Before We Start With This Week’s Insight –

The latest Aviation Unscripted video is now on line. This edition is a Vox Deorum airport planning discussion with Lawrence Krauter, CEO of Spokane International Airport.

We cover the hot buttons…

– How traditional passenger forecast methodologies are now completely obsolete.

– Why traditional air service development “market studies” and “leakage analyses” are based on metrics that no longer apply to the new air transportation system.

– Geographic and demographic changes are taking place in regard to air traffic demand. Past O&D data are not reflective of the future.

– How programs such as EAS and the Small Community Air Service Development grant program are focused on recreating the past, instead of building for the future.

– The need to implement programs to encourage economic growth at small airports, instead of just trying to attract air service that generally is consumer-obsolescent.

– The enormous opportunities open to small and rural airports in both economic recruitment and the expansion of rapid-delivery logistics.

Larry Krauter and Mike Boyd tackle issues that need to be openly put on the future planning table – issues that often run counter to traditional thinking.

Click here & take the time for this nonstop dive into areas that need to be explored but are usually drowned out by consensus thinking.

And Later This Week…

The latest Boyd-Swelbar Unvarnished video will come on line – and as usual we take no prisoners.

We’re talking about the changes in airline strategies… whether the recession will really affect air traffic demand… where we see changes in consumer patterns… and a lot of other incisive and iconoclastic assaults on the status-quo.

Ready this Thursday… Check out our channel.

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Airline Customer Service Shortfalls:
The DOT Camel Just Stuck His Nose In The Tent

In any situation, it’s a leadpipe cinch that whenever politicians get involved, it’s not good for business or the customer.

In the airline industry, it is management’s responsibility to assure that what the customer experiences does not set off a nationwide jihad. Otherwise, everybody loses with the injection of usually irresponsible trendy and woke nonsense from the appointees in Washington.

In the past week, there was yet another milestone in the evolving post-CCP-pandemic airline industry.

The DOT issued a Notice of Proposed Rule Making that, shock! shock! largely makes solid sense. The shame is that the airline industry should not have let things get to that point.

Abusing The Situation. The flying public, by the nature of air transportation, is essentially and literally trapped. They have to follow rules for safety. They also have to follow the airline’s specific customer service rules. It’s a delicate line to walk between assuring safety and not making passengers feel that they’ve just entered a minimum-security prison.

Unfortunately, customer service policies have degenerated from making the air travel experience easier and more comfortable to instead assuring that revenues are maximized. Fare rules, fees, adding confusing no-frills fares, etc.

Customers don’t have much recourse, and the result can be demands for outside intervention. And when it’s intervention from the DOT, that’s not good. But it’s really not good when what the DOT is suggesting are things that are reasonable and which the industry has failed to address.

Post-CCP-Covid: Brilliant Operational Planning. Customer Relations, A Lot Less So. The events over the past two years have done just that. It is clear that the airline industry has been brilliant and innovative in getting through the worst crisis since Wilbur & Orville. But at the same time, they failed to aggressively adjust customer service policies and procedures to accommodate the chaos and confusion naturally attendant to what the pandemic did to the business.

Complaints up wildly. News stories of klutzy airline responses to service failures. The expected life forms in congress and at “consumer” organizations calling for regulation and revenge and other poorly-researched but very trendy solutions.

So, now the DOT has issued a 70+ page NPRM covering a wide range of fallout from the past months of airport chaos, cancellations, delays and other fun things. The main impetus has been how airlines have handled consumers due to the changes wrought by reaction and regulatory responses due to the gift that keeps on giving, the CCP-induced Wuhan pandemic.

Post Covid Refunds: Like Arguing Over The Bar Bill On The Hindenburg. As the travel market collapsed in early 2020, there was a massive Martian fire drill because of confused determinations regarding “voluntary” passenger booking cancellations due to fear of infection v those that were the result of plunging traffic and airline-determined flight cancellations.

It was not the airline industry’s proudest period. We were in a near-panic epidemic, and when consumers were afraid to travel, that was not the time to whip out and lecture them on the Contract of Carriage. But that’s what pretty much happened in too many cases.

Stories abounded regarding real, imagined and – indeed – concocted decision outrages by airlines in regard to refunds. In the midst of a near-total shutdown of the air transportation system, there were far too many media stories of consumers getting the “gotcha” treatment, with some airlines splitting hairs between whether the refund was due or not, when flight schedules were being slashed – often at the last minute – to almost nothing, anyway.

Now fast forward to the last six months. The pilot shortage and other factors have resulted in cancellations, both well in advance of flight date, and also right up to post-boarding. This led to the traditional voucher offer – where instead of cash refunds due to failure to operate, the grand alternative was giving the affected consumer the promise of the value to be applied to a future flight. Oh, yeah, and a lot of them had expiration dates. This was in place before the CCP-pandemic. But this time it was on a huge scale.

Now this gets to the core of an airline business policy that was, frankly, pretty huckster long before the pandemic. And that is the implied determination by airlines that a booking to a destination is the consumer’s contractual obligation to go there. Period. Whenever.

So, if there was a snowstorm, a blizzard, an attack by Klingons or other reason they airline couldn’t deliver the flight on the date promised, they still would graciously allow the consumer to use the transportation later… but an actual refund wasn’t usually part of the discussion. You booked it, pal. You gotta go or lose the dough.

This is flat out abominable. People book air travel to get to someplace usually for a date-certain event. When the airline can’t deliver the transportation reasonably within the timeframes booked, that cruise ship connection still sailed from Fort Lauderdale, the wedding still took place, the crocodile tears shed at not-so-missed Aunt Verna’s funeral are done with, and the business meeting was held and now over.

So, if it’s due to the airline’s inability to deliver transportation generally as promised, the situation is what lawyers might define as a “change of consideration.” What was promised was not delivered. Something else is offered in its place that does not represent what the consumer paid for.

But instead of making the option of a refund clear, the industry has generally tried to simply offer to let the consumer go some other time, or maybe get a voucher for a future flight.

This is not a situation that makes the public all warm and fuzzy about air travel or the companies that provide it.

Confusing & Sometimes Arbitrary Rules Administered By Non-Employees. Toss in another fun factor. Increasingly, the customer/airline interface on the ground is increasingly a customer/low-bid vender interface. So, the person dealing with the confused, concerned or apoplectic customer at that ticket counter might not even work for the airline.

They may be fine folks, but at the end of the day, they have no skin in the game if that ticked-off family of four ever flies the airline again. They can’t have pride in a product they have no interest in. In most cases, their “career” working there ends when the vendor’s contract come up for bid in two years.

The Camel’s Nose Is In The Tent. And He’s Planning To Set Up Housekeeping. This has gotten out of control to the point that Buttigieg and the DOT are getting involved.

The new NPRM is pretty clear about the voucher thing. It’s a cash refund unless the customer wants a voucher instead.

But that regulatory snout gets in further. If the flight is delayed more than three hours, consumers can demand a refund. If the aircraft is downgraded to one that has less amenities (however that may be defined), the consumer has recourse. There are a bunch of other rules, most of which are attached to pleas in the NPRM that folks will help the DOT define what they are.

The Inmates In Airline Alcatraz Are Still Unhappy. It is noted that several airlines have now moved to address the situation. But the issue is settled… the DOT is going to be a lot more involved.

Nature abhors a vacuum. The one left by airline customer service policies has just been filled.

The ball is in the airline industry’s court. Make air trave

Let’s Start With A Challenge To Consensus Thinking

The Guide To The New Air Service Access Realities
Discarding Obsolete Approaches

Air service dynamics were completely evolving even before the arrival of the current recession. A lot of air service assumptions made no sense in the past, and even less today.

The new economics and new role of air service demand completely new thinking. Airline strategies and fleets are changing. Consumer demands are changing. The value and utility of air transportation have changed.

Stop Working With Obsolete Metrics. Providing airlines with traditional “leakage studies” or geographical catchment area analyses are like sending new sheet music to the orchestra on the Titanic.

Boyd Group International is now offering a brief overview of the new realities that communities need to address to assure access to and from the rest of the world.

The Guide is short and direct, but it pulls no punches in demolishing a number of accepted methodologies and assumptions traditionally used in air service development programs.

Take a look at the future. Click here and request your complimentary copy. Then, let’s talk about programs to break into the new air transportation future.

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Of Course, There’s No Recession. It’s Just A “Transition.”
Oops. Air Consumers Didn’t Get The Memo

In the latest Aviation Unscripted video, we commit heresy.

We’re calling the current economy for what it really is. A recession.

We just covered this in our latest Aviation Unscripted video. In eight short minutes, we demolish the drivel coming from the hacks inside the beltway who are telling us that all is well.

Click here, or at the bottom of this Insight, to take a look at reality.

There’s Certain Evidence. Last week, Frontier indicated it was dropping more than 43 routes from its fall schedule. (We say “more” because we were informed by our friend Anthony Gilmer that Louisville was also a victim, but SDF was not reported in the media stories, apparently.)

Most of the markets were dependent on price-induced impulse Florida traffic. That would indicate booking levels are not percolating for the 4^th quarter. That would indicate there is less and less “impulse.”

Now American Airlines has announced major cutbacks in service, including at its Philadelphia hub. The red flag is that this was not entirely attributed to lack of pilots, but also to adjust capacity to demand. Gee, that would mean less demand.

This is not a “transition” – which is what the life forms in Washington are telling us. For the airline industry it’s a transition into less demand. Let’s take a look:

It’s just that consumers aren’t planning on spending as much on air travel. It’s just that major companies are cutting staff. It’s just that roaring inflation is continuing to eat up discretionary dollars.

What Happens At Heathrow Affects Omaha & Spokane, Too. Going into the 4^th quarter, it now is near-certain that more capacity will be coming out of the schedules. While the first hit will be in fare-stimulated impulse ULCC markets watch for additional pull-backs in business demand, and – surprise – even in trans-Atlantic demand.

Heathrow is now a non-hub, with British Airways yanking down significant short-haul flying. That will affect AA and oneworld carriers who connect traffic over that airport. Amsterdam is limiting passenger volume as well, which will zap a lot of connecting SkyTeam traffic. This means the international feed traffic that the domestic AA system fed to its DFW-trans-Atlantic flights will shrink materially. Ditto for the feed traffic to the DL hubsites at Detroit and Atlanta.

By the way, the chaos at airports such as LHR and AMS are not primarily due to the supposed explosion of demand that the media conveniently sites. The reality is that these airports in the post CCP-Covid period don’t have staff to ground handle flights.

Possible: A Downward Traffic Spiral. Major enplanement declines in the 4^th quarter. At the start of 2022, BGI’s Airports:USA® forecasts indicated nearly 700 million enplanements at US airports. That has continually slipped due to airline capacity cuts and now due to economic “transition” issues. We are now predicting 615 million.

And no, that is a long way from 2019, before the CCP thugs in China foisted the pandemic on the world. In that year, there were 983 million enplanements.

The entire underpinning of air service demand drivers has changed. This means traditional pre-CCP-Covid forecast methodologies are obsolete. Airports need to re-assess the future based on the new dynamics of air transportation. And the new dynamics of air transportation as a communications channel.

Get Ahead of The Future. In the next 90 days, we are going to see some major shifts in airline route and market strategies. As always, if your community is interested in a truly comprehensive  airport traffic and access strategy, click here and we’ll look forward to exploring together.

To take an 8 minute view of how the recession will affect air traffic, click here for the latest Aviation Unscripted video.

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The New Role of International Traffic –

Affecting Airports Across USA In 2023

We need not touch too much on the fallout of EU airports as they evolve into competition with Ringling Brothers.

Key connect points like Heathrow and Amsterdam have become three-ring circuses. ‘Cept instead of trained bears and performing elephants, they’re making the audience – passengers – the main attraction.

The assumption in the media seems to be that it’s all due to a crush of passengers. A crush there is, but the real reason is that a number of airports are simply under-staffed and poorly-managed.

A Ouija Board isn’t required to divine the fallout this has on trans-Atlantic traffic flows. What a life experience it might be for the family of four stuck, in a crowd at LHR, with their flight to Rome cancelled and their checked luggage dispersed across Europe like post-war Care packages. Truly character-building for the kids.

The trans-Atlantic boom has become the trans-Atlantic Gong Show.

But that’s not the only place where the traditional contribution of international travel will fall short.

For those on our weekly Touch & Go™ newsletter distribution, we’ve recently outlined the fact that USA airports since 2018 have seen a decline of approximately 8 million annual O&D passengers in one international travel segment alone.

Poof. Gone. Not coming back. Not just a declining travel sector – a vaporized travel sector.

It’s the USA-China market. Here’s a tidbit, according to data from our friends at Cirium, today, the second largest (albeit very shaky) global economy now has less that one fifth of the nonstop traffic from the US than does Turkey.  Actually just over 16%.

As we noted in the T&G, China leisure visitation accounted for over 6 million of the 8 million O&D in 2018… that’s around 3 million tourists. And they were not shrinking violets after they got through customs. Based on Airports:China™ research, the total “spend” was over $15 billion dollars. Tour companies took these folks to points all across the nation. Not anymore. We touched on examples of places that are being materially affected by this change.

There are a lot of dynamics in play here. The politically-trendy dodge is the supposed “trade” war between the two countries. The real reasons are internal political shifts in China, like, faltering Chinese economy, billions caught in Ponzi-like real estate scams, a run on the banks, the CCP-created and continuing Covid pandemic, and – trade war or not – the hard fact that the CCP is now actually restricting all foreign travel. Outside of the flashy skyline of Shanghai’s Pudong, the place is a house of cards.

There’s more than the tourist component. The chaos in the business sector is indicative of a wider challenge well beyond just seats occupied on trans-Pacific airliners. The message here is that the once-robust Chinese investment in the USA is dead. Gone. No more.

It also points to the need for looking at the fallout due to potential changes in US regions where there has already been strong investment from companies in the Middle Kingdom. Where these head will make economic waves that can and will affect disposable and business spending on air travel.

Regardless of other issues, the Chinese economy is heading south. That means Chinese companies are heading that way, too.

The deterioration of diplomatic relations also puts in question the future direction and status of the economies of US regions with high dependence on Chinese-owned businesses. If the mother country is in economic decline, and the government is in policy-confusion, that probably will have an effect on the future of Chinese owned companies already established in the USA, too.

Remember, every Chinese company – every one – involves the heavy hand of the CCP, the mafia that runs the country. As they make decisions regarding the relationship with the US, it can and will affect the direction of China-owned companies operating here.

There are obvious examples. Raleigh-Durham comes to mind, with the extensive presence of Lenovo. So does Louisville, where the former General Electric appliance factories are actually owned by Haier of China, and the brand “GE” is being used for an agreed pro-tem period of time.

But there are many others. Locations where, say, Smithfield Foods (owned by China) has processing facilities. There are auto parts factories in Michigan owned by CCP-controlled firms. There are dozens of such examples.

How these communities will be affected is not clear, and will depend on a range of factors. But they will be affected, and that will shift the direction of long-term traffic demand patterns, both domestically and internationally.

Summary: The point is this. The role of international travel demand within airport and aviation planning is changing. Pre-pandemic, international demand generated – directly and indirectly – almost 32% of enplanements at US airports. Naturally, that affected JFK and SFO a lot more than MBS or GEG. But it was a factor.

It still is… except Airports:USA® forecasts indicate this percentage will be closer to 20% in the immediate years ahead. The situation in the EU is likely shifting leisure attention to Hawaii, Mexico and other more stable destinations. China is now a hermit kingdom. Other points in Asia are not in line to replace this lost traffic.

Add In New Fleets, And Travel Patterns Will Change Even More.  BGI has often pointed out that new-generation airliners such as the A220-300 and the A321XLR will open new international (mostly trans-Atlantic and LatAm) markets at large, non-hubsite secondary US airports.  Albany, Grand Rapids, Richmond and at least half a dozen more airports will be in the crosshairs of EU carriers seeking to expand their hub operations on the Continent. Assuming there is airport capacity.

Put that into the research mix, and the name of the future airport planning game is to be completely outside the traditional planning box.

The conclusion is that all air service planning should discount the past and make assumptions about the new future – domestically and internationally.

It’s still a global economy. It’s just a very different globe.

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By the way, if you’re interested in joining the aviation professionals who receive our Touch & Go Newsletter at the end of each week, just click here.

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Subsidy Dollars For Leisure Passengers?
The EAS Program Is A Nightmare For Everybody – DOT Included

It Doesn’t Connect To The Air Transportation System.
It Only Serves A Small Part of The Consumer Base, Mostly Impulse/Leisure Passengers.
It Does Little To Make The Community More Business-Attractive.
It Appears To Offer Only A Few Flights A Week.

Yup. But it’s going to be providing EAS service at Eau Claire.

There seems to be a lot of legitimate scrutiny about Sun Country – a leisure-destination ULCC – being awarded over $6 million in Essential Air Service dollars at Eau Claire to provide mostly vacation/leisure flights to a couple of Florida destinations.

Just to cut to the chase… Ray Charles could see the problems with the DOT’s decision.

• The Sun Country service does not meet the air access needs of Eau Claire. It’s just a few flights a week to leisure/impulse destinations, and two flights a week – count them, two – to MSP where there might be limited connectivity to a few SY destinations. But that’s it.
• The Sun Country service, being ULCC in nature, will draw ridership from other small communities. That was not the intent of the EAS program.
• The Sun Country service will not enhance Eau Claire as a business investment site.

The DOT Is Stuck In The Middle. It’s obvious as a gorilla in a china shop, that this situation really doesn’t fit the intended EAS objectives.

But the fact is that the Department of Transportation really doesn’t have a lot of options. Most applicants are small carriers that are in the “EAS business,” and some of the proposals don’t make a lot of sense. In the scramble to replace SkyWest/UA, a couple of communities recently only got applications for single-engine service, when the requirements are for multi-engine. So, the community rejected them, asking the DOT to get alternative applications.

Unfortunately, the folks at the DOT aren’t magicians. They really don’t have the ability to gin up EAS operator-applicants that aren’t there. They have to take what comes in from interested applicants – and these operators are getting fewer and fewer.

So, they get the Sun Country proposal for EAU to provide leisure-focused jet service to a few destinations in Florida, and two weekly flights to MSP.

With that, the DOT is faced with the decision to potentially give the award to another small-aircraft operator with fleets that are less than what consumers at EAU really want. (Assuming there is one that meets requirements.)

Or, there is this 737-800 ULCC operator that logically will generate hundreds of enplanements weekly. Not business enplanements, to be sure. And not service that is connective to the total air transportation system. But it will put a lot of people through that airport.

DOT knows that most of the usual-suspect small-airliner applicants don’t have the market horsepower to really make EAU fully connective, anyway. And, again, most operate aircraft that consumers don’t easily cotton to.

At the end of the day, the Sun Country application is a lot less policy-disruptive and a lot more capable of attracting passengers (albeit leisure passengers) than other applications.

At the least Sun Country is likely to generate willing passengers. No, this service in no way is essential to the business base of the region, but it’s a much better use of the funds than the traditional and usually ineffective alternative proposals with unbranded flights to points with low connectivity, anyway.

Sun Country is playing completely by the rules. They made an application up front and professionally, and the DOT knows full well of what they were honestly offering. The conundrum facing the DOT likely was that the other applications weren’t going to generate much more than fueling revenue for the EAU FBO.

This is a tough conclusion, but it is a fact. If not awarded to SY, the alternatives are placebo flights that won’t attract enough passengers to fill a Ford Econo-Van.

Actually, Beneficial For Other Communities In The Region. But Not In Delivering Air Access. Also, the concept that these SY flights will “divert” passengers from other airports in the region is not necessarily valid. Remember, the SY flights will be mostly to a couple of impulse-generated leisure destinations. That means it will, as with most ULCC service, draw traffic from a wide region. But most will not be core demand. And almost none will be business travel.

No More Uncertainty. EAS Needs To Be Rebuilt. Or Scrapped. Bottom line: The Sun Country award is actually a positive event. In a very real sense, this Sun Country situation is very positive in that it illuminates the need to re-think the entire program.

The main benefit is that it clearly illuminates the obsolescence of the current EAS program. On one hand it is no longer effective. On the other, the range of applicants that the DOT can consider is getting pretty thin.

Again, to assure we understand the nature of this service: It won’t make EAU more attractive to business. It won’t do a whole lot to connect the community to the air transportation system.

But that’s a description of the entire EAS program as it stands today, not just at Eau Claire. The DOT is stuck trying to administer a program that is 30 years out of date and addresses an air transportation system that’s been gone at least that long.

All that notwithstanding, will probably generate a whole lot more PFCs at EAU than any of the alternative applications. Leisure segment consumers will benefit with a spend option not there now, and the airline will be making money.

And maybe, just maybe, this could be the signal to rework the entire EAS program.

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Final Comment for The Week

To read the media stories, the airline pilot shortage is causing all sorts of mayhem.

Small communities losing flights. The stories of dire hardships are recounted, often without much accuracy

Here’s a point: there is a pilot shortage causing this situation at smaller airports. But it’s a specific type of shortage, one that phalanxes of new pilots won’t fix.

This slide sums it up factually…

This is just one part of the latest Boyd-Swelbar Unvarnished video, which dives into a number of today’s most controversial aviation issues.

It’s 26 minutes of insight, perspectives and exploration that you won’t find anywhere else. If you haven’t logged on yet, click here and join us.

And be sure to let us know your thoughts by going to the comments, or just send an email.

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Newsflash For Small Communities:
It’s A Growing Shortage of Airplanes, Not Pilots

What If We Had An Airline System And No Airplanes Showed Up?

It’s a play on an old line used in 1960s anti-Vietnam tomes.

But it’s fully appropriate in regard to the future of a lot of small community air service. New airplanes are not coming to the smaller capacity segment of the US airline system, and those now in service are being retired.

This plays directly to the need for shifts in future planning at many small airports.

The emerging reality is simple: you can’t recruit air service if there aren’t any airplanes that fit the market.

Disappearing Fleets of 50-Seaters. The fact is that the specific airplanes in major airline fleets that once – but no longer – had the economics to provide national and global connectivity for small community airports are disappearing.

Going away. Retiring. Sunning themselves in the desert. Recycling into Bud Light displays at the local supermarket.

Paying To Recreate The Past Won’t Bring It Back. Here’s a fact that tosses a monkey wrench into a lot of the supposed “marketing programs” that small communities get hornswoggled into commissioning with the goal of attracting “more flights” or “more airlines” …  the entire category of under 100 seat airliners is declining.

That means a lot of these expensive consultant studies may as well be looking to recruit service operated with sky hooks, Ford Trimotors and Zeppelins while they’re at it.

Pilots Or Not. The Problem Is Not In The Cockpit. There are around 425 50-seat jets still “active” in US network airline fleets. As has been seen at Texarkana, Flagstaff, Toledo and other places, they are being pulled out of fleets. American has indicated they are sidelining between 100 and 150 of these aircraft.

No, regardless of stories to the contrary, it’s lack of not pilots, per se, that’s driving these decisions. It’s the deteriorating economics of these flying machines. Airlines can’t spend expensive resources – of which pilot time is just one, on flying that loses money. Additional pilots won’t bring those routes back to life.

One Glance At The Evolving Cost Factors, And It’s Obvious. Let’s talk general cost factors.

In 1995, these 50-seat CRJs and ERJs gobbled jet fuel, adjusted for inflation, that cost 85 cents a gallon. Today the average of go juice is between $3.80 and $4.80. Like, almost five times higher.

Then there’s the natural escalation of maintenance costs. Form-41 data can be a wallow in trying to compare different metrics at different operators, but suffice it to say these airliners are experiencing the additional costs – including upgrades and occasional ADs (airworthiness directives) that come with aging.

Remember, on average the airplanes in the US 50-seat fleet are old enough to cast an absentee ballot in Wisconsin.

Let’s talk the revenue side. Average air fares since 1995 have gone up. But adjusted for inflation, they are up less than 40%. Admittedly, it’s shaky to use anything regarding “average air fares” – but apparently, take total air fare spend and dividing it by passengers, and we have a telling metric at least in regard to the revenue situation for airlines.

This does not take a Cray computer and an advanced degree in fractal geometry from MIT to figure this one out.

Darwinian Theory Is In Play. This is consistent with airline economic evolution of the last 30 years. Like the robust fleets of Metro-IIIs, Beech-1900s, S-340s, EMB-120s, J-31s, and Casa-212s that once flew around sporting major airline liveries, the viability of these 50-seaters is evaporating. Evaporating right along with the potential of the hopes of small communities being led down the airborne Primrose Path, paying for “studies” to find airliners that increasingly no longer exist.

The Airliner Cavalry Isn’t Coming. So, what about 65-seat through 76 seat airliners? Here’s another downpour on the ASD parade. There are no more of these coming, either. There are no material new orders or deliveries for <100 seat airliners in the USA airline system. (Depending on airline configuration, the new A220-100 might skirt that number – but these are mainline airliners, with mission capabilities that have little in common with E-175s and CRJ-900s.)

That means to have any snowball’s chance of success, small airport recruitment efforts must convince an airline to shift aircraft from another market.

A tough sell, particularly at communities where the majority of the locally-generated traffic is already using other airports. Or, where there simply wasn’t enough revenue to make a 50-seater work. Regardless of the size of the study and the brilliance of the compelling data provided, airline route planners don’t like taking chances.

Point: The raw costs of providing flights at local airports at small communities are eclipsing the revenue the local market can generate. That will not change, civic hubris notwithstanding.

Communities Should Be Appraised of The Truth. Small communities can commission all the “leakage studies” and “true market analyses” the local budget can pay for, and they still won’t fix the core issue, which is that increasingly, there won’t be airliners that can do the job.

Message To Media. Learn The Basics of Airline Dynamics Before Opining On Them. It is a complete falsehood to assume that small airports and their communities are on economic Death Row without scheduled air service at the local airport. Yet that’s way too often the basis of a lot of reporting on the subject.

Without going too deep into it, there recently was an incredibly ignorant article from some third-tier newspaper declaring the plight of “flyover cities” and the despair they face without having flights at the local airport. Got a lot of coverage, despite the fact that it was garbage.

The truth is that in most such cases, the consumer base has already skedaddled into using better alternative air service options. At Toledo, for example, their own studies indicated over 90% of local consumers used much more time-effective and nonstop-convenient service at Detroit, less than an hour away. In that regard, Toledo has great air access, which cannot be matched in any case at the local aerodrome.

Invest 14 Minutes & Get A Futurist Perspective. But ignoring the Cassandras in the media, there are economic and demographic forces emerging across the USA that play well for the future for small and rural communities and their local airports, no matter whether they have commercial flights or not.

This past week, BGI’s Aviation Unscripted video series covered this topic. We go into how inflation, poor energy policy, and changing consumer spend patterns will affect traffic at specific airports and the corollary aviation-related businesses they can support.

As a key part of this, we also discuss how these factors are creating economic expansion opportunities for small communities across the nation.

Hint: certain states are working very hard to make doing business as difficult as possible. This opens opportunities for airports and communities in other parts of the nation.

Instead of spending tens of thousands on futile air service recruitment programs, there are better opportunities recruiting aviation-related firms languishing under dimbulb taxes and regulations in, say, Southern California. Or in Oregon or other like-minded progressive states.

Examples only. There are lots of potential job-creating targets of opportunity for small communities that focus on their advantages in regard to business environment and quality of life.  Developing targeted programs to attract such businesses should be a priority.

The economic impact will be far greater than the distant potential of getting minimal local air service most people won’t use.

Join Us – Want some hard facts? Take a 14-minute coffee break and click here to get perspectives on the future for small airports. We’d be happy to send you the presentation deck – just hit the contact button this page and let us know.

And if you’re interested in looking to develop a futurist aviation planning program, including an aggressive outreach program focused on industry opportunities, just send us and email and we can start talking.

There is a future for small communities and their local airports. It’s just a bit different from what was expected in the past.

Insight posted on Tuesday, July 5 in observance of USA Independence Day holiday.

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The Airline Service Quagmire –
Cruisin’ For A Federal Bruisin’

The levels of consumer angst regarding flight delays and cancellations have likely been blown out of proportion in the media.

But not much.

The stories are real about consumers finding out at the airport, right before departure time that their flight has been cancelled. Then comes the near-immediate follow-up message telling them that the airline has already re-booked them.

For a flight two days later, in some cases.

Lots of fun for the family of four that’s on a connecting flight, or flying from and airport where they have no alternative friends or family.

Stuck two days at an airport where they’d need to pay for their own accommodations – if there are any available. The airline will claim they have no control in these cases, and the consumer will just have to understand.

Can you say, “total nonsense” boys and girls?

But the airline is usually quite gracious, sometimes offering a complimentary 5K miles to be added to the customer’s frequent flyer account – probably less than 10% of what’s needed for a RT coach trip to any point in the USA – assuming seats are allocated for that category of traveler.

Naturally this will get the cancelled consumer just rarin’ to book in the future, just as soon as they can find space to sleep in the terminal.

Or giving out a voucher for $15 to use at an airport restaurant, which might just be enough for coffee and stale donut. Oh, yeah, and the voucher expires after today. Use it or lose it on your two-day unplanned stay in a strange airport. Airlines don’t want to overdo it, don’t ya know.

These types of airlilargesse are not “re-accommodation” – they are flat out “thanks for the business, sucker” insults. Blaming it on a pilot shortage is a dodge. They are selling a product knowing full well – or should know – of any limitations they have that could inflict this stuff on consumers.

So that family of four, or that grandma on the way home, is stranded because the airline doesn’t have the ability to service the product they sell.

The Traditional PR Will Only Make It Worse. An open letter to the public from a CEO apologizing won’t cut it – especially when it’s the core system that is the culprit. The only thing that will rectify this is a complete re-thinking of airline service delivery system.

Technology’s Great. But That Check-in Kiosk Is Clueless. The current approach and foundation of major airline service is predicated on reliance on technology, which has naturally replaced human contact. Part of this has also been the cost-saving of shifting key service areas – customer service, underwing operations, and telephone access to the airline – over to low-paid contractors.

That’s great for the bottom line. At least until the bottom falls out of the operation due to the fragility of the service system to almost any disruptive events that may occur, and literally strands passengers with limited or no recourse, let alone information.

See, that “service agent” who finally answers the phone sometimes doesn’t work for the airline and may have zero leeway in regard to waiving rules. The team loading the luggage might be at $15 an hour, with low benefits and zero career path, and might not decide to show up for work because the local Burger World suddenly has an opening. The reality is that airlines in many ways have replaced customer service with hired-in, short-term and disinterested outside labor.

Junk The Obsolete System And Rebuild – The Federal Wolf Is At The Door. Fixing this – i.e., the ability to recover from off-sched events – should be the #1 priority and that may mean complete restructuring of the concept and delivery of customer service. It may mean having more staff to support the operation – staff empowered to assist the customer, instead of being the guardian of some sacred set of rebooking rules.

The alternative is having a poorly-qualified political appointee – the Secretary of Transportation – getting involved. Plan on grand statements and promises and inflicted regulations and lots more bad press for the airline industry.

With all of the adverse news coming out regarding the swamp this administration is stumbling into, the airline industry is delivering a prime opportunity to shift media focus from inflation, recession and spiraling crime rates to stories on how the DOT is marching in to save the consumer.

The point is simple. The current and traditional underpinnings of airline customer service are collapsing. It will require more that adding pilots or other staff.

It’s the system they work in that’s broken.

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A380s At American? 

Our colleague Jamie Baker has reported that rates for A380s are included in the latest AA/APA negotiations. Other than setting loose a flood of panting fantasy postings from the Walter Mittys who hang out on airline chat boards, it’s pretty unlikely that this means much.

A380s simply don’t have the mission flexibility for American to spend the millions to put on their certificate any of the used ones sitting idle around the world. This entry on the TA was likely a position-holder for the distant possibility of a next-generation widebody. A very distant possibility.

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SCASD Program In Need of Complete Overhaul.

BGI has been one of the most successful – possibly the most successful – consultant in crafting winning applications under the Small Community Air Service Development Grant program. About $24 million. We won the second largest SCASD grant in the program’s history. There are several airports that today have service as a result of our SCASD work.

But that was essentially long, long ago in an airline galaxy that no longer exists.

In the past four years, we have accepted very few SCASD projects – mainly because changes in the air transportation system and consumer patterns have made the program much less effective.

Actually, today it’s almost completely ineffective in assisting small airports in attracting viable air service.

Assuming Fleets & Airlines Not in Existence. United has announced they are dropping Texarkana-IAH at the end of the summer. The service was attracted on the basis of a Small Community Air Service Development Grant, even at a time when United was dropping other regional markets, including Killeen-IAH.

United gave it a shot, to their credit. But with the increasing costs of 50-seat jets, including the fact that current administration policies that guarantee continuing jumps in the price of jet-A, the potential for this program engendering truly small community service is up there with sky hooks and magic carpet travel.

Complete Ignorance of Today’s Airline and Consumer Economics. The entire premises on which the SCASD program is based are now essentially bogus. It misleads the public by the contention that small communities need scheduled flights at the local airport, with no understanding of the issue of consumer preferences and alternatives.

It assumes that there are lots of airlines that can be enticed into these small airports, thereby lowering fares and increasing local ridership.  That may be the case on other planets, but not here on Earth.

The program can “lower fares,” according to the DOT’s description of SCASD. That’s when a small airport is experiencing ticket prices higher than the “national average”. That is another concept that’s in complete ignorance of air transportation realities. There is no valid metric such as this. Air travel is not like a watermelon or a gallon of unleaded – it is different in product and scope and value at every airport. The DOT is clueless on this.

Yet year after year communities are hornswoggled into paying for SCASD applications that even if granted won’t do diddly. But it’s a huge market for Pied-Piper consultants that tend to forget advising airports of the low potential for this program to bring home anything other a nice-looking application.

The Future: Economic Development Instead of Air Service Pipe Dreams.  As we indicted in the Third Rail study on regional air service recently accomplished with Swelbar-Zhong Consulting, the DOT should make the goal focused on economic development and job creation at small airports, not pie-in-the-sky attempts to assume the airline system and the business base of 1980 is still in existence.

Look! Up In The Sky! It’s A Bird! It’s A Plane! But It Sure Isn’t A 50-Seat Jet. With 50-seat jets in now in the crosshairs of high fuel prices, increasing labor costs and expenses due to aging fleets, more than ever the SCASD program is evolving into a boondoggle eagerly inflicted on unsuspecting small communities.

Texarkana is just the latest – there will be more. There still are some uses of the SCASD program, but they are very few in regard to success potential, especially with fleet changes at network airline systems.

The future for small airports is in economic development, not trying to get service that won’t work in an airline environment that has completely changed in the last five years.

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Before We Start This Week…

Clear Your Calendar For This Friday, July 1

Time for some clear, direct and politically-incorrect discussion of today’s air service chaos.

This Friday, July 1, we’re posting the next Vox Deorum discussion on our Aviation Unscripted™ video channel. This is where we bring in an industry expert to explore heavy aviation issues.

This week were doing a no-holds-barred discussion with our friend Kathryn Creedy, editor in chief of Future Aviation/Aerospace Workforce News, and one of the nation’s most insightful experts on regional and national air service issues.

Right now, just about every problem in air travel, regardless of what it is, seems to be attributed to the pilot shortage.

Flight cancellations, delays, diversions, security lines, small community service cuts- you name it, and the news stories will categorize it as due to lack of pilots.

Wrong – there’s a lot more to it than that. This Friday, we’ll be exploring it – no holds barred – with Kathryn. We’ll be discussing verboten topics like the 1,500 hour rule and what it represents or doesn’t represent in terms of aviation policy. We’ll be cutting into the foundation of today’s airport chaos, naming names and stating facts.

So, if you’re interested in getting perspectives that relate to reality, instead of the “consensus,” log on to Aviation Unscripted™ first thing this Friday.

In the meantime, take a look at the current Aviation Unscripted video now on line– it expands on the Three Dynamics we’re discussing below, and touches on the core issues we’ll be exploring in this Friday’s Vox Deorum session. It will be posted initially on our Rumble channel at 9AM ET.

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The Three Key Emerging Air Service Dynamics

To read some of the media coverage, the air transportation industry is in a record boom situation, with hordes of passengers overwhelming airports across the country like medieval Visigoths in the process of sacking Rome.

The stories of airport chaos, cancellations, long lines and confusion are front and center, with the implication repeatedly stated in the media that record demand combined with a “pilot shortage” are the culprits.

Neither are accurate… which is the reason airport planning needs to shift into full metal jacket mode to accommodate major shifts coming in airline strategies and consumer patterns.

There are three core dynamics in play.

Dynamic #1

Traffic Levels Still Below Pre-CCP Pandemic Levels. As it stands today – and it’s likely to drop in the second half of 2022 – the nation’s airport system will handle @ 12% fewer enplanements than in 2019. Fewer, not more.

To be clear, there are some airports that are blessedly seeing higher than pre-pandemic enplanements. That’s great, but a hard look at some (not all, certainly) of these indicate that the growth is based on spikes in leisure travel capacity.

With a reported 8.5% inflation – more likely closer to 12% for key consumer items – some of these airports that are highly-dependent on leisure traffic – particularly ULCC impulse leisure consumers – should take a hard look at potential changes in revenue streams in the next 12 months.

Think about it. When some reports claim that 40% of households are using savings to pay bills, leisure traffic just might move down the priority list, ya think?

Think about it. When there is an increasing consensus that we are heading for – or are already in – a recession, spend on travel might just get red-lined out of the company budget.

The point here is that the traffic growth – be it “pent up” or “revenge” or whatever the buzzword may be – could slow materially in the coming months.

Dynamic #2

It’s About Highest & Best Use of All Resources. Not Just Pilots. Then there are the misconceptions regarding the pilot situation.

Places like Dubuque and Toledo have lost all commercial air service not because of a shortage of cockpit crews, per se. Instead, airlines are not going to apply resources – pilots, cash, fuel, ground staff, etc. – in markets that can’t any longer deliver an adequate return.

The raw economics of $4 jet-A, higher labor costs, and the fact that the local airport may not be what consumers determine to be the best air gateway option (as in the case of Toledo) have combined to make a lot of routes economic dogs, and in the process accelerate the retirement of smaller airliners – read: 50-seat jets.

Naturally, we can depend on some of the vapor-weights in the media to keep us misinformed. A really stupid article in the Washington Examiner (likely with a readership up there with paperback cookbooks) recently recounted the dire future that Toledo now faces being cut off without local air service. Loss of businesses, trapped consumers and economic devastation.

The fact that consumers have had and still have their main air gateway at Detroit – which is the main reason for AA taking a powder at Toledo – is beyond the ability of some reporters to research. Caveat reader.

Point: the airline industry has an airplane shortage. More specifically, a permanent shortage of airliners with the economics to continue to access some markets.

This means regionalization of air service access… in many cases a regionalization process that’s already established. In other cases, it will entail some political gumption for communities to craft programs that maximize consumer understanding of air access realities.

Dynamic #3

Airlines Selling Product Without Product Support. The chaos at airports is mainly driven by the inability of airlines to recover from off-schedule events.

Regardless of the reasons, the emerging image is a situation where customers are orphaned as soon as a flight cancels or a delay causes a misconnect.

As we point out in the current Aviation Unscripted video, it is not uncommon for flights to be cancelled at the last minute, with the airline (and we’re talking network carriers) grandly telling the passengers that they’ve been automatically re-booked. But on a flight two days later.

And, in light of the fact that recovery from off-sched operations can be this extensive, there is zero excuse for airlines not to be prepared to deal with customers. Hour long and longer phone waits are strictly Third World – which, unfortunately, is where some carriers’ call centers are located. (It’s cheaper, see.)

Consumers are trapped. This could lead to a much worse situation – getting the feds involved in developing new rules to “force” airlines to improve.

The usual suspects in the media would be jumping puppies at the thought. But coming from a DOT secretary with zero expertise in transportation (which was the case with most of his predecessors, by the way) any intervention would be mostly political theater.

More Insight On These Dynamics… Invest Eight Minutes For Incisive Perspectives Others Miss.

We’ve covered this on the latest Aviation Unscripted™ video. It’s direct, to the point, and delivers insight that goes beyond consensus thinking.

Among other things, we outline the four air traffic segments that are in the cross hairs of rising inflation.

Click here to join us! And while you’re there, subscribe to get updates when new Unscripted videos are posted.

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Delays & Cancellations:
Airlines Lost In Space (And O’Hare, Too)

Robot: “Warning, Will Robinson… Alien life forms are approaching…”

The stories are coming in a flood… airlines reportedly have been caught flat-footed in a huge tsunami of air traffic. Delays, cancellations, bad hair days, whatever, are sweeping airports across the nation.

The perceptions, unfortunately, are mostly reality. Stranded passengers trapped in terminals without a clue, cell phone batteries going dead as they wait on hold with the airline sometimes for hours, desperate to get some information, only to finally be answered by contract employees in a far-away country who obviously honed their English skills watching re-runs of Mr. Ed on the local TV.

Consumers Rejoice! Help Is On The Way. Or, Maybe Not. This past week, the august leader of the Department of Transportation, whose depth of experience in global transportation is essentially watching the bus system at South Bend, Indiana, has threatened to take firm action against airlines for delays and cancellations.

That oughta be great. Consumers should be thrilled – no, horrified.

It’s like expecting the cavalry to come save the day, only to find it’s an indignant Cub Scout troop on a sugar high.

If we want more chaos and costs and confusion, this guy dictating new regulations is the one that can deliver, big time. This airline situation is a perfect vehicle to show that his team is “on it,” not to mention an attempt to shift some headlines from $5 gasoline, surging inflation, and consumer confidence diving deep enough to resemble a West Virginia coal mine. Bashing airlines – especially when valid – always gets the public attention diverted.

The Ball Is In The Airlines’ Court. But if airlines don’t take action now, at warp speed, we can expect this guy to take full advantage of the opportunity. Mea Culpa advertisements and apologies aren’t going to turn the tide. The hard fact is that the airline industry has let the situation get ahead of them – out of control.

Barnum & Bailey To The Forefront, Please. If the DOT gets involved, the political circus will be even more image-damaging to the airline industry than just delays and flight cancellations.

It will start with, naturally, Kangaroo-court hearings in Congress, where carefully selected people will be flown in, to tearfully recount tragic stories of delays and service screw-ups causing enormous physical hardship and pain, with the clear implication that such takes place every day on every flight at every airport. Then chime in the Vaudeville-like soapbox photo-op responses from indignant political hacks, denouncing the nasty airlines for creating winged Gulags out of airports across the nation.

And, to top it off, they’ll drag in a few airline CEOs for camera-ready target practice.

It’ll do the trick and replace the economic-related lead-in coverage issues now on the usual suspect network outlets.

No, The Nation Is Not At Record Passenger Levels. Here’s a factoid that may rain reality on some of the breathless media coverage of the chaos at US airports… and make the airline customer service situation even less excusable: we don’t have record passenger traffic.

No question, some airports are seeing record traffic. But that’s not the story across the USA.

Current passenger traffic is not exceeding 2019 levels – as a matter of fact, nationally we are at less than 90%. Airports:USA™ forecasts predict that for the year, we’ll clock in at @87.5%.

And this assumes that growing inflation, an expected recession, spiking jet-A prices, higher airline labor costs and rising fares don’t toss a few monkey wrenches into the program. So, the 87.5% is predicated on air travel demand not doing a one-and-a-half gainer into the deep end in the fourth quarter.

Nevertheless, The Service Problems Are Real… How Come? So, if overall we have less traffic than before the arrival of the CCP-Covid pandemic, how come all the media articles portraying crowded meltdowns in air travel? Simple. The fact is that these stories generally are accurate in description, if not the reasons reported.

Airlines – No Second-Strike Service Capabilities. Service breakdowns have been part of the system ever since Orville lost Wilbur’s luggage on the first flight in 1903.

But today, what’s clear is that airlines can’t respond as quickly to service failures… can’t recover when things go down the operational ceramic fixture.

A couple of fundamental factors in today’s airline operations are at the core of this situation.

* Staffing. Today, there isn’t a lot of manpower or even technical reserve capability at airlines when a thunderstorm hits ORD and proceeds to divert inbound airliners across the Midwest. Or when a day-of-week flight departure at San Juan has a maintenance cancellation. The back-up resources apparently just are not there to always effect a fast service recovery.

It’s sort of like Ford selling new cars, but without adequate service departments. When something goes on the fritz, there’s a wait for the fix.

Then there’s ground handling. Let’s face it, these jobs are not what they were 20 years ago. A huge part of under-wing work now is with contractors, not folks working for the airline itself with a reasonable level of compensation and benefits. Even passenger-facing customer service is often with such contractors. The long-term career potential is only until the contract is re-bid.

So, if there’s a challenge in regard to attracting dedicated workers, it shows up when the system goes “flifo” (a term for those once at American.) There isn’t a lot of job “ownership” from the $18 an hour agent for which the job is just temporary. It is a service issue.

Point: selling transportation is without being able to adequately service it is bad business and is an invitation for that former mayor of SBN to get involved. Airlines have the responsibility to their shareholders and their passengers to avoid this at all costs. The DOT is clueless and political.

* Dump The Rules & Allow Discretion. Slamming airline booking, fare and other rules down passengers’ throats tends to be the norm, even when operations go south. Not only do customers often have difficulty reaching an airline-related human being on the phone, too often that creature they do connect with is company rule bound, and perhaps a contract person that has zero discretion, and even less concern about the airline itself.

Add to that, under off-sched operations, these people – whether contractors or airline employees – have been under fire for hours. Not a good combination. The customer stuck at LGA is too often told about the restrictions and sacred rules, and not about how the immediate problem can be addressed.

* Partial Solution: Let Them Get Away With A Broken Fare Or Booking Rule. Now, anybody who has worked in direct customer contact, in person or on the phone, knows that occasionally customers make unreasonable demands, can be incredibly obnoxious, and sometimes aren’t even honest. These are not the majority, but these few tend to put customer service people on the defensive. “Don’t let them get away with anything! These are our rules!”

In all cases, but especially in off-schedule operations, the objective is to get the customer out of your face – on the way to the destination. If that means waving a fare-change rule or an add-collect in the case of a service melt-down, that is the foundation of good service. The airline won’t be on the courthouse steps filing “chapter” because a carry-on charge was waived.

Airlines Are The Solution. Now, this is not to imply that airlines are sitting on their hands. A number of carriers have implanted aggressive and innovative systems to address foreseen and expected off-schedule events.

But the question remains regarding handling consumers in transit when these things take place. The control of the message today is with the gadflies and media lightweights who use “delay” and cancellation data they don’t understand to define air service. The progress airlines have made with digital customer contact simply has not shortstopped the potential for alien life forms from the DOT to arrive at the front door.

Part of the solution in the near term is adjusting flight levels – that is in progress at every major airline. The other is to assure that the people buying tickets – the great unwashed riding in economy, in addition to the exalted Plutonium-level frequent flyers – don’t get the impression that airlines are not on their side. That’s where the solution is.

Passengers should never feel they are Lost In Airline Space. Right now, that might be the case. And some may mistakenly welcome DOT intervention.

Warning! Airline Industry…

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