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Second Quarter 2011 Fare & Travel Cost Rankings
The Real Data...

December 20, 2011. Based on where consumers are really paying the most per mile for air travel, it's not necessarily at all those connecting hubs, where an airline allegedly corners the market, runs up the Jolly Roger over ticket counter, and extorts millions from hapless consumers. The real picture - both measured by average one-way fare paid, and by cost per-mile - is very different.

We took all US markets with 2Q traffic over 25,000 and ranked the top 25 by average one-way fare, and again by ticket-prices charged on a per-mile basis.

Average One-Way Ticket

Average Cost Of Air Travel By Mile

And what about CVG, which is reportedly the most expensive in the nation? It's way down the list with an average one-way fare of $260.09, including federal fees and taxes.

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DOT Re-Issues T-100 Tables - Back To 2002
2Q 2011 O&D To Be Revised

November 18, 2011. For subscribers to Aviation DataMiner, please be advised that the DOT has completely re-issued updated T-100 tables back to 2002. The corrected information will be available by COB 18 November.

Also, the 2Q 2011 O&D is on line, but the DOT will be re-issuing it shortly to address some data issues with CO/UA and YX/F9 data. As of the current 2Q data, care is urged when reviewing any numbers with these carriers. As it stands, the early issuance will show F9 in markets where they have not had so much as a flight diversion, and YX showing as a carrier as well. DataMiner addresses these issues typically, but the mis-reporting is so widespread that the DOT will completely re-issue the quarter in the next week.

Off-Schedule Operations - By Airline Brand

October 10, 2011. Traditionally, monthly on-time performance data (more accurately described as off-schedule data, as airlines must add time to their flights to accommodate the deteriorating ATC system) is reported by certificated carrier.

This leaves the consumer in the dark, because most airline systems today, such as American, United, Delta, and US Airways, are combinations of certificated carriers. Furthermore, some certificated carriers, such as SkyWest, provide aircraft and crews to more than one airline brand. But they are required to report schedule performance independently of the airline system(s) they are flying for.

Shortly, subscribers to Aviation DataMiner will have a new analytical tool - On Time Performance (OTP) analysis that provides metrics for both the certificated carriers and the total airline brand. Here, we've taken data for the first seven months of 2011 and outlined key metrics for specific carriers. (The actual DataMiner report provides much more, including delays by category (which are subjective.)

We've also added a column showing the cancellation rate for the first seven months of 2010. The DOT Secretary's claim that his "Tarmac" rules haven't increased cancellations rings pretty hollow.

Also, note the percent of delays that are officially credited to the ATC system. These don't include delays due to aircraft that got ATC-zapped on one flight, and ran late for the rest of the day.

Key Points: Generally, about 40% of airline flights do not arrive on-schedule. There's about a 1-in-5 chance of a flight arriving more than 15 minutes beyond what the airline publishes. And, on most carriers, the ATC system is "officially" the cause of as much as a  third of all flights arriving late. Going back one, three, five, or even ten years, the percentage of flights arriving +15 minutes has not materially changed - regardless of the hype put out about great strides in ATC technology and billons tastefully wasted on programs that are late and way over budget.

This report capability is just one of the new features being rolled out shortly for subscribers of Aviation DataMiner. It is the most advanced competitive and analytical tool on the market, and is in a league well beyond any other source. For more information, and to get a free trial, give Bill Oliver a call at (303) 674-2000.

(c) 2011, Boyd Group International

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Southwest - Now A Network Carrier

September 26, 2011. We compare the Southwest of 2000 with that of 2011... There has never been an airline - or perhaps any American company - that has so successfully handled change and growth over such a relatively short period. Taking the carrier's top ten markets for each period gives a rather compelling view ...

Average passenger trip is up 45% - from 594 SM to 864 SM. At the same time, average passenger fares are up 55%, and even with the longer passenger LOH, yield is up almost 7%.

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A Look At Metrics - Merging Carriers

August 22, 2011. We've taken a couple minutes to compare key 2010 operating metrics of Continentl and United, and of AirTran and Southwest.

No major issues, except one: Southwest is getting an AirTran system which generates much lower yields than does the current WN system. Some of that is the off-ATL Florida flying that is now being discontinued, such as MLI-RSW. How this yield issue will affect ATL flying will be interesting to see in the months ahead.  Click here to download the report.

New York Metro Airport Traffic
A Decade Later

August 15, 2011. We're comparing the first quarter of 2000 with that of 2011 for the three metro New York airports. While total passengers has grown less than 2% in the decade (from 116 million to 119 million), the capture between the three airports has markedly changed.

Notice that JFK now captures one third of the NYC market - nearly double that of 2000. JetBlue has made the airport a clear domestic option, much more so than in year 2000.

Note also the change in the top ten. Commuter markets DCA and BOS are no longer there.

This is just one of the many analytical options open to subscribers of Aviation DataMiner. Unlike some other sources, DataMiner has O&D data back into the 1990s. T-100 tables, too. Plus, with our partner Innovata, LLC, we make the option of schedule and capacity analyses available to our subscribers, too.

There's more: DataMiner filters the data for errors and mis-reports. With DataMiner, for example, SkyWest traffic is properly aggregated to the airline brand - DL, UA, FL, and soon, US. We don't just dump it into a "commuter" category, as some other sources do, thereby making any market analyses invalid. And DataMiner reconciles raw O&D for greater accuracy.

Also, other sources completely leave out huge parts of the traffic picture. For example, ExpressJet, which only operates 50-seat jets, does not report its O&D. Being a major lift provider to Continental, this is a giant hole that other sources just ignore. That's probably because the vendor isn't even aware of it.

For more information and a brochure showing how DataMiner can give you the competitive edge, click here. If you're looking for accurate industry data and market intelligence, DataMiner is the new standard.

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First Quarter 2011:
AirTran Top Markets

August 8, 2011. The top ten passenger markets for AirTran in the 1Q of 2011 indicate the carrier's success in entering markets that the competition really isn't too interested in fighting over.

 

The #1 passenger and revenue market for AirTran in the quarter was IND-MCO. Of note, only two ATL markets were in the top ten.
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First Quarter 2011:
Average Fares Cross The $200 Threshold

August 1, 2011. For the first time, the average US air consumers is paying over $200 for a one-way flight. Actually, $208.95, to be more precise. That's up from $192.31 in the first quarter of 2010. (Includes federal fees and taxes.)

As for the highest per-mile fares in the nation, Shreveport, Evansville, Columbia (SC), Northwest Arkansas, a nd Juneau round out the top five. In the less-than-meaningless category of highest one-way dollar fares, Anchorage and Fairbanks are on top. Not surprising since the average lengh of a passenger trip at ANC is almost double the national averagee: 2,011 v 1,161. Fairbanks average passenger trip, one-way, is 1,735.

This is the reason that just comparing average fares isn't a valid methodology. The BTS approach of comparing itinerary costs may give a comparison between average consumer spend at a given airport, but it tosses in one-ways, round-trips and multi-leg journies into the mix.And hat can vary wildly by market.

The complete Quarter One 2011 Airport Traffic Review covers all airports with 60,000 or more O&D for the quarter, and provides several key comparisons and rankings. It can be reviewed and downloaded by clicking here. It is a 39-page document, so it might take a few seconds.

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Metrics: American Eagle

May 31, 2011. In light of reports that AMR has stated that it may keep Eagle in the corporate fold, we thought we'd look at some key statistics for the carrier, based on 3Q 2010 data.

According to the data reported, Eagle carried over 4.2 million passengers for American Airlines in the quarter, with key metrics indicated as follow:

With "Regional" Carriers The Data Is Really Raw. Care  must be taken in comparing cost and "per passenger" metrics between small lift providers. Each has different agreements, where some cost components are attributed to the major. For example, the raw data reported by Comair indicate a CASM of 8.7 cents - about half the Eagle figure. Tha't because certain costs - such as fuel - are paid by Delta, thereby skewing the numbers. This stands true, also, for revenue data. Because neither Eagle nor Comair sell their own seats, the revenue per passenger data are based on computations that may have little to do with the actual fares paid by passengers sitting in those RJ seats.

Amateurs: Don't Try This At Home. Data such as these provide only raw material for further professional analysis. As with all aviation data, knowledge of the subject matter is necessary to properly analyze the information. When numbers like these fall into the hands of amateur journalists or reporters from some of those national financial magazines (dare we forget the dimbulb "Rip-off Airports" story in Forbes?) there's no telling the levels of intellectual mayhem that can result.

 Observations: An Economically-Obsolete Fleet. And No Replacements Coming. Two metrics to look at are the average stage length and the average load factor. Relatively short flight sectors (487 miles) and numerically-light passengers per flight (36). In light of the fact that the ERJ fleet at Eagle is essentially economically obsolete, and there are no replacements on the drawing board, this represents a looming crisis for AMR.

As ERJ costs and fuel prices go up, the situation will get worse. At some juncture, a tipping point will come for more and more of the missions where Eagle is used by American, and service will need to be cut back or cut out. It is not hypothetical. The Eagle 37-44-50 seat fleet is simply moving to the point where they can make a positive contribution in fewer and fewer applications. It is a mathematical certainty.

This also illuminates the intellectual "crazy aunt" in the attic that nobody wants to talk about: there are no real alternatives for Eagle outside of the AA system. This doesn't mean that AMR won't be able to (somehow) spin Eagle off and out from under the AMR banner. Regardless, the implications that as an independent entity it will be able to bid on flying for other majors are simply not consistent with reality. Ask ExpressJet how well that's working for them, long term.

Fact: there is a glut of RJs in the US industry, and at $3 jet-A, it's an increasing glut. Fact: some portion of the passengers now carried by Eagle will not have an alternative when more of these machines are retired. Much of this, to be sure, will be in missions where consumers have alternatives. But that doesn't change the fact that there will be some reduction in the number of passengers that the American system will carry in some markets.

Another Indication of Coming Air Service Regionalization. The point is this: much of the traffic that Eagle (and Comair, and Air Wis, and others) are carrying today may be totally uneconomic in the next 18 months. Carrying just 36 people at a clip across the sky made sense at $1 jet fuel. It makes sense in fewer places today.

Face it. The air service deluge is coming.

There's More. A Lot More. It's not necessarily pleasant nor well-accepted in some circles. But we'll be reviewing fleet changes and the new airline economics at the 16th Annual International Aviation Forecast Summit, August 28-30 in Albuquerque. And, if you can get there a couple hours early, register also for the optional workshop, The Global Airline Industry: Challenges & Opportunities For US Airports. It's going to cover territory other conferences don't touch. Click here for information and to register. Early registration rates end June 3.

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Southwest Edging Toward Denver Dominance

May 23, 2011.  As of the 4Q 0f 2010, Southwest has moved within a hair of being the largest domestic-market carrier at Denver International. Depending on shifts in capacity within the UA/CO system, Southwest could well eclipse United by the end of 2011 as the largest local O&D carrier at DEN. Data below reflect the combined United-Continental traffic and the combined Southwest-AirTran passengers. This is local Denver O&D only.

The unknown will be capacity shifts on the part of the two carriers. As it stands today, looking at Denver schedules for the full year 2011 v 2010, the United system will offer approximately 135,000 fewer seats in the Denver market, while Southwest is scheduling an additional 172,000. Do the quick math, and that would point to Southwest clearly being the largest domestic O&D carrier at Denver by the end of this year.

None of the capacity is in stone, however, and will likely be adjusted as the year goes on. But there is no doubt that Southwest is closing in on traditional #1 United in terms of local O&D.

Then, There Are The Connecting Enplanements. As for total DEN enplanements (local O&D plus connecting), United still has the advantage, with local passengers (shown in the above table) accounting for only 35% of its Denver traffic, with the remainder being flow passengers.

Of Southwest's total passengers at Denver, today roughly 62% are local O&D, with 38% through or connecting.

That's less connecting traffic than United, but not bad for an airline that the media cognoscenti still claim is just a "point-to-point" carrier.

Financial Houses & Aviation Suppliers: Get The Advantage With DataMiner. Our subscribers in the financial industry find that having DataMiner gives them the edge in analyzing carrier strategies and direction. Our subscribers in the airport and airport-related industries use DataMiner to plot demand within a range of metrics. And unlike other sources, our team will construct custom reports specific to the subscriber. For more information and a brochure, click here.

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AirTran Atlanta Performance - Some Indicators
Regarding Southwest Route Decisions

May 16, 2011. A review of AirTran load factors at ATL for the first month of the year 2011 can give an idea of the challenge that Southwest planners are facing as they work to merge the FL operation at Jackson-Hartsfield into their existing route system.

Top 12 Load Factor Markets

Southwest already has operations at seven of the airports in the top 12 FL ATL load factor markets. Of note is Bloomington-Normal, which has the tenth highest load factor out of the 50 nonstop FL routes from Atlanta. BMI is now the de facto regional airport for central Illinois, accessing much of the service areas of lesser-served Champaign, Springfield, Peoria and Decatur. In fact, the daily O&D flow traffic that BMI generates into and out of ATL for FL represents almost three full 737-700s for Southwest.

SRQ's load factor is right behind, and would likely sew up the entire West Coast of Florida for Southwest.

San Juan is almost certainly to see not only continued ATL service, but also Southwest adding MDW. But that might be it - the challenge with SJU is that it is a low-yield market that is better suited to wide-body capacity from more distant destinations. Eventually, WN could open ATL-Ponce as well. But that's down the line.

On the other end of the spectrum, of the ATL FL airports with the lowest load factors, Southwest is in six of them, and the only real toss-ups would appear to be ACY and ICT. The latter has a state subsidy. ACY has potential for traffic draw on a north-south axis along the Jersey Shore as far north as Essex County. The open question is whether or not WN will determine if it can draw passengers from the ACY region with existing service at PHL and EWR.

Keep in mind that this is a snapshot only, and the volatility of each market will change over the year. But it is an indicator that what Southwest is taking on at ATL are predominantly highly-viable additions for the WN system.
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In Scope, This May Be A Piston-To-Jet Event
The Geared Turbo Fan Engine - Now, It's A Game-Changer

May 9, 2011. When the jet age opened over half a century ago,  those new-fangled 707s and DC-8s sure were a big comfort improvement over those piston-engined DC-6s, DC-7s, and L-1049s. But they came with one characteristic that at the time didn't mean a whole lot.

Fuel. These jet contraptions gobbled up JP-3 (and in some cases JP-4) like Godzilla touring Tokyo. But not to worry, fuel was cheap at the time, like 10 cents a gallon or less. Even with inflation, a dime back then wasn't too much of a big deal. (Tidbit for cocktail party repartee: these things also burned a lot of water along with jet fuel. Maybe 500 gallons or more.  It was injected at take-off to make the mixture more dense in early non-fan turbojet engines.)

But since fuel was a relatively low-priced component of the total airline cost mix, the motors hanging on the wing of those early water wagons were okay for the time. There were incremental improvements over the years, predominantly high-bypass technology, but nothing that really changed the picture dramatically.

Fast forward to today. Over the past 30 years, the price of go-juice has become the headache of choice for airline CFOs across the globe. And with the dollar declining, and forecast demand for oil increasing, fuel is now the most critical issue threatening the airline industry.

The changes this will drive in the coming 12 months will not be incremental - they will be fundamental. Air transportation economics will affect where and how people travel. Or in some cases, not travel.

A 16% Fuel Saving. Ten Years Ago, Impressive. At $4 A Gallon, Imperative. We are now at the crisis stage: the cost of fuel will quickly drive major changes in airline operations. That will mean more aggressive fleet-renewal, which is a nice term for junking old airplanes as fast as possible.

With fuel prices and declining demand chomping at cash reserves, this is not something that airlines will stand around and have a lot of committee meetings to discuss. (Well, not most of them, at any rate.) Decisions will be made fast and furious - and that means that carriers are going to get at it when it comes to getting airplanes that need less fuel.

Front and center in this will be the geared turbo fan (GTF) engine. If it comes out near where it promises, the field is clear for Pratt & Whitney to have a land-office business. Airbus has the A-320NEO (New Engine Option) which is mostly a re-engining program, which is a lot more complicated than just screwing an new motor on the wing, but does use most of the existing airframe design. Mitsubishi has the smaller MRJ planned with the GTF, but the game is now Bombardier's to lose. In the C-Series, it has the only clean-sheet single-aisle platform that can be stretched to 150 seats or more. Hello, Boeing. Hello, Southwest.

It Is A Breakthrough. According to Pratt & Whitney, its PW-1000G engine platform has at least 16% less fuel burn than current-technology engines. At a buck a gallon, that would be impressive. At $3.50 - and going up - it will be imperative to competitive survival. 

Putting that into dollars-and-cents context (or Euros, or RMB, if you prefer), the potential impact of this engine technology is astounding. If jet fuel were still 50 cents a gallon, it wouldn't be as important. But at $3.50 and heading to $4, it's huge.

We took the fuel expenses of mainline Southwest, American, Delta, United, and Continental for the first three quarters of 2010, and computed just what a 16% reduction would represent.

It works out to just under three billion Washingtons - figure just for these carriers over a billion dollars a quarter at current fuel prices. Point: the P&W 1000G may be as much of a deal changer as the original PW JT3 was compared to the piston PW-2800s, 4360s and Wright 3350s fifty years ago.

Make no mistake, this is a deal changer. Airlines cannot take the chance that their competition will have a double digit advantage in fuel costs. (This is in addition to other savings the GTF represents, such as fewer moving parts and expected lower maintenance due to operating at lower temperatures.)

A Deal Changer. Maybe A Partner-Changer, Too. Plan on more phone calls from carriers around the globe to both Toulouse and Montreal. Plan on some serious discussions between Boeing and best-customer Southwest. Breaking up may be hard to do, but when it comes to replacing a fleet of 737-300/500s, this is strictly business,

Unlike 2008, when the airline industry was essentially blind-sided by $147 oil, US carriers today are almost universally in full metal jacket mode to deal with the situation. It's unclear how much higher the cost of jet fuel will go, but plan on an airline industry in 2012 that won't look the same as it does today. The GTF is one of the drivers of that change.

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Now For Some Hard Data
Southwest, Cracks, Safety & The Media

April 4, 2011.  One of the advantages that Aviation DataMiner subscribers have is that they can quickly pull the hard data they need to make sound planning decisions.

This includes research on all areas of the industry. Subscribers to the Airline Financial option, for example, can quickly pull reports to identify and compare key airline metrics.

in the wake of some really slap-dash reporting on the Southwest 737-300 fuselage incident, we decided to check out some of the canards that some in the media and in the financial world confidently spit out as if Moses just dropped them off on his way home from Mount Sinai. So, we looked at data for the full year ending 3Q 2011.

Fleet Average Age. We'll start with this. The 737 involved in this incident was put in service just short of 15 years ago. But when compared to other large network carriers, that's right in line with average fleet age.

And overall, a point missed by a lot of reporting so far, Southwest has one of the youngest fleets in the network sector...

Yes, we rank Southwest as a network carrier. While it may not schedule flights in fully-formal banks, it does rely on substantial connecting traffic at MDW, DEN, BNA, etc. When it takes over AirTran, it will have no choice but to bank flights at ATL if it wants to retain the traffic now captured by AirTran.

Newer carriers, established in the last 15 years, and which have grown and added aircraft in their first fleet plans over the past ten years, such as jetBlue and Frontier, have younger fleets. But they have not been around for four decades, and gone through a number of fleet-renewals. Point: Southwest does not have an "old fleet."

Okay, But Southwest Flies Them More Every Day. Not quite. Utilization is high, but it's in the middle of the pack compared to other airlines' domestic operations.

The data are clear that Southwest makes great use of its fleet, but the rest of the industry does, too.

What  About Cycles? Southwest's average flight length is 643 miles. That compares to 1,165 for United, 1,028 for Delta, even 746 for AirTran. This does mean with the 10+ hours of utilization, Southwest aircraft get a lot of cycles each day...

The high daily cycles and the strong daily utilization have led some in the media to conclude that Southwest rides its planes hard and parks them in the hangar wet. So let's put that myth to bed.

The main metrics for aircraft maintenance are hours and cycles. If the cycle limit is reached in a year or in a month, it's still the same number of cycles. If the hour-limit for a component is reached in ten days or ten months, it's still the same hours. So all this high-cycle and high-utilization means is that Southwest airplanes likely see heavy maintenance on a shorter calendar basis than some other airlines. True, it does mean that hours are added to the airframe, but the aircraft are still maintained in compliance with the airline's FAA-approved maintenance program.

Get The Edge - Subscribe To Aviation DataMiner. These are just examples of the rapid analysis that our subscribers accomplish with Aviation DataMiner. Having accurate information is having power. Get it. Click here for more information.

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Figure Around 2.6 Million Domestic O&D At Risk
Tokyo Traffic - Not Inconsequential

March 21, 2011.  The stories of airlines cutting back at Haneda and Narita due to potential radiation risk seem so far away. But the reality is that Tokyo represents a market of just under 3.7 million annual passenger for US carriers. (Not including traffic carried by foreign airlines.) And that's just from mainland gateways.  Cutting off that flow also means a loss of a huge number domestic enplanements that are either connecting to/from the gateway, or are domestic trips accomplished by visitors to the US.

An analysis of the traffic by Boyd Group International indicates that somewhere in the range of 70% of these passengers are connecting to or from the gateway. That is at least 2.6 million domestic O&D to/from the gateway. Raw numbers: Tokyo traffic actually represents over 6.3 million O&D for US airlines.

But the markets that are most at risk in losing any Tokyo flying are the #1 and #2 US markets to that city: Guam and Honolulu. HNL is around 650,000 annual passengers, and GUAM - a big time Japanese vacation destination - is over 770,000.

Bottom line: if the radiation situation gets to the point that US airlines find it necessary to cancel Tokyo flying, the effects will be felt at airports across the nation. For most, not a huge hit, but it does again demonstrate the fact that international traffic generation is an increasingly important part of domestic air travel.

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AirTran 3Q ATL Load Factors
Indications Of Post-Merger Winners & Losers

February 28, 2011.  An Aviation DataMiner 3Q review of the highest and lowest AirTran load factor markets at Atlanta Jackson-Hartsfield International can be a view toward which markets Southwest will likely see in a positive post-merger light, and those that may be highly problematic.

AirTran: Atlanta 3Q 2010:

Load factors aside, markets such as Dayton, Gulfport and Richmond are likely to add some strong opportunities for Southwest to add MDW and BNA spokes in the post-merger months. That may not be the case for Atlantic City, where there's still draw from WN flights at Philadelphia, not to mention the encroachment at the north end of the ACY catchment area from new WN flights at Newark. The ICT service is underwritten by a state subsidy, but at 49%, Southwest will likely give strong scrutiny to that market's total system contribution.

These data represent another area where subscribers to Aviation DataMiner have the competitive planning edge - the ability to ascertain market strengths and weaknesses. If you're not a subscriber yet, click here to discover the Analytical Firepower of DataMiner.
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Southwest: Operating Dual Hub Systems?

February 21, 2011.  An Aviation DataMiner 3Q 2010 look at the top ten Southwest O&D airports shows again that the carrier is indeed dependent upon flow traffic over its mid-Continent airports:

In fact, taken as a whole, almost one in three passengers at the carrier's top airports is a flow passenger. The top connect airport - Midway - was about 42% flow, which to be sure is well under, for example, the 70.1% flow rate of United at Denver. But there are two take aways from these data:

• Flow traffic revenue is critical to Southwest. The Wall Street paper hangers can put out all the lore they want, but flow is the future.

• The revenue generation of the AirTran operation at ATL that Southwest will inherit later this year is based on a traditional system of scheduled flight banks, with over 67% of the traffic fully connect flow. Southwest will need to implement this type of operation at Hartsfield-Jackson if it is to retain AirTran's current passenger levels. Then, it will need to assure that this enforced-bank scheduling at ATL will blend into its more "random connect" system of flowing aircraft over cities in the rest of its system.

A challenge, to be sure.
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Using Analytical Firepower To Identify Differing Airline Strategies:
Airline Planning: Whole New Metrics

February 14, 2011.  Two airlines flying the same route traditionally are considered as competitors.

And they are, but only to a point. Airlines may have flights in the same market. But, contrary to traditional thinking, that doesn't necessarily mean that they're competing for the same traffic. Today, airline strategies differ, and identifying them is a critical part of planning in all areas of aviation, from aircraft manufacturers, to airports, to suppliers, to even labor groups who need cutting edge information to use across the bargaining table.

Seat Value: It's The Gelt Capture. Not Necessarily Market Capture. One of the key points that we emphasize to our aviation clients is that the name of the recruitment game is matching the traffic revenue dynamics of a given community to the target airline's specific strategies. And that varies from carrier to carrier - even in the same market. It drives all aspects of an airline's operations, including scheduling and future fleet planning.

As an example, we queried Aviation DataMiner(TM) for a Nonstop Segment Financial Performance Report covering the four carriers in the Denver - Phoenix market.

The data (in this case for the 2Q of 2010) show that each airline has a different strategy and model. Each is chasing after, and capturing, different traffic stratas, based on their route system strengths and weaknesses. Each is doing quite well, even in light of the fact that the capacity these carriers offer is roughly double the local O&D demand in the PHX-DEN market.

Different Strokes For Different Airline Folks. Southwest - which has de facto hub operations at both DEN and PHX - is focused on filling its flights with local O&D in the DEN-PHX market. Not surprising, in that the geographic location of the two airports would dictate most WN connectivity would be only to and from the Northwest over Denver. Given the levels of United and Frontier connectivity to this region from DEN, not to mention strong nonstop service between PHX and the Northwest, a focus on capturing local demand in the market fits the specific route and revenue flows of Southwest.

With A 13% & 14% Local O&D Share, United & US Airways Are Cleaning Up. What's interesting is that the strategy of both United and US Airways in the DEN-PHX market is to capitalize on using the seats they're tossing between DEN and PHX to maximize their hub strength (UA at DEN and US at PHX) - and to cede the local market to the competition.

At first glance, that would indicate that they are running from the LCCs in the market. That would probably be the quick conclusion of some folks in the media, not to mention some of those learned university professors allegedly teaching the next generation about aviation, yet who probably think "flow traffic" is a plumbing term.

But let's look beyond just local O&D. The DataMiner report actually shows that US & UA are arguably doing better than the competition on the DEN-PHX route by the only metric that really counts - money. In short, the scorecard is simply how much long green do those nonstop seats generate to the carrier's system. The report is quite clear on that count.

Beware Using Yesterday's Measures To Plan The Future. On the surface, the data show low local O&D capture for United and US Airways. But the market intelligence in this report provides the real story.  Take a look at the dollars: US & UA generated the most money with those nonstop seats they put in the sky between DEN and PHX.  In the local market, for example, United has a whopping 41% local yield premium over Southwest, plus a computed 17.9% yield premium on the traffic it flows beyond Denver. And it achieves this with an 85% load factor on mainline equipment. The computations are similar for US Airways, which is leveraging its hub at PHX.

To be clear, none of these four carriers is in any jeopardy in the DEN-PHX market, but each is pursuing traffic based on its own strategy, service model and market strengths. For aviation analysts, airport planners, and financial houses, this is another indication that yesterday's metrics - such as "market share" - are often outright wrong in determining how an airline may be doing on a given route, or even in a given region.

You Can Have Access To This Planning Intelligence, Too. This is just one of the reports that subscribers to Aviation DataMiner are now utilizing to generate true market intelligence, as opposed to just columns of numbers. With DataMiner, queries generate not just the specific metrics requested, but also corollary metrics that are pertinent to the report. It is truly Analytical Firepower(TM).

It's Our Competitive Edge. Aviation DataMiner(TM) is the superior tool Boyd Group International uses to the advantage of its consulting clients. We have better data and, combined with our industry-leading forecasting expertise, the most advanced aviation industry intelligence in the business. It makes our work more efficient, more accurate, and delivered faster than any other consultant. We find trends and emerging dynamics well ahead of the curve - trends that other consultants discover only after they read about them in the newspapers, and are then "safe" to discuss, lest they appear to be outside of the "consensus."

Aviation DataMiner(TM) is also the competitive edge for our growing subscriber clients - airports, airlines, labor unions, financial planners and suppliers. Unlike other outdated sources, we tailor each DataMiner subscription to the specific needs of the client. We even provide programming for custom reports specific to the business model of the client, whether it's an airline, an executive aviation firm, a labor organization or a financial house.

For more information, and to apply for a trial subscription, click here.
(c) 2010 Boyd Group International, All Rights Reserved.

 

St. Louis - Life After The Hub

July 5, 2010. The AA hub at STL is now officially dead. But it has not left a lot of opportunities for other carriers. Southwest has added only a few spokes - such as MSY, SAN, and SEA. Alaska has some opportunities in grabbing some Boeing business in the SEA-STL market.

But for midsize and smaller airports in the region, access to the world via STL is a memory that isn't coming back to reality.

Now, according to lore, not to mention some consultants, this pull-down should have offered dozens of new markets for all those LCCs supposedly circling American like bull sharks. But that's not the case. We can look at how Southwest reacted when AA stopped flying to all those points from Lambert.

True, comparing 3Q 2004 with that of 2010, Southwest is up about 281,000 seats. But that's nowhere near the 785,000 seats eliminated by American over the same period. Despite the lore, Southwest is indeed operating a connecting hub at STL, but it does not replace the connectivity that the TW/AA hub provided places like South Bend, Waterloo, and Cedar Rapids.

What needs to be remembered is that AA pulled the STL hub down for a number of reasons, not the least of which was the post-9/11 downturn, and then fuel costs that made a lot RJ feed operations fountains of red-ink. They were not driven out of STL by any onslaught low fare carriers. American made a business decision and left.

Fares & Local O&D - STL Is Very Strong. Comparing traffic and average fares paid in the top ten 2004 STL markets with the same data for 2009 reveals that the STL consumer has not been hit in the pocketbook - at least overall - with the elimination of the AA connecting hub. Compared to the rest of the nation, it's quite the contrary.

Average fares in the top ten 2004 O&D markets have gone up by 9.7%, to $149.11 (including federal fees and taxes), but that's about 18% below the national average of $182.00. For the entire STL O&D, average fares have actually dropped by almost 2%. Note also the total O&D generation, even after losing the huge number of hub-supported nonstops (which tend to stimulate traffic at the hubsite city) is down just 1.1%.

Going forward, STL still has excellent connectivity to the rest of the world. The fact remains that it is a key commercial center, and as such will have strong air service. But it won't again likely have a major airline connecting operation that provides nonstops to 100+ destinations.

Is Cargo A Revenue Alternative? Furthermore, concepts such as Lambert becoming a major trans-shipment hub point for Asian and Chinese air cargo might sound promising, but regardless of the number of studies and commissions and trade missions sent to Beijing, they are not highly likely. Air cargo is cost-effective only for goods that demand fast transit... high value electronic components, perishables, even fashion clothing.

Furthermore, air cargo works best when it is near the source or near the final destination of the goods being shipped. Ypsilanti works because it is in the midst of the auto business. JFK is a strong entry point for clothing and other goods because it is in the middle of a huge, established distribution network. STL has neither the local size nor does it have a huge cargo-centric distribution network.

The point is that the benefit of fast transit becomes rapidly diluted when the goods must be trans-shipped any substantial distances by ground - particularly if it's by rail. And if it's by air, it gets even more costly. The usual consultant's throw-away factoids that STL (or Plattsburgh, or Muskegon, or wherever) is "3 days from 50% of the US population" or "96 hours from umpty-ump million people" sound compelling, but are by themselves meaningless when it comes to the viability of an air cargo operation.

Increasing air cargo is a valid objective for any airport. But it must be an objective that meets a market need, and is not a solution looking for a problem.

Going forward, St. Louis Lambert does face a strong future as a gateway to the region. But with the elimination of the AA hub, it is no longer a gateway to the world. That's real-world reality.

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