Worland, Wyoming…

Part of America’s Global Advantage

In this Update, we cover how the US has already built an airport system that makes it more competitive than any other country in the world in maximizing the future of the globa economy.

Yup. Worland.  Please read on.

We’re constantly bombarded with lightweight media stories on how our airports have fallen behind the rest of the world.

The trendy comparisons are made using LaGuardia – which some nitwit politician a few years ago declared to be “Third World,” although the guy probably couldn’t begin to describe what that really meant.

But the comment got great, swooning and unquestioning press, though.

Then, as proof of our aviation myopia, we’re shown the sparking terminals at Beijing Capital, and at the new Daxing International Airport. Or, the new Istanbul airport. Or the wonders of the Incheon facility. Or the incredible shopping malls at airports like Hong Kong or even Heathrow.

America, we are told by the newly-formed airport-design Peanut Gallery, is falling way behind. This is often accessorized by really stupid comments inferring that any small airport without scheduled passenger flights is on the edge of total failure.

But, like a lot of the media reporting today, it’s mostly just veneer nonsense. They don’t know what they are talking about.

Fact: In the context of the future, and the new future technologies of trade and logistics, airports will be a critical competitive factor… America is way ahead of the rest of the globe, and far better postured for the emerging global economy.  There is a lot more to our airport system than the parking convenience at ORD, or the snazzy people-mover at DFW.

Actually, these major airports are only one part of the US airport system. Our rural airport system is where the real advantages are – they will allow the US to be completely accessible to new logistical systems. No, scheduled passenger service isn’t in the cards, in most cases. New channels of communication are already making a lot of rural and intra-regional passenger air service non-competitive.

In the future, air logistics will be the difference in being competitive and being left back in the 20^th century. The US airport system today – over 5,000 facilities – opens every corner of the country to potential access and benefit from this new global economy.

Airport Value Goes Way Beyond Passenger Service. What these parrots miss is that airports are not about the splendor of the architecture or the grand sweep of huge terminals, replete with glorious art work. Those are nice, maybe, but they are not the metrics on which to judge the value and efficiency of a nation’s airport system.

The only foundational metric is whether a nation has a viable airport system – and that goes beyond monuments to civic hubris and goes beyond the outdated and increasingly sham-infested concept of “air service development.”

Here’s some insight that goes beyond the day after tomorrow, which is the typical horizon of a lot of the current discussion on America’s airports…

The future of global competitiveness will be speed of logistics. Speed of logistics will be shifting to new modes of air transportation that will open whole areas to new development – but that requires an airport system that’s built, efficient, and ready.

Across the globe, only the United States is ready for this.

A Couple of Points… In November, we were honored to deliver the keynote address to the 40^th annual meeting of the Airports Consultants Council. Here are some of the key points that Boyd Group International would illuminate in regard to the future.

We mention Worland… it’s just one part of the gigantic US airport system. The USA has over 5,000 airports. China has 300. The USA’s airport system will open all parts of the nation to the new systems of logistics. As we’ll note below, the cost differential between air logistics and ground will materially diminish in the next decade, illuminating potential for communities across the country to be part of the world commerce system.

Most of the planning assumptions that were in play 20 years ago now look a bit ridiculous. That’s normal – the future cannot be completely forecasted. But then and now, every assumption needs to be put up against emerging global transportation and trade shifts.

Every one of these made sense in the context of twenty years ago. But today, airline fleets are size-compressing – at both ends of the unit-size spectrum. Supersonic air transportation is back in the play. But the main issue to consider is #5 – speed is the #1 competitive factor, and it’s shifts in propulsion technology that will revolutionize air logistics.

There is no such thing, anymore, as a US automobile. The parts and components come from suppliers based and/or headquartered around the world. This means that transportation and production efficiency will be determinants of where production and distribution facilities will be located. It’s already starting to happen. With advances in UAS technology, locations like Worland and New Braunfels, and Gaylord are all in the hunt.

Yes, this is contrarian… but in the context of today, most of the future is contrarian.

The full presentation made to the Airports Consultants Council can be requested by clicking here.

But the main concept to consider is that in the global future, air logistics will be a critical component of competition. And, regardless of what happens rebuilding LGA or JFK or MCI, the USA is ready.

Keeping Up With Airline Fleet Trends

With the capture of the Bombardier CSeries platform by Airbus, it brings to a close over 50 years of consolidation in the global airliner business.

With only a few niche exceptions, from this point on airlines won’t have the bother of trying to figure out who to buy planes from. They will have two options – Airbus and Boeing.

In that light, it might be of interest to see what’s on the fleet horizon for the coming year

Airbus Looking At A-320 Follow-On. Airbus has reported the start of long-term research to develop a clean-sheet new narrow-body airliner platform to be a follow-on to the A-319/320 series.

Missed in these reports is that they just acquired such a project – the Bombardier CSeries, a platform that actually is a next-generation narrow-body – one with substantial stretch potential.

Message: Folks in Mobile may need to keep a close watch on the A-220 program, in regard to future production, which is planned in that city. It may not be as long-term as some may expect.

MD-90s… Delta is continuing to reduce its fleet of MD-90s, a portion of which were acquired over the last ten years from other carriers, based on the aircraft’s favorable price v performance ratio.

Now, with new 737s and A-320/321s coming on line, it’s off to Dr. Hacksaw’s sunny desert resort for the MD-90s. There are no airlines left on the globe looking for MD-90s. Actually, that’s where Delta got a lot of their current fleet – from other operators. A great airplane, but an orphan.

B-717s…Another McDonnell-Douglas market-timing misfire, the MD-95, nee the B-717, is also seeing the start of retirement.

The fleet of ex-AirTran B-717s that Delta acquired from Southwest are apparently facing a shorter half-life than might have been expected, as the carrier has started to pull them from service.

Because of the unique engine on the -717 and the relatively low number of operators, it’s likely the next role of the airplane will be in a Bud Light commercial.

A-319s… American & United have been adding A-319s from various sources. United from several carriers, and AA gaining units coming off lease at Frontier. Acquisition costs are very favorable to the point that when these units come up for a heavy C-check, a keep-or-retire decision can be made.

A-380s… Air France is reportedly ready to retire half of its fleet of 10 of these super-jumbos. We would point out that Boyd Group International was the only forecast/consulting firm that from the git-go of this project forecasted that the A-380 would be fortunate to sell 400 units. The current deliveries and orders combined are at 352. The rest of the consulting industry swooned over the plane, without doing a shred of research beyond repeating what “everybody knows.” One major financial periodical confidently reported that “all major airlines are ordering the A-380.”

DHC-8-400s… Write this down: there will be a growing demand for turboprops in the 30-70-seat category… it just won’t be in North America.. Alaska/Horizon has pulled another four Q-400s out of its fleet in the last few months.

The US airline industry has less than zero interest in bringing anything back that has a propeller. Not so in other regions of the world.

The Russian A-320-ski, The MC-21. A new Russian competitor for the A-320/B-737, they managed to get the second prototype out of the factory this spring– a full year after the first one. Not exactly an accelerated program.

But it’s a big seller among Russian financial institutions that otherwise will have no earthly place to put these machines, assuming the production line ever gets rolling.

Aside from some orders from Aeroflot (likely due to a bit of government shin-kicking) the only real interest outside of Mother Russia’s sphere of influence has been an airline in Peru that’s not even operating.

50-70 Seat Jets… The Fuel Gods Are Smiling. For Now. Ten years ago, $100+ oil prices had this segment heading into history. For the time being, however, oil in the under $80 range will slow the retirement of this segment.

But if we see prices much over $80 again, it will be a different story. A lot of newly-added feed markets in the AA/DL/UA systems will be dropped should it appear that the increases in jet-A are more than a temporary spike.

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Reminder

New Summary 2018 Report…

We’ve just made available our Summary report of the trends emerging as we come to the close of 2018.

There are some interesting takes… like, the potential for rural airports to emerge as part of a whole new logistical system, CLT developing into a China gateway, and mid-size non-hubsite airports seeing much more robust growth.

A short read, but take a look. Click Here.

Forecasts & Trend Analyses. While there, check out the analytical firepower of having access to the only individual US airport enplanement forecasts accomplished entirely in the private sector. Airports:USA is now on-line and it’s updated monthly to accommodate airline capacity and scheduling shifts.

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To Start This Week…

Yes, Internet Booking Is Here To Stay

“Delta, of course, has a hub at Dallas-Ft. Worth International Airport…”

This was a new revelation – certainly to Delta – issued last week, from what is postured as a major media magazine for the travel agent industry.

The core of the article was lamenting that airlines are not turning to travel agencies to help sell seats, anymore.

There may be a reason, eh?

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The Amazon HQ2 Facilities At Queens & N. Virginia –

Massive New DCA/LGA Traffic?  Just More Fake News

There was a loud burbling sound coming from the shallow-end of the media gene pool this week…

“…As a result (of the Amazon decision to locate in the NYC and WAS area), local airports will likely have to boost manpower and bolster infrastructure to handle the influx of employees, their families, and increased business traffic.”

That’s the media’s confident din, aimed at the great unwashed, who they assume are too numb to ever question what’s above or beneath the fold.

Yessir, there’s going to be a tsunami of new airline passenger traffic generated by the decision by Amazon to locate facilities in Queens and in Northern Virginia, promising to bring an additional 25,000 jobs to each region.

Airport crowds will be tighter… traffic more congested, and those security lines will be longer and more stressful, some in the media are warning us.

Taking it to the intended impression, LGA and DCA will look like the fall of Saigon on a daily basis, unless the powers-that-be get crackin’ right now to build more facilities and hire more people.

Yup. Amazon is coming to Queens and Northern Virginia… to hear the amateur and embarrassingly ignorant babble in some of the stories, it’s the air traffic equivalent of the Normandy invasion.

“… With security lines a notorious bottleneck at airports around the country, the potential for HQ2-related congestion has long been on the Transportation Security Administration’s radar.

Really? Notorious bottlenecks around the country? And – just a question – why would a business decision by just one company – Amazon – be on the TSA’s “radar?”

HQ2-related congestion? At airports?

Monkey Media Hear, Monkey Media Report. It begs the question and illuminates the answer… do some people in the media ever try to verify stuff they hear from each other? These types of stories certainly can’t be from any intelligent effort to check facts.

It’s “terrarium reporting” – where the data and facts are churned in a sealed atmosphere, free of contamination by any pesky outside input, and then proffered as professional insight.

Actually, they’re talking as if this new Amazon facility is going into Grand Island, or Yakama or Yuma. It’s not… did they bother to check out any data whatsoever? Like populations, traffic data, employment base, application sources?

Answer: nope.

Message to the fourth estate… try to spend at least five minutes to make sure your stuff is at least within a galaxy or so of factual.

Okay, A Little Data To Rain On The Hype Parade. Here are some numbers.

Queens, where the Amazon facility is planned, has a population of 2.4 million. The Amazon announcements are for 50,000 new jobs, split between there and Virginia. That’s 25,000 in Queens.

Point: Do The Math – if every single new Amazon job were performed by a new resident to Queens, that would mean a population increase of just over one percent. But most of these positions will likely be filled by locals, not new residents.

Some will be from Queens, some from other Buroughs, and some from Long Island and elsewhere in the region. But most won’t be arriving in moving vans.

So, media guys, what about all that new infrastructure you predict will be necessary…?

Point: Do The Math – In 2018, LaGuardia Airport is forecast by Airports:USA® to handle 30.8 million passengers, total including both in and out.

Now let’s assume that each employee at this new Amazon facility of 25,000 will generate 3 net-new additional air trips a year (wildly high, as will be explained below) and they’ll all use LGA, eschewing the drive down the Van Wyck to JFK.

That would mean that LGA would be in for a whapping 0.49% increase in passengers, if they all showed up today, and if all of the 25,000 were employees migrating to the region, importing new travel demand,

But they are not. The media stories imply that there will be a fleet of Noah’s People Arks arriving along the East River, disgorging thousands of new residents into Long Island City, all heading to get jobs at Amazon, and hankerin’ to get on the ‘net and start booking air travel.

Not even close. These jobs are not all travel-focused, as some of the media seem to indicate.

Bottom Line: More Sloppy Media. These data are as immediately obvious as a Big Mac at a vegan pep-rally. But this is emblematic of a lot (not all, certainly) of the media coverage of the aviation industry.

The economic impact of Amazon will be positive, just has the investment made by other firms that have or may expand in the NYC or WAS regions.

But the drivel oozing out of some media sources regarding the choking effects it will have on LGA and DCA is one more indication that more and more, we’re on our own getting reliable facts.

New Summary 2018 Report…

We’ve just made available our Summary report of the trends emerging as we come to the close of 2018.

There are some interesting takes… like, the potential for rural airports to emerge as part of a whole new logistical system, CLT developing into a China gateway, and mid-size non-hubsite airports seeing much more robust growth.

A short read, but take a look. Click Here

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Forecast Update:

Going Beyond “True Market Analyses” & Into The Future.

Boyd Group International’s Airports:USA program is now producing comprehensive Forecast Trend & Market Analyses, designed to give airports a clear view of the future.

Instead of just digging up past data, the program discovers the dynamics that will shape an airport’s future. Factors such as changes in airline strategies, fleet shifts, capacity changes, emerging or declining choke at the airport’s gateway hubs. Expected changes at competing airports. And more. In short, a review and plan of what an airport will face in the coming years.

For more information and to request a detailed proposal, click here.

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It’s Now Complete:

The Consolidation of The Airliner Business

Last week it was announced that Bombardier has sold off its remaining turboprop airliner business.

Roughly three decades since they bought what was deHavilland Canada from Boeing, they’re quitting that sector of the industry.

Lock stock and barrel.

The Real Story: The Loss of The CSeries As A Competitor. That’s news, but it’s dwarfed in long term impact by the announcement of last summer, when Bombardier essentially turned over its CSeries jet program to Airbus.

That transaction, combined with the pending Boeing-Embraer partnership, signals the end of a consolidation in the airliner manufacturing business that began fifty years ago.

Back in the 1960s, global airlines had products from Convair, Douglas, Vickers, Dassault, British Aerospace, Lockheed, Sud-Aviation, and Boeing – all of which had full-size jet airliners on the market.

Today, we’re down to Airbus, Boeing and Embraer… and the latter two will soon be in a cooperative venture.

Despite some nonsense from analysts who are not particularly concerned with learning about the subject matter, the CSeries is a mainline airliner platform – not a “regional jet” (which itself is an obsolete term, anyway.)

The CSeries was a clear future competitor to the A-319/320 as well as the B-737. In fact, the decision to come out with the A-319/320 NEO series and the B-737MAX was clearly due to the threat of the CSeries, which was a major economic breakthrough airliner, and which likely has the stretch capability to 160 seats or more.

With the expected economics of the CSeries, it was in line to cause some serious market heartburn in corporate offices in Toulouse and Chicago.

The Delta order for the CSeries could have been the start.

Now, that potential competition is not going to happen.

Airbus will certainly market the former CSeries in its present form, but it’s not likely that they’ll do much to expand the program into larger variants that will compete with the A-319/320.

CRJ Nearing End of Run? In the commercial airliner segment, all Bombardier has left is the CRJ program. Still a strong order book, but it is pretty clear that the company isn’t too interested in pushing further into commercial airliners.

Just Airbus & Boeing… It is noted that Boeing and Embraer are in discussions to collaborate in airliner development in the future. With Bombardier’s CSeries out of the competition, and the E-170/190 platform clearly size-limited, it’s time to tumble to the reality that when it comes to jet airliners, the future is with two manufacturers, Boeing and Airbus.

Chinese Airliners? A Decade Late & A Couple of Yuan Short. Where might new competition come from in the future?

We can forget Russia. The experience with the Sukhoi Superjet hasn’t been real super. Reportedly, InterJet of Mexico had to take one off line to be a parts supply for the rest of the fleet. And a few years ago, Sukhoi flying a demonstrator into a mountain in Indonesia didn’t do much to polish the image of the machine.

The TU-204  “757-ski” has had zero success in the global market. Russian airliners are not in big demand – particularly from Russian airlines.

But China has an emerging airliner industry, so there will be the logical suggestions that China’s aerospace industry can jump in.

They certainly could – it they had a competitive, or more critically, a super competitive product. Which they don’t.

The ARJ-21, a relatively simple traditional 100-seat design with mostly off-the-shelf components, took years upon years to become market-ready. A nice aircraft, it offers zero advantages over anything produced by Boeing or Airbus or Embraer.

The C919, albeit a completely clean-sheet airplane, designed to compete with the -319/320 and the 737, offers nothing substantially better than the now-in-production Airbus and Boeing narrow-body airliners. It’s development is behind schedule, and now there’s an issue with needing cockpit modifications to meet FAA certification.

With this in mind, it’s unlikely any current non-China operator of Airbus or Boeing airliners would be willing or interested in going through the expense of introducing either of these machines into their fleets.

The huge costs of needing another parts inventory, new pilot and maintenance training, not to mention issues of global technical support, would only make sense if these Chinese airplanes offered material advantages in performance and cost. They don’t. So, their market reach will be captive Chinese airlines and a smattering of smaller airlines across the globe.

As for turboprops, China has the 60-seat MA-60 and slightly re-designed MA-600. Based on a Russian design, the MA-60 is such a dog that it’s pretty much only sold to cash-short airlines outside of China, and has an abominable operational record.

There’s the new, MA-700, which curiously resembles the ATR-72.  But it is years away from market entry.

Let’s not forget the planned Sino-Russian wide-body C929 that’s also a glimmer on the long term horizon. Or, maybe we should.

The reality is that if China is to become a global presence in the airliner field, it will need to develop – or acquire – airliner platforms that will represent breakthroughs in either performance or in mission applications.

China has emerged as a global thought-leader in several industries. Airliners are not one of them.

Other Fallout: Major Upheaval In Ontario. Just in passing, the Bombardier turboprop sale involves all of the intellectual rights to the deHavilland name, the support business for the global fleets of Dash-8 100/200/300/400s, plus the roughly 111 -400s on order.

The purchaser, Longview Capital, reportedly paid $300 million CAD – roughly the retail price of about 20 of the Q-400s still to be delivered. Earlier this year, Bombardier also quietly sold off its entire factory complex in Downsview.

It’s unclear whether Longview Capital will be engaged in further R&D on the -400. In any case, the product support business alone will be very lucrative by itself. Longview is the parent of Viking, which several years ago bought the production jigs and rights to build a next-generation 19-seat Twin Otter utility aircraft.

With this latest sale by Bombardier, 5,000 jobs will reportedly be eliminated. An enormous economic hit.

Canadians can look forward to some excitement in the next election in Ontario.

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Concorde: In Its Time, A Techno-Marvel…

So Was The Erie Canal, Except It Really Did Affect Travel

The fifteenth anniversary has just been marked of the retirement of the Concorde supersonic airliner.

There’s media commentary on how it supposedly was a breakthrough in air travel, and today, half a century from when it first rolled out, and depending on which side of the Luddite table some are on, it’s supposed to be a warning regarding the economic impossibility future supersonic air transportation.

This is galaxies from reality.

Concorde was just a one-off, and commercially is not anything that is of value in discussing the potential of supersonic air transportation today.

The Concorde Lesson Has Zero To Do With Technology. Amid the adulation about this airplane as a techno-wonder, let’s grab a contrarian but accurate third-rail. The lesson of Concorde should be viewed for what it really is: Aside from being a flashy airliner, it was a gigantic example of an incompetent boondoggle.

And, in point of fact, Concorde (in the UK, there’s no “the”) really had minimal impact on future air travel… it was mostly a small sidebar. A curiousity. A near non-sequitur.

This is not to say that the machine wasn’t an enormous technological achievement for its time. But it was still a poorly-planned, market-incompetent boondoggle.

Yes, great publicity and a really cool Buck Rogers profile, but 14 machines that eventually entered service did little to substantively change the fundamentals of air transportation. It just cost the taxpayers in England and France enough money to do a full re-enactment of the Napoleonic Wars. British Airways and Air France might have made money on them, but that’s due to the fact that neither airline paid anywhere near market price to get them.

Concorde, truth be known, set no new trends, and resulted in zero competitive responses to the three airlines (yes, three) that actually operated it.

Aside from the technical-wonder-for-its-time aspects, the real message and real example of Concorde is that of out-of-control government hubris and “don’t-question-the-experts” thinking can lead to gigantic and embarrassing flops, building stuff that has no earthly connection to reality.

Gin Up A Story, And Stick With It. In fact, that is exactly the lesson Concorde represents. Today, it’s literally a chapter in a book titled, “Great Planning Disasters.” As a commercial project, it earned its place there.

Supposedly planned as a competitor and replacement for sub-sonic Boeing 707s and the like when it was first announced in 1962, Concorde was DOA from the gitgo. The market justifications could fill a shelf in the fiction section of Barnes & Noble.

Some will contend that the 1973 oil crisis killed off its orderbook, but the red pencils were at work well before that.

Today, Supersonic Is In The Works – And It’s Based On Economic Reality, Not National Hubris. Today, fifty years later, however, there is proven technology, a market place, and the economics in place to support a rationally-planned supersonic airliner program – or programs.

As the attendees at the 23^rd Boyd Group International Aviation Forecast experienced, the Boom Supersonic 55-seat airliner is one such example. With rational understanding of airline economics, consumer trends, and use of existing technology, this is a machine that will change air transportation.

Virgin Atlantic seemed to think so. So does Japan Airlines. Ditto with China’s largest travel organization. These and other investors did not just fall off a turnip truck.

But, make no mistake, it – and other supersonic aircraft projects today – have no lineage or relationship to Concorde.

And no planning relationship, either.

A Point To Clear Up History… Oh, and the three operators, which most of the veneer media stories miss… were Air France, British Airways, and … Braniff, whose crews – cockpit and cabin and maintenance – operated the airplane on an interchange over IAD to DFW in 1979-1980.

Singapore and BA had a co-branded route from London to Singapore using Concorde, but it was operated entirely by British Airways cockpit crews and a combination of BA/SQ cabin staff.

And none of it made any money.

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Starting This Month…

Airports:USA.com will feature a Forecast Flash regarding key trends in air traffic.

This month, we look at the projected growth at the 23 mainland US connecting hubsite airports.

Charlotte is a very interesting situation. Take a look at the future.