Archives - January - March 2010

Hot Flash - March 29, 2010

More LaHood Follies
Park The Trucks & The Planes. Pedal The Stuff To Market

Just when it was thought to be safe to move on to other issues, Secretary of Transportation Ray LaHood strikes again...

This guy is providing more material than the writing staff at Saturday Nite Live. Three weeks in a row, Secretary Lahood has come across with stunts that simply cannot (and in the interest of the nation's transportation future, must not) be ignored.

(For the folks who will now harrumph that for three weeks the focus has been on LaHood, we'd ask the question: how come you haven't at least recognized - let alone be outraged - that this man is not moving US transportation in the right direction? Bad policy is bad policy, whatever side of the aisle one is on. If you don't see the danger signs, you are not looking. Or, don't want to look.)

The latest: our intrepid DOT Secretary last week announced a new policy that appears to require any new or repaired highway projects include creating walking trails and bike paths.

“Today I want to announce a sea change. This is the end of favoring motorized transportation at the expense of nonmotorized.”

Yessir, that motorized stuff is just sooo over-rated in regard to public benefit. Let's dump those New York taxis and get some of those old pedicabs they used to have in the streets of Taipei until about 40 years ago, when that city joined the Dark Side and eliminated them in favor of - yikes! - motorized automobiles. Or, let's dump those ugly motorized 18-wheelers and go back to horse-drawn wagons.

Who's Writing The Scripts? For a DOT secretary to even imply that motorized transportation should be put on an equal policy par with muscle-powered modes indicates that he's seen too many episodes of The Flintstones.

It's clear that LaHood is reading cue cards - he can't be dreaming this stuff up on his own. First, there was his famous "don't drive your Toyota, take it to the dealer" admonition. ("Scotty, beam my Prius to the service department at Fast Eddie's Toyota Emporium...") Then the proposed cell-call ban for automobiles, including hands-free, which by extension means talking in a car, even to one's self, is now considered unsafe. Of course there was the dishonest tarmac delay dictum that neatly misled the public into believing that airlines intentionally trap passengers on airplanes. A lie, but he got away with it. And now, he's declared that walking trails will have the same Department priority as commercial highways.

Get a musical score, and we've got a hit TV comedy series. Unfortunately, somebody else grabbed the best title: Lost.

Aviation - Is It Included, Too? Great. Now official policy is that a bike path has the same - or more - priority as constructing or rehabbing a mile of interstate. We probably can assume that the policy extends to aviation. Maybe new master plans will be required to include glider pads, hot-air balloon stations, and a kite-flying area.  Certainly, walking trails through airports will make things so much easier for any amateur terrorist who wants to try out his new RPG.

Memo to LaHood: Check The Title On The Office Door. It says "Secretary of Transportation." We have precious little money enough for transportation projects. Roads and highways, and runways and ATC systems are, yes, transportation. Bike paths and trails where people can walk their Golden Retrievers are not transportation - they're recreation. They have no earthly relationship with transportation systems for the nation's commerce. And, by the way, what significant parts of our transportation system can be shifted to nonmotorized?

LaHood doesn't know the difference, apparently. Can't wait until he announces how we can move groceries and lumber and industrial machinery across the nation using a 10-speed.

Is He Really In Control? With what's been coming out of the DOT front office recently, we'd suggest that if any of the aviation alphabet groups want to discuss policy issues, skip LaHood entirely and go directly to Carol Browner, the administration's eminence grise of green. LaHood told us last year that he'd be a "good soldier" and take his cues from her

And he's doing what he promised. This latest dictum clearly shows that he's more of a mouthpiece for Browner than a voice for America's transportation system. The nation is built on motorized transportation, not humans pulling rickshas, and oxen dragging things out of environmentally safe quarries where humans use picks and shovels. Another memo to LaHood: America didn't become an industrial power and achieve the standard of living it enjoys today based on its global dominance of jogging trails.

Think that's a bit harsh? Well, read again what LaHood said. It's clear and unambiguously stupid. We need sound transportation policy, not nit-wit schemes. He's embarrassing himself and cheapening his office by playing Howdy Doody to Carol Browner's Buffalo Bob.

But make no mistake. It is a sea change. This is the end of favoring solid leadership at the expense of crackpot feel-good policy-making.

(c) 2010 Boyd Group International

Hot Flash - March 22, 2010

The Regime Has Spoken:
Obey. Do Not Argue.

"Let me give you a little political advice: Do not be against high-speed rail."

This stern warning was issued by DOT Secretary Ray LaHood to the assembled masses at the recent FAA Forecast Conference.

Yessir, he's spoken: you all better not disagree with the regime. Regardless of your free speech right to express your opinions, do not be against high speed rail. You had better not be stupid enough to offer any facts or figures or opinions that counter the Obama Dynasty.

Ignore this at your peril: LaHood didn't make just a statement. He issued an open threat to anyone who might question or oppose the administration's as-is plan for high-speed rail. Remember, he said this is "political" advice.

Let's recognize and call this for what it is. LaHood's direct order, made openly and brazenly at a huge event covered by all sorts of media, sounds just like what would come out of a proto-typical Fascist thug.

Insiders: Get Your Heads Out Of The Washington Muck. Okay, here's the perfunctory response to the Washington panderers-to-the-elite-for-monetary-gain, who are aghast and outraged at any suggestion that LaHood has an affinity for the tactics used by folks who are into jackboot couture:  admit it, LaHood is a powerful official  that just issued a warning to people who might disagree with the government. One does not issue a warning unless he has the intent to enforce it with some form of punishment.

LaHood warned anyone who might want to discuss, debate, and offer counter-opinions. He basically said that free speech in regard to high-speed rail will not be tolerated. Don't mention it unless you agree with the administration. That's what insecure Fascist types do. When they sense disagreement, they threaten. Remember, LaHood said he'd be a good "soldier" for the administration and take his cues from others. He's coming across well with those promises.

Again, Washington hangers-on: ignore this at your peril.

Accept The Dogma, Even If It's Based On Looney-Tunes Reasoning. He went on,  "People want high-speed rail, so get with the program... The administration wants it. Americans want it. It is coming. We are going to be in the high-speed rail business."

Now, note that the first entity that "wants it" was noted as the administration. That's more than a Freudian slip. LaHood's allegation that "Americans want it" is totally unsubstantiated. If advised of the costs, the lack of flexibility, and the fact the farebox by all experience won't cover but a small part of the cost, leaving taxpayers for the tab, it's not within several zip codes of possible that Americans want this pet project.

There isn't a high-speed inter-metro train system that makes money. They vomit red ink in all directions. (Note to the Rail-Lobby Luddites: at least airlines have been shown to be able to make money - and when they lose it, it's not the taxpayer that's directly on the hook.)

Now, LaHood said that "we are going to be in the high-speed rail business." But he then added, "The idea that it will be all subsidized by the government is nonsense... There’s not enough money in Washington." Okay, whiz kid from Peoria, then where will the money come from? You're not making sense.

Oops. Just violated the rule about not questioning the Administration.

Airlines: You're Getting Bad Lobbying Advice. Apparently, a lot of those who were in attendance at the FAA event didn't want to cross that line. After LaHood's tirade, the place got knee-deep in obsequious milquetoast.

"I got the message. I’m all for high-speed rail." said American's CEO.  "But we’ve got to keep today’s system vibrant." (Message to Mr. Arpey: today's ATC system isn't "vibrant." It's  decaying. It's costing American Airlines over a billion dollars a year in excess costs. Yet LaHood's more interested in tossing money at rail lines that will lose billions, than keeping the air transportation system "vibrant.")

The head of the Air Transport Association, which represents the airline industry in Washington, showed his filial subservience to the Alpha Male DOT secretary.  "I’m not against high-speed rail, I just wish we could get more funding."

Wish. But by all means don't demand. Don't trumpet the fact that it's LaHood's DOT that failed to accomplish the ATC upgrades the nation needs. No, just toss us a bone and we'll be good followers. No, we won't demand better from LaHood. No, don't suggest that the pros and cons of rail be at least discussed openly and freely. No, we won't offer any backbone or intelligent counter points to his plans. No, we won't treat him as a public servant, but instead bow to him as a demi-God from the must-be-obeyed-Administration. No, we're terrified to stand up and express our true feelings.

LaHood was very clear: You better not express any opinions counter to high-speed rail.

You don't want to offend the regime, for fear of reprisal. Just like in a country run by... well - you fill in the blank.

If you've got the guts.

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Hot Flash - March 15, 2010

DOT: If We Screw Up, It's Never Our Fault

That's sort of the approach we're seeing from the DOT under the Gilligan-esque leadership of Secretary Ray LaHood. (As a sidebar, any doubts about that were quashed last week when he called for a nationwide ban on cell phone use in automobiles - including hands-off Bluetooth use. Take that to it's logical conclusion, and LaHood has decreed that talking while driving is unsafe.)

At hand we have the "Tarmac Rule" that was proclaimed by LaHood. Any on-ramp delays more than three hours will result in a $27,500 per-passenger fine. "Chronically delayed" flights would also be fined.

Finally! Those evil airlines are getting what they deserve. No more passenger abuse! Now there's a consumer crusader running the DOT!

No, all we have is a pandering incompetent running the DOT.

"Goodness! Please we can't say that, even though it's true!" will be the immediate reaction from a lot of folks in the aviation world, including some alphabet groups who are even now maybe ordering the plaque they're planning to give LaHood at their next conference. "Hey, we gotta work with this guy, and he can make our lives miserable if we call him on his dimbulb actions. We have to be nice to him."

Memo to those folks: wake up and smell the stupidity. LaHood is already making your lives miserable with amateur acts like this, and there will be more. So get some backbone and stand up for what's right, not what's politically-expedient.

It's Not A Rule. It's A Cheap Political Stunt. There probably has never been as dishonest a dictum as this "Tarmac Rule." Notwithstanding the fact that even the word "tarmac" is a bit misleading: it's a term used by media types trying to look like they're "in the know" - but it's been out of use in the airline business since well before Gregory Peck bombed Berlin in 12-O'Clock High.

But if anybody in the media - particularly the aviation media - would take a hard look at this rule, LaHood would be identified as the laughingstock he really is.

• It's dishonest because it implies that 3-hour ramp ("tarmac") delays are routine. Airports across the country, LaHood would have us believe, are littered with winged Sing-Sings, trapping hapless passengers without food, water, or sanitation. That implication is a flat out lie. (Yes, panderers-to-the-Washington-elite, it's a lie, because LaHood knows better.)

• It's dishonest because it implies that airlines intentionally trap passengers on airplanes for hours. Think about it, veneer journalists. Do you really think Delta or American want to tie up their airliners for hours on the ground, with unhappy passengers, overflowing lavs, and cabins turned into what looks like Woodstock the day after?

• It's dishonest because it assumes that there's always an easy fix when a flight gets delayed. In a particularly glaring bit of political sleaze, a DOT spokesman made the following statement

"Carriers have it within their power to schedule their flights more realistically, to have spare aircraft and crews available to avoid cancellations and to place passengers on other carriers' flights when there are cancellations..."

That comment, coming from a DOT official who should know better, is another  blatant, bald-faced lie intended to mislead the public. It is completely at odds with air transportation realities, and one of the most egregiously-inaccurate comments ever to come out of that agency. Memo to some in the media: if you're going to report on the airline industry, try to get some knowledge of it before you file stories that contain comments from DOT officials who are lying to the public.

Let's use just one of many potential examples. At times when Denver's All-Weather Airport (remember the one that "can land three streams of aircraft, no matter how bad the weather") goes down due to weather, there might be a dozen or more flights diverted to Colorado Springs. There aren't enough gates to handle that over-flow. Unbeknownst to the ethically-challenged hacks at the DOT, not all airlines that might find it necessary to divert have staff at COS. There aren't a dozen extra airstairs to simply deplane passengers. There may by issues with security. And there likely aren't "other carriers flights" available. Planes could be stuck for hours. So, rather than risk breaking LaHood's law, airlines will comply, and cancel more flights if there's a reasonable chance of diversions.

• It's dishonest because it implies that it's entirely the airline industry's fault. Here's some truth, which is in short supply in LaHood's DOT: airlines schedule flights to meet the air travel demands of the nation. It's the DOT's consistent incompetence over the past 30 years that has resulted in a situation where airlines must fly more minutes to get from A to B, and sit on ramps for hours waiting to take off. It's the DOTs long track record of ATC upgrade failure that needs to be addressed.

What that appallingly-dishonest DOT spokesman left out is that it's the DOT that should be adjusting its activities to the needs of the US air transportation system, not the other way around. Airplanes are delayed for the very reason Boyd Group outlined to Congress over 15 years ago: The air traffic control system can't handle the nation's air transportation demands. Not then. And still not now.

Tarmac Rules Are The Direct Result of Bad Airline Washington Strategy.  The good news is that the airline industry may be starting to take matters into their own hands, instead of following really bad strategy advice from their outslide lobbyists in D.C. Finally.

At those congressional hearings in 1994, we stated on the record that the ATC situation was so bad ($5 billion in extra costs then - it's double that now) that airline CEOs "should form a conga-line" into the DOT demanding not just action, but demanding results.

Unfortunately, the airline industry continued to follow really bad advice to "work with the FAA and DOT to find solutions." Given the years of DOT failure, that's like helping Bernie Madoff cook your financial statements. There have been no real results. As a strategy, going along with the DOT, instead of standing up and blowing the whistle on them, is an outright failure. That strategy and the insiders who promulgate it should be discarded.

Worse, the airline industry has been misled into believing that the entire solution is funding the FAA's NextGen. The problem is that ATA, not to mention the other alphabet groups, are not demanding that the the ATC system get fixed. They have been merely tossing their support behind the DOT - which is the very bunch who year after year has failed to craft any meaningful "new generation" approach to handling our nation's air transportation needs.

One airport alpha group recently held a workshop teaching members how to "pitch NextGen like an expert." (Wonder if they included breath mints for this kiss-up session.) Looking at the track record of the DOT and the slop-shop ATC results over the past 15 years, the first thing that needs "pitching" is the lack of vision and leadership such an event represents.

The ATA periodically leads airline CEOs into congressional offices like prize ponies, lobbying the solons to step up to the plate and give the FAA the money it needs for NextGen - a program that's so far behind and so far in the future that Ray Charles could see it's a failure. Let's try something new: airlines must demand results, and they must refuse to be used as toadies for failed DOT programs. Heck, if the last 20 years is not clear proof, there's no hope for the industry. Bring on the stupid rules, LaHood.

Here's the problem: the airline and airport industries have been mis-advised and mis-led by Washington insiders into equating NextGen as the only ATC solution. The results have been more delays and, yes, the public perception that "tarmac delays" and off-schedule flights are all due to the airline industry's intent to abuse the public. It's time the airline industry realized that the advice they've been getting from their paid insiders in Washington has been ineffective. The continued misdirection of the ATA on funding NextGen, instead of fixing the ATC system, is not productive. Sucking up to incompetent political appointees is no substitute for just telling it like it is: the DOT has failed the American public.

Maybe, Just Maybe, The Industry Is Taking Charge. Years of milquetoast airline industry Washington strategies have paid off in a continuing decline in airway efficiency and now, dishonest crackpot rules that will harm consumers and smokescreen the continued incompetence at the DOT. But this new tarmac nonsense seems to have awakened the industry. Finally.

The CEO of Continental put it clearly:

"The reason we're on the ground is because we use the very finest 1950s ground-based radar technology in our air-traffic-control system. The government sticks us on the ground because they refuse to invest in the highways in the sky. Then they fine us, when as a result of their incompetence we are held on the ground. We'll cancel flights."

Funny, if you go back to the 1994 hearings and dozens of media stories and reports since then, this is exactly the point we have been making. Alone. The rest of the aviation consulting crowd remained under their intellectual rocks, lest they lose potential business from the Feds. 

Yup, the great improvements over the past decade are sooo comforting. Incredibly, some will point to the recent DOT on-time stats as a great sign. Really? 20% of all flights arriving more than 15 minutes beyond already (and necessarily) padded schedules is an indictment of the airline industry, not an achievement.

But what the airline industry needs to do now is to avoid getting misled into believing that ATC improvements are just a matter of shifting to satellite technology. The whole approach needs to be rebuilt from "highways in the sky" to using the entire sky. On the positive side, there's a new FAA Administrator who just might be different from his predecessors.

LaHood's tarmac edict is a wake-up call for the airline industry. The get-along advice it's been getting in regard to ATC improvements has failed. Either they do what Continental's CEO has done - come out and tell it like it is - or they can just sign a confession that they are evil and must be punished.

One thing's certain. The industry needs a whole new direction in its approach to Washington.
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Hot Flash - March 8, 2010

Measuring 2010 Aviation With 1960s Metrics
Regardless of Pedigree, It's Bad Advice

Recently, we had occasion to cross paths with a couple of those very-big-name, multi-billion dollar, multi-industry, multi-tiered, multi-disciplined, multi-Gucci-outfit Big Name consulting firms. You know, not much different from the ones that sponsor bazillion-dollar sports stars, and who tend compete on the basis of the number of zero-real-world-experience MBAs on payroll, and the number of really neat but unintelligible buzz-terms they can blurt out in a 30-second period.

It didn't go real well. For them.

In a 15 minute period, a team from one of these august firms told an assembled meeting that their scholarly research revealed that a rural airport enplaning no more than 200,000 passengers has service from no less than a dozen scheduled passenger airlines. (It's actually four.) Having established this beach head of ignorance, they went on to discuss a larger airport in the region, observing that while it was ranked as one of the top 20 US enplanement airports in the 1950s, today it's ranked way down the national list. Their implication to all: The airport certainly has failed, and must be steadily losing passengers to other airports.

The concept of varied regional demographic growth trends over the past 50 years (like, that's half a century) or the concept of hub growth or shifts in spending patterns since Ike and Mamie were living at 1600 Pennsylvania Avenue, were not to be considered. These guys got all them there college-learned MBAs, see. So nobody had better argue. Even if they look stupid. They got a big name.

They also looked at nonstop markets that had been dropped over the years, and grandly implied that the airport had let this happen, and all efforts must be made to re-establish those exact routes. The hows, whys, and  focuses of various airline strategies were not reviewed. Load factors were not reviewed. The passenger revenue streams were not reviewed. Airline profitability was not analyzed. The airport's strong increases in hubsite access to both domestic and international points wasn't within several zip codes of the analysis. Those things, apparently, are minor details that high-paid MBAs from Big Name firms need not bother with. They just saw that some nonstop flying had been dropped and that meant the airport had better go get it back.

As for their claim of all those airlines providing service at the small airport, they insisted it was accurate because these denizens of the firm's aviation "practice" had accessed this gem of wisdom directly from - Holy Accuracy, Batman! - BTS data! No, not from any aviation-specific experience and expertise, but from reading it on the internet. They couldn't explain the difference between airline system and certificated operator.  "They're both the same, right?"

Apparently, these experts had no concept of how these data are reported, or what the data meant. They had no knowledge that the T-100 reports any certificated entity that has an operation at an airport. Like, the Pinnacle flights and the ASA flights flying Delta passengers. The Eagle and the Chautauqua ERJs in AA colors. The college charter. The Air France diversion to dump off a suspected terrorist.

But these cutting-edge $500-per-hour wizards had not a clue. They read it on the 'net, and the letters after their names should be enough to convince anybody not to challenge them. Heaven only knows the number of innocent clients who, assuming that company size equates to quality, get taken by this type of stuff and make incredibly bad decisions as a result.

It Takes Intelligence to Understand Market Intelligence. In fairness, neophytes often tend to get tripped up by this stuff. Including the ones charging clients hundreds of dollars for the privilege. Take a look at the BTS data for ORD last July.

These guys would probably send a letter of congrats to Mesa for being the #5 airline at Chicago/ORD. According to BTS data, American Eagle, SkyWest, and Mesa are among the top five airlines there. The fact that none of them have a phone number to book a seat isn't an issue. The fact that Mesa and SkyWest may be carrying passengers for more than one airline isn't an issue, either. The system was set up in the 1950s to track certificated carriers. Back then, that meant airlines. Today, airlines such as American, Delta and Continental are combinations of airplanes operated by several certificated carriers, many of which of which are in the business leasing airplanes and crews, not selling seats directly to the public.

The airline world has changed. BTS/DOT/FAA reporting processes have not. Unfortunately, there are a lot of consultants that actually resell this stuff as the True Gospel - including some aviation consultants. It's the type of slapdash that gives consultants a bad name.

Get Real Market Intelligence From Aviation Professionals. That brings us to the hard sell. Before you sign on the dotted line to subscribe to any source of aviation data, click below and take a look at DataMiner from Boyd Group International. It's the only one that addresses the errors and mis-reporting that other consulting firms and data providers practically worship.

DataMiner knows which SkyWest flights are carrying United passengers, and which are carrying Delta revenue. In an airline industry where United and American Airlines are now 50% operated with leased-in "certificated carriers" the old reporting system is entirely unreliable.

Take a couple of minutes and go through the pdf Airports:USA DataMiner presentation. You'll see the depth of the market intelligence and the ease of accessing it. And. again, don't sign anything until you experience a free on-line trial. After all, if you're looking for the best in aviation data, information and market intelligence, it's prudent to spend a fast five to see how DataMiner is far superior to any other source. Any other.

Then you can make a decision, and we can welcome you to our growing subscriber base.

That way you won't run the danger of looking like one of those Big Name firms.

 

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Hot Flash - March 1, 2010

An Aviation Safety Breakthrough!
How 'Bout New CVRs? - Congressional Voice Recorders?

If the NTSB and some politicians get their way, the entire US airline industry is back to a three-man cockpit. And the new guy is a rat for the FAA. He's called Big Brother.

The NTSB is recommending that airline pilots should be constantly monitored by routine reviews of cockpit voice recorders. The idea is to download these tapes and have the airline or the FAA review them to make sure that pilots are doing their jobs right.

There are certainly regulations on cockpit activities during some parts of the flight, but this grand proposal removes any expectation of privacy in the pilot workplace. Take those boxes out, guys, and listen to the tapes. Every comment, every personal aside, every opinion of  the company, the union, the FAA, the Administration, ex-wives, the kid's scholarship, all right there for Big Brother to review.

Needless to say, the usual gang of politicians have jumped on to the bandwagon. Senator Jim DeMint (R-SC) and the ever-on-the-soapbox Representative Jim Oberstar (D-MN) are urging this be done immediately. "Don't let another day go by" was the general comment.

Of course, they're both assuring pilots that the information on the tapes will not be misused and will remain confidential. It's sort of like concluding that pilots are routinely guilty of unprofessional conduct at work, and this is just a form of self-reporting.

Let's Put New CVRs In Washington - Congressional Voice Recorders. But, wait. It may be a good idea after all. How about having recorders in Oberstar's office? And Senator DeMint's place of work, too. Senator McCain's conference room. Committee backrooms. Do it for all these guys on Capitol Hill. Let the public hear what's going on in their workday, too. All the deals, all the conniving, all the backbiting, all the partisan backstabbing. With a 20% (or lower) approval rating, there's got to be lots of sleazy stuff going on that the public should know about.

After all, unlike airline pilots, the people in congress work directly for the American public. Heck, a couple days of listening to complete loons like Louise Slaughter (D-NY) babbling inside their own habitats could be hilarious material.

Actually, It Would Improve Air Safety. Yeahbutt, some will retort, congress members don't have jobs where mistakes can cause loss of life. That's flat untrue. Think again - these people really do promulgate policies and systems that endanger the public. Think tolerance of the TSA and its failures. Think ATC and the deaths that have resulted from the failure of congress to demand better from a whole rogues gallery of past DOT secretaries, let alone come up with reliable funding for the FAA that doesn't resemble a plan ginned up by Household Finance.

And, truth be known, some people in congress actively work to ignore and cover-up safety issues. Anybody remember Oberstar's speech of outrage when it was discovered FAA inspectors were told to bury reports recommending ValuJet be shut down due to major safety problems? The same reports that were right before 110 people died? No, nobody does. Because Oberstar, the Barney Fife of aviation safety, said nothing. That's a lot more of a fundamental safety problem than conversations in the cockpit of a 737.

Anybody remember the congressional response when DOT Secretary Pena arrogantly proclaimed from the crash site that "ValuJet is a safe airline?" This was just three months after his department issued a doctored report, "The Low Fare Revolution" that dummied the numbers to intentionally cover up ValuJet. No, nobody remembers the bi-partisan congressional outrage, because there was none. They ignored it.

Congress isn't a major part of aviation safety problems? Anybody who says these types of things are not a threat should be tested for illegal substances.

Get it. If monitoring any conversations will make aviation safer, we need to start on Capitol Hill, not in airline cockpits. Maybe if the public had open access to these guys' work places, there'd be the uproar we need to change things. Aviation would be a lot safer than congress demanding that the FAA become a cockpit Richard Nixon, taping everything that goes on.

Expletives not deleted.

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Hot Flash - February 22, 2010

China: More Important Than Low Fares
Regardless of Community Size

We're in a global economy. And it's increasingly going to be a Sino-centric economy. As airlines continue to morph from independent brands to metal-transparent alliances, assuring access to China will be increasingly critical for all regions of the US.

Airline Stability Notwithstanding, Traffic's Exploding. Enplanements in China was reported to have jumped 20% in 2009 to 486 million. All of the growth was in domestic markets, with international traffic declining slightly.

Some comparable statistics between China and the US air transportation market are instructive of how this huge market is emerging. Remember, 30 years ago the Shanghai skyline was not much different from pictures of the Bund in 1940. Take a look today. Take a look at other metrics, too, like China today being the world's single biggest automotive market.

Of interest is that in one year, the number of Chinese airports that handled more then 10 million passengers jumped from ten to fourteen. Furthermore, over 50 Chinese airports last year handled over 1 million passengers each.

Knowing The Way To San Jose Is Less Important Than Wuhan. It's great to have Southwest or nonstops to Orlando, or low fares to 'Vegas. But international access - particularly to China - is also more critical to future economic growth than most people realize, regardless of community size.

In our Air Service Enhancement consulting, one of the most important quality metrics reviewed is airline (alliance) access to/from China, and connectivity to points beyond Beijing, Shanghai, and Guangzhou.  In just a couple of decades, China has emerged as the #1 future international player that US communities need to consider in their air service planning.

It's A Big Market, But Not A Backward One. Boyd Group International is working with a number of aviation clients to size the market and potential business opportunities in the Middle Kingdom for the next 10 years. The Global Fleet & Trend Forecast projects demand for an additional 2,925 airliners through 2019 - more than double that of either Europe or North America. Chinese carriers by that date will comprise a fleet of just under 4,800 airliners, up from under 1,900 in 2009. This will push demand for corollary aviation services.

China has announced a huge airport construction program over the next five years, but it's uncertain the level to which this represents opportunities for US companies. Many of the planned facilities are in very rural areas, particularly western China. Furthermore, regulations, red tape and other factors affect the extent to which foreign entities can participate. China is not a backward nation. It's not technology-challenged, either. These factors shape the scope and range of opportunities for US companies.

Bottom line: As we pointed out as far back as our 2002 Aviation Forecast Summit, all sectors of US aviation - regardless of size or category - need to prepare now for a world where China is not only a potential market, but a definite competitor.

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The New Hot Issue:
The Cessna 172 Threat

The tragic incident where a disgruntled individual flew his Piper Cherokee into the IRS offices in Austin has created the latest hot issue for the don't-bother-to-think section of the media, not to mention a whole passel of politicians.

"Aviation Security Lapse Uncovered!" was a general headline. "Domestic Terrorism" was the reference made by another source. "More needs to be done to screen these private airplanes!"

More needs to be done to find journalists who can think their way out of a paper bag.

Here's the deal: there's a fundamental difference between terrorists and idiots who go off the deep end. Terrorists can be identified, and, hopefully, thwarted. But there's no defense against a loon who gets ticked at the IRS, gets in his airplane, aims it at a building, and joins the 29 virgin IRS auditors in heaven.

He wasn't carrying explosives. The event was not the result of a security failure. It wasn't domestic terrorism. It's the result of a societal vulnerability to people suddenly going bonkers, notwithstanding whether they choose to express themselves with a Piper Cherokee, a 12-gauge shotgun or a baseball bat.

Janet Nepolitano's On The Case. So, exactly what is the TSA supposed to do to "screen" these types of people? Interview every private pilot before he or she clambers into the 172?  "Hi, there. Are you intending to fly this contraption into a building?" Or, "Is your karma in the love place today?"

Finally the real-deal question: "Do you harbor a secret dislike of the IRS?"

That'll clear the general aviation skies in a flash.

A tragic event, but not a security failure. But do expect the usual congressional suspects to try to make as much of this as politically possible this week.

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Hot Flash - February 15, 2010

News & Reviews

Latest DOT Off-Schedule (a.k.a."delay") Data. The news stories are just bubbly about the DOT reporting that 79.5% of all flights in 2009 were on-time. The best since 2003! 'Course, they leave out the fact that the numbers reflect only flights within 15 minutes of the airline's schedule. Yessir, having over 20% of the total airline product to be time-defective is a real coup!

Some eagle-beagle journalists have just caught on to the fact that airlines set the actual schedules, and lo! they've in some cases actually added minutes to elapsed times. So, these lightweights have either implied or outright stated that the airlines are cheating to show to show better on-time performance.

It's what happens when reporters run off and compare a couple of old schedule filings and decide they're the new Woodward and Bernstein, when they don't know squat about things like ATC, time-of-day congestion, shifts in departure density, and how increased block times generally are revenue negative,

AA/BA Joint Business Agreement (JBA) Approval. The World's Changing. Over the last six months, Boyd Group International has completely re-structured its Air Service Enhancement practice. We've made fundamental staff changes in order to recruit analytical and forecasting capabilities that are more intensely futurist-oriented. We've developed entirely new data modeling approaches. We've moved beyond just route-and-market analyses based on what's in place today, and replaced them with programs that help our airport clients meet the future precisely, with a planning trajectory that postures them for the changes that are coming.

One of these is represented by the DOT approval of the AA/BA/IB Joint Business Agreement. It's not just another antitrust immunity case. It's a clear window on the new dynamics of air service connectivity for US communities of all sizes, from DFW to GTR. It's about metal transparency and ultimately brand transparency. In the future, it won't be a matter of just recruiting "United" or "Delta" or "American." It will be a matter of being connected to Star, SkyTeam, or oneworld. Air service enhancement will be measured on much more than trying to recruit a low-fare airline.

The point is that this DOT approval signals an acceleration of the globalization of air transportation. For our clients, we understand that the future for Air Service Enhancement is the key to economic development. It must focus on building access to and from the rest of the globe, and not just getting cheap fares so local families can go ride Dumbo.

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Major Airline Small Jet Fleets -
An Operational Dien Bien Phu?

There's no telling how many stories have appeared in the media of late about how airlines are shifting more flying to small jets. Academics who aren't airline experts, but who play them in the media, jump on to the bandwagon, typically declaring that this is the trend of the future.

A couple of points that might rain on this parade: first, large numbers of RJs are being retired in the next five years. It's a process already in place. The second point is that they're being yanked out of service because of their economics.

The Boyd Group Global Airliner Fleet Demand Forecast indicates that of the approximately 1,632 CRJs (200s through 900s) and ERJs (-135s through -145s) flying in North American service in 2009, only about 565 of these units will be in operation by the end of 2015. Add to this the forecast additional 324 new CRJ-900/1000s expected to be delivered through 2014, and that leaves a fleet of under 900 RJs left.

What that means is that while there will be fleet shifts at some airline systems, there won't be any increase in the number of small jets in the skies, comments by academics notwithstanding. It's not the wave of the future. It's a wave good-bye to hundreds of airplanes headed for the desert.

An RJ's Sector Costs Might Be Low, But When Southwest's The Competition... Getting back to those news stories, what they're revealing is a lot more than just vapid quotes from frequent travelers who dislike small airplanes. Instead, they're outlining what could be a future crisis for some carriers who have outsourced more flying to high-cost RJs than might be prudent, and who may have bet the competitive farm on RJs.

We know this: RJ-dominated connecting hub operations represent ASM costs that are high. We know that RJ-dominated connecting hubs don't have the economics to work well. CVG/Delta has been proving it. Independence Air tried it at IAD. When it's connecting flows across the nation that are in play, the price points are set by airline connecting hubs with the lowest ASM costs. Even in high-density O&D markets, multiple-frequency RJ flying is a tough economic match when the competition is flying 9-cent 737s. Or, when the direct competitor is Southwest.

Of interest, for example, is United's Denver hub operation. They've hunkered down, brought in lots of RJs, and are apparently waiting to blow away the attacking competitors. But that's pretty much what the French tried at Dien Bien Phu.  

In 2004, over 61% of its departures at DEN were mainline United. Today, less than 40% are mainline, with the rest outsourced. Over 53% of all United flights at Denver today are operated with RJs. (Another 5.9% are operated with outsourced narrowbody jets, E-170s, which are not "RJs" per se.)

Source: Airports:USA Via Innovata, LLC, Effective 2/10/10    (c) 2010 Boyd Group International

This wouldn't be much for concern, except that the #2 airline - and growing - at Denver is Southwest. The #3 is Frontier. An RJ gets cut to ribbons on an ASM basis when it competes with these carriers. For local traffic, those 7 daily United DEN-TUS CRJs are at a huge seat cost disadvantage. Ditto for much of the connecting traffic, since over half of United's Denver departures are with RJs. This is even more problematic in light of the fact that WN is increasingly making DEN a connect point.

The question is how long before (or if) a tipping point is reached where the preponderance of high-ASM cost RJs become a financial - and perhaps, marketing - millstone for United.

RJs will continue to be a part of the US airline fleet mix. But they never were and never will be a competitive panacea. And when they dominate an airline's hubsite, history has shown that the outcomes are not positive.

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Hot Flash - February 8, 2010

Announcing...

First, A Super Bowl Win. Now, The #1 Aviation Forecast Event.
New Orleans Is On A Roll...

We're excited to announce that New Orleans Louis Armstrong International Airport will be the host of the 15th Annual International Aviation Forecast Summit. All of us at Boyd Group International are honored to have MSY as a client, and to be holding the #1 aviation forecast event in one of America's greatest cities.

Following the success of the 14th Annual Summit at Lexington, we're planning an even more comprehensive event in 2010. Global Alliances and international cross-investment will affect all areas of aviation. Airports - from global portals such as Atlanta down to regional gateways like Bozeman - will be part of the new environment.

Today, one in four enplanements in the US are directly or indirectly the result of international traffic. It's going to be over 30% by 2015. Business strategies and aviation planning need to shift into a fully global-centric mode. This summit is all about just that. New Orleans, a center of international trade and commerce, is the perfect venue for this year's Summit.

As always, this will be a forecast summit - hard data, not wishy-washy panels offering streams of consciousness. Boyd Group International will be presenting ten year forecasts of airport traffic, airline trends & strategies, as well as its Global Fleet Demand & Trend projections. This year, we're expanding the forecasts to include emerging trade and traffic flows by global region.

We will also have an outstanding array of aviation decision-makers who will provide their insights and perspectives on what to expect in the coming years.

This is an event that's about facts and real-world realities. The hallmark of the Boyd Group International Summits is that they're focused on facts, figures, and realities. There are no repeat-the-party-line presentations from federal bureaucrats. They're not invited: what they can provide is repeated over and over like a broken record at other industry conferences. We cut new territory at the International Aviation Forecast Summit.

The event will be at the Ritz-Carlton, right on Canal Street and near the French Quarter. We've arranged some very attractive room rates for the Summit, too. But clear your calendar and join us in the Big Easy October 24-26, 2010.

In the meantime, click here to see highlights of last year's Summit at Lexington. It was the biggest and most comprehensive yet. In 2010, we're raising the bar. To register on-line for the Summit, click here.

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The Security Stupidity Olympics
Janet Napolitano Leads In The Medal Count

The Winter Olympics open shortly in Vancouver. But the Security Stupidity Olympics have been in full swing since 2002. These games started under George W. Bush, and the bureaucratic baton has been passed flawlessly to the Obama administration.

In the 2010 games, we have Janet Napolitano sweeping the Gold Medals.

The Foot-In-The-Mouth competition was a walk for Ms. Napolitano. A terrorist came within seconds of blowing a Delta airliner into the Next World, and she declared that “the system worked.” In a sense, she was right - the Kabuki Theater she passes off for aviation security actually did “work” as it has been designed to do: it failed.

In the Reality-Jump Competition, Ms. Napolitano outdid herself, making proud anybody who’s a big fan of bureaucratic sleaze. No, we’re not referring to the Erroll Southers incident, where a guy who lied to congress was put up to be TSA Administrator. He withdrew from the competition, whining that he was the victim of "partisan politics" - which in itself was yet another reason he was eminently unqualified.

No, this is the incident in Richmond, where the TSA strong-armed the airport into issuing full security access to a TSA employee who is a convicted felon. Yes, a convicted felon - like, he's got a rap sheet. Just the kind of person we want out there protecting us. The fact that he's barred by statute from getting security clearance is something the bureaucrat-appointees at the TSA don’t care about.

What does this tell you about the people running the TSA? The rank-and-file folks in the blue shirts on the front lines must be just so proud of their leaders. TSA screener arriving home from his shift: "Hey honey, they let me work with a real felon today!"

Worse, a lot of the aviation industry doesn't seem to care, either. Quite the contrary, what with Washington Alphabet groups and airport consultant mobs falling all over themselves to laud and award the very rogues gallery of incompetents who've been running this show since 2002. (Likely rejoinder: "Hey, it's Washington. We gotta go along to get along, don't ya know." Sure. Even if it turns a blind eye to dumb policies and dangerously-bad aviation security.)

Getting back to the Olympics, the Chutzpa Competition was easily won by already-Gold-Medalist Napolitano, when she appointed the new TSA Chief of Staff. In a glowing press release and with a completely straight face, she outlined the stellar qualifications of the person in this important security post. He was head of the Arizona Lottery - and he has zero security background whatsoever. A true coup and a Chutzpa Competition record: not one bozo in congress noticed, or gave a rip.

But look at the bright side. With this guy in the saddle, there’ll be a new day at the TSA, and we can look forward to new, fuller consumer disclosures at airport screening points across the nation. After all, US airport security really is a game of chance:

“Welcome to the TSA Security Lottery!
Your odds of inept screening, 1 in 4. Chances of a screw-up that evacuates the terminal, 1 in 125. Odds of  a dangerous item getting through a screening checkpoint: 1 in 5. Chances of getting blown to smithereens and meeting Jesus due to a terrorist attack: 1 in 220 million, unless an actual terrorist comes along, which lowers the odds to 1 in 5.  Chances of TSA airport screening failing to anticipate and deter a determined terrorist attack: 100%. Thank you for playing the TSA Security Game.”

And make no mistake, it is a game. Any organization with leadership like this cannot be described by any other term. The threats are deadly serious, and we've got this Original Amateur Hour supposedly protecting us.

Think about it: the bad guys are training professional terrorists in Yemen to kill us. We're responding with an organization that hires felons, is run by a former governor whose state had one of the most porous borders with Mexico, and has a chief of staff whose main qualification is that he ran a state gambling lottery.  It's the equivalent of sending the high school glee club to take down the Mafia.

But, let's just ignore it. Most of Congress certainly is. And you don't want to look like a troublemaker.

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Hot Flash - February 1, 2010

Year 2010:
Some Quick Industry Projections

Seems that nobody's sorry to see 2009 go away.

Somehow, December 31 is some magic turning point - a date when we all hold our breaths for a New Year, ushered in by partying mobs watching a lighted ball drop on Times Square, thousands of bottles of bubbly consumed, people hugging one another, and Dick Clark (how long has this guy been around?) hosting a TV show with really dried out performers that nobody watches anyway.

The fact is that New Years on January 1 is an arbitrary date set in a calendar designed by some medieval Pope. He probably had stock in a champagne company. Or was personal friends with Dick Clark.

Nevertheless, it's a traditional time to look ahead and make predictions. So, here's a few

Passenger Traffic: Don't Start Celebrating. There's been a lot of stories in the past week reporting that demand will kick up in 2010. Some reporters are getting confused between the potential for yield improvement on one hand, and increased passenger traffic on the other. The former is, indeed, a real possibility - revenues, measured in TRASM (what we define as total revenue per ASM) will likely come up in 2010. But any material - or even incremental - jump in enplanements is not in the cards,

That's because the deck is economically stacked. Forget the silly 5%+ GDP jive. Most of that was inventory games. And much of what's left is due to the feds tossing out printed money like bread crumbs to park pigeons. Heck, the greenback is so dicey that it was reported that the Russians are starting to prefer the Loonie - the Canadian dollar. Then there's unemployment going nowhere.

And even if there is an economic spark, there's the little issue of capacity - it's going to drop by more than 3% measured in raw seats. Our Airports:USA forecast stands: a decline in enplanements of 3.2% to 3.5% in 2010.

Airline Financials: If Not Champagne, Crack Open A Bud. The US airline industry, barring a material spike in oil prices over $85 or so, is likely going to do at least okay in 2010. Not grow. But they will be able to match the expected decline in passenger demand and recover some of the 13.8% yield decline they experienced in 2009.

Now we're not talking about the global airline industry. Just the US, where carriers have the flexibility to adjust capacity in a large domestic market. Air France doesn't have that. Neither does Singapore. When they need to cut capacity, it's more like a whole 744 on a once-a-day route. US airlines, with a robust hub system (and that includes in this case Southwest), can cut domestic frequencies and still retain much of the revenue. WN, for example can cut out ALB-LAS if it needs to, and still retain a portion of the revenues on other routings from Albany.

So, the reports of US airlines being in dire trouble are not necessarily what they're cracked up to be.

Triage In Process: Small Jet Providers. When Boyd Group International's forecasts back in 1998 - 1999 began to illuminate that the combined number of 50-seat RJs in operation, on order, and on option in the US represented hundreds more units than the market could absorb, some clients with skin in the RJ game were not happy.

All the other forecasts predicted that the skies would be black with these little jets. If you were "in the know" that meant you repeated the mantra that RJs were the new future. Our forecasts went deeper than in-media pep rallies. Every airliner category has a market limit. At approximately 1,100 to 1,300, that was the zenith of the US airline industry in regard to the need and role of RJs. Beyond that, and the rest were airplanes looking for a place to fly. (And we did eventually see exactly that - for example RJs in long haul off-hub missions that didn't make a lot of money, but kept the plane busy.)

Fuel spikes didn't help. But even without $80 oil, the number of economic RJ-capable missions in the US simply could not support the 1,600+ that were in operation in 2006. And now that it's obvious and safe, some of those same RJ-cheerleaders from ten years ago are now gravely "predicting" large numbers of RJ retirements. Memo to these folks: it's not a forecast after it happens.

And, for 2010, do not plan on seeing any large numbers of the 200+ newly-retired RJs coming back to life as independent airline brands, regardless of how cheap the lease/ownership costs are.

Air Service Access. And that brings us neatly into the issue of air service trends for 2010. Without question, 2009 can go down as the Year Of Air Service Development "Innovation," also described in the real world as flim-flam, scams and crackpot schemes.

The economics of air transportation now preclude any chance of restoring some of the air service that some communities once had, and/or would now like to have. That can understandably create community frustration, which can make some of these folks vulnerable to bright ideas that are not connected to any electrical sources, let alone reality.

In that regard, it was a banner year, 2009. Just some of the highlights:

We had the JetAmerica fiasco, where just a wisp of a crackpot concept had consultants convincing airports to spend thousands of dollars marketing and advertising what was literally nothing more than an airbrushed picture of a 737-800.

With less than daily service to Newark and $9 fares on every flight, JetAmerica's ads proclaimed "this is not a gimmick!" Sure looked like one. But one thing is certain: it wasn't an airline, either.

There was one really embarrassing project that breathlessly concluded that a small-to-midsize airport could instantly become a hub gateway for small rural communities, just by tossing some 9-seaters into the sky. No discussion of things like schedule connectivity. Nah. Consumers are just falling all over themselves to climb onto a non-air conditioned piston airplane, fly to another airport that has no banked airline schedules whatsoever, sit around for a couple of hours and eventually board another flight that would connect them at a big airline hub to their final destination. Okay, let's get started on the set-up phase, regardless of facts.

We had any number of "locally-supported air service initiatives" - golly gee, all those RJs coming off lease might be a goldmine for small communities. There were a number of differing schemes from a number of differing sources, but generally communities were advised that if they would just commit several millions up front to basically lease-in their own RJs, and take all the financial risk, well, they could get that air service they needed, and make a buck or two to boot. Step right up, folks! Lottsa RJs available! Purple Kool-Aid, too.

But criticize or call this stuff out, and the angered response is immediate. "We gotta do sumpthin!!!..." is the cry. Anything to bring back that lost air service, or attract Southwest, or get those low fares. It's more and more starting to resemble a New Guinea Cargo Cult. (Google it if you need). Heck, some of these air service get-togethers seem to have degenerated into support groups, with people exchanging their stories of woe and how they're fighting the good fight. It sounds like Weight Watchers, or part of the 12-step program. Unfortunately, social events won't change market realities.

It's not as if things are hopeless. As our clients - from Fairbanks to Amarillo to Myrtle Beach, and a lot of places in between - have seen in the last year, there are expansion opportunities. It's a simple matter of blunt facts replacing snake-oil and wearing blinders. The first thing to do is recognizing the new air service realities. Some types of air service are today completely ruled out by new economics. Therefore, in the coming year focus must shift to what can be accomplished, not recreating 1985.

But with another 200 or so small jets (and some turboprops) heading for retirement in 2010, plan on more gnashing of teeth in place of sucking it in and dealing with the real world. And that'll be fertile ground for more schlocky schemes.

Fleet Demand. There remains the 75-120 capacity gap at a number of US carriers. In a shrinking demand environment, that may remain a gap for the foreseeable future. The airliner program to watch in 2010 is the Bombardier C-Series. Strategically, the airframe industry has shifted. Boeing and Airbus are now years out in major follow-ons to the 737 and A-320 platforms. That puts the C-Series and its GTF powerplant in an interesting market position, particularly if fuel continues up. Key point to remember: fleet renewal is all about more efficient flying. It is not about replacing seats on a 1 for 1 basis.

Another outlier: conceptually, there is a demand for new-generation <70 seat platforms. The reason there aren't any is that the developmental costs would be astronomical compared to the ROI, and there are no techno breakthroughs to make such aircraft materially more efficient than current models. That could change.

Washington: Watch for some really dimbulb suggestions. Like, making airline pilots live where they are based. (like the situation on the plantation? Thought Lincoln did away with that stuff.) Then there's the consumer legislation - if there's another high profile airline screw up like at Rochester last year, plan on it. If not, maybe not. Just do not underestimate what might come out of LaHood's office this year.

Year 2010 - we're a month in. The next 11 will be fun. 

 

Pre-Hot Flash Update...

Analytical Firepower Workshop Summary

We want to express our appreciation to the airport planners from all around the nation who joined us last week in Denver for the first interactive air service data and planning workshop.

As an added benefit, we were honored to have Daniel Shurz, VP - Strategy & Planning of Republic's branded operations (Frontier and Midwest) join us to review his perspectives on the airline industry. We also want to thank our partner, Innovata, LLC for sponsoring lunch at the workshop.

Great Participation After The Workshop, Too. Subsequent to the workshop, attendees were given  extended online access to Airports:USA DataMiner to follow-up on the report outlines covered and to pull down additional data for their 2010 air service programs. We're pleased that attendees pulled down over 1,000 DataMiner reports. Among the most accessed were:

These represent just a few of the hundreds of aviation reports that DataMiner provides. And, unlike other sources, it reflects the realities of the 21st century airline industry, identifying and filtering out the reporting errors inherent in raw BTS data.

Requirement: Being Smarter Than The Data. One of the critical points made at the workshop is that just accessing "data" is not a magic key to gaining and retaining air service. It is only a part of the process, and accessing various data sources does not make experts out of neophytes.

Accessing accurate data also can lead to the hard conclusion that some types of air service simply can't work. If the traffic and revenue are not there consistent with the target airline's strategies (note, the airline's strategies, not just black ink) it makes no difference what data is used, or how whiz-bang the presentation deck may be, or whatever other P.T. Barnum marketing stunt is attempted. They aren't coming. Air service is all about meeting the airline's specific market and revenue needs, not theatrics.

The point is that data sources such as O&D tables, T-100, Form-41 and schedules are tools for professionals, and effectively applying metrics demands that the user have an extensive knowledge of the industry, its structure, and emerging trends before making the first keystroke. Effective data assists those who are informed. It can lead the uninformed way off the reservation.

Scheduling A Follow-Up. The sold-out event was unable to accommodate all who wished to register. So we're looking at a second workshop later this year. We're still reviewing dates, and we may schedule it again at Denver International Airport, or perhaps at our headquarters building in Evergreen, where we're working on setting up a training classroom for DataMiner clients.

For more information on Airports:USA DataMiner, click here.
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Hot Flash - January 25, 2010

Security: Enough Political Hot Air To Threaten Polar Bears

The Christmas Eve near-disaster and the security breach at Newark Liberty International have politicians dancing around like trained bears. They're outraged! They're going to take action!

They're making fools of themselves. Not to mention the nation as a whole

Senator Lautenberg of New Jersey has introduced legislation to fine anyone who breaches security a minimum of $10,000 and toss 'em into the clink for up to a decade. With brilliant insight into the obvious, his legislation also will require cameras at check points and require that they get inspected to see if they're working. No mention of fixing the management incompetence at the TSA.

Representative Sheila Jackson Lee of Texas called for an audit of past security failures. “There is no letting your guard down in securing the homeland,” she stated, leaving out the fact that her calling for an audit tends to prove that a lot more than our guard has been down.

Somehow, nobody in the media thought this was weird coming from the woman who supposedly heads the Transportation, Security and Infrastructure Subcommittee of the House’s Homeland Security Committee. What's she been doing all these months?

Now she puts on a high-profile, I'm-shocked!-shocked! photo op after the TSA was caught with its collective pants down. Her whole show - staged and surrounded by a host of oh-so-concerned bureaucrats - had all the credibility of Bonnie and Clyde denouncing bank robberies.

Finally, the Obama administration has accepted, with great sadness, the withdrawal of Erroll Southers from consideration to be the next TSA Administrator. Southers blamed partisan politics. He - and the people who thought he was "uniquely qualified" for the job - failed to mention that he lied under oath to Congress last fall. Most of these swooning supporters wouldn't let a guy with that on his record handle their 401K.

But national security? No problem.

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A CVG Resurgence - Sans A Large Hub
Fare & Traffic Metrics: 3Q 2009

The airline industry has clocked in for the year 2009 with mixed, but not disastrous results. When we compare just the 3Q 2009 data, the overall conclusion is that US carriers did pretty well considering declining demand and fare yields down double-digits compared to the same period in 2008.

The Airports:USA Airport Traffic Review is now available, and reveals some interesting information:

Nationwide, traffic dropped by 2.4%, and in light of strong load factors, the US airline industry did well in matching the recession-driven decline. But part of that was achieved by fare activity, as the average paid on a one-way basis dropped from $203.16 to $176.22, including federal fees and taxes. Out of the 150 airports covered in the Report, 145 saw fare declines.

The most interesting factoid for the 3Q 2009 is the airport that had the strongest increase in local O&D. It was Cincinnati Northern Kentucky International. While the Delta hub shrank, and total enplanements declined, the mix of local  and flow passengers shifted markedly, with a 27% increase in local O&D and an almost 35% reduction in average fares.

The Airport Traffic Review can be accessed and downloaded from the Aviation Updates page. Click here.

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Hot Flash - January 18, 2010

At $15 It Was A Pain. At $25, It May Be A Revolt
Bag Fees: Southwest Better Hire More Staff

The airline industry might want to start considering that there is a limit to what passengers will tolerate.

In the last month, at least one major carrier has "enhanced" its frequent flyer program by raising the miles for upgrades and implementing a "co-pay" fee. That upgrade for a party of three to Europe went from 90,000 miles to 110,000 miles plus a $1,200 (yes, over a grand) co-pay. The carrier's high-level exalted spent-uranium-level frequent flyers must feel real valued right now. Great idea: tick off your most frequent customers.

Then the announcement came that carriers are raising first-bag fees to between $23 and $25, depending on airline. Toss in things like periodic but major security failures that have shut down airport terminals over the past month, the threat of more intrusive pat-downs, the stories of full-body scanners, rumors of no movement in the last hour of the flight, and the whole concept of air travel takes on a visual reminiscent of the Spanish Inquisition.

But it's the baggage thing that's liable to cause the natives in the coach cabin to exhibit unrest.

The rationale behind baggage fees really isn't out of line, but the airline industry has failed miserably to articulate it. They've abandoned the PR field to consumerist twits and vapor-brained politicians.

 The airline industry seems to be taking the Marie Antoinette approach: let 'em eat cake. Passengers have no choice. Take it or leave it. We don't have to 'splane nothin' to them. But the industry may want to consider what happened to the lovely and gracious Ms. Antoinette. There are more than a few loons on Capitol Hill that are willing to make airline heads roll to get some cheap political points, not to mention the "consumerists" and their running-dog talk-show supporters. (They're not airline experts, but they play one on TV.)

Even With Fees, Airlines Are Taking In Less. Both on the surface and in hard economic reality, bag fees make sense. First, unit revenues were down around 10% for the year 2009. Even with travel-specific ancillary fees (baggage charges, which are an intrinsic part of the consumer's trip, as opposed to the option of buying stale potato chips on-board) passengers were actually paying less to travel than the year before.

Second, with internet booking, ticketing, and check in, the functionality of airport facilities has fundamentally changed to one that's baggage-centric, and less passenger-centric. That ten-position ticket counter isn't needed when there aren't any tickets anymore, and passengers process themselves at home or at a check-in kiosk. Airport facilities are more into bag-processing than passenger processing.

Finally, charging bag fees is essentially a selective fare increase: No bag for the carrier to handle, no fee.

But none of that is registering with the flying public. All they see is a minimum of a $50 hit round trip just to give their Samsonite to somebody at the airport they don't know. They don't see any of the rationale. They don't care if, even with the bag fee, they may be paying no more than last year's trip to Tucson. They don't have any idea of the complex nature of airline pricing. All they know, read, and hear is that those greedy airlines are hiking fees. And we hear nothing from the airline industry.

They May Not Really LUV Bags, But Passengers Are Noticing. So, we have a situation where carriers really do need the revenue those fees bring in. But in the process they've created a golden market opportunity for Southwest to look like the knight in shining 737s.

Consumers are taking notice that Southwest isn't charging for baggage. They hear Southwest isn't clipping them another $25 bucks for that change of underwear that won't fit in the carry-on. In short, for consumers that do have luggage, Southwest, right out of the box has a perceived $50 round-trip "fare" advantage. With savvy yield management, the airline can engineer that into both more revenue for it and lower costs for the consumer. And, at some point, frequent flyer loyalty goes away at fee-charging carriers. That family vacation to Florida is getting pretty pricy when it's another $100 or more just for luggage.

It's true that Southwest is leaving millions on the table by not charging for luggage. But they may be putting millions more in the passenger cabins of their airplanes. One additional WN fare on average is the equivalent of almost five first-bag fees. Do the math.

Consumers probably are. And there's not much other carriers can do about it.

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DataFlash - American's Top 25 Markets

For DataMiner subscribers, third quarter 2009 data is now on-line.

Using this latest quarter, we've downloaded American's top 25 O&D markets, including fares, yields, and share in each. This is a snapshot of the information that attendees at the Analytical Firepower Workshop will be experiencing this week. Click here.

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Hot Flash - January 11, 2010

Our Airports Are Wide Open To Terror
But, Meanwhile, Back In Washington...

One of the most inane and inaccurate myths going around on the talk show circuit is that the Bush Administration's grand vision and policies protected America from another 9/11 attack. Typically attached to this is some reference to the current administration being soft on terrorism.

The vanguard of this stuff, at least as reported in the media, seems to be former VP Dick Cheney, who was less wordy than Harpo Marx during the last election, but now is suddenly posturing himself as Mr. National Security.

It's unfortunate that the two political parties can't see an issue where they are in complete alignment. The fact is that both are completely clueless when it comes to homeland security. And they are both playing politics while real terrorists are playing with real explosives.

No, Bush Didn't Make Us Safer. The Bush Administration, via Jane Garvey's incompetence and willful ignorance of security warnings, can't say they're blameless. (Doesn't matter who made the tragic mistake in appointing her to the FAA, she was there, and Bush was clueless regarding her lack of ability to do the job.)

The fact that Bush did nothing to clean house after 9/11 is another indictment and an indication that if we've not had another event since 9/11, it's for the same reason there wasn't such an attack before 9/11. Nobody's wanted to do it. Sure, we have hardened cockpit doors and things like that - but they are all reactions to the last attack, not pro-active anticipation for the next one, which will take another approach.

And don't get too enamored about the current administration - letting terrorists out of Gitmo to go back to Yemen and train people to kill us isn't exactly award-winning national security planning. And Obama trying to sidestep the true intent of the murders at Fort Hood was the kind of disgusting nonsensical babble that used to be heard only at the opening session of the Supreme Soviet. Politics at the expense of security.

Be Nice If They Wanted To Nail Terrorists Instead of Each Other. This week, congress will be in full metal jacket mode, making as many political points as possible. After the security breach at Newark, Senator Frank Lautenberg (D-NJ) lauded the police for tracking down the Chinese guy that went through an unattended point to plant a wet one on his departing girlfriend.

"It was premeditated," Lautenberg was quoted to have said about Mr. Jiang, who slipped under a rope when the TSA screener left it unwatched. The Senator went to great lengths to lament the fact that the fine will only be $500.

Premeditated what, Senator? Premeditated puppy love? Hello Senator - you failed to note that the TSA had a major security failure. You're playing cheap politics, guy. You're the reason we have bad security - you tolerate it and ignore it.

Let's wander off to the other side of the Political Reservation. Here, we have Senator McCain (R-AZ), demanding that somebody be held responsible for all these TSA screw-ups lately: "Somebody has got to be held responsible. We can't go back to the old Washington kind of routine, we are all responsible, so therefore nobody is responsible."

That "old Washington kind  of routine?" When this guy and his party were in power, McCain wasn't too critical of the "Washington kind of routine." It was his guys who got the TSA off to such a stellar start, with bogus background screening of employees, TSA Administrators that were dangers to real security, cost overruns, and test after failed screening test. Funny McCain wasn't up in arms then.

It's Showtime. Starting today, the usual politicians will be performing like the flying Wallendas. Plan on lots of TV face time this week from the likes of Senators Schumer, Lautenberg, McCain, plus any number of residents of the Lower House. Just keep in mind that they are out after each other, not fixing what is now proven beyond doubt a shabby excuse for national security.

When there's a major security failure at Newark, and the biggest deal to the local Senator is apprehending some nerdy exchange student from China, instead of fixing the TSA, there's no question that we're wide open to another major terrorist attack.

Tolerating and even encouraging bad security is one area of major bipartisan cooperation. Unfortunately.
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Hot Flash - January 4, 2010

Aviation Security: We May Have Run Out of Time
Forget Body-Scanners. There's A Better Device To Use First

It wasn't as if we didn't expect the Japanese to do something un-neighborly in 1941. We just ignored the warnings.

It isn't as if we don't know that there are Muslim extremists out there wanting to kill us. We've known it since well before 9/11.  But like December 1941, we're sitting ducks. Unlike 1941, however, we've wasted nearly a decade just reacting, fixated on pointy objects at airport security check points, instead of working to harden all aviation and non-aviation infrastructure from attack. Worse, issues like threat mitigation and post-event contingency planning are completely ignored.

Even The Airline Industry's Noticed. Now, we had a guy that came within aces of taking a Delta flight down. This after eight years of "enhanced security" or "multi-layered approaches" to airport screening. Finally, we have the US airline industry, hopefully emerging from the cloak of poor political advice inside the Beltway, asking why, eight years after 9/11, security is still so sloppy. The CEO of Delta has actually asked why his passengers and employees were almost blown to smithereens on Christmas Day.

Here's the reason: Aviation Security is sloppy because the people entrusted at the top are not only sloppy, they're negligent. And they're enthusiastically supported by phalanxes of connected lobbyists, former administration hacks, and proven-incompetent political appointees.

Get real, y'all. Take a look at the billions spent since 9/11. Read all the garbage put out by TSA Administrators since 9/11. Then, all it took was a snot-nosed kid and his buddies from Nigeria to give the lie to the contention that aviation security has been "multi-layered" and effective all these years.

We Can Fix It. If We Invest In The Right Equipment Now. The giant din from the Peanut Gallery is now that we need lots and lots of Full Body Scanners, and we need  'em toute suite. They're magic, don't Ya know. It's the latest dodge from the incompetents running AVSEC. Not a question as to whether they work. Worse, no real questions if they would have caught the intended bomber. There's some indication he may have attached the explosives to his leg after boarding.

But the call for body scan machines will do just the trick to bamboozle the public into thinking that our Homeland Security folks are on the case - regardless of the fact that they're the ones whose incompetence let the 25 December event unfold in the first place.

Security Devices To Deal With The Core Problem. Possibly, no week in history since the immediate days after 9/11 has proven just how vulnerable this nation is to terrorism. Or, how security-negligent our leaders are. Worse, no week since 9/11 has demonstrated as clearly that politics, not security, are the top priority. 

And, that's what we need to fix ASAP, before some other Muslim terrorist scum blows a bunch of planes, airports, electrical grids, schools, and water supplies to Kingdom Come, while bored TSA people sit in airport back rooms watching electronically-naked people go through screening.

As usual, the TSA management jumped to the terrorist attack like trained seals at Barnum & Bailey, with pathetic amateur reactions (don't read a book an hour from landing, etc., turn off your laptop, etc.) and we had the usual oh-so-Roosevelt-after-Pearl-Harbor proclamations from just-off-the-golf-course Obama. As if bad aviation security is a big surprise. We have politicians scrambling around trying to make political hand grenades out of the security failures that they've created, tolerated, and actually nurtured. "Not my fault - it was the other party."

Your Wouldn't Hire Him To Babysit. But TSA Administrator? No Problem. We had 300 people nearly killed by a terrorist who found little problem in getting though what has been trumpeted as eight years of advanced "layered" security. Former TSA Administrator Kip Hawley, now being lavished with sycophant awards from the airport consulting set, went on TV to tell us that full body scanners would have prevented the event - blissfully failing to refer to all the times as the TSA hack-in-charge he declared how good our AVSEC was. Never mentioned then that the system was short on such contraptions.

But now Hawley has a potential Obama Administration replacement. Erroll Southers. FBI background, even. Only a couple of problems. First, he had some major ethical problems 22 years ago in illegally using FBI resources to investigate his ex-wife's boyfriend. But the problem isn't just 22 years old. It's current, in that Mr. Southers has now been found lying to congress on the matter - under oath - last November. Incredibly, Obama defends the guy.

Get this. We have what may be increasing terrorist activity - not only on AVSEC but the rest of our infrastructure, and the Obama administration has no problem nominating a TSA head who two decades ago couldn't handle the pressure from his ex-wife without breaking the law, and two months ago lied - yes, blatantly lied - under oath. That's the quality that the political hacks in Washington - generally on both sides of the aisle - want.

Underscoring this, a former Clinton Administration NTSB hack was asked by CBS last week-end on whether the public should be concerned that the administration wants as TSA chief a proven liar who has abused his position in the past. The response typifies the intellectual and ethical sludge that exists inside the Beltway:

"I think Southers, from having gone through this examination of his mistake is going to be very tough on access to private records."

Toe that good party line, guy. Honesty and integrity are secondary. Liars are always great to have in tough jobs. Lack of values is a Beltway hallmark. Heck, one of the 9/11 Commission members today told MSNBC that security is just great. We're more secure than ever. The Secretary of Homeland Security initially blurted out that the "system worked."

Wonder if the folks on that Delta flight believe it. So, what is the problem? Clearly, it's the pack of clowns in Washington.

Forget Body Scanners. Call Moline & Order A Real Security Device. We can scan all the bodies on earth. But as long as these Washington clowns are in control, we're still unsafe. So, we've got to clean house.

Here's the most advanced technology for the purpose, and it needs to be applied throughout the Beltway.

It needs to be applied to the top offices of the TSA, and the DHS as well. It needs to be used all along Connecticut Avenue - shoving out the installed lobbyists and alphabet groups of the kind that support having liars in top TSA jobs. It needs to be operated to simply bulldoze out the negligent sludge that have let our security be at the mercy of Muslim Terror.

We can scan all the bodies on earth. But as long as these Washington clowns are in control, we're still unsafe. So, we got to clean house.

Or your can plan on terrorists cleaning our clock.

 Copyrignt (c) 2009 - 2010 Boyd Group International, Inc. All Rights Reserved.

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