The Return of the 737 MAX…

Lots of Messages For Airport Planning

It’s been reported that the FAA will begin comprehensive flight testing of the Boeing 737 Max very shortly.

Some Ready For Prime Time Later Than Others. Of the approximately 800 Max airliners parked, just about half of them have come off the production line after the March 2019 grounding, and likely still have a lot or a little finish work to be accomplished.

But the other 400 were already in service, and can be yanked from storage fairly quickly, depending on the level of FAA modifications determined to be needed.

While the opinions seem to be that in any case the FAA process won’t be completed until the fall, this still begs the question whether global airlines will be able to quickly absorb an immediate 400 more narrow-body airliners (the ones in fleets when the grounding occurred), when they might still have dozens of earlier model 737s already stored due to the CCP-COVID pandemic.

A somewhat contrarian conclusion would be that the last quarter of 2020 would be an optimum time for re-entry of the MAX. And if there is any reasonable expectation of these machines returning to operational status in the fall, that may be an incentive for carriers to simply leave many of the earlier 737-800 versions in the desert.

The Age Mix of Stored 737-800s. A review of the inventory of the 2,046 737-800s that are currently in storage indicates that while the average age is about 9 years, there are only 339 that are at five years or less. More than half of the 737-800s reported as parked are over ten years in age.

It’s possible that fleet planning departments at the carriers involved might recommend leaving these older units out of the schedule as demand returns, pending the arrival of new Max units.

A Mountain of Theoretical Maybes. There’s a lot of complex factors here, such as lease terms on existing fleets, relative position in component maintenance cycles, the need to generate revenues quickly, and – critically – training of pilots and technicians to operate the Max. Bookings for time in Max-specific simulators will be at a premium, depending on what the new training requirements may be.

But the point remains that the Max could return to service at a point in time where operators might opt to early-retire older 737-800s, even if it means spilling some near-term demand recovery.

Another Factor That Points To Fleet Trends Driving Air Service. The fleet groundings due to the CCP-COVID pandemic have tossed traditional “air service development” approaches into the landfill.

The type of back-to-clean-sheet fleet planning that’s illustrated by the 737Max situation, is in process at every major carrier involving every airplane type. As one example, we’ve seen a complete restructuring of Delta’s narrow body fleet, as well as the retirement of 777s, all aimed at simplifying fleet types. These shifts will materially change Delta’s revenue objectives and reflect a different route map.

Air service access programs must now first focus on the new fleets and mission applications at each carrier, before tossing money at more jive-time “true market studies” that have no bearing on anything unless the conclusions first and foremost tightly match airline fleet strategies.

Naturally, this makes the challenge of building air access planning a lot more granular.

It means that piles of historic O&D tables are reflective only of an air transportation system that no longer exists. As we’ve pointed out recently, that also means that “road hubbing” – collecting more leakage from cities peripheral to each carriers’ connecting hubs – will be a near-term recovery strategy.

Join Industry Leaders At The IAFS™ For Futurist Fleet Projections. The new fleet strategies – which will vary airline to airline- will be one of the major focus areas at the 25^th International Aviation Forecast Summit, August 23-25.

This will be the first major event that will explore the post-CCP-COVID aviation industry. We will be having discussions with aircraft manufacturers regarding how they see the future. We’ll be outlining the new factors and imperatives necessary in forecasting demand and consumer trends.

Airlines will be there to deliver their perspectives of the new future. Plus, we’ll be covering incisive forecasts of air service trends and the consumer-driven factors (usually ignored in most such projections) that will frame future air access programs across the nation.

Click here to get the latest and to register for the 25^th Boyd group International Aviation Forecast Summit.

Before We Start…

Southwest. Spirit. Sun Country.

Joining Aviation Leaders At the IAFS

On August 23-25, the first post-Covid aviation event will take place at Cincinnati, USA.

The 25th International Aviation Forecast Summit is on, and it’s going to be exploring the new realities – and new opportunities – the industry faces in the aftermath of the CCP-Covid global pandemic.

We will be discussing the future with the industry thought-leaders and innovators.

The leisure sector is the first to see a rebound. And we’ll be hearing from CEOs and top executives from airlines across the globe as well as from other sectors of the industry.

We are excited to announce that Mr. Ted Christie, CEO of Spirit, Mr. Jude Bricker, CEO of Sun Country, and Mr. Andrew Watterson, Executive VP & Chief Commercial Officer of Southwest will be with us, each with their perspectives of the future.

The IAFS will be looking over the horizon, not rehashing the past. The sessions will be incisive and direct, and we’re planning a pre-Summit Workshop session to be illuminated shortly. Click here to reserve your space.

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Just One More Thing… Before We Start…

Announcing the new aviation channel on YouTube…

Boyd Group International is implementing a new access point for clear and incisive perspectives of the future. Aviation Unscripted will have a new video each Friday morning, covering topics that will be thought-provoking, fun, and interesting. All intended to be about ten active minutes or less. No holds barred.

This week, we’re tacking the changes expected as the airline industry continues to rebound… so log on and join in.

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Okay – The Monday Update

The Pandemic:

It’s Put D.O.A. On Russian & Chinese Airliner Hopes

The CCP-Covid pandemic has sent a volley of torpedoes into the global airliner manufacturing industry.

One unexpected consequence is that these changes have completely left the global airliner business in the solid hands of just Boeing, Airbus, and depending on corporate decisions, Embraer.

Take this to the bank: any potential for new players has been now put to bed. Specifically, this now eliminates the infinitesimal chances of either Russia or China getting into the market.

Some background…

In the past year, dozens of orders for 737MAX variants have been cancelled, and while there hasn’t been a corresponding hit to the A320 platform, the fact is that with the economic damage of the CCP pandemic, they both face new de facto competitors from available orphaned 737-800s, and even some A320neos that are all dressed up with nowhere to go.

Flickers Of Hope… On the surface, there recently are some positive indications. Last week, one leasing company “confirmed” previously unannounced orders for 16 737MAX units. Looks great, but just a dent in the order for 80 that was cancelled by the same customer back in March. In the meantime, Airbus continues to deliver A320 and A350 aircraft across the globe. Emerging changes in new fleet needs have not been fully registered – yet. As we’ve pointed out earlier, the multi-mission capabilities of aircraft such as the A321XLR and A220-300 will be a major factor in fleet planning at global airlines.

Russia & China: Cadaver Programs On Life Support, Still, unnoticed in all of this is now the certainty in regard to new-entrant airliner platforms from Russia and China. They are dead.

Long before China’s CCP did its handiwork in allowing the corona virus to spread across the globe, it was already pretty obvious that the airliner programs from both countries were political pipe dreams. Just me-too designs, and me-too performance and me-too economics, with backlogs relegated to mostly forced orders from domestic captive airlines and financial institutions.

The platforms under development are strictly retro-1980s upgraded to glass cockpits. In China, we have the 70-seat or so ARJ-21. It came out of the factory in 2008. Today, a dozen years on, there are only about 25 flying with Chinese airlines. Not exactly a line of carriers in front of the sales office.

A decade late and a lot of yuan short, it’s entering a market sector that’s already died out. The CRJ series is winding down, and it appears that the Mitsubishi M90, nee MRJ, has been iced.

Then there is the Chinese COMAC C919, a very rudimentary attempt to build something approximating the A320 or B737. The certification process has been a circus. That’s not surprising, when politics, not market need, drives airliner programs. Then we can get into the allegations of intellectual theft – which, if accurate, would indicate the stuff stolen wasn’t of much value, based on the projected performance of the C919.

If the manufacturer, COMAC, had actually been left to its own devices, the world might have seen another disruptive new entrant – such as was the Bombardier CSeries (now A220)  – an airliner designed from the start to swing for the performance fences. Didn’t happen.

Russia has the Sukhoi SuperJet – a one-off platform – in the same dead segment as the CRJ and M90. It did have “success” outside of Russia – with a fleet of hangar queens sold to Interjet of Mexico. The fact that the crack Sukhoi sales team flew a demo into an Indonesian mountain a few years ago didn’t do much to get the phone ringing at the sales department back in Mother Russia.

Russia and China have the CRAIC 929 – a joint venture seeking a 2025 debut to compete with the likes of the Boeing 787. Nothing like being a couple years late and a platform short, since the initial market demand bubble for the 787 has already come and gone, and the supposed superiority of the 929 isn’t anything to get excitement going in the front offices of IAG or American or any Western operator.

Russia has the United Aircraft MC-21, which is another attempt to grab share from the 737 and A320. The potential success of placing another aircraft type that is only marginally better than incumbents (which the MC-21 has no guarantee of being) is not likely.

With the structural changes in the airline industry now unfolding, these airplanes from Russia and China are somewhere just beyond Mars in regard to market need. It was a snowball’s chance before. Now, it’s zero chance.

Dedicated To Political Vapor Holes. One comforting factor for Boeing and Airbus is that the airliner projects in both China and Russia are economic flytraps that will keep these countries engaged in dead-end programs for years to come.

Politically, they cannot easily reverse paths, admit these are dog programs and start over. With all the hype and financial investment, they are now wedded to going forward in futile efforts to make good on obsolete airliner programs.

Conclusion: There will be lots of stories about how these new airliners will be a threat to the major duopoly of Boeing and Airbus, and to Embraer.

One look at market realities paints a different picture.

One More U.S. Victim of the CCP’s Corona Virus

Another Reason for Airports to Pursue Recompense – But There Will Be Push-back From Unexpected Corners

The CPP-COVID virus may be slowing its expansion, but the financial damage continues to spread.

Here’s another example – a small footnote in the newspapers, but another indication of the range of the damage this pandemic continues to inflict on the lives of thousands of people.

The Commonwealth of the Northern Mariana Islands is facing a revenue crisis, big time.

The cessation of tourist flights from China to Saipan has hit the airport system with a nearly 50% cut in total revenues. Not inconsequential, and the immediate proximate cause is the CCP-COVID pandemic, and secondarily, the emerging and continuing political thuggery of the CCP toward the Chinese people, plus a concerted program to convince the Chinese public that the USA is responsible for the emerging economic plunge starting to manifest across their country.

The CNMI government has petitioned the DOT to exempt them from the restriction on flights from China and Hong Kong, noting that this traffic is critical to the Commonwealth’s economy.

Here’s some troubling news for our friends at Saipan and the region: with or without allowance of additional frequencies, this traffic segment – Chinese tourists – is toast. They aren’t coming back.

The reality is that the Chinese Communist Party has been working very hard to vilify the United States and convince Chinese citizens that it would be unpatriotic to travel to the USA. That includes Saipan and Guam, just like Harrisburg, Moab and Las Vegas.

Point: the CNMI, as well as other formerly-favored destinations on the part of Chinese visitors, need to find other revenue sources. This one is kaput.

A Complete Change in Just 36 Months. We would point out that this is a complete 180 from the situation just three years ago.

Back then, before the Xi Jinping clique fully put the dogma screws to the Chinese public, the market appeared to be almost unlimited. BGI was at the forefront of this, with our ChinaNiHao team. We were working on both sides of the Pacific to make China-U.S. travel continue to expand.

Not anymore. The China-U.S. leisure market is gone. President Xi and his sinister team of un-elected government hoodlums have seen to that.

For those interested in updates on the China-US aviation situation, bookmark www.BoydGroupChina.com. We’re developing the site into an independent source on China, including the criminal culpability of the Chinese government in the COVID-19 pandemic.

Second-Agenda Media Protectors – Don’t Expect Hard Facts. Keep in mind that some American news sources have a lot of dogs in the fight and money invested in China offices, not to mention associates there that can be subject to “discussions” with CCP authorities, should an article appear that they don’t agree with.

So, in a very real sense, a lot of these entities are defenders of the CCP in the USA, whether they intend so or not. They are part of a de facto fifth column that Beijing can depend on to cloud the facts.

Let’s not dance around the politically-correct maypole. A few of these supposedly unbiased media channels will at the least have the tendency to sugarcoat the stories, leaving out facts and points that are unfavorable to the CCP. Or, more blatantly, like 60 Minutes, righteously mislead the public, implying that it’s disinformation to blame the Wuhan Virology facility for the virus. Not true.

In March, one major American financial journal published an article covering how various global regions were responding to the pandemic. The online edition included a video purporting to explain how the virus spread in the first place. It completely sidestepped any real facts on what happened in Wuhan. It simply noted that the Wuhan authorities had discovered the contagious nature of the virus, and then the video skipped to telling the readers that an infected person was then found in Thailand, and then others elsewhere in Asia. This was their story on how the spread of the disease got started.

The financial journal’s video completely left out the events and actions in Wuhan and in China that were the direct causes of the spread. Not inconsequential. In light of what was clearly known at the time, it was a whitewash, or else the product of really amateur journalism.

No mention was made of the cover-up and direct misinformation to the citizens of Wuhan, who they encouraged to participate in enormous communal New Year feasts and other events, right up to 48 hours before they gave up the ruse and declared the epidemic. The reporters for the august financial journal didn’t mention the efforts by the CCP Wuhan government to convince residents that the virus was not transmittable, including videos of happy citizens dancing around without masks, singing “bu pa!” – not afraid. The respected journal made no mention of the muzzling of medical staff to not report the danger.

The respected financial journal didn’t focus on how, even when knowing the contagious nature of the virus, the CCP allowed millions to travel from Wuhan for the New Year festival to points all around China and the globe. They just pretty much jumped to the infected guy discovered in Thailand.

It’s like reporting on how the U.S. got into WWII and skipping the part about Pearl Harbor.

At best, sloppy journalism. And even that is a hard one to swallow. In any case, it shamefully misled and misinformed the public. It served to protect the CCP from any hint of the massive and criminal malfeasance they engaged in. We did e-mail the writer of the article, noting several facts missed in the video. Naturally, the people who put it together never responded.

Thinly-Veiled Paid Advertising For The CCP, Postured To Look Like Reliable Facts. Not only that, but, incredibly, in the past week it has come to light that several U.S. media channels have accepted payments – some in the millions – in exchange for printing “advertisements” that although have “advertisement” on the header, still look a lot like articles, provided by the China Daily.   It’s a newspaper run by the propaganda department of the Chinese Communist Party. Over the last four years, they’ve paid at least one major U.S. financial journal $6 million dollars to place these “ads.” Therefore, they are a customer of the media channels they do business with.

The question comes up whether in stories done covering China, this business relationship – the CCP being a more than million dollar annual (on average) advertiser – should be disclosed. Furthermore, due to the clear nature of the CCP, and its repressive nature toward free speech and human rights, it might be suggested that the propaganda nature of the inserts should be clearly illuminated, and not just routinely placed, along with ads for watches or automobiles or expensive clothing.

These and the invested interests still doing business in China are financial dragons that a lot of people on this side of the Pacific do not want to get gored.

Another issue of caveat reader.

How Badly Has Your Airport Been Hit? A final point. The CNMI is not alone. Airports across the USA – from ALB  to YUM – have suffered enormous financial losses, specifically and directly due to the CCP. Hundreds of millions.

At some point, Congress will implement mechanisms that can be pursued to demand recompense. It’s not about suing a foreign country. Remember, just about all Chinese investments in the U.S. are actually connected to the Chinese Communist Party. They run China, but they themselves are not a sovereign nation. Theoretically, then, there’s close to $150 billion in CCP assets in the USA.

Now, we are talking about federal channels that may be developing. This is not a matter for the late nite TV ads with law firms trolling to find clients to participate in semi-ethical class action suits that will line the lawyers’ pockets first and leave victims with peanuts. This situation is not like a defective weed killer or an obscure acne medicine that caused peoples faces to fall off. This is a nationwide matter that has affected all citizens, and it’s well beyond the scope of legal firms trolling for quick business. It will be the feds that run the show.

Boyd Group International is ready to assist airports and communities in developing accurate, supportable and professional projections of damage done directly by the CCP-COVID pandemic. There are direct revenue losses. There are job and economic losses. There are market opportunity damages as a direct result of the CCP-pandemic. The key is to have a clear set of defendable projections.

We can help. Having this information now will be a benefit when (not if) the federal government takes action to hold the CCP accountable. Remember, anything that threatens the CCP will bring on the the type of nonsense journalism described above. Hard and unshakable data is the only protection.

Make no mistake, at some point in the near future, it will be time to drag the CCP dragon into court.

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Rebound Check

It’s real.

Traffic demand is returning along with the rebound in the economy.

First, consumer sentiment is pushing well into the “let’s take a trip” mode. Second, the airline industry is clearly seeing this and pulling more aircraft out of storage.

This is all great news. But there is a lot more capacity and demand that will be put into the system in the next six months. Here is a snapshot of active v stored mainline aircraft at AA/DL/UA, along with the percentage of departures and ASMs that are scheduled to be operated in-house in July, as opposed to use of fleets of contract carriers (the mis-named “regional airlines” which are essentially in the business of leasing aircraft operations).

Without getting too deep into the numbers – which are changing daily – it’s clear that the three systems have different rebound and fleet strategies. (Note that the Delta data for stored aircraft do not include recently retired fleets of MD-88, MD-90, and soon to go B717s.)

New Air Service Access Dynamics – A New Playbook

However, we will need in the future to recognize three key emerging dynamics within the post-CCP-COVID air transportation world.

Airlines have taken, and are continuing to take, a financial hammering. The fact is that the financial underpinnings of the U.S. airline system will be very different. Carrier systems have had to bring in a lot of new debt. This means that route and market planning will be different.

That $1 million SCASD grant in 2021 likely won’t be enough to get them to answer the phone – assuming the skeleton planning staff has time to even pick up the receiver. It means the curtain of reality will be continually pulled open at some smaller airports, revealing Oz-like nonsense being peddled on them to “find more airlines” when there aren’t any to start with.

Consolidation of route systems will be very apparent. We are going to experience more regionalization of access – particularly hitting smaller airports and metro-peripheral airports.

Airlines will not be as interested in wallowing through more “true market studies” that belabor a whole lot of data that are inconsequential to the fleet and strategic realities of the new air transportation system. As for “leakage” studies, the answer will increasingly be, “Yup, know that. And we’re after more. We’re focused on continuing to regionalize access. Thanks for sharing.”

New fleets will emerge – with new mission envelopes. With the accelerated retirements of parts of airlines’ fleet mix, the replacements will focus on new multi-mission-capable narrow-body airliners such as the A220-300 and the A321XLR. Stand by for more foreign invasion of interior U.S. airports.

Along with this, the capacity floor at major carrier systems will gravitate to 76-seats and above. Plan on seeing fleets of 50-70 seat jets pulled out in the next 24 months.

The key to developing the new-future air service access program will be in understanding airline fleet plans.

The markets will adjust to these, not the other way around.

Re-Planning The Future. For airports now reassessing their air access development plans, Boyd Group International stands out. Our focus is on identifying emerging trends in fleet mix, expansion strategies, and consumer preferences that have been affected by the shutdown of the system due to the CCP pandemic. Past traffic and demand data are now only fractionally valuable in the planning process, because the industry is rebounding with different financial dynamics.

To get a fresh view of the future, give us a call or a quick e-mail and we can discuss .

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The International Aviation Forecast Summit Is On!

This will be the first post-CCP-Pandemic event that will cover the future the industry faces.

We will not rehashing what’s happened, but looking at how we can optimize coming out of the economic wreckage foisted on the air transportation system.

Clear your calendar for August 23-25 and join aviation leaders in Cincinnati, USA to get a jump on the future. Click on the icon to register.

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

The Rebound Is In Progress, Big Time

We were sort of out on a limb, according to some in the industry.

That’s referring to our April forecasts that indicated a return to 85% traffic, month compared, year-over-year by the end of 2020.

Apparently that was not as far out as it may have appeared to a lot of traditional forecasting approaches, as well as professional opinions from very respected analysts elsewhere in our industry. One of the usual suspects is claiming it will take three or four years to get back to 2019 levels.

It’s what happens when consultants rely on “models” instead of having a grasp of industry trends.

For The Cassandras, Read’em And Weep. The indicators now are all very strong. We have seen Frontier adding new markets, Allegiant taking back airliners from the desert, American noting they will be back to 55% of pre-CCP-COVID capacity. We see Delta’s July schedule filings indicating a 70% increase in departures over June, and 146% more ASMs. Spirit is restoring capacity, also.

The fact is that the economy is coming back, and it is taking air transportation demand along with it.

The latest jobs numbers show that. The description of this CCP-inflicted pandemic as being an episodic event rather than a structural decline, is accurate. Actually, air travel is more of an intrinsic part of the economy than other industries, some of which may take longer to regain pre-pandemic revenues. It’s closer to the restaurant industry… when they reopen, people come in and order.

Warning: Routes & Markets – No Return To The Prior Status Quo. This does not mean that the air transportation system will have the same structure. The pandemic-inflicted damage has shifted both fleet strategies and market tactics. While traffic levels will recover domestically, not all airports will be back on airline route maps until later in 2021 – and some simply won’t be there at all. In the coming week, we’ll be covering this in our Touch & Go news flash to our clients.

Just An Observation. Apparently, These Data Aren’t Welcome In Some Corners. These changes in airline demand due to the economy coming back on line are material, and very positive indicators of the direction of the economy. They were unexpected among the supposed cognoscenti in both the mainline and aviation media. Clearly great news. They indicate positive and important directions in the economy.

Yet, funny, you’re hard pressed to find any real coverage of this in much of the media. Wonder why… maybe some folks aren’t rooting for positive recovery.

Forecasting Is Analyzing The Dynamics Shaping The Future, Not Entering Data Into Static Models. In any case, when you need forecasting expertise – domestic, international, trend, fleets, master plans – give us a call. We help our clients identify the future. We don’t follow the crowd, and neither do our clients.

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Don’t Miss This – Fantasy Lives!

Social Distancing & Outright Claptrap

Suggestions From An Airline At The Source

Let’s again get real. Air travel and social distancing. The two concepts are mutually exclusive.

The stuff about leaving seats open or putting plexiglass dividers between seats are malarkey. Actually, we are seeing the “solution” we are now already experiencing it, with the downward trend in lethal infections.

But, speaking of malarkey and vapor-thinking, we thought we might review some of the brilliant actions that one airline suggested to make the trip health-safe, even when the pandemic was at its peak and spreading fast. Not surprisingly, it’s from a carrier owned by the Chinese government, an organization that would make the Corlene family look like Cub Scouts.

When Nobody Can Give Feedback, You Can Say Anything. Back in February, at the height of the start of the spread of this deadly virus – due to the cover-ups by the Chinese government – one Chinese airline – again, government owned, don’t ya know – issued a list of actions that passengers could take to make sure that they would be safe flying across the friendly, albeit infected, skies of the Middle Kingdom. This was at the height of the rampant spread of the corona virus.

The babble put out is beyond incredible, but in the CCP-governed thought-bubble, there’s never much room for any counter-feedback. That was tried on a big scale back at Tienanmen Square in 1989, and didn’t work well. So, any attempt at correcting things to do with what the CCP puts out isn’t particularly high on any citizen’s to-do list.

But, it still makes a good read. Our review of recommendations issued by an “expert” from Xiamen Airlines can be found here… it’s a short fun read, and it’s still pertinent to what’s going on today, four months later.

By the way, this is part of BoydGroupChina.com, which we are developing into a portal of independent information on aviation in China. The Intelligence Tab is updated regularly, and our summary of airport forecasts is the only one published anywhere outside of China, where data are political first, and accurate second… or third.

Again, click here to get the gems of air service wisdom from right at the source of the pandemic.

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ALL OF US AT BOYD GROUP INTERNATIONAL WISH YOU A HEALTHY AND PROSPEROUS WEEK!

Preparing For A Future That Does Not Exist?

Face masks. Temperature checks. Plexiglass barriers wherever transactions take place. Mandatory social distancing in airplane cabins.

This is the stuff that is sometimes repeated in the media as being the permanent “new normal” for air travel. That’s because, according to at least one article, we are now in the “virus era” of air transportation.

Actually, we are in the me-too era of media reporting. That’s when the source tends to be a compendium of “what everybody knows” instead of hard fact checking.

The more we know about the China-inflicted corona virus, the more we are finding that while contagious, for the majority of the population, it is not lethal. Yes for some sectors, such as nursing homes, it is a proven killer… but so have been other viruses.

That can be managed without the entire population of America doing a re-run of The Flintstones, living in caves. The main challenge now for airports is in crafting pro-tem measures that not only deal with curbing the spread of the virus, but addressing the demands for politically-acceptable facility changes… changes that in a year won’t be needed.

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Rebound Is Accelerating – Air Fleets Leaving The Desert

Fleet composition reports are daily indicating a return of more airliners into both U.S. and global fleets.

Southwest, which was reported to bring another 70 737-700s back into service on Friday, has indicated that it will be back in full operation by the end of the year. Frontier has announced a number of expansion markets to be implemented in the coming weeks. United is pulling more aircraft into service.

Delta continues to retire MD-88s, MD-90s and B717s. However, it is clear that this was a process in the works before the CCP-COVID pandemic.

Add to this reports of increasing traffic through airports, and it is becoming clear that air transportation will be part of the economy that will see an early return.

We are still confident of our Airports:USA® forecast of a return to 85% of 2019 year-over-year traffic by the end of the 4Q 2020.

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New Airline Economics – New Metrics Needed

 Below are O&D numbers for a few markets in the Northeast. They tell a compelling message in regard to crafting future air service access planning.

There are similar examples across the nation, but these provide a stark example of how the value and time-efficiency of air transportation have changed over time

The 1980 numbers are estimated based on past schedules and other factors. Back then, “commuter” airlines filed data with the CAB on a different table, and sometimes didn’t file at all. The 2000 and 2019 numbers are as analyzed by our friends at Cirium. Data reported under 200 passengers in any market can be considered as “noise” due to the outdated reporting systems in use by the DOT.

Toss in the enormous time-inefficiency of air travel in markets such as these, and – take it to the bank – this sector of aviation history is dead. It’s just one sector that’s now completely changed – and not all are negative. Not that the loss of routes such as those above is negative – it’s just a reflection of shifts in consumer and business preferences.

Positive Shifts Are In The Works. As we’ve pointed out before, there are fleet changes in play that will generate a new set of long-haul routes from interior U.S. non-hubsite airports, including international. Our advice is to put down the past data, and start forecasting and projecting what the new fleets and new airline strategies will be.

Changes in global trade patterns will emerge. Don’t buy into the assumption that post-CCP-COVID air travel will be the same as before. Take it to the bank, as just one example, substantial FDI in manufacturing and heavy industry will shift away from China, which is becoming a global pariah due to their malfeasance that inflicted corona virus on the world. These will also change airline strategies, domestic and international.

Take it to the bank, too, that new efficient airline fleets will extend hub reach materially in the next five years. Take it to the bank that airports such as Norfolk, Albany, Grand Rapids and Columbus will have trans-Atlantic nonstops.

Post CCP-COVID pandemic, the structure and the strategies of the U.S. airline industry will represent a new set of planning metrics.

Join Us In Cincinnati To Explore This New Future. The aviation industry is now in line for the greatest set of changes in history.

The CCP-COVID pandemic has completely changed the global air transportation system. Across the globe, airlines have disappeared… others face new opportunities. Super longhaul flights will have an effect on traffic flows over airports such as Singapore, Dubai and Istanbul – all different in scope today but all in the crosshairs of change, too.

More regionalization of air access will be in play. But increased growth of ULCCs will continue to develop new traffic flows from airports that formerly had little or no passenger traffic at all.

Fleet changes and near-term excess airliners on the ground will pose both challenges and opportunities for OEMs and for aviation suppliers. Airports across the USA could be in line for new investment.

And, sometimes not fully understood, we have the UAS segment – drones.

Forget the four-rotor toys used by real estate agencies to take pictures of fixer-uppers, we are looking at the development of “dronelines” that could network the nation with a new logistics delivery system using aircraft that are a whole lot more that amateur curiosities. For the first time, rural airports may well be in line for a new role in aviation.

The IAFS™ will be the first major post CCP-COVID event and one that will outline the future of the new aviation industry.

We will be exploring the real future – not rehashing what’s happened. This is a forecast event, and that’s the exclusive direction we’re taking. Airline strategies will be different… fleet demand will change things from facility needs to communication systems… logistic shifts will positively affect airports, particularly rural airports… and past planning metrics and programs will be obsolete.

We’re going to be tapping the expertise of a range of industry thought leaders, and we’ll be outlining the agenda shortly. For 25 years, it has been at the IAFS™ where new trends and breakthroughs in air transportation have been first illuminated. This year will be even more so.

So, clear your calendar and join us and your colleagues August 23-25 in Cincinnati, USA for the 25^th International Aviation Forecast Summit. Click here for more information and to register.

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FROM ALL OF US AT BOYD GROUP INTERNATIONAL, BEST WISHES FOR A GREAT & PROSPEROUS WEEK!

CCP-COVID Traffic Rebound

We will start with this… our Airports:USA® CCP-COVID forecast projections are starting to play out.

While May was more of an economic disaster than expected, resulting in around a 95% elimination of consumers allowed to take trips, it appears that the second half of June will still be the stark turnaround point.

According to TSA, Memorial week-end delivered a couple of near 350,000 passenger days. Anecdotal information indicates that ULCC leisure traffic is rebounding strongly. As just one example, our client Latrobe will be gaining back independent nonstops to Orlando, and it appears that Frontier, Allegiant and Spirit are experiencing traffic comebacks.

On the fleet side, the picture is also positive…

… Delta is going ahead with the acquisition of an additional seven A-350s from Qatar airlines. That portends well for the near future.

… Allegiant indicates it has brought a net 22 more A319/320s back into service.

… Southwest has parked another 70 737-700s, but brought 62 back into service. Since these data are just a one-day snapshot example, this would indicate at the least a wash.

Point: fleets are starting to return.

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It’s Time To Fricassee Chicken Little

Okay, the argument could be made that as far as air service was concerned, the sky was falling. But only temporarily. It’s coming back.

Going out on a forecast limb… by the end of June, daily passengers going through TSA checkpoints will be over 1.0 million and by January we will be back to 85% of 2019 levels. A major factor in it not returning to full 2019  demand is international traffic… it will remain weak, particularly in trans-Pacific markets. USA-China traffic will plunge – and stay – at @20% of prior levels. As for the E.U., leisure traffic will be a fraction of before to and from North America.

It all has to do with the economy being allowed to come out of the caves. It has to do with an increasing understanding of people who are and are not at risk.

Domestic Air Service Access Restoration – Certain, But Trickle-Down. The pandering veneer media stories are rampant that it will take years to get air travel back to where it was before the CCP and WHO allowed this pandemic to spin out of control and eventually spread from Wuhan to just about everywhere. They are wrong.

(Yup, that last comment is a red herring for the folks who are trying desperately to mislead the public into believing that the Chinese government isn’t responsible for the pandemic. Or worse, contending that holding them responsible is just a “distraction” or even more dishonestly, racist. Got a problem with that, then bring it on. We have facts. When all this settles out, the CCP must be held accountable.)

Back to the U.S. air transportation system – we are seeing the ULCCs starting to gain traction. For major carriers, mainline O&D traffic between hubsite airports is felt to be gaining strength, and by the end of June, the they will be adding spokes to more secondary feed markets.

Damage Done. New Approaches. New Airline Industry. But the system will be different. As we’ve noted, the air transportation industry is not unlike parts of the economy… the CCP-Pandemic has damaged the underpinnings of the entire transportation system… so when the dust settles, not all will be as before.

Some smaller communities will see their air service accessed at airports other than the local one. The mid-size airport metro-peripheral air service trend over the last 20 years will be affected as well. Consumer and businesses have found that some air travel can be replaced – or is no longer necessary – due to electronic communication channels.

Traditional Air Access Approaches – Here’s a Flash – There Is No Tradition. The key factor to remember is that airlines will be operating different fleets, with different market strategies and revised revenue goals. Traditional “true market studies” and “leakage analyses” measure (and often not well) the pre-CCP-COVID airline industry, not the future one.

Post-CCP-COVID, air transportation will have a different development trajectory and different route-decision metrics.

Forecasts – Not Past Data. At Boyd Group International, what sets us apart is that we are a forecast and research firm, with a 30-year track record of assisting clients with futurist planning. Our work with airlines and aircraft manufacturers in identifying emerging trends – from new aircraft platform feasibility, to specific airliner demand, to shifts in national and regional traffic patterns –has been our advantage in assisting clients develop effective air access programs.

The point is that BGI is better postured to identify the fundamental changes and emerging opportunities emerging from this pandemic.

If your airport is looking at crafting new-generation plans for the future – including long term strategic opportunities, click here to send an email, or just give us a call. We’ll get right on a tailored air access strategy program based on the future – not old data.

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

Update on CCP-COVID Wreckage

There are mixed messages coming out of the airline industry.

Delta has returned to service a net-plus 27 CRJ-900s, operated by Endeavor Air. Seven 50-seat CRJs are also being put back in the mix.

Congratulations Client to Latrobe… Spirit has been doing well combining PIT-LBE to MCO, and at least one flight in the next ten days already is fully-booked. The plan is to re-instate LBE-MCO nonstops next month.

A note regarding realities of airline/airport relationships. LBE implemented an aggressive strategy to support Spirit, right from the start, back when the carrier was proposing to reduce flying to conserve cash several weeks ago.

Short-Sighted Planning – Sowing Seeds For Future Air Service Reductions. In contrast, there are some small airports in the nation that apparently have tried to play hardball with incumbents in regard to flying empty airplanes in and out. Reminder: as of October, when the CARES requirements expire and airlines will be able to economically restructure, they will remember which airports supported them and which didn’t.

Traditional ASD Approaches Are Not Going To Work, Anymore. This will be particularly true in regions with secondary, metro-peripheral airports. Delta’s latest route-drops are clearly in this realm. The open question is to what degree such service will be reinstated in 2021, and that will be dependent on a new-structure in the airline industry.

New Traffic Generation Patterns… New Airline Strategies. At BGI, we are developing entirely new forecast approaches for airports in the cross-hairs of what will be shrinking fleets in the 4Q of this year. Point: the traffic generation in some regions will not rebound because the economic foundations have been damaged by the COVID pandemic. Think petroleum regions. Think auto-focused regions. Think international markets supported by specific industries.

The traditional approaches to “air service development” – the overstuffed “true market studies” – won’t have any bearing on the fleet realities and strategic realities facing U.S. airlines. Fleets will be a core driver in the process, not lists of raw and obsolete BTS O&D data. Give us a call or email and we can discuss the specifics for your community… the nation’s economic base has changed, and so will the airline system.

Airliner Groundings… Shifting Toward Future Fleet Optimization. There are increasing indications that the multi-fleet network carriers – AA, DL, UA – are doing triage with parked airliners, exchanging in-fleet units with some parked earlier. The ongoing process is still net fewer airliners, but at the least, they are re-planning fleets for the future.

Miami Air Goes 86. Arguably one of the best and most professional charter carriers, Miami Air has filed bankruptcy and is liquidating. No sports teams in operation means one major revenue stream evaporated. It took out the carrier, too.

USA Jet Airlines – a supplemental carrier – has also shut down, at the least. Heavily focused on the auto industry – the CCP-COVID pandemic has shut that industry down, too.

United Airlines has cancelled an order for 96 B-737-10 MAX airliners. This may put the backlog at Boeing below 4,000.

This tracks with the apparent economic reality that when facing a global glut of 737-800/900s that may be available for, say, $50 million a pop, the economics of a new airliner at double (or more) ownership costs get real foggy… especially in the specter of very low jet-A prices. The backlog at Airbus is likely in the same line of fire.

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And, Finally,

A Word About Our Pandemic Sponsor, China’s CCP

Make no mistake. The day is coming when the Chinese government’s bluster and babble won’t be able to cover up for their criminality in the start and spread of the pandemic. They inflicted this on their own population, as well as the rest of the world.

Countries, states and even individuals have initiated, and others are planning to initiate, legal action against China’s un-elected government, otherwise essentially the Chinese Communist Party, or CCP. There are issues with suing a sovereign nation. But that isn’t the issue… it’s the Communist Party of China – a pack of thugs that have been in business just short of 100 years – that is responsible, and they are not a nation. They also have connections with Chinese-owned businesses across the globe. Billions of dollars in value. That may be fair game.

The first line of defense for the CCP is to fan the dishonesty that going after a political party – one not even selected by the people of China – is “racist,” which is a complete lie. A political party – particularly one like the CCP – is not an ethnic entity.

There Will Be Some Recompense. As we’ve noted in the past, airports should gain a clear and unvarnished understanding of the negative impact that has been inflicted due to China’s CCP. Likely, it will be some mechanism generated by the U.S. government, probably not a lawsuit, that will be the modality.

Guilty & Caught Red-Handed. Yes, this virus came from China, and the CCP was calling the shots, often to the lethal detriment of the Chinese people. Yes, the proof is beyond question that it was the CCP’s actions from November on (at least) that allowed this to become a pandemic.

There is no question that the CCP must be held responsible.

When All Else Fails, Deny Reality. All of that notwithstanding, the CCP has a formidable first line of defense – almost a fifth column – in the U.S. that is lining up to defend them.

One bulwark is parts of the media, now spinning the dishonest narrative that to blame the CCP is only an attempt to take pressure off of the alleged U.S. failure to act soon enough. Or, worse, the dishonest allegation noted above that to accuse the CCP of this crime equates to racism. Let’s put it on the table once again: the CCP is a political party, not an ethnic group. An un-elected political party, to be more precise.

In short, the CCP strategy is to rely on fantasy and hope it won’t be questioned. It also is relying on U.S. entities that do business in China to ally with the CCP to protect their investments there. With the now history and facts surrounding the CCP’s involvement, doing business in China is going to be a lot less lucrative and a lot more risky. So the idea is to aggressively defend the CCP.

‘Course, this runs counter to the actual facts, but that makes no difference. Just keep telling the party-line story over and over.

Criticize The CCP & You Threaten Special Interest Rice Bowls. Another bulwark is made up of the “philanthropists” and special interests that are defending the incompetence of the WHO and want to smokescreen what the CCP has done. And a third line of defense is the many professional firms that have lucrative branches in China. (The good news, such as may be, is that U.S. airlines have not had – and actually would not be in line to have – a major role in China’s international access.)

Furthermore, there are stories that the CCP has an army of wu maos – people paid to file comments in channels such as Facebook and Linkedin supporting the regime. It’s common in China where people are paid half a yuan (five tenths or “fifty cents”) to post bogus negative comments.

The whole process is based on trying to create the fantasy that China is really the hero in this whole mess.

To that end, this week there is an Intelligence update at BoydGroupChina that relates to the fantasy that China’s air transportation system is coming back and is an example for the U.S.

Click here to take a look.

Before We Start This Week…

CCP-COVID Damage Estimates

It is now clear that the U.S. government, as well as those in Australia, Germany and the U.K., will be taking off the gloves and going after the CCP in China to recover losses from that organization’s total coverup of the Wuhan-originated virus.

The CCP – Chinese Communist Party – is essentially the un-elected government of China. And, globally, there are lots of assets that are connected to the CCP. They are now in the cross hairs of governments across the world.

At some point, and in some manner, there will likely be some mechanisms for public entities, such as airports, to pursue damages.

We are assisting airports in determining the traffic hits due to the CCP-COVID pandemic. It is important that when the time comes, airports also have a clear and defensible estimate of the financial hit this has caused, and be able to – through whatever systems are established – file for recompense.

Give us a call or email and we can discuss.

For more insight and intelligence on the evolving CCP-COVID scandal, check out the Intelligence tab at BoydGroupChina.com.

Unlike other information “sources” on China, we don’t have the intellectual constraints of an office in that country. A lot of these “sources” have to walk a careful line to assure their staff and businesses in China are not “affected” by government actions, should they say something not in line with the CCP.  Click here to explore.

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Future Factors To Consider…

The COVID pandemic has changed everything.

Air travel economics, airline strategies, airport facility needs, consumer trends, new multi-mission airliners – everything in air transportation will have a new playbook. And from the wreckage brought by the CCP-COVID epidemic there will be new opportunities.

The old assumptions and planning metrics no longer apply.

Fleets. Move to the middle. It will be multi-mission 737MAX, A321neo and A220s that will emerge. Airlines will have different fleet mixes that will shake traditional route planning to its core. Fewer widebody airliners, a reduction in smaller 50-70 seat airliners. This will change how airlines approach route planning. Within these new strategies, the term “air service development” will be shifted to “air service retention.” It will be highest and best use of resources.

Post-September Restructuring. Standby for uncertainty. The CARES money is intended to preserve pay for airline employees through September… employees that, based on current demand, are largely redundant. It will depend on the rebound in the economy regarding what airline systems will look like after the CARES program ends. It is not beyond the realm of possibility that there will be only limited reductions in labor force. All depends on how rapidly the economy comes back.

More Regionalization. At least to some degree. All of the four main network systems have indicated that they will emerge smaller. Combined with new fleet mixes, this means concentration on fewer regional feed spokes. DOT programs such as SCASD, which is intended to preserve the past, will be even more obsolete. New airline focus: revenue concentration, not rural route expansion.

Consumer Travel Demand Patterns – Longer Not Shorter – There have been some prognostications that the new air  transportation system will give rise to more short-haul, close radius O&D air travel demand. We would submit that this is nonsense. Increasingly, air is less and less time-efficient for short-haul transportation. The coming excess of small jets will put a strain on demand for parking space in the desert, not more intra-regional flying.

International Traffic – Opportunities. By the end of 2021, alliance hub operations in the E.U.  and U.K. will be prowling for more trans-Atlantic feed. With new fleets of multi-mission narrow-body airliners, it will be secondary, non-hubsite commercial centers in the U.S. that will be in the cross-hairs of planning departments across the Pond. This was already in play before the CCP-COVID pandemic, but will gain more focus in the next 24 months.

Excess Airliners Around The Globe. Messing up the demand for new jets, basic math indicates at least 2,500 economically-viable airliners will be on ramps and in the deserts across the globe. The potential for new entrants is probably less than it would appear, but it will depend on regional economies.

A New Playbook. The conclusions are clear: pre-CCP-COVID planning and strategies are out. Airlines will be different in structure, and the consumer base will be, too.

There are a lot more factors and fallout to consider… airports will have different  facility needs. Consumer travel patterns will shift, and in some cases evaporate. Suppliers will need to adjust to the fallout caused by the changes in airline fleets. And more…

Get Prepared For the New Future… These will be just a small part of the range of new dynamics that we’ll be exploring with industry leaders at the 25th International Aviation Forecast Summit, August 23-25 in Cincinnati, USA. We will not be rehashing what has taken place – we all are aware of that. Instead, we’ll be illuminating the new future that each sector of the industry will be facing.

Click here for more information regarding the reasons industry leaders will be at the only aviation forecast event… and writing the new aviation planning playbook.

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The Coming China CCP Litigation

Airports Might Have Recourse…

But Beijing-CCP Has Lots of Buddies In The USA

Let’s be absolutely clear.

U.S. airports are in line to incur billions in financial losses this year. Seattle alone has indicated a quarter-billion loss for the rest of 2020.

The entire U.S. airport system – the most extensive in the world – is now mostly quiet terminals with an occasional empty scheduled flight and possibly some limited business and GA operations.

The fact is that the CCP-COVID pandemic has destroyed our air transportation system for the time being, and has inflicted long-term damage to airports across the USA. It is not a natural event… the proof is clear that it is the criminal malfeasance of the Chinese Government that allowed this to happen.

Every airport has indeed been a victim of the CCP-COVID pandemic, and may want to pursue whatever determinations are made by the U.S. government regarding the total culpability of the Chinese government. As this situation winds down, there will be enormous pressure to revisit the disgusting and intentional way the CCP manipulated and mishandled the virus. Rather than again go over the sordid details, you can log onto BoydGroupChina.com, and check out the Intelligence tab.

Is a Political Party The Same As A Country? In regard to getting recompense, one of the open questions appears to be whether a sovereign nation can be sued or held accountable for criminal actions and damages resulting from them.

So, the question that the legal and diplomatic entities involved in these suits will be probably considering is whether officially and technically the Chinese Communist Party – which was calling the shots – is a “sovereign nation,” or is it a political party that just happens to operate in China.

It is the de facto government of China, to be sure. But is the CCP itself the same as “China?” As a political party, they’ve been in business since the 1920s… it’s only since 1949 they’ve had a monopoly on the political gig in China.

What Really Are the Damages – Hard Defensible Numbers. We are not in the litigation business, but if you are considering any such participation, it will be imperative that you have a solid projection regarding the actual damage that the CCP-COVID pandemic has done to your airport. This is where BGI can help.

Danger of Losing China Air Traffic? Don’t Worry. It’s Vaporized, Anyway. One of the logical concerns for large U.S. airports in taking a stand is that in doing so, any chances of increased air service access to and from China would be out the door.

Whether it’s a rural airport or a huge international hubsite, rest easy. After China’s malfeasance in regard to this virus, and the deflation of its economy, passenger traffic between the two countries is essentially dead. Flat-lined. Draw a chalk line around it. The drivers of that traffic are gone.

In 2019, the total O&D between the U.S. and China was @8.2 million. In 2021 and beyond, our Airports:China forecasts indicate less than 500,000.

The heady days of the moon-shot trajectory of China-U.S. travel are over. BGI has been directly involved in researching this area over the past five years, and now the upward spikes seen year after year from 2003 to 2017 are over. The CCP-COVID situation, as well as major political shifts since the accession of Xi Jinping to the head of state, have completely torpedoed these expectations.

Therefore, any reticence to pursue paths for remediation on the basis of losing lucrative future China flights is misplaced. That damage has been done, and the open question is whether there are avenues for legal redress from the CCP for the damages inflicted by their actions.

Beijing’s First Line of Defense: Buddies In The USA With A Dog In The Fight. Take a look at a lot of what’s been reported on the CCP-COVID pandemic. Despite the overwhelming proof of the actions of the CCP, there are lots of folks in the business world, the media, the philanthropy sector, and the global consulting sector that are front and center defending Beijing.

That’s because they have interests to protect in China. Parochial interests. Any and all efforts to illuminate what the Chinese government has done will be aggressively attacked. The misinformation so far from these sectors is amazing, and it is a lead-pipe cinch that they will be Beijing’s heavy artillery on the ground in the U.S. to shortstop any attempts to hold them accountable.

Where BGI Can Help. This would include reasonable and supportable enplanement and operational forecasts – both pre-CCP-COVID and the realities of post-CCP-COVID air service… the losses in local revenue to the airport… the loss of economic impact as a result… the future loss of revenue and fallout from known or expected changes in airline strategies and fleets. And a lot more.

U.S. airports have been fundamentally damaged directly due to the CCP’s cover-up of the virus. The actual – and defensible – data will be eye-opening.

A complete airport CCP-COVID economic impact report can be a valuable tool in keeping communities aware that this situation is for the time being structural.

Also, there will be a lot more class-action efforts aimed at China, and having hard numbers would be an asset should an airport or community would decide to participate.

At the least, the community needs to understand that this financial hit is not going to get fixed in the near term.

In this regard, give us a call or email and we can discuss putting the numbers together to assure that your community is fully aware of the future.

More Information: We will be expanding on this and posting on the Intelligence tab at www.BoydGroupChina.com. Log on and take a look… it is a source of unvarnished information on the aviation-related effects of the CCP-COVID pandemic.

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