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,