What Our Research Indicated
About Southwest In 2006

New Rural Air Service Realities
Consultants Preying On
The Desperate

The Airline Quality Report:
Another Amateur Act
From Academia

TSA: The New
Twilight Zone

Airline Delays: Not A
Summer Revelation
It's Just The Same 'ole
FAA Song

Airline Bankruptcy Myths

Hot Flash Archives
Oct-Dec 2006

Hot Flash Archives
Jan-May 2005 

Hot Flash Archives
Through June 2006

The Boyd Group, Inc.
Advisors to the Aviation Industry
Since 1984

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Evergreen, Colorado, 80439
303-674-2000
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The Boyd Group Advantage

Aviation Insight & Perspectives
Available Nowhere Else

Archives - January 2007 - April 2007
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Hot Flash - April 30, 2007

Regional Jets As Financial Hot Potatoes
Flying Financial Refugees

The day of the "regional jet" is declining faster than the membership at an Imus fan club.

And, more critically, whole new economic relationships are going to evolve between small lift providers ("regional airlines") and the major carrier systems that have traditionally paid them for their services.

In fact, the direction of the invoices and the money may well start to go in the opposite direction from that of today.

Narrow-Cabin. Narrow Future. There is no longer any question that there's already a glut of 50-seat RJs. Major airline systems are making it clear, both in their public statements and in their fleet decisions, that the economics of these machines are getting problematic. Without question, the larger, 70-to-90 seat CRJs will have a longer half-life than their smaller RJ brethren, but even here, there are clouds on the horizon, in that many, if not most, CRJ-900s are coming on line in 76 seat configurations instead of 86-90 (due to ergonomic and scope reasons), with a corresponding upward push on their ASM costs.

Toss in the market competition from the Embraer E-Jets, which have mainline cabins and comfort levels that are equal to or better than 737s, and it becomes clear that the folks in the financial world who're "holding paper" on 50-seaters - be they CRJs or ERJs, or even smaller FRJs - may increasingly find the value of those documents to be be heading toward what's in the bargain bin at Wallpapers-To-Go.

More ominously, there is no secondary market - anywhere on this planet - for any large number of RJs. None, at least in the role of flying machines.

Our forecast clients are not surprised. Back in 1998, our data indicated that the number of RJs in operation and on order exceeded what the US airline industry could support by 2002-2003. And we advised our clients that the ambient and oft-repeated rosy projections of unending demand for these contraptions were just so much happy talk based on the safe groupthink that tends to permeate much of the financial industry.

But as recently as a couple years ago, according to the lore, RJs were an unstoppable trend. It was in all the papers, remember? And who can forget the famous "Proposition RJ" scheme, which had small communities drooling all over themselves, believing that in exchange for a couple grand contributing to a magic "study" on scope clauses, they, too, could get the wonders of jet service at their local airports.

This despite the fact that RJs were never designed for, nor do they have particularly good economics for, serving small communities. (The "regional" in "regional jet" referred originally to their target customers - regional airlines which needed an airplane with which they could expand to bigger and longer markets. Being able to serve Fruitcake Falls Municipal was never in the equation.)

Listening To The Din. Instead Of Looking Over The Horizon. The current RJ situation is somewhat similar to the it-can't-fail ostrich farm scheme of a few years ago. The idea was that for health reasons, consumers were going to give up beef and go for delicious, delectable, low-cholesterol ostrich meat. The demand for these dumb birds, according to belief, was going to go through the roof. One ostrich egg, it was claimed, could result in acres of birds with their heads in the ground, leading to hundreds of thousands of dollars in quick easy profits selling Big Bird Whoppers to Burger King.

Unfortunately for the investors, the result was a gastronomic Edsel-ville. That's because it was based on unquestioned assumptions and bad research, which in turn leads to bad results. And, apparently, it leads to being stuck with a lot of really ugly animals with no economic use whatsoever. Entities who have portfolios in RJs, as it may turn out, may be facing a similar fate.

Regional jets, not surprisingly, went through a similar process. Unlike ostriches, they did have strong economic value in the early years, until a range of economic factors came into play. Nevertheless, these shifts were almost entirely missed in some circles, which until fairly recently continued to claim that RJs would be a growing, permanent part of global airline fleets. Demand ad-infinitum. That was then. This is now, with financial entities finally seeing the potential for a lot of birds sitting on a ramp, all dressed up with no place to fly.

In both cases, again, the research was faulty. Ostriches and RJs have both turned out to be financially-ugly birds. At least with the ostrich egg, the poor schlemiel who got stuck could make a really impressive omelet. Not so easy with a fleet of excess 50-seat jets.

The New, But Limited, RJ Trend: Pay-To-Play. US Airways has already noted it has too many 50-seaters in its fleet. Other carriers are also moving to reduce their exposure to the number they lease from small lift providers. The move is well underway to replace these with larger units of capacity, albeit in some cases with larger CRJs, which likely only postpones another day of fleet-reckoning by a few years.

That brings up the question: so, where do all these 50-seaters go? Ultimately, the answer is unavoidable: into the crusher to begin a new life as a can of Miller Lite.

But in the meantime, there's a new game in town. Where historically majors leased-in RJ lift, paying operators mostly on a cost-plus basis, going forward the play will tend toward doing a 180 - RJ operators who are stuck with excess birds actually paying to use major carriers' brand-identity, and flying entirely at-risk.

For the major, it's a win-win. As long as the RJ operator is clean and reliable, the big airline gets a fee, the major gets some market exposure, and the operator takes all the risk, hoping that the major carrier's brand-identity will be enough to get enough passengers on secondary, non-served markets to pay the freight.

The only problem with this is that these pay-to-play RJ operations will face increasing economic hurdles. First, any such markets would need to have a near-zero level of competition with existing flights of the major airline brand. That means mostly off-hub flying, and/or flying markets the major carrier wouldn't consider on a bet. Second, it means that any such flying would, in most cases, need to support the all-up O&D RJ sector costs, with minimum or no flow traffic revenue.

What this points to is that the trend toward RJ pay-to-play is going to be severely limited. There aren't enough such RJ-viable markets to support more than 50 to 75 aircraft in the US, at wildly-optimistic best. Compare and contrast this with The Boyd Group Global Fleet Forecast, which indicates that by 2017 almost 700 RJs will become excess to the needs of the US airline industry. The math is ugly.

This is one of the factors that will result in average per-unit capacity in the US airline fleets moving from 127 seats today to over 148 seats by 2017.

Airport facility planners should take note. And in the meantime, plan  on it being increasingly a buyer's market for RJ lift.

(For more information on The Boyd Group Global Fleet Forecast, click here.)

(c) 2007, The Boyd Group/ASRC, Inc. All Rights Reserved
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Hot Flash - April 23, 2007

Sheep Races
Things "Everybody Knows"  
But Nobody Seems To Want To Question

We'll call it the concept of "Dogmas Du Jour" - beliefs that suddenly out of nowhere become righteous, trendy, and not to be questioned, and then disappear as fast as they arrived. But while they're in vogue, anybody who might question them is at risk of being tossed onto the barbie as a unknowing heretic.

That's the challenge in defining aviation trends - sorting the chant and intellectual hogwash from the reality. And there's fertile ground to support such hogwash. All it takes is a couple of news stories, and something that has no basis in fact gets repeated so many times that, at least for a few months, it becomes "what everybody knows." It's validated only by the fact it's being repeated over and over again.

Here's four of today's most trendy aviation dogmas. All are - or were - accepted as Holy Aviation Scripture. None have any basis in hard fact.

Dogma: Airline Mergers - No Doubt About It. Just six months ago, it was the sacred, not-to-be-questioned dogma that all airline CEOs were talking merger, and the US-DL deal was just part of an unstoppable trend toward "necessary and inevitable" airline consolidation. "Everybody knows," was the line, "airlines must merge." And that was because everybody was saying it.

The fact that actual statements by most airline CEOs refuted this silly mantra were ignored. We heard business editors from prestigious journals such as the Washington Post declaring that airline industry leaders were all looking at mergers as a solution to the industry's problems. We saw it printed over and over again in newspapers around the nation. "Experts" appeared on TV, touting the benefits and inevitability of reducing he number of airlines.

One guy, dredged up by a network from who-knows-where, proclaimed that "there are over 100 airlines in the US today, and we must cut it back to just six or eight."  (No kidding, he actually said that - there're 100 airlines in America, he announced. On a national business network, too.)

That was typical of the kind of charlatan expertise oozing out from under intellectual rocks to jump on the mergers-are-coming bandwagon. Rumors - with no foundation in fact - were spread, sounding almost like inside information, that this airline or that airline was secretly well down the pike in merger talks. Much of it untrue, but since it fit the accepted mantra, a lot of media types ran with it without checking it out.

Today, with the exception of the Midwest-AirTran combination (which is the outcome of years of off-and-on contacts, not some generic industry trend) the merger battlefield is quiet. The din from all the "experts" is gone, give or take the very occasional excuse that "airlines are doing well, but wait 'til the next downturn" - which itself is another chant that ignores some fundamental changes in the industry.

But it doesn't change the fact that six months ago, mergers were being touted as immediate and inescapable. Those "experts"must be on vacation..

Dogma: Carbon Offsets, Carbon Footprints, & Airlines Hurting Earth. It's now not to be questioned. The airline industry is polluting our planet and must - must - make amends. Just how much are airlines contributing to"climate change?" Almost nobody's asking. They don't need to. It's something "everybody knows" - airlines are big polluters.

Regardless of the fact - Al Gore notwithstanding - that there is considerable question regarding the whole issue, airlines will now start doing the mea culpa boogie, trying to convince the public that they'll make amends for damage that stuff coming out of the business ends of CF-6s and JT-9s are allegedly doing to the rain forests.

The industry is playing with an almost intentionally losing hand. First they admit to creating stuff that causes "climate change" (global warming is passe) yet they - as well as their accusers - cannot measure what or how much. Then carriers will likely hire some outside fruitcakes to help them craft a high-profile "carbon offset" program, the beneficial effects of which can't be measured, simply because the damage airlines are supposedly causing can't be measured. It's a perfect no-win situation.

So stand-by for the ghost-written "letters from the chairman" in the front of in-flight magazines."Here at Trans-Apology Airways, we're dedicated to fighting climate change and to saving the planet. So we're paying some idiot front group a lot of money for carbon offsets (whatever that is) to clear our guilt, cleanse the skies, and try to keep Greenpeace from picketing our headquarters..."

The real statement should be: "There is no credible evidence that airlines such as ours are contributing in any meaningful way to 'climate change'. Therefore, we'll continue to do things like separate the trash and recycle pop cans, but we won't be blackmailed by some latter-day 1960 hippies in tie-dyed tee-shirts, factless and feckless, whose real agenda is to have us all revert back to the fun lifestyles of the 16th century..."

Today, anybody who's ever used a disposable diaper or tossed a Yellow Pages in the trash, must be held accountable for what caused Hurricane Katrina, or for snake darters having a low birth rate. But let's go back a couple years. Gee, whatever happened to acid rain? A decade ago it was supposed to be turning the forests of Quebec into the Gobi Desert. Today, that's passe. Even "global warming" is passe. Now, it's "climate change" - that's because it's hard to explain things like the snow in Tucson last winter.

To be more accurate, now it's just a righteous lynch mob who'd prefer we all lived like the Flintstones. And not have airlines at all.

Dogma: Congress Must Protect Consumers From The Airline Industry. Hearings on Capitol Hill have been conclusive, at least in the alleged minds of pandering hacks like Peter DeFazio (D-OR). Laws must be passed to protect consumers from delays, lost bags, and being trapped on airplanes due to ice storms.

Gee, DeFazio on one hand want to "protect" passengers from airlines, but sits on his political tush in regard to the fact that consumers sitting on those flights he demands leave on-time are wide open to terrorism because the TSA is inept.

He was the ranking member of the committee that had TSA oversight, yet never - not once - suggested legislation to protect passengers by overhauling that corrupted TSA jobs program he passes off as "security."

Dogma: Major Airlines Shifting To International, Abandoning Domestic. It's fairly common today to read the nonsense that comprehensive network carriers are running away from low-cost carriers. Oft-heard:  "Legacy carriers, under pressure, are conceding domestic routes to LCCs, and shifting to international markets..." or, "the discount carriers are scrambling to fill the market voids left as legacies expand internationally..."

Sounds good, and it's been repeated so many times, a lot of the media doesn't bother to even check it out. The fact is that it's tough to find any major domestic market that's been "abandoned to LCCs" by legacy carriers. Nor are LCCs rushing to fill these voids-that-aren't. Capacity gets adjusted from time to time, but the stuff about legacies retreating overseas to avoid Southwest and AirTran is sheer nonsense.

The fact is that as CNCs add international markets, it strengthens the domestic network. Those Delta flights coming into Atlanta from Munich feed a lot of connect passengers on to New Orleans, Los Angeles, and Wichita. Plus a portion of them become internal US passengers for Delta, making other domestic trips before returning across the pond.

Fact: LCCs are scrambling to place aircraft, only because they've got a lot on order, and the markets where the LCC model works are not unlimited. But they're not charging to fill any voids left by majors. Essentially, there aren't any.

Regardless of what you might read in the media.

(c) 2007, The Boyd Group/ASRC, Inc. All Rights Reserved

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Hot Flash - April 16, 2007

GAO: Rural Air Service & Re-Authorization
Opportunities, Realities, Desperation ...
& Men-In-Plaid Scams

The US General Accountability Office (GAO) last week interviewed staff of The Boyd Group at length for professional input on the deepening air service challenges faced by rural communities.

They unilaterally contacted us because this firm has been in the forefront of the issue for over a decade, and we have a solid track record of assisting rural airports in improving air service. The Boyd Group is the only consulting firm that over the years has independently provided public input regarding what needs to be done to assure rural America is not cut off from the global air transportation system.

We've helped airports like Jackson, Joplin, Kalamazoo, Durango, Jacksonville (NC), Latrobe, Marathon, and a number of others add new air service. We've helped EAS communities enhance ridership, such as the SCASD grant we help three communities in Kansas win, resulting in a program that's resulted in double-digit increases in enplanements.

The GAO apparently recognized that we really do have the reputation for telling our clients the hard truth - even when it's not what they want to hear. When the economics are not there for an airline, that's what's called the truth, and there's no amount of number crunching, or market "studies," or community angst that will change it. Sometimes that really doesn't go over well. But facts are facts and truth is truth, and ignoring it can be very expensive in the long run for the community.

Re-Authorization: How Much For Rural Airports? The GAO was looking for independent, futurist views of what needs to be addressed in three areas: Essential Air Service, the Small Community Air Service Development Grant Program, and the concept of rural air service regionalization, where some communities in the same region may need to toss in the towel and agree to work together, focusing on a single gateway. (In most cases, we advised the GAO, peace in the Middle East is more likely.)

Some of the points discussed with the GAO:

Essential Air Service. The term "essential" needs to be re-defined as "necessary" and "fully-funded." Today, there are a number of cases where we're paying for scheduled service at airports that don't generate enough traffic to fill a 4-door Yugo.

We urged the GAO to recommend changes in the EAS program encompassing three basic criteria. All three should be in place before a dime is spent on EAS at a given point: First, to be EAS-eligible the community must have no meaningful alternative service, which means if there's a larger airport within a reasonable drive time, say 75 minutes, tell 'em to tune up the Chevy. Second, any EAS service must focus wherever possible on access to a connecting hub, on the brand of the airline operating the hub. (At some communities where EAS is entirely necessary, say Presque Isle, Maine, that simply isn't possible by virtue of distance).

In any case, silly sideshows like EAS flights at Pueblo, and Manistee, and Brookings have got to go, because nobody is flying on the flights to speak of, and in the case of Brookings, the service offered has less connectivity than an unplugged clock-radio. Somebody needs to tell the local congressman that having a couple 1900s departing to nowhere everyday with nobody on them is not some magic requirement for economic growth.

The third recommendation we made to the GAO -  and it's admittedly a third-rail issue - is that the community or the state has got to have some skin in the game - i.e., responsible for some of the subsidy risk. That could be a flat 10% share of the cost, or a flat percentage offset by ridership revenues, but there should be some local or state risk component. If the thrust of the current FAA Re-Authorization debate is trying to make general and business aviation pay their full share, then EAS communities or the states they're in - with some exceptions - need to belly up to the bar, too.

(And in this regard, don't miss the press push across the entire nation this morning, pointing out how GA airports and "business jets" are getting a free ride from fees paid by airline passengers. Articles in Denver. In Salem. In Bangor. In San Antonio - in the media all over the nation, customized with local references in each article. For proponents seeking to spread out the costs of the FAA and ATC, we're witnessing the Normandy Landing of media promotions.)

Small Community Air Service Development Grant Program. Yes, the staff of The Boyd Group has a bias regarding this program, simply because we've had more success than any other consultant in winning SCASD awards for communities, and more success, too, in helping those places translate the dough into real, long-term air service.

We told the GAO that the SCASD program has been enormously positive for rural air service for three reasons. The first is that it is clearly focused. The second is that it has been professionally administered and tightly managed by the DOT. The third is that the dollars are just what's needed to convince a carrier to risk entering a new small market. That much said, there are changes needed to make the program more effective. The first change is raising the funding to at least $50 million.

On a wider note, we recommended to the GAO that the DOT not encourage or entertain any more Space Cadet grant applications that could only have been dreamed up on some alien planet. It's one thing to be creative and to think out of the box, but quite another to be thinking like somebody who just left a Timothy Leary reunion.  

What should be round-filed in the future: intra-regional on-demand air taxi service, such as the one funded in the Dakotas in 2002 - really a feel-good deal, but it was doomed from the gitgo. Or, things like buying commuter airplanes, starting airlines, funding intra-state service nobody will use, and finally, anything involving a Cessna Caravan.

In past years, such awards have accomplished little more than entertainment. Most were born dead, but some, unfortunately went on to waste some substantial taxpayer gelt.

Past grants in these directions have come up giant croppers, and the funds could have been used much better in more ho-hum, but potentially successful, applications such as revenue guarantees or adding flights at EAS cities where there's a chance to build traffic back to economic viability.

Regionalization. Going forward, some communities are going to have to let go and accept reality. It's okay to swing for the fences in air service recruitment efforts, but some airports are stuck playing with a very small bat. But when the game's over, and there's no, or declining, interest on the part of additional carriers to serve the community, it's time to stop playing the air service equivalent of Custer's last stand, and start negotiating with the Indians, i.e., hard reality.

We pointed out to the GAO that there are two fundamental trends in rural air service. The bad one: the cost and revenue bar to support such service is going up. What small turboprops are left are eventually going to go out of service. Regional jets are expensive and getting more so. The Boyd Group Global Fleet Forecast projects that average aircraft size in US airline fleets will go up from 129 seats to over 140 seats by 2017. None of it bodes well for small and rural communities that have stagnant or even moderately-growing economies.

The good trend is that some rural communities are in the line of fire for substantial local job growth, and therefore have a real air service future. Typically, these are communities that are the beneficiary of substantial and focused in-migration of new industry. Examples: Tupelo, Mississippi, where there's a new auto factory being constructed. Or the emergence of aviation industries at GTR. Or, the military-related jobs that has made Delta Air Lines entry to Jacksonville, NC a success.

The minefield here for the feds, we noted to the GAO, is distribution of airport funding. Some financial triage must be conducted regarding where the big bucks are spent, which means trying to forecast where the growth will be, where the new runways, taxiways and terminals will be needed - and where they won't. Going forward, all rural airports cannot be treated financially equal. Tupelo, which will emerge as an auto manufacturing center, will need the bucks more than a rural northern airport that has a snowball's chance in Havana in attracting more air service. It's going to be tough, and maybe, politically impossible.

If It's Not The Answer The People Want To Hear, Study It Again. And that brings us to another dynamic in rural air service we shared with the General Accountability Office - increasing air service desperation that's developing out in the provinces. The natives are restless, angry, and very frustrated.

There are rural communities that are seeing two ugly air service realities. The first is that with the increasing costs of providing air service, the incumbent(s) has no intention or economic incentive to add more air service. The next is that there are no other airline systems that have any intention, nor the economic ability, to enter the market. In most cases, there simply isn't enough traffic to support more than one airline system. It's even worse when there's a bigger airport an hour away, or if a Southwest-served airport is say, within two hours. The rural community sees that it has few choices and higher fares. That leads to the feeling of being held hostage to the incumbent carrier. That leads to frustration. That leads to desperation. And, we advised the GAO, that leads to the community falling easy prey to snake-oil scams.

In some cases, it seems that desperate rural communities have started to replace widows in Boca as the preferred target for confidence schemes. It's one thing to think positively and, again, swing for the air service fences. Is is another thing when a consultant knows, or should know, that there isn't any carrier that has the intent nor the economic ability to serve the market, yet promises to do a "study" to find one. It capitalizes on the false belief that air service development is like medical science - just keep researching the matter and a "cure" will be found. It's vintage used-car lot stuff, peddled by the intellectual equivalent of men in plaid.

The reality - which some communities don't want to hear - is that there's no airline store out there. There is only a certain number of airlines that have the ability to serve a given rural community. This gets filtered by size of market, distance from the carrier's hub, type of aircraft operated, and the range of alternative applications for the carrier's resources. When all this is sorted through, the bottom line is that some rural communities simply cannot support nor attract another airline. Period. End of game.

At The Boyd Group, we have built our reputation not just by being the most successful firm in air service development work, but more importantly, by not selling false hope. We reviewed with the GAO the challenges faced by small airports in the Dakotas, for example. Thin populations and long distances from alternative airline connecting hubs.

There are no easy answers, nor do any really exist, to find a second carrier system that could provide additional service to many rural airports. Unfortunately, there are some consultants who peddle the hope of getting service, and all the community needs to do is pony up $30K or $50K for a "study" that will find the "cure."

At the end of the day, there is none. But the desperation of some communities is so high, they're eager to try anything - sort of like traveling to alternative clinics Mexico to cure arthritis with artichoke therapy. It won't do diddly, all it does is spend money and mis-lead people from facing reality.

Air Service Is Expensive. Some Communities Can't Pay The Tab. The rural air service issue is a complex and tough one. EAS and SCASD are mechanisms that can help, but the disparity in per-seat costs of serving a small community compared with serving larger ones is getting wider by the day. Within the re-authorization process, there must be additional funding to assure that a) truly rural communities have air service connectivity, and b) there are funds available to assist rural communities in incubating new service - but only where it can actually be supported.

Betting: some compromise will be found. Unfortunately, it will probably be one that pretty much leaves out funding increases for rural air service enhancement.

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Hot Flash - April 9, 2007

The Latest Episode From The TSA Twilight Zone

You are traveling within another dimension...a dimension not only of sight and of sound, but of mind-numbing stupidity. A dimension the boundaries of which are limited only by the the gullibility of politicians... A dimension where global terror is fought by eliminating lip gloss, toothpaste, and hairspray... A dimension where right and wrong, good and bad are no considerations whatsoever...
A wonderous dimension populated by political creatures who couldn't manage themselves through a re-run of Star Trek...
Wait! There's a signpost up ahead, a screening checkpoint...
Your next stop, The TSA Zone.

And what a wonderous dimension it is, magically protected from truth, totally outside the bounds of professional standards. A dimension where failure is lauded as success, and where inept bureaucrats have superhuman powers protecting them from any accountability whatsoever.

Episodes of the TSA Zone just keep coming week after week. Great story lines. Like how screening failures are really proof of management competence. How smuggling in secure areas proves how "flexible" and "layered" the TSA really is. Baggage theft. Weapons getting easily though checkpoints in tests. Airport perimeter security programs that are roughly the equivalent of giving Willie Sutton the combination to the safe.

And who can forget the human interest episodes, like the one a couple years ago, where the IAD Federal Security Director got nailed on a DUI during a high security alert. Or the one just aired this season where the FSD in a western city decided to expose himself in a hotel elevator. Or at Newark, where the FSD was given a $20K bonus for great performance, only to find months later that the airport really didn't have a full, comprehensive security plan.

And at the end of each show, the finale is a TSA official claiming that whatever went wrong, whatever the screw-up, it was proof positive that the TSA is doing a super job deterring global terror.

The TSA Zone - a wonderous new dimension of creative entertainment. But not very good security.

Miss 90% of Test Items. A Great Success! Last week's episode of the TSA Zone did not disappoint.

It opened with a great statement from TSA Security Director Earl Morris, who apparently works at the TSA Mother Ship of Intergalactic Mumbo-Jumbo in Washington.

“We have a very robust program of which we are very proud..."

Then the episode went into flashbacks of the events that led to this grand conclusion. It seems that the media discovered that screeners at Denver International failed to find 90% of test weapons and explosives passed through the checkpoint by Red Team investigators. That's right - 90%. A giant embarrassment to the TSA, right?

Wrong. Remember, this is The TSA Zone - another dimension where giant failure is declared as incredible success, just with a condescending, unquestioned one-liner or two. And nobody in this dimension, or outside of it, apparently, gives a hoot.

In the TSA Twilight Zone, incompetent security is described as "robust." Failure is achievement. There's no question whatsoever that good sense has left the building.

But in the real world, in the Dimension of Reality, this is called putting the public at risk. It's also called lying. To the TSA, a 90% failure isn't any big deal. In the real world, a 90% failure rate would indicate, five years after 9/11, that the TSA Zone is a show that needs to be cancelled as soon as possible. It isn't working.

TSA Zone-dweller Morris' claim - that the TSA is so robust - was in response to a comment made by Bogdan Dzakovic, the former FAA Inspector - and American hero - who blew the whistle on corruption at the agency right after 9/11, and had his career totally destroyed by a vengeful bureaucracy.

When asked by the media regarding the 90% failure performance at the TSA, Mr. Dzakovic put it clearly and honestly, stating that this was only the latest example that proves airport security is non-existent.

It's a cruel and dangerous joke that the TSA is nothing more than a self-perpetuating bureaucracy which not only has no accountably, but no integrity, either. Simply put - it's another dimension of sight and sound focused mostly on covering their own tushies, not protecting the public.

Only in the safety of "another dimension" could Morris, hiding in the TSA Zone, be "proud" of a system that lets bombs and explosives through screening points. We assume that today's Rod Serling of the TSA Zone, Kip Hawley, is proud, too. These guys are openly proud of incompetence. They are proud of failure. They are proud of the garbage performance of the TSA.

Professional Terrorists v Press Releases. Here's a flash for these two deluded bureaucrats - this ain't no fantasy show where simply re-writing the script when something screws up will magically make the the problem go away. This is the real world, and it's proven that we are saddled with mis-managed aviation security that's flunking tests time and again.

Here's another outside-of-the-New-Dimension flash for Hawley: terrorists are proud, too. They're proud of what was done on 9/11. They're no doubt proud, too, when they know that the $15 billion spent by the TSA has resulted in scandalous security failures at Newark, Orlando, Denver, and who knows where else. If a Red Team can get through, a professional terrorist can, too.

But Hawley and his team know that they're completely protected inside the TSA Zone. They know their system is secure, as are their jobs, yet all the while the TSA is a national laughingstock.

Instead of being fired - as he should be - for the security scandal that's being played out at airports all over the nation, TSA Administrator Hawley is lauded on the speaker's circuit. He's always welcome and warmly received at AAAE conventions, for example. Too bad some folks inside the Beltway don't have the guts to declare that the TSA Emperor is fully clothed, but simply has failed at his job.

Guess they, too, are proud of a security system that has a 90% failure record at the nation's #5 airport. This time is was a Red Team. Next time, it could be the real thing.

Got The Guts? Look At Why The TSA Was Created. While the TSA plays out its fantasy that they're really tough on terror, reality marches on.

Suggestion: instead of accepting the dishonest drivel from the TSA every time they fail, go on-line and pull up those pictures of terrified people hanging out of flaming windows at the World Trade Center, and of people jumping to their deaths, all because of criminally negligent aviation security. Then remember that experts are finding that security today is no better than it was on that September morning.

Then ask yourself how proud you are of the TSA. Of Hawley. Of bureaucrats like Morris. Of having this failing system lauded by people like those at the top of the AAAE, who certainly know better. All of these people are spitting on the victims in those pictures.

Bottom line: the 90% failure in Denver is one more warning that it's time to fire Hawley and overhaul aviation security. Now.

Before more people are killed.

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(c) 2007, The Boyd Group/ASRC, Inc. All Rights Reserved
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Hot Flash  - April 2, 2007

They're Baaaack!
The Airline "Quality Report" Returns

The issue date could not be more appropriate - it was yesterday, April Fool's Day.

We're talking about the annual "Airline Quality Report" - an opinion paper issued each year by a couple of universities, regurgitating publicly-available DOT data as if they had single-handedly discovered the Dead Sea Scrolls.

The date - April 1 - works, because over the past several years, the "AQR" has fooled enough journalists to fill Yankee Stadium.

Each year, the media breathlessly repeat the "findings" of this tome without any basic research or due diligence on the source, or any even basic questions regarding the alleged airline industry expertise behind the document. If it has a university imprimatur on the cover, well, what else is needed to establish the veracity of the data?

Lots.

Note To The Media: Ask Some Questions First. It's unfortunate that the subject matter - airline service - is so viscerally emotional. Especially after the jetBlue Valentine's Day event, the airline industry has been convicted, tarred and feathered of being a scourge on humankind. This AQR - which is little more than re-ordering of DOT data that's already public knowledge - only adds to the fervor of the witch hunt. Not academic analysis, just emotion.

This year, lo! - complaints are down to the DOT, and the authors are claiming it's because of "lowered expectations." Of course they have no data to back that up. None. No consumer research. Just their opinion, passed off as some type of expert finding.

The thought that maybe lower complaints are an anecdotal indicator of consumers being less abused does not cross their minds. They have determined that airlines are worse, or so they imply, and the reason complaints aren't up is that consumers are too cowed or too stupid to agree with the learned professor's subjective opinion.

In the interests of professional journalism, we'd suggest that reporters ask a couple of basic background questions before trumpeting the "findings" of this AQR:

Ask: Does This Represent Expertise In Airline Operations? The answer is little or none. It's difficult to make grand pronouncements on "problems" in the airline industry when the people doing the work have no real hands-on background in how a ramp operation works, how weather affects flights, or basic staffing issues. It's even more difficult when the source data for the "findings" are simply pulled down from a federal website, and, as noted below, are not scientifically compiled or verified.

Ask: Does This AQR Represent Awareness of Airline Realities? We'd suggest that reporters check this out before blindly parroting the stuff that comes out of this alleged expert report on the status of the airline industry.

Here's a clue: In past "AQR" reports, even the names of some airlines were wrong. They refer to "Delta Airlines" - but the name is Delta Air Lines. Or, "JetBlue Airlines" when it's really "jetBlue Airways." It's not a minor issue - if this report is to be taken seriously, one would think they'd know the proper names and spellings of the airlines on which they're purporting to be experts. Heck, one might expect that university professors would demand that students get names right in any project report or term-paper.

Apparently, the AQR isn't held to such a standard.

Last year, there were some additional comments made by the authors regarding baggage handling, including the discussion of luggage coming to the airport "loading dock." Nobody knowledgeable in the airline industry would ever use such a term. There are no "loading docks" - airline luggage goes to baggage make up areas (which are not "docks") and to claim areas - there are no loading docks anywhere in the system, nor does anybody in the airline business use that term in regard to baggage handling.

Again, if this were just some itinerant student report, that would be one thing. But this AQR is being held up to the world and the media as some benchmark expert analysis on the industry. If they don't even bother to find out how airports work, their credibility get an "F."

Ask: What Independent Data Are Represented Here? The answer is essentially none. The data comes from public DOT tables, which anybody has access to. They supposedly flush the numbers through some subjective formula that results in a subjective "ranking" of airlines, but as for any "survey" of additional hard data beyond the DOT stuff, past AQR reports were nothing more than information that the media has access to every month from the DOT.

We would also point out that DOT complaint data are simply compilations - regardless of what they may say, the DOT does not fundamentally verify complaints. Therefore the statistics are anecdotal, and are not scientific. Therefore, this AQR is not scientific, but anecdotal as well.

Add that to authors who think baggage goes to "loading docks" and some hard questions need to be asked. A comment by one of the authors raises more questions...

"As many people as are out there who are unhappy with the airlines right now, I was very surprised that the complaint rate didn't inch up some..."

Golly, professor, do give us that number - how many people are unhappy with "the airlines" - specifically?

There is no data to verify this statement. In the past, the rock-solid indicator of consumer "unhappiness", according to the AQR, has been the number of DOT complaints. But, gee, when those drop, well, there still must be a lot more upset passengers, because, well, the opinion of the authors is that people must be angry, regardless of complaints or lack of them. Their opinion, not supported by data, by the way. Scientific this isn't.

Then there's the statement in regard to higher delays, and baggage problems, in spite of fewer complaints filed...

"They (the airlines) just don't get it yet..."

No, its the authors of this lightweight report that don't get it. If they had a modicum of understanding of what's going on in the airline business, they'd not make such a stupid statement.

Delays are mainly the cause of the dilapidated air traffic control system, which victimizes the airlines and their passengers. But, apparently, these people don't understand the complexity of the system. As for luggage, there is the major issue of theft and pilferage that's being reported across the country at the TSA. The authors don't have a clue that the chain of custody of luggage is no longer exclusively in the hands of airlines.

But that's the main issue with this report - it spits out what's on the DOT website, without any analysis of the how's, why's and where's of the data. They just shoot to veneer conclusions, not hard independent analytical research. Yet much of the media just takes this stuff as gospel.

Ask: What's The Track Record of The AQR? When one goes into some of the earlier "Airline Quality Reports" any real credibility goes out the door.

Blessedly, the last few years have had a minimum of amateur subjective AQR narrative, but some of the statements made in AQRs from a few years ago were nothing short of hilarious, albeit factless, and indicative of little knowledge of the airline industry.

Some of the most memorable and inaccurate rantings were things like nasty airlines forcing children to sit in the back of airplanes, or "unrealistic limits" to carry-on, or refusing to let passengers carry food on airplanes, or airlines generally reserving window and aisle seats for frequent flyer program members. All concocted and bogus, and none supported by so much as a shred of data in the published document. But nevertheless, there such statements were, right under the names of the universities that published the document. So much for academic excellence.

It's Easy When Nobody Questions The Findings. It is unfortunate that today titles seem to be sufficient to support and validate expertise. One of the authors last year stated that the hub-and-spoke system is "outdated." That alone should raise more questions. It's trendy to beat up the hub system, but those that do are universally outside of the airline industry, and universally outside of reality.

It's easy for the Ivory Tower types to spout this type of drivel and never be questioned. Students won't argue - they want the grade. The airline industry won't say much, simply because, outside of the ivy-covered halls and the boundaries of the campus, nobody puts much stock in what comes out of academia, anyway. So, they live on in blissful ignorance of reality.

The hubs-are-outdated mantra generally comes from some selective, limited knowledge of the industry. In particular, the argument contends that a hub system doesn't supposedly utilize aircraft enough. Usually this is accessorized by some off-the-cuff comparison of utilization rates at Southwest with those at say, United. Not understanding the differences in revenue streams, and the operational systems, these self-appointed airline industry "experts" often go on to note the "profitability" of Southwest and the bankruptcies at other carriers.

Needless to say, there's no analysis of the fundamentals of Southwest's "profitability" or the hard fact that about 30% of WN's revenue comes from connecting passengers, without which the airline would go bust. And these academics also ignore the fact that over 50% of Southwest's passengers are either on a connecting itinerary or on a multi-stop journey. So much for the wonders of a clean, point-to-point system. But facts like this just get in the way, apparently. So does knowledge of airline realities.

Media: Some Reality Countering The Snake-Oil. Finally, what these AQR types don't seem to analyze are the fundamentals of air traffic demand. The vast majority of mid-size and smaller airports - and the economies which depend on them - would die - die deader than the academic excellence that once existed at America's universities - without the hub-and-spoke system.

For example, there is not one single nonstop market that could be economically supported today with local traffic demand at Erie, PA. And that's true for dozens of communities. Yet markets like this experience hundreds of thousands of annual O&D passengers. What keeps these communities connected is the hub-and-spoke system, which these trendy dwellers of academia proclaim as being "outdated," without much understanding, apparently, of the subject matter.

Another tidbit of reality ignored in the Ivory Tower: At most small and mid-size communities, as much as 80% or more of the local passenger traffic is comprised of markets each of which alone represent 2% or less of the total. Try that with point-to-point service, or by going back to the halcyon days of interline connections - days that didn't really exist in the first place.

But, Standby For Flim At 11. Lack of facts, lack of expertise, and lack of scientific data notwithstanding, this silly Airline Quality Report will be getting lots of media coverage, in most cases with zero scrutiny of the fact that it's little more than public data gussied up to look like a breakthrough in hard academic research. It will be entertaining and timely, given the events of February and March.

But it will offer little in the way of expertise, explanations or solutions.

Happy April Fool's, y'all.

(For a review of the outlandish "conclusions" from earlier AQRs, click here and then click on the appropriate boxes.)

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(c) 2007, The Boyd Group/ASRC, Inc. All Rights Reserved

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Hot Flash - March 19, 2007

Customer Service "Downsourcing" -
Major Airlines Are Starting To See The Light

Over the past 15 years, major airline systems have increasingly subcontracted aircraft, crew time, and ground customer service handling from what some still mislabel as "regional airlines."

While these entities were once independently-branded carriers, the majority today are simply in the business of selling lift and airport services under contract to major carriers. Generally, these companies make few decisions regarding where they operate, fares charged, or schedule. For the most part, they sell no seats to the general public. They are now just "Small Lift Providers," not "regional airlines."

In effect, the business relationship isn't much different than other lease arrangements at major airlines. Delta leases aircraft from, say GECAS and ILFC, and it leases lift from Republic and SkyWest, too. The only real difference is that the latter two come with crews as well as airplanes. And increasingly, major airlines have also contracted out - "downsourced" - handling of their passengers at many airports to these SLPs, too. Where American or United once had their own people handling their passengers at Syracuse or at Charleston, today, those functions are often contracted out to one of their SLPs.

Saves lots of money. Maybe.

Cheap Customer Service Is Very Expensive. To be sure, replacing mainline, often unionized, agents and ramp people with lower-paid SLP new-hires represents an enormous reduction in cost.

But major carriers are starting to find that in some cases it can be exorbitantly expensive.

While some SLPs really do a superb job, the unfortunate fact is that in many cases this downsourcing simply tosses the airline’s passengers into a system that is staffed by low-paid kids who have not the training, the support, or the supervision to properly provide comprehensive customer service, particularly when things go off-schedule.

The problem is compound - in some cases, SLPs generally don’t pay well, the training is minimal, and "customer service" gets translated into passengers too often being just processed by employees who have questionable skills to do the job.

There are cases where the pay is so low that these SLPs cannot keep staff on the job more than a few months. The result is enormous customer dissatisfaction and lost future revenue for the major carrier.

Big Airports. Sometimes Really Small Service. It's not just at small airports, either. In some cases, the concourses at hubsite airports where major carriers have downsourced passenger handling to their SLPs resemble Ellis Island on a really bad day. Multiple flights going out of small hold areas never designed for this type of operation. There are semi-confused consumers standing around with no place to sit. For entertainment, they can sometimes hear the agents' squawking radios revealing the inner workings – or inner confusion – of the operation. "Where's the crew for 6108?... I dunno, I just got back from lunch..."   Really professional stuff.

Paint The Walls? We Did That Back In The 70's. The SLP facilities at big airports are sometimes hand-me-down and clearly not a priority on the part of the major carrier. Passengers forced to schlep down filthy stairwells littered with trash, and then walk across a confused ramp often covered by the stuff that drips off airplanes and ground equipment. Then they leave their "carry-on" at the foot of the stairs, on the wet ramp, out in the rain, if they're not lucky. The whole show is almost intentionally second-rate.

At smaller airports, the horror stories are legion. There are cases where passengers in line 29 minutes before departure of a 34-seat turboprop are routinely turned away because they are "late." Incidents where staff have no idea how to re-book a passenger due to weather cancellations. It is so bad that some communities are in danger of losing all air service, simply because the consumer base uses other airports, refusing to be abused locally by poorly trained airline employees.

Excuses, Excuses. One major airline executive became quite indignant when this was mentioned at an industry conference a few years ago... "These are separate companies, and we don't have control over them..." Goody, that means you're selling seats under your name and then doing a bait-and-switch by giving the customer downsourced service on what is, when there's a complaint, not your problem.

Not much has changed, either. Last December, two 70-seat United Express flights, full of United passengers, diverted to Cheyenne, Wyoming due to Denver International being closed by snow. United has no employees at Cheyenne. The airplane crew - who worked for the leasing entity, Shuttle America - ran out of time, and the passengers were left to their own devices to find hotels for the night.

Passengers were effectively stranded when the next day the two airplanes flew out empty. Not us, was one of United's excuses. "That's Shuttle America..."  No, that's cut-and-run service, since none of these passengers booked a seat with Shuttle America, which was just the leasing company providing the planes. (Other stories on this incident include desperate passengers calling United reservations, only to get some clown in India who had no idea where Cheyenne was.)

If You Can't Afford The Table Stakes... Or there's the excuse from the SLP side that might be made - "We can't afford to pay wages and benefits that will keep employees!"  Okay, if that's the case your entire business is untenable... if you can't afford employees who can do the job, then you really need to go out of business, toute suite, and stop abusing consumers.

Light At The End of The Concourse. But this is not universal, and there are bright spots on the horizon. The poster-child for what airlines should be doing at hubs is Northwest. At both DTW and MSP, every SLP flight has a separate hold area, and in most cases, jetway boarding. From a facility standpoint, it is totally transparent with the rest of the Northwest operation.

Another bright sign is that Delta has apparently thrown in the towel and decided to take over what has been one of the most egregious long-term affronts to airline customer service – the ASA Concourse C operation at Atlanta. Probably the beneficial result of the SkyWest acquisition of ASA, Delta will install its own staff to handle its passengers. Small communities throughout the Deep South should be dancing in the streets.

Going forward, the trend is going to be major airlines demanding that the entities to which they sublease flying and customer service meet the same standards as the mainline carrier. This will be concurrent with the decline in the number of regional jets in operation, which is forecast to drop by almost 700 units by 2017.

Final point: airline profitability is a combination of costs and revenues. When significant parts of an airline's customer service delivery is sub-standard, both of these factors go in the wrong direction.

Tightening up on SLP operations could result in a lot more black ink to the bottom line. Right now, in a lot of cases, it's driving business away.

Bad service is an expense they cannot afford.

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Hot Flash - March 19, 2007

Chutzpah Quote of The Week

"TSA moves in a flexible, nimble fashion to address vulnerabilities with a layered security approach."

That was the latest babble from TSA Administrator Kip Hawley, referring to the TSA's after-the-event "surge" reaction to the revelation that Orlando International Airport was a hotbed of back-door gun and drug smuggling.

This was his smokescreen to cover the fact that the TSA was once again proven to be an embarrassing failure, with no cohesive, anticipative security program for airports' "back doors," despite the fact that it should be part of basic security, not to mention having been repeatedly brought up to he and his boss by Congress.

Tellingly, this numbskull statement was made just before the Orlando Sentinel reported that confidential security documents contained in the airport's master plan were found in a dumpster. Yup, there's real security awareness all around in Mickey Mouseland.

When the next terrorist event takes place, Congress, the airline industry and the airport industry will have no excuses. They know this TSA leadership is reactive and incompetent, and we've been warned time and again with events like in Orlando. Tolerance, and worse, encouragement, for what's going on at the TSA is putting the flying public at risk.

It's time they spoke out. Loudly. Our aviation industry is NOT secure. This time, it was just guns and marijuana.

Next time, it could be C-4 and RPGs.
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Just In From The Mother Country...
Demonizing Airlines For "Climate Change"

The British Conservative Party - out of power for around a decade  - just moved into the lead for making themselves look like a pandering Children's Crusade without a clue. 

In this case, a crusade to get the British traveler to pay the price for global warming, or in the new nomenclature now in vogue, "climate change," after a nasty winter that even brought snow to Tucson.

In their on-going efforts to reduce global greenhouse emissions, not to mention to find something, anything, that might have traction with the voting public, the Conservatives are proposing a tax on air travel to deter people from flying in the first place.

The concept is as simple as the minds that dreamed it up. The Conservatives want Brits to stay home and off of airplanes. That'll mean, according to them, less airplanes in the skies, and, voila! lower emissions for all. This despite the fact that airlines around the entire world are estimated to contribute 2% or less to total greenhouse gases, and cutting the number of air commuters between Heathrow and Manchester may fall well short of saving Siberian forests from deadly drought. Or, for that matter, do diddly to clean the pollution-filled skies of parts of China and India, clogged by factories that have zero emissions controls.

Just Rich People. The Ones That Used To Vote For Us. Just to show that Labor doesn't have a lock on compassion in the UK, the Conservatives' idea is, well, very egalitarian.The Conservative plan is to not tax those once-a-year travelers who holiday in the Canaries to thaw out from wet British winters, or the semi-drunken hordes flying charters to unruly football playoffs in Milan. No, these are not the offenders. According to the Tories, it's those frequent business flyers that need to be taxed to teach them not to travel so much and cause so much muck in the air.

Again, that should be a bang-up way of dealing with "climate change." And it shows a brilliant understanding of global trade, too. It'll sure make Britain a world power again, penalizing folks for leaving home. Too bad Conservatives weren't around when Sir Walter Raleigh or Sir Francis Drake were taking all those trips. Sure, they may have used wind power, but it's a leadpipe cinch they dumped a lot of raw sewage and other nasty stuff overboard. And there's no telling the mess that Lord Nelson left behind at Trafalgar. They all should have stayed home and protected the environment, according to the Tories' new doctrine.

Kill The Economy. But Save The Planet. Or, Maybe Not. Let's do some quick math to determine the wonderous benefits that may derive from the Tories' plan. Very rough math, but a fair way of estimating how much the Conservatives' bold initiative can really save the world.

Okay, British jet airliner fleets are approximately 5% of the globe's total. Let's say that the Conservatives' plan is so wildly successful that it reduces British flying to the point that half of these airplanes - or the equivalent flying - can be grounded. That means good-bye to 2.5% of the nasty jets threatening the globe and causing Al Gore sleepless nights.

Apply that to the 2% of the alleged global airline share of bad stuff in the air, and it works out to a whopping reduction of one twentieth of one percent of the world's greenhouse gases. And that's based on half of Britain's passenger fleets shut completely down, or the equivalent of less flying hours, transforming the UK into the new Hermit Kingdom.

That oughta make the UK's economy just glow. Luckily, there's no way that this much flying could ever be cut from the UK fleets. Without question, the Conservatives are without a clue, which maybe is why they're also out of power, too.

The Man-Is-Bad And Must Be Stopped Hysteria.This new airlines-are-bad trend is little more than a latter-day Salem Witch Hunt. Lots of accusations, not a lot of sense, but a rabid fear of disagreeing, to avoid being burned at the stake for being a climate heretic. Don't question anything regarding "climate change." The time for rational discussion is over. This is now Academy Award-winning religious dogma that will brook no dissent, and part of that dogma is that all those rich people flying around in the business class cabin are causing icebergs to melt and polar bears to wear sunglasses.

Yessir, the British Conservative Party wants to stop citizens from traveling as part of their well-meaning, albeit totally dingdong scheme intended to save the world. Right, let's take that thought process (if you can call it thought) to its logical conclusion and just go back to caves and live like the animals that these people think are so ecologically righteous.

Margaret Thatcher should be just thrilled, wherever she is.

(c) 2007, The Boyd Group/ASRC, Inc. All Rights Reserved

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Important Update: New Award Criteria
Small Community Air Service Grant Program

Communities considering applying for SCASD grants this year need to be crystal clear on the changes in award criteria for 2007.

In particular, the DOT has now decided that an application from a previous awardee will be rejected if it contains any use of funds whatsoever that was mentioned in the prior successful grant application.

For example, if a community's prior award was to recruit an additional airline, and that proposal included use of some of the funds for marketing and promoting the new carrier, providing revenue guarantees, and purchasing ground equipment to support the carrier, that means any new application that contains any of these uses in any form will be turned down.

Therefore anything that was even mentioned as a use of funds in a prior successful grant application is now a deal-killer in a new application.

Also, grant funds cannot this year be used to add service or frequency at a community that already has EAS service. This is also a change.

Last year, The Boyd Group guided its clients around these types of obstacles. If you're interested in getting a share of this year's SCASD dollars, give Mike Mooney a call at (303) 674-2000, or click here. to ask for a copy of our exclusive Guide To Filing A Successful Grant Application.

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Hot Flash - March 12, 2007

The Airline Industry:
Maybe It's Time It Took Its Future In Its Own Hands

The clamor in the media for the blood of airlines in the wake of the JFK jetBlue event last month has been hallmarked by a decided lack of understanding of airline operational realities. Much of the criticism has come from ignorance, and much of it is nothing more than cheap populist babble, based on zero facts.

But that doesn't mean that airlines are blameless.

True, it is an indisputable fact - ignored (sometimes intentionally) or simply glossed over by many of the airline industry's critics - that airlines and their passengers are joint victims of an operating environment that is choking economic growth.

The main reason for delays is that the FAA has consistently been allowed to fail in its job of building and maintaining an air traffic control system that meets the growing needs of the nation. The result is that while airlines have added capacity and flights to adjust to market demand and market growth, the ATC system has lagged farther and farther behind. Result: delays, cancellations, inconvenience. Easy alternative: airlines cut back, fly less, and, in an environment where flights are 80% full, carry fewer people.

Airline Industry: Beat Me. Whip Me. Make Me Have Delays. That much said, the solution is not that simple. As a matter of fact, the solution is nowhere in sight. The simple reason is that maybe the airline industry isn't sufficiently focused on solutions, despite the abuse heaped on it by the FAA's failure to keep the ATC system updated. One might think the industry would be at the FAA's throat.

Alas, that's far from the case. Actually, the FAA/Airline Industry relationship has a lot in common with habitual spousal abuse. The ATC system almost daily beats the airlines and their passengers to a pulp, yet, by and large the industry essentially supports the FAA, instead of filing charges.

It gets down to this. The folks who rail against the airline industry for cancellations, hours of delays on the "tarmac," and other outrages, are, unbeknownst to them, really right. Yes, the airline industry is indeed a victim of the deteriorating ATC system, but they are a willing victim, which makes them accountable.

Let's put it on the table. The airline industry knows the outdated ATC system inflicts huge cost hits on them and on their customers. A decade ago, United and American each internally estimated that the decrepit ATC system cost each of them over two billion dollars a year in delays and lost productivity. It's a lot worse now.

Airlines know full well that the ATC system is the cause of delaying flights in clear weather at LGA, letting passengers wonder why, and concluding that it's the airline that's at fault. Yet, the industry almost never points a finger at the FAA. So, by default, it's the airline industry that gets pilloried in the evening news and on semi-informed talk shows, not the FAA.

The airline industry knows full well that the FAA's approach to fixing and upgrading the program is a near-total failure. Airlines know that their typical joint airline-FAA committees on the subject degenerate into mutual admiration societies that only serve to keep the current system in place. They know that the FAA Administrator is mostly intent on excuses and cover-ups of continuing failures.

Yet, there is absolutely no outrage in airline front offices. They are content with an operational environment that abuses them and their passengers. Name one airline or one industry Alphabet Group that's come out swinging at the FAA.

So, at the end of the day, airlines are responsible for delays and the bad customer service that derives from the FAA's continued failure to do its job.

It's A Decades-Long Trend, Too. In August of 1994, The Boyd Group and the ATH Group published an independent study on the matter, titled Free Flight: The Economic Impact. This was the document that brought the concept of "free flight" out of the back rooms of industry-FAA cabals, and into the forum of open discussion.

It also prompted Congressional hearings on the matter. At those hearings, it was noted (and it's in the Congressional Record) that, given the costs inflicted on the airline industry by the ATC system, airline CEOs "should form a Conga-line" into the FAA Administrator's office, demanding the system be fixed. Judging by what's happened in the ensuing years, airline CEOs apparently don't have much rhythm. After demanding cuts in labor, operational systems, and from suppliers, it begs the question as to where is the gumption to take on what is today their #1 cause of operational waste.

The point is that the airline industry cannot afford to continue to accept the system in which it operates. And if it does, it is precluded from denying responsibility when flights get struck on taxiways, or when thousands of consumers are trapped at ORD due to a line of thunderstorms in Iowa that the outdated ATC system is too outdated and too under-staffed to handle.

Labor unions and their employees have given up money, lifestyle, and in some cases, their career futures to get the industry righted after 9/11. But those savings are eaten up every day by an ATC system that the industry knows is wasting billions a year.

The ball is in the airline industry's court.

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Hot Flash - March 5, 2007

Small Community Air Service Grant Development Program
Off & Running

With some new revisions, the 2007 SCASD grant program is now authorized.

Congress has allocated $9.9 million to this year's SCASD program, and the DOT has set a deadline of April 27 for grant applications. Any airport that was classified as a "small hub" or smaller in 1997 can apply for funds aimed at a range of air service deficiencies.

We've helped communities all over the nation use the SCASD program to improve local air service. From re-establishing air service at Latrobe, PA, to gaining a second carrier at Lewiston, ID, to incubating low-fare service at Sarasota - our clients have been able to find real uses for these funds. Last year almost one third of all SCASD program dollars were awarded to clients of The Boyd Group.

The Boyd Group's exclusive Guide To Filing A Successful SCASD Application has been updated to reflect the changes made to this year's program, and is available on a complimentary basis to communities that meet the DOT's filing qualifications.

To discover how we can assist your community in getting its share of SCASD funds, and for more details on this year's program, Click Here.

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It's Not Just Passenger Waistlines That Are Getting Bigger
Global Airliner Forecast Update

Airports planning to construct extensive RJ-specific gate facilities may want to revisit the extent of such projects, as there will be approximately 700 fewer of these small jets in the American skies ten years from now. Over the same period, the average size jet in US airline operation will grow from 127 seats to over 158 seats.

And the shift to composite manufacturing technologies will fundamentally alter traditional aircraft manufacturing channels, affecting regional economies that have historically been dependent on production facilities for metal airliners.

These are findings contained in the updated 2007-2017 Boyd Group Global Fleet Demand & Trend Forecast now being shipped to subscribers.

Based on the firm's extensive airliner fleet database, the forecast indicates some very significant shifts in airliner demand, as well as a number of "wildcard" events that should be monitored by airports, airlines, and financial institutions.

Some of the key points in this new independent forecast include:

Mid Is In. Due to retirements and entry of new-generation airliners, the strongest demand is for mid-size airliners. For example, at the lower end of  the 11,248 new jet airliners required globally over the next ten years, over one third of that figure will be comprised of mainline-cabin airliners between 75 and 125 seats. Most of the demand for widebody airliners will be driven by retirements of older airliners as new-technology models, particularly the 787, the A-350, and the 747-8, come on line. (Turboprops indicate only “trickle” demand, and are therefore not included in the forecast.)

Retirement Bubble  - 2010 - 2013. In the mid-years of the forecast, over 50% of all new airliner demand will be the result of retirement activity, overtaking demand increases caused by traffic growth. In the last years of the forecast, however, this rate drops below 40%. In most cases, retired airliners will remain that way, particularly widebodies, where the replacement drive will be the result of the arrival of higher-efficiency 787s and A-350s, making older-technology airliners obsolete.

RJs - Demand Is Evaporating. The Boyd Group Fleet Demand & Trend Forecast segregates "regional jets" separately, regardless of capacity. This is because RJ-cabin airliners (ERJ and CRJ) are platforms aimed specifically at the small lift provider segment of the air transportation industry. Demand for these "regional jets" will not rebound, and will taper off to almost zero by 2012. Higher-capacity “stretched-cabin” versions - even 90-100 seat variants - will likely be mostly limited to follow-on orders from small lift providers, as their main – although likely substantial - operational advantage is commonality with smaller, earlier CRJs. New demand: under 300 units globally. In fact, the forecast indicates a decline of over 850 RJ units in global fleets.

Replacement Demand For Retired DC-9s/F-100s/737-200s. Of note is the demand forecast for lower-capacity mainline-cabin jets in the 75 to 100 seat range, which will be approximately 15% of total jet airliner demand over the next ten years. The Embraer E-170/190 platform is currently the only player firmly within this mainline-cabin category, as smaller versions of Boeing and Airbus airliners do not have competitive economics. Wildcard: a next generation composite 737 or A-320 platform, with variants that would encompass this size range, at least in terms of operating economics, could emerge as a major competitor to the Embraer E-Jets.

Growth Everywhere. Particularly China. Total global passenger airliner fleets will expand by 34.5% between 2007 and 2017, with China being responsible for almost one third of that increase in fleet size. China will also be responsible for 21% of global demand for new jet airliners, essentially equal to that of Europe. North America’s share of global demand will drop to just under 34%.

US Airports: Prepare For Larger Aircraft. But Not The A-380. The average unit size aircraft operated by North American carriers will increase markedly, to 158.8 seats, by year 2017, while China will see average passenger airliner size decline by 8% during the same period.

The LCC Frenzy In Europe Coming Back To Earth. Capacity increases in Europe will flatten substantially - below 2% per year - subsequent to 2010. The clear indications are that the low-fare airline phenomena will slow in that region.

The Boyd Group is relied upon by aircraft manufacturers, OEMs, financial institutions and other aviation entities for its independent and incisive fleet forecasts. This year's complete Global Fleet Demand & Trend Forecast can be ordered securely on-line by clicking here

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Aviation Security Update - A Quick Review

Just how far we have not come in aviation security is again outlined in a recent GAO report, which between the lines concludes that the TSA staffing models are out of whack.

Add that to really inept "policies" like the 3-ounce (or is it now 3.4-ounce?) rule for liquids, revelations of inspections of screening points being doctored, TSA officials getting caught doing weird stuff, and other fun news, and there is no doubt where this nation is headed.

Click here to go to the Security Update for a couple of quick bullet points.

(c) 2007, The Boyd Group/ASRC, Inc. All Rights Reserved

Hot Flash - February 26, 2007

Update:
2007 Small Community Air Service Development Grants

So much for prognostications of a late docket issuance. The DOT has issued the 2007 SCASD docket. For details of the 2007 SCASD program, and examples of how these grants have improved air service in the past, click here.

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Top Five Reasons A Congressional Passenger Bill of Rights
Would Be A Dishonest Sham

It's taken on a Crusade-like atmosphere.

The evil airline industry must be tamed, punished, and shown the will of the people. Those that disagree or who dare question the Crusade are infidels, who incur righteous anger from those who have joined the Great Cause.

"You are anti-consumer!" a few outraged, if mentally-unburdened, radio talk show hosts have blurted out when views alternative to the Doctrine of the Crusade are mentioned. Editorial Boards across the nation have joined the movement, demanding that "something" be done about the on-going nightmare of airlines trapping passengers on airplanes for hours. To read some of the tomes coming out of the print media, one might conclude that an airline ticket is immediate entry to a winged Gitmo.

The Righteous Din Is Really An Uneducated Mob. Now for something that a few folks in the media, and it seems just about everybody in the consumerist world, want to ignore. It's called reality.

The top five reasons that a Congressional passenger rights bill would be a dishonest sham:

Reason # 5: What happened at JFK with jetBlue on February 14th was not necessarily completely avoidable, as congressional-panderers maintain. jetBlue launched flights that subsequently could not take off due to weather, and could not be safely deplaned due to that weather. A Congressional mandate as proposed won't change this in the future. Those that blindly maintain that "there's always a set of stairs" or "get a bus" some other lame-brained comment have never seen the complexity of running a ramp operation. If the plane is a half a mile from the terminal, trapped by sudden ice for example, those options don't exist.

To be sure, for aircraft close to the terminal, a better job might have been done, and it will be done by jetBlue in the future. They don't need the sudden blowfish outrage of Sen. Barbara Boxer to fix it.

Reason # 4: These are NOT common occurrences. As noted last week, do a news search to find any major such events since 1999. True, the American flight at Austin on Dec 29 was apparently a case study in screw-up, but despite the dishonest implications by some self-appointed protectors of the consumer, it was not an epidemic across the nation. It was one flight out of thousands operated by AA, and NOT an indication of a systemic failure.

And, please, for the media out there that bring up the 1999 incident in Detroit, note that that was eight years ago, and there was a major one-off and fast-moving snowstorm that simply overwhelmed the airport and the airlines. Glance at the calendar - enough time has passed since then to experience two Presidential campaigns, a war in Iraq, and to gestate three generations of Indian elephants. It cannot be used as a dot on the continuum of airline consumer outrages.

Reason # 3: Simply mandating that passengers have the right to get off an airplane in three hours (or whatever other arbitrary time) does not concurrently provide the means to do so. What Senator Boxer and her no-need-to-check-reality buddies don't understand is that there may not be facilities or equipment or the ability to get people off airplanes, get food, and other things they may congressionally-mandate. And in some cases, it may be really bad customer service to do so.

See, passengers can find themselves on an airplane for hours, and not be at the same airport they departed from.

When Denver's all-weather airport shuts down due to weather, sometimes a dozen or more flights can get diverted to Colorado Springs. All gates may be already occupied. Some of the carriers may not have staff at that airport. Furthermore, there may not be the ability to off-load passengers safely due to the volume of aircraft at the diversion airport - or to get them back on the plane again. Then it may be the case that there are no sterile areas available to off-load passengers, which could mean once they're off, they stay off, particularly if there is no TSA staff on duty.

The point is that the "problem" of folks stuck on airplanes is not one that congress can wave a wand and fix, nor is is a one-solution fits all, nor is is one that is endemic to the airline industry.

Reason #2: These situations, particularly the jetBlue 14 February event, are UNIQUE. That day the weather appeared to allow operations, but turned nasty unexpectedly, trapping airplanes on the ramp at JFK. To paint this as a systematic industry-wide problem that the airlines are not addressing is simply dishonest.

Reason #1: Airline consumers do deserve better. And that means they do not deserve the thousands of hours of delays encountered every year because the FAA's air traffic control system has been incompetently managed over the last 20 years. Unlike the jetBlue incident, flights are routinely trapped on ramps, diverted, or cancelled simply because the ATC system upgrades needed to handle the nation's air transportation system have been negligently mis-managed by the FAA. If Barbara Boxer and some consumer vigilantes really cared about passengers, it's the ATC system they'd focus on, instead of playing cowardly soapbox politics.

Going forward, we'll be hearing more on how Congress must save consumers from the evil clutches of the airline industry. The airport industry best not conclude that they're going to be immune from this stupidity, either. It's not above these oh-so-outraged Senators from demanding that airports have the facilities ready and in place to handle such situations. Stairs. Ramps. Jetways. Food concessions open and ready. Whatever fantasy Congress can dream up to look like stars. And moral cowards.

What these incidents have illuminated is not how bad the airline industry is, but instead how shallow and unconcerned Congress is.

(c) 2007, The Boyd Group/ASRC, Inc. All Rights Reserved

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Hot Flash - February 19, 2007

The Torches Are Lit. The Mob Is Enraged.
The Rumors Are Rife...
It's Time To Beat Up Airlines. Again

Here's a fun suggestion.

Do a news search for anytime in the past year, up to mid-December of 2006. Look for all the media stories on passengers getting trapped on airliners for hours, stuck on the "tarmac" (a media term, not much used in the airline industry) and suffering the total indignity of no food, no water, no lavs.

What you'll find: almost nothing. That's because such events simply didn't happen much, except in very extreme weather conditions.

But you'd never guess it from the panting stories being churned out by any number of me-too journalists, trumpeting the sudden need for a "Passenger Bill of Rights" as a result of the alleged constant incidents of passengers getting abused by airlines intentionally caging passengers inside airplanes for hours, for no good reason except for fun.

On December 29, American Airlines really screwed up, with the result of a single airplane being stuck for eight hours on the ramp in Austin (note to journalists: that's what you call "tarmac") with no good reason. Not something to be proud of. But it was a one-off human failure event, not part of an industry-wide attack on paying passengers, as some nitwit consumerist gadflies would have you believe.

Then on Valentine's Day took place what is becoming the Bastille Day of airline consumerism - jetBlue got several airplanes stuck on the ramp for hours at JFK. That was all that was needed to light a fuse to politicians, consumerists-without-a-life, and a few journalists who tend to file the story first and research the facts later.

These two events have launched what has become a media lynch mob, ready to hang those nasty airlines for all their anti-consumer actions. The delays! The lost luggage! The cramped, full cabins! And now, the virtual temporary kidnapping of thousands of passengers by intentionally trapping them on airplanes, all for evil profit!

The folks who organized the Salem Witch Hunts would be proud.

Needless to say, the usual politicians have jumped in to protect the consumer. At the forefront is Senator Barbara Boxer (D-CA) who has suddenly got consumer religion, and is promising to implement new legislation to force airlines to make sure passengers are not inconvenienced when weather and, as noted below, the FAA, screw things up.

Boxer, among other things, is demanding legislation that will give passengers the "right" to get off an airplane should it be on the ground for more than a legislated number of hours. Sounds good. Sounds wonderful. And it's a typical blanket attempt to legislate something that can't be legislated.

Okay, Senator. What about when an AirTran flight is diverted to, say Colorado Springs, a location where the carrier has no staff whatsoever, when Denver's "all-weather" airport is closed due to weather?   Say, along with 20 other airplanes. Say, when there is no gate available. Say, when there are real security issues, particularly for an airline that has no staff at the diversion airport?

We could go on, but this mess will unfold more in the coming weeks as the angry mobs continue to grow, egged on by media stories - a few, unfortunately, with valid points - that will feed on one another, illuminating how heartless airlines really are, facts not withstanding. We're going to hear from all sorts of sudden experts in how airlines can fix their problems. And there'll be some wonderful Congressional hearings where human passenger suffering will be detailed before oh-so-concerned committees of politicians emitting a river of crocodile tears for the benefit of the C-Span cameras.

The unfortunate part is that airlines have indeed from time to time allowed events to happen that, given some reasonable pre-planning, could have been avoided. More unfortunately, airlines are high-profile targets that politicians will paint has having no excuse for making any mistakes in handling passengers.

Furthermore, there really are some increasing cracks in the airline customer service armor that politicians in the coming weeks will exploit. The witch hunt is on, but this time there's just enough witchcraft in the airline business for politicians to exploit in order to "justify" burning a carrier or two at the stake.

The trials have already begun in the flush of media stories that would have the public believe that the airline industry is trying to turn airports into winged gulags, holding passengers against their will, trapped in airplane cabins.

But in the meantime, a couple of realities to ponder amid the din:

The Only "Epidemic" Is In Really Sloppy Reporting. Not Airline Failures. The number of events where passengers are trapped on airliners are very few, and in virtually all cases are the result of weather-related issues that would be difficult to have foreseen. Not that planning can't be better, and this is not to say that there really are some incredibly bad customer service stunts from time to time.

But it is blatant dishonesty for Boxer and the rest of her hoodlum friends in Washington to paint these events as some sort of intentional disregard for humans that she can fix with punitive legislation. As noted above, before Dec 29th, this wasn't even an issue. Two events, and, poof! we have an epidemic.

jetBlue: An Example of Excellence, Not Failure. The media and politicians' not-so-veiled implications are that what happened at JFK proves that jetBlue is intentionally and wantonly anti-consumer. In reality, that's like accusing  Mother Theresa of running a numbers racket in Bombay.

jetBlue is managed at the top by probably the most moral and principled people in American business. Suddenly, it's forgotten that jetBlue brought excellence in customer service, tied to low fares, into markets where prior to their entry one needed a wire transfer from a bank in Zurich to get a ticket out of Syracuse. But to listen to the media vultures, jetBlue has fallen from grace and has gone over to The Dark Side.

Those implications are inherently dishonest. jetBlue's main problem is that it's run by humans, and humans can make mistakes. Unlike Barbara Boxer.

In this case, jetBlue apparently did not respond rapidly enough to deal with the storm. and, judging by continued cancellations days after the event, there could be some major problems with the carrier's operational recovery systems. But in the context of what that airline has done over the past five years, they'll fix it, and don't need the klutzy help of Congress. (Oh, and by the way, for the enraged muddle-brained dwellers of the consumerist peanut gallery out there: we don't do any work for jetBlue. We're just telling it like it is.)

How Come Boxer Won't Take On The FAA? Whatever consumers experienced on that Valentine's Day at JFK, it's diddly compared to what's inflicted daily on the flying public by the incompetence of the FAA's collapsing air traffic control system. In fact, much of the mess that Boxer and her cowardly fellow-travelers claim is the airlines' fault is instead the result of her failure to hold the FAA accountable. At least $8 billion in excess operational costs are passed on to the consumer annually because Marion Blakey and her predecessors couldn't get their job done, and Congress has done nothing about it, year after flight-delay-strewn year.

Face it: the FAA's continued failures to fix the ATC system is inflicting not only daily damage to consumers in the form of delays and cancellations, but is putting them at a safety risk, too. That's a whole lot more dangerous that what happened last week at JFK.

But Barbara Boxer and her Congressional friends don't have the guts to take this on. The FAA and the ATC system won't generate the high media profile that taking blind shots at airlines can bring. In short: Senator Boxer is an opportunist coward.

Airlines: Playing To Boxer's Inside Straight. To be sure, nobody can completely design an airline operation that's bullet-proof from effects of weather. But that doesn't change the fact that airlines can do a better job of focusing on the customer.

One of the major and emerging failures is the lack of service consistency across some major airlines' service systems. In fact, they're giving Ms. Boxer some great ammunition to get her inept "Rights" legislation through to a bi-partisan success...

Outsourcing. When a passenger off a flight diverted to Lincoln calls reservations and the dude in Mumbai who answers the phone thinks "Lincoln" is just a competitor to Cadillac, the airline has a problem. (A bit of a stretch, but there is a problem with some of this foreign-outsourced service being short on knowledge of the subject matter, including not having any earthly idea where, or what, Omaha is.)

Small Lift Provider Contracts. A major part of US airlines' systems today are operated by leased-in aircraft and crews, what used to be called "regional airlines." Today, these leasing companies operate the major's markets of all sizes, often alongside aircraft operated by mainline equipment.

The point is that somebody who books a seat on United Airlines is a United customer, regardless of the airplane that he or she eventually gets on. It's a United customer if he rides a UA A-320 leased from ILFC, or if he rides a United Express CRJ leased along with its crew from a small lift provider.

But consumers sometimes find that when things go wrong, that leasing contract between major and the small lift provider suddenly doesn't exist. Often majors outsource their customer service at smaller airports to these entities. The problem is that some of these small lift providers spend more time training employees to dump the lavs than on skills to deal with passengers, and when things go wrong, the service experience can be like trying to reason with a semi-literate street gang.

Customers feel shortchanged and abused when the carrier they booked ends up putting them in the hands of shiny-faced kids who don't have a clue, and sometimes don't want one.

To be sure, some SLPs do a very good job. But a few in some cases are barely a step ahead of a primate farm. There are incidents where the lazy lunks hired at near minimum-wage at some of these small lift suppliers will actually send an agent to the ticket counter 29 minutes before the departure of a half-booked 34-seat turboprop, just to tell the passengers still in line that they "missed" the flight due to "the 30-minute rule." Or where even the simple task of re-booking passengers might as well be a complex question in fractal geometry as far as the agent is concerned.

Worse, there are even incidents when a customer's been abused by a small lift provider, the contracting major airline goes into a dishonest Pontius Pilot mode, no pun intended, denying any responsibility, because, well, "that wasn't our plane. That was Trans-Deficit Regional. You'll have to call them."

No, they're going to call Senator Boxer instead.

Dumb Rules Enforced Dumbly. One of the hallmarks of bad service is relying on rules that make little sense. Like concocting a local 30-minute cut-off at a rural airport served with 30-seat turboprops. Or, when a passenger on a later flight shows up for an earlier one that has plenty of open seats, and the airline insists on hitting him up for an additional $25 bucks. Great for generating brand-loyalty.

The message is clear: airlines are under attack. Some of it is understandable, but most of it's because, after two stuck-on-the-ramp events in two months, we have a real crusade that will provide Congress a refreshing alternative to arguing about immigration or Iraq. Beating up airlines can be wonderfully bi-partisan.

Airlines: Circle The Wagons. And Start Shooting Back. The industry has the responsibility of protecting its passengers not only from the weather and from delays, but just as importantly from bad legislation. That means standing up to this stuff, and making very sure its own house is as clean as possible.

Senator Babs is coming. And she's got lots of ammunition, some of which the airline industry is providing.

(c) 2007, The Boyd Group/ASRC, Inc. All Rights Reserved

Hot Flash - February 12, 2007

The DOT's EAS Program
A Guarantee For Rural Economic Decline

Rural air service is a hot topic in Congress. At the recent hearings on airline mergers, the proceedings degenerated into senators trying eagerly to outdo each other, whining about how "deregulation" has killed off air service to smaller communities, and something, yes, something must be done about it.

They could start by looking into the mirror.

It's the clumsy, half-baked, and obsolete DOT Essential Air Service program - which they all support - that's nearly guaranteeing that some regions of the nation will be cut off from the national and global economies. EAS generally supports airplanes nobody wants to fly, sometimes at airports nobody wants to use, with service levels so low that it's a joke. But it does provide a wonderful soapbox for self-righteous politicians who wouldn't use EAS-subsidized service themselves on a bet. The fact is that all too often, EAS dollars are being wasted to maintain flights (not air service) entirely for political reasons.

Designed nearly 30 years ago, it's a program that is in dire need of being brought into the 21st century, because as it is structured today, it's relegating rural areas to a guaranteed future of being cut off from real economic growth. In general, it assumes that "air service" is defined as a couple of turboprops departing each day to a larger airport, including some that the DOT still classifies as "hubs" but which haven't seen a connecting passenger since the Ed Sullivan Show went off the air.

That, for the record, is not air service. All it does in too many cases is simply waste fuel and, in the long run, deter real air service from developing for a given region.

But that's totally ignored. Since it's budget season, we have the expected grandstanding from elected officials.

Problem: Focus On Dollars, Not Economic Need. The Bush Administration wants to reduce EAS funding and have communities pony up for some of the costs, with the reasoning that the nation's taxpayers shouldn't be soaked to support air service that even the people in the communities involved won't use. This, leaving open a huge political opportunity to paint the Administration as heartless and cruel, has prompted the likes of Hillary Clinton to propose legislation, such as the "Essential Air Service Preservation Act of 2007," to assure that the program is not financially molested by those knee-jerk right wingers.

Note that Bush just wants to slash the program. Hillary and her colleagues want to use it to show voters that they really, really care about smaller communities.

Both sides are not only wrong, but they represent the core reason that we have a rural air service crisis in the first place: neither side has the guts to admit the program's a failure, and hard decisions need to be made regarding a replacement.

Air Service Is The Wrong Approach. Regional Connectivity Is What's Needed. It's not that the concept of supporting service to truly rural airports isn't a good one. In fact, it is absolutely necessary. But the EAS program today has no resemblance to any mechanism that accomplishes this. It simply buys airline time based on a totally outdated set of criteria, aimed at keeping scheduled flights at airports that historically had scheduled flights, with the blind assumptions that, a) the community can still support such service, and, b) we're still in the 1970s where interline connections were the norm. 

One cannot blame the Bush Administration from wanting to do a slash-and-burn on this part of the national budget. One can blame them, however, for not recognizing that a new program is critically needed. On the other side, one can universally take shots at cheap politicians like Hillary, who want to protect the very program that assures the North Country of New York State of continuing inadequate and Balkanized air service. The point is that a regionalized approach is needed, but that means telling some communities that the two 1900 departures at the local airport that nobody uses have got to go. Hillary doesn't have the integrity to do this. She's pandering.

Tale of Two EAS Cities. The problem, which is likely what the Bush Administration, in its signature bumbling manner, is trying to point out, is that what the EAS program supports in many cases is neither "essential" nor can it be defined as "air service."   "Essential" means that there is a pressing need. "Air service" presupposes that people would use it.

We can take Pueblo, Colorado as one example of this. Hundreds of thousands of dollars are being spent to keep two independently-branded 19-seaters flying to Denver each weekday. Such a convenience, too, as it's an alternative to that 45-minute (or less) drive to Colorado Springs, where there's service via six major airline systems, accessing these carriers' one-dozen (count 'em - 12) various connecting hubsites.

Waste? You betcha. But try to point out that tens of thousands of consumers in Nassau and Suffolk Counties have at least that much of a drive time to get to LGA or JFK, and Senator Salazar (D-CO) will condescendingly ignore you. The people of Pueblo "deserve" that air service, even though they don't use it because there's much better access just to the north. Like, to hear the politicians, if those two B-1900s didn't operate, the economic underpinnings of Pueblo might collapse. Why, the new super-security penitentiary in nearby Canon City might have to close for lack of inmates.

That's probably why the EAS carrier at PUB is doing a rip-snortin' 28% load factor. On 19-seaters, too. Waste of money.

Now, let's take a look at Presque Isle, Maine. It's the airport gateway to a huge region of Northern Maine represented by Aroostook County. It's almost 50 miles from the nearest Interstate highway, and it's a good-weather two-and-a-half to three hours' drive time to the nearest alternative airport, Bangor. While the region has a strong economy, nobody can accuse it of not being isolated from other airport gateways. Nor can anybody accuse it's EAS-supported air service as being frivolous or "non-essential." With three daily 34-seat S-340 nonstops to Boston (with the US Airways code) the flights hover around a 50% load factor.

These two examples illuminate the challenges facing the EAS program. In the case of Pueblo, it's a political sacred cow that should be barbecued as quickly as possible, but if Hillary and others have their way, it won't. At the other end of the spectrum is PQI, where the program truly supports meaningful air access (and economic growth) where there is no reasonable alternative, and Bush wants to reduce its funding.

There is no need for middle ground. What's needed is a move to entirely new ground - like, someplace in the 21st century.

The EAS program, truth be known, needs to be totally re-structured. For rural air service, the planets are not aligning well - the cost of flying smaller airliners is going up - on a per-seat basis, a B-1900 isn't an economy ride. Consumer preferences ("don't put me on that little turboprop") are shifting. The number of operators interested in messing with EAS is declining. Finally, the need for true access to the air transportation network has too often been ignored by the DOT's Eisenhower-era thinking that places like Omaha are still "hubs."

In deference to the Administration, squandering money at communities where the consumer won't use the service should be stopped, the protestations of the local politicians notwithstanding. But the prudent path would be to design an alternative program that keeps all regions of the nation (not all communities, note) connected to the air transportation system. The other side of the current argument - just keep funding this EAS pig - is just as irresponsible.

Solutions? They're There, But That'll Take Political Backbone. Unlike most consultants, The Boyd Group has been at the forefront of this issue for most of a decade. We've outlined new options at our Annual Conferences, to the media, in our consulting work, and in one-on-one interactions with members of Congress (including, proudly, being essentially asked to leave at least one Senator's office, simply because we dared to not agree with him that all was just fine in his state, which is today one of the most air-service challenged in the nation. (The Senator's name isn't relevant - neither is he, for that matter - but it sounds just like a major city in South Africa.)

Triage must be performed on the EAS program. First and foremost, cost considerations must be replaced by economic considerations - the real-world economic impact and economic need for the service must be established before subsidies are awarded. Just because North Central had three DC-3s a day through the town back in 1970 is not adequate criteria. The Pueblos have got to go, while in other cases, hard decisions based on consumer preferences and the hard magnetic pull of larger airports need to be considered. Regionalization is critical, too - depending on the area of the country, concentrating meaningful levels of service at one, instead of a number of airports, is a potential solution.

But more than anything else, the concept of essential "air service" must be discarded. That's what we have today in too many places - just airplanes coming and going on a scheduled basis, with almost no concern for whether those flights connect to anything but the baggage claim area at the other end. We need to have Essential Connectivity to the rest of the nation and the globe. And in some cases, that may mean a drive to an airport other than the local one. Even if it's an hour or more.

The Bangor Daily News last week put it succinctly. In a February 9 editorial, it noted, "Supporting small airports that demonstratively serve a need makes sense. Financing those that unnecessarily undercut regional airports, which play an increasingly important economic and transportation role, does not."  The nation needs more communities and civic groups, not to mention politicians, to tumble to this.

The point is this: the reason rural areas are experiencing declining air service is directly because of people like Bush and Clinton, and a host of mis-informed civic types, who want to keep the current program as-is and where is, regardless of the funding level. Instead of having the ethical integrity to suggest fixing it, one side simply wants to cut it back on fiscal grounds, and the other side wants to use it to suck up to voters, including those who couldn't find the local airport and it's EAS flights with a map and a tour guide.

In both cases rural America loses.

(c) 2007, The Boyd Group/ASRC, Inc. All Rights Reserved

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Hot Flash - February 5, 2007

Regional Jet Glut Accelerates. Airports: Get Prepared
Excess Jets Results in ExpressJet

Today, there are two things you don't really want to get stuck with, 'cause they're stuff nobody else wants. One is a litter of stray kittens.

The other is a fleet of excess regional jets.

As CRJs and ERJs begin to come off lease, and/or major carriers increasingly find less utility in their operations, their secondary market applications will tend mostly to be in boneyards, or sunning themselves in the desert, or being the star components of Bud Light displays at the local supermarket.

Our fleet forecasts as far back as 1999 indicated that the number of RJs on order and on option at that time exceeded what the market could support by 2003 - 2004. We advised our forecast clients - manufacturers, suppliers and OEMs - to prepare for a glut of "regional jets." Today, it's here, and our clients have not been blind-sided. This is not to say that RJs aren't fine aircraft, just that there are more of them in the sky than the market needs or can eventually support. And the economic realities of the 2007 airline industry make RJ flying more problematic, too.

Excess Aircraft. Shrinking Mission Applications. Decreasing Economics. To underscore our forecasts, two years ago, Atlantic Coast started Independence Air, and in the process yanked 80+ RJs out from under the United Express system. Far from being found short of aircraft, United didn't miss a beat in finding the replacement lift they needed.

Then last year, we witnessed Continental shifting flying for 69 Continental Express RJs to a cheaper vendor, leaving ExpressJet with a litter of ERJs, all dressed up and nowhere to fly, replete with hefty monthly lease payments. Do the numbers - 69 ERJs, and even if they have very favorable lease rates, say, $100,000 per month, it's easy to see that ExpressJet is looking down the barrel of a nearly $7 million gun each and every month. A potentially lethal gun.

If You Can't Find A Home For Excess RJs, Create One. The challenge for ExpressJet is daunting: they're shelling out millions a month for five dozen (plus) ERJs in an airline environment where virtually every potential major airline system already has its RJ dance card full. The only option open to ExpressJet: try to find - or create - some alternative economic use for those airplanes. So, they're putting some into charter service, and using the rest to start their own scheduled airline as an independent brand. In this case, ExpressJet is creating an all-RJ airline, flying between "underserved" intra-regional markets on a nonstop basis.

The concept of hub-bypass service on a substantial scale, particularly with jet aircraft, has some merits, at least on paper.

On paper, there's enough traffic to possibly fill a couple of nonstop 50-seaters a day between say, Colorado Springs and San Diego, or Sacramento and Tucson. On paper, it's likely that some portion of the flying public would like to go between Raleigh-Durham and Kansas City nonstop, instead of having to connect at CVG, ATL, or ORD. On paper, there is some portion of the flying public that would be willing to pay reasonable fares for such service. And in at least one instance - New Orleans - the concept of adding O&D service, whether on paper or not, would almost certainly be a slam-dunk, based on the underserved nature of post-Katrina MSY.

Potentially Dangerous: Assuming DOT Data is "Demand" Data. What's unknown is whether consumers really will come to the XJet party. Just looking at DOT O&D "PDEW" (passengers per day each way) data in a given city pair isn't a very solid indicator of whether there's potential for hub-bypass flying, or of much else, for that matter.

To start with, such information is not indicative of "demand," but more correctly it merely shows traffic being carried by other airlines, based on existing service patterns, fare levels, schedule frequencies, and a host of other issues, assuming it's been reported correctly.

Such data does not identify emerging markets, nor latent markets that have seen growing communities of business interest. For example, SHV-DTW, based on DOT PDEW data, should have been a loser. Northwest, to the contrary has found it very lucrative, even though the historical data did not illuminate the strong auto industry traffic that has developed over the past decade.

Tossing nonstops between two cities may or may not be able to break through existing brand loyalty and change consumer preferences. It may or may not, depending on each specific market, result in traffic stimulation based on convenience. Or, it might not do diddly to capture or stimulate additional traffic. Until the schedule is set and the service starts, it's a jump ball.

Been There. Done That. Lost Bundles of Money. Historical precedent is not encouraging, however. Nonstop or not, RJs are not exactly airplanes the consumer hankers for any more, particularly on longer hauls.

The 2006 attempt by United Express (Trans States) to implement hub-bypass service from San Antonio to several cities with high concentrations of O&D and communities of business interest, may be a harbinger of what XJet faces. The SAT UAX service had benefit of the strong brand identity (if not local brand equity) of United Airlines, as well as being concentrated at the #1 non-hubsite commercial center in Texas. Yet it failed.

Then there's Independence Air. We need not go too deep into that fiasco, which depended on below-cost fares to stimulate traffic on RJs.

Nevertheless, there is nothing to show that the ExpressJet foray into the airline business, trying to capture market share with 50-seat RJs in hub-bypass operations, can't work. It certainly would be another welcome dimension to a US airline industry that faces a very robust future, and, in most cases, it would represent competition and an alternative consumer option that most existing carriers might not want to try to counter.

Coming: More Homeless RJs. But the real story here is not a new airline, or whether ExpressJet can be successful or not. The real story is that this venture is the iceberg that defines the sinking demand for "regional jets."

The objective of XJet is to create a productive home for 44 jets nobody else wants, as opposed to filling a demonstrable and clearly consumer-supported market need. The sky-writing simply again underscores the emerging fact that the RJ glut is here and now, not something over the horizon. It also points to the fact that there simply is no secondary market for CRJs and ERJs, unless an operator can actually create one.

In fact, by 2017, The Boyd Group Global Fleet forecast indicates that fleets of ERJs and CRJs will decline by over 50%, to about 900 left in service. And even this is based on some optimistic economic assumptions.

Emerging Demand: Lower-Capacity Mainline Jets. While stretched versions of the CRJ (-700 and to some degree the -900) will continue to have some residual demand, their cabin ergonomics will tend to work against them in the long run. The trend will be a fleet shift globally toward more accelerated retirement of RJ-cabined airliners, with airline industry focus shifting toward filling the gap left by retirements of DC-9s, F-100s, and 737-200s with new-generation E-Jet mainline aircraft.

Ramifications. RJs are not going away, at least not entirely. But their economics point to fewer and fewer in operation going forward. This portends a number of outcomes that airport and aviation planners would best consider:

Shifting Facility Needs: RJ-specific gate capacity should be revisited. The need will decline, not increase. Unfortunately, at least one major airframe manufacturer is still forecasting another couple of thousand RJs coming on line in the next 20 years. A return of Elvis is more likely.

Small & Rural Air Service: Communities should be ready to deal with the fact that there are new economics in rural air service, and they are not going in the right direction, as witnessed by the fact that RJs are moving out of reach. They need to also recognize that consumers are rebelling against getting on 19-seat airplanes and flying to places where connections are about as pleasant as an Army Induction Center. In some cases, alternative regional access plans should be pursued in lieu of simply trying to get service into the local airport that's either impossible or in the long term won't work anyway.

Hard reality: the driving factor in finding solutions to rural air service starts with a review of the airline industry available to serve such points, not with $10,000 to $40,000 studies or surveys that purport to "determine where community's air service needs really are."

That's like passing out a questionnaire on a sinking ship to ascertain the type of lifeboat the passengers might prefer.

The options within the airline industry in regard to truly rural and isolated air service are usually clear, and no amount of jive "research," outdated MIDT data, or cyber surveys will change that. When the report comes in and the invoice arrives, you're back to the initial realities - there are only a set number (if that) of airline options, and they are not much affected by the needs of the low traffic levels generated by a given small community.

Bottom line: just tossing money at studies and surveys won't do anything to get a second airline or an RJ into a community whose traffic generation can barely support a Metro-III in cargo-combi configuration. The nation needs a whole new approach to assuring rural air service access, and it will have to come from outside of the Beltway, and outside the outdated thinking that we're still in the 1950s.

Financial Institutions: As was found with the turboprops that came on line in the 1980s, the economic half-life of regional jets will be a whole lot shorter than originally planned. Whether the ExpressJet experiment works or not, the fact is that it's a desperation move, not one necessarily driven by market forces, and it's not one that has unlimited expansion opportunities, either for them or for other operators. Therefore, as more CRJs and ERJs come off lease, plan on seeing an airport real estate boom at Mesa, and Marana and Coolidge. Take a look around the world - the secondary market applications for RJs are about on the level with hula-hoops and black-and-white TV sets.

It's hoped that ExpressJet will be a success. But in the long term, the nation is going to see a lot fewer "regional jets" - for better or for worse.

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Hot Flash - January 29, 2007

Air Service Note
Jacksonville NC Gains Additional Service

Delta has announced a third round trip between Jacksonville, NC and its global hub at Atlanta. The Boyd Group is honored to have assisted the community in winning a Small Community Air Service Development Grant that succeeded in attracting Delta into the market with an initial pattern of two flights a day.

Working with the airport, our data showed that the market was well worth the risk to Delta in establishing service, and this latest upgrade in capacity validates those numbers.

This follows Continental's announcement of new service between Jackson, Mississippi, and Newark, another air service recruitment success of The Boyd Group. Air Service Development isn't the only thing we do - which gives us a wide base of expertise for our airport clients, and is why we're the best at helping communities win the service they need.

If your community is seeking new approaches to air service recruitment, give Mike Mooney a call at (303) 674-2000.

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Random Information of Interest
A Couple of Traffic Data Points

Looking back at the year 2006, we thought a couple of data points might be of interest.

Top Growth Airports

The nation ended the year 2006 at almost a dead heat with 2005. When considering the data was skewed by some irrational competition on the East Coast, and some pricing experiments on the part of Delta in '05, that's not really a bad number.

Dallas Love saw what was simply nonsensical net-new capacity on the part of American, plus some additional flying by Southwest as a result of the "Missouri Adjustment" to the Wright Amendment. While AA's capacity will be pulled down, WN will likely see increased load factors on existing flights in 2006, at least netting out the AA reductions.

Richmond was the beneficiary of some expanded LCC service, and will likely plateau in terms of such growth in late 2007.

Bloomington/Normal has benefited from a very strong regional economy. Finishing the year with just over 262,000 enplanements is a far cry from the less than 50,000 the airport experienced not much more than a decade ago, a 500%+ increase. (Maybe it had a little to do with the air service consultant that's worked with the Airport over these past 11 years.)

jetBlue - SRQ Was No Mistake

Looking at load factors for the Florida markets jetBlue operates from JFK, it appears that the new service to Sarasota Bradenton is a home run.

We'd point out that The Boyd Group assisted SRQ in developing pertinent data to recruit jetBlue. Historically, the airport's main problem was simply lack of available seat capacity, resulting over one million passengers in the airport's service area having to drive to Tampa. jetBlue and other service enhancements are recapturing a meaningful percentage of this traffic.

Boutique Trans-Atlantic Carriers: Positive Signs

First there was MaxJet and Eos. Soon, they will reportedly be joined by Silver Jet.

The business plan is generally the same: offer a high-quality business/first class product across the Atlantic at a fraction of the fare charged by the major incumbents. The idea is to capture - or create - enough traffic to fill a low-density cabin, and do it to a peripheral London airport, such as Stansted or Luton.

On paper, it's a compelling concept. All that's needed is to attract a tiny sliver of the existing business class traffic - one that British Airways, American, or Virgin would be hard pressed to even notice. As of the end of October, it's clear that what these two carriers are enplaning would certainly fit that description - a very tiny share of the market.

It appears that EOS is averaging in the neighborhood of 26 passengers per flight, and MaxJet is filling somewhere around 53 to 54 of the seats on its 102-seat 767s. Its IAD service, as of the end of October, was below a half-full airplane.

But load factors by themselves do not represent profit or loss, just ask Independence Air, if you can find them. This is particularly true when it involves an "alternative" type of product. Put pen to paper, and depending on what fares are actually being charged, it is entirely possible that the two carriers could be tossing some black ink toward the bottom line, at least on an operational level. Whether the size of these two airlines' fleets has reached critical mass to support their infrastructures is another issue. But it does appear that the concept can work.

On thing is certain - the numbers of passengers carried is indeed a tiny fraction of the total premium-cabin traffic in the market. This makes these airlines not only low-profile targets for British and AA, but possibly ones not worth bothering with at all.

At least for now.

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Air Traffic Delays:
FAA Still Failing The ATC Challenge
- A Consistent 20-Year Record, Too

The headlines are popping up all over:

"New DOT Data Show Skyrocketing Flight Delays"

"Airlines Get Poor Marks For On-Time Performance"

"FAA Working On Next-Generation Air Traffic Control System"

"Gridlock In The Skies Predicted If ATC Not Improved"

"Something Must Be Done About The Crowded Skies!"

And beneath these dire lead-ins are several column inches droning on about how air traffic is growing, delays are exploding, and consumers are getting zapped sitting on "the tarmac" (a term used mostly by the media, not the airline industry).

Then come the perfunctory Pontius Pilot (no pun intended) statements from top FAA officials, noting the dire nature of the situation, and how something must be done. "A billion passengers by 2015," they'll tell us, adding, "unless the ATC system is replaced, we'll see thousands of hours of annual flight delays."

It's like Tony Soprano complaining about the increasing crime rate.

The Same 'Ole FAA Song. All of this stuff is a smokescreen to cover the fact that it's the FAA's unfocused, unaccountable management that's allowed the ATC system to deteriorate to the point that it can barely keep up with today, let alone the growth in the future.

To read this stuff, one gets two basic impressions. The first is that this is some sort of new emerging problem. The second is that the FAA is hard at work dealing with the issue.

Hint: Don't make book on either of those misconceptions.

In fact, you can go back 15 years and find almost exactly the same headlines, exactly the same reaction from the FAA hacks (some of whom have since cashed in on their FAA positions and have nice jobs in private industry, including companies with hefty ATC contracts), and the same vapor-brained quotes from academics blaming airlines for delays.

The truth is that the FAA has mis-managed the entire ATC upgrade program for years. We are in this delay mess because the FAA hasn't done its job.

Check it out - the GAO has documented program after program being years late, over cost estimates, and often significantly scaled back. The FAA has a decades-long track record of negligence in failing to do its job, but it also has a track record of being able to fast-talk its way out of it. In the meantime, our air transportation system is being slowly choked.

FAA: Do A Little Dance. Sing A Little Song. But Don't Get Down To Facts. The fact that important ATC upgrades are as much as a decade behind schedule is glossed over. The fact that as of last year, the FAA had no real idea on its cash needs to hire sufficient controllers in the future, is also glossed over. The fact that the FAA has been found to violate its own staffing rules, as was discovered in the wake of the recent tragedy at Lexington, is simply ignored.

When dealing with the FAA in regard to the ATC system, facts are neither appreciated nor allowed into the debate.

If the FAA could engineer the air traffic control system as well as they do their PR and media shows, we'd be in tall clover. Instead, the nation is facing a situation where an entrenched bureaucracy is inflicting damage on the national economy. If the FAA people in charge of ATC were in private industry they would be fired. Or worse, charged with dangerous dereliction of duty that threatens the public.

Solution: Make Air Travel Adjust To FAA Incompetence. The unfettered garbage now being put out by the FAA focuses on having the air transportation system adjust itself to the failures and incompetence of the ATC system. If there is a delay problem, just have airlines fly less. In short, constrict national commerce because a string of FAA Administrators, from Hinson, to Garvey, to Blakey, have been unable to assure that we have the system we need.

For all the media folks who take the FAA's statements at face value, we might suggest you consider the following: It is not the FAA's job to adjust the air transportation system to avoid flight delays. Instead, it is the FAA's responsibility to assure that we have an ATC system that meets the needs of the nation in the future without flight delays.

Here's another point: Virtually every commercial flight in the United States is actually "delayed." Even if it arrives according to the schedule published by the airline, the flight is delayed - delayed by the need for air carriers to adjust block times to accommodate the FAA's outdated ATC system. What the public misses is that a "delay" is based on the variance between when the airplane arrives, and when the airline - not the FAA or any outside agency - in its best judgement had scheduled it to arrive. In that planning process, air carriers must adjust to constrictions that are caused by an inadequate ATC system.

Forget the claptrap about just needing more runways, or the total nonsense that we have too many airplanes in the skies. Regardless of runway capacity, it's managing the skies that is the issue. The fact is that the ATC system cannot handle the needs of the nation, and the reason is due to mismanagement, incompetence, and a total lack of accountability at the FAA going back decades.

The FAA's Got A Lot of Support For Its Failures. Another factor keeping this system in place is that the FAA has a national Peanut Gallery of supporters who take umbrage to any hint that the Agency is mis-managed. These folks range from some of the ever-ready suppliers to the FAA, to some alphabet groups like the AAAE, which never has the guts to criticize FAA Administrators when they screw up, to consultants on the dole of the FAA.

Probably the most onerous of these supporters are some of the "airline-FAA joint committees" or task forces, or task teams, or whatever moniker they may operate under, formed to provide a "collaborative" approach to improving ATC. Unfortunately, these can degenerate into apologist groups, making excuses for the FAA, and assuring that the FAA's modus operedi not only continues, but is protected. In some cases, the airline participants totally forget who's paying them, and become shameless shills for the FAA.

It's The Same Old FAA Song. In 1994, The Boyd Group and Captain Michael Baiada of United Airlines published the first - and as of today, the only - truly independent analysis of the challenges facing the ATC system. It brought the concept of Free Flight out into the open forum of public discussion, and it also prompted Congressional hearings.

To read the transcript of the comments made by the FAA at those hearings could almost result in accusing today's FAA leaders of outright plagiarism. It was the same empty, we're-working-hard-and-solving-the-problem party line that we're hearing today - a dozen years later. Free Flight - which back then could save the airline industry approximately $5 billion annually - is nowhere closer to being fully implemented than it was then. (Despite the protestations to the contrary from the FAA and its lapdog supporters.)

The Airline Industry's Got Stockholm Syndrome. We testified that the financial burden put on airlines by the ATC system should have CEOs forming a conga line into the FAA Administrator's office, demanding immediate changes in the ATC upgrade process. If an internal department at an airline was found to be wantonly wasting millions of dollars, heads would roll. But in the case of the FAA, the airline industry seems to have simply tucked in and accepted the fact that they're going to get cost-gouged by the FAA's incompetence.

Congress will be investigating the airline industry in the next few months, in response to increasing consumer complaints and rising flight delays.

Too bad they refuse to investigate the real cause.

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Starting March 1
Airports:USA(R) Forecasts
New Revisions & New Format

Since 1992, Airports:USA has been the only independently-published air passenger forecasts in the nation. Covering 146 airports, representing over 95% of all US traffic, it has achieved a track record of accurately predicting shifts in enplanements years before the FAA's reactive-methodology forecasts have recognized them.

Starting March 1, the Airports:USA website will be completely revised, allowing subscribers much easier access to the latest forecast and trend data across the nation. In addition to the web-based version, we will again be offering a hardcopy-only option, which will represent the latest data as of the date shipped to the subscriber.

We'll be sending out information on this new format to our subscribers over the next few weeks.

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(c) 2007, The Boyd Group/ASRC, Inc. All Rights Reserved

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Hot Flash - January 22, 2007

Continental Announces Jackson-Newark Service
Another Boyd Group Air Service Success

We're proud to congratulate Jackson, Mississippi on the recruitment of its first-ever nonstops to New York/Newark.

We're also proud to have assisted Jackson in the successful crafting of a Small Community Air Service Grant that facilitated this new service. The Boyd Group also worked with Jackson in preparing the route and market data to showcase this market opportunity to Continental.

If your community is seeking the best in professional air service assistance - assistance that is respected by airline leaders - give us a call. Jackson is just the latest community that has seen the results we can bring to town.

 

It's That Time, Again..
Small Community Air Service Grant Program

Speaking of SCASD, according to the DOT, a docket will be issued in the next couple of weeks, requesting proposals for grants under the 2007 Small Community Air Service Development Grant Program.

Initial information indicates that there will be only minor changes from the 2006 program, although nothing's certain until the docket is actually issued. Presumably, applicants can look forward to a repeat of having to navigate a secondary registration on Grants.gov - a website that seems to have been developed specifically to be as annoyingly non-intuitive as possible, and equally as useless.

We believe that that funding for the program will again be a fraction of what Congress originally promised - less than $20 million. We will be revising our Guide To Filing A SCASD Application with the details as soon as the docket is issued.

What do these communities have in common? Click on the map to find out.

Other Consultants Talk. We Deliver Results. The Boyd Group has been more successful than any other consultant in assisting communities in filing successful grant applications. Last year, almost one third of the total funding went to our clients. Not only that, but we've been more successful in assisting airports in translating these dollars into air service improvements.

For details on our successes in this area, click here. If you're community is interested in joining those who have engaged The Boyd Group in crafting winning SCASD proposal strategies, e-mail us, or call Mike Mooney, at (303) 674-2000.

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Aviation Security - The 2007 Outlook

Screeners failing basic tests. FSDs warning screeners before Red Team inspections. Politicians passing laws requiring TSA perform basic security functions. Four TSA Administrators in as many years.

The year 2007 is shaping up to be one that'll out-do 2006. Click here for a review.

A politically-incorrect, but entirely accurate, review.

(c) 2007, The Boyd Group/ASRC, Inc. All Rights Reserved

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Hot Flash - January 15, 2007

Wright Amendment: Love Isn't In The Air
Not The Metroplex Airport of Choice, After All

During the fun and games surrounding the Wright Amendment controversy last summer, we pointed out that Dallas/Love wasn't the convenient consumer air Mecca that some, including AA, were painting it as. It's a partial, and increasingly marginalized access point to one part of the DFW Metroplex. And a hard one to get to, too.

That's the reason we noted that American's announcement of adding mainline flights at DAL was not much more than short-term chest-beating. When the dust settled, we predicted that they'd quietly yank the airplanes out of Love Field.

And there they go. Mainline AA MD-80 flights to Kansas City and St.Louis are going to end in April, and be initially replaced with AA Eagle RJs, a move that's sure to cause loss of sleep across the field at Southwest headquarters.

Another golly-gee: Didn't AA and its consultants claim that they HAD to offer these mainline flights or lose all the Dallas-generated MCI/STL traffic to Southwest, the reason being that Love Field was, according to AA's research, the hands-down favorite airport in the region? The implication was clear and direct: just roll that MD-80 to the gate at DAL, and Stemmons Freeway will be choked with consumers rushing away from D/FW International to hop on at Love Field.

At least that was the story.

But anybody who had any experience with or knowledge of the DFW Metroplex knew that it was nothing more than posturing. Given the vastly easier access to D/FW International from virtually any part of the Metroplex, not to mention the near-mystical renovation of that airport into one the nation's most consumer-friendly facilities, for AA to move flights to Love was the equivalent of refusing to answer the door when Publisher's Clearinghouse arrived with the sweepstakes check.

But AA did just that. They tossed MD-80s from DAL to both MCI and STL, plus they increased RJ flights to both AUS and SAT. Destinations supposedly preferred by AA's best frequent flyers to be accessed via Love.

So much for that. It appears that AA's exalted Gold-Platinum-Titanium-Spent Uranium level frequent flyers never showed up, at least not in any numbers. In fact, the load factors show that these Love flights aren't carrying diddly. Take a look:

Embarrassing, especially after all the rhetoric about the consumer "preference" for Love. Not only did the 140-seat MD-80s gain dismal ridership, but even the 44-seat RJs in the Austin and San Antonio markets seemed to miss the groundswell of Mineral-Level AAdvantage customers who were supposedly clamoring for Love service. Maybe they're still stuck in traffic trying to make the turn off Mockingbird into the airport. Or, maybe they really didn't like Love so much in the first place.

It's not that Southwest has kicked AA in the proverbial vertical stabilizer. Instead, it's simply a matter of AA's passengers not caring as much about the "convenience" and "location" of Love Field as its "research" seemed to indicate.

The Non-Pulldown Will Continue. To be fair, AA's efforts to keep the Wright Amendment in place were honorable self-interest, albeit short-sighted competitive strategy. But they apparently began believing their own propaganda, and it became a Kool-Aid campaign that resulted in putting flights into Love that clearly were cross-competitive with AA's service at DFW. It's great to have intimate knowledge about your competitor. Unless it's you, as was the case here.

To have airlines fighting over Love Field was sort of like having gourmet chefs fighting over a can of Spam.

Prediction: The American Eagle flights at DAL are also in line to get 86'd. Give it nine months as a face-saving period. Then, it will vaporize. The economics of the Eagle system are probably already getting dicey, and running 13-cent ASM ERJ-140s up against 7-cent Southwest 737s is something that even a Wharton MBA could see doesn't work real well.

Somebody Calling From Brazil? Final point: Love Field isn't exactly a gold mine for Southwest, either. Based on load factors, it tends to underperform in many markets for Southwest, compared to its system averages. The reason is clearly due to the boxed-in nature of the airport, which accesses a limited portion of the DFW Metroplex.

Food for thought: The Embraer E-190 would match well to the traffic levels at DAL, and would offer the same (actually, better) comfort as 737s.

No way? Denver was a WN "no way." So was PHL. And PIT, too.

Remember, all assumptions based on how Southwest, or any other airline, operated in the past are no longer reliable.

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Frontier/Republic Deal: Another Nail In RJ Demand

And speaking of E-Jets, Frontier's decision to contract with Republic to operate a fleet of 76-seat Embraer 170s is another example of the slow decline in the role of RJs that was first predicted in forecasts by The Boyd Group in the late 1990s.

While some may continue to refer to E-Jets as "RJs," the hard fact is that they are mainline jets, with mainline ergonomics, mainline applications, and - in the larger versions - are essentially of the same capacity as lower-end 737s. Frontier could have opted to contract with an operator of CRJ-700s or -900s, but that would have meant having an RJ-type product. Certainly OK, but with some significant disadvantages compared to mainline airliners, including E-Jets: tight seats that put passengers up close and personal with cabin mates, limited carry-on, and the need to have the laptop surgically-attached to the solar plexus, should a passenger want to get some work done in flight.

What is often missed in the media, including much of the aviation media, is that the market niche intended for the Embraer E-Jet platform from its inception was not to be a follow-on RJ, but instead to fill the market gap for mainline airliners left by the retirement of similar-size mainline DC-9-10s, DC-9-30s, and F-100s, regardless of what certificate they might be operated on.

The RJ segment of the market, particularly 50 seats and under, is now headed down the same path as was seen a decade ago with 19-seaters. The market has changed. The economic underpinnings of the industry have changed. And consumers are changing, too. Like what was experienced with 1900s, Metros, and J-31s in the early 1990s, RJs are going from a staple part of the airline system to one that will be more and more marginalized.

SJPs: Evolve Or Sink Into The Economic Tar Pit. Frontier's move also showcases the coming evolution of the small jet provider ("regional airline") segment - which will be to adjust to the new realities or get stuck with a fleet of excess RJs. At our 11th Annual Aviation Forecast Conference last October, US Airways CEO Doug Parker made it very clear - his carrier had too many 50-seat (read: RJ) jets. A number of US Airways' competitors are fixin' to discover the same problem.

Stretched CRJs: A Stop Gap Only. While we may see some moves to shift RJ capacity into larger versions, such as the Northwest and Delta acquisitions of CRJ-900s, such only underscores the problem facing SJPs. The 50-seat segment is a declining one, and a shift to the CRJ-700 or -900 is a relatively easy and cost-effective one from an operational standpoint. But it still leaves the major with the long-term problem of having a significant portion of its lift being not service-transparent with its mainline fleet.

Frontier has leapfrogged that challenge, and in the process is acquiring a fleet of airliners that in all aspects are product-compatible (or, better) with its A-320s, give or take in-flight TV. The Frontier-branded E-170s will give the carrier a significant feed advantage at Denver over Southwest, without the competitive downside having RJ-cabined lift.

Regional Jets. They'll Be Around. But In Declining Numbers. Globally, there are just under 1,900 RJs operating in passenger service around the globe, over 1,400 of them in North America. Our 2007 Global Fleet Forecast indicates that almost 1,000 of these airliners will be out of service by 2017. The majority of those left will be 70 and 90 seat versions of the CRJ, with the 50-seaters and the smaller-capacity "scope clause" variants likely seeking out the warmer climes of the Arizona desert or becoming key players in the next Bud Bowl. There is no discernable secondary market of any significant size for these RJs once they come off lease.

Small Community Air Service: More Pressure. As in the case with 19-seaters, there simply is no viable replacement on the horizon for 50-seat RJs. It's a capacity gap with little chance of being filled with an economic follow-on aircraft in the foreseeable future.

The implications of this trend are clear: the traffic floor for small communities to support viable, globally-connective air service is going up as the numbers of 50-seaters go down. While RJs were never designed primarily for small community service, they still are the smallest units of capacity in most major carrier fleets. As they get retired, there's going to be some ugly fallout for smaller airports. There is some potential relief in a marginal return to turboprops, such as with Dash-8-200s at Continental, but it's a limited option at best, given consumer preferences going forward.

The Bombardier Q-400 turboprop isn't a panacea, either. Notwithstanding the Q-400's excellent economics and cabin ergonomics, it's still a 74-seat airplane. It's a big piece of iron. It's also a new airplane, and new airplanes tend to come with a monthly payment. Frontier's coming Q-400 fleet will be another competitive tool to gain revenue feed to flights where it competes with Southwest, but the Q-400 still has 74 seats to fill. Again, the implications for many smaller communities are clear. Disturbingly so.

For more information on our Annual Airliner Fleet Forecast, click here.

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Finally...
More Merger Fun

Mantra. Chant something over and over again, and some folks believe it'll become reality. Even if it has no basis in fact or possibility.

That's what's coming from folks of the pro-merger persuasion. Lots of them have assumed the Lotus Position and are intoning various babblings about how the hostile take over of Delta will bring peace and order to the cosmos, if not the airline industry.

It's about all they have to go on.

Let's All Chant Together: LCCs Are Coming. LCCs Are Coming. The number one emerging mantra from the usual sources of un-informed airline lore is that in the event of a US take over of DL, it will result in a land office business expansion for low-fare carriers. There'll be gazillions of new markets to enter, and that'll keep fares low for everybody.

And the Easter Bunny just joined the Teamsters, too.

This LCC claim is typically made by "analysts" who apparently get most of their analytical data from reading the newspapers or maybe from inhalation of controlled substances. It certainly couldn't be from an understanding of the airline industry itself.

The mantra is short and sweet. It goes something like this: the combined US/DL system will leave huge opportunities for those ever-expanding LCCs. Period.

Sorry, no further data available. No specifics. Just accept it as gospel. And if you question it, well, you're simply not with the program. Just hum a few bars, say it over and over again, and you will shape reality.

Unfortunately, it's a load of baloney. The truth is that the only markets where there will be any significant capacity reductions will be at mid-size airports where the combined DL/US operations will still dominate, offering no real opening for LCCs.

One of the silliest parts of the mantra is that some communities will have the wonderous availability of LCC service within a 100 mile radius. Goody, they seem to be predicting the merger will cause even more traffic leakage for smaller airports.

What the mantra leaves out is that most of these LCCs themselves are facing real challenges - increasing costs, increasing competition, and a lot of new expensive lift coming on line, all dressed up and often with no clear place to go. Rushing in to save consumers at Charlottesville isn't in the cards.

Airline Knowledge Need Not Apply. Neither Does Reality. Some of the "expertise" coming out from under industry rocks could make for an episode of the Gong Show.

One "analyst" last week proclaimed that consolidation is necessary by virtue of the "fact" that there are over 100 airlines flying in the US, (say what?) and that number must be reduced to six or seven. (?) Not only that, the experience at Pittsburgh was a poster child for consolidation, because now, US Airways doesn't have a hub there that dominates the market. (Leaving out, of course, the concurrent loss of dozens of nonstop destinations and virtually all international service - something the local Western Pennsylvania business community is no doubt thrilled about.)

The same guy concluded by stating that the government must assure that no airline has more than 30% of a given airport's traffic. (Which means no hubs, and that they'll have to force another three airlines into places like Latrobe, to assure the 30% cap is not exceeded. Truly brilliant thinking.)

We have another two weeks until the US Airways' February 1 take-it-or-I'm-gonna-take-my-toys-and-go-home ultimatum arrives. Do plan on lots more twists and turns.

Not to mention more entertainment from the outlying planet systems of the aviation analyst galaxy.

(c) 2007, The Boyd Group/ASRC, Inc. All Rights Reserved

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Hot Flash - January 2, 2007

Year 2006 - Our Thanks

Question: What Do Over 50 Airports
Across The Nation Have In Common?

Answer: They relied on The Boyd Group
for professional consulting in 2006.

Over 50 airports, from GA facilities such as Tracy, California, to emerging growth centers such as Sarasota Bradenton, right up to global portals like D/FW International, turned to us for a range of consulting, research, and data services last year. We provided cutting-edge excellence in activity forecasts, trend projections, long-term strategies, and air service development. These clients are in addition to the dozens more airports that attended our 11th Annual Aviation Forecast Conference.

And that figure doesn't include our many clients in other areas of our consulting work, including aircraft manufacturers, legal firms, labor unions, and financial institutions.

Going into 2007, we want to thank all of our clients for making 2006 a banner year for The Boyd Group.

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The Grinch Airport Comes Clean...
"All Weather Airport? Oh, That Was Just 'Hype'..."
...Along With Most Of The Other Stuff DIA Promised

This Christmas, it wasn't just chestnuts that got roasted on an open fire.

Denver's "all-weather" airport, the one that was built to unclog the Western skies, the one that was going to be the glorious technological beacon for all future airports, got roasted big-time in the national media. Justifiably.

Denver International got cooked on something called "the truth."

For almost two days before Christmas, the airport was shut down due to snow. At most times of the year, and at most other airports, this would have been not much more than a page three human interest story, with interviews of passengers stranded like refugees in a big terminal, being asked really deep questions, like, "How long have you been standing in line?" or "When do you think you'll get home?" Or, "Gee, you gotta lot of luggage there." Anything to fill a 90-second piece that's been done dozens of times before.

But this wasn't just any time of the year. And it wasn't at just any airport. First, it was an event that messed up the Holidays to some degree for perhaps as many as 100,000 people. That meant there were interviews with stranded soldiers from Iraq, their precious leave days being consumed by a closed airport. Then there were the perfunctory pictures of bewildered young families stuck in the terminal, surrounded by despondent little kids fearful of missing Santa Claus, holding the package containing the ThighMaster they were going to give Grandma for Christmas. High profile, newsworthy stuff.

Second, it took place at an airport that was built on the promise that it would never happen. DIA had repeatedly told the world that it would free mankind once and for all of the scourge of flight delays. Mystical DIA, they promised, would handle any - that's right - any weather. No exceptions. Any weather. And when they said all this, they were dead serious and took condescending shots at any infidel who would question it.

A couple of notable quotes from the days when the City was building DIA. These from 1992, for example:

"It's the world's first all-weather airport. We will be able to operate as well in a in a blizzard as Stapleton does on a sunny day..."

or, how about this:

"...We can still land 90 planes per hour in a blizzard..."

In fact, these wonderous promises were made by DIA officials and City politicians as the foundational reason to build this magic new $2.5 billion - now, over $5 billion - airport for the Mile-High City. "Weather delays will be a thing of the past," one of the breathless promo pieces said. Another, aimed at the bond houses that were to finance this thing, claimed, "An all-weather airport, capable of landing three streams of aircraft, no matter how bad the weather..."

In a blizzard?  Since there are no arrest records indicating these people were smoking funny cigarettes or having Timothy O'Leary parties, it's clear that they were saying this stuff with a straight, sober face in an attempt to claim something that they knew wasn't possible nor true. In English, it's called a lie.

At the time, The Boyd Group and a few others went on record, pointing out that, unless they could get Jesus to be a sub on the engineering contract, the chances of DIA being "all-weather" were zero to none.

Aviation Cognoscenti: The Emperor's New Runways. But this was a billion-dollar project, and there was lot of money to be made. So, virtually nobody else in the aviation industry - not the alphabet groups, not the FAA, not even the aviation media, dared say anything. They wanted to remain politically correct.

They all knew, or should have known, that the "all-weather" claims, as well as many others concocted to support the project, were simply not true. But they said nothing.

Perfect Storm: Snow. No Santa. Four Networks. And A Dumb DIA PR Stunt. Of course, DIA has closed on many occasions due to weather. A couple of times, "officially" closed, and on a lot more occasions, functionally closed when airlines simply couldn't operate, yet the bureaucrats would claim DIA was "open" - it was just those silly airlines who refused to land on runways covered with snow, or where they couldn't taxi to the gates. Or in dangerous wind-shear conditions. Or not operating because of those dumb consumers who couldn't get to the airport because the meandering 12-mile access road was impassible and unplowed.

In those instances, nobody much noticed. But then came The Nightmare Before Christmas. From a public relations standpoint, it was DIA's Perfect Storm.

As would be expected, when DIA shut down, the national media descended to do the usual perfunctory Grandma-got-run-over-by-a-flight-delay stories. But then they noticed three things that didn't make sense.

The first was the actual amount of snow that it took to close the airport in relation to it's all weather, better-than-any-other-airport-in-bad-weather claims. Unlike the rest of the region, which saw in some cases almost four feet of white stuff, DIA got 19 to 22 inches, depending on the source. Even with wind, it was neither a 100-year storm, nor of a size particularly unheard of in Colorado. The second thing that got their attention was DIA's announcement that it would not open for almost 24 hours after the last flake had fallen and the bright Rocky Mountain sun came out. Almost a full day. This at America's supposedly most technologically-advanced airport. Red flags went up.

But the third thing that got the media's investigative juices into hyper-drive was when DIA's PR staff opened their mouths and started spitting absurd excuses in all directions. The reasons for the delay in re-opening, they explained confidently and condescendingly, were the huge snow drifts - at first, claimed to be seven feet high, and later the drifts grew in the press statements like Pinocchio's nose to a whopping 12 feet. With a straight face, they told this to network reporters who had just easily traversed the all-four-lanes-open access road, with little or no evidence of such Himalayan-like snow drifts.

Adding to the intrigue, DIA's PR staff arrogantly claimed that the airport had done everything perfectly - in fact, they said they had no reason to change anything in the future. The PR stunts became more silly when they couldn't answer repeated questions regarding why the 12-mile access freeway was clear and open and free of 12-foot drifts, yet all six of DIA's runways were still closed, its ramp areas were clogged with snow, and it couldn't operate for nearly a day after the weather had cleared.

Looking around the terminal, seeing hundreds of people stranded, soldiers from Iraq spending their holiday leave sitting on the floor in their desert fatigues, and passengers around the country messed up due to 20 inches of snow at a $5 billion facility that was supposedly going to do away with weather delays, and things just didn't add up.

The media smelled a cover-up, which is like waving a t-bone steak in front of a hungry Rottweiler.

If They'd Just Told The Truth Right Off... The truth was that, as humans do sometimes, somebody dropped the ball and DIA found itself without a plan to handle a 20-inch snowstorm. A screw-up. But instead of simply coming out with the hard facts, the airport PR hacks went into their usual tell 'em anything mode, a technique that's worked well in the past, but backfired badly this time.  By the time the airport finally opened, DIA's PR department had less credibility than Saddam Hussein as a candidate for term life insurance.

But finally, the intense national coverage led the airport to come clean. They announced at a press conference that indeed, they didn't have an adequate snow-management plan, and - countering their original contentions of operational perfection - they were even going to hire a "snow consultant" to fix things, as opposed to relying on the snow job its PR people were providing.

But the damage was done - Denver was splattered all over the national news as an airport to avoid if there is any chance of bad weather.

A Murder-Suicide Pact In The Works?. And that brings us back to the all-weather claim made by DIA and tacitly supported by a host of financial hangers-on, in order to prove the need for the new airport.

After being repeatedly badgered by reporters on the all-weather claim, including the two quotes above, the Airport's long-time chief spokesperson finally blurted out:

"... I'd like to choke the person who came up with that (all-weather) term..."

Within hours, the Denver media dug up the intended strangle victim. Oops. Guess who was behind those all-encompassing quotes? Put it this way - we now have Denver's first pre-announced murder-suicide. Grab your trachea, guy, and squeeze vigorously.

But it gets better.

All Those Great Promises? Oh, Never Mind. The real story was when this same chief  DIA PR official was questioned on a radio talk show on December 28th about the original promises and claims made by the City of Denver, its officials, and DIA supporters in order to "prove" a new airport was needed.

The host asked why DIA and the City had made claims for the airport that they knew not to be within several zip codes of being accurate. The PR guy's response was clear.

Yes, of course, he admitted, the airport and the City used what he termed as "hype" and "hyperbole" to sell the need for a new airport. They did so, he noted, to get public support. Basically, he admitted that DIA put out outlandish projections, including the all-weather jive, to mislead the public.

Cutting to the chase, he admitted that they lied.

When asked why public officials would say things they knew not to be true, he took the Nuremberg defense. The public officials were just following orders. At the time of construction, those would be coming from none other than Federico Pena, who went on to greater heights of hyperbole, being responsible as DOT Secretary for the ValuJet FAA cover-up that killed 110 people.

Lots of "Hype" & "Hyperbole" Behind DIA. We could get into the other jive-lie claims - like how the new airport would win new nonstops to Asia (topographic, operational and demographic issues essentially preclude it) or how it would increase service for smaller airports in the region (ask the smaller communities in the area that lost service from one of two hubbing carriers) or the ridiculous concocted nonsense that DIA would attract new service from points all over Europe. (Today, DIA has nonstops to three European points, far from the dozen or so, with over 50 weekly departures, that the airport was supposed to magically attract by 1993.) Or the "hyperbole" that Stapleton couldn't be expanded to handle future growth. (The airport's 1988 EIS outlined growth potential to over 70 million passengers.) No, it didn't default on its bonds, at least not yet, but it has been re-financed a number of times, and, according to the former head of the SEC, it loses money. And the delay stuff? Check out the first three years of operations. Even since then, it's nothing spectacular. Weather delays are not a thing of the past.

There's lots more, but now, they've admitted that we can't trust any of the claims on which $5 billion's been spent to date.

But It Exists. So They Need To Be Honest Going Forward. DIA is here. It's operating. And it needs to be supported.

But that doesn't change the fact that it was built on lies and doctored data that were obvious at the time, but conveniently ignored by a lot of aviation sectors who knew better. Now that they've come clean, it's a lesson that needs to be learned.

We're proud that The Boyd Group was among the few in the consulting field that pointed out these things from the start. Too bad some of our colleagues in the business were afraid to stand up lest they offend a politician or lose out on some business.

The nation needs more airport capacity. But when snake oil is needed to support a given project, it's a political boondoggle, not a capacity project.

(c) 2007, The Boyd Group/ASRC, Inc. All Rights Reserved

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