junk fees on airlines.

Not true, but it can play well in soundbites.

But this fee structure change isn’t due to some grandstanding inside the Beltway.

Diving Into The Major Market Maw.   Changing fee structures is a necessary product strategy to accommodate the new direction of the ULCC sector. They are diving into major mainline carrier markets, and need to compete now directly with American, United, and Delta.

Let’s wake up and smell the difference between impulse passenger traffic – focused on low fares attracting discretionary consumers mostly to leisure destinations –  and the passenger profiles in non-leisure markets these airlines are entering, like Boston – Chicago, or Akron-Austin or Atlanta-Grand Rapids.

Take a look at where Frontier and Spirit and Avelo are planning to fly, and it becomes very clear that the traditional ULCC model is changing.

Getting a piece of the action between PIT-PHL or PHL-DTW, and a whole passel of other non-leisure markets means that the take-it-or-leave-it-‘cause-it’s-a-low-fare service and product approach isn’t going to work when the skies are already blackened with major airline capacity.

These ULCCs – and remember, the “U” part is evaporating – need to either capture some of the traffic now carried by the majors on these routes or stimulate new traffic with low fares that the incumbents may or may not try to match.

That is, if fare stimulation is even in the picture. Consumer impulse decisions to jump a low fare to ‘Vegas are not real likely to be seen in the clientele flying between Motown and Pittsburgh.

This inherently means that their product has to be competitive with what consumers expect on AA or DL or UA. It cannot be a process where the departure gate is festooned with colorful signage warning customers about rules and fees and the penalties for showing up at the gate with a non-paid carry-on.

It can’t be service where there is no customer service support. It can’t be service delivered by low-bid, not-involved contract customer service staff.

The clientele and consumer expectations are a lot different in the Austin-Akron market than in leisure markets where the travel base is comprised of traffic being lured into a leisure trip on the basis of low fares. It is difficult to estimate how many consumers can be fare-stimulated to fly between Charlotte and DFW, when AA’s flow traffic is filling up flight with feed at both ends.

Stand by. There may be a market for limited-capacity competition in high-volume O&D markets. In some cases, the major incumbents might not be able, or want to, cut fares to match. Or, not be too concerned about the local O&D, in that even if it can be increased by lowering fares, that traffic could displace more lucrative flow traffic.

One indication is certain. There is going to be more competition in a number big-volume markets.

The question is whether the consumer will bite, and the eager entrants can gain brand loyalty, well beyond just fare-based traffic.

This 3^rd and 4^th quarter should be interesting.

The only thing that’s certain is that the ULCC model is morphing toward direct competition with majors who have their acts very much together.

The ball is in the ULCCs’ court.

__________

 

May 13, 2024

Travel Agents:
Working Hard To Bring Back The 1970s

The American Society of Travel Advisors, a.k.a. travel “agents,” just wrote a scathing missive to the Federal Trade Commission, accusing American Airlines of anti-competitive actions by not awarding AAdvantage credits to most bookings made outside of the American website.

The bottom line is that AA has simply decided to retail its product more toward its own website. That is only good business, especially since the consumer can deal directly with the airline.

To ASTA however, American wanting to sell its own product, without ASTA getting a piece of the action, is “monopolistic.”

You Need Us! If You Disagree, You’re Gouging The Public. Hello, travel agents. Join us in the 21^st century.  Your basic service premises are gone like dial telephones and AM-FM radios.

Remember milkmen delivering direct to consumers? How about the repairman coming to the rescue with vacuum tubes when that Sylvania or Westinghouse or Admiral TV went on the blink? Gee, don’t want to miss tonight’s episode of Gunsmoke.

Hello, ASTA. Most of your services are pretty much in the same category. Like so many other commercial channels, technology has almost completely made middlemen useless to basic air travel. Dig it: Most consumers don’t need you.

Unfortunately, a lot of the folks still in this line of work are outraged about this.

ASTA seems to think that airlines should be required to use them, even if it makes little business sense. It’s anti-competitive, they claim to the FTC, to not let them wet their beaks. So, the strategy is to accuse American of being anti-consumer.

These ASTA people need to wake up and smell the internet.

The Entire Raison d’Etre Has Vaporized. I think it would be of value to look at some background of how this industry evolved. One has to wonder if ASTA has noticed the writing on sky. Or looked at a calendar.

In the regulated old days, airline booking and ticketing was a hugely complex system. There were manual tariffs – giant books looking like the catalogue at NAPA Auto Parts, with regulated fares for every route – including joint rates, points beyond, hidden cities. Routing guides that outlined the regulated markets for each airline.

And hand-written tickets, filled out to show the routing, the fare and taxes, the form of payment, the class of service, a destination ladder, plus the need to account for the auditor’s coupons, even with conjunction itineraries that demanded more than one four-coupon ticket. Really complex.

Manual calls to airline reservations, too. Full airline system computerized reservations only came along in the early 1960s. (Sidebar: here’s some cocktail party ice-breaker repartee: the first such system was not at American or Delta or United. It was  at Mohawk Airlines.)

Anybody from back in the days of booking and pricing  international travel remembers the “Maui Fence” or “Denpasar.” They were tariff break points in a lot of such itineraries, and important to proper faring.

Incredible detail. At some airlines, such as American, employees were given four weeks or more of classroom training before they were allowed to get close to a ticket counter. An expensive program.

So, the airline industry relied on “travel agents” to do it, in exchange for a percentage of the fare, usually between seven and ten percent. This shifted a lot of the personnel and training costs away from the airline. At one time, over half of all passengers came from travel agents.

But TAs represented all airlines. In ancient times where there was no frequent flyer brand loyalty, they were the ones who directed the client as to which airline would be booked. In a lot of ways, airlines were required to suck up to agencies, to keep them happy and preferably directing clients to their flights. If the airline wouldn’t give an agency something special,  like clearing a seat for a client on a full flight, or maybe a first class upgrade for the TA himself, they could decide to book clients on another airline.

Sort of the Stockholm syndrome – airlines were captive to the whims of TAs, so they played along with a lot of crocodile babbling calling them “partners in travel.” In the back rooms at airlines, they were often referred to differently.

Fast Forward To Today. Oops. Technology and deregulation came about. Like the milkman and the boob-tube repair guy, over time the march of technology eliminated the need for and the influence of these travel agencies. Just about all travel bookings and even airport processing can now be done by the consumer, quickly.

Economic reality started on a slow but steady march, eliminating the power TAs had in controlling consumer airline choices. Travel agency commissions went away years ago. Today, the airline industry doesn’t have the need to pay an outside entity to book their passengers or write complex tickets. The brick-and-mortar agencies went down the economic fixture more than a decade ago.

Airlines no longer have to host ghastly travel agency “appreciation” events, replete with expressions of great love, based on buffet tables with  lots of shrimp and cheap white zinfandel, which seems to have been the standard industry equivalent of Purina Travel Agent Chow.

Today, electronic agencies are next. Airlines want consumers to deal directly with them. Big corporations no longer need to award contracts to agencies to manage their business travel.

The hard fact is that most consumers don’t need “travel advisors” anymore.

In short, this entire channel of retailing the airline product to outside entities has evaporated. Gone, like black-and-white TV sets and dial telephones.

So, while there are some other moving parts, the bottom line is that American now will only award frequent flyer awards to those that book directly with American.

They have the right to do this. They have an economic reason for doing this. In most cases, the need for a middle-stop in the airline retail process is a waste of money, so it is logical to encourage customers to business directly with AA.

And despite the whining of ASTA, the consumer really isn’t affected. They just have less reason to involve an intermediary when they book travel.

The Travel System Has Moved On. ASTA Hasn’t. Message to ASTA: Time to rethink your consumer value proposition. Getting the FTC or Buttigieg involved won’t do much to keep this sinking ship afloat. The consumer doesn’t need you.

Join us in the 21^st century.

That is, if you have a service that doesn’t need bureaucrats to force airlines and consumers to pay for it.

___________________

 

May 6, 2024

AAM – Turning Into A Children’s Crusade?

 

 

Advanced Air Mobility – a set of concepts for applications of new-technology air transportation, based on battery power.

I have noted in the past that conceptually, from a 3,000-ft view, there are indeed whole new communications applications for such machines. But  I’ve also pointed out that the AAM concept has been hijacked into sacred not-to-be-questioned, do-not-report-the-facts dogma.

Any discussion of things like battery technology,  the dependence of materials from a CCP/China-controlled supply, the need for new CFR safety programs, and even the true potential operating cost are not in evidence.

The hard reality is increasingly clear: this battery airplane concept is a long way from being ready for prime time.

Aviation Industry Media: Cheerleaders. It is unfortunate that most of the aviation media is just playing rhythm guitar for this program, repeating and regurgitating the trendy press releases from companies involved as well as any pablum veneer experts whose heads are somewhere out near Pluto. The aviation fourth estate is a cheering section, basically, never asking any hard questions.

Indeed, major events happen that are never investigated if they bring shadows on this AAM parade. The public needs to be informed, but instead they are entertained with pie-eyed interviews with slow pitch interviews with CEOs of companies trying to build these machines.

Airports: Proceed With Professional Caution. But the facts – the hard truth – are pointing in a direction that needs to be considered when revisiting airport master plans that are assuming a big role for air taxi and short hall electric transportation.

Last year, NASA cancelled its own experimental 9-seat electric prototype, after years and millions invested. One reason quietly given was safety. Conclusion: it won’t work economically.

One might think that this important event would be covered. Nope. Take a look. If it’s mentioned even on the NASA website, it’s buried where it’s not likely to be discovered. And, again, the aviation media groupies ignored it.

Tecnam, which had actually contracted sales to a Norwegian airline, cancelled its 9-seat electric airliner program in 2023. They concluded that the entire concept could not result in anything close to being economically viable.

One might think that would be a critical indication of the foundations of the AAM concept. Nope again. Can’t find much in the way of professional investigative reporting.

Volocopter, an EU based developer of electric air taxis indicated last week that it may be facing bankruptcy due to various German government sources getting cold feet tossing more money on the company.

Again, not a minor event. But beyond the reports specifically covering Volocopter’s need for capital, nobody questioned whether the machines they were planning to build made sense.

“Two seats, 18 rotors, endless possibilities… The Volocopter program is emblematic of the rest of the electric air taxi concept, festooned with tag lines like this. The last two words should be, “endless fantasy.”

Volocopter  had announced that they’d be providing air taxi service for the Paris Olympics this summer and would soon thereafter do so in Rome. Not likely.

But has anybody done even a cursory look at whether this is based on even basic economics? Take a gander at the machine. Room for one passenger, transported by a contraption levitated with a complex system of machinery turning a dozen and a half rotors.

As of today, the only coverage of Volocopter is regarding the failure of financing, instead of the fantasy idea that all this machinery, and a pilot, and support equipment, and support staff, and retailing distribution costs and new infrastructure can all be economically supported with one paying seat.

Waiter! Check please!

Oh, and by the way. It’s  stretch to call any battery-powered aircraft as “sustainable.”  That is pure inaccurate jive. These batteries come from minerals in the ground,  just like petroleum. The real difference is that it’s arguable that the mining process for battery components is much more damaging to the environment that oil production.

Message To USA Airport Planners: Put any investment in AAM-related facilities on a back burner.

And you may want to turn off the stove.

 

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Rural Air Service:
When Does The Fantasy End
And Reality Take Over?

Rural Air Service. Let’s tell it like it is.

Putting maybe too fine a point to it, trying to inject realities into the subject matter is viewed as being akin to telling kids in line to see Santa Claus that they’re not going to get diddly from the fat guy in the padded suit.

Hey kids, he’s jiving y’all.

But the rural air service issue is full of fat guys in padded suits telling communities things that are, in truth, just flat-out fantasies. And charging richly for it, too.

There is indeed a major challenge facing the need to assure access for rural America from the globe. But that demands innovative understanding of economic realities, instead of wallowing in the fantasy that the solution is “luring” flights operated by an airline system that no longer exists, operating airliners that were retired long ago.

Assuming Solutions Not In Evidence. Nor In Existence. Just noticed a website from an organization called “RESTORE.” It’s promoting a return to air service at small airports. The airports on the support list certainly mean well, but as far as reality goes, this site is running neck and neck with an outtake from Alice In Wonderland.

I only bring this up because aviation consultants have the responsibility to assist airport and community clients in pursuing solutions that are consistent with economic realities of the future. There are in fact lots of consulting St. Nicks out there promising goodies that won’t be delivered.

Airports Involved: Rethink. Whoever is misleading the few airports involved in this RESTORE program should be ashamed of themselves. The communities listed all intend positive results. But they do have the responsibility of understanding emerging air service realities.

This website does not do the community any benefit in that endeavor. But it is entirely emblematic of some of the pandering consulting foisted on a lot of small, well meaning but knowledge-vulnerable communities.

Toss More Money. Ignore Economic Facts. The core of the program is to simply get congress to lavish more money on Essential Air Service and vastly increase funding for the Small Community Air Service Development Program.

Then toss in fixing the pilot shortage, and all will be well. (And as we’ll see, all three of these are now kaput as potential solutions.)

These three changes, as implied by the website, will have airlines come a-runnin’ to small airports that have lost scheduled service in the past several years. “Air service” will magically appear under the economic tree as soon as these are accomplished.

It’s like promising that a 300-pound guy will come down the chimney soon.

Ignore Reality: Don’t Define The Objective. ‘Course, “air service” is assumed to be a unitary product. The public is misled into believing that just having a scheduled flight at the local airport will have the chamber of commerce buried in inquiries from businesses seeking to relocate.

It’s not necessary, according to whoever generated this site, to define what access is needed. And it’s not important to define the specific consumer value and impact of the service that is sought. “Air service,” the fantasy states, is all that’s needed.

Point: a  problem cannot be solved when the goal can’t be specifically defined. In this case, a lot of the people peddling panaceas like this know that if they get into the solid details, the truth about the real airline service potential will be illuminated and the whole house of cards will come down.

Airlines: The Assumption Is That There’s Lots of ‘Em. The fact that the communities involved are not directly enlightened by whoever is behind this website before squandering money getting into the line to pay the air service Santa is a blot on the aviation consulting industry. A big time blot.

This RESTORE website simply assumes an airline industry that does not exist. It misleads the public into thinking that if EAS and SCASD get more funding, lots of airlines will be interested. The truth is that there aren’t lots more airlines. The truth is that fleets are evolving to the point that the financial incentives needed would be astronomical. Naturally, that is not addressed.

EAS is great, but what needs to be defined is whether it can compete with alternative options. I have pointed out the situation at Toledo, where the proximity of hundreds of departures at nearby Detroit precludes almost any levels of connective air service at Express airport. In any case, massive increases in EAS are not in the cards. The FAA authorization raised it from $340 million to $350 million. Not enough to cover inflation.

As for SCASD, somebody has not bothered to investigate the program. Since 2002, it’s done wonders for a lot of mid-size airports, but almost universally has not successfully incubated new flights at unserved rural airports. But the title says, “small community” and whoever put this site together just assumed it was a solution.

As it stands, it’s just hot air, as the FAA authorization under vote today throws another $5 million – up from $10 million – at SCASD. Chump change.

Then there is the canard that the pilot shortage is the problem. It is, at least to the extent that pilot resources are getting far too expensive to be used operating small airliners. Plus, United is now looking to reduce pilot numbers temporarily. Spirit is furloughing over 200 cockpit personnel. FedEx is encouraging pilots to leave. In any case, more pilots won’t bring more service to Topeka or Youngstown. It’s a cost v revenue equation.

Quick! Call The Web Designer. The Grand Plan Has Been Blown To Bits. As it stands today, all three of the proposed “solutions” are dead. Gone. Evaporated. Funding won’t be increased and the pilot issue is a non sequitur. Writing your elected representative will just waste time.

Okay, it’s time for RESTORE to go back and develop some new approaches to sell. And while there, they may want to take the pictures of 737s and A320s off the site. Misleading big time.

The Cavalry Is Not Coming To Save The Fort. Neither Are Airlines. In the case of Williamsport, the coming addition of connective service via Southern Airways will be a great benefit. But it is not a “baby step” to getting major airline flights. It is the final step. Period.

Unfortunately, the local leaders have openly denounced American for leaving town. And accused the airline industry as being scammers for taking billions in CCP/Covid relief and then cutting flights at points where they can’t make money.

That won’t do much to encourage AA back, or another of the two major systems to invest a 76-seat, $20 million airliner to serve a community that has openly accused them of malfeasance.

Ignoring this is fatal to the credibility of the website, and it is shameful to whoever is misleading these communities into thinking that it’s just more funding that’ll get totally undefined “air service” back to town.

Don’t Bother With Naysayers. Even When They’re Right. One interesting part of the RESTORE website is a link to an NPR story. It recounts how Williamsport is the poster child for the small community airport crisis. They interview local officials. They decry the rural crisis and imply that there are solutions.

But they also interview – extensively – Bill Swelbar. He makes it clear, fact after fact, that economic and consumer realities are the reasons for this situation, and it won’t change. He speaks the truth.

The truth that whoever is misleading these communities involved in the RESTORE project isn’t making clear. Then, as if it never was covered, NPR goes back to the local civic leaders with zero attempt to get their input on Mr. Swelbar’s professional observations.

Solutions Need To Go Beyond Air Service Initiatives. Small communities are not well served by schemes that are promulgated on the RESTORE website.

Plus, all three of the magic veneer solutions – huge EAS and SCASD increases and more pilots – are now precluded. Whoever is Pied-Pipering small communities in this project needs to come up with other jive. And they probably will.

Remember, today air service is just one of many communication channels.

There are others. And small communities would do well to innovatively research how they can be used. Just throwing money at snake oil solutions won’t fix it.

Neither will letters to Santa Claus.

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April 22, 2024

Airline Service:
Simplifying The Customer Experience

It Is Happening.

The DOT Secretary has mounted his soapbox and declared that USA airlines are systematically and consistently abusing consumers. He’s asked state attorneys-general to help him corral this aberrant sector of the national economy.

He has declared airlines to be consumer-abusing scofflaws. The industry needs to react aggressively. Not to this guy, but to their passengers. Get them on the airline side of the equation.

It’s Not Like Buying From Amazon. Air travel is unique as a product in that the user enters into a relationship where he or she uses it almost completely under the control of the seller, and largely to subject to rules and requirements outside of the consumers’ control.

The buyer is not in control. Think about it: there are a lot of “or else” instructions. Comply or you don’t get the product, which is arriving at Spokane.

It’s based on direct orders, albeit somewhat with a public relations veneer of seeming to make the trip a great experience to look forward to. Nice try. These are not suggestions from the crew but are direct orders.  But it’s all a situation where rules must be followed, starting with safety, and going into issues involving the sub-product the customer may have agreed to buy.

The first category is regulatory. After that, it’s the airline that makes the decisions on compliance or non-compliance with their rules.

The hard regulatory stuff is easy to understand, if sometimes imparted like a Marine Corps DI. Like, to keep the seat fully upright during takeoff, to relinquishing personal goods (a.k.a .checked baggage) to other people, to being instructed when to get on the plane, specific carry-on instructions, watching a video that seems to make light of the very distant potential of needing to get off the plane fast, lest one become a crispy critter in economy.

You know, the hard and fast safety stuff. How it’s communicated is critical to customer service, but it must be  followed. No exceptions.

People don’t like to be trapped in a metal tube and know that at the bottom line they are required to follow orders. It’s a natural human response, but essential to safety. Deal with it.

Then comes the soft parts of the air service product purchase. At most airlines, it’s a giant menu of varying accessories and rules to the basic product of transportation. Differing fare levels, each with varying levels of amenities, like seat selection, boarding priority, carry-on rules, legroom, location of seat in the cabin, etc.

Now comes the acid test of airline customer service: failure remediation. When the flight cancels or is delayed, remediation is necessary. This is  as intrinsic to the air travel product as is fueling the aircraft, but a lot more complex to deal with, particularly in cases where the consumer feels he’s been put through enough uncertainty or perceived mistreatment loses composure.

This is where the seeds are sown to get people like Buttigieg involved.

There are two paths that the USA airline industry needs to pursue to avoid more inept DOT intervention that is based more on lore than on reality.

Refocus on Customer Service As A Priority. Having people around the airport to deal with customer issues is really, really expensive. And so is having to have pilots in the cockpit.

In reality, both of these are critical to the air transportation product. Unfortunately, a number of airlines have clearly decided that they aren’t going to pony up to handle silly issues coming from their customers.

One airline reportedly closes its customer service counter an hour before flight. Tough, passengers. You should have been here earlier. Others have completely eliminated any customer service phone lines. Do it by text, they say, which is an enormously amateur and arrogant approach to taking care of that family of four that just found out the flight is cancelled, and there’s nobody to talk to at the airport.

Rethink how much money is saved farming out customer processing to mercenary vendors. Yup, getting bids for handing check-in and airport services from outside companies is a great way to save money. And reducing administrative hassle. It’s just a three-year contract, which will be re-bid. Wow, we won’t need to deal with personnel issues or, god forbid, a union drive.

The truth is that this puts airline customers in the hands of staff that don’t work for the airline, have no career path, are paid low wages, and have zero interest in going out of the way for passengers. They are not on the airline’s team. So, when things go operationally south, the customers are pretty much on their own.

Brand Loyalty: No Attempt At Building It. Some airlines pander to ads showing how great their frequent flyer programs are, but when the customer gets to the airport, all that pap about wanting brand loyalty goes down the tube.

Point: It appears that some airlines really don’t care if the customer flies them again. Professional level customer service staffing and training are really expensive. And again, so are pilots and flight attendants, too. But customer interaction skills are not federally required.

But they are ethically necessary.

Simplify The Product. Can somebody please take a look at Southwest?

And then compare it to most other airlines. The reason WN has high customer loyalty is that it’s simple to fly. But more importantly, their airport staff don’t have to deal with a plethora of fares and other rules to get passengers on and off the plane.

No arguments with passengers on baggage fees. There aren’t any. No angry passengers who had to pay change fees. There aren’t any. The issue is that flying WN is easy for the customer, but just as critically, it’s a product that’s easy for their staff to deliver.

There are unintended consequences to any soft rules regarding passenger fees. The “choice seat” fee is one that has landed major airlines in the crosshairs of the DOT and the media. It has engendered the lore that airlines intentionally charged families extra to sit together as a policy.

That is a lie. Truth, accuracy and investigative reporting aren’t really germane to the DOT.

Like, hello media: no airline ever had extra fees charged specifically for families to sit together. Some did have, and continue to have, a large number of seats in the economy cabin – no different than others – to which they assign a “choice” fee (or some other cockamamie name) if consumers want to choose them in advance.

The official reason is that these are closer to the front of the plane. But the real reason is that consumers will pay to avoid the uncertainty of getting an arbitrary assignment at the last minute in a middle seat between two Sumo wrestlers, or as unlikely as it may be, get oversold at the gate.

So, the crack canasta champion team of four flying to the big play-off in Chicago might find that the only unassigned seats together are those in the “choice” (sic) section, and if they want to discuss table card strategy on the flight, it’s pony up or get airline-assigned seats at the last minute.

Nothing sinister about this. But when that group of four is a family with two kids, well, it means they, too, must cough up the $30 per seat fee. That’s where this political nonsense started.

The folks in the airline product planning department logically didn’t think about this. Nor should they have, necessarily.

Price The Revenue v The Political Consequences. But this is an example of how airlines can get labeled. Rethink fees that consumerists can misconstrue as predatory. Like, one airline actually offers passengers to board before their assigned group for just $23. That’s a value of about $4 a minute to get to your assigned 17.5-inch seat a couple minutes early. It makes the airline tend to resemble a carnival hawker.

Airlines have every right to charge for what they deem of value, whether it’s a carry-on fee or a seat-selection fee or a get-in-the-cabin early fee.

But the hard vision goes back to the Southwest product model. Airlines need to rethink every part of the customer processing system and do a scenario review of the real-world outcomes – particularly the political outcomes.

Remember, there are folks in Washington just hankering to take airlines to the public firing squad.

The ball is in the airline court and the solutions are simple: simplify and refocus on professionally trained customer service.

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April 15, 2024

The Spirit Situation.
It’s A LOT More Than What’s On The Surface.

Spirit has announced deferrals of new aircraft into next year, and furloughs of 260 pilots.

Naturally, to a lot of veneer aviation analysts this goes completely against dogma. First, there is a pilot shortage, right? Next, we see where Southwest and United (at the least) are scaling back expansion plans for the 3^rd and 4^th quarters, due to non-delivery of 737s from troubled (very troubled) Boeing.

So, by the logic of the consensus, this situation should be gangbuster opportunities for Spirit, right?

What is being missed, nearly completely, is that the traditional leisure-impulse ULCC model isn’t the traffic slam-dunk it was in the past. What is being missed is that the traffic models of network carriers and ULCCs are not the same. What is being missed is that ULCCs such as Spirit and Frontier need to seek revenues from other market genres than in the past.

Certainly,  the major reliability problems with the P&W/RTX engines have made fleet utilization and schedule reliability a major challenge. However, these are not the drivers for Spirt jumping into the EWR-ORD, or BOS-MCI or EWR-MCI routes. These are routes where NK is looking to capture some traffic spilled from incumbents, and/or where maybe a lower fare might stimulate some traffic.

One difference from the  traditional ULCC model, this new genre of markets is not likely to be deep financial wells in capturing leisure traffic. It’s what VFR traffic that can be generated as well as some price-driven business demand. This is a whole new model, and it remains to be seen if it will work.

It could. In O&D markets like these, the incumbents all have heavy load factors, supported by connecting flow traffic. For these network airlines to respond aggressively to the single daily O&D frequency offered by NK, the cost in lost yields or displacement of flow traffic could be very expensive.

 

All this aside, the real message is that the Florida/Vegas impulse traffic well may be going dry. Spirit today has strong strategic management. They have apparently determined that in the near term, they simply don’t have a lot of lucrative impulse markets in which to expand. It’s an open question as to how many folks in suburbia or SmallTown, Iowa can be attracted to shifting discretionary spend into a trip to Orlando, mostly due to a sudden low fare.

So, now they are looking at nibbling at the edges of major network traffic flows. Sort of like pilot fish shadowing a great white, looking for some scraps.

Frontier is apparently pursuing the same strategy. There may be enough traffic to support markets like CAK-AUS, but if not, they can drop it like a hot potato and go elsewhere.

But that is the unknown for these evolving ULCCs. There is no guarantee that there will be an “elsewhere” to expand.

April 8, 2024

Ten Years Later: The Expected Cuba Travel Bonanza.

The One That Was A Complete Pipe Dream.

It’s been almost a decade since Obama grandly visited the Cuba Workers Paradise, promising to open up relations with the Castro regime. Lots of media coverage. Yessir, this was going to be a bonanza for the hotel industry, which would swoop into Havana and the island with new resorts. A windfall for USA businesses, which in the planned absence of a US-Cuba trade embargo, were projected to see huge orders for US goods. ‘Course, there wasn’t much investigation of whether this all made sense, which it didn’t. Cuba has no business base to buy USA goods. It has no real foundation for tourism, either. The beach resorts are not competitive with others in the region, and transportation to get to them was (is) rudimentary at best. But the facts didn’t matter. Cuba was going to be the Next Big Thing. Heck, the usual clowns on the left condemned any molestation of the Castro economy. One actually urged travelers, “get to Cuba fast before capitalism ruins it.” Yup, getting rid of food shortages, and power outages, and lack of soap, and prohibitions on free speech will just devastate the place. So here we are ten years later, and, holy revolution, Batman, Cuba isn’t much different. That air service boom – the “pent up demand” for getting to Cuba – just didn’t happen. Maybe the fact that even if they had the money (which they don’t) Cuban citizens are not allowed to leave the country.

In 2009 Boyd Group International accomplished a research study on the potential for opening Cuba to air travel. We updated it in 2014 after Obama made the move to engage with then-doddering Castro. The reports made clear that with only one-way traffic demand, and not a lot of incentives to go that way, the bogus claims by the travel industry of full airplanes, and by veneer economists about investment were pretty clear. I thought it might be appropriate to do a quick, six-minute update on Cuba in a new Aviation Unscripted video. It’s to the point, and if you’re interested, we can get a synopsis of our study to you, too. Just hit the contact button and ask. Just click here to take a quick six minutes into the realities of the Cuba-USA market. The 2014 Rapture on Cuba was just another example of hype overcoming sound analysis.

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April 1, 2024

The Boeing Situation: Now, It’s A Convenient Political Trojan Horse.

The ongoing fiasco concerning Boeing is getting worse.

Aside from the hard facts that have been illuminated, including major production and maintenance snafus at Boeing itself, the entire subject has started to spin out of control in regard to hard facts and reliable reporting.

If A Tray Table Is Broken, It Can Get Coverage. Take a look at the burgeoning stories. Today, routine operational and maintenance events with Boeing airplanes are tossed into reports conflating them with the production snafus. The point is that an engine failure on a 777 built 20 years ago gets reported as being another indication of the mess at Boeing.

Some Dangerous Trends Developing. On March 31, I discussed this matter on Fox News. There were two issues raised that are clearly just the first shots across the bow of Boeing’s public image.

Disturbingly, the Fox interviewer candidly stated that she herself had cancelled a flight reservation when she found it was on a 737MAX. This was regardless of the fact that the booking was non-refundable. The takeaway here is that there is indeed public concern regarding the safety of flying on these Boeing airplanes.

She raised the question of whether airlines should be required to refund when the consumer determines not to ride on a MAX. What this says is that this may be a major challenge for airlines operating the MAX. If the public is spooked by all this media coverage of “problems” with Boeing airliners, it’s not a small issue.

And you can take it to the bank that if it represents a potential soapbox, Buttigieg and his cronies will jump on it, maybe demanding that carriers disclose at time of booking if the flight is on a 737MAX. That would be devastating in that this disclosure requirement would be a tacit implication that these airliners are less safe, and consumers need to know it.

Yikes.

My point to the media  is that if a pilot at American or Alaska or Southwest or United gets in the cockpit, it’s a sure sign that the plane is safe.

Nevertheless, the message to 737MAX operators: Get ready for some incoming political artillery.

Now, Let’s Use This As Political Trojan Horse. Another issue raised in the interview was just as concerning. The Attorney General of Texas is now demanding an investigation into Spirit Aerosystems, the major fuselage supplier to Boeing. He wants to know how that company’s DEI (diversity, equity, inclusion) program may have affected the quality and safety of their manufacturing.

The implication is that Spirit is more concerned with political correctness than with properly building airplanes.

Okay, whatever one’s position may be on DEI, the question needs to be asked whether this AG has a legitimate dog in the fight. Here’s a guy sitting in Austin, with pretty much zero expertise in air safety, demanding answers from a company in Wichita. Not so much about operational aspects, but whether DEI is responsible for the mess at Boeing.

Let’s be clear: This is cheap pandering that will only continue to cloud the facts around the issue.

Plan For More Fireworks. Bottom line: This is a situation that is continuing to get more complex and more confused.

The core proximate issue is manufacturing and maintenance procedures at Boeing. The longer-term revelations are that the management philosophy that led to this has also left Boeing way second to Airbus in future product development.

Maybe The Boeing Boardroom Needs A Bulldozer. While Airbus over the past decade has aggressively moved into advanced platforms such as the A321LR and XLR, as well as the A220, Boeing did a one-and-a-half gainer into the shallow end of the strategic planning pool. In the major future demand area  – multi-mission narrow-body airliners – Boeing is clearly running out of time.

That has economic significance beyond just manufacturing.

 

March 25, 2024

Boeing Issues & Airline Operational Events:
There Is A Consistent Thread: Lack of FAA Oversight

First, we had the MAX tragedies, where a design failure caused fatal crashes.

Of late, it has been discovered that Boeing has major potential issues with its manufacturing processes and oversight.

A string of mostly un-related operational airline incidents – focused on United, but actually across the industry – have been reported. No real information on whether these are at abnormal rates or are simply highlighted due to the escalation of the subject matter in the public eye.

Lots of media coverage, naturally. People are looking for threads to connect them together, without much in evidence.

But there actually is one consistent thread that’s been overlooked.

It’s the FAA.

The agency is taking the mantle of being the cavalry coming over the hill to save the flying public. And in a very real sense, that metaphor is on the money: The FAA is just arriving.

What is missed is that the FAA has been AWOL in regard to oversight – they were on site at Boeing and took full part in the certification of the 737MAX, deadly MCAS flaws and all. They are responsible for oversight of Boeing’s manufacturing and maintenance, too. Like, the alleged failures in process and in paperwork revealed by the near disaster with the Alaska 737-9 door plug blowout.

The point here is that these events all took place while the FAA was supposed to be on the job.

Now the DOT/FAA is in full metal jacket mode attempting to convince the public that they are coming in to save the day, when in fact they have some ‘splainin’ to do themselves.

It is starting to look like a PR show. They are telling passengers on that Alaska flight that they may be victims of a “criminal act.” That’s a serious finding, but when it’s tossed out as a PR stunt with zero foundational explanation, it could be an attempt to deflect their own failures.

One other thing we clearly know is that Boeing apparently was allowing maintenance to be done without record-keeping in regard to mechanics doing the work. Hello, FAA. How widespread was that practice? It is your responsibility to oversee Boeing. You failed.

Now, they are making vague comments that they are stepping up scrutiny of United, with public notice implying that they are going to restrict that airline’s planned expansion. That plays well on the 6PM Ken-and-Barbie-TelePrompTer news. Particularly when they haven’t started their  enhanced investigation.

Think about this. There may be no excuses for some of this on the part of Boeing. But for the FAA to posture itself as having had no direct oversight is actually another safety issue to investigate.

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Blunt Assessment of Boeing.
Interview on Fox Morning Business, March 21, 2024

I recently was invited to discuss at Fox Business with Maria Bartiromo, along with Mr. Stewart Glickman of CFRA. No holds barred. The points raised were that Boeing has fallen behind Airbus now to the point that it will likely stay as #2 for years to come.

Unfortunately, even when Boeing fixes its manufacturing problems, it will still face the reality that, compared to Airbus, it has no future new product in the all-important multi-mission narrowbody sector. That’s where the growth will be, and the 737 is now a run-out platform.

Click here and get our insights.

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March 18, 2024

Small & Mid-Size Community Air Access:
Too Often Ignoring The New Airline Reality Commandments.

Here are the ten unshakable realities regarding small and mid-size airport air service access recruitment.

1. There are only three fully connective national network airline systems in the USA. American, Delta and United. Alaska – with only one full connecting hub operation at Seattle, is more of a point-to-point carrier. JetBlue traditionally eschews on-line connectivity. Southwest has connectivity, but for small communities, it’s a pipe dream.

2. Generally, at the three fully connective national network airline systems, the lowest capacity units in the fleet are 50-seat jets at United and American. Delta is parking 50-seaters. United has a fleet of 70-seat CRJs culled down to 50 premium seats.

3. Beyond that, the lowest capacity in the fully connective networks will be 65 seats (AA CRJ-700s). The future is now with scope-constricted 76-seat E175s, as the 20-year-old CRJs get parked.

4. For communities, the main value of scheduled air service is connectivity to and from the rest of – or a major portion of – the air transportation system. That means service that accesses a major connective airline hubsite.

5. In fact, most small and small/midsize communities cannot unilaterally support point-to-point service to non-leisure destinations, even to very large metros, without the support of the flow passengers that are connecting beyond the hub. The local O&D won’t cut it. The failed RedWay O&D experiment at Lincoln – obviously based on DOT data that was completely misunderstood – was another example of this dynamic.

6. Anything short of this is not connective air service. The traditional – and now changing – ULCC model is not connective air service. It is a service catering to impulse passengers to shift discretionary spending to a leisure trip.

7. The presence of connective air service is what draws consumers from small communities to larger ones that can support higher levels of traffic and frequency. It’s traditionally mis-labeled as “leakage.”

8. The concepts of “leakage” and “catchment areas” are generally obsolete in regard to estimating air service that can be attracted to a small community airport. The passenger demand at most of these communities “leaks” away to a larger airport because that airport can support wider network carrier service that the small local airport cannot. So, it’s not “leakage” but instead it is passenger traffic legitimately belonging to the larger airport. Swallow hard, it’s the future.

9. Even connective air service is sometimes rendered dead at small community local airports when consumers have alternative options that, even with a drive of 60-90 minutes, can be more travel-time efficient than trying to use the maybe two or three flights that the local airport might be able to recruit. With changes in major airline fleets, this is accelerating.

10. Consumers are time-loyal and value-loyal. They are not local airport-loyal, unless it can offer better alternatives than other airports in a region. That unscientific web survey asking if people will use the local airport is garbage because typically it leaves out any discussion of service levels, fares, target airline, etc.

Reality Ignored. Okay, this is not rocket science. It’s just an outline of hard realities that any basic air service analysis would include.

• So, how come we still have airport boards intent on seeking out “more airlines” beyond these? More airlines that don’t exist.
• How come the concept of  airline strategies is so often blissfully ignored? A fast check of the fleets at each airline can be a big information bang. When a major airline providing service with 50-seaters leaves town, it’s strange that so many airports are convinced that another airline can be “lured” back operating airplanes 50% bigger and far more expensive.
• How come hard questions aren’t asked when that outside expert comes to town and counsels that just a little more time is needed, and “talks” with airlines will bear fruit? Particularly when the mystery airlines are not identified.

It’s Not An Issue of A Pilot Shortage. Yes, it’s like breaking into the visit Santa line at the department store and telling the kiddies that the fat guy in the red suit is really just Fred from accounting filling in for the season.

But it has to be said: more pilots will be coming to major airline systems, eventually, but they’ll be flying bigger airplanes, and not necessarily ones with small community economics.

There Are Solutions. But Very Different From Traditional Approaches. Point: There are new air channels that are coming online that can address air service at a number of small communities. Not all. But some. Reference the Southern Model we covered in a recent Touch & Go a few weeks ago.

But in any case, the ten realities cannot be reversed. That means traditional ASD programs must adjust.

Interested? Hit the contact button and we can discuss.

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March 11, 2024

What To Watch For This Week

– The 737-10 Delay. Airline Strategy Shifts

– The AA E175 Order. Not A Lifeline for Small Airports

– The Spirit Airlines & The Media.
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The 737-10 Affair

Delta has reported that the deliveries of the 100 737-10s it has on order may not arrive until 2027 – two years later than originally envisioned. United has taken its 110+ 737-10s out of its fleet plan for now.

Watch for fallout in route and market applications to be worked into these carrier’s strategic plans. These events are gigantic long-term monkey wrenches for these carriers.

Mobile Alabama In The Positive Crosshairs

The mess at Boeing may be troubling for Renton and Wichita but points out well for our client Mobile. The problems with the 737-10 will be driving carriers toward the A321, which will put some pressure on the Airbus global production system, including Mobile.

Usually, it would make no sense for Airbus to ramp up to take advantage of a temporary production shortfall at Boeing.

However, Airbus is looking at the potential for increased demand for as many as 350 A320s, which is not a bump, but a long-term demand shift. This means the company is subsuming much of the demand for mission-flexible, long-haul narrow-body airliners that were originally on the Boeing books.

For growth, Airbus has land available at Mobile. Not so much in Germany and France, and the political upheavals in China may give them pause to expand in Tianjin.

Let’s watch.

American’s E175 Order

The AA order for 90 E175s is a harbinger of the future reach of the AA domestic system.

There has been some conjecture that this will mean much more AA service into smaller airports. Unfortunately, the message is just the opposite. The E175 is essentially a small mainline-cabin airliner – a very expensive asset. It will indeed give AA a lot of market flexibility, but at 76 seats, there won’t be any rush to lease space at small community local airports.

The message is that the floor to support AA branded service will be 76 seats, and these $20 million flying machines are not destined to bring service back to markets that couldn’t support 50-seaters.

Point: This order for E175s means the traffic demand bar will continue to go up. Not down.

This was discussed in the latest Touch & Go™  weekly vision letter. If you’re not on the subscriber list, click here and we’ll get you on board.

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Spirit Conjecture –  Incompetent Media Can Shape Things

It seems that gloom and doom is the trendy new direction in reporting on Spirit Airlines.

Since an uninformed judge but the kibosh on the merger with JetBlue, it has become normal to find dismal media stories about potential financial issues at NK.

Not passing here on the financial issues surrounding the potential merger, should it have been approved. But the consumer impact would have been enormously positive. Water under the bridge.

According to the management, Spirit  has sufficient financial wherewithal to be a going concern. But when “word” gets spread that any business entity has financial challenges, it can spook suppliers and customers.

Let’s remember the Frontier bankruptcy. Just when the carrier had switched credit card processors, the Wall Street Journal came out with an incredibly amateur and inaccurate article declaring that Frontier could not compete, due to pressure at Denver from United and Southwest.

The article was unsupported garbage, but played to veneer stereotypes. The data clearly showed that it was Southwest, not Frontier, that was getting the short end. But with the supposed “prestige” of the WSJ, Frontier’s credit card processor suddenly got spooked and withheld funds. Sloppy journalism can be economically lethal.

That same inept but trendy-safe stream of stories may accelerate. Unfortunately.

Weekly Summary: Keep an ear to the ground – there may be some big changes in play in the next several days.

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March 4, 2024

Watching This Week’s Trends

1. JetBlue and Spirit Strike Their Colors.
2. Florida Traffic Demand: In Flux.
3. Mobile Scores United-IAD – Stiff Fleet Competition

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JetBlue Tumbles To The Obvious

One of the most promising events in regard to increasing airline competition went 86 with JetBlue calling off the merger with Spirit. Apparently, proceeding with the appeal would have mostly benefitted legal fees, not the consumer.

This is another indication that when it comes to understanding air transportation, let alone having a grip on cohesive, professional policy, the DOT is firmly mired in the 19^th century.

 

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Florida Traffic: Changing Dynamics
Illuminating National Airline Strategy Trends

Relying on data from our friends at Cirium, it was of interest to take a look at Florida capacity, comparing the 2Q of 2024 to the same pre-CCP Covid quarter in 2019.

These data are only for the main players, and only for Florida-North America capacity.  Breeze and Avelo were not in existence in 2019, so there’s no comparisons.

Of interest is that there are actually fewer flights, but on materially larger airliners. The average seat capacity was up almost 14% per departure. Only one of the four majors – Southwest – has an increase in flights. ULCCs were the growth vehicles. For now.

There is a take-away here that the resurgence of Florida air access is due mainly to ULCC capacity, and to fleet changes  as all carriers continue to shift into larger units of capacity.

This type of trend data is important to watch, as fleet changes will be a major determinant of route decisions in the future.

Of note: if you compare the 2Q of 2023 with that of 2024, there is another emerging dynamic clearly coming into view: capacity flattening in Florida markets. This can be accessed in about 20 seconds via Cirium, and is a trend that airport market planners should grasp.

Fleet Uncertainty. On of the factors to watch in regard to changes in Florida capacity (and for that matter, capacity at Las Vegas and Phoenix) are potential capacity pull-downs due to the delays in aircraft deliveries due to the fiasco at Boeing and at RTX. Low yield markets will be taking a hit at least in regard to planned capacity increases.

Air service planning today is a whole lot more than churning out catchment and market studies. The foundational starting point is now understanding airline strategies and the events that affect them.

Want more understanding of the futurist approaches to air service planning? Give us a call.

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Mobile United IAD Flights

Mobile has recruited nonstops to United’s Washington/IAD hub.

Mobile is the poster child for communities that are in the positive crosshairs of the new economic development dynamics in the USA. The growing Airbus factory is making the region an aviation-centric growth area. The United service fills the demonstrated need for additional access to the EU as well as the East Coast.

Boyd Group International is honored to have crafted the successful Small Community Air Service Development grant that helped make this new service possible. We only accept SCASD projects when our hard futurist economic data indicate strong commercial value to both the community and the airport.

SkyWest Taking On 20 More E175s For United. The Message.

United will have SkyWest operate another 24 E175s in 2024. This is a fleet message that’s increasingly important to airport air service planning.

Point: the 70/76 seat fleets are growing at United Airlines. Smaller jet fleets are declining. In the USA there are just two operators of

This is a reality that’s too often missed in traditional air service development programs. The staring point for any small community air service program is no longer a “true market study” or “catchment analysis.” Airlines are not chasing markets based on these types of data.

It’s the mission capabilities of the fleets under their control. That’s now the first step. Blind shooting with data that have obsolete value isn’t going to get air service.

These E175s are far from net-new expansion airplanes for United. Due to issues at Boeing, the airline is going into 2024 with Boing unable to deliver 100 new 737s that were planned to be in the fleet.

Again: Air service access planning today must start with airlines and a clear grasp of industry trends.

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February 26, 2024

Airline Retailing:
Where It Was. Where It’s Going.
Watch American Airlines.

American Airlines just announced that bookings made through certain travel agency portals will no longer be eligible for frequent flyer miles. No word on which of these portals will be affected, but take it to the bank, this is the beginning of the final step in deleting most off-carrier airline sales.

AA also is restricting some services to members of its frequent flyer program. It’s all about circling the revenue wagons.

In trying to opine where this may go, it’s instructive to see how airline retailing has evolved over the years.

Yikes. When we say “travel agent” for some of us, it recalls a dark medieval time when airlines were dependent on brick-and-mortar entities for a substantial part of passenger revenues. Not just dependent, but at their mercy.

Until the mid-1980s, the process of determining itineraries, booking reservations (often inter-line itineraries), computing fares manually, consulting massive tariff books, checking routing guides, applying joint fares on multi-airline trips, and writing out complex tickets, was an ordeal. So, airlines found that paying an outsider some percentage of the fare was cost-effective in retailing their product. It was a necessity, not necessarily something that they preferred to do.

But these travel agencies represented all carriers, and they were fully aware that they were in control of the consumer decision regarding what airline the customer would fly. They had no qualms using this as a sledgehammer pitting airlines against each other to get the bookings. The official airline pablum line was that travel agents were “our valued partners.” But the reality was that it was just a fragile truce – the TAs generally played the consumer-decision card openly and brazenly.

So, for an airline, the care and feeding of these agencies was critical and expensive. Airline sales reps were responsible for visiting and pandering to these agencies with all sorts of bennies in hopes they would be less likely to book folks on another carrier. Lots of “travel agency appreciation” receptions (cheap white zinfandel and shrimp seems to have been the feeding of choice), fam trips to far off places, and other incentives.

All done with the sincerity one usually finds only at a used car lot.

Travel agencies knew they had juice, and they generally did not hesitate to let airlines know it.  One airline CEO referred to these people as “extortionists” – give’em what they want or else.

It was not uncommon for a TA to indignantly declare they’d never book another client on a specific airline in retribution for some failure to pay homage properly. Luckily, “never” was usually not much more than a week or so, or until the next cheap-wine-and-shrimp event. Short memories, usually.

But with the evolution of computerization, the end of interline routings, and automatic faring, by the mid-1980s, these agencies weren’t needed. Not at all. Consumers could do it on-line. Airlines could now advise the formerly-arrogant TAs that they could take a hike.

The complex training to read tariffs and fill out time-consuming conjunction tickets were no longer needed.  Actually, tickets went away completely.  The commissions ended. The travel agent help desk at the airline was disconnected. There were no more sales reps walking through the door with crocodile smiles. Airline retailing had left brick and mortal travel agencies in the past.

So, now we’re in an age when airline retailing is far more efficient, and in the control – mostly – of the airlines themselves.

That brings us to AA’s leadership in honing costs further. Bet on it, any part of the system where outsiders are involved in the airline choice (or choice of airline product) is going to be under scrutiny.

You have to assume that entities such as Travelocity and Expedia and others are in the crosshairs of the march of progress. Airlines have their own web portals, and maybe these other channels aren’t all that necessary. Or at least some of them. American has been upfront in making it clear that consumers who are AAdvantge members and who use AA.com have “status.” Sort of.

So, the battleground is where the costs v benefits may be in using outside retailers. AA dabbled with being off of some of these channels and went back. But Southwest seems to have survived okay, not being accessible on these channels.

The open question is what retail channels are the most cost-effective for the airline. One thing they’d like to avoid is having competition in the booking process. On these electronic travel agency portals, consumers have the ability to compare.

There’s another sea-change (sky-change?) in the works in regard to airlines busting out of anything traditional in retailing their product.

Stand by. Let’s see what Delta and United do over the next few weeks.

 

 

 

February 12, 2024

RIP Ultra Low-Cost Carriers:
Evolving Into AOCs:
Alternative Option Carriers.

This hoedown is clearly coming to an end. Or at least the party is moving elsewhere.

We are talking about the concept of the ultra low-cost carrier, which was focused on plumbing net-new traffic mostly by low fares to leisure points.

An Evaporating Market Strategy. The entire ULCC model was essentially based on being able to offer a new discretionary spend product – service to leisure and a few other markets where low fares could generate net-new impulse traffic.

That traffic is running dry. For two reasons.

One, it’s getting clear that markets such as Florida and Las Vegas and Phoenix are getting more capacity than can be stimmed but a cheap initial base fare.

The other is more ominous: the “U” in ULCC is evaporating fast. Cost advantages just aren’t as much in play as in the past.

New revenue streams are needed. Soon.

Think about it. ULCCs have no real advantage in fuel costs, or aircraft lease rates, or airport costs particularly as some continue to shift into major-density non-leisure markets. Labor costs are evening as well. New and expected gains across the bargaining table for pilots, flight attendants, maintenance and other classifications are leveling the cost ledger between ULCCs and major/hybrid airlines.

Take a look at the shifts in market strategy. Frontier is the most obvious example. It is pulling down capacity in Florida and Las Vegas. At the same time, they just announced a whole passel of expansion – into mostly major non-leisure markets – at PHL, DFW, MSP and CLT.

All, apparently, are markets where the incumbent’s high local fares could be in play. What Frontier is doing is offering an alternative air option. One with a much more bare product, a limited schedule, and fares lower than incumbents based on structural limitations on competitive responses.

The Key Is When The Incumbent Is Capacity-Trapped. It is going to take a lot more than an intro $19 fare to make these route print black ink. The local fares are high because in many – most – of the new markets targeted by F9 a lion’s share of the revenue is flow traffic over the major’s hubsite, and local O&D isn’t the main focus. In some cases, the incumbent may be reticent to fare-match for fear of spilling some of the more lucrative flow traffic over its hubsite.

So, the open question is determining the actual battle advantages of each player in these invaded hubsite local markets.

On one hand, there is the potential for F9 capturing some of the local O&D from the incumbent, due to the lower fares. In some of these markets, the incumbent major carrier is operating leased-in E175s, which have higher per-seat costs than the A320/321s Frontier will be operating.

Plus, these major airline flights tend to be at or above 80% load factors, giving little wiggle room for competitive response.

Again, this is particularly true when the majority of the passengers on the major are flow traffic that could be damaged in a local-market fare war.

Seat density – the last main expense refuge as other areas see increases – can be an advantage for F9, but they still must fill those 180-200+ seats, even with a day-of-week schedule, regardless of actual ASM costs.

Daunting. But Not Entirely Crazy. On the surface, by traditional thinking, what Frontier is doing is the airline equivalent of a bull moose charging an oncoming locomotive. The operative word here is “traditional” – that means old. That means – maybe – out of date.

The Stim Factor Is The Unknown. We took a look at Cirium data for one route involved – Grand Rapids-DFW. American enjoys an 80% load factor in the market with almost 230,000 passengers on board.

But over 65% of that high load factor is connect traffic over DFW, which is completely out of reach for Frontier. They will need to stimulate – or capture from AA and other incumbents, or both – a current local O&D traffic of about 91,000.

Okay, doing a fast pass at what F9 is planning, assuming three weekly A320 round trips DFW-GRR and assuming a need for an 80% load factor, the airline would need to board about 45,000 to make a go of it.

It leads to the conclusion that between diversion of some of the current O&D from American, and some stimulation due to lower fares (assuming they are still economic) this market entry may not be as daunting as it looks. Maybe. Grand Rapids is close to a boom market, as is most of Michigan’s Lower Peninsula. Point: this could actually work for Frontier.

The bottom line is this: for ULCCs to move into the future, it means moving some capacity into traditional and established markets where simply a low fare can both capture existing passengers and stimulate new ones. Lots of new ones. Their new niche needs to offer an alternative – a different product that can capture and stimulate traffic. It’s not direct competition, per se, but another product.

This means a whole new competitive picture, based on a model not yet proven. But it may be the only option left for the ULCC sector as cost advantages continue to be blurred.

The third quarter of 2024 should be really interesting.

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February 4, 2024

Frequent Flyer Programs.
Some Big Changes Might Be Coming.

Back in October, two senators petitioned the Department of Transportation to investigate what they opined are anti-consumer actions on the part of airline frequent flyer programs.

Now, Buttigieg and crew are on it. Not good news, as it guarantees political grandstanding will come into play.

Cutting to the basic bottom line, the contention is that with airline affinity credit cards, consumers are awarded “miles” based on what they spend, whether it’s for travel or for groceries. That’s great.

The fly in the ointment is that the value and application of these miles gained in the spend process are at the mercy of airline decisions.

That, according to the thought patterns at the DOT, represents something close to bait and switch. Consumers spend, are awarded miles based on a reasonable expectation of their value. But when airlines can – and have – arbitrarily after the sale cut the value of these miles by increasing award levels, that could be considered as defrauding the consumer, at least by some.

Were it simply a matter of earning miles flown on the airline – which was the original program – the airlines’ contention that they can change these values at any time is clearly between them and their passengers. But when affinity credit cards are responsible for billions of spend, much based on consumers’ intent to acquire “miles,” then slashing the value of those miles takes another turn.

Let’s get clear here. The original intent of miles-derived frequent flyer programs was to build brand loyalty. Period. They were widely implemented to keep consumers from using another carrier.

For example, the American AAdvantage program was intended to attract passengers from Delta, United, Southwest, Continental, TWA, Braniff, Northwest, Ozark, North Central, USAir, Southern, and Texas International.  Back then, airlines had plenty of seats available for award travel, and a gangbuster system load factor was 60%.

Let’s fast forward to today. All but American and the first three airlines listed are gone. No more. Not there. Plus, American, Delta, United and Southwest all have load factors in the roughly 80%-plus range. That means a lot fewer unsold seats to give away to award applicants. And possibly almost none except at off-peak times and circuitous routings to popular destinations.

Now, it doesn’t take an MBA from Wharton to conclude that it’s not good business to give away product that you can easily sell. So, that award chart now might be double or three times or more higher than five years ago.

Read: reducing the value of the miles earned when Fred Consumer uses his airline affinity card to pay for a burger and beer at the local gin mill is possible. Once awarded, there is no guarantee the value of those earned miles won’t be arbitrarily cut.

This does not make Fred real happy when he finds that after a couple of years charging everything on his Trans-Deficit Airlines Gold Card, the planned Hawaii trip with the kids is 50% more miles, and involves three connections to get to HNL from Omaha. (That is not an exaggeration.)

The conundrum facing airline FF programs is that the entire raison d’etre for them is gone, and now it’s the affinity cards that are the gold mine, instead of snarfing passenger demand from other airlines.

From that perspective, it is possible that the DOT and DOJ may have some legal leverage. Or think they do.

Ball is in the airlines’ court. They need to craft something beyond the claim that they have always made clear that the program is subject to change.

Fred thought he was getting a free trip. Now, maybe not. When he paid for that cheeseburger and beer, airline policies were not in play.

Standby.

 

January 29, 2024

Been a big week …

The 737 Affair – It’s Not Just A Grounding.
It’s The Start of A Major Shift In The Airframe Industry
And It Will Affect USA Airport Planning

Lincoln, Nebraska just got word that United is yanking IAH service, starting in May.

This could be the first drive-by victim of the 737 fiasco at Boeing. United will have fewer airliners this summer than it had planned on. The service ends at the start of the summer – when a lot of expected airplanes will still be unbuilt.

It’s Just Starting. The Fallout Is Spreading Fast. The FAA has approved operations for the 737-9. But that does not address the cumulative damage inflicted on the air transportation system by this – only the latest – collapse of trust in Boeing.

Listen up, y’all. The Boeing issues have already changed airline route planning and air service access across the entire USA air transportation system. There’s more to come.

Let’s start with this: there is going to be a shortfall in planned airliners at United, Southwest, American,  Alaska and Allegiant. Boeing is constricted by the FAA from increasing production rates. That means customers need to put off adding capacity, and maybe reconsider what they have on order from Boeing.

Airbus is licking their chops. Despite a full production dance card into the next decade, don’t assume that they are out of the picture as an alternative option for airlines which are the victim of Boeing’s issues. We’ll tackle that in a moment.

The production delays at Boeing are just the latest events that have resulted in Southwest taking out any assumptions that the 737-7 will be delivered in 2024.  They have 300 on order. The carrier is working to knit-in the 18 new airports they unilaterally added in 2020-2021. The -7 was a part of that program. Operative word: was. This is a financial issue for WN.

United is delaying the scheduling of 737-10s, which is also facing certification delays. The airline has indicated it is now looking at alternative options. It has over 200 on firm order. Or, maybe not so firm.

Alaska Airlines has estimated a $150 million loss from the -9 grounding, which took 27% of its fleet and over 30% of its seats out of the sky. Oh, by the way, they have 50 737-10s on order, too. Or maybe did.

A Couple Hundred Order Shifts To Airbus? Airbus, which is the only other mainline narrow-body game in town, is production-booked until 2030. But that could change. The Boeing problems could – as a very raw estimate – shift as many as 500 or more 737 orders their way. That could well justify new facilities. As one option they have another 70 acres at Brookley/Mobile that is ready for expansion.

Embraer Out In The Cold? Embraer might have some new opportunities for the E190E2. Up until now, however, USA airlines have shown little interest in the platform, beyond the smaller scope-compatible E175 versions ordered for operation by “regional” contractors, which is not a sector that will be expanding – for economic and labor reasons.

Boeing Front-Office Credibility Is The Issue. Scott Kirby of United said it loud and clear. These -9 fiascos are just the latest in a stream of problems at Boeing, and as he put it, it was the straw that finally broke the camel’s back. He’s already paid a visit to Toulouse, according to reports.

Captain Dennis Tajer of the Allied Pilots Association noted that there is trust in the 737 as an airliner, but no trust in what’s coming out of Boeing management. Describing the Alaska incident being the result of a “quality escape” by Boeing executives was right up there with the “wardrobe malfunction” description of what happened several years ago at the Superbowl.

It was the kind of babble that comes out of those billion-dollar consulting cabals staffed by MBA escapees who couldn’t boil an egg without clear instructions.

Captain Tajer pointed out a stream of production failures on the MAX over the past two years, all similar to the loose bolts found on the -9. Not comforting.

Boeing Is Big. So, Too Will Be The Effects On The USA Economy. This entire situation has tentacles reaching into lots of aviation sectors. Air service planning will be affected not only by Boeing production delays and order cancellations, but by the costs imposed on the airlines themselves in trying to deal with the situation.

Suppliers to Boeing will be adversely hit. A slowed production line means slowed demand for components provided by contractors for the airplanes.

The FAA Will Be Under A Microscope. This party is a long way from over. Remember that the FAA is on the hot seat, too. They cannot, and now will not, allow politics to get involved.

Boeing is a major military contractor, with powerful connections on Capitol Hill. Their phone calls to these entities just might not get answered.

Based on the fact that lives have been at stake with the entire MAX program, it’s not entirely out of the question that Boeings “friends” inside the Beltway may take a powder on this one.

Message To Airports: Keep A Watch On Airline Schedule Filings. The shifts in airline route planning will likely be subtle, and embedded in glowing press releases announcing new service additions. But count on it: the red pencils are out and working in market planning.

More to come…

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January 8, 2024:

What Would A Long-Term 737-9 Grounding Mean To Air Service?
It Is Unlikely, But, Let’s Think About It

The fallout from the Alaska incident, when an exit-door plug blew out after take-off from Portland, could have effects on not just Alaska and United (the only USA operators), but on dozens of communities across the nation.

Probably, a lot less effect on the national air transportation system than it may appear. At this point, the only airliner affected are 737-9s at Alaska and United. It’s a total of 144 airliners out of over 6,000 in USA airline service.

In the hopefully unlikely event a long term grounding is inflicted, both carriers would be facing some challenging re-structuring of schedules, disrupting thousands of flights and tens of thousands of passengers. But both carriers, particularly United, would adjust fairly quickly.

At UA, there are 79 737-9s in the fleet, with seven more on the order book. These aircraft represent only about 8.3% of United’s fleet, assuming that all are in active service, which is unlikely due to routine maintenance programs. More cogently, the 737-9 fleet comprises less than 12% of the carrier’s mainline narrow-body fleet.

The percentage of system ASMs these airliners represent is much smaller, but the real issue is dealing with flight schedule adjustments.

It would be tough, but taking into account the leased-in E175 lift in the United fleet, the airline would likely be able to readjust schedules relatively quickly for a long-term -9 grounding. Expensive, complex, and with reductions in some frequencies. But not a total body-blow to United’s customers.

Alaska Airlines is a different situation. The -9 fleet involved in this affair represent almost 30% of the operating AK fleet, which in the case of a longer-term grounding would entail some significant route system surgery. The most likely immediate move would be a slashing of significant percentages of the carrier’s trans-con markets in order to get aircraft time to support the rest of the AS system.

It would be a very real challenge for the carrier and some of the cities it serves.

It would likely result in diverting substantial E175 flying away from smaller markets, reducing frequency and possibly cessation of service entirely, depending on the length of the grounding.

All this tossed on the table, the NTSB preliminary findings should be out in the next week. If it does indicate a long-term (say, several weeks) grounding, then we’ll dive into a more granular analysis of the effects on air service.

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January 1, 2024:
Aviation Dynamics To Watch

Airline Capacity:
Majors Up 5.0% Over 1Q 2023.
ULCC Capacity All Over The Board.

Watch the first six weeks of 2024 to determine where the economy is headed. Nobody seems to be sure, depending on political viewpoint. So, consumer spending will be the metric. A metric that will determine growth or non-growth in air traffic.

According to our friends at Cirium, traditional mainline carriers are planning on a 5% increase over last year. ULCCs as a group are at @7.8%, but it’s all over the chart depending on airline.

On the mainline carrier side, some of the five per cent capacity increase is due to shifts in fleet mix, as more 50-seaters are sent to the desert.

But on the ULCC ledger – which comprises a fundamentally different airline business – the projections range from less than 2% growth (Allegiant) to almost 20% at Frontier. Percentage comparisons with Breeze and Avelo are not meaningful as both airlines were in start-up mode.

Airplane Order Books: Strategic Planning Indications. There are some telling data when fleet plans at ULCCs are compared, from over 200 new units on order (over several years) at Frontier to no hard future fleet numbers at Avelo, which still has just 16 737-700/800s operating.

For subscribers of the Touch & Go vision newsletter, we’ll be covering this in more detail at the end of the week.

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Red Way Fiasco: Amateur
Schemes & Plotting In ASD.
Hopefully, Lessons Learned.

The embarrassing fiasco of Red Way, which was a semi-charter attempt at Lincoln, Nebraska, just got more embarrassing. A state agency pilloried the scheme, describing it as a “riverboat gamble” and outlining how it never got within several galaxies of its glowing traffic projections.

Red Way was the embodiment of a lot of the amateur Pied Piper ASD consulting that’s being inflicted on some airports. Pander to and take advantage of local lack of knowledge of air service and consumer economics.

Routes were initiated and then dropped like flies right from the start. Load factors were akin to transporting sailboat fuel. The only thing that appeared positive was that Global X, the actual operator, was apparently a lot more reliable than the jive numbers the Red Way folks forecasted. In fact, the state report indicated that just one flight – the first one out of LNK – was profitable.

The number of $3.7 million is reported to be the tab. What is of concern is that most of the local comments revolve around hot air claiming it was a good try, it was a noble attempt. It was just the start. The community won’t be denied. Then the perfunctory new consultant hired arrives and suggests that American and Delta should be prime targets. Nothing like illuminating the obvious.

Red Way was a major failure in judgement and in planning. To romanticize it as noble is outrageous. It’s a poster child for the need for communities to learn about the economics and structure of the airline business before diving into civic-pride sideshows like this. Yessir, we need that service, is the mantra.

But having any inkling of the actual needs and trends of air consumers isn’t part of the program.

Hopefully this will be a message in 2024 that civic gung-ho is no substitute for responsible and professional air service planning.

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DOA?
Airline Combinations, a.k.a. Mergers

JetBlue Acquiring Spirit. Do a media search, and virtually all of the articles paint the B6 acquisition of Spirit assets (no, it’s not a route merger) as being an attack on the consumer.

The me-too reporting – even in the supposed aviation sector – has been more trendy than accurate in regard to what this deal represents in regard to actually increasing competition.

Then toss in the incompetence at the top of the DOT, the nonsense from consumer gadflies, and probably zero active support from anyone in the Marble Playpen (congress) and the betting here is the deal loses. And so does the consumer.

Alaska/Hawaiian. This is really a change in ownership, not a combination of competing route systems. It can bring a lot of financial stability to the Hawaiian part of the system. Unfortunately, the “M” word (merger) is involved, and knees are jerking across the usual media. No hard projections here, but the ill-advised mergers of he 1980s (TW/OZ, NW/RP, AA/Air Cal, US/PI, etc.) are now being used as bogey-man warnings.

The industry has changed, and these four-decades old deals are non-sequiturs and not even relevant to the two airline deals on the table. But consumerist jihadists will likely get their way.

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2024: DOT Jihad On Airline Customer Service.
Airlines: Move To Make Flying Less of A
Customer Guessing Game.

Never assume that the folks at the top of the DOT will pass up anything they can use to put political spotlights on the airline industry.

There is no question that a lot of this is due to really short-sighted planning at some carriers. Namely, imposing all sorts of rules and fees and enforcement of same, often to be handled by gate staff that have less training than the guy operating the Slurpy machine at the local 7-11.

But that has generated a fertile field for both the media and the DOT to make press. We witnessed the sorry press conference a few months ago where Buttigieg and the occupant of 1600 Pennsylvania actually lied about a number of airline-imposed consumer issues. (Sorry if that statement offends anybody, as truth sometimes does.)

In 2024, unless the airline industry wants to have more regulatory interference which ultimately will harm consumers, it’s incumbent to assure that the air travel experience is simplified, de-ruled, and handled by trained and loyal staff.  (That good deal in farming it out to Fred’s Ground Services is really a bad idea.)

Take a look at some of the coverage. There was the unfortunate one-off event where a six-year-old got boarded to the wrong destination. No argument, a giant service failure that could have had nasty repercussions.

But just this week, the media is burbling loudly about a 16-year-old kid that got on the wrong flight and ended up in San Juan instead of Cleveland.

A service failure, but a sixteen-year-old? The guy was old enough to drive himself to the airport. That’s not an unaccompanied minor, but the media coverage makes it look like the kid will be emotionally warped for life.

One network made this front-page above-the-fold website news, even to the extent of posting pictures of San Juan and of Cleveland to make the emotional point that the airline delivered him 2,000 miles away from Ohio. A 16-year-old kid, who according to the media had no responsibility for reading signs or hearing departure announcements or welcome announcements on the airplane.

Heck, when I was that age, I was fortunate to travel up and down the Pacific rim from our home in Taipei, often solo, without the benefit of a cell phone, internet or even a credit card. Scary and mind-warping it wasn’t. In this case, barring any mental challenges not mentioned in the panting articles, it is clear that this kid bears a lot of the responsibility.

The takeaway: air travel is a trendy treasure-trove for media attention. Most of it negative. The ball is in the airline industry’s court, but in some cases, there’s not much to be done to counter stupid media coverage.