Archives - April - June 2010

________________

Monday, June 28, 2010

The LaHood Brilliance Comes Home To Roost In Hartford

Gotta love the catfight that's broken out as a result of the Virgin Atlantic diversion to Hartford/Springfield last week, "trapping" passengers for hours.

The usual consumerist twits went into high gear, at least one offering legal assistance for the passengers to sue the airline. (Gotta love those 747-chasers.) Some of the don't-bother-me-with-facts media reporters jumped to the immediate and wonderfully ill-informed conclusion that this event shows that foreign carriers must be made to adhere the Secretary of Transportation's consumer-friendly 3-hour rule. Because, see, this would never have happened otherwise. The rule would have prevented the bad weather that caused the diversion. Powerful, this DOT Consumer-Crusader is.

There's That Pesky Thing Called Protecting The Border. 'Course, reporters who went deeper than the veneer fact that an airplane got stuck on the ramp at BDL for hours were few and far between. They didn't bother to make any investigation into the fact that the passengers were not cleared to enter the US, and therefore could not legally deplane without customs and immigration clearance. It's another example of the bothersome reality that LaHood and his sycophant staff want to ignore - there isn't always a safe and available way to deplane an airliner that's been diverted due to weather.

For LaHood, and some media reporters, it's less important to gain some subject-matter insight than to chase sensationalism.

But to be fair, the present Administration isn't too concerned about what they describe as "undocumented" entry in Arizona or California or Texas. So not giving a rip about such trivia at Bradley International would have been completely policy-consistent. Just let 'em off, give them their baggage, and let them set off into the darkness across the suburban desert toward Westport. The Obama administration is quite comfortable with that approach along the rest of the border.

Needless to say, there're claims and counter-claims in all directions. The Captain of the flight states that he was told any passengers who got off the plane would be arrested. The feds, after wallowing around with several different stories, now claim that isn't true. Sure, they must have just said, "let these un-cleared passengers off the plane... we'll be there in due time..."

Kinda like they do along the Mexican border.

Take a hard guess about who's doing the lying. 

It's Cancellations, Not LaHood's Policy. And for those folks who will point out that these 3-hour plus events have dropped off since LaHood's rule took effect, you might want to consider some realities. The first is that such potential events are very very rare. The second is that if an airline thinks a flight might get into an non-addressable 3-hour situation, they are now going to cancel the flight, instead of risking a multi-million dollar fine. So the five or ten flights that are cancelled are a drop in the bucket compared to the thousands operated every month. Nobody notices. Nobody gets fined. And the crackpot dishonesty of LaHood's policy is preserved.

Who's Defending The Airline Industry? The bottom line is that the recent event at BDL once again illuminated that this 3-hour rule is amateur, anti-consumer, and purports to tell the public that airlines trap people for fun and profit. 

What's strange, though, is that the airline industry pays lobbyists and alphabet groups millions annually to stand up for them inside the Beltway. But, listening to the thundering silence, they seem to behave more like latter-day Wesley Mouches. (Google it if you need to.) Where are these people when it comes to reaching out directly and aggressively to the flying public with the facts?

Maybe they don't do it because not offending politicians takes a higher priority than making sure the public knows the full truth about what their airline clients are facing. They sure don't want to offend any senators, don't ya know. Who knows who they're going to need to be nice to on their next lobbyist gig working for trial lawyers or the diaper lobby, or some drug company? These guys are not industry-specific. They circulate like 'Vegas blackjack dealers between casinos.

According to public statements from some of these lobbyist types, airlines need to be protected from pesky people who tell the truth about their government buddies who've inflicted no telling how many billions of costs on airlines with dimbulb ATC failures, "tarmac" delay legislation, threatening free speech on matters such as high-speed rail, cap-and-tax, and who knows what else.

When the airlines' own paid lobbyists try to tacitly defend incompetent government policies, the industry is in deep yogurt.
___________

Follow-up: The Business Diversity Conference

Boyd Group International COO Marian Boyd, and VP Bill Oliver were among the hundreds of delegates at last week's 2010 Business Diversity Conference in New Orleans. The event was an incredible opportunity to meet a huge range of business and industry leaders, and to widen contacts in the airport sector.

We had three winners of the drawing for aircraft models. Congrats to Richard Whayne of Whayne Enterprises, Julio Rodriguez of Southwest Florida International Airport, and Eric Bain of CH2MHill.

Speaking of New Orleans, it's also the venue for the 15th Annual Boyd Group International Aviation Forecast Summit. This year will be the largest event yet, and New Orleans International Airport will be the host. If you're planning for this new future, join your colleagues October 24-26.

For details and to register, click here.

_________

 

Monday, June 21, 2010

Update:

Airport Minority Advisory Council
2010 Business Diversity Conference

If you're attending the 2010 Business Diversity Conference this week in New Orleans, please stop by our Exhibit at Booth 610. We're offering a drawing for an Airbus A-350 model, and we'd be excited to demonstrate how Aviation DataMiner can give your company the competitive planning edge.

We look forward to seeing you.

___________

It's That Cuba Thing, Again...

Other than maybe one of those zero-think, rah-rah conventions that peddle multi-level marketing schemes, it's rare to see so many people so blindly fired up over a new miracle product that's entirely not what it's cracked up to be.

This time it's not soap, but a country - Cuba.

The Cuba cheer-leading is accessorized by visions of thousands of happy US vacationers rushing off to the crystal clear beaches and wondrous resorts the Island offers. Politicians from farm states are dreaming of all the wheat and corn and barley and other stuff that Cuba needs and we can supply. Travel agencies see hundreds of thousands of new vacation trips that will spark the industry. Investors are just drooling over the potential to peddle cell phones, flat-screen TVs, and lots of consumer goods.

To listen to the multi-level hucksters in Congress, Cuba is the next Big Thing.

Get Real. When Toilet Tissue Is In Short Supply, It's Not A Vacation Option. At the risk of being like the schoolyard bully who tells little kids that there's no Santa Claus, here's a wet splash of cold reality: the whole Cuba thing is hype. Fact: There isn't any big market there. And whether one can fly nonstop from Atlanta or not, it won't change anytime soon. Here's why: there is no infrastructure on the island to support big-time tourism at what US vacationers expect. When it's a big deal to ask for an extra roll of the local equivalent of Charmin, it's not a multi-star leisure venue.

Other points of reality: The average Cuban consumer is consuming at a subsistence level. The Castro regime doesn't want big time foreign investment, and can't afford it, anyway. Want to take a bike trip across the Island? Bring your own food - the restaurants are pretty skimpy and there's no supermarket to drop into. Want water sports? Not recommended. The Cuban authorities get real antsy when they see people heading out into the surf.

It's A US Embargo. Not A Global Embargo. And as for Cuba being a huge market opportunity for US farmers, it's the kind of dimbulb stuff that politicians read off at press conferences from cribsheets concocted by punk staffers who still think Havana is the mystical city seen in Godfather II.

There may be an embargo on US trade with Cuba, but they can trade freely with Canada and Australia for wheat and grain. So there isn't a big market for North Dakota farm products. Cuba can buy all the locomotives it wants from France or Germany. So there isn't this gigantic pent-up demand for the GE plant in Erie, should the US embargo be lifted. One call to a manufacturer in Taipei, and Cuba could be awash in cell phones in a fortnight. Message to Motorola: Don't bank your cell-phone spin-off on selling handsets to folks in Santiago de Cuba. Blackberrys and Droids are sort of down the consumer chain when it's hard to buy soap.

The reason that Cuba is short of just about everything is that they are short of money, not the ability to trade internationally. Anything that the US might sell them, they can already get elsewhere in the world. They don't buy much because for the last fifty years the Castro regime has trashed out the Cuban economy.

VFR Revenue: No Real US Gateway Opportunities. What about all that Cuban-American population that may want to visit friends and relatives in Santa Clara or Holquin?

It's based on more partial analyses, and not many facts. Lots of US cities are eagerly applying to be a designated gateway to Cuba, either claiming that the local Cuban population will support it, or (especially if they've hired one of those billion-dollar, multi-national, multi-MBA-ed consulting firms who have offices around the globe and airline industry knowledge that's strictly shallow end of the pool) they can "connect" Cuban Americans from all across America onto nonstops from their city into Havana.

Today, Miami, New York, and Los Angeles are the only designated "gateways" for such flights. And only MIA has much traffic. There's a reason. Most Cuban-Americans are located in Florida, not all around the nation. The largest percentage of these citizens are located in Southeast Florida. Hello, Miami. Not a snowball's chance for you, Houston.

While beautiful, Cuba isn't the only vacation destination with beach resorts. And it can be described as a place where residents are not real happy campers. There's not much industry, so they don't have exciting work to do, and not much upward job mobility. People from outside the island send in money and food and medicines. Residents can't leave the island without permission.

That's also a pretty good description of what Alcatraz used to be.

We've Done The Research The Billion-Dollar Firms Shy Away From. Unlike other consultants, Boyd Group International has researched the potential for US-Cuba travel and trade. We've done it independently, and the facts are much different than the hype some politicians in Congress spout.

It's great to have open flights with any country. But Cuba offers virtually no economic bonanza for US businesses, farmers, or consumers. Or, for those from any other nation, either. What Cuba suffers in regard to lack of consumer goods has nothing to do with the US embargo. And remember, even if air service is liberalized, virtually all the potential passengers will be US-originated. Over the past 50 years, history has shown that most of the local travel demand generated within Cuba tends to be one-way outbound, and it's highly discouraged by the Cuban regime.

We can liberalize US-Cuba travel and trade until the pina coladas come home, but it won't change the core reason that the Island is near-destitute, with power shortages, caloric-rationing and lack of basic toiletries: it's self-inflicted.

For a review of the Boyd Group International Cuba study, click here.

_______________

International Aviation Forecast Summit
October 24-26. New Orleans

The 15th Annual International Aviation Forecast Summit this October in New Orleans will be the preeminent industry forecast event. This is now the global aviation industry, and every player, from major companies like Boeing and Airbus down to rural airports in Sichuan and Nebraska is affected.

To get an idea of the scope of this year's Summit, click here. Then, literally, move the world - click on the various points on the Globe to read how we're addressing a wide scope of issues. When you're done, click on the appropriate button to reserve your space at the Summit.

The dates are October 24-26. New Orleans Louis Armstrong International Airport is this year's Summit host, and they plan to make it the biggest and most exciting in the 15 year history of the event.

All of us at Boyd Group International look forward to seeing you.
_____________

__________________

Monday, June 14, 2010

The Recent Airline "Consumer Survey" - Lots of Questions

The results of a recent survey on how consumers rank airlines has been making the rounds, with the typically-expected results. The "discount" carriers are wonderful and the legacy airlines need a lot of work.

What's surprising is that not one journalist ever stopped to ask if the survey itself made any sense. Not one ever investigated or questioned the underlying data.

Open Questions. First, the results were from interviews with 12,500 passengers who took airline trips between April 2009 and April 2010. That's about two one thousandths of one percent of all the passengers who made trips in that period.

Second, (before one launches on the usual tirade about how accurate sampling can be) there's an open question if it's really a sample of the same population. A traveler who flew once in that year likely has a different set of perspectives and expectations, and travel-values than a road warrior who takes the LGA-BOS shuttle three times a week, and is different again from the sales executive who flies six airlines on 20 flights a year.

The survey sample seems to have only one sure thing in common - they got on an airliner in the last year. The experience on a 767 is very different than a CRJ-200. The levels of employee interface varies whether it's a one-off vacation or a business trip to Fargo. Point: just having made a trip on a flying machine is hardly a consistent passenger sample.

The other question that journalists should consider is just how accurate is a survey of somebody's recollections of a trip six months ago? Do they really remember how the check-in process went? And what if they only take one flight - does that really give the consumer a valid basis on which to claim the carrier is a service wonder or a blight on the traveling public?

It's not the same as asking what they think of the car they own. The jalopy is sitting in the garage and they drive it every day. That's not the same as recalling what they experienced months ago on an airline trip, going through processes that they are not familiar with, and about which they may not have the capability of making a valid quality judgment. Opinions, yes. But how valid in determining if one airline is better than another?

And there are variances in consumer stratas - consider Las Vegas, where over 80% of passengers are inbound-generated, compared to Boston, where 56% are inbound-generated. They do have in common that they got on an airplane. But they did so with differing levels of knowledge and expertise.

And finally, there is the taint of "what everybody knows." How much effect would it have on a respondent who took a flight three months ago, but when being surveyed had just read how Delta had mis-directed a couple of unaccompanied minors? Or just last night watched a TV talk show host unleash a wandering diatribe on how airlines are out to abuse the public.

Basically, is the laboratory sterile, and is it the same laboratory? Probably not.

But it makes great press.

_______________

Late Update For US Airports:
Small Community Air Service Development Grant Program 2010

The DOT will probably be issuing the docket for the 2010 SCASD program shortly. It's going to be somewhere in the range of $6 million.

Again this year, Boyd Group International has updated its Guide To Filing A SCASD Application. It contains the experience and expertise of the firm's eight years of crafting applications that have won over 25% of the program's dollars for our clients.

To download your copy, click here. Or, give Brain Siler a call at (303) 674-2000 to discuss your ideas and how we can help.

___________

Selling American Eagle? More of The RJ Conundrum

Media stories are bubbling that AMR might be in the process of trying to sell Eagle. Like, to what, or whom?

Some sort of corporate stock spin-off, maybe. A sale to another small jet provider? Problem is that most of those have too many RJs already. And a long-term AA agreement with such an entity doesn't solve AA's problem of too many small jets and not enough revenue.

 A sale of Eagle as an operating stand-alone makes no sense to any buyer. Eagle is a part of the lift for American Airlines. Nothing else. It's a segment of their lift that inexorably is becoming more and more cost-problematic. There are no other airlines out there who need more RJ lift - quite the opposite. And stand-alone RJ flying has worked so well. Ask ExpressJet or Independence Air.

The recent - and quite brilliant - strategy of using Eagle to feed military traffic into the AA DFW hub from places like Columbus (GA), Cheyenne, and Manhattan (KS), will certainly bolster flow revenues. (Military traffic tends to be on high-yield refundable tickets.) But that will not fully offset rising costs of ERJ operations due to fuel and the simple fact the aircraft are getting into more complex maintenance cycles. A day of reckoning is coming. (As it is for the rest of the small jet provider sector.)

The excess regional jet fleet in the US airline industry, particularly as it ages, will become a much higher-profile issue in the coming year. More rapid retirements are in the cards for 2010 - 2011. That will shift the air service patterns in several regions of the nation, and the effects will be seen a lot sooner if oil spikes again over $90.

It's one of the issues that will be covered at the 15th Annual International Aviation Forecast Summit, October 24 - 26, in New Orleans. We'll be looking at all aspects of fleet renewal in the US and the rest of the globe, and how it'll affect airports of all sizes in the US. For more information, and to register, click here.

_____________

 

Monday, June 8, 2010

 

The Customer As An Afterthought:
Now, Even LaHood's Making Sense

The airline business is now becoming a contest to see who can implement the dumbest rules, regulations, dictums, Papal Edicts, fatwas, and secret rituals to confuse the flying public.

Nature Abhors A Vacuum. Last week, our Secretary of Transportation came out with a laundry list of new rule proposals to be foisted on the airlines. As usual, they were couched in terms that made the DOT look like the good guy, and airlines like Darth Vader wannabes. "Tarmac delays" for example are just outrages randomly and willfully inflicted on the consumer. And, according the DOT, there's always a gate right there ready to take passengers off flights stuck on the ramp.

But aside from the tone, the most troubling part about the DOT dictums (which included a prohibition on peanuts on airplanes - wonder if Jimmy Carter'll submit a comment on the rule-making) is that they aren't totally from left field. In fact, they appear to address what are real consumer concerns.

It is what it is. The majority of the DOT's recommendations in the docket make sense, and address real service problems.

It's Not Just Air Travel. It's An Obstacle Course. Let's be blunt: with only  a few exceptions, airlines seem to have gotten out of the customer service business and are focused more on moving airplanes. If passengers toe the line and follow the rules, they'll get to Omaha along with the airplane. If they don't, there will be consequences.

Air travel today has become a consumer minefield of difficult-to--understand and not-to-be-waived service rules. The days of one airline genuinely trying give better customer service as a competitive tool are over.

If It'll Make It Easier, Well, You Can Pay Extra For It. Today, at least the perception is that airlines watch each other to see what new rules and fees will work without huge customer backlash. The M.O. seems to be that whether it's poor service  or not, if the other guy's charging it, we'll be leaving money on the table if we don't.

One of the most inane is shaking down a passenger who's already at the airport $50 just to get on an earlier flight that has seats open. It's not only poor customer service, it's appallingly bad process management. Whenever you have the chance to get the passenger out of town early, you do it. His later flight might be oversold, or cancel, or get delayed. You got his money. You got a seat. You get him out of town. He's happy. The airline wins, too.

What's worse is when an airline has the chutzpa to announce the new charge-for-early-departure fee with some bird-brain press release stating something to the effect that "... our customers will just love the convenience of knowing that they can get on an earlier flight for a small fee..." Right. Especially when it costs the airline nothing and it used to be free. What they're really saying  is. "We think our passengers are dumb enough to believe this el toro doo-doo..."

Passengers Are Trapped. Best Not Bang On Their Cage. Airlines need to increase revenues. And they have the absolute right to charge as they see fit for their product. But they also need to remember that customers are essentially trapped - either literally in an airport or an airplane cabin, or figuratively as sometimes they have limited options when they want to travel. People instinctively don't like to be at somebody else's mercy - which is what airline travel by its very nature must be.

That much said, it's starting to look like open season on the customer. Today, there are enough rules and regulations to rival an Army boot camp, replete with a system of punishments and financial demerits should a consumer not toe the line. 

"... Your plans change two months out? Well, you're going to pay for your indecision. That'll be a $100 change fee... Whoops, you say you just booked on the internet and inadvertently used the wrong date? Too bad, lady. You hit the enter button, there was a warning screen, and our rules are clear: you gotta pay if you want to change it... Missed the flight due to some moron shutting down security by trying to sneak an AK-47 through the check point? Tough. Buy a new ticket. And by they way, it's gonna be at full Y... We mis-connected you on a published 35-minute connection with an RJ, that was 20 minutes late to arrive and then the ramp folks took 20 minutes to find a belt loader to get your "carry-on" off the plane? Too bad, we'll try and get you on the next flight. Oops. It's full, and it's the last flight of the night. You can probably find a chair to sleep on. Sorry. Your flight that had an idiotic, razor-thin connect time was delayed due to weather, and, hey, that's God's problem, not ours. You can call our Customer Care line, but it's gonna be answered by some nitwit third-party call center in India with people who don't even work for the airline, have an unintelligible accent, and are instructed not to bend any of the sacred rules..."

Those are not exaggerations. These things happen to passengers every day. Instead of being guests of the airline, too often passengers are made to feel like inmates. Yes, it's a perception. But we know what that is in the real world.

In any case, it's not customer service. It's a game of financial "gotcha" inflicted on the public, and as the DOT's rulemaking points out, consumers don't always know what the rules are from airline to airline. It's more like carriers are moving airplanes from A to B and customer service considerations are secondary. It's a void of customer service. And it's rule-driven, not employee-driven. Heck, front line employees are probably embarrassed by some of the shtick that comes down from the front offices.

Most of DOT's Points Are Valid. But Why Did They Need To Step In? And into this confusion has slipped the DOT, with a whole passel of new rules.

But, shockingly, most make sense. Like letting passengers cancel a reservation within 24 hours without penalty. (United already does, but not all carriers do.) Refunding bag fees if the bag isn't delivered on time. (US Airways does, but not all carriers are clear on that.) DOT wants to raise oversale compensation, which in light of the very low number of bumped passengers is no big deal. But they do want to require the airline to clearly tell the customer if the travel voucher he's getting in exchange for volunteering to accommodate an oversale is good only on Sun Yat Sen's birthday and is capacity-controlled. That's fair.

The docket is OST-2010-0140. Read it. Then understand what it really says between the lines. The airline industry - much of it - seems to have forgotten the customer, the customer's sensitivities, and the fact that they customer is their guest, not an imposition. Instead, rules are first. And, please, don't hide behind the safety argument. These have nothing to do with safety.

It's a real indictment when Ray LaHood makes more customer service sense that some airline rules do.

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

___________

Tuesday - June 1, 2010

US DOT Small Community Air Service Development Grants - 2010

We're expecting the DOT to issue the docket for the 2010 Small Community Air Service Grant Program very soon. For details on what to expect, click here.

If you're interested in filing an application this year, give Brian Siler a call at (303) 674-2000 for a free consultation on your grant objectives. He'll tell you the straight facts - the pros and the cons, and whether an application is appropriate. At Boyd Group International, we've done better for our SCASD clients because we understand air service realities. If there's potential, we'll discuss innovative approaches. If not, we'll tell you that, too.
_______________

The "Registered Traveler" Scam Is Back
Terrorists Are Probably Lining Up For Their Background Checks

It's baaack. Like a fantasy poltergeist from the past, the concept of "registered traveler" is again oozing under the door.

The concept is that if we do background checks of passengers, then airport security can focus less on them, and more on everybody else, the belief being that the folks who pass the checks are okay. Last week, Governor Tom Ridge, the first head of the Department of Homeland Security, urged that registered traveler program be set up to allow honest citizens to get less screening, while the TSA hones in on those travelers that do not go through a voluntary background check.

Sounds great to the neophyte. Only a couple of problems with the program.

To start with, the Registered Traveler idea is patently stupid within the concept of keeping airports and airlines safe - the idea is to do some clerical work (a voluntary background check) and that replaces some -  or maybe all - of the need for security checks before the consumer gets on the plane. Think about it.

The contention is that a registered traveler program will allow the TSA to focus on un-registered passengers, thereby speeding up the process for the righteously-backgrounded. When even a cursory review is made of the sheer volumes of passengers flying every year, that contention is amateur hogwash.

Do The Math: There are over 700 million enplanements at US airports annually, comprising over 550 million passenger trips. No hard data on how many actual people that figure represents, as many of these folks make more than one trip a year. But let's just say it's 200 million humans who generate those 550 million passenger trips - each one requiring a security screening. Now, just what percentage of these 200 million folks are going to tumble to spend $200 bucks to get a shorter screening line? Ten percent? Fifteen? It sure isn't going to be the majority.

But the entire argument for a voluntary registered traveler program is bogus. It won't make us any safer. Most of the 9/11 hijackers probably would have passed a background review with flying colors. Second, terrorists are not like big-time criminals, who typically have rap sheets as long as the New York Thruway. Terrorists can be students, or people with zero past indications of making bombs, blowing things up, taking vacations in Yemen, or participating in other jihadist rituals.

They Can't Handle The Data, Anyway.  Then there's the issue of how valid and accurate any registered traveler data may be. Heck, the experience with the current No-Fly list proves beyond doubt that the feds aren't capable of properly handling a grocery list, let alone managing and keeping up to date millions of background records - even if a politically-connected private company does the initial checks.

No, It Won't Speed Up Screening. And It Shouldn't. And finally, the supposed benefits of faster screening to the honest God-fearing and background-checked masses simply are not there. The nanoseconds of research done by some media reporters is evidenced by grand proclamations that past attempts at registered traveler schemes, such as the defunct but soon-to-be-resuscitated "Clear" program, "zipped passengers through security" like magic.

Memo to some journalists: all that any registered traveler scheme can do - at best - is "zip" the consumer to - (read, to) the security check point by having a dedicated line that people access based on writing a check for a couple hundred bucks for a placebo "background check." When he or she gets to the actual screening, the process is the same as for the poor schlemiels who can't afford to pay for a shorter line.

In fact, whatever they are called - registered travelers, background-checked flyers, anointed ones, whatever - they must not be allowed any less screening than anyone else. A background check is not a security check. The truth is that we can't do any less screening than we are today. Passengers go through a magnetometer, and their carry-on gets screened. So, what part of that would be eliminated or reduced?

Smokescreening The Real Dangers. The nonsense of schemes like registered traveler clouds the real dangers facing US aviation. The failure on 9/11 was not primarily passenger screening - it was a total failure of the FAA and the administration to have any concern for comprehensive aviation security. Despite warning after warning from Red Teams, FAA Administrator Jane Garvey did nothing. And those warnings were more than just suggestions to look at passenger screening.

Bluntly, a total vacuum of leadership before, and particularly in the weeks after, 9/11 on the part of the Bush administration left the entire direction of revising aviation security in the hands of the world's most incompetent committee - the US congress. Go back and look - Bush had no stand or programs in regard to taking control of the crisis. He just appointed his "good friend" Governor Ridge to be DHS Secretary, and then some incompetent friend of his dad's to run the TSA after congress created it. (Remember, the guy who's first act was to spend $400K redecorating his office.)

The Secretary of Transportation, Norman Mineta, was stone-cold clueless. He only ordered planes out of the skies after airlines had unilaterally begun doing so. Days later, he formed ad-hoc committees to "study" security - and then told the public that what they found is classified. It could be because they probably reported that the administration was in security la-la land before 9/11.

The point is this: chasing after eyewash things like registered traveler programs wastes time and energy that should be put into professional security planning for aviation and the rest of the nation's infrastructure. That includes contingency and event-mitigation plans for terrorist acts at not only airports, but water systems, power grids, and bridges.

Instead, we're more concerned with jive programs to "zip" people through screening at airports.

The terrorists have focus and leadership. It has to be questioned if the same exists on our side.

_____________

Monday - May 24, 2010

US Air Transportation System - A Dysfunctional Family?

They're all related, and they all need to work together. But they don't get along very well.

That's pretty much what the US air transportation industry's starting to look like.

Airlines & Airports - One Can't Live Without The Other, Right? We have the airline industry lobbying hard to stop a $2 increase in the passenger facility charge, claiming it will hurt the consumer and hobble an already-troubled business situation. They contend that in a period of recession and soft demand, this is no time to hit the consumer up with more taxes.

Then the airline industry quietly goes ahead with fare surcharges for the summer.

Factoid: The PFC increase represents a 1.7% higher ticket price, based on an average one-way nonstop fare. The airline fare surcharge - assuming a $10 fee - is a 5.5% hike.

It would be proper and appropriate for the airline industry to strongly oppose this PFC hike if the program were like the accompanying federal ticket and security taxes Washington gouges out of the passenger, and then proceeds to squander. But PFCs go directly to the airport, less an admin fee for the airline, and have been instrumental in supporting infrastructure upgrades that have benefitted the consumer and the airline industry.

To be sure, airlines have seen unit revenues drop, and they have the right to add all sorts of fees - $10 surcharges, $25 for bags, $50 to standby for an earlier flight when the passenger's already at the airport, hit 'em up for $20 more if the customer wants to select his seat in advance, $20 to get to the front of the security line,  etc. ect. etc. Yes, some of these are optional, which a PFC is not. But one can argue that a $25 first-bag fee really isn't optional for a lot of consumers. And a fare surcharge is a pay-or-don't-go option

Unfortunately, airports cost money. Airport facilities and upgrades are necessary to airline operations. And airports are in a cost squeeze, too. The PFC program - which admittedly was developed because congress is stealing and mis-appropriating the original ticket-tax funds intended for what PFCs are doing - at least can be shown to have produced positive results.

Point: airports need to raise revenues, too. They're in the same situation as airlines.

But, It's The FAA That Hasn't Done The Job. Like, For Over 20 Years. On another front, we have the continuing ATC mess. The correct relationship is that airlines are customers. The FAA is a supplier. It seems that the relationship has been forgotten.

Go back 15 years and look at the commitments, promises, and claims made by the DOT/FAA. Hot air. Sorry, delays (more accurately, off-schedule flights) are not really getting better. But last week we had the FAA Administrator come out swinging, declaring that airlines are not going to get away with making his agency a "scapegoat" for late flights. He also urged airlines to "de-peak" schedules.

Memo to the Administrator: With all due respect, Captain, the fact is that your predecessors - Blakey, 9/11 Blood-on-her-hands Garvey, Hinson, and who knows who else, failed to do their jobs. But going to the "scapegoat" issue - there is some validity in Captain Babbitt's contention. It is a fact that the airline industry has not been particularly vocal about the ATC situation, either. They have accepted it willingly. In a very distant sense, the airline industry has not provided they type of stern guidance to the FAA that's been needed. They have not acted like customers. The situation is very much the airline industry's creation, too.

Airlines "peak" schedules because that's how they create the benefits of connecting hubs. That isn't to say that the industry couldn't improve, but there are hard realities that the public needs to be aware of. We could go on and discuss a whole lot of key points in this regard, like aggregation of revenues, benefits to smaller communities, etc.

But we won't go there. The airline industry is paying a lot of heavy gelt to lobbyists and supposed Washington political advisors - so let them carry the water. (Something, by the way, they haven't done very well, if the thundering silence in response to the FAA administrator's comments are any indication.)

Nevertheless, the ATC system  hasn't improved based on the one real metric - handling the nation's true air transportation demand. That also is a fact. And it must be addressed.

Final Point: There Is No Summer Peak. A lot of this is just posturing to deflect blame from what's supposed to be another summer of flight chaos. Alice In Wonderland lives.

In regard to delays, the media stories are coming out about the spike in in air traffic expected this summer. Be nice if they did a bit of research. As far as airports go, there won't be many more people adding the huddled masses yearning to be free of O'Hare. Flights are already north of 80% load factors, and have been that way for years - which means at times when most mortals want to fly, airplanes are already full.

And as for delays, it won't be because of increased volume of airplanes in the sky. There's no material increase in departures, either.

But plan for more dysfunctional aviation family squabbles. Sure would be nice if we could toss the politics in the round file and see the FAA, the airline industry, and airports actually start to work in the same direction, as if they are key parts of a transportation system, instead of squabbling competitors.

The flying public might even be better off, too.
______________

 

______

Monday - May 17, 2010

Air Service Enhancement Note...

Congratulations to Fairbanks, which now has low-fare service to the Lower 48 with Frontier flights to Denver. Boyd Group International is honored to have assisted FAI in recruiting this exciting new access, as well as in crafting the Small Community Air Service Grant application that helped make it possible.

By The Numbers...

Some random numbers on the US airline industry...

- 5.4%     The decline in US enplanements in 2009

- 6.8%     The decline in airline seat capacity in 2009 v 2008.

    .7%      The year-to-date change in US enplanements in 2010 - effectively zero growth.

     446      The number of CRJ/ERJs forecast to be pulled from US fleets by 2014   

           5      The RJs reported removed from US fleet operations in just the first 12 days of May

     159      The number of 737-300s from US carriers that have been parked or scrapped since 2002.

     196     The number of 737-300s still in US scheduled fleets. Southwest has almost 90%. 

 32.8%    4Q local O&D growth at CVG compared to 4Q 2009. Nation's highest.

     1.7%   The increase in total average US ticket price if the PFC is increased by $2.50

   27.4%   The increase in average ticket cost w/ the new $50 airport standby fees at some airlines. 

         2     The number of weeks qualified companies can get a free trial to DataMiner.

Analytical Firepower. Data and market intelligence is critical to aviation planning. DataMiner from Boyd Group International is the new standard in accurate, comprehensive industry information. Better data, faster, and more cost effective than any other source. Click here for a free 2-week trial for qualified candidates.

_______________

Being Hit For More Than $200M A Month... And They're Happy?
March DOT Data: The Less Bad Contest Continues

Maybe it's just a form of gallows humor.

Only in the airline business would you find companies prancing around like peacocks in mating season, proudly showcasing proof that they've failed to get one out of every five of their customers to the destination anywhere near what they promised in their published schedules. Not failed, really. It's worse. Prevented.

But that's what's being trumpeted as the Good News from the DOT March Consumer stats. Only 20% of flights arrived substantially beyond schedule. Needless to point out, the media is joining in, with headlines like, "Airlines are doing a better job of staying on time..." or "Delays plummet from 2009" or "Airlines focus on punctuality..."

Yup. In March, "only"  20% of flights arrived more than 14 minutes beyond the schedules filed by their operators. The same schedules that airline planners must stretch to accommodate the inefficiencies of the DOT's forever-being-improved, outdated air traffic control system. And for some twisted reason, the airline industry seems happy with that performance.

It Really Is The Best They Can Do. In a sense, airlines should be happy - it's likely the best they can deliver within the inadequate ATC system they must tolerate. What's weird, however, is that there seems to be no fire, no anger, no intensity in regard to the fact that the DOT has year after year promised fixes, and still, 20% of what an airline schedules gets hung up in the sky or on the ground for substantial amounts of time. All that seems to happen is lobbyists telling airlines to support NextGen. The fact is that there is a fundamental difference between NexGen and an ATC solution.

More By The Numbers. Let's put this in context:

• One out of five. That's an airline customer's odds of being on a materially delayed flight in March. A 'Vegas casino should be so lucky.

• 10.2 million - the approximate number of domestic airline passengers involved in flight arrivals that were 15 minutes or more late, based on system schedules for US carriers. That's just for March.

• 140,000 - roughly the number of arrivals substantially late, based on the number of flights the US airline system scheduled for March of 2010;

• $158,000,000. The minimum estimated operational expense these delays inflicted on the US airline industry. And that's only if all of these delayed flights were no more than 15 minutes late, based on a light estimate of $75 per aircraft minute. The actual figure is much higher - at least $200 million. And that's just for the month of March. Pan this out for the full year, and the hit to the airline industry is well over $2 billion. (That's just for the direct operational costs - and these are just the tip of the iceberg.)

• $51,000,000 - that's a conservative estimate of the customer service (sic) costs, if just 5% of the 10.2 million delayed passengers need re-booking, baggage delivered, etc., based on $100 per passenger;

• $167,000,000. That's 80% of the combined low-ball costs noted above. That should be the bill the airlines send to the DOT - because at the bottom line, it's the DOT's failure to upgrade the ATC system that's the primary reason flights can't operate on schedule.

• Zero. The number of angry airline industry protests to the DOT. Gee, one might think that if there's a DOT problem that year after year inflicts major inconvenience to 20% of an airline's customers, the industry might get in an uproar. Not a peep. Instead, compliments to whatever appointee is in the Secretary's chair.

• 100%. The chances of the US public believing that delays and inconvenience are entirely due to fat-cat airlines not giving a rip.

If the airline industry won't defend itself, (and it is not) it is dooming both it and the flying public to more sham regulations such as the "tarmac delay" rule. Take a look at some of the vacuum-brained media stories, telling the public that the rule will end long delays, implying that airlines will stop intentionally turning airplane cabins into winged gulags. And the industry doesn't defend itself with hard facts.

Whatever advice the industry is getting from their Washington lobbyists, it's taking them in the wrong direction. Think about it. A 20% major defect rate. Billions in excess and unnecessary expenses. Millions of their customers mis-connected, inconvenienced, and abused primarily due to reasons beyond the airlines' control. Yet the public's putting all the blame on the airlines.

And where's the lobbying energy? At the moment, it's in overdrive, trying to shortstop an increase in the airport PFC, claiming it will hurt consumers. Including, we assume, the 10 million who get zapped monthly by ATC-caused delays. It's incredible: there's more outrage over a $2.50 increase in the PFC charge - one that actually goes to airport improvements - than there is over an ATC system that zaps airlines and consumers with billions in extra costs.

The Prestigious "Least Bad" Award. It's almost Kafka-esque. Every month the airline with the "best" performance - say only 18% of its flights 15 minutes or more late - issues a press release crowing about how great they did. Say what? Where are the values? Where is the concern for passenger service? A public apology would be more appropriate, along with an explanation that the DOT has dithered for 20 years, failing to deliver on their ATC upgrade promises causing double-digit percentages of flights being inordinately late.

Yet the advice they get from Washington lobbyists seems to be that airlines should play fat cat targets for twit congressmen, instead of grabbing the DOT secretary by the political trachea and broadcasting to the public that it's his department that's most responsible for the delay situation that's inconveniencing and abusing the flying public.

A 20% major defect rate, and he industry cheers. The Stockholm syndrome lives.

______________

Monday - May 10, 2010

Mergers & Consolidation: Not What The Parrots Are Predicting

It seems every law firm and one-man consulting shop in America is now confidently pontificating on the outcomes of the Continental/United merger.

The combined entity will cut capacity by 5%. Or was it 8%? Or was it none? The merged carriers have too many hubs. Or, not enough. We only need three US airlines, is the new mantra. Low cost carriers will find a bonanza in the routes that the new merged airline will drop. Regional airlines - a term defined differently by various sources, sometimes dumping SkyWest and Southwest in the same category - will see a resurgence. Or, maybe a financial Waterloo. Or, they're all headed for the 'loo. Fares will go up. Or, was that down?

Planning The Future In A Futurist Context. Boyd Group International takes a different approach: we apply hard data, emerging trends, and look over the horizon. And we have a track record to prove it. For example, back in the day, we told client PIT that if US Airways pulled its hub, it would drop to under 40 nonstop destinations. Nonsense! was the response from the usual suspects. It'll never happen... other carriers will rush in to fill the gap. Today - it's about 36 nonstop destinations. And all those airlines that were supposed to rush in and replace the US Airways hub never arrived. 

So in regard to mergers, here's a bit of heresy: tomorrow's airline context will not be anywhere near what we have today. Fact: in the long run (roughly five to seven years out) it may not mean diddly if carrier A gets merged into carrier B.

More Anathema Thinking: Ignore the Peanut Gallery mantras. US Airways, for example, isn't "left at the altar." American isn't the Ugly Betty of the industry, replete with corporate zits and unable to get a date. They don't need partners, because they may be filling a very different market role from that of today. As for the latest merger, it could ultimately be consumer-neutral - whether the combined new entity is named "United" or "Continental" or "Air Fred" may not make any difference.

One word, Benjamin: Alliances. Read the AA/BA/IB Joint Business Agreement (or at least skim it - it's lethally boring). What comes out are buzz-terms like "metal neutrality" and "brand indifference" - all of which indicates that individual airline brand will increasingly be subordinated to the global alliance system identity. It may well gravitate to the point where AA, UA, US, et al are lift providers to their respective global (note: not US) alliances.

This is part of a global airline trend - in ten years, it may not make much difference whether it's UA or AA flying the airplane - it will be competition between Star, oneworld, or SkyTeam. So, if UA and CO combine, all it ultimately may mean is that there is one less corporate lift provider to the Star Alliance. In today's context, it would be like a merger between Pinnacle and Mesaba. The corporation would change, but to the consumer, they'd still be booking on Delta. That's the future for independent international carriers - just on a global scale. Consumers book on Star, and the airplane might be operated by (depending on how the system develops) United, or US Airways, or for international travel, Lufthansa or China Eastern.

It's a global business world. And it's going to be connected by global alliance systems, not individual international airlines. So, for the long term, prognostications on how to deal with the UA/CO merger are the equivalent of planning arrival festivities for the Titanic.

For information on Boyd Group International independent analyses of merger effects on specific aviation sectors, click here.

________________

Times Square Bomber's Near-Escape:
More Proof Homeland Security Is A Sorry Sham

It's all the airline's fault.

That's the spin that the administration is putting on the security screw-up that allowed the Times Square near-bomber to board a flight and almost succeed in skidaddling out of the country.

Yup. The Feds knew who he was. They knew he tried to blow up Times Square. They knew he was likely to try and flee. But he actually was able to get on a flight destined to (golly, gee, will wonders ever cease?) the Middle East. And Homeland Security is crowing about what a great job they did. Right. They let a known terrorist board a scheduled airliner.

'Course, the federal ruse worked perfectly - now they're telling us that Homeland Security, et al,  intentionally opted not to call and warn airlines that this guy - the one that attempted to kill thousands of people in New York City - could show up at the ticket counter. One media source said that the feds tried to claim that they did this intentionally  in order to garner more info in case the guy made a cell phone call or two. Right. And some people actually are believing that this was part of Janet Nepolitano's Gran Plan to confuse terrorists.

Then they all - Holder, Napolitano and the rest of the Comedy Club - held a press conference where Holder (who came to the administration from a law firm that worked to free the poor downtrodden inhabitants of Gitmo, by the way) announced that the near-bomber really was connected to terrorist organizations. (Earlier, the Mayor of NYC did his level best to put a partisan spin on the near-tragedy, suggesting that the perpetrator may have been just another loon who was against the Health Care Bill. And he probably bristles when people sometimes hold politicians in roughly the same esteem as cockroaches.)

Cut to the chase: A guy tried to bomb Times Square. True, the feds ID'd him. But then they lost him,  he came aces within getting out of the country because the No-Fly list system didn't work. And, more importantly, they made no effort to let airlines know he might be coming. (Days later, they changed their tune and suddenly claimed "some airlines" were contacted. Sure.)

Like on Christmas Eve, this time we lucked out. But the handling of the whole event is consistent with what our President said just this past week-end at a college commencement:

"Information is a distraction."

Well, that certainly seems to hold true in his Homeland Security regime.

____________

___________________

Monday - May 3, 2010

News & Reviews

Year-To-Date US Traffic Prognosis. As of today, the tea leaves coming from airport enplanement data do not portend any rebound in air traffic in the US. Based on what's been reported, the number of passengers getting on airplanes is flat year over year.

While that isn't all bad, based on the data coming out of the economy, the Airports:USA forecast remains with a baseline projection of a 3.1% decline for the full year 2010.  Despite some flashes of data-encouragement, there simply are no concrete dynamics on the horizon that point to any material increases in air traffic demand. The 4Q 2009 Airport Traffic Review is now available and can be downloaded. See below.

Will PETA Picket CenterPort? It's been reported that AA is being sued by New York's American Museum of Natural History for allegedly dumping an air cargo shipment of dead fish from the Congo because it was leaking formaldehyde and was infested by maggots.

Now, apparently, maggots have rights, too.

_______________

A Quick Primer On Merger Myths

We're going to sit out and watch media frenzy on airline mergers continue on it's merry way this week.

There're a lot of points within the CO/UA deal that are being missed entirely as some of the usual suspects rush to report what are more like rambling streams of consciousness than hard journalism.

Nevertheless, here are some of the points of lore that we'll be hearing over the next week:

The CO/UA Deal Will Force Other Carriers To Merge. Watch for the "American's out in the cold without a partner" stories. Here's a factoid: this is the airline business, not the Senior Prom. AA faces essentially the same competition from a combined CO/UA as it will from a merged entity. (Yes, that goes counter to most of the clowns in college classrooms who wouldn't know the difference between propwash and a bottle of Clairol.)

Facts are that, a) there is not a great deal of additional brand power this deal will bring to the marketplace. (Heresy!) The connecting hubs for each carrier will remain the same in terms of feed reach, and b) the two carriers now code-share already. American, for example, faces no materially-stronger competition from the DL/NW merger than it did before the two airlines merged.

Final point: there aren't any large number of big players left. Just AA and US. True, there could be some Wall-Street-Promoted-Deals with smaller players, (Remember, the guys on the 'Street make lots of gelt on these transactions.) Alaska, for example, has been a merger target for the last 30 years. Or, there are some other LCC-type deals. But they'll be driven (if at all) by dollars, not necessarily a market imperative, and certainly not because of the UA/CO deal.

The we-gotta-merge urge has been seen expensively in the past. We can go back into history and look at the what-were-they-thinking acquisitions - the second-tier airlines acquired by majors, with eventually nothing to show for it. US Air - PSA. Or AA - Air Cal. Or the mystery of the 1990s, AA - Reno. Today, the majors don't have bupkus to show for those deals. But if the itch is there, and Wall Street wants it, anything can happen.

Mergers Will Squeeze Out Excess Capacity. This is another mindless mantra. First, industry load factors are in the 80% range, i.e., full. Second, neither of the last two mergers (US/HP and DL/NW) did much to directly reduce capacity. In fact, DL will have more capacity in the 3Q of this year than last.

The reality is that airlines have been squeezing out capacity for the last five years. True, Econ 101 clearly states that if product supply is restricted in the face of demand, prices will go up. But this is the real world, where the free market determines a range of capacity/price metrics.

Mergers Result In Fewer Hubsite Operations. In ancient times, a.k.a. the late 1980s when we saw mergers such as TW/OZ, NW/RC and PI/US, a number of connecting hubs got real redundant real fast. The dual TW/OZ STL hub became one (and, despite really strange rulings from DOT judges, hammered competition at a lot of small communities.) The Piedmont hub at DAY went away, too.

But that was long ago in a galaxy far away. The NW/DL merger was additive, and the all-knowing parrots who predicted the demise of MEM as a hub ("it's too close to ATL") have not been heard from recently. CVG was being pulled down before, and separate and distinct from, the merger with NW. AA eventually closed the former STL TW hub mainly because the world changed after 9/11. Prior to that, STL had a future in the AA system. There were a lot of market dynamics in play in 2000 that indicated the acquisition of TWA made strong competitive and strategic sense.

In the current UA/CO deal, only CLE looks shaky. But it will be at least a year before any pull-down (which is not entirely certain) takes place.

Fares Will Go Up. The UA/CO merger doesn't give the combined entity any more pricing power than it had before. But fares will go up in any case. They were down over 5% in the 4Q 2009 compared to the year earlier. Mergers or not, airlines will need to increase revenues.

There are more myths and lore surrounding mergers. But the key point to keep in mind is that they are more finance-driven than competition-driven.

_________________

Boyd Group International
Merger Reviews & Analyses

Mergers affect more than just airlines and airports.

With all the talk of mergers and consolidation in the airline industry, what has been ignored is the range of opportunities and risks that various carrier combinations - and even alliances - represent to suppliers, airports, manufacturers, and small-jet lift suppliers, a.k.a. "regional airlines."

When airline systems combine, the need for airport facilities, ground support, hub-feed, and other key metrics change dramatically. Fleet mixes and airliner missions can change, too, representing not only disruption, but opportunities for many areas of aviation. But until now, it's been difficult to get independent, professional analyses of how various merger scenarios will affect specific aviation sectors.

That's because much of the media reporting on mergers, even from financial outlets, is not much more than TelePrompTer reading, instead of in-depth analysis. And a lot of the Wall Street analysts can't be relied upon, simply because they've got positions in airline stock, or have other financial dogs in the merger fight. Independent they are not.

Now there's an alternative. Boyd Group International has accomplished merger analyses for a range of its aviation clients, - financial institutions, airports, suppliers, labor unions and others. They're getting hard, independent forecast scenarios that pertain to their specific aviation sector. Not generalized wandering, but outlines of what the client should prepare for under identified airline combinations. Hard data, from independent professionals.

If your airport, company, airline, or organization is in line to be affected by potential airline consolidation, give us a call. Or click here for more information on how a Merger Analysis from Boyd Group International can prepare you for the opportunities that may be in store.

It's a tough future ahead. Don't go it alone. Enlist the expertise of Boyd Group International.
________________

Airport Traffic Review - 4Q 2009 Now Available

Subscribers to Boyd Group International's DataMiner now have on-line access to 4Q 2009 O&D data. In addition the Airport Traffic Review, which provides key traffic and fare data for the nation's 150 largest airports, can now be downloaded.

Of interest is the continuing local traffic surge at CVG. Yes, surge. While the total enplanements at the airport were down 19.2% for the 4Q compared to 2008, local O&D continues to explode - up over 32%, spiked by a 24% decline in local fares. And without the entry of a "low fare" carrier.

The Airport Traffic Review is a snapshot of the data and market intelligence delivered to on-line DataMiner subscribers and subscribers to the Airport Key Performance Metrics & Forecast.

The Airport Traffic Review is available in pdf format by clicking here.

_________________

Monday - April 26, 2010

It's Time.
The Airline Industry Can Stand Up.
Or It Can Get Squashed By An Administration With An Agenda.

"Passengers on flights delayed on the tarmac have a right to know they will not be held aboard a plane indefinitely. This is an important consumer protection, and we believe it should take effect as planned."

So spoke Secretary Ray LaHood in categorically denying airline requests to be exempted from his 3-hour "tarmac" delay rule due mainly to runway construction at JFK. It's a rule that intentionally and dishonesty convicts airlines of causing delays, and imprisoning passengers for hours in airplane cabins without water, food, or sanitation.

'Course, consumers don't have the right to know what's in stimulus bills or in health care bills. But get stuck on a runway, and airlines had better be "transparent." That's a good suggestion from Mr. LaHood - airlines should start immediately to let passengers know the truth.

Truth like that it's incompetent DOT planning that brought us to this point. Like that they have to add minutes to flight schedules to accommodate an obsolete air traffic control system. Like how over 20% of all flights are materially off-schedule because the same nation that put a man on the moon four decades ago can't implement the infrastructure we need to get Grandma to Tallahassee on time.

It'll Cost Airlines Millions In Cancelled Flights. But It's Self-Inflicted. What's really sad is that the airline industry has created this situation - one where the DOT's decades of infrastructural failure that caused major air delays has been blithely accepted - and in some cases, tacitly lauded - by airline CEOs. Airlines and passengers over the past two decades have been abused by an air traffic control system that's falling behind.

The Mugger Blaming The Victim. Now, directly because of a reticence to speak up and defend itself, it's the airline industry that's getting hoisted on the DOT's petard of incompetence. It's DOT's bailing wire ATC system that can't handle the nation's air transportation needs that is the main driver of late flights. It's not "over-scheduling" as claimed by self-appointed consumerists and TV talk show hosts who don't know diddly about the airline industry, but angrily shout down any input that runs counter to their factless verdict that airlines are essentially the new Spanish Inquisition with wings.

Values? Truth? Accuracy? Forget It. This Is The New Political World. This "tarmac" rule is just another giant red flag warning America and the airline industry that competence, facts, and professionalism now take a back seat to political expediency.

This is not just another new administration in Washington. What LaHood is spouting represents a full sky change. Right and wrong do not matter. Realities don't matter. Facts don't matter. This stupid and very dishonest "tarmac" dictum is prototypical totalitarian policy. The government is not working with industry, but dictating to it. The government is making sure that it's own failure is painted as sheer airline incompetence.

Think that's a bit harsh? Get real. This is a DOT secretary who warned aviation leaders not to oppose high-speed rail - advising them not to express any opinions or statements on the subject that might be critical of the administration's rail policy. And, he made it clear that this was political advice.

That comment alone - a high-ranking administration official threatening people if they try to disagree - should be taken seriously for what it is. The US Constitution guarantees aviation leaders - and anyone else - the right to point out flaws in an administration program, without threat of government retaliation.

That's exactly what LaHood did. Whether he actually, consciously intended to do so is an open question. But the fact is that he did threaten people if they disagreed. His comment was clear and unambiguous. Welcome to the Third World, America.

The Line's Been Drawn. Memo to airlines: this is a huge threat, right along with 9/11 and the spike in fuel prices. When the government dictates from afar how airlines must respond to ad hoc operational issues, particularly ones largely caused by the government itself, it represents a situation where airlines cannot win. It's a situation where lore, myth and political agendas dictate the future. One of which airlines have no control.

Here's a fact: plan on more cancellations. Plan on more full loads of passengers dumped off in terminals simply because of an arrogant and ignorant political decision by the DOT secretary. No airline can take a chance getting a $3 million fine on a single flight if there's any real potential that weather might result in a diversion to an airport where there is no option of deplaning passengers. If JFK looks like it'll have 3-hour delays taking off, an airline is going to cancel. With the exception of the CEO of Continental, nobody in the business has spoken out.

Not The Time To Run From The Fight, But... The ATA has attempted to lobby, jaw-bone, and file op-eds in places like USA Today, but has failed to come right out and ask the flying public to rally with them against air travel enemy #1: the DOT. Until now, that might have been adequate. Not anymore. The attack has been launched, and more milquetoast lobbying isn't cutting it. (Worse, as of today, when media outlets are clamoring for comments and input, ATA is refusing to go on camera on the subject, leaving the airwaves wide open to misinformation from consumerist crackpots, and nobody to defend the industry that ATA supposedly represents. In short, ATA has decided to tuck and run, instead of stand and fight. Gotta wonder.)

Things The Industry Should Do. Tumble to it: the approach airlines have taken in dealing with Washington has failed. Years of happy-face press conferences, photo-ops with DOT secretaries, and commitments of "cooperation" have simply led to a situation where airlines are now largely considered to be an Evil Empire. LaHood has signaled that it's going to get worse, too.

It's time the industry stands up, stops playing a political game that's rigged against them, and enlist the aid and support of the flying public:

• Here's A Refreshing Idea: Tell 'Em The Facts. Deny the DOT of the dishonest fantasy that they're the good guys. The core reason for most delays is lack of ATC infrastructure to handle the levels of air service the US economy needs. The industry should make that clear to the public - "we've been putting up with failure after failure at the DOT for the last 25 years, and you, the flying public, have, too. Now, we're doing what we can to address this, but we need your help..."

• When It Happens - Inform Passengers and the Media. Bank on it. Cancelling a flight due to this "tarmac" rule will boomerang back into the airlines' laps. Unless, that is, every airline has a program to immediately tell passengers the reason. Tell them it's the law.  If they have a problem, tell' em to call LaHood. Write this down: airlines are in for another full-scale attack, because when they comply with the "rule," the veneer media will blame carriers, not DOT. (It's that "over-scheduling" thing.) Hey, LaHood demands that passengers "know" - so airlines had better tell them.

• Take Control: Demand ATC Solutions - Not Pet Projects. Airlines are wasting time prancing into congressional offices with lobbiest-handliers, begging for support of the DOT's NextGen. That is specifically the wrong approach, and it is doomed to failure. The industry shouldn't endorse NextGen, per se, but should define, support and demand an ATC system that meets the needs of the flying public. Then tell the DOT/FAA to do it. Forget the PR stunts - remember, NextGen is just the new Madison Avenue packaging for a lot of older, delayed FAA programs. Worse, it claims - tenuously - that it's just an improvement, not a fully-considered solution. (The positive news is that the current FAA Administrator appears to be different from past occupants of the office.)

• Outline The Goals. Don't mess around. Airlines must outline the progress that the DOT should achieve in terms of reduced delays over the next year, the next three years, and the next five years. Grandly taking pride in "#1 on-time performance" based on "only" 20% of all fights being more than 15 minutes off schedule, tells the public that the airline industry is enamored with mediocrity. For crying out loud, if that's best the system will allow airlines to achieve for their passengers, it's an outrage that the public should know about and join with the industry to pressure results from the DOT.

• Try, Just Try, To Remember Passengers Are Not The Enemy. But airlines are not without some blame for consumer anger. In some ways, it's almost as if we're back to what a major airline VP of (alleged) Customer Service said in the 1990s - "Passengers will do business our way..." Airlines are indeed in a very difficult situation. Fares alone in this competitive industry do not produce an adequate return. (For these academics who disagree and say it's just a matter of raising fares, please go back to sleep.) Ancillary revenues are needed. That's not a fun conclusion, but it is the real world. Unfortunately, this makes doing business with an airline more complex and confusing for customers. Confused customers tend to lead to service dissatisfaction. Arrogant, no-waivers-no-favors approaches to dealing with customers are far too common. It's not the fees that are the problem. It's how they're implemented and communicated to the customer.

• Be Up Front. Passengers are "trapped" in a world of rules, regulations, and punitive results if they don't tow the line. Truth be known, the airline industry as a whole isn't doing a good job of letting passengers know they appreciate their business.

For example, it's ludicrous and insulting to put out press releases stating that customers "will just love and appreciate" the new $50 fee to stand-by for an earlier flight when heretofore there was no charge. That sort of approach tells passengers that the airline thinks they're all idiots. Job One: if you're going to get the consumer on your side, make it as easy as possible for the passenger to do business with the airline. Today, the feeling seems to be sell a ticket, and then threaten the passenger with discomfort if they don't pay extra fees for, well you name it - legroom, baggage, line-jumping, whatever. "Unless you pay an additional $15, we cannot guarantee you won't be shoehorned into a middle seat between two Sumo wrestlers..." is the message. It's subtle, but clear: the ticket price is just the down payment to get to Boise.

Tough challenge, but it isn't being addressed. Arranging and taking an airline trip today is evolving into something more akin to dealing with the IRS. Secret rules, tough penalties, and incomprehensible logic.

One key point that the airline industry had best not ignore: playing Stockholm Syndrome to LaHood won't work anymore.

Stand up or be squashed.
___________

Monday - April 19, 2010

Senators Warn Airlines:
Shaking-Down Consumers is Our Job

Senator Charles Schumer is leading a cabal of other lawmakers to push legislation outlawing airlines from charging for carry-on baggage.

“We’re fed up with airlines that nickel and dime passengers when it comes to meals, pillows, luggage, legroom, and we’re here today to say enough,” the oh-so-outraged Schumer proclaimed in a shower of indignant crocodile tears.

Seems this guy has never been too concerned about the nickel-and-diming taxes that he and his Merry Band of political commandos have been inflicting on the American public. So, there must be a reason he's so ticked off about a plan where Spirit will lower fares, and implement a carry-on fee.

Congress. The Risotto Brothers. Don Corleone. All In The Same Business? Don't kid yourself. In reality, Schumer and his Beltway buddies couldn't give a rip about the consumer. This is a territorial dispute - the kind mob families get into from time to time. The Five Families aren't opposed to things like extortion, loan-sharking and shake-down scams. They just argue over who gets to do it and where. That's what Schumer's doing. He thinks Spirit's carry-on fee is muscling in to Congress's territory. He all but admitted it.

Here's a little factoid: consumers flying into and out of the three major New York area airports are hit up for $1.3 billion annually in federal fees and taxes. That's close to 15%. What consumers get for that tribute is not much different than what happens in a mob protection racket, i.e., nothing. The money supposedly going to the Trust Fund is mis-appropriated into other uses. The "segment tax" goes into a black hole. And the "security fee" allows the TSA to maintain the same ineffective levels of protection as before 9/11.

It's Not The Fees. It's Who's Getting The Take. And Congressional clowns like Schumer are all for adding more protection-racket fees. He's all for cap-and-trade scams that'll really hit the consumer. He's never seen a tax he doesn't like. He's a fan of the direct and indirect taxes on small business inflicted by that alleged health care program he championed like an Underboss supporting his Don.

See, Schumer fears that the carry-on charge will have the effect to cause fares to drop, which means less take for the feds in fare-related taxes.

So, let Spirit Airlines appear to be cutting into his action, and Schumer (and a host of other Senate Capos) scream foul. Even if it's an airline legitimately deciding to charge for its own product, well, that is outrageous! (Whether Spirit's program is a good marketing move is not the question. It's their space, not Schumer's.)

In one media report, "...Schumer said Spirit can lower their ticket price by the cost of the bag fees, and only pay taxes on the remainder..."  So it's clear: passengers paying lower fares is bad, if it cuts the Congressional take. That's what's got his undies in a bundle, not any concern for the consumer. But in the tradition of a mob kingpin trying to look like the good citizen who holds neighborhood parties on the 4th of July, he twisted the truth: Spirit isn't the one paying taxes. The consumer is. As he outlines it, the Spirit plan will lower the consumer's tax bite. And for a political mobster like Schumer, that's an infamnia.

“For every dollar they bilk out of consumers in the form of fees, 100% of those fees go to padding the airlines’ bottom line,” Schumer was quoted as telling the media, which means that Congress is getting cut out of some of the action.

But not to worry. Schumer now has the commitment from major airlines that they won't implement a program similar to Spirit's. That means that Congress will not lose any more fare-tax action.

So that will be the peace. Carry-on fees will be permitted, but they will be controlled. Don Schumer will provide protection, and it will be business as usual.

____________

Iceland Volcano Damage

Boyd Group International has done a review of the effects of trans-Atlantic cancellations on US carriers. You may be surprised that the damage extends to Billings and Bangor, as well as New York and London. Click here for details.

 

Hot Flash - April 12, 2010

Another Terrorist Event Registered

In the months before 9/11, the terrorists tested our system repeatedly, taking dry-run flights, probing how flight attendants would respond, by sneaking up behind them in the galley. They monitored airport operations, flight movements and aircraft types, looking at our security (sic) systems, and gaining a clear understanding of our alleged defenses.

We just got pinged again - on a United flight last week between Washington and Denver. Regardless of the nonsense coming out of Homeland De-Security, it's a lead-pipe cinch that this was an intelligence mission.

The incident initially was breathlessly reported as another shoe-bomber attempt between Washington and Denver. Then it was quickly written off as just a misunderstanding with a guy who innocently tried to take a smoke break in the lavatory of a 757.

Move along folks, nothing to see here.

ally full - over 80% average load factors. That means not a lot of seats out there left to sell, at least when people want to travel.

Then a quick capacity comparison between this summer and last year replaces media hype with hard data. The bottom line: virtually no increase in system capacity to speak of. In the case of most major carrier systems, any year-over-year increase is so small as to be classified as "noise" - not any intentional up-scaling of seats across their systems. Shifting of aircraft resources, yes. A big increase in resources, no.

The clear point: the 3Q will be strong for the US airline industry because they are not adding capacity. Plus, most have safety valves to pull down capacity if the recession deepens (yes, deepens - who's kidding who? with 9.7% unemployment, close to 20% under-employment, higher taxes in the wind, jive-time "job creation" stats that are bulked out with census workers, and $85+ oil, this isn't a robust picture of the future. Any credible passenger forecast must consider these factors.)

The eight major airline players will see a whopping combined .7% increase in capacity this summer. Given that flights are already 80%+ load factors, unless carriers install subway straps in the coach cabin, there isn't much chance of any "peak" traffic this summer, let alone a big jump in passengers.

The Wall Street Merger Myth Exposed. Another media myth is blown away with a glance at the Delta numbers. These are the Northwest and Delta data combined, post-merger. Anybody remember all the pronouncements from the paper-hangers and stock-peddlers on Wall Street that mergers were "necessary and inevitable" and were needed to remove all that "excess capacity" that was supposedly out there. Look at the capacity data. Funny, Delta didn't get the Wall Street memo, or maybe they don't read the right financial columns. Delta is keeping capacity level - and at 80%+ load factors, too.

These data again underscore the Airports:USA enplanement forecasts that predict a 3.2% to 3.7% at best decrease in enplanements in 2010. These were computed on assumptions of $80 oil and the start of an economic upturn in the 4Q of 2010.

This is just one of the advantages that subscribers to Airports:USA DataMiner have over their competitors. They have hard data on which to plan the future, instead of having to rely on "what everybody knows" - which is usually just a step ahead of gossip.

To join the leading aviation companies and airports who are switching to DataMiner, click here and sign up for a free trial.

____________

Slot Swaps:
Positive For Consumers. Positive For The Carriers.
But Not Sea-Change In Airline Relationships

The American - jetBlue JFK deal last week has the usual suspects who lurk safely in academia, well beyond the fringes of reality, predicting that this signals the new airline industry trend: LCCs like jetBlue and Southwest, etc., increasingly will be feeding traffic to major carriers.

You betcha. It's yet another reason that home schooling should be considered well past the 12th grade.

It wasn't too long ago that birds in the same intellectual flock were instantly predicting that Lufthansa's purchase of jetBlue stock signaled a major change in traffic relationships at JFK. There was going to be feed up the whazoo for both airlines. No need for any hard analysis - or even a cursory glance at real-world things like schedules, load factors, and basic airport logistics - all of which would run counter to the dogma.

Now, with the new marketing agreement between jetBlue and American, here's the new, not-to-be-argued-with snap-conclusion dogma: there's going to be huge passenger synergies and inter-connecting traffic between the two airlines. Just like there was supposed to have been with Lufthansa and jetBlue.

For those occasional academics who aren't airline experts, but play them in the media, this conclusion certainly makes sense. Addressing reality isn't a course pre-requisite. But for those in the real world - like, anybody who's been at JFK in the last 18 months or so - the potential for strong connectivity is pretty remote. Incremental traffic, yes. A net positive for both carriers, yes. But huge connecting flows, no.

Ever Tried To Cross The Street At JFK? It's all about little things. Like airport facilities, scheduling issues, existing load factors, yield dilution, and competitive alternatives. Those nagging bits of reality that get in the way.

Just take a look at the logistics of JFK. Making an intra-terminal connection at peak periods could be the subject of an entire episode of The Amazing Race. How about the real minimum connecting time necessary? Figure getting off the B6 flight, going out of the sterile area, getting on a train to the next terminal, and again going through screening. Got to plan on at least a two hour process, just to be safe. Probably much more.

And that assumes flights are on time. JFK isn't a shining star in that regard, particularly at the peak international in-out periods when most of such connections would be made. Going through JFK on an interline itinerary is one of the premier ways of complicating one's life.

It's The Slots, Not The Connections. So, what's the deal all about? It's slot swaps - not intra-terminal obstacle course races through JFK. Buried in all the stuff about how passengers can now theoretically connect from Portland to Caracas, is the part about jetBlue getting DCA slots, in exchange for AA getting JFK slots.

That means Washington will have more competition - which is positive. It also means that New York will have more competition - which is positive, with AA and DL and CO all fighting to be the Big Apple's #1 carrier.

This is a rare deal where nobody loses. It's a deal where the consumer ends up on top, and the carriers involved benefit as well.

So there's a real possibility that the leadership (sic) at the top DOT and Congress may step in to screw up the deal. To the detriment of everybody. It will depend on what service commitments have been already made to the Washington elite.

Even with any such pre-promises, it's still a deal that's better for the consumer than the current status-quo.

_______________

Finally...

The next Air Service Data & Aviation Firepower Workshop, will be held at Boyd Group International offices in Evergreen April 20-21, 2010. We currently have two openings left. We have arranged special room rates at the Quality Suites right near our offices. Call Sonia Watts at (303) 674-2000 to register. Click here for more details.

Copyright (c) 2010, Boyd Group International. All Rights Reserved

 

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

__________

_______________