Key Forecasts And Insights From Aviation's Most Prestegious Annual Event
From Marian Boyd: COO, Boyd Group
International: The scope of this year's delegates underscores the stature of the
Boyd Group International Summit as aviation's most prestigious and incisive annual
forecast event. Attendees included: 21 airlines from the US and internationally, 40
airports, four global aircraft manufacturers, four major OEM suppliers, six major
financial institutions, six major aviation media outlets, four convention & tourist
bureaus, two 
ski areas, and - as planned - zero Federal
agencies. The last number is due to the fact that none were invited. This is a facts and
information Summit, and folks from federal agencies are limited to repeating the official
line. The Boyd Group International Aviation Forecast Summit is all about the bottom line.
From Ben Brockwell, Oil Price Information Systems: Speaking of the bottom line, the recession can be measured by consumption of diesel fuel. It's what the nation's commerce runs on. When use of diesel starts to go up, that means business is turning. And consumption is still dropping.
From John Kirby, Sr. Director,
AirTran: The name of the game is maximizing existing resources. Aircraft
applications will follow that dictum. When/if new opportunities open, the carrier will
move resources as necessary. He went on to observe, "This
is the one industry where people will fight to defend things they didn't even want in the
first place."
From Bob Jordan, Executive VP, Southwest Airlines: watch for new cities being opened in 2010.
From Andrew Nocellla, Sr. VP Planning/Scheduling, US Airways: Many US airport facilities represent legacies built for an airline industry that no longer exists. Example: linear ticketing counter space - not much ticketing is done at airports anymore. Example: the facilities are more and more there for baggage handling. Hence, it's reasonable that those consumers that use it should pay, instead of all consumers.
From Will Ris, VP - Government, American Airlines: Skillfully implicating Warren G. Harding as a being partially responsible for today's air traffic control system mess, Mr. Ris noted the current approach to ATC is the conceptual successor to the bonfires that were lit to guide mail planes in the 1920s. The major difference is that now it's done by radar or satellite, and the planes fly much higher. He noted that his daughter's cell phone GPS was more advanced than the system we're using today. She can know where her friends are from her own phone. Airliners need to ask ATC where other planes are.
From The Airports:USA Enplanement Forecast: There will still be 14.5 million fewer passengers taking to the skies in 2014 compared to 2008. The sector hardest hit: regional airports will have 5.1% less enplanements in 2014 than in 2008.
From Bill Swelbar, Aviation Research Engineer, MIT: It's positive to have Captain Randy Babbit at the helm of the FAA. He's understands the challenges aviation faces. But it's unfair to expect him to turn the agency around quickly or painlessly.
From Captain
Michael Baiada, CEO ATH Associates: The US airline industry is operating at
between 35% and 40% defect rates, based on flights arriving more than schedule plus 5
minutes. For the airline industry to take pride in claiming that 80% of flights arrived
within 15 minutes of schedule is to accept failure.
From Jim May, President, Air Transport Association: Airline CEOs are becoming more active, meeting with lawmakers and demanding congress fund ATC upgrades to reduce delays.
From Michael Boyd, President, Boyd Group International: It's great that airline CEOs are pounding on congressional doors. But are they just asking that the FAA's discredited "NexGen" be given more money, or are they demanding the FAA start producing results? There's a huge difference. ATC is costing the airline industry at least $10 billion in wasted costs annually. Every year at the Summit we review the ATC issue, and regardless of the FAA hype, there really is no substantive progress to report.
From the Boyd Group Global Fleet Forecast: The US "regional jet" fleet (ERJ & CRJ series) will decline by 43% between 2010 and 2019 - down to 815 units. The economics of 50-seat jets are simply reducing the number of missions they can profitably be used in. There is a very limited secondary market for these airliners, regardless of plunging lease costs and regardless of amateur Pied-Piper air service schemes being peddled to airports for excess RJs. They don't represent opportunities, except for companies leasing space in the desert.
Say Good-Bye To Lots of RJs
Also From the Boyd Group Global Fleet
Forecast: Even in light of the above retirements, the forecast projects
that there is a demand for another 315 larger-version CRJ airliners (mostly -900s and
-1000s) over the next five years. The Bombardier forecast presented at the Summit mirrored
Boyd Group International's independent demand projection for these new units.
From Boyd Group International Aviation Trend Forecast: International enplanements are approximately 10.2% of the nation's total. But international inbound passengers generate approximately 1.5 additional domestic enplanements. Result: international business is directly responsible for over 25.5% of all US enplanements. And this affects airports of all sizes.
International passengers are incredibly important to the health of all US airports. These consumers don't all stay at the gateway city. On average, every international passenger coming into the US is estimated to generate an additional 1.5 domestic enplanements. That means foreign visitors benefit airports across the US, including those that have no international service.
From The Rural Air Service Discussion Session: Chuck Howell, CEO - Great
Lakes, Roger Cohen - President- Regional Airline Association, and Don Bornhorst, Sr.
Vice 
President - Delta Connection, Delta Air Lines
all agreed that the Essential Air Service (EAS) program is broken. Mr. Howell noted that
it's risky to bid on a 2-year EAS contract, when aircraft leases are for five years. Mr.
Bornhorst commented that it is very dicey to bid on EAS contracts where there is not firm
mechanisms to address spikes in fuel costs. Tim Sieber - VP - Boyd Group International
pointed out that establishing an airport operation today is not like the old days when it
meant just ordering ticket stock and bag tags, hanging a sign, and installing a
phone/computer line. What incentive, he noted, is there for Delta to invest in the
extensive airline-specific equipment (kiosks, etc) when in two years another carrier might
bid them out of the contract.
From The Air Service Dynamics Workshop: An emerging dynamic is "impulse" sector passengers - consumers that shift discretionary dollars from Home Depot, or the new couch, or just savings, into a leisure trip. These passengers are typically net-new to the airport, do not divert ridership from other carriers, produce a lot of PFC revenue, and can enormously reduce total airport per-passenger costs. The driver here is mostly Allegiant, which provides high-value, low cost leisure travel options.
Also From The Air Service Dynamics Workshop: This is a global economy, and the airline industry is going toward focus on their global alliance brand. Airports of all sizes need to prepare for this gradual trend from "airline" service to "alliance" service.
From Captain Dan Wolf, CEO Cape Air: Reliability and frequency are trump cards for rural air service. While having a major network brand may be desirable, in smaller communities having more access and reliable service that can connect to the air transportation system are more critical to market success. Also, there is a huge need for new-generation small aircraft (with small operating costs) - the problem is whether there's a manufacturer that's willing to take the risk.
These are just a few of the insights and issues discussed at the 14th Annual Aviation Forecast Summit. More data and pictures of the event will be posted shortly at www.AviationForecastSummit.com.
