Before We Start…

Airline Relief Is Welcome –
But Is It More of A New Gas Cap In An Emerging Tesla World?

The relief funding for airlines is great news… over 30,000 employees with at least their income restored, and airlines adding back service (as required by the legislation) to points which were dropped since the last relief funding expired in October.

The only fly in the ointment is that all this can vaporize after March when the funding expires.

It’s near certain that some of the airports that have received reverse-pink slips in the past two weeks will ultimately retain the service after the expiration of the relief. But not all.

Where the uncertainty is found is in the consumer and economic shifts in the basic structure of the air transportation system. Currently, the goal seems to be restoring the air transportation system to its pre-2020 structure.

That, unfortunately, is a near-impossible objective. The economic system on which the industry was dependent has changed fundamentally.

Point: the relief is positive. But it does not address the future changes that will be necessary in the coming year. We touch on this below,

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New Metric: Traffic Composition Replaces Traffic Volume

Get with it. We’re not going back to 2019.

There is no longer any question that the role of air transportation as a communication modality has now been changed completely due to the economic damage done by the China-CCP pandemic.

Airports and aviation-related businesses need to recognize this – and start to plan accordingly, NOW.

It’s basic, unshakable economics:  When the utility and veracity of any product declines, the core consumer demand will decline and take a new role in the marketplace.

This is exactly what has happened with air transportation.

Its utility has been materially changed by the acceleration of the trend toward electronic means of communication. This has been a trend for the past 25 years, as demonstrated by the increasing economic obsolescence of short-haul air service. But with the forced lock-downs across the country in the past year, the stampede away from business air travel to virtual communication has gone into warp speed.

As a modality for business communication, some sources estimate as much as a 20% decline… which may be accurate. But the impact will be registered based on the mix of business v leisure travel in each region and each airport.

What to watch for in 2021 as a result of this shift:

Short-haul business markets will continue to atrophy.

This will likely be most severe in markets that were already declining, such the WAS-NYC-BOS corridor.

It will likely also be experienced in former strong business/commuter markets like PHL-PIT, and any point-to-point segment where the travel time for a day trip (total time, not just the time sitting in 13A breathing through one’s increasingly uncomfortable mask) is more than 4 hours.

That’s a rough estimate, but do the math when it’s a three-hour meeting or less. The immediate interaction via a modality that admittedly still looks like a hostage video is a lot more cost-effective and vastly more time-effective.

Even some west coast markets that were previously less affected by the electronic dragon, such as the LAX – SFO area markets and any short haul intra-regional routes involving declining city battlegrounds such as PDX and SEA will likely see major declines.

Leisure traffic less affected. It’s less sensitive to travel time.

Getting to Boca to see the family usually is a much less time-centric process than having to be at a 10:30 meeting in Chicago.

Therefore, we will continue to see domestic and near-domestic (such as Caribbean) experience some recovery. And there will be more airline planning focus on shifting capacity into such markets.

But do not tumble to the concept that this will replace the decline in business traffic, either in volume or in revenue.

International demand is kaput for the rest of the year… maybe longer

This is more of a hit than it may appear. The airport enplanements driven by international traffic flows – direct and indirect – represented about 31% of the total U.S. airport traffic. Very uneven across the nation, but still near a third of our traffic. We can safely project that this will be slashed at least in half.

Nobody is planning a magic vacation to the lake country of Italy this year. One cannot do business in the U.K. when it gets closed from time to time. Doing an unexpected 14-day quarantine on arrival at a foreign destination is not what a family of four is hankerin’ to do.

Australia is not only fundamentally cut off from the air service world, but even domestic travel between states is restricted. Want to go to northern Ontario for a fishing trip? This year, phone it in. The trout get to relax. The border is essentially closed.

It’s Traffic Composition, Not Traffic Volume

In the coming year, the #1 challenge for the air transportation industry, including airports, will be accurately adjusting to the fallout from the shifts in the basic structure of the consumer base.

Give some thought to the levels of infrastructure and facilities at a given airport that will change due to the fundamental changes in the role of air travel in the economy.

At the terminal, what about the accommodation for black cars, which will be in less usage at many large airports.  Then at smaller airports, keep in mind that those rental car counters were supported largely by business travelers. We’ve already seen some companies pull out of such airports.

That very appropriate business lounge the airport built will have less demand. Maybe at some larger airports, that major airline membership club might not be needed. How about any changes in the concession mix?

The point is this. Much of the planning that’s been in place for the last twenty years will be challenged with the new consumer mix. At Boyd Group International, we’re applying our industry-leading forecast expertise in assisting our clients to identify, adjust, and optimize these changes.

If you’re interested in pursuing a new-generation strategic plan for your airport, just hit the contact button, and we’ll set a time for a conversation regarding our Runway To The Future™ program, tailored to your airport.

The Airline CCP-Covid Relief Plan

Good News – But Where Are These Off-Furlough Employees Going To Work?

It is great news that 32,000 furloughed airline employees will see their pay restored, at least for the next three months.

It’s great that as a result a few cancelled markets will be restored, too.

But in a shrunken air transportation industry, and amid the “experts” urging consumers not to travel, the main benefit will be just a paycheck – not necessarily work – for thousands of employees, plus some restoration of small community air service that didn’t and won’t now make any money.

We are not fixing anything, really.

Not exactly a prime future that solves the long-term challenge, which is dealing with the effects of the China-CCP virus without destroying the economy. The nation has been on lockdowns, quarantines, travel restrictions and all sorts of other “solutions” for almost a year. One point not mentioned – all those hospital beds and even hospital ships and thousands of ventilators that were supplied last spring were never needed.

But state governors are still calling the shots, mostly misfires. And in this mess, it is air travel that they are actively warning against – all the while applauding bringing 32,000 people back on payroll at the very companies they want to shut down.

But do take some comfort that Congress is also sending billions in aggregate to places like Burma, Pakistan, Nepal – even Tibet – in the latest spending spasm.

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Boeing 737 MAX – Give It Six Months & It’s A Back To Normal Market

Probably there has never been a time when airlines were more anxious to get off the headlines.

There has been a lot of media regarding Boeing losing orders for the 737 MAX. Temporary. The press problem is any article about the return of the MAX is accessorized by the reference to why it was grounded in the first place. It’s a core part of the story that cannot be left out.

There’s no question that Boeing has taken a hit on the orderbook. But the reality is that as it stands today, there are orders registered for 4,238 undelivered MAX units, which is roughly a six-year backlog.

Among U.S. carriers American, Alaska, United and Southwest have a total of 442 on order. United, however, cancelled an order for 96 737 MAX-10s last year.

Nevertheless, by the end of the second quarter, the MAX return won’t be a news article, anymore.

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And Speaking of Relief… There’s More Gelt Reportedly Added To SCASD

Yessir, the fine folks in congress are really on top of it…

In addition to several millions to study gender issues in Pakistan, the new funding onslaught from Congress is reported to include an extra $5 million for the Small Community Air Service Development Grant Program. It’s up to $18 million…

Wow! That’s the equivalent of fourteen hours of average cash burn at American Airlines. About the same for United. It insults the term “chump change.”

And now that airlines are going to be required to start flying to unprofitable small airports dropped in the last six months, a traditional SCASD application is right up there with yesterday’s sports section in terms of eager interest in planning departments.

But that doesn’t mean that all is lost… there are a number of innovative approaches that can be taken, within the current and apparently challenging air transportation industry.

This Year, It’s A Different SCASD Ball Game. Amid what is probably a blizzard of rah-rah, no-problem-we’ll-help-you-get-the-money email missives from consultants, we’d suggest taking a look at the SCASD button at the top of this page.

It delivers a clear and concise perspective of how to approach a 2021 SCASD application – including when to simply hold off.

Remember, Boyd Group International has won over $24 million for its SCASD clients – so we’ve been around the block a few times – and we understand the situation facing the airline industry. Click on the tab or just click here.

It will be very different than what a lot of folks are peddling.

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This week, let’s cover some points regarding China-U.S. travel…

From The Creators of The China-CCP Pandemic:

Flight Attendants – Cover Your Face.
Use Gloves. Wash Your Hands…
… And Don’t Forget Your Diapers.

It all Depends. Literally.

Apparently, that’s the advice of the Civil Aviation Administration of China (CAAC) to airline cabin crew.

From the rogue, unelected government that inflicted this pandemic on the world, they are now suggesting that airline cabin staff wear diapers when working on airplanes, so as not have to use the lavatories in flight.

As support for this, one media source – which may have been CNN, even – sort of gave this crackpot suggestion some credibility. It noted that lavs are really dangerous places, referring to a single passenger – back in August – who may have contracted the China virus when visiting the lavatory on a flight between Europe and Korea. (Real thorough research, eh?)

It noted that this little excursion was “the only place where she didn’t wear an N95 mask” so, according to the article, it just had to be the lav where she got the gift that keeps on giving from the CCP.

In light of the nappy-recommendation, however, one can only wonder exactly how she was wearing the mask before she entered the loo.

A Whole New Reason To Wear A Mask On Board. Consider what the cabin of a 777 on an 8-hour flight will resemble with a dozen or more cabin crew members conveniently “taking care of business” as they prance along the aisles with beverage carts.

And for the staff, there’s probably no experience quite like the whole crew wearing damp and maybe full Huggies for a couple of hours.

It gives a new meaning to the concept of “jump seat.”

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Fact Is, The Diaper Joke is On Us, Not The CCP.

On a wider note, the story about Chinese flight attendants needing to wear diapers is actually emblematic of what the CCP has done to the global economy. It’s not so humorous.

The truth is that it’s the rest of the world that the CCP has figuratively and successfully shoved into wearing economic diapers.

It’s now been a year since the CCP/Corona Virus began to clearly show up in Wuhan. Do you see any economic outrage from U.S. consumers… heck, there are politicians telling us that we shouldn’t be judgmental – or that it’s “xenophobic” to think such thoughts. With all the facts we have at hand, these clowns probably would have said that about the Japanese Empire on December 8, 1941.

Most of those Christmas lights we’re buying are made in a country where the government persecutes those that try to celebrate the event. So, who’s wearing the economic nappies now?

It’s now been a year since the CCP that runs China began a concerted campaign to cover up the spread of the epidemic. There are some ethically-challenged news sources in the U.S. who have diligently defended the CCP, claiming no proof of the virus starting in Wuhan. But they can’t cover up the fact that the CCP was culpable in muzzling the epidemic and encouraging it to spread.

It has now been one year since this virus was allowed to spread outside of China due to the criminal actions of the Chinese Communist party.

Running Scared – Like Infants In A Panic. The CCP now has the entire global economy running from this virus, shutting down business and trade, and driving some governments to be in a state of total panic. In the USA, thousands of businesses are being destroyed by willy-nilly and often ridiculous constrictions on interactions between citizens. So, who’s wearing the disposables now?

Yet it is now politically incorrect to speak the truth about the culpability of China’s thug government. We should just act as if it never came from there and keep on buying stuff made in Sinclair Lewis type sweat shop factories that directly feed the coffers of the CCP criminals.

So, in the grand scheme of things, who really is wearing political diapers?
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And, As For Fallout…

China-U.S. Travel Is Now A Cadaver

Back in March, our Airports:China™ forecasts indicated that the 8.2 million O&D between the USA and China in 2019 (via nonstop and connect routings) would atrophy to less than one million.

The once-robust expectations of increased travel went into the ceramic fixture due to the actions of the CCP. Back in 2016, we easily saw 6 million visitors by 2023. Not anymore. The entire situation has changed.

A Combination of Caustic Actions By The CCP. One was the disgusting actions of the CCP in covering up and lying about the corona virus. Another was the fundamental changes in local political control implemented by the despots under the Xi Jinping regime, which tended to discourage leisure traffic to the U.S.

Then there was the decline in the China economy, including the deflation and continued collapse of the real estate bubbles in the country. Finally, it became very dangerous to visit China. Much of the country’s venues have been closed off to foreign visitors, and due to the CCP propaganda, foreigners are no longer as welcome in the country. The locals are actively told that it’s the USA that started the pandemic.

Visit China At Your Personal Peril. Today, anyone in their right mind should carefully reconsider traveling to China. This particularly so if one’s company isn’t a Fortune 100 entity that the CCP needs to pander to. Indeed, the latest capacity data indicate that this advice is taking hold. Business travel is becoming risky. The pandas in Chengdu are getting lonely, with a lot less foreigners coming to visit.

There are the incidents of foreigners literally and randomly detained from leaving China, based on extortionate or political demands on the part of the CCP. There is the well known “two Michaels” from Canada who have been incarcerated for over a year, with no reasons given, other than they have been “tried.”

We personally know of one businessman who has been refused exit until he turns over some of his company’s significant assets to the CCP – assets over which he has no control. We leave out names and details because the efforts continue to free him. There are undoubtedly other examples.

Yes, there are huge U.S. investments in China… billions of dollars in business. But at what cost?

You Aren’t Allowed One Phone Call When You’re Collared In Shanghai. Remember, once you are in China, all bets are off. It is run by a government well into ethnic persecution, religious intolerance, and near-zero regard for human rights. By the way, if you are arrested, the system allows you a lawyer, but only in the presence of a CCP thug. And if you dare discuss the case with your lawyer, the meeting ends. True.

But, boy, those low-wage, no-labor-rights factories in places like Zhengzhou, Nanchang and Weihai can really churn out the clothing, electronics and auto tires that make big profits here in the USA. Just make sure you conduct business via Zoom, not in person.

What all this means is that the robust leisure traffic between the two countries is as dead as Confucius’s house cat, and as for business, it’s dead, too.

Now, back to our forecast. It may have been a bit aggressive.

We compared U.S. – China nonstop seat capacity scheduled for January 2021, with that of January 2020, before the full effects of the China-CCP Covid pandemic took hold.

Last year, ten U.S. gateways had nonstops between the USA and China. Today, it is only three, and the capacity is down over 96%.

Given the other issues, such as U.S. carriers having to bounce China flights one-stop over Seoul due to nasty conditions in China, it is very likely that our projection of 1 million O&D is highly optimistic.

The point is this. The exciting changes we were beginning to see in China from roughly 2008 to 2017 are gone. So is the traffic that was generated. Including direct and indirectly generated traffic, we estimate that this is about 4.8 million less enplanements across the USA in 2021.

But let’s remember, the source of this pandemic is the same source as this stellar new response to diaper fashions – i.e., the CCP government running China.

There is no telling what this bunch can come up with. Just remember, they cannot be trusted.

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FROM ALL OF US AT BOYD GROUP INTERNATIONAL, BEST WISHES FOR A HEALTHY AND PROSPEROUS WEEK AHEAD

Air Service 2021:

Let’s Wake Up & Smell The Cash Burn

Last summer, it appeared that the air transportation industry was rebounding strongly.

June, July and August indicated a traffic trajectory that pointed toward 80% or more of 2019 enplanements by the end of the year.

Alas, the airline industry was ready… the China/CCP pandemic made sure that the economy and the marketplace were not.

American Airlines just advised that it will be burning $30 million in cash daily through the end of December.  That is almost one billion dollars a month. Much smaller JetBlue has indicated an $8 million daily cash burn.

While American and other U.S. carriers are for the moment apparently well set in regard to financial reserves, it does not take a Doctorate from Wharton to figure out that this situation is not sustainable – and will need to change very, very soon.

One of two outcomes: Either the traffic and revenue base returns to a level that can support the current airline structure, or the airline structure will need to adjust.

Let’s stop the fantasy and skyhook-like wishful thinking. Based on the willy-nilly, almost panicked run-here, run-there responses from governors across the nation, none of which seem to do much except destroy business and commerce, it is at this moment obvious that it’s the second alternative that will be imperative. People cannot travel freely.

Airlines in the first quarter of 2021 will need to completely re-structure to fit the new economic environment. Yup, carriers might have big cash hoards, but they are largely based on loans, and every dollar they spend now will need to be repaid, and repaid within a much smaller set of revenue streams.

Of course, another (necessary) federal support mechanism for the airline industry is critical, but it is clear now that there is no returning to the pre-China-CCP pandemic system we had in the past. Airlines will need time to not just shrink the scope of their route systems, but to adjust fleets and staffing accordingly.

The unfortunate part of this is that almost any such relief coming from inside the Marble Playpen, a.k.a. congress, will be accessorized by cheap political garbage, such as demanding that airlines continue to fly to places that don’t generate enough traffic to fill a VW Microbus.

In The Post China-CCP Pandemic Word, The House (The Economy) Has The Odds. Just like the occasional “777” that comes up on casino slot machines, the recent moves by some carriers to enter new domestic and international routes should not be misunderstood. These are actually part of the eventual major restructuring of the air transportation system, and not an indication that happy days are just around the corner.

Southwest is aggressively looking at new revenue streams from airports that one year ago it would have not even considered. But, missed in some of the veneer articles such as those trumpeting how much “damage” they supposedly can do to United and American at ORD (group think, nothing more), the fact is that the airline has stated it will not be expanding its fleet.  In other words, Southwest is adjusting their system to meet the crisis, not growing the network, per se.

United is adding some additional new international routes. But it, too, has been clear that overall system capacity growth isn’t in the near-term plan. Again, as the two United vice presidents pointed out at the International Aviation Forecast Summit in October, the airline is actively moving resources to accommodate the shrinkage of the national and international marketplace.

The hard reality is that air transportation economics in the post China pandemic world will have a very different role. Airline hub operations are much smaller than one year ago, and that means the entire feed systems will change.

Airports such as Worcester, New Haven, and others have lost the low levels of schedule access they had before the pandemic. Take a look at the load factors, and it is no wonder that in a shrinking air transportation system, they are toast. In these specific cases, the communities are not “without air service” – ORH still has Boston and HVN has Hartford/Springfield – where most of the demand was going, anyway.

We can go on, but there’s a lot of project work on the table here at BGI. The hard point is that every airport in America needs to now – right now – take a look at its current air service access, and make hard contingency decisions in the context of the 2021 airline system.

Doing more 30K “true market studies” is a great temporary placebo to divert energies from facing the new realities… the data that is on the books is from an air transportation system that no longer exists.

There are some opportunities inside this dark cloud… as carriers move to consolidate and redeploy resources, there are a number of airports that are in the cross-hairs of some strong traffic growth.

But one thing is certain: The airline industry will be undergoing very substantial strategic and market changes in the first half of 2021. Airports that assume a rebound is coming will be caught blind-sided.

If your community is interested in crafting a plan that addresses the uncertainties of the future, give us a call. We are delivering our Runway To The Future™ program to a number of our clients. Unlike other consultants, Boyd Group International is the leader in aviation traffic and trend forecasting, and we can assist in developing a battle plan to optimize the new future.

Unlike other consultants, we focus on the future dynamics that will drive air traffic – not stale data from yesterday.

Click here for more details, and then drop us an email to set up a time to talk… ten minutes can make a difference.

One thing is certain… the air transportation system we see today cannot exist too much longer.

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FROM ALL OF US AT BOYD GROUP INTERNATIONAL, HAVE A GREAT AND HEALTHY WEEK AHEAD!

Preliminary 2021 Projection #1

The U.S. Air Transportation Structure: Not Geared For The Present –

But Plan On Big Changes In 2021

Regardless of the industry, adjustments need to be made when the market changes.

The faster the changes are identified and adjusted to is the difference between survival and Chapter 7.

This is exactly what the U.S. airline industry faces at this moment. Time is running out waiting for a rebound in demand. The new economic environment – domestically and internationally – is one that will support a very different and smaller air transportation system.

Actually, it is already out of time.

Every sector of the industry needs to tumble to the fact that the industry has changed – and that includes airport strategic planning.

Reality: The Core Airline Business Foundation Has Been Fundamentally Changed. After nine months of post-CCP-China pandemic, airlines are now facing the future: What has taken place since January 2020, is not just another passing virus.

Many of the economic underpinnings of the globe – i.e., the ability to freely do business – have been destroyed for the foreseeable future and revised fundamentally for the long-term.

Point: the need, the role and the future of air transportation as a communication modality that existed in 2019 have all changed. It is time that all aviation planning – from facilities to financial needs to air service access – be completely re-thought.

Covid – Economic Poison Gas. Let’s stop being politically correct, particularly since the China CCP/Covid pandemic has been the equivalent of a gigantic World War One poison gas attack on the life and economy of the entire globe. The  deadly vapors have penetrated literally every corner of the world. Devastating. And for all intents and purposes, this is essentially the same as if it were entirely intentional.

(And for those that might question the observation that this event is not much different than being intentionally inflicted,  feel free to give us a call. We are the leader in monitoring aviation trends in China, and the events that unfolded last January resulted in a substantial amount of research on our part. The unelected criminals at the CCP – which runs China – have been caught red-handed; no pun intended.)

It’s The Entire Economic Base, Not Just The Airline Industry. There’s way too much misleading media purporting to put most of the cause of airline traffic declines on consumer fear of getting on airplanes. That’s just flat-out sloppy veneer reporting.

The fact is that the consumer base in many cases simply can’t take a trip – it’s fact that there’s complete uncertainty whether there will actually be an open destination, what with ad hoc quarantines, shut-downs, business restrictions, etc. being implemented here and there around the nation. The economic constriction of free travel is the reason airline traffic will be down 30% or more this year. The airline industry is all dressed up in it’s 2019 finery, and is now saddled with fleets and facilities and staffing way in excess of the new core traffic base.

That cannot continue.

Contrary to the indications in June and July, there is no way that air travel volume can “rebound.”  BGI forecasts indicate it will be 2024 before 2019 levels come back. IATA and others are similar in their forecasts. The hope is that we’re all wrong.

(And, please, do not get sidetracked when reading about the millions traveling over Thanksgiving. They mostly were going to visit family. Grandma does not traditionally demand incoming kinfolks to quarantine.)

What this means is that the new dynamics of the marketplace no longer support the structure, size, strategies and market services of the pre-2020 air transportation system. Domestic demand simply can’t come back soon, based on the confusion across the states on how to handle the situation, not to mention statistics that in many cases cannot be trusted.

Trans-Atlantic & Trans-Pacific Demand Are Toast. As for international travel – a major component of not only airline revenues, but also indirectly-generated domestic enplanements – compared to pre-CCP/China Covid – it is as dead as a dodo in hunting season. Not coming back anytime soon.

Summary: We Are Closing Into Crunch Time.  In the first half of 2021, there will be some very challenging adjustments in the airline industry. The airline sector cannot continue indefinitely to have major parts of their fleets “parked” when the prospect of a demand resurgence is getting more and more distant.

The Positive News: Airline Leadership Expertise Is In Place.  In airline front offices, it is apparent that nobody is getting blindsided to this situation. Today,  the U.S. airline industry is now piloted by probably the strongest business leaders in its history. Every single airline system can be pointed to as having “war time” leadership. Different strategies – but full recognition of the future.

That’s the reason that in the coming year, it is very unlikely to see any operational failures among American carriers. If ‘Vegas reopens completely – go there and make book on it. But it also means that there will be major changes in strategies and route systems that are obvious as gravity: smaller airline systems, new operating economic imperatives, and new route strategies. Financially, there are other airline industry challenges – higher debt loads and reduced revenue streams… an issue to watch.

It’s Not Just Airlines Getting Zapped… It’s All of Aviation. Airlines don’t exist in a vacuum… there is the enormous corollary damage to the supplier sectors – the entities that were in place to serve the needs of the pre-2020 airline industry.

Wrenching changes are already taking place… changes that will materially affect the U.S. economy, thanks to the China/CCP pandemic.

To start, a smaller airline industry means less need for things like new and replacement parts, and that’s a hit to a whole constellation of suppliers. It’s more than General Electric warning last week regarding the plunging demand for new aircraft and engines. It is also a reduced set of revenue streams for component manufacturers. Less need for technicians doing landing gear overhauls. How much less jet-A will be sold? Right now, suppliers are looking for different customers and applications for excess jet fuel that won’t be needed.

It means less demand for new airport boarding bridges, deicer units, GPUs and even lav trucks. How about passenger parking revenues? Concession agreements that don’t reflect the decline in terminal traffic.We can keep going…

The effects of airline decisions regarding highest and best use of airliner assets have already started with elimination of service at places like Williamsport, or New Haven or Newburgh/Stewart. Or partial reductions at other secondary airports. All the kings horses and all the kings men and all the “speed date” events possible can’t put this former Humpty-Dumpty together again. It’s a new system, with new planning demands.

The tentacles of this pandemic-inflicted nuking of the economy are there by the thousands. The imperative is for airports and communities to fully recognize the new realities and plan for them now. Reliance on past approaches and past metrics won’t do.

More Insight To Come. In the next few weeks, The Monday Insight will be covering additional areas where the aviation industry will be seeing structural changes necessary to adjust to damages done by the post-China-CCP pandemic.

We will be talking about areas and outcomes affecting airports, communities and suppliers that, unfortunately, are being completely missed. Bookmark this page… remember, BGI is the leader in aviation trend forecasting. And we don’t follow “consensus” thinking.

Final Point Not To Miss: There will be no “re-bound” – but instead a reconstruction of the role of air travel as a future communication modality. We will be exploring this aspect in the coming weeks. Log on and get perspectives not found elsewhere.

More Video-Based Insight On-Line. And in the meantime, as for new perspectives, take a couple minutes and review our latest videos at Aviation Unscripted, the newest and most incisive source on YouTube exploring the new challenges – and opportunities – facing airports, airlines, suppliers and communities.

In the meantime, all of us at Boyd Group International wish you a great week ahead!

Latest Projection: 2020 Traffic To Further Lag…

Year 2019 Levels: Not Until 2024

Some positive news – Thanksgiving travel is shaping up to be relatively strong… despite “warnings” from a semi-discredited CDC. Plus, some leaders in the airline industry are seeing positive signs of business travel recovery. Southwest, Spirit and Allegiant are announcing new markets.

But Will The Destination Be Open? On the other hand, political moves across the country are tossing a monkey wrench into the air travel picture. Philadelphia is closed. California, too, for all intents and purposes. Colorado’s governor is fixing to do things to zap that state’s ski season, without any real plan.

It is becoming more and more clear… The lights at the end of the tunnel may be getting more numerous, but also more distant.

We have an airline industry that simply has not yet adjusted to the economic damage done by the China/CCP Covid pandemic. By the end of the 2Q 2021, the U.S. air transportation system will be very different and a lot smaller than was projected just nine months ago. Nevertheless, we are now charged with finding new solutions in very different business and leisure environments.

Unexpected: December Sag. Boyd Group International’s Airports:USA forecasts now indicate that enplanements will be a few percentage points lower than expected in December, due to the massive travel uncertainty resulting from ad hoc travel and business restrictions at points across the country. The fact is that consumers simply are deterred from taking air trips. It is uncertain if a vaccine will make a near term change.

As of now, the U.S. airline industry will be handling 1.3 billion fewer enplanements between 2021 and 2023, compared to pre-pandemic forecasts.

The U.S. airline industry will have no choice but to adjust fleets, routes and market strategies.

Add to that other fundamental shifts, such as the trend toward electronic meetings, diffused working arrangements and other consumer-driven dynamics, and the fact cannot be dodged any longer: Airports and communities need to start to re-plan for the future – NOW.

Reliance on past metrics and air service development approaches is like doing a demand forecast for manual typewriters. A total non sequitur to the new market realities. Not only have the metrics changed, but so, too has the consumer base for air travel.

2021-2023: A Much Lower Structural Level of  Demand. That means that we have much less need for capacity. That means we need fewer airliners to serve the demand. The airline industry is in the process of going to Plan S… survival in a new marketplace.

It is a matter of reassessment and managing expectations.

As a trend, it is likely that any small airport that prior to 2020 was viably served by either two or all three of the full network carrier systems (AA, DL, or UA) will likely retain air access from at least one of the incumbents. But those on the revenue cusp – which includes single carrier airports where drive time to another airport is 60 or even 90 minutes away – may not fare so well. In addition, the trans-border drive traffic to and from Canada has evaporated.

As one example, the specific traffic-source U.S. airports that depended predominantly on Canadian leisure traffic, such as Plattsburgh and Ogdensburg, are already seeing this change. Border closed. Traffic vaporized. Leisure flights are gone. Until the border re-opens and Canada’s economy recovers, the belief that “other carriers” will flock in is pure fantasy. One would hope some consultant isn’t selling this bill of goods to these airports. It’s like looking for gold after it’s proven that the mine is completely exhausted.

It is true that some business travel is coming back, but it’s sort of like Gorden Bethune was reported to opine a few years ago. Going from 300 feet underwater to 100 feet underwater is a nice metric – but you’re still underwater.

It doesn’t take a Wharton MBA degree to identify these dynamics. Unfortunately, a lot of airports and communities have yet to recognize this new future, which is understandable, up to a point.

Vulnerable Widows In Boca, And Small Community Civic Leaders – Con Men Call Them “Marks.” And let’s be blunt – some small communities are being actively misled. It’s one thing for the mayor of a small town to believe that there are “lots of airlines” just hankerin’ to replace the one that left. He or she is paid to be a positive civic spark plug, and typically doesn’t know the air transportation industry. But it’s quite another when an outside “advisor” whisks into town, promising deliverables that can’t be delivered, and intentionally misleading the community for a market study and a fast buck. Shameful.

This is the time for professional results-focused and futurist-based economic planning, not rah-rah civic hubris to bring back the past. The role of airports is changing within this new economy… in some cases, it will be a positive dynamic, as more and more logistics shift to immediate-need air cargo. In other cases, the hard realities of evolving airline economics need to be recognized and innovative alternative economic paths explored and developed.

It is not all doom and gloom – but it is necessary for airports and communities to take stock of the fact that aviation and the air transportation industry will be undergoing huge changes… and the ones that act now, with solid data, forecasts and perspectives of the future, will ultimately prosper.

Again, we invite airports that want to seek new paths to join us with a Runway To The Future project – a program that cuts to the realities with no sugar coating and no political correctness.

This is not another “market study.” Instead, it is a candid and granular analysis of the new air transportation industry in America, and of the specific new dynamics affecting the local airports… air service shifts, consumer trends, facility issues, expected changes in other revenue streams, regional changes at other airports that will affect the local facility.

It’s about identifying the new runway to the future. The forecast expertise of Boyd Group International is our clients’ advantage.

Invest ten minutes in your future – let’s talk.

Click here for more information – then drop us an email to set a time to chat about the future.
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Before We Start This Week:

Aviation Unscripted’s Growing Viewership

When we opened our YouTube page, Aviation Unscripted last spring, our intent was to provide a new channel with short videos of issues and data concepts not generally covered elsewhere.

We also opened access to the individual videos via channels other than YouTube, including our Linkedin sites. As a result, the viewership has continued to grow, and we are experiencing over 2,200 views of our latest video, in just the first few days after posting.

At BGI, we believe that active communication and involvement in the forum of aviation ideas is important. Aviation Unscripted is just the latest. In addition, this Monday Insight goes back to 1997, with now over 1,000 articles published. In July, we also implemented our weekly Touch & Go news email for our clients and friends, addressing emerging issues and data.

We want to thank all the folks who have accessed our information channels, and we’ll be working to expand the scope of Aviation Unscripted in the months ahead.

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Prognosis For 2021:

A Fundamentally Different Air Transportation System…

… Fundamentally Smaller, Too.

Fifty-six percent.

That’s the number of scheduled departures U.S. airlines will be operating in the fourth quarter of 2020 compared to 2019.

Or, putting it on the other side, it’s about 44% fewer flights. Almost one million fewer, just in the 4Q.

Think about it: A whole lot fewer airplanes in the sky. Lots of jet-A that isn’t going to be purchased. A lot fewer folks going through airports. A lot less consumers using air travel. A lot less need for some facilities.

And, how ’bout those expected PFC revenues? Next year is going to be the “year of the accountant” at airports – re-thinking how to handle what will be one billion dollars in less PFC money to airports across the country. It’s back to the forecast drawing board for any projects that were funded by, or bonded via, passenger facility charges.

The tough part is that there doesn’t appear to be anything on the CCP-Covid horizon that will result in a fast growth curve.

The CCP-Covid pandemic is still in control, as is a lot of the panic it brings with it. States are still bumbling around, thinking that closing businesses and restaurants, and keeping people home, and requiring “masks” as if just anything covering the nose and mouth – a cloth, an N95, a pollution mask, an oxygen mask over seat 23A, or whatever, is effective. Right.

The Future: Less Airliners. New Route Systems. New Airline Strategies. Today, A4A estimates that 25% of U.S. airliner fleets are on the ground. Accurate, but it gets worse… the ones that are flying are likely nowhere near full utilization. BGI fleet forecasts indicate that essentially, it’s the combined equivalent of one out of three airliners out of the system. Not all will be coming back into the sky.

The entire future of airports has changed. Indeed, the entire future role of airports as part of our communication modalities is changing.

New Smaller Airline System. Old Data & Metrics Are Obsolete. It’s as clear as a Big Mac at a vegan wedding that the next 3-5 years will result in an air transportation system that isn’t anything like it was before the pandemic. Airports and communities must not be misled into believing that things will get back to the structure we had up until the CCP-Covid pandemic, soon or even in a couple years.

The pre-February Humpty Dumpty air transportation system is now an omelette.

The sooner this is fully understood – and the factors surrounding the future are grasped – the faster airports and aviation can accommodate the future. But, right now, the airport system and air transportation system that uses it, are not prepared for or appropriate to the new realities.

At Boyd Group International, we have the expertise and the resources to address this.

Every airport has different vulnerabilities to the changes we are seeing. It depends on a range of factors that vary and will be specific to each airport – airline strategy shifts, airline re-fleeting, the damage and changes inflicted by the pandemic on regional traffic flows, the business/leisure and domestic/international mix, proximity to other airports, and an entire passel of additional factors. We are talking about first identifying the changes that can be anticipated, and making hard decisions on a strategy plan to both accommodate and optimize them.

Once again, a hard fact that can be ignored only at a community’s economic peril is that from now on the air transportation system will not be like before. It will be smaller, more focused, and will be operating on different operational and financial metrics. This also means that historical traffic data are not indicators of the future. They relate to an industry that no longer exists.

A Few Hard Realities… The “smaller and more focused” air transportation system will be accommodating and adjusting to different revenue goals within a different consumer mix. Business travel is not going to return rapidly, and will be affected to some degree by the shift to electronic communication. Leisure traffic will be a larger part of the travel mix, and that means whole new pricing challenges for airlines, as well as a tendency for additional regionalization of air access.

Let’s cut to the chase: airport planning based on what was on the shelf or in the works last February is now obsolete – just about every dynamic of airport operations has and will continue to change.

This is the reason airport and aviation planners engage Boyd Group International’s expertise in crafting plans that address the changes that the CCP-Covid scourge has inflicted on our economy. It is the reason we’ve developed a comprehensive program to deliver a clear and actionable view of the future for airports. For our clients, we’ve developed Runway To The Future – which takes every aspect of known and anticipated change at the specific airport and develop logical outcome effects as well as planning to address them.

We Are The Forecast Source. BGI is the leader in aviation trend forecasting, be it traffic, airline trends, fleet trends, airliner feasibility and more. Other consultants will endeavor to find forecast answers from outside sources, and then report back. At Boyd Group International, we are the source, because for the past three decades, forecasting is our foundation, and our clients over the years have gained the competitive edge as a result.

• Our independent Airports:USA program has identified trend and traffic changes well before any other source, and helped our clients be proactively prepared. Our Global Fleet Trend & Demand Forecast expertise has assisted global aircraft and powerplant manufacturers in projecting demand – or, indeed, lack of same – for new platforms and products. Our expertise in aviation has assisted the support sector in forecasting demand for component systems from thrust reversers to new-generation flight simulators.

BGI is on top of trends in the industry, and this CCP-Covid situation is no exception.

Based on this unrivaled expertise, we are offering an aggressive program for airports to clearly identify the changes in aviation and where the new path ahead will lead, based on their specific and unique circumstances.

Getting on the right planning runway means having full understanding of the changes in all areas of aviation – not just commercial service, but general aviation, executive aviation, and – now importantly, air cargo logistics.

So, the choice is clear. Uncertainty is the alarm bell for new planning necessity, and BGI’s forecast and analytical expertise can be your advantage in meeting the change due to the CCP-Covid pandemic.

Get a jump on the future… click here or on the icon above, and let us know a time when we can talk.

We’re looking forward to working with you.

Monday 26 October Insight – In Progress… To Be Posted Shortly!

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25th IAFS™ – The Most Successful & Productive Yet!

We want to again thank our hosts, sponsors and attendees for making this year’s International Aviation Forecast Summit one that again sets a new standard for industry events.

We will be posting pictures and summaries of key sessions shortly, and our attendees have been provided with access codes to virtual program.

In the meantime, there is a more detailed preliminary discussion of the IAFS™ on the home page.

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China – Still No Mandarin Translation of “Chutzpa”

Solid data… it’s what allows aviation professionals to make logical planning determinations, as well as ferret out where trends do or don’t make any sense.

At the International Aviation Forecast Summit, we had the great experience of Mr. Jim Ogden of Cirium outline the new importance of having reliable data, and more importantly being able to understand what they represent, instead of just taking them at face value.

One of the key parts of the IAFS  Cirium Workshop were examples of schedule data. In particular, the difference between “schedule changes” and “cancellations.” The first is adjusting capacity on a pro-active advanced basis, more than one week out. The second is cutting flights close to departure date. Then there is the concept of “orphan” flights – capacity left in the schedule but not operated. Flights left in schedule but not operated.

Or, as we’ll see below, flights put back in schedule with no intention of being operated… for political eyewash.

One of the examples given was a chart of schedule capacity changes by region between the first of the year and the third quarter. This one slide was enough to prove that having solid data from Cirium is critical to professional aviation planning. It can illuminate a lot of things beyond just the numbers filed by airlines and governments across the globe.

In this case, it was a simple comparison of changes in airline capacity over the past year.

In all regions, as would be expected, the scheduled capacity went into a nose-dive in March and April. And as expected based on the economic damage done by the CCP-pandemic, in all regions – except one – the capacity has hovered at 30% to 40% of last year.

Golly gee – guess which “region” has boldly rebounded to the point that it is just about back to year 2019 levels…. the only one to do so.

Yessir, that region is China. Capacity filings by Chinese airlines – all controlled directly or indirectly by the Chinese Communist Party – imply that air travel demand has resiliently come back like a giant boomerang. And no other part of the world that has been a recipient of the virus they allowed to spread has any similar trend.

Take a look from Mr. Ogden’s IAFS presentation, regarding the levels of flights cancelled. Take a gander at the purple line. That’s China… and it purports to represent that capacity in that country is coming up roses – right back to 2019 levels. That is in contrast to every other region of the globe.

Now they wouldn’t file these data unless those seats were occupied, right? If you buy into that, call your real estate agent. That bridge in Brooklyn is for sale, again.

What is the magic causing this miraculous trend in the Middle Kingdom?

The reason is simple. They are lying. Orphan flights galore, likely… and a smattering of flights operated just to imply the market is gangbusters.

It’s what they are reporting, not necessarily what they are operating, and not necessarily any indication of traffic volume. But it sure makes great press for the gullible. Or for those who have a business dog in the China fight and are not too picky about questioning information from an unelected rogue government that has a history of publishing bogus data.

The global consulting firms and media hacks with big China operations are assuming that the data are not only accurate but are indicative of a traffic resurgence. So, too, with most of the aviation media. They are actually trumpeting that China is the example for the rest of the world.

Example it is indeed.

P.T. Barnum must be smiling broadly from wherever he may be… apparently there’s been a lot more than just one sucker born every minute.

Now, put this in context. The same sleazy government that hid the corona virus and let it infect the world, and lied about it consistently, is now to be trusted with the data they file in regard to airlines?

Sure.

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IAFS Update…

We are excited to announce that Mr. Joe Esposito of Delta Air Lines will be joining us at the International Aviation Forecast Summit, October 11-13 in Cincinnati, USA.

This year’s Summit is shaping up to be the most-attended yet, with a live/virtual hybrid presentation. We have four places left on-site at the Hyatt, and virtual attendance is still has a few openings as well.

Click here to see the agenda – no other event delivers anywhere near the content and insight.This is first – and only – aviation forecast conference since the advent of the CCP-Covid pandemic – data and perspectives that cut to the reality of the future

Log on and join us!

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Getting Geared For A New Transportation System

Two Thousand, Two-hundred and Sixty-six.

That’s 2,266 airplanes to be exact. It’s the difference in the number of jet airliners that were in service in North America (approximately 6,620) on February 1, 2020 and the number reported as in service as of August 30, 2020.

That is a lot of cold iron… plus the units that are back in service likely are seeing low utilization. Based on Airports:USA forecasts of traffic re-bound, it is entirely likely that the fleet won’t again get to the 6,620 level until the end of 2022.

These are some of the findings in the 2021-2030 Boyd Group International Global Fleet Trend & Demand Forecast, which will be presented at the IAFS next week, along with forecasts from Boeing, Airbus and Embraer.

Changes In Mission Applications Driving Fleet Restructuring. It’s not just the number of airliners, but the major changes in fleet mix. With the major decline in international demand, there will be what looks like a long-haul fleet dichotomy. Airlines will be tapping into new ultra-long haul markets to developing regions such as Africa and India, due to a major decline in “traditional” demand, such as trans-Atlantic. Point: ultra long range airliners will tend to supplant some in the fleets with lesser range.

As for domestic service – we are already seeing the effects – metro-peripheral airports will see less service, with carriers intending to aggregate traffic in a given region into fewer gateways. Some smaller feed markets will see less capacity as 50-seat jets get retired. And as for short-haul and intra-regional O&D traffic – it’s going by automobile or via Zoom. That won’t change.

More Seats At The Gate. One key metric that will change: In 2019 the average seats per airliner in fleet was 137. At the end of next year it will be 151 seats. It is an indication of the retirement of large numbers of 50-seat jets.

Small Communities… Less Service. Not Necessarily No Service. There won’t, however be a wholesale abandonment of scheduled service at small airports. The misleading wolf calls from some industry organizations that loss of “regional airlines” will leave such communities high and dry are non-factual nonsense. There have been a few such companies go out of business, but many of the airplanes just shifted to operators. ExpressJet is going down… but many of their aircraft are now going to be operated by CommutAir.

Nevertheless, the air transportation system itself is fundamentally evolving into a different role. Changes in the economics of air travel, changes in fleet applications and consumer shifts to other communication channels are all taking place right now. Airport planning cannot just assume a return to pre-CCP-Covid days.

New Planning Is In Order. Call The #1 Aviation Forecast Team. Dust off that master plan. Even if it was done just last year, it’s focused on an aviation industry that’s no longer in place.

At Boyd Group International, we are providing our clients with a new program, Focus On The Future, that takes every business and consumer aspect at an airport, and relates them to the known and expected realities of the new emerging environment. Give us a call to discuss and get started. Assuming the past is not an option

Also, the new air transportation environment will be the subject of a pre-Summit Workshop, The Titanic Dynamic, which covers the need for anticipation, rapid response, and no reticence to accept “mathematical certainties” in air service planning.

This is not another tired discussion of “air service development” – it will be a incisive look at the new air transportation system and its role in the new communication systems, and how to recognize where new opportunities will be.

Again, just click here to register for the Summit and the pre-event Workshops.

And don’t forget to call or drop us an email to discuss scheduling your airport’s Focus On The Future program.

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FROM ALL OF US AT BOYD GROUP INTERNATIONAL, WE WISH YOU A HEALTHY AND PROSPEROUS WEEK AHEAD!

AND IN THE MIDST OF ALL THESE CHANGES, KEEP A SHARP EYE FOR NEW OPPORTUNITIES… THEY ARE THERE, WE JUST NEED TO ADJUST OUR VISION A BIT.

Announcing…

Airport Success Planning In The New Environment
From Boyd Group International

Here’s a not so subtle fact or two…

• Between 2021 and 2025, US airports will see 1.5 billion fewer enplanements than what was expected before the CCP-Covid pandemic.
• The US airline industry will shrink in scope and fleets… today over one third of airliners are either parked or enormously under-utilized.
• Changes in fleet mix with new airliner types will result in different airline market strategies.
• Airline route and market planning will be based on different metrics and corporate strategies.

One thing is clear – the entire air transportation system has changed permanently. The CCP-Covid pandemic has shifted travel patterns in the economy, and has engendered material and structural changes in the entire airline industry.

Past metrics and past approaches to airport strategic planning no longer apply… airports must understand and adjust to a whole new air service environment in order to remain connected to the global economy.

That “true market study” reflects an airline system that no longer exists. That “leakage” analysis does not fit the new airline structure – or the new consumer demand trends.

The airline industry is now re-emerging, and bank on it – airports and communities need to get a clear picture of the new air transportation system to craft the programs necessary to assure maximizing air access in the new global future. Past data and past mechanisms to retain air service are just that – past.

Traditional approaches won’t apply, because the airline industry is operating on whole new metrics.

Announcing our exclusive Runway To The Future Program. It is based on this new emerging airline system. The forecast expertise of Boyd Group International will deliver a clear understanding of future consumer and airline shifts and how they impact your air service future and your airport.

Think about it – almost 1.5 billion fewer enplanements over the next five years… what effects will that have on revenues? On facility needs? On consumer patterns? Anticipating and planning is far superior to reacting to these factors.

Here’s the approach…

Runway to The Future combines a clear forecast of the emerging air transportation dynamics as they will affect your airport. This is based on Boyd Group International’s unrivaled expertise in identifying new aviation trends.

We start by imparting a clear and concise picture of the new structure of the U.S. airline industry, and then relate it to what you can expect in the future. No sugar-coating. Just the hard facts – and some will be quite positive, by the way, particularly in the area of new fleet mixes. Others will represent challenging shifts in future projections.

Section One: National Airline Trend Scenarios

The airline industry is re-structuring, driven both by consumer pattern shifts as well as due to the extensive damage done to balance sheets caused by the CCP-Covid pandemic. It’s important that your community understand the new environment and how airlines will evolve in the future

Section Two: Emerging Local Air Service Trends v Historical

Put that pre-Covid market study back on the shelf – or into the round file. It’s all about an air transportation system that no longer exists.

This is where the landing gear meets the runway. Our Runway To The Future program candidly reviews the historical trends at your airport, and relates them to what is forecast to take place in the new environment. We’ll relate current shifts in air service due to airline strategy changes, and candidly discuss how they will affect your community

Section Three: Trend Analyses & Forecast Scenarios – Short-term & Long Term

Boyd Group International is the leader in airport forecasting. Our Airports:USA® program relates all aspects of air traffic generation. The Runway To The Future program will deliver a near-term forecast – month-by-month, out one year – to gain an understanding of what can be expected as the airline industry restructures. The long-term traffic and trend forecasts what is expected over the four years beyond the short-term projections, and will discuss known and expected strategic scenarios.

We bring to bear our industry leading expertise in traffic, trend and fleet forecasts. This includes our Airports:USA forecasts – published since 1992 – and our Global Fleet Trend forecasts. These are relied upon in our global aviation projects.

We’d note that at the International Aviation Forecast Summit this month, BGI’s ten year fleet demand forecast was within 2.5% of Boeing’s. This is representative of forecast depth unrivaled by any other consulting firm, and is indicative of all our forecast activities.

Section Four: Strategic Blueprint

From these data, Boyd Group International will assist in developing and crafting your airport’s comprehensive strategic and tactical air access program. We will discuss each incumbent and potential airline within the real context of the future.

No other source can deliver this level of forecast expertise – which will cut through the hype and deliver hard facts and projections which are critical to airport planning in the new environment.

Section Five: Community Update Presentations

The Runway To The Future Program includes the delivery of a comprehensive community presentation that will outline the findings and forecasts of the project.

The format can be on-site or be provided electronically, for up to 100 attendees, and allowing robust interaction and Q&A. The goal is to bring to the fore what the community can expect in the near term and how individuals can rally behind the airport in these tough times as well as in the future.

A Complete Future Vision For Your Airport – Based Professional Analyses

The Runway To The Future Program includes comprehensive data and analyses that will give an independent perspective from the leader in aviation trend forecasting – Boyd Group International.

Don’t wait… the future is now different… Your planning needs to be so, also.

Click here to get the discussion started. Or give us a call at 303 674 2000. We’re ready.

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