Boyd Group International, Inc. - Aviation Hot Flash & Insights

Hot Flash - Monday, July 13, 2009

Again, Plan For Big Capacity (& Cost) Shifts By 1Q 2010
Take The Bankrupcy Stories With a Grain of Salt...
or, Maybe The Whole Shaker

June airline results indicate that for the first time since last November, capacity cuts are overall tracking with declining demand, instead of lagging it.

However, bookings for the fall are, from all indications, really getting problematic. As we've noted, this stimulus hocus-pocus might work in the fertile minds of Washington politicians, but the effects of Chrysler, GM, and other continuing episodes in amateur economic-planning, have yet to fully register in airline traffic.

The Southwest-induced fare sale of last week was one indication that carriers are looking to fill seats in the interim, while much bigger capacity cuts are going to be on-line for November - December and the 1Q of 2010. (Give it three to four weeks, and schedule filings will start to reflect this.)

The Southwest sale, which from all indications was a huge success, may well be one of the the last before schedules are adjusted downward for the final two months of 2009 and early 2010.

The brilliance of the Southwest strategy is that the most consumer interest was probably in markets priced in the $90 fare bucket. So the hit was not as huge as one might conclude, because the sale likely really did pry thousands of net-new consumers (and their money) out of their Lay-Z-Boys who otherwise would have stayed home watching TV. (Any sale that - reportedly - brings an airline's website to its knees can only be described as a success.)

Another Boom For Bankruptcy Lawyers? That brings us to the latest trendy prediction that's been popping up in the media like a blemish on prom night - airline bankruptcy.

It started about two weeks ago, and is now becoming one of those "everybody knows" staples, with the brilliant deduction that if airline unit revenues continue to fall, and if fuel keeps going up, and if international demand keeps falling, and if consumer demand falls materially, then airlines will be in a stampede to the courthouse steps to file "chapter."

That's all very accurate. Textbook accurate, but not necessarily real world accurate.

Bankruptcy stories are emerging as the new airline industry hot issue du jour. And it's a subject that'll certainly be tossed around a lot more this coming week in business media venues, particularly if there's a break in the administration's media barrage trying to convince the gullible that more and more people losing their jobs proves the huge success of their stimulus package.

Airlines Are Not Deer In The Landing Lights. The bankruptcy-prediction stories almost universally leave out the most critical "if." And that's if airlines do nothing to adjust. Like, the assumption is that airlines are just standing still, like Bambi in the cross-hairs of a 30-06. And that's not what's happening.

The indications are more than clear. The Southwest fare sale, an industry-wide continued reduction in flying & capacity (and that means reduction in costs), and re-direction of fleet applications (including retirements) at virtually every airline, show that airlines are addressing this "if."

Could there be airline bankruptcies next year? Holy DIP-Loan, Batman, that's always possible. But most of the media stories intimating the "predictability" of chapter 11 filings don't even touch the issue of airline strategies, or airline fleet shifts, or the ability of carriers to adjust revenue streams. They don't address all the factors. In short, most of these tomes merely assume airlines are static targets, not managed entities. And some of them are nothing more than jump-on-the-bandwagon, "me-too" pieces.

For a review of currently-filed August 2009 capacity by airline system and by major hubsite, log on to AirportSnapshot.com by clicking on the logo above. It's the only source of immediate airline data on the Internet.

In the meantime, watch what airlines are doing strategy-wise. Year 2010 might be a pleasant surprise, particularly if oil prices don't get too frisky.

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Cyber-Lynching - The New Consumer Option

It's hilarious, professionally-done, and entertaining.

We're referring to "United Breaks Guitars," a YouTube video done by a Canadian musician who claimed his $3,500 instrument was damaged when he connected flights at O'Hare. The video tells the world in rollicking verse that United is uncaring and treats baggage like a football on 4th and long. It's the toast of the Internet. It's making the e-mail rounds. It's been on the evening news.

The only problem is that we don't know United's side of the story.

We don't know - and as far as we can tell none of the media-beagles have asked - if the guitar was properly packed in a suitable case. We don't know if, at $3,500, it might have been an item that should never have been checked as luggage, which is an environment that never was engineered, designed, or claimed to be, one for delicate objects. Checked articles are routinely stacked, loaded, shifted, tossed onto belts, and whatnot on the basis of time and flight schedule expediency. A delicate and valuable guitar doesn't seem to be something a musician would normally feel comfortable entrusting to such a system.

We really don't have any idea whether United's refusal was completely legit, a simple mistake, an arrogant decision that was poorly thought out, or some conclusion made by a barely-literate call-center bozo in some foreign land. All of those might be possible. Anybody whose been on the airline side of the equation would know that.

But in this case, all we have is a very funny video, not a full story. All the facts are neither needed nor wanted.

It's The New Revenge. Today, all a consumer has to do is go on YouTube, or Twitter, or a number of other cyber bullhorns, and let loose. United has no option to effectively tell its side of the event. So, the consumerist twits and the usual suspects on evening talk shows had a field day at United's - and United's employees' - expense.

Here's a flash to the mindless masses and the media types: it's a pretty sure bet that United Airlines isn't in the business of routinely destroying musical instruments. But that's the decision of the court of angry-mob cyber-justice. According to this verdict, the airline could make short work of the entire New York Philharmonic. Just hand that oboe or clarinet over to United, (or, by extension, any airline) and it's as good as gone to the landfill.

Cybermob Justice. Two weeks ago, an Allegiant flight had an engine failure out of Las Vegas. The cockpit crew, focused entirely on safety, concentrated on returning the now single engined MD-80 to the gate. Under the circumstances, they didn't have time to make, nor should they have made, an extensive cabin announcement. It's unfortunate that passengers had to go minutes without having the comfort of knowing from the cockpit what was going on. But that's life. But the cyber-lynch mob was soon formed, telling the world that there was a major problem and Allegiant tried to hide it from its passengers.

In one media story, a follow-up with a passenger was done - a hot passenger who later found out that Allegiant had had, yes! another flight with an engine problem some time earlier. This, obviously, means that Allegiant is concealing major issues from the flying public. It's true simply because it's on the self-righteous cyber-lines. No investigation, no research. None needed.

So a good airline gets a black eye because some ill-informed idiot in seat 23F with access to the Internet thinks that anything that doesn't go right demands the cyber-space equivalent of vigilante justice.

Airlines: Even Less Slack For Errors. But this is the new paradigm, and the airline industry had better get prepared. The concept of pro-active communication is more important than ever. The need is critical to have mechanisms in place to shortstop and/or counter bad, sensationalist media reporting that's based on nothing more than un-substantiated stories on the Internet, many of which are garbage.

It also means that it's time to finally get rid of the suits in HQ back rooms who couldn't find a ticket counter with a map, yet who dream up ways of making it more difficult to do business with the airline, via dimbulb, opportunistic obey-or-you-won't-fly rules. It's also a wake-up call that making passengers feel like boot camp recruits must be avoided at all costs.

It means the arrogant concept of "no waivers, no favors" as one major airline actually espoused a few years ago, will result in very expensive consequences in the form of instantaneous bad press.

The Customer Isn't Always Right. But He's Always The Source of Revenue. Any of us who've been on the front lines, or behind the lines dealing with post-flight complaints and problems, know that a lot - like, a whole lot - of passenger complaints are partially or completely el toro doo doo. We know that there are customers who embellish claims to the point of being candidates for creative-writing awards. Anybody who's worked baggage service knows that if Nikon made as many cameras, or if London Fog made as many overcoats, that have been claimed to be inside lost luggage, both companies would have sales approximating the GDP of France.

But, as sagely Hyman Roth pointed out, this is the business airlines have chosen. And that means sharper training, combined with a full metal jacket campaign to reduce potential rough edges in the customer experience, should now be at the top of airline service priorities.

Job One - Fewer Moving Parts. The underlying secret to airline customer service - particularly in an anxiety-laden business that levitates people inside of big metal tubes - is minimizing the number of "moving parts." Minimizing the amount of understanding the customer must have of the airline to avoid getting humiliated for not following arbitrary procedures. Minimizing the number of situations where customers are clubbed over the head with "rules" that are sometimes enforced like omerta inside the Mob.

Bottom line: More than ever, airlines are guilty before any facts are necessary. That means the industry had better get down to re-shaping and simplifying the rat maze consumers often need to go through just to get to Tucson.

Boyd Group International's division, Airline Services Training, Inc., has programs that have proven results and can be quickly tailored to any carrier's specific situation, and address this very issue. Give us a call for details.
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DataFlash:
Airline Brand Load Factors

Airports:USA DataMiner is the new dimension in the Analytical Firepower aviation professionals need. Quick, complete reports that allow immediate identification of key emerging trends and changes in the marketplace.

This week, the DataFlash reviews American Airlines load factors at LaGuardia. The complete American Airlines, including all flights operated with leased-in equipment and crews (what lightweight consultants still categorize separately as "commuters" because they don't know much about the airline industry.)

This exercise quickly identified one LGA market that's likely to come under some red-pencil scrutiny (not to mention some political scrutiny, too) in AA's planning department, particularly if the price of oil stays over $60.

Click here to go to the DataFlash.
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Final Note:
Small Community Air Service Grant Program

There are expected to be more filings in coming weeks by major carrier systems to pull out of a number of smaller communities, in the absence of the DOT granting a subsidy for continued service.

While nothing is certain, it's possible that these moves could result in additional SCASD funds being diverted to EAS, as was done three years ago. Congress has mandated the DOT to put EAS ahead of other programs, including SCASD.

Remember all that stimulus plan money? Not much of it was for aviation, and virtually none was to assist small communities retain, maintain, and increase air service. Spending billions building rail lines between static points, which probably nobody will use, are high-priority in this administration. Air service access to the rest of the world for rural America is not. It's just a hard fact.

We are keeping our SCASD clients informed by e-mail.
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(c) 2009 Boyd Group International, Inc. All Rights Reserved

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Hot Flash - Monday, July 6, 2009

JetAmerica Delays Start-Up
Say It Ain't So! Naysayers In the HQ?

Jet America has issued a press release stating that it's delaying start of service for a month, due to access problems at Newark Liberty International.

The entity is wet-leasing a 737-800 from Miami Air, and plans a very weird, and very sparse couple-days-a-week rotation of flights from places like Toledo, South Bend, and Melbourne. But because of the Newark stumble, it has has announced that it's refunding fares paid by the 6,486 consumers who booked Jet America flights for the period July 13 through August 13.

The press release went on to give glowing details on JetAmerica. It noted that it had planned 34 weekly flight segments for the period in which service had to be delayed, and declared, "JetAmerica's successful business model is based on flying big jets and offering non-stop, low-fare flights in (sic) cities that are underserved..."

It's always heartening to hear that any airline project is already successful weeks before it even begins tossing airplanes across the sky. Given the history of the industry, if they quit now they'd be ahead.

But in addition to a loopy air service concept, they also seem to have a weird definition of "success." Maybe it's the advance bookings. And, maybe not.

Running the numbers provided in the JetAmerica press release, and assuming they're accurate, the math indicates that the five weeks' delay in starting service represented about 170 cancelled segments (34 a week x 5 weeks). The release also proudly notes that there were 6,486 consumers who were already ticketed for those segments, and due refunds.

Computing this out, their data - again, given in their own press release - would seem to indicate JetAmerica, two weeks from service start, had average bookings of 38 passengers per segment, operated with 737-800 airliners. Big jets and not a lot of people. Lotsa room for air service comfort.

Revenue-wise, this successful track record likely includes some of JetAmerica's highly-publicized $9 seats, too. That's $9 plus a laundry list of additional fees, however. Like the "convenience fee" to book the seat (Question: "Convenience" as opposed to what? Massive inconvenience? Being attacked by rabid Rottweilers at check-in? And do consumers have a choice of paying it or not? If not, isn't it really just a hidden fare? We digress.) Maybe the average revenue for these $9 travelers is what, $30, $40 - or even more.)

So, reading the press release, the clear indication is that, based on the first month of bookings, this project was indicating a 25% - 30% load factor on a 737-800. Hardly the kind of information that imparts the glowing image of "success."

"People should not be so quick to jump to negative conclusions about JetAmerica," the carrier's VP cautioned. "I am particularly referring to internet bloggers and naysayer who are predicting the worst."

Based on these numbers, he may want to add his own PR department to that list.
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In This Week's DataFlash
Capacity Cuts... They're Just Starting

Last week, there was a story in Travel Weekly that included a quote giving us the revelation that "legacy carriers" are cutting capacity as part of a strategy to "rapidly" move away from the hub and spoke model, and implement more point-to-point flying.

This is, of course, because of the inroads being made by the "low cost carriers" which, as any gibbon knows, don't sully themselves with connecting flights - they're all point-to-point, see.

Yessir. Absolutely. And Elvis will be running for Governor of California next year. It is astounding how much really, really bad information can be spouted by folks whose depth of airline knowledge is firmly planted in the shallow end of the pool.

Must Be Why Southwest Is Pulling Capacity Down. And all those inroads the "LCCs" are making are just wearing them plum out. So much so, that between January of last year and October, Southwest will have reduced departures at 90% of the airports it serves, net of Boston and Milwaukee. We cover it in this week's DataFlash.

Southwest is aggressively preparing to be profitable in 2009 and beyond, and to be major trouble for its competition. They are fundamentally re-positioning themselves - and not paying much attention to the Peanut Gallery of Wall Street lightweights who get a lot of their expertise by parroting each other.

And as for those poor legacy carriers, just how many additional mainline point-to-point missions has American Airlines added in the past six months? Or, Continental? Or, United? In fact American is cutting some point-to-point markets, the latest being AUS-SJC.

Hard facts, not lore, is what airline planners need to prepare for the future. That's why more professionals are subscribing to Airports:USA DataMiner. Anybody can print out numbers from raw DOT tables, and peddle them with not a clue regarding what they mean. DataMiner is professional Analytical Firepower developed by aviation professionals for aviation professionals. It's an advanced planning and forecasting tool. Not a compendium of semi-accurate printed reports.

Click here to review the DataFlash.
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Don't Be Breeding On The Job, OK?
Was This Covered By J.D. Power?

VietNamNet Bridge – Prime Minister Nguyen Tan Dung recently issued an official warning to Vietnam Airlines (VNA) General Director Pham Ngoc Minh for having a third child, said VNA Chairman Nguyen Sy Hung... The General Department of Population’s vice head Duong Quoc Trong said government officials who have third children will be punished.

What an exciting new dimension in airline performance metrics... EPP - Executive Propensity to Procreate.

Maybe that silly "Airline Quality Report" will pick it up next year.
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Update

Capacity Continues To Fall. The latest airline schedule filing as of June 25, 2009 shows that US carriers have yanked 7% capacity in July, compared to the same month in 2008. Of the top 25 airports, only MSP will see a year-over-year increase in capacity - all others will see fewer seats offered.

We want to thank the hundreds of aviation professionals who have signed on as subscribers to AirportSnapshot.com over the last six weeks. It's the only readily-available live data on the web. It's better data - from the Airports:USA DataMiner suite of decision tools, because it is first-sourced and analyzed by Boyd Group International.

In addition to higher accuracy, Airports:USA is on-line and updated constantly - including when DOT issues revisions to prior quarters of data. And, unlike some other sources that simply re-package and print numbers from another vendor, Airports:USA understands the industry. It doesn't understate airline traffic by dumping small jet providers into a "commuter" category. Some other sources literally don't know the airline business, such as reporting an airport's total enplanements as "O&D."

For more information, and for a free on-line subscription to AirportSnapshot.com, click on the logo above.

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

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Hot Flash - Monday, June 29, 2009

Another Fruitcake Security Concept Bites The Dust

After 9/11, congress and the Bush Administration went on a legislative tear, considering and implementing one amateur concept after another to allegedly preclude another terrorist event.

'Course, starting by replacing the incompetents at the FAA who ignored repeated warnings, was not ever considered. Even today, they're still among us - like former FAA Administrator Jane Garvey, who's right now a favored person on both sides of the aisle, blood on her hands and all. So, it's no surprise that the bi-partisan efforts after 9/11 have been proven time and again by GAO and other sources to be pathetic eyewash.

If You Pay, You Get To The Screening Point Faster. One of the pet projects advanced by virtually every one of the empty suits Bush appointed as TSA administrator was "registered traveler." Golly gee, if we get a background check on a consumer, then, hey, we can do less screening on them, and concentrate on those that refuse - surely for sinister reasons - to undergo and pay for such a check. Like, the grandma who travels once a year. Or that 11-year old unaccompanied minor.

Now, Mohammed Atta and most of his friends who participated in the 9/11 event probably would have passed a background check. (It appears they did - at least one of the hijackers' visa was successfully issued after 9/11.) And the fact that at IAD, hijackers were indeed given additional screening was also not an issue to be considered in the registered passenger concept. The clear truth is that the 9/11 event was planned over a very long period - including taking test flights - by more than just the 19 slimeballs on the hijacked airliners.

But "registered traveler" is the kind of pabulum that a lot of media folks and the average person on the street will swallow without much questioning as to whether it makes a lick of difference in deterring terrorism. The registered traveler concept is just another veneer concept, concocted by the security-incompetents Bush seemed to like to have running the TSA.

Last week, reality hit. Verified Identity Pass, Inc., marketed as "Clear" - a private enterprise attempt at a "registered traveler" program at several large airports - bit the financial dust. Apparently, not enough people saw any real value to the concept - especially if they have to cough up a c-note for an alleged "background check." That's because there wasn't any value in it.

And When You're Through Clear - You're With Everybody Else. As a practical matter, Clear just offered consumers the ability to pay to get a shorter screening line at big airports. Period. No telling how many journalists to this day still file un-researched stories claiming that the background check entitled Clear customers to go through less screening than the mere mortals who couldn't or wouldn't pay for a background check.

True, Clear was accessorized by lots of marketing, pretty signs and smiling people, as well as actual and promised whiz-bang equipment that did nothing in particular to improve anything, let alone security. And the customer still went through the exact same screening process as everybody else. It's just that if his flight was at a peak period, he waited in line less time. And paid a private company for the privilege.

Meanwhile, across the checkpoint at most airports, first class passengers and premium members of frequent flyer programs got pretty much the same benefit, without having to pay anything, and they didn't need to stick their hand into some flashy machine to prove they'd paid to be there.

Clear was one of those Bush-era illusion programs that to the average passenger seemed to represent a security improvement. As an enhancement to protect the public, it's just more smoke and mirrors.

Like a lot of what the Feds pass off as security.

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Yes, But What If They Start Accepting Credit Cards?

KATHMANDU (AFP) – Nepal's anti-corruption authority has come up with a novel solution to rampant bribe-taking at the country's international airport -- the pocketless trouser...

The authority said it was issuing the new, bribe-proof garment to all airport officials ... "We sent a team to observe the growing complaints about the behaviour of airport authorities and workers towards travellers and we discovered that the reports were true," said Ishwori Prasad Paudyal, spokesman for the Commission for the Investigation of Abuse of Authority (CIAA).

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Hot Flash - Monday, June 22, 2009

Cuba: It's An Opportunity...
But Not Anywhere Near The Hype

Boyd Group International today is publishing a new Research Report on the airline opportunities represented under a range of liberalization scenarios between the US and Cuba.

To hear some in the travel industry, full elimination of restrictions would be the equivalent of the California gold rush, only with more Ban Du Soleil.

Some in congress claim it would open huge markets for US goods. Some are predicting Cuba to be a huge opportunity for US carriers.

They're right. Unfortunately, there are a range if fundamental realities that get in the way. Big time.

This Research Report is the first to independently analyze the Cuban "opportunity" - and what we found wasn't anywhere near the bonanza predicted. One thing that we Americans have generally missed is that Cuba is not an isolated nation. It can and does freely trade with the rest of the world. It has air service to the rest of the world, too. It can and does buy and sell on the international market. In a very real sense, it's the US that's been isolated from Cuba.

What that leads to is a review of the core economic and infrastructural underpinnings of Cuba and how they will affect any liberalization of air traffic to and from the US.

Cuba: An Independent Analysis Of Opportunities and Challenges is now available and can be ordered securely on-line. If you're looking for straight talk and logical projections regarding what Cuba does - and does not - represent to US carriers, we'd suggest you click here.

Like all Boyd Group International reports, this one tells it straight.

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Europe – Maybe They Could Discover Some Backbone.
Nah. They’re The Discoverers of Stockholm Syndrome

It’s official.

Airlines and air travel are major polluters. Facts not needed. This pronouncement comes from no less a lofty source than the Chairman of British Airways.

"For the industry to play its part in reducing the effects (of alleged climate change being caused by airlines), the people who benefit from it will have to pay for it as well," Mr. Willie Walsh of BA was recently quoted.

When it comes to lunacy, or, more accurately, an industry in full retreat from reality, the European airlines take the cake. The EU carriers have formed the "Aviation Global Deal Group" (AGD), which is an industry effort to shortstop Draconian environmental regulations by trying to convince the governments that airlines confess and admit to their environmental sins, with a clear plan to find the straight and narrow path to ecological righteousness.

If It's Proven Wrong, Change The Name. Under the AGD, the industry would hit up its passengers for pollution fees, for the purpose of initiating “climate change initiatives” in “developing countries.” It's that cap and trade thing.

Yessir, paying a carbon-bounty to the government (be it UK, US, the EU, the Harper Valley PTA, or whoever) will just do wonders to reverse global warming – oops, we mean climate change.

Now that data are showing that the globe might not be really warming, we need another term to prove the damage that humans are doing to the planet. That’s it… climate change.

Fifteen years ago, it was the hole in the ozone. And, anybody remember acid rain? It was all the rage back then. Nobody dared question it. Just like climate change today. Disagree, and you will be burned at the intellectual stake. Like Heathens. Infidels. Heretics. Anybody that dares question global warming… oops again, climate change.

Want to be cruel, insensitive and loutish? Ask a global warming advocate to tell you specifically how much temperatures have changed since 1900, and if they’ve ever changed that much in the past. Or, for a real hoot, ask for a specific number on the amount of CO2 in the atmosphere compared to 1930. Or, ask Mr. Walsh and his oh, so concerned AGD buddies what’s being done about coal emissions in China? Or how much he’s doing to clean up, say, the cement industry in Thailand? British Airways' entire fleet can’t hold a polluted candle to things like that.

Go ahead, try it. Chances are, you'll be treated like somebody at a Grateful Dead concert who thinks "joint" is a plumbing term.

Great. Let's Give Our Penance $$ To Total Idiots. And pertinent to the AGD’s intent that their passengers pay to clean up the mess they’re creating by flying on airliners, inquire just what the government is going to do with the loot they tax-extort out of travelers. Or how, just how, paying bucks to the government in some Third World nations will make our rivers run more clear and endangered species more comfortable?

Oh, forgot. They're going to give the dough to "developing nations."

No strings attached, see. "Developing" means countries that have less than, say, the UK or the US. No need to ask why they have less. They just do. No need to ask how the money will be spent. Guess the UN - that paragon of administrative corruption - will make sure it's done right.

No need to question it - we need to transfer wealth from the capitalist pigs who have earned it, to the poorer countries where their glorious leaders can more effectively squander it. Like some former Soviet states, which haven’t had an honest election in years. Or, to Zimbabwe, where Mr. Mugabe is just about finished sacking what was once one of the world’s most promising prosperous nations. A few billion gouged from airline travelers who have honestly earned their livings will be just the trick to keep him in power for a few more years.

We Thought Y'All Learned From That Chamberlain Guy. European airlines - as well as their colleagues in the New World - rather than have some backbone and stand up for the facts – like, the one about air travel not being an ecological disaster – have decided to take the mea culpa route. The strategy is to admit to their crimes and vow to do something about it voluntarily before the Luddites in the Movement shove airliners back into the hangars where they belong, with the motors off.

Here’s a hint that the Europeans - of all people - should know better than anybody: when you acquiesce to tyranny – even intellectual tyranny – you’ve disarmed yourself and you’ve put yourself at tyranny’s mercy. And, friends, make no mistake, much of the get-the-airlines movement isn’t about rational thinking. It’s about punishing those who have achieved, and forcing them give it away to those who sat on their collective keesters. What the AGD is doing is just that - giving in to this tyranny.

Here's a prediction: The EU Luddites will take whatever the airline industry offers. And then demand more. Remember, this is not about integrity, facts, or honesty.

Here's another prediction: this cap-and-tax, transfer-the-wealth stuff won't do diddly to clean up anything. Those that believe so don't understand the foundation of prosperity - which is something,that they want to destroy.

The EU Luddites - and those in the US - are on a jihad. Just remember, a jihad takes no prisoners.
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Hot Flash - Monday, June 15, 2009

Update On Elimination of Symbols of Corporate Greed
More Progress For Glorious Proletariat Masses

Within a day or two of its bankruptcy and its effective takeover by the government, General Motors moved to become more eco-friendly and more in line with modern political thinking.

It petitioned the bankruptcy court to invalidate leases on several of its corporate jets.

Gone will be these symbols of fat-catism, not to mention environmentally unsustainable modes of moving over-paid enemies of the People across the nation.

The common man certainly is cheering at this victory over what congress has declared as symbols of corporate greed and sloth. But there's more progress to report in the war on the elite who have supposedly milked this nation dry to the point where our Glorious Congress must step in and print money faster than the latest edition of the Sunday Times.

Victories Scored Across The Nation! Last month, Gulfstream laid off 2,000 workers. Dassault Falcon eliminated 153 jobs at its Little Rock business jet facility. This follows Hawker Beechcraft, which has cut 2,300 jobs system wide. Cessna has cancelled the Columbus business jet program as well as the planned construction of the factory that was to build it.

Last month, Cessna also announced closure of its Bend, Oregon plant, which until last year was busily spitting out small single-engine aircraft, each of which was no doubt adding to global warming, threatening endangered species, causing arctic ice to disappear, and were nothing more than baubles to keep overpaid orthodontists entertained on weekends.

That'll teach 'em.

Toss in Rep. Henry Waxman's hobby-lobby cap-and-tax schemes, and we can write finis on general aviation again threatening the common people, at least anytime soon.

Economics, Yes. But... Yes, it's absolutely true that the recession has a whole lot to do with business aviation's problems. Budgets are being slashed, and corporate flight departments are at to top of the hit parade. Existing orders are being cancelled.

But make no mistake: this is not just about a downturn. It's about a political jihad against symbols of wealth or perceived symbols of wealth. General/business aviation fits that bill. It's exotic. It's expensive. And it's not a product that the masses readily use or know much about. It's a perfect target for politicians who care more about making a media splash than they do about integrity.

Any industry whose products are so blatantly painted as those of irresponsible greed - which congress and the media have been doing with business/general aviation since last fall when three auto execs used corporate planes to get to D.C.- isn't operating on a level playing field. It's very clear that there's been a self-righteous witch hunt by sleazy soap-box politicians against the industry. And, to be sure, the man on the street has mostly cheered on this great movement, not having a clue about the facts of the matter.

GA & SUVs - Only Irresponsible Citizens Would Want 'Em... Even when the economy rebounds, big corporate America will think twice about ordering that G-650, and well-to-do individuals (if there are any left) won't be so eager to rush out and buy that used 337 Skymaster. Beyond the issues of political correctness, there's also the issue of an administration hell-bent on limiting use of oil and restricting drilling for more. (Try getting to the grocery store on wind power.) Result: General and business aviation will come with a much higher price tag.

Washington is just sooo focused on "saving jobs" - but only those that meet the trendy smell test. General and Business aviation are perfect class-war punching bags, so those jobs can just go away. Washington won't do a thing to stop it.

And the masses really are cheering. They don't understand. And many don't want to. They're under the impression that the GA industry is a symbol of the rich, and in this new political environment, rich is bad. Achievement and symbols related to achievement - such as private airplanes - are bad. You'd best not disagree for fear of being painted as unpatriotic.

It's what happens when me-too mob mentality replaces rational policy making. It's what happens when people who know better refuse or are afraid to speak out against the accepted "consensus." And that's where we're headed.

This Isn't Bidness As Usual. As far as aviation goes, things have changed fundamentally with this new administration. Blindly assuming that what's been going on in Washington since January 20 is just more "politics-as-usual" is as naive as describing Honolulu a week after Pearl Harbor as "just another day in paradise."

Deal with it: fundamental changes are in place and more are coming - doctrinaire policy changes that don't have the aviation business in mind. Policies are being formulated by people who wouldn't know a G-V from a Popsicle.

For example, FBOs across the nation are feeling the pinch - and it's going to get worse. How many jobs are at stake there? How much airport revenue is at stake. What could be the fallout to our general airports? Deal with it: Washington does not give a rip. It's not on their radar screen.

Or, more accurately, it is on their radar screen. As a target.

Airline and airport industries, take note. The attack has been launched. You're next in line for amateur social architects to try their populist magic.
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In This Week's DataFlash...
Fargo, North Dakota

Airports:USA DataMiner is a powerful analytical tool.

It's used by clients to ascertain relative cost factors for the 767-300 between two airlines. It can provide them with route profitably analyses for transcon carriers in key markets. It will provide relative fuel burn between carriers on specific routes. It gives them comparative capacity and schedule projections for the 4Q at JFK, EWR and LGA.

But it also provides important in-depth reviews of small markets, and the dynamics in play in regard to local air service. They need professional, accurate data, too.

Several subscription options allow competitive analysis of airports across the nation. Subscribers can quickly identify where an airline may be struggling, or where it may be doing lights-out business. Competitive intelligence is a huge advantage for air service development strategies.

This week, Airports:USA DataMiner randomly picked Fargo, North Dakota. We wondered how the Denver dogfight between United and Frontier might be doing. For simplicity, we looked at the last two quarters reported.

In less time than it takes to brew a pot of decaf - a lot less, by the way - the system told us all we needed to know about the competition between United and Frontier at FAR, and pointed to some conclusions - conclusions that weren't obvious when just looking at raw DOT data.

Click here to take a look and get an idea of how DataMiner can assist you in getting the competitive intelligence you need to prosper in the new airline environment.

(c) 2009 Boyd Group International, Inc. All Rights Reserved.
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Hot Flash - Monday, June 8, 2009

Probably, We Ain't Seen Nothin' Yet
Capacity Free-Fall, This Fall?

Here's a simple reality: air travel demand is a function of jobs in the economy.

The two are connected at the hip. The economy goes up, air travel lags a bit, but it goes up, too. The economy goes down, or, even is reported to be going down, and air travel demand goes right along, with minimal lag. (Thank you, Professor Obvious.)

But as obvious as that statement is, a lot of analysts are clueless. Based on events popping up just over the last four weeks, there isn't going to be any turnaround in air travel demand. To the contrary, the immediate prognosis for jobs is in the Crane fixture. This means a portion of the passenger traffic that airlines were expecting to experience in the last quarter of this year and the first one of 2010 won't be there.

The Indicators Are Simple. Too many analysts are bamboozled by what the stock market does. The fact is that the recent run-up has nothing to do with the dynamics that will drive air service demand over the next twelve months.

The market is often just an indicator of what some people think is happening or is going to happen. But it's an indicator with a whole lot of intrusive inputs and enormous emotion. So the market's recent climb to over 8,000 - which is still well below last fall - doesn't really mean diddly in regard to the fundamentals that drive consumers onto airplanes.

The real tea leaves for the future of air travel demand are much more concrete and less subject to subjective manipulation, as is the stock market. Again, it's called jobs. When jobs go away, the dollars available for all sorts of spending - including air transportation - go with them. The NYSE can do it's thing - but when employment drops, air travel's going right along, the Dow notwithstanding.

Actually The Jobs Aren't Lost. They're Just Going to Hubei. Or Taichung. In fact, TARP notwithstanding, stimulus plans not withstanding, core industrial jobs are continuing to disappear from the US. That means we're in for further declines in air travel demand. Probably steeper than currently-planned 4Q schedules are anticipating.

Let's use Shreveport. When the GM factory there was cranking out Hummers and trucks, there were almost 3,000 highly-paid workers spending money that resonated through the community. The facility itself generated strong inbound business traffic - suppliers, sales, support, and GM people going to and from the Detroit RenCen mothership. Despite the stupid nonsense sometimes reported, consumers really wanted to buy these Hummersauruses. They stopped doing so not because of changing consumer preferences, but mainly - with or without a spike in gas prices - because consumers were cut off from credit needed to buy the contraptions.

Result: most of the SHV-GM jobs went away, with a corresponding plunge in air traffic demand at SHV, exacerbated by the overall decline in demand caused by the recession itself. There are pull-backs in other industries, too. Result: a continuing decline in air transportation demand. It's not rocket science to figure this out, at least on a macro basis.

But it's being completely missed inside the Beltway. No, more accurately, it's being intentionally ignored by many of the grand dragons inside the marble playpen, a.k.a. Capitol Hill.

First, we have an official unemployment rate of 9.4% - highest in 23 years. (We were told that's what we'd have if the no-time-to-read-it stimulus package wasn't passed. It was, and here we are, anyway.) That does not bode well for 4Q airline traffic. Yet, the official story is that this is great news, because "we expected worse" - which, at least from the administration's claim that the stimulus would hold unemployment to 8% or less - is sheer nonsense Try not to laugh.

Next, we have tens of thousands more high-paying jobs in the auto industry certain to be eliminated in the next six months, causing thousands more indirect job cuts. (Yup, GM sold Saturn, but the new owner's going to buy cars from Korea, not from the existing factory in Tennessee. And Hummer's been reportedly peddled to some unknown farm-implement company located in the wilds of western China. Having production continue in Shreveport probably isn't in their business plan.) Result: more job losses to come late this year and early next. More decline in airline traffic demand as a result. Bank on it. If your bank is still in business.

The massive spending planned by this congress cannot but be accomplished except by printing money. We don't need a lot of references to the Weimar Republic to understand what that can do. So, people will move to transfer their dollars into commodities to protect themselves from inflation. One of these commodities is oil. Jet-A comes from oil. Jet-A prices will, understandably, rise. So as jobs and demand drop, the cost of tossing an airplane across the skies will go up.

The effects of the job losses at GM, Chrysler, Gulfstream, Dassault, Cessna, et al, both direct and indirect, haven't yet reached the airline ticket counter. This means that their effects on air service demand have not yet been worked into the fall schedules.

Here's what we can expect, most likely, for the fourth quarter and the first quarter of 2010:

Reduced RJ Missions. This portion of the US airline fleet is the most vulnerable to a downturn. If oil prices keep in the $60+ range, plan on additional pull-downs of RJ missions, including some of the recently-restored or recently-implemented "long haul" hub feed missions - over roughly 600NM. In many cases, they're going to be toast.

Frequency Reductions. There will be continued capacity trimming, particularly on major carriers' "bar-bell" routes between their connecting hubs. Hub banks will be in some cases scaled back.

Earlier Retirement of Older Aircraft. Airlines still remain well-positioned to weather this storm. As noted last week, major US carriers have extensive flexibility to shed aircraft. They will get through this, but parking space in the desert may be in short supply early next year.

International Systems Scrutinized. This has already been seen with the delay of several US-China route authorities. Now at risk: those routes operated with low seat-density, long-haul aircraft - i.e., 757s that have been specially configured for flying in what are "secondary" international markets. These are extremely vulnerable to market downturns because of high "seat loading" - each seat bears a high proportion of the revenue requirement, i.e., these operations need very strong revenues on a per ASM basis. If traffic to Turin, or Barcelona, or Lagos, or between PIT and Paris starts to weaken, red pencils will be very busy in airline scheduling departments.

Adjustments. Not Wholesale Service Cuts. Prepare for the news stories that airlines "are slashing unprofitable routes and getting out of cities where they can't make money." The fact is that analyses by Boyd Group International indicate that outside of some experimental markets, there will be very few - if any - airports completely cut by any one carrier. Reduced access, yes.

No Opportunity For LCCs Or New Entrants. Every carrier - including those that may be receiving a stream of new airliners they couldn't defer - will be in big-time reverse capacity gear by late 2009. There won't be any market "opportunities" that will open for LCCs to jump into. It's important to understand that these airline capacity cuts are due to fundamental evaporation of demand. It's fewer people wanting to fly at all. That means start-ups like JetAmerica will have all the potential of the beer concession at a Baptist revival.

Forecast Revisions In The Works. As it stands today, the Airports:USA estimate for 2009 being down in the 9% range compared to 2008 still holds. However, the economic events noted above will have a negative effect on air travel demand that may cause the 4Q of 2009 to be much - very much - worse than expected. Schedule capacity pull-downs in November and December could be as high as 12% year over year. As a harbinger - take a look at May. It's clear that year-to-date capacity cuts are barely keeping pace with declining demand. With the job situation that we're seeing, that's not going to improve.

Any hope for a turnaround in 2010, as predicted by the FAA, is strictly out to lunch.

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Hot Flash - June 1, 2009

Who'd A Thought It A Year Ago?
Airline Industry: The Economic Bright Spot

Revisions to the Airports:USA Forecast for 2009-2010 show trends that point to continuing declines in US passenger traffic levels.

But as far as air service access goes, the picture isn't anywhere near as bleak as it would appear. And certainly less bleak than some of the fill-a-90-second-spot news stories would have one believe.

First, The Hard Reality... While 4Q airline capacity is likely to be cut at least 10% compared to 2008, it may not be sufficient to meet the downturn in consumer demand, which means even more may be yanked out by October-November.

The forecast challenge is that we're in a whole new economic universe, one that has no precedent, and one that is being addressed by "planners" in Washington who're acting like the proverbial monkeys who just discovered a football:

General Motors goes C-11 today. A collection of industrial wreckage due to a sudden 35%+ decline in demand for its products, the economic hobbyists in the administration are engineering a re-organization that will end up with hundreds of thousands of job losses, directly and indirectly. Outcome: less discretionary dollars in circulation, and an indication that businesses across the board have only started to apply the red pencil to travel budgets;

Chrysler may come out of C-11 this week, shed of tens of thousands of jobs, and owned partially but Italy's Fiat, which itself hasn't exactly been the subject of B-school case studies on economic success, and has never been able to penetrate the US auto market. Great partner, eh? Outcome: ditto, above.

Latest GDP numbers show a quarterly decline of almost 6% year over year - a huge indicator that the economy is tanking, regardless of media stories profoundly claiming "it could have been worse." Outcome: ditto above, plus, regardless of any recent upticks in consumer confidence, less propensity for air travel;

The government has tossed out $700 billion in TARP funds, to who knows who (they refuse to say), and the credit markets are still as yet unstuck - meaning access to dollars for growth and investment aren't there. Outcome: all this mumbo-jumbo about how TARP and the don't-bother-to-read-it stimulus bill will bring the economy back is more political hot air than substance. Result: less consumer spending, including on air transportation

Reflecting what's happened prior to these fun events, US enplanements thus far in 2009 are down 11%, although the ATA is predicting summer will only be down 7% year-over-year. Airports:USA projections now indicate a 9.2% full year decline. But - critical point - there are no indications of any enormous reductions in the access levels that most US communities have today.

Now, Another Hard Reality: Airlines Can Deal With It. Obviously, these are not positive for the US airline industry. But unlike automakers, the airline industry is in much better shape to weather this storm.

Virtually all comprehensive network carriers can trim capacity further. None have any millstone orders for net-new airliners. American, for example, does have a comprehensive fleet renewal program - but that's all it is - renewal, not a willy-nilly capacity addition. Furthermore, they have financing for the next batch of new 737s coming on-line to replace older aircraft. Delta has the remaining ex-NW DC-9s than can be easily parked. And all CNCs have some flexibility in cutting out some leased-in RJ flying. With the exception of some LCCs, the US airline industry is very capacity-flexible.

Airports: It's Not Armageddon. Point: while the next 9 months are going to be nasty, the US airline industry is not going the way of GM. That means, despite some of the poorly-researched news stories that will surely be coming out, airports and communities across the nation are not in line for wholesale slashes in air service access.

Cuts in seat capacity, yes. But access to the rest of the world will still be there. To be sure, as fuel goes up, plan on more long-haul RJ hub spokes (over 600 NM) - including some recently re-instated - to be eliminated. This will be particularly true in auto-centric markets out of Motown, for example.

Then there's the air traffic control issue. At this point, there is no option but for carriers to throw in the towel and cut the size of some hubsite connecting banks. This will reduce frequency into key metro markets for some smaller communities.

The hard truth is that the ATC system cannot handle the nation's needs, and there is no fix in the works. Over the last 20 years, the senior management of the FAA has proven itself totally incapable of addressing the issue, NextGen technobabble notwithstanding.

But regardless of these realities, there are no indications that there will be wholesale airline failures or airline system changes that will economically hamstring mid-size (roughly 200,000 enplanements) and larger airports. (Essential Air Service communities are another story - simply because of a lack of operators willing to take on such contracts, not to mention a lack of flying machines suited to the application.)

Watch Out For The Federal Dragon. One unknown is what this new administration plans in regard to its inevitable assault on the airline industry and air travel in general.

We know they've already declared air transportation to be environmentally questionable. Trains are better, see. Just look at Europe, regardless of the fact that those systems lose money - taxpayer money - by the carload.

We know that the DOT secretary has pledged his loyalty to Carol Bronner, the weirdo environmental eminence gris in the Obama Administration. We know that it's official policy that any uses of oil products is bad. And folks like Senator Schumer would just love to get their legislative paws on the airline industry, to teach it a lesson.

Assume that these observations are over-statements at your own risk.

But the point is that, short of what may be economically-damaging fiddling by the administration, what's on the horizon indicates that most airports and communities do not face the need to re-structure their terminals into bowling alleys and pizza joints. The US airline industry, barring another $80+ oil price level, is not going the GM route.

Unless, of course, the administration wants it to.

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Hot Flash - May 26, 2009

Like An Earthquake In Imelda's Closet?
Traffic 2009: The Other Shoe Has Yet To Drop

The early tea leaves are not encouraging.

Southwest has indicated that May traffic fizzled. Continental is cutting - on relatively short notice - several longer-haul RJ markets out of of EWR. It's likely that some secondary international routes may be cut by more than one US carrier before the end of the third quarter.

Face it. Remember the grand stimulus package last February that just had to be signed right away before anybody but its authors could read it, to bring fast relief to the nation? It sure isn't doing all that quick magic - at least as yet - to encourage consumer confidence.

The latest schedules filed indicate a 6.7% year-over-year decline in capacity for June. It is entirely likely that August will eventually pared to 10% or more below 2008. Adding to the fun airline planners face are oil prices - again heading up as investors seek safe havens from a dollar that's under huge downward pressure - downward pressure that in itself jacks up the cost of a barrel of crude. Plan on it: 4Q capacity will get trimmed a lot more than current schedule filings indicate.

This again points to the need for airports and communities to have a strong and pro-active air service plan. Remember, when airlines face traffic uncertainty and oil heading back toward $80, route-cut decisions can sometimes be made on a drive-by basis as the VP cruses through the planning department on his way to get chewed-out by the CEO. It's too late when the phone rings with the pink-slip message. Communities that keep airlines aware of economic and other issues are less likely, all things equal, to get zapped than those that are out of sight and out of mind.

We suggest airports log onto AirportSnapshot.com and do a couple of quick passes at the Nonstop Market Financial Performance option. It can give an idea of how key markets are performing. Or non-performing.
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Regional Airline Association Conference
Round Table: Future of The Airline Industry

Boyd Group International was honored to participate in the 2009 Regional Airline Association Convention, and moderate the opening session, which was a candid exchange of views between virtually all sectors of the industry.

The commuter airline sector was represented by Dan Wolf, President of Cape Air. The small lift provider sector ("regional airlines") was ably represented by Chip Childs, CEO of SkyWest, Jim Ream, CEO of ExpressJet, and the major airline sector was represented by Dion Flannery, President US Airways Express, Cindy Szadokierski, VP United Airlines UAX Services, and Don Bornhorst, SVP Delta/Delta Connection.

The session was opened with an outline by Mike Boyd of the ominous clouds on the Washington horizon. These include the administration openly looking for "environmentally sustainable alternatives" to air travel - a policy that falsely accepts as prima facie fact that airlines are sloppy polluters.

The inept federal intervention in the auto business - which is driving tens of thousands out of jobs by willy-nilly closing of independent dealerships - was given as an example of how federal economic policies seem sometimes to be designed by "advocates, activists, and hobbyists" instead of business professionals. Combine that with arbitrary presidential environmental directives and dangerous cap-and-tax legislation, and it's clear that the airline industry could be next in line for a sound federal sacking, unless it steps up to the plate and clearly articulates its role in the national economy.

Finally, the point was again made that referring to this sector as the "regional airline industry" was akin to referring to one's iPod as a Victrola. In fact, it is neither "regional" nor an "airline" system any longer. It is now an inseparable part of the total air transportation system, providing lift that represents over 30% of all major airline departures.

Declining Fleet Availability. During the round-table, the challenge of follow-on airliners was raised. On the small end, Cape Air's Cessna 402 fleet is providing service in a range of markets across the nation where other aircraft either can't economically perform, or simply are not available. But they're limited in number and out of production. There are also limited numbers of 19-seat turboprops left for EAS service applications, and there are no new-generation aircraft on the drawing boards.

By the same token, economic and customer preferences have caught up with 50-seat jets, and that means faster retirements are coming - earlier than a lot of owners expected. (Boyd Group International projects over 800 will come out of service by 2014.) Like with smaller turboprops, there simply is no business case for any manufacturer to spend a couple billion bucks to design clean-sheet follow-on airliners. That means the airline industry is looking at a capacity-floor of 70 seats. And a segment-cost floor represented by 70-seats, too.

The Business Relationships Are Changing. Another area touched on is the trend now moving away from simple fee-per-departure arrangements between majors and their small jet providers. The trend is emerging toward having these providers take on more of the risk, which modifies the safe role of just being a lift provider. The main driver is that there simply is an excess of 50-seat jets due to airlines cutting back and deteriorating operating economics reducing the range (often, literally) of missions that 50-seaters can economically perform.

And There Were The Media's Opinions, Too. The administration's stated affinity for a new high-speed rail system was discussed in regard to its affect on the airline industry. While laudable, there are only a limited number of regions where such a program can effectively replace air service.

Unfortunately, some of the local Salt Lake City media in attendance put their own spin on the Round Table. Any issues raised about the administration and its policies were carefully avoided. One newspaper, commenting on statements regarding the challenges of a new-generation 50-seater, misreported it, writing that it would take years to develop a "clean-burning" 50-seater to compete with the Obama administration's plans for "efficient" high-speed rail.

No such comments were ever made. But the reporter used the event to express his opinion. Not a big surprise.
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Also At The RAA Conference...

Boyd Group International also held a business-card drawing for two Aviation Forecast Summit models, one an ERJ-190 provided by Embraer, and a CRJ-700 provided by Bombardier. We want to congratulate Clement Upke, Marketing Executive of Houston Airports System and Leslie Gavin, Director Route Development, Winnipeg Airport Authority.

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Hot Flash - May 18, 2009

Update:
Small Community Air Service Development Grant Program
The Straight Facts...

Recently, some airports may have been misinformed into believing that the 2009 SCASD program will be funded to $30 million and the filing deadline is the end of June. Apparently they're being urged to move quickly in getting their applications in before time runs out.

This is the kind of stuff that must have P.T. Barnum smiling broadly from wherever he is today.

Such information is entirely, and maybe intentionally, false. Here are the facts: DOT has advised that as yet there is no hard date for issuance of the docket, let alone the filing deadline. Even if the docket were issued today, a June 30 deadline would be tight. But the fact is that they have not done so at this time, and any information to the contrary is not accurate. Furthermore, DOT has made it clear that the program funding is $8 million. Would that it could be $30 million, but it's not.

We verified this with the DOT. Apparently some other entities haven't bothered. Or, maybe they had different intentions. For more information - factual information - on this year's program, click here.
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Looking At The Numbers...

22%. The percentage of flights in March that were more than 15 minutes off-schedule. Not "delayed," but off the already-bloated schedules airlines must file to adapt to the outdated air traffic control system. Comparing it to last year, it's being touted as an "improvement." Wonderful. Consumers have a more than one in five chance of being on a time-defective flight. Real quality we can all be proud of.

40. The number of years that American Airlines has had the same paint scheme. The blue-white-red stripe (top to bottom) motif was first introduced in 1969, and in some cases initially it was tape, not paint. The last of the orange-lightning schemed AA airplanes were re-done by 1971. Some other carriers have had a half dozen paint scheme variations over the same period. United's had at least five, not counting the first United Shuttle and the Ted thing. At Delta, it seemed that they offered every new CEO a compensation package that included his choice of airplane livery. Sherwin-Williams stock probably went up every time there was a change in the carrier's front office.

-11.5%. The percentage that enplanements are down year-to-date in 2009. Airports:USA Forecasts indicate that this decline will slow by the end of 2009, pretty much targeting our projection of a year-over-year decline of between 7.5% and 9.0%. That assumes the space cowboys in Washington don't continue to screw things up with more nitwit schemes to manipulate the economy back to health.

-7.0%. The ATA's projection of year-over-year traffic for this summer, which, in light of the statistic above, now shows a slowing of the traffic decline.

-6.7%. The cut in airline capacity scheduled for this June v last year. Give or take some statistical noise, that's roughly equal to ATA's projection for traffic declines. This indicates that we may see some real pricing traction for the industry by the 4th quarter. By the way, as we announce below, you can now see airline-by-airline capacity data at AirportSnapshot.com.

$329,000. The estimated cost of the stupid White House stunt that had a presidential VC-25 (nee 747) buzz Manhattan, causing near-panic on the ground. Nobody in the administration has yet to offer credible explanation, except a ridiculous comment that the accompanying F-16 flying parallel was there to take pictures. Maybe the buzz-flight was to give Michelle and the kids a joy ride. One thing's certain: for an administration that claims "transparency," the only thing this episode made transparent was that we may have a pack of rank amateur yo-yos running parts of the government. Memo to Obama: Want a picture of Air Force One over New York? Download PhotoShop and start creating. Your kids can probably show you how. And leave the VC-25 on the ground.

Looking at the one official picture the White House finally issued, there are more questions raised, although not for the swooning WH press corps. Do F-16's have a camera gun on the side of the fuselage? Maybe they do. Or was the pilot in the fighter using a hand-held Kodak Brownie? Maybe the picture was from PhotoShop. Doesn't make much difference now. The taxpayers are still out 329 grand for a snapshot. Change we can all believe in.

$16K. The reported annual salary of the co-pilot on Colgan Air 3407.

0. The professional level of aviation knowledge and amount of research done by some in the media who took the $16K factoid and loudly postured it as if "feeder airlines" (another indication of poor research) routinely poach the drive-thru at McDonalds when they need to hire pilots. Learning about the pilot profession, FAA standards, the business model of entities like Colgan, etc. are things that don't get in the way for some people in the media.

$20. United's new fee for checking the first bag, up from $15. Read it and weep, consumerists: if the passenger will pay it without a whimper, why not? Southwest, with no fees, isn't currently besieged with disgruntled passengers from airlines in the ancillary-revenue camp. Some, maybe. But not a stampede. The open question is whether or not the number of new "fee-averse" passengers WN may be getting will bring in as much or more than the revenues they'd collect by charging for the first two bags.

$106.39. To analyze that question, this is Southwest's average fare revenue per passenger in the 4Q of 2008, from the Airports:USA Airline Financials package. So that means each passenger that switches to WN as a result of other carriers' fees represents 5.3 $20 baggage charges ($106.39 divided by $20). Apparently it won't take many such passengers to make up for what Southwest might otherwise gain from bag charges. If just 1,000 consumers a day - which is a drop in the Southwest enplanement bucket - are diverting to WN, it's almost $40 million a year in net new revenue, not to mention happy passengers.

�5. The minimum fee passengers must pay to get a boarding pass on Ryanair. And that's the charge for getting it on-line, off the airline's website. If you wait 'til you get to the airport, you'll need to cough up another 40 quid - or you don't go. This brings the ancillary revenue game up to a new level. First, it was charge'em for checking a bag. Then, hit'em up for an on-board soda. With this new Ryanair concept, there's a now an additional fee if you insist on actually using the ticket you've already paid for.

Next? The sky's the limit for airlines with any sense of innovation. A "consultation fee" for hitting the flight attendant call button? How 'bout charging for a seat in the departure lounge? Putting a toll gate on the jetway? Renting overhead bin space? Or, maybe an exit fee for being allowed off the airplane at the destination.

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AirportSnapshot.com
Airport/Airline Capacity Reports Now On-Line

We're gratified by the number of aviation and aviation-related professionals who have signed on to get information from this new data source, just in the first week. Now, we're expanding it.

In addition to the O&D and Segment Financial Performance Reports, we've now added a Weekly Capacity Update, with two downloadable reports.

Airline Capacity Shifts. This report compares departures and seat capacity for the next month, airline by airline, compared with the same month last year.

Airport Capacity Changes. This compares total departures and seat capacity for next month compared with the same month last year, for each of the nation's 25 largest airports.

It's not static data, either, as these reports are updated every Friday.

AirportSnapshot.com is a valuable data tool, and is provided to showcase the enormous Analytical Firepower™ of Airports:USA DataMiner from Boyd Group International. Be our guest - click here to register and log on.

(c) 2009 Boyd Group International, Inc. All Rights Reserved.
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Hot Flash - May 11, 2009

New Complimentary Data Portal
Now Available From Boyd Group International

Introducing AirportSnapshot.com.

We want to showcase the Analytical Firepower™ of Airports:USA� DataMiner™, so we're implementing a new website that provides valuable data and reports for aviation professionals. And it's complimentary. Just register and you've got access to the following traffic and airline data for the latest reported quarter, directly from Airports:USA� DataMiner™:

Access the Top Ten O&D Markets for any airport in the nation.

Get Airline Segment Financial Performance for any nonstop segment operated by any US airline. Airports can get an incisive view of the load factor, level of connecting traffic, local and beyond fare yields, average fare paid, and more. A good indicator of how well a feed market's doing. Or not doing.

Take a look at Market O&D for any set of US airports.

Our objective is to give a feel for the analytical power that subscribers to DataMiner have right at their fingertips, 24/7. So log on to AirportSnapshot.com, and be our guest.

It's A Valuable Resource. Airports, media, and financial planners can access AirportSnapshot for a quick view of what the O&D is at Spokane. Or JFK. Or, take a look at what the top O&D markets really are at OKC. Get the O&D between ALB and GEG, along with the average fare, the gross and net yields, and the circuity (miles routed v nonstop miles), and more. Review how AA's service from HNL is feeding DFW, and how much of that traffic is local, and what the load factor is on the segment.

The catch? The data are for the most recently-reported quarter only. (Of course, it's also the most recently-revised data for that quarter, which is typically not the case with other vendors.) And it's a limited set of reports - only a tiny fraction of the total number of decision tools that subscribers to Airports:USA� DataMiner™ can access. Still, it is valuable information, in addition to getting more folks familiar with the advanced data and forecast services from Boyd Group International.

Data Without Industry Expertise = Bad Information. What sets DataMiner™ apart is that it is developed and managed by aviation planning professionals, and is far and away more comprehensive and reflective of the real world than any other source.

Today, it's no great achievement to pull down raw tables from the DOT/BTS and slap them into database software. Anybody can do it. Unfortunately, many vendors consider this information to have credibility roughly on a par with the tablets Moses dropped off on his way home from Mt. Sinai. But such reports are riddled with misleading data. It takes strong industry experience to identify these, and reconcile the raw data to the realities of the airline industry.

Raw DOT data, for example, may erroneously indicate that LAX is Bakersfield’s #1 O&D market. Or DEN is the top place passengers fly to from Cheyenne. The fact is that there’s almost no O&D traffic in these markets. Due to the reporting system, the connecting traffic is not accurately reflected. Another red flag: if the passenger numbers at any mid-to-large airport all end in zero, you've got a report that's just regurgitated native DOT tables. And it's not ready for prime-time planning use.

DataMiner’s advanced software and the professionals at Boyd Group International make sure that our subscribers get better data – accurate data they can use and rely upon.

So, log on to www.AirportSnapshot.com and see why data from Boyd Group International is the best and most comprehensive available anywhere. Once you do, it’s likely you’ll want to join the aviation professionals who have the competitive edge with a full subscription to Airports:USA� DataMiner™.

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Hot Flash - May 4, 2009

The Administration: Another Aviation Stumble

There must be political reincarnation. Dan Quayle is back. And he looks just like Joe Biden. It's Gaffe City with our new Veep.

The classic, of course, was when Biden urged some guy in a wheelchair at a political rally to stand up and take a bow. Later, during the campaign debate he proudly stated he regularly talks to the common folk at some local home town cafe. A cafe that'd been closed for years.

The latest is the Veep's advice last week on national television, urging people to avoid airline travel for fear of getting swine flu. It was yet another example of how really oblivious this administration is to aviation, how it works, and the enormous value it has to the national economy.

There Is A Message Here. And It's Not About Swine Flu. This is not a question of whether Biden should be passing out medical advice or not. Over the past six months, he's proven himself to be a laughable loose cannon, without much credibility, but causing repeated embarrassment and distraction to a new president trying to deal with all sorts of mayhem. Obama's probably put a child gate on the doorway to the Oval Office, just so he can get some work done without Biden barging in.

The real story is the total lack of understanding of the damage that dumb comments from uninformed public officials can do to an industry that's a vital part of the US economy. Telling the nation to stay off airliners was no different in Biden's mind than telling citizens to stay out of the rain. His view is that both can be detrimental to your heath, see.

What Biden is oblivious to is that rain doesn't have thousands of employees dependent on it for their livelihood.

His inept, thoughtless comments directly threatened the jobs of thousands of people in the airline industry. He has no expertise whatsoever in disease control. And quite obviously, Biden has no clue that a recommendation from the Vice President of the United States might have consequences, even from a walking parody like him.

To be sure, the ATA, the Washington Post, and others immediately came out swinging, informing the public that Biden was "misinformed" or he "misspoke." Biden's office clumsily tried to backtrack, only making the guy look like a bigger buffoon. But the damage was already done.

Later, the president's press secretary, when asked by an ABC reporter about Biden, went into some dishonest jive babble about what the Vice President "really" had talked about. To which the reporter responded - "that's not even vaguely close to what Biden said." Undaunted, the press secretary retorted, "I understand what he said, and I'm telling you what he meant to say." Thank you, Mr. Press Commissar.

The Late Great General Aviation Industry. But this follows other ominous cheapshots at aviation that indicate it's an industry considered by Washington to be mostly for political target practice.

In one cheap stunt after another, Congress and the administration have essentially declared business jets to be evil tools and enemies of the people. Tell that to the thousands that have been laid off at companies like Gulfstream, as big backlogs evaporated. 'Course, Gulfstream can't say a word, lest there be retribution against its parent, General Dynamics, which depends on a lot of defense contracts.

It is true that the recession has contributed to the decline, but that's not all that's driving the plunge in general aviation, and probably giving Trade-A-Plane a land office business in new classifieds. Politically, buying a bizjet is now about as acceptable as doing a coke deal in the corporate boardroom. Selling off business jets - or closing the entire corporate flight department, as the towers of jelly managing GM did - is the in-thing to show you're "patriotic." Even if it's the wrong thing to do.

But Wait! There's More. Three factors are now coming together to zap this side of the aviation industry. One, obviously, is the recession. Another is the pandering self-righteous congressional witch hunt against business jets. And next will be the expected onerous taxes on petroleum resulting from the crackpot cap-and-trade zealotry in congress.

The result is that the entire general aviation industry is starting to fold up like a two-bit suitcase. Cessna just announced the closure of its Bend, Oregon plant (the former Columbia Aircraft facility) which just a year ago was going great guns. It's also canceling development of a new-generation business jet and a proposed plant planned to be built in Columbus. All the people Cessna was going to hire there are out of luck.

Cessna still plans to go ahead with the 162 SkyCatcher light single. But that means zip, because it'll be built by Shenyang Aircraft Corporation in China, not in Bend, or Wichita, or Columbus, or Independence. And not by American workers.

It isn't proper nor accurate to suggest that this has anything directly to do with the recent Cessna cutbacks. But - attention Obama administration - US jobs are going away, and part of the reason is that you're oblivious to the needs and realities of the American aviation industry.

Now, it's the airline industry that's in the cross-hairs. Yes, Biden's comment was a glib blooper - but it does show how low aviation is on the administration's food chain.
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The Flu Will Go Away. But It's Not The Real Problem
US-Mexico Air Service Demand: More Than Sniffles

The airline capacity cuts to Mexico due to the swine flu scare got a lot of press last week. Not surprising.

But these cuts are actually just the latest body-blow to US-Mexico air service demand. Long before it was fashionable to wear a face mask on the subway, traffic demand was already taking a dive due to two other dynamics - ones far more dangerous in the long term to US-Mexico air commerce than the swine flu.

It's Not What's In The Water. It's The Lead Content In the Air. Fear of getting the flu has cut traffic to Mexico, true. But fear of flu doesn't hold a chalupa compared to fear of getting one's head cut off by a disgruntled drug kingpin. Or, instead of getting blown away from one too many Margaritas on a warm beach, literally getting blown away, caught in the middle of an ad-hoc firefight between a drug cartel and the Mexican Army. To read the stories, folks in El Paso must be finding it tough to sleep at night, what with all the shooting going on across the border in Juarez.

Needless to say, this doesn't accurately describe Mexico. But it does describe a lot of the media reporting that's painting Mexico as an off-Broadway version of Vietnam. Except this time the 'Cong have a profit motive.

Business Traffic Was Already Drooping. The other, already-seen hit to US-Mexico traffic is the near-collapse of the auto industry. Much of that high-yield business traffic to places like Saltillo and Chihuahua has fallen faster than orders for new Chevy Tahoes. No need to visit the factory south of the border when there's 120-day supply of cars at dealers across the nation.

We've seen this also in US markets. For example, Delta's cut nonstops between Shreveport and Detroit. When the GM Hummer production was keeping 2,800 folks employed, and before the clowns in Washington trashed consumer credit channels, the route worked. Now the employment's down to less than 800, and GM is planing to dump the Hummer line entirely. Result: traffic demand between SHV and the GM Mothership can now be found under a microscope. (By the way, we're reviewing demand dynamics such as this and other effects of the downturn for a number of our client airports, so they can restructure their air service development planning. It's a new world.)

This Is Long-Term. Getting back to Mexico, the flu and the fear of it will abate. But the other two challenges to rebuilding air service demand won't. The violence south of the border will continue to get above-the-fold play in the US media.

And as for business traffic, particularly the once-robust auto-centric revenue streams to Northern Mexico, forget it. There is no telling what other violence Washington may inflict on the US auto industry. Everybody there is now "a car guy" - including Obama - spouting politically-motivated solutions to problems they don't understand. The Chrysler mess is just the start. For airlines, all this points to deflated demand to those industrial points in Northern Mexico. Bottom line: plan on trans-border traffic to remain depressed for the long term.

Face it: there's no vaccine for the fundamental problems US-Mexico traffic faces.
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Hot Flash - April 27, 2009

When Statistics Aren't Information
In Fact, Sometimes They're Misinformation

Nothing's more dangerous than information in the hands of people who don't understand it. Particularly aviation data.

When the DOT's February airline statistics were released a couple of weeks ago, the overall headlines trumpeted that traffic was down, and so were delays. All very nice, but all very misleading.

That's because raw DOT data is the basically just numerical moonshine right out of the still. Might taste great, but it can make the user intellectually blind. It needs a whole lot of further distillation and refining before it can be consumed safely.

Basic Industry Knowledge Is Critical. DOT data are collected and reported in a manner that absolutely requires the reader to have in-depth understanding of the airline industry. For example, there are consultants who peddle clueless data showing SkyWest as an independent "commuter" when in reality it is carrying passengers for United, or Delta, or Midwest. The result is under-reporting of these larger carriers' traffic at specific airports. But, golly gee, since it comes from the guv'ment, it just must be accurate, the amateurs claim.

Not only that, but anybody can download DOT data, feed them into a software program, and then claim to have great information. But without strong expertise in the structure of the airline industry, the results are essentially garbage.

News Flash: A "Certificated Carrier" Isn't An Airline. One reason that there's a lot of Charlatan information out there is that DOT data are reported by "certificated carrier" - which, unfortunately, the uninformed assume is the same as "airline." The reality is that airlines such as American, United, Delta, and Continental are combinations of "certificated carriers" providing service under a single airline brand.

Passengers flying on Delta Air Lines may be carried on one or more of at least six "certficated carriers" other than Delta itself - SkyWest, Comair, ASA, Pinnacle, Mesa and Republic - each of which report data to DOT independently, without aggregating it to the customer airlines they provide lift to - the airlines that actually apply the lift of these "certificated carriers" as they see fit.

It's essentially the same as what's done with the airplanes that Delta (or United, or American, etc.) leases from GECAS or ILFC, the only real difference is that these come with a crew. The consumer doesn't book on any of them.The seats are booked by Delta. The ticket revenues go to Delta. The passenger is Delta's.

And this is where a lot of consultants, a few in the media, and a whole passel of university academics fall off the Intellectual Trolley. They drink the DOT 'shine without a clue regarding what it really is. And from a factual perspective, their conclusions are blind.

If You Can't Book'Em, You're Not Bumping 'Em, Either. Here's one example. According to February DOT stats,the worst airline for involuntary bumpings was supposedly Atlantic Southeast (ASA), with a rate of 3.83 out of every 100,000 passengers left seatless at the gate. The media and academics got their paws on this information and proclaimed to all: ASA overbooks its flights - painting it as if you've got House Odds of being oversold if you book on ASA.

But the truth is that ASA doesn't overbook anything. It has no ability to do so. It doesn't even have its own CRS system, and ASA doesn't take reservations. (Note to the academics: try to go to the phone and call ASA's reservations number. You can't.) ASA leases all of its aircraft to Delta, which handles reservations and route planning. It's the same with Republic - it just provides airplanes to United and Delta. They are not a stand-alone airline. But DOT requires reporting by certificated carrier, not by airline system. And that's where a lot of misinformation comes from in regard to the performance of the airline industry.

These are yet more reasons subscribers to Airports:USA DataMiner have better data to make better decisions. DataMiner addresses these inherent problems. Other data sources don't.

Info For The Media. In regard to this subject, we thought we might go through a couple of past points regarding the care needed when analyzing DOT data.

Bumping Data Is Often Misleading. "Oversale" statistics focus mainly on the number of passengers who are involuntarily denied boarding. Okay. But the definition of "volunteer" varies from carrier to carrier. For those of us who speak English, a "volunteer" is a person who has the choice of going or not going and chooses the latter option of his own free will. But several airlines speak a DOT-approved dialect that's different. To them, a "volunteer" is anybody who is denied boarding and accepts any form of compensation. A voucher for a ham sandwich magically turns the consumer into an instant "volunteer" whether they want to be or not. Kinda like the Army.

DOT Does Nothing Much With Consumer Complaints. In terms of actually getting action, writing a letter to the DOT is only slightly more effective than howling at the moon. Nobody at the other end really can do much with the problem - the DOT doesn't have the staff to investigate let alone take any action on airline consumer complaints. All they can do is just categorize and file them. Right or wrong. Typed or written in crayon. Literate or illiterate. DOT just checks a box. That's all.

Airline Rankings Can Be Skewed. Since the DOT can't really investigate complaints, nobody knows if they're even valid. Combine a long ATC delay with one passenger who sets himself up as a "mob leader" and poof!, a dozen DOT complaints are generated from gate 12 at LaGuardia. DOT has no idea if the complaint even makes sense. You can complain that your fruit salad was wilted. Or that grandma was attacked by a Klingon in the lavatory. It just gets turned into a check mark against the airline.

Complaint Filing Isn't Scientific & It's Not Secure. Now that it can be done via the internet, any high school punk whose .357 is in the shop can entertain himself in the meantime by filing bogus complaints. Or a passenger with a grudge can file several over a period of time. The DOT has no idea. But such shenanigans can put a carrier's rating into Crane fixture of DOT rankings.

Airline O&D Data Isn't Reliable In Raw Form. As noted, "certificated carriers" such as SkyWest, Pinnacle, and Republic are in the business of leasing aircraft and crews to customer airlines - and to more than one airline, too. As reported, that Republic passenger might be a United passenger. Or, a US Airways passenger. It takes analysis and review by professionals who are conversant in current airline structures and schedules to properly apply these O&D to the right airline brand. And SkyWest and Republic by the way, aren't independent airline brands.

DOT data are not inherently bad. They just need a lot of processing - work that some vendors don't do. It gets down to this: when reviewing airline-related data it's caveat reader.

For more information on Airports:USA DataMiner & Forecasts, click here. It's real data from aviation professionals, for aviation professionals.
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This Week's Data Flash
Week-Over-Week Flight Schedule Tweaks For August

We take a look at Southwest's latest filings for its planned schedule for August, 2009, noting the frequency and capacity shifts made over last week's filing.

This data, which is sourced at Airports:USA DataMiner from our partner Innovata, LLC, clearly shows that there are strategic shifts at WN - pulling back at some key airports, such as MCO and DEN - likely due to less point to point flying and more concentration on generating connections. Click here to go there.

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Hot Flash - April 20, 2009

"Never screw up on a slow news day"

That, supposedly, is attributed to George McGovern in the 1972 presidential election. If nothing else is going on, the media can latch onto something relatively minor and turn it into a contest between outlets to see who can do the most stories on a subject that's mostly intellectual air.

It happened last week to United Airlines.

It boils down to this populist concept: when you board your flight, and find that your assigned seat 14B is partially occupied by the person "of substance" in 14A, it is unreasonable for you to complain. Sure, somebody else is taking up what you paid for, but if you object, well, you're insensitive. You're a bad person. You should gladly let the man in 14A have your seat. Otherwise, you are just biased and at least bordering on hateful. It isn't that guy's fault he weighs 300 pounds. But it's your responsibility to accommodate him. Even if you end up seatless and not going. You must understand, see?

United, typical of their front-line customer service (which, truth be known, really is excellent - among the best in the industry) attempted address this issue professionally and fairly by allowing gate staff the discretion of moving passengers around to accommodate this type of situation. If that didn't work, United joined other airlines in requiring passengers who require two seats to pay for them, a policy that is not anything new to the industry.

But it hit the press big time- "United To Charge Overweight Passengers More." Or "United Takes Aim At Obese Passengers." The usual consumerist twits hit the news shows, railing against the airline industry. United, according to the general tenor of many of the news stories, was coldhearted and piggish. Of course, none of the man-on-the-street interviews asked, "how would you feel if the lady next to you insisted on taking half of your seat?"

But let's cut some slack here. It really was a slow news week.

Obama was in Latin America, apologizing for our nation, doing near high-fives with fun emerging dictators like Hugo Chavez. Seven congress members returned from Cuba, agreeing whole heartedly that Castro, a man that persecutes free speech and has trashed his people into near-poverty over the last 50 years, is right: America is the one that needs to change. And, of course, in an unprecedented event - even more so than during the Vietnam war - hundreds of thousands of people took to the streets across the country to peaceably take advantage of their right to protest what they feel are bad public policies.

Don't want to bother the public by doing too much coverage of minor stuff like that, don't ya know. The latter event - the nationwide protests - was something the New York Times pretty much ignored completely. Thank heavens. The people of New York City have enough to worry about. They don't need to know that lots of people across the nation are upset about things like taxes, scofflaw cabinet members, and spending that makes no sense whatsoever.

Nope, not much of interest happenin'. So it's easy to see where United's attempt to actually improve customer service was a godsend to keep those 6PM news shows interesting.

Thanks, United. No attempt at a good deed on the part of an airline goes unpunished.

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More Proof Aviation's In For A Tough Time

It is time to stop dancing around the politically-correct Maypole. What's going on in Washington isn't going to be pleasant for aviation.

Point: The president, flanked by a smiling and adoring Ray LaHood, last week announced a $13 billion program to build high-speed rail. General corridors were mentioned, but there's no hard plan yet. Except that they know it's $13 billion that's going to get appropriated. Great planning.

No hard, independent analyses of the cost/benefit of the program, of course. "We all know" like good little sheep, that rail is much more "environmentally sustainable" than other modes of transportation. "We all know" that rail is soooo much more efficient - we don't need to do any pesky analyses. We need not do any reviews of the environmental effects of generating the electricity to power these things. No need for any unbiased and independent reviews of the core traffic demand, and certainly no independent environmental reviews are needed regarding effects on the countryside that these trains will cut through.

But we can rest assured that some of the usual suspects in the consulting industry are just licking their chops to get contracts to concoct exotic and glowing studies, proving the wisdom of the administration's plan. All for a fee, of course. Intellectual prostitution doesn't come cheap.

So, that's the plan - $13 billion for some kind of undetermined rail system that will be very expensive to build, and for mid-to long haul use, may not be economically-viable. And how much has been mentioned for real improvements to aviation infrastructure? Oh, yeah. The Administration and Congress are about to lavish $7 million on the Small Community Air Service Development Grant Program. Down for $9 million last year.

But not to worry: you better write this down - this Administration has put air transportation right up there with coal-fired powerplants as far as spending priorities go. Airport and airline industry alphabet groups had better take note.
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Finally: Let's Kill Small Community Air Service
It's Unsafe, See?

Part of the House version of the FAA re-authorization - spearheaded by that alleged aviation fan, Rep. Oberstar (D-MN), includes codicils that, if taken to their logical conclusion, will require small commercially-served airports to have full-time 24-hour ARFF on duty. One airport - Elmira - has noted that this would mean hiring 43 full-time staff.

Needless to say, it's one of Rep Oberstar's more brilliant concepts, and a sop to special interests.And it will make air service to many small communities economically impossible.

Just like a lot of folks in Washington want.

As for Oberstar, wonder if he's broken the news to the voters in Hibbing, his home town?

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

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Hot Flash - April 13, 2009

Southwest & LGA
Just Say, "Ka-Ching"

"Southwest To Shake Up New York Market!"
"Southwest Effect Arrives At LaGuardia!"
"Watch Out, Delta Shuttle. Southwest's Coming!"
"More Point-To-Point Service For NYC!"

If one puts any credence in "the consensus," Southwest's entry at LGA is going to be the biggest deal since the Indians pawned off Manhattan to the Dutch for $23 bucks. (The natives then moved to New Jersey to avoid the New York state tax bite.)

Yessir, that "Southwest effect" is gonna turn the Big Apple on its ear, the consensus is telling us. Incumbents better watch out - fare levels are fixin' to come down faster than shares in a Bernie Madoff fund. And, boy, if and when Southwest starts an East Coast shuttle, getting to Boston and Washington from the Big Apple will be dirt-cheap.

That's pretty much describes the all-knowing consensus, which usually at the end of the day doesn't have a clue about the subject matter.

Success, Yes. But Not What The Parrots Are Reporting. Write it down: this LGA move is not about what Southwest will do for New York. It's about what NYC will do for Southwest. The real story is that LGA is yet another indication of how Southwest is successfully responding and evolving to adjust to the new airline industry. Competitors, take note.

Boyd Group International has just completed a Research Review that addresses much of the silly lore that's being trumpeted about Southwest's LGA strategy.

New York isn't going to be turned on its ear. But Southwest is going to clean up. Click here to review and download the Review.

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This Week's DataFlash: LGA-Chicago Capacity

Relating to the Southwest entry at LGA, the DataFlash provides an Airports:USA overview of the market that the carrier will be dealing with when it starts service on June 28.

It is another example of how DataMiner can give subscribers the analytical firepower to get a clear view of the future. Click here.

(c) 2009. Boyd Group International. All Rights Reserved
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Hot Flash - April 6, 2009

In This Week's DataFlash...
Analyzing Airline Strategies

Hard data is key to understanding and analyzing an airline's strategies. This week, we give a step-by-step example how subscribers can apply the power of Airports:USA DataMiner to accomplish this. Click here.

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Tune In For Crocodile Tears
And Feigned TV Outrage This Week

Airlines have no duty to provide
passengers "with a stress-free flight environment."

This was the fundamental finding of a judge in Little Rock last week in dismissing a suit from a consumer claiming that American Airlines had "illegally imprisoned" her for 9 1/2 hours on the ramp at Austin in 2006.

The judge made it clear in his ruling that American screwed up - which, undeniably, they did. Having people on a diverted airplane for that long a period shows that the carrier didn't have a clue, at least that day. And, American has basically admitted as much by probably implementing a range of procedures to try to avoid a repeat. But one thing is also clear: this type of event is not an everyday thing, and it's not, as these alleged consumerists claim, some evil plot by the airline industry to abuse the public.

But an entire cottage industry of "coalitions" and consumer groups are living off that deception, ably assisted by some in the media who put on their white hats and sally forth to defend the public, usually forgetting to put anything else on, at least intellectually.

The Consumer Isn't Without Responsibility For Travel Decisions. But the verdict cut to the chase. Consumers are buying tickets to get on big metal tubes that levitate them across the country. That means they constructively accept the reality that weather and other factors may affect their comfort. They constructively accept the responsibility for choosing a mode of travel that is subject to all manner of physical realities that can and will from time to time result in stress and inconvenience. To imply that the airline is responsible for inconvenience caused by a thunderstorm is stupid and pandering.

Actually airlines might consider actively encompassing the judge's comments in their contracts of carriage, and make it clear to every passenger booking a ticket that weather and other ugly things can mess up that planned trip to see Grandma in Muskegon. Before they can hit the "purchase" button on the internet, there needs to be a screen that basically says the following:

"Safety is our number one priority. Be advised that air travel, as with all other forms of transportation, is affected by physical realities beyond the carrier's control that can and often do affect the carrier's ability to safely deliver a completely on-schedule operation. These realities include weather, mechanical malfunctions, air traffic control failures, and other factors. In purchasing this ticket, the customer acknowledges these physical realities and the fact that the carrier may need to adjust to these realities to assure safe operation. The airline will do all possible to provide a reliable flight. However, the purchaser acknowledges that there can be no absolute guarantee against delays, diversions, and other events that may result in inconvenience. Our complete contract of carriage can be reviewed if you wish by clicking here."

ACCEPT DECLINE

Other industries have disclaimers. Airlines should as well. Airlines must treat customers with respect - and sometimes they really fall short. But consumers cannot be completely relieved of the responsibility for choosing a mode of travel that is naturally vulnerable to factors beyond the operator's control.

Quick! Call Congressman Rolex & Get Legislation Moving. There's a good chance this court ruling will spark a media blitz by the consumer jihadists who want to get ink and build membership increases in alleged 'coalitions" that sensationalize and attack airlines, instead of working constructively to address the infrastructure challenges the industry faces, and which are the real cause of most giant operational foul-ups.

But that won't happen, probably. Not enough sex appeal for story lead-ins and for the late-nite talk shows. Making airlines the evil empire is great fodder for people who'd rather act like righteous crusaders that learn the hard truth. To imply that long "tarmac" delays are intentional and the norm, as these morons do, is patently deceptive and dishonest.

Airline-Caused Service Failures: Zero Tolerance. The airline industry had best tumble to the reality that this is a new day in Washington, and aviation is going to be a target for consumerist gadflies-without-a-brain, environmentalists who want us to live in caves, and politicians pandering to divert attention away from passing spending bills nobody's allowed to read first. All this means is that airlines have zero leeway for any major service screw-ups they can otherwise avoid. They're be plenty of concocted ones every time the ATC system shuts down ORD for three hours.

But now that the Little Rock case is settled, it may negatively affect lawsuits being pursued in other courts across the nation. This means the consumerist-wannabes will accelerate their pressure on Congress to quickly pass some disruptive, reality-free "bill of rights" before other courts rule objectively against these bozo suits.

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And Speaking of Other Fun Stuff..

Today, the annual rite of spring comes out. And we're not talking about beer-soddened parties at Daytona Beach.

We're referring to the annual "Airline Quality Report" issued by a couple of Midwestern universities. It purports to be the one true source of airline performance metrics. As always, the media will swoon over this document, doing earnest interviews and showing graphics of the report's findings.

But in effect, it's just a week-late April Fool's joke on the gullible reporters trying to fill that 3-minute spot on the 6PM news. It's astounding how the much of the media gets hornswaggled into believing that this is new, breakthrough data, when it's essentially been out for months. It's the equivalent of that old SNL skit proclaiming that Francisco Franco is still dead.

A couple of points about past AQRs that reporters might want to consider before putting pen to paper...

It's Not New Data. The "report" numbers are not the result of any new, independent "survey," nor are there any truly independently-collected data in this "report." The authors just use public-knowledge DOT complaint data, which is information to which anybody has access, and from which anybody can generate a report based on whatever criteria they want to use. Nice to see it again, but nothing new here.

It's Based On Non-Scientific Data. The DOT data used in this AQR are not scientific. DOT just files complaints. They do not verify them. And, critically - this is not scientifically-collected data, either. Anecdotal, yes, but in no way reliable data on which to posture any report as an expert source of information on the airline industry.

Rankings Are Subjective. All the report represents is those same unscientific DOT numbers put though a subjectively-developed ranking system. It's just opinion regarding which category of unscientifically-collected data is more or less important. Nothing wrong with that, but it's no more or less expert than anybody else's opinion.

Some Past Reports Were Great Reading. In the last few years, the report has focused strictly on providing charts and graphs purporting to be highly reflective of the airline industry. However, some of the earlier annual reports stepped way over the line, accessorized with hilarious and inaccurate commentary and "explanations" railing against the airline industry that were not only ridiculous, but had no relationship to the data on which they were supposed to be based.

An Expert Report Would Know Airlines' Names, Ya Think? In the past, the report has been amateur to the point that it often didn't even get the names of airlines right, referring to "JetBlue Airlines" (it's Airways) or "Delta Airlines" (it's Air Lines.) One might think that if these people are experts, they'd at least know the names of the airlines that they are "rating." So, if they don't know the right names of the airlines, it's a legit question to ask regarding just how "expert" their findings are. Maybe this year'll be different.

There's nothing wrong with a couple of academics expressing their opinions. It adds to the forum of discussion. But the media should keep in mind that's all this AQR really represents. Opinions.

Nevertheless, the next three days will still probably be a wondrous media circus. We'd suggest that aviation reporters recognize that, like the real circus, much of the stuff will be more fantasy than real-world. At least if it tracks like in the past.

To get some context, click here for reviews of some of the best of past AQRs - the ones with the hilariously-dumb unsupported commentary. The grid that will appear has a couple of selections for earlier Hot Flashes on the subject. They will give some, shall we say, context to the AQR.

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Hot Flash - Monday, March 30, 2009

Waiting For NextGen Is Like
Leaving The Light On For Elvis

"Nobody knows what the figure is."

That is the brilliant proclamation made by our new Secretary of Transportation regarding the cost of the FAA's wondrous and mystical NextGen air traffic control upgrade program.

"Nobody knows" is one of the most refreshingly honest statements to come out of this new administration. It truly is a fact - and one that's been in place for the last 20 years in regard to the ATC system. Nobody has had a clue. At all.

Gee, remember all the statements made by Jane Garvey? And by Marion Blakey? Statements that assured us NextGen was on-schedule and on-budget? Now we find from the new DOT Secretary that all of that stuff simply wasn't true.

Let's go back further - to the year 2000 press-event where President Clinton, surrounded by airline CEOs, announced that his FAA would get control of delays. They all told us that they "knew." They, and the succeeding FAA Administrators all told us that the ATC cavalry was just over the hill.

Now, we find out that "nobody knows" what the program'll cost. Deal with it: that means they really don't know exactly what the program is. That means that there isn't much control over the situation - just as the recent (March, 2009) DOT IG report noted. (It was carefully sandwiched in on pages 17-18, for those folks playing the home game.)

For some real facts on the NextGen mess - and, media, stop being suckered - it is a mess - click on the ATC system link on the left navigation bar. Then scroll to the bottom of the page for the March 13, 2000 Hot Flash. That was more than nine years ago. Read it. Then ask yourself if the FAA's done diddly. And ask yourself if anything has changed since then.

One thing is now wonderfully clear when it comes to NextGen. And we heard it from the top: Nobody knows. And we've spent billions on it already.

But it's a firm FAA tradition handed down from administration to administration.

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In This Week's DataFlash... LAS, Again

From Airports:USA Forecasts, the only airport traffic and trend projections accomplished independently in the private sector, we re-visit the estimates for LAS..

The current forcast at baseline indicates a 1.6 million decline in 2009 enplanements. It is based mainly on national economic, and, to a lesser extent, politically-correct factors, i.e., the president's negative comments on how businesses should't consider meeting in Las Vegas.

With the local economy in some difficulty, the 19.6% of Las Vegas traffic that is local-origination may be in some question as well. The cancellation, postponement or other financial problems with a number of major construction projects could affect thousands of high-paying jobs, and hence, spending power, in the region.

Another issue is the geographic mix of traffic patterns at LAS, with almost 30% of it generated within a 500-mile radius of the city. It is uncertain how much of this segment may be more vulnerable to the recession, and/or vulnerable to shifting to driving.

Barometer of The Economy? One key point to keep in mind is that these traffic declines are temporary - albeit longer than Las Vegas may want. The market will turn, and it's likely that 'Vegas will be an early harbinger of an economic recovery.

It is very difficult to project what spending patterns may resemble after this Administration finishes tinkering with the economic underpinnings of the nation. However, Las Vegas will still be a key impulse destination, as well as a convention center. When disposable dollars come back to the economy, it will be first registered at Las Vegas.

Click here to review.

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Hot Flash - Monday, March 23, 2009

Year 2009 Danger Signs Are Growing

The tea leaves are not encouraging...

Reviews by Boyd Group International of key data for US-European traffic are indicating that trans-Atlantic sector revenues may be down as much as 15% year over year. This is a double-whammy, in that these international sectors are key components of domestic traffic. They provide incremental feed, at much more than incremental revenues.

Fare cuts are not working. Indications are that the free fall in domestic demand is not responding to fare treatment, resulting in RASM heading south in the double-digits. The consumer's wallet is in the closed position.

Oil prices have again exceeded $50 a barrel. Most media stories do silly sunshine comparisons to when the black goo was selling for almost three times that, and conclude that airlines are just rolling in the dough now. What these me-too articles miss is that regardless of where prices were, it's still a fact that the airline industry isn't well structured for $50 oil - especially when core traffic demand is falling.

There is some concern regarding the strength of aircraft manufacturer orderbooks. China and India are airline basket-cases, putting into question some of the backlog at Boeing and Airbus. The continuing 787 program delays at Boeing aren't helping, and the recent Emirates press comments on the A-380 are not encouraging either. Point: Boeing production is a big part of what goes into the US trade balance. The effects of deferrals and cancellations can reverberate across the economy, putting further downward pressure on air travel demand.

US enplanements are down 10.5% year to date, and the indications for the future are not positive. This is especially true when it is expected that carriers will take a hacksaw to 3Q schedule capacity.

Upshot: Year 2009 was expected to be a moderately strong year for the US airline business. As of now, it's becoming a race to shrink - get capacity down rapidly to meet the unexpected near-collapse in passenger revenues. Again, it's the carriers with the most diverse fleets and the most diverse revenue streams that are best postured.

This is a huge shift from last fall. Check out this week's DataFlash. It illuminates the hugely positive shifts that carriers were accomplishing year-over-year in unit revenues and other metrics. They've all done a 180 since then.

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Rejoice! Random Screening's Back!

They must be getting bored in the TSA front offices.

The people at the top of the TSA have decided to bring back - no doubt by popular non-demand - their concept of "random" airport gate screening. This is where TSA screeners stalk the departure lounge, and like lions on the Serengetti, suddently pounce on some unususpecting passenger, dragging it like helpless prey to be subjected to a pat-down perp walk.

They did this in 2002, and it was nothing more than a stupid sham that proved beyond doubt that the people Bush appointed to run the TSA were amateurs more focused on show than go. And today, it's clear that focused, professional security is still not the objective. Randomly harassing citizens as they board flights is not security. It is an admission that the TSA is still unequipped to deal with future threats.

The rank-and-file screeners deserve a lot of credit for having to put up with this stuff.

Terrorism Is Focused. The TSA Is In A Sleep-Walk. Here's a fact, one that the political appointees running the TSA don't understand: Terrorists focus on pre-defined, specific targets of political or economic value. Trying to counter that by randomly screening passengers, instead of professionally identifying and hardening airport vulnerabilities, isn't "security." Actually, it is the complete opposite, because it wastes resources. Another point: real terrorists don't hang around departure gates. Instead, they're doing what the 9/11 guys did - spend months studying airport and airline vulnerabilities.

We're Random. And We'll Prove It By "Non-Profiling." Of course, the bureaucrats in the front office of the TSA want to show the public that they are very egalitarian - nobody is above suspicion. And paradoxically, that means "random" screening degenerates into targeted screening, to prove how "random" it really is.

They don't ever go after a Mohammed Atta look-alike standing in line with a shoulder-holster lump under his jacket. That would be too, well, un-random. Instead, pick out little old ladies that can barely get down the jetway, let alone strong-arm an AK-47 into the coach cabin. Or, an airline captain in uniform. Or, as we saw in 2002, intentionally going after easily-recognized public officials, like when Al Gore got "randomly selected" - twice in the same day, reportedly.

The TSA policy is not about identifying threats. It's about trying to put on a show.

You Created It, Congressman. So Quit Your Bitchin' - Rep. Peter DeFazio (D-OR) was one of the first fortunate winners selected for this waste of time and money. He got targeted boarding a flight at PDX last week.

It's not like the good Congressman was traveling incognito wearing a Groucho mask. In Oregon, this guy's more recognized than Benedict XVI on the Vatican balcony. He was targeted specifically because he was both well-known and a congressman. It was a show to demonstrate how "random" this program really is.

DeFazio wasn't amused. He reportedly made it clear to all in earshot that this program is "stupid." Which, of course, it is.

What's also a hoot, is back in the immediate days after 9/11, when Bush's DOT Secretary Mineta was too befuddled to provide any leadership, it was members of Congress that dreamed up the "need" for random gate screening. The same Congress where DeFazio worked.

But it gets better. It was DeFazio himself who was the ranking member of the very congressional committee that oversaw the topsy growth of the TSA as it spun out of control after 9/11. Yes, DeFazio for years sat like a potted plant in hearing rooms, quietly accepting sloppy excuses and insultingly dumb presentations made by a parade of successively-inept Bush-appointed TSA Administrators.

Back then, random screening and repeated reports about poor airport security weren't so important to DeFazio. Back then, it was the flying public that was being abused, not DeFazio. Even in light of GAO reports and other events proving that the TSA at the top was managed by total clowns, not once did the now-so-outraged Rep. DeFazio demand that anybody be fired.

But, boy, all it takes is one pat-down, and our man DeFazio is on the case for the consumer, meeting with the TSA and demanding the program be stopped. But, no luck. The TSA PR department came out of the meetings babbling righteously that random screening is just another one of the "many layers" of TSA programs that are keeping consumers safe.

Or, more correctly, keeping consumers totally misled about the fact the TSA leadership is more into games than real security. Too bad DeFazio didn't care about that when he had the political juice to do something about it.
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Hot Flash - Monday, March 16, 2009

Year 2009: Traffic Stumbling Out of The Gate

If January is any indication, year 2009 US enplanements are going to look like a ledger from Bernie Madoff's accountant. Lots and lots of numbers in big red brackets.

Of the 146 cities covered by Airports:USA Forecasts, less than a dozen are showing traffic up for January - and some of them are only in the black due to entry of Allegiant. Core air service capacity is down - and enplanements for January are tracking at 10.4% below 2008.

Reviewing current and expected schedule shifts, including the reductions in November through February capacity reductions, the year-over-year 2009 v 2008 percentage declines will moderate in the third quarter. This tracks closely with the Airports:USA national baseline forecast for @ 6.5% to 7.0% reductions in passenger traffic for the year.

If year-over-year traffic in the 3Q and 4Q of this year remain down in double-digits, however, all bets are off. The unknown is how much consumer spending has been torpedoed by the gloom and doom media stories, both real and imagined.

Countering some media stories, our forecasts indicate that business and traditional leisure traffic demand will be hit almost equally. The only difference is that business travel is widely destination-diffused, while leisure traffic tends be concentrated in fewer places - like Florida and Las Vegas.

In the latter case, by the way, the Airports:USA "low" (worst case) traffic scenario has been adjusted to reflect the possibility that the Pariah status inferred by the administration on business meetings in LAS might have done more damage than most of us would like to consider - down to around 18 million enplanements by 2010.

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Update: Small Community Air Service Grant Program

The DOT will issue a docket in early April for the 2009 Small Community Air Service Development Grant program (SCASD). The initial indications were accurate - the administration's campaign babblings that they were committed to the SCASD program simply have not panned out - at least in the form of funding the program to its full congressional authorization.

Nevertheless, there's $8 million for the taking, and in this environment of airline capacity cutbacks, that gelt can be used in a number of ways to keep service levels up, if not increase them.

Boyd Group International has been more successful than any other consultant in assisting communities in getting their share of this program's dollars. Again this year, we're providing a Guide to filing a winning SCASD application.

For details and insight to this year's program, click here.

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This Week's DataFlash:
Cincinnati/Northern Kentucky International

One of the competitive advantages subscribers to Airports:USA enjoy is the ability to quickly sort through the amateur aviation lore that often permeates the media.

For example, this week we did an analysis of the occasional allegation that local consumers flying out of CVG are consistently gouged by high fares due to Delta's "dominance" of of that airport's traffic. Without Delta's stranglehold, the conclusion follows, consumers would have much lower fares. And they'd have a lot less of other things, too. Like access.

True, local fares at CVG are higher than many other airports. But here's a reason: CVG, based on local population and local traffic generation, isn't a huge market. Even when compared to non-hubsites like Columbus and Buffalo, CVG simply doesn't have the traffic generation of larger regions.

And, countering the fact-challenged consumerists who contend that airline strategies come directly from the Dark Side, Delta doesn't "dominate" CVG's traffic. In fact, Delta creates most of the traffic at CVG with its connecting hub. Claiming the airline captures an unfair share of CVG enplanements is like accusing Neiman-Marcus of monopolizing its men's department.

Another bit of wishful fantasy sometimes heard: in the absence of the Delta hub, Southwest would rush in, just like they did when US Airways pulled down its PIT hub. Here's a flash: Pittsburgh is more than double the size of the local CVG market, and a fifth of the size of (just-announced) Boston. Unless there is a change in corporate strategy (which is possible), or some political considerations, CVG isn't necessarily very high on the Southwest radar screen.

Bottom line: the Delta CVG hub is a very valuable economic asset for the region, regardless of local fares.

Forget the lore. Get the facts, as do Airports:USA subscribers. Check out this week's DataFlash by clicking here.

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Hot Flash - Monday, March 9, 2009

Aviation Loses A Leader

All of us at Boyd Group International wish to express their condolences to the friends and family of Fred Krum, former director of Akron/Canton, who passed away last week.

Under Fred's leadership, CAK emerged as one of the major portals to northeast Ohio, bringing new competition and lower fares to hundreds of thousands of consumers. His enthusiasm, vision, and friendship will be sorely missed.

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This Week's Data Flash
United Getting Hammered By Southwest At Denver

The accepted Wall Street lore that Frontier is the Southwest victim at Denver is countered by something some of these analysts don't bother with - hard facts. Check out the DataFlash.
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It's The New Sensation Sweeping The Nation!
NextGen - Hotter Than Hula-Hoops

The bandwagon's rolling! The market's hot! Everybody who's anybody is on-board. It's the in-thing for the aviation in-crowd...

It's satellite based! It's the only solution!

It encompasses lots of whiz-bang Buck Rogers technology!

It's gonna save us from airline delays! Don't ask how, just accept and believe!

It's the new Mystical Messiah that'll change air transportation forever!

Don't be gauche. Don't be dull. Be cool and get on this bandwagon or get laughed at by the veneer cognoscenti. It's latest thing to show that you're really in-the-know, and "with it."

We're talking, of course, about the FAA's NextGen air traffic control system.

Like teenage girls shrieking at the feet of a rock star, the usual on-the-edges-of-aviation crowd is now jumping on this new hot trend. They're suddenly ATC experts - telling the world, congress, and any media outlet that NextGen is the solution to the gridlock in the skies. Give the FAA the money it needs for NextGen, and do it quick! Free those thousands of consumers that are imprisoned on airplanes stuck on the airport "tarmac" gulags across the nation!

Of course, any real understanding of the system, its background, or what it really represents is unnecessary. Any knowledge of the history of NextGen or its Dr. Frankenstein creators at the FAA is not a pre-requisite. It's now the latest intellectual fashion. Be there or be square.

P. T. Barnum Goes ATC. Yup. Being on the NextGen bandwagon is now the badge of Heavy Kool - being smarter and more "in." They talk about it in a manner very similar to how the country club crowd in Palm Beach used to boastfully whisper about their financial secret.

They were Kool Enough to be invested with Bernie Madoff.

The Only Game. But The Wrong One. One thing is true about NextGen: it is the only game on the table in regard to fixing the ATC mess that the FAA has nurtured over the last 20 years. But that's because no other approaches - such as a true Free Flight system - has been pursued. NextGen is the equivalent of the Emperor wearing no clothes, including the cheering masses urging him on.

But because it's the only thing the FAA has pursued doesn't mean it's the right thing. In fact, as has been pointed out repeatedly, "NextGen" is not new. It's the same set of initiatives the FAA has been bungling with for the past decade - with near zero results.

It's a hoot to see some of these people using NextGen as a vehicle to show that they're now ATC experts. Obviously, some of these folks are the logical prey of confidence men - checking into the product is secondary to believing the fancy brochures and shady promises. Sort of like those "suitable and sophisticated" folks who put their millions with ol' Bernie.

Just Keep Promising. They'll Buy It. The fact is that over the last thirty years, the FAA has had one magic elixir or another they were selling as the ATC solution. There was MLS, there was the AAS, there was GPS, now there's NextGen. Every year, the FAA tells the world that their hard work and latest trendy internal team structure du jour have got the problem cornered. And every year the trendies on the periphery of aviation jump on the FAA bandwagon, each trying to outdo the other in showing that they're good loyal groupies.

And every year, nothing improves. Take a look at the FAA's own numbers...

Remember, each and every year the leadership of the FAA claimed that things were improving. But except for the traffic declines subsequent to 9/11, the delay mess is no better - actually worse - than it was ten years ago. Years of jive promises, and no results. It's a tribute to human gullibility that some people today are predicting the great successes to come from the FAA and its NextGen spawn.

The Teflon Agency. The FAA gets away blaming airlines - too many airplanes in the sky - they say. But that's simply a concocted line to confuse the public. The airline industry is simply meeting the demands of the nation. They're not "over scheduling" as some consumerist morons claim, trying to get gullible people to join one angry coalition or another. Airlines are not arbitrarily filling the skies with little jets just for yucks and grins. They are trying to meet the legit market demands of the American economy.

It's the leadership failure at the FAA, year after year, excuse after excuse, and acronym program after acronym program, that's the core reason our airline industry is increasingly inefficient and consumer-averse when it comes to dependability. And remember, the FAA makes it clear between the lines that NextGen will at best improve things - assuming, dangerously, that it works as advertised, which it won't. It won't free up the skies - it actually states that it will open additional air lanes. That isn't the solution - using all of the skies is the answer.

Okay, some will demand, you gotta better idea? The answer is yes. The answer is that it's been out there for fifteen years, from us and others. In a number of studies including congressional testimony. The answer is a full Free Flight approach, not upgrading the current 1950s approach. But the public and these poor groupies at the edge of the industry have tumbled to the conclusion that what the FAA is doing is the only path that can be taken.

And he track record over the last two decades shows that the FAA's chosen approaches go in the wrong direction.

The sad fact is that there is no incentive for the FAA to consider any alternative. They've tossed billions at what they've now dishonestly re-badged as NextGen. And, besides, they've now got the aviation cognoscenti groupies cheering them on.

So, take the chart above, adjust delays slightly downward for the current decline in flights and demand due to the recession, and then tick it up in 2010 through 2020. Unlike some other consulting firms that sit around tongue-tied from speaking the facts, hoping to get a project bone from the FAA, Boyd Group International will tell you the truth:

Plan on consistent double digit percentages of flights being off-schedule for the foreseeable future. It won't change, with or without the adulation of these NextGen peanut gallery.

Because we can count on the leadership direction at the FAA not changing, either.

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It's Official:
Rural Air Service Improvement Is A Back-Burner Issue

The Small Community Air Service Development Grant program is now likely to be resuscitated for 2009.

As it stands, however, it's the equivalent of digging up a cadaver and dressing it in a three-piece suit. SCASD for 2009 is shaping up to be well short of the commitments made by the Obama campaign last fall, which expressed strong support for expanding the program. Now that the election is over, they apparently don't recall what they promised.

DOT staff advise us that the program has been approved by the House and sent on to the Senate, with a whopping $8 million in recommended funding. The authorization level for the program has been consistently $35 million, but nowhere near that amount has every been appropriated.

One might think, in light of the administration's pre-election rhetoric and the current blizzard of dollars being tossed in all directions between the "stimulus" and the omnibus federal funding bill now being considered in Congress, that a program such as SCASD would be a slam-dunk for increased appropriations.

Dream on.

Left Out: Salt Marsh Mice & SCASD. We could take the easy route and make comparisons between the chintzy $8 mil lavished on SCASD by the House and the reported $30 million in the stimulus bill to be spent in Nancy Pelosi's district on the Salt Marsh mouse.

But we won't - simply because there is no such appropriation in the stimulus bill. No mice seem to be mentioned whatsoever in the legislation. It's a long-stretch talk-show staple with not much credibility.

But that fantasy aside, there actually are hundreds of idiot earmarks in both the stimulus and in the funding bill. One might think that a program with a strong track record such as SCASD might be recognized for the economic impact it can produce in these tough times, but that's probably too much to expect.

Advice: Go For It. Any community considering applying for a SCASD grant this year should go full speed ahead. Trying to spread $8 million over the 40 allowed grants - or even half that number - isn't going to be fruitful. The real value of the program over the past seven years has been in incubating new air service. Today, that's going to take big dollars - from both the program and from the local match.

Since the inception of the Small Community Air Service Development Grant program, clients of Boyd Group International have won more dollars than those of any other consultant. One reason is that our data and trend forecasts - the best in the industry - are brought to bear in crafting applications. Another reason is the respect airlines have for our work - which is the reason that we're more successful than any other consultant in translating post-award grant dollars into new air service.

We have an exclusive Guide to SCASD applications, available by giving us a call or e-mailing Mike Mooney at mooney @ aviationplanning.com.

While the money's not what we want to see for the program, there is some there. Boyd Group International can help you get your share.

Or, possibly, more.

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Hot Flash - Monday, March 2, 2009

Airline On-Time Performance:
Who's Kidding Who?

"Yessir, this is quite the model," the salesman gushes, pointing to the shiny new Belchfire V8 convertible in the showroom. "We've really improved the quality this year," he proudly tells the potential buyer. "Today, only one out of five of our cars come off the line with major defects..."

"Hey, that's just swell," the potential buyer responds. "I'll take it."

Congratulations to US Airways.

It legitimately had a better on-time performance in 2008 than the rest of its peers. Significantly better, as a matter of fact. We could quibble that the data might only reflect "mainline" flights, which is not necessarily reflective of the carriers' entire system. But nevertheless, in the current environment, at 80.1% of flights within 15 minutes of schedule, it's an achievement for US Airways.

It's an achievement, at least comparatively within the "current environment" of the US airline industry.

Unfortunately, that environment is, to put it bluntly, a national embarrassment. From the perspectives of efficiency and being able to deliver what is reasonable in regard to on-time performance, the operational environment in which US airlines must operate is a cesspool.

Even GM Does Better. Think about it: the best on-time airline in America in 2008 still couldn't deliver as promised to 20% of its customers. That's a 20% product defect rate. Nobody would buy a GM car if one out of five was as likely to be unreliable. Nobody would even consider a brand of refrigerator where 20% or 30% of its models were likely to go on the fritz when they got it home.

But, that's exactly what the US airline industry is in the position of doing. Not intentionally, and, unlike an auto manufacturer, most of the "defects" are imposed by outside factors. But the fact remains that when it comes to getting the passenger to the destination as promised, the industry is not able to provide a consistently reliable product.

Flight Delayed? Send A Thank-You Note To Washington. The reason is that the FAA has failed, year after year, to professionally upgrade the air traffic control system. Airlines simply cannot produce a completely reliable schedule, because the air traffic control system is completely un-reliable. The ATC system can't efficiently handle weather. It's equipment is unreliable. It's understaffed and under-managed.

Naturally, the factually-challenged "consumerists" and the don't-bother-me-with-facts talk show hosts don't want to discuss the ATC mess. It would require them to think. According to their mantra, the airline industry is an Evil Empire that takes great joy in stranding passengers, and leaving them sitting on "tarmacs" for hours.

Or, a favorite type of torture they often mention from their fertile if uninformed imaginations - airline flights leaving from the gate on-schedule to claim an on-time departure, when the carrier knows full well they'll be sitting for hours waiting to take off. (These consumerist twits don't bother to get any real expertise in airline operations or DOT reporting - which requires both departure and arrival information. But they're on a jihad to punish airlines, and cannot be side-tracked with facts that might not be consistent with their witch hunt.)

Time For Airline CEOs To Hit The Bricks. Could the US airline industry do better? No question. There're still lots of operational slop out there. (We covered it in an earlier Hot Flash. Click here to go there.) But the biggest cause of the airline product defect rate is the fact that the air traffic control system cannot handle the nation's air travel demands.

The jihadists will blurt out that it's just a matter of "over scheduling" or "too many little jets" or some other primative babble. The truth is that the US airline industry is trying to meet the needs of the nation, but can't, because the leadership of the FAA has not done its job over the past 20 years.

In 1994, The Boyd Group and ATH Group published a study, "Free Flight - The Economic Impact." It outlined the deteriorating ATC system, and the delays it unnecessarily inflicted on the airline industry. It reviewed the consistent past bungling of the FAA, and how the system at that time was inflicting a $5 billion hit to the airline industry.

The study prompted congressional hearings, during which we made the on-record comment that the costs the ATC system inflicted on airlines were such that airline presidents should form a "conga-line into the FAA Administrator's office demanding action."

The ATC delay music's been playing loudly for the last 15 years. No conga line has been reported at FAA headquarters.

Instead, the FAA has year after year been able to successfully fast-talk the industry into believing that a fix is in the works. At those hearings, way back in 1994, that is exactly what the FAA told congress. Today, they're saying almost exactly the same things. And, of course, not much is happening.

Except that airlines cannot deliver what they reasonably promise, and they're taking the fall for it.

NextGen To The Rescue! Of course the current trendy mantra from the aviation media is that NextGen is on the way. It's satellite-based, see, and that'll allow flights to take more direct routings, saving money.

But when you ask "and just how much will it save?" the only response is "a lot" or some garbage comments repeated from the FAA itself, with the same general tone they used at those hearings more than a decade ago.

Yeahbut, some will counter, the Financial Feedlot in Washington, a.k.a. "stimulus package," reportedly has $800 million in it for NextGen. Wow! $800 million for a project the FAA now tells us, depending on what their Ouija Board says on any given day, will now take $15 billion or more. (Needless to say, that's a moving target.)

This Is NOT Washington Business As Usual. And here's another windsock pointing in an ominous direction: the Obama administration is earmarking a reported $8 billion for a rail line between Las Vegas and Disneyland. That's, what, ten times what they're tossing at the ATC system? Make no mistake, and don't take any political wooden nickels from the new DOT secretary: this administration is not pro-aviation. Airlines in particular are becoming the boogie man of choice. They pollute. (How much? Doesn't matter.) They've got a big carbon footprint, which is the latest Voodoo chant. They're anti-consumer. And they torture passengers routinely.

But getting back to "on time performance." The airline industry is saddled with a situation where they are not only precluded from being able to deliver what they promise, but are now in the cross hairs of being severely attacked and potentially regulated by the same primitives in Washington (and their running dogs in some corners of the media) who created the situation in the first place.

Maybe it's time the above ad gets a new headline and some realistic copy:

"Directly because of the FAA's ATC incompetence over the last two decades, 80% on-time performance is the best we can promise - and that's after we've added minutes to your flight schedule in an attempt to account for the inherent and rampant inefficiencies of the ATC system. It's costing you money in higher fares and in travel-time inefficiency. Call your congressional representatives and demand action."

On the other hand, the airline industry can keep on doing what it's done for years - play the Washington game. Unfortunately, there's a new game in town, and the rules are stacked against the airline industry.

The traditional lobbying stuff isn't going to cut it. Memo to lobbyist ostriches inside the beltway: Airlines are in the cross-hairs., and when they have to be proud of a 20% schedule defect rate when they're simply trying to meet the nation's needs, something's very wrong.

One thing's certain. Unless they start to take a more aggressive stand with the FAA, airlines are going to get hosed by this administration.

And so are consumers.

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Hot Flash - Monday, February 23, 2009

Two Remembrances of 9/11

SOMERSET, Pa. - U.S. Sen. Arlen Specter and Pennsylvania Gov. Ed Rendell signed a letter of commitment Friday to build a memorial for victims of the 9/11 terrorist hijacking of United Airlines Flight 93.

"There has never been a more heroic act than that which occurred on Sept. 11th, 2001," Specter said at a news conference at the Somerset Trust building in Somerset.

And...

The NationalJournal.com, February 19:

"...(Secretary of Transportation) LaHood added that the administration is poised to nominate a deputy secretary of Transportation, expected to be former FAA Administrator Jane Garvey..."

And, later in the story, regarding his role in the administration...

... LaHood said he would take his cues from Obama and White House energy and climate adviser Carol Browner. "We're going to be in the room," LaHood said, adding, "I'm going to take my leads from Carol Browner. I'll be a good, faithful soldier on this."

Great. A good faithful soldier that's "just following orders." We've heard that before in history. What stellar leadership - we're building a memorial to those that died on 9/11, and concurrently promoting one of the negligent political hacks who ignored warning after warning, and helped make the tragedy possible.

Yup. That's change we all can believe in. Especially if we don't care too much about integrity.
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Small Community Air Service
Development Grant Program..
It Might Actually Get Funded

Returning from the legislative dead, the Small Community Air Service Development Grant Program is part of the current FAA reauthorization program. (This year, make note, the SCASD funding is included in the FAA bill.) Last year, the DOT withheld some of the money, ostensibly to have the funds to wind-down and administer prior grants.

The good news is that there might be a 2009 SCASD program after all. The bad news is dual in nature.

First, the bill notes that the SCASD program will continue to be authorized at $35 million. That's authorized, not funded. In fact, the program has never been funded with more than $20 million, and last year less than $7 million was doled out.

Second, in this new airline environment, the risk-abatement bar is much higher. Today, a $500,000 grant aimed at getting RJ service in most cases won't get an airline to answer the phone, let alone start service. Not only are the risk bars higher due to plummeting consumer demand at many small and mid-size communities, but airline fleets are being cut back as well.

If the SCASD program actually gets funded - which in this toss-money-in-all-directions administration, it should - the real-world ground rules for grant applications will be very different. The name of the game is attracting new service. To do that, it will take very hard and demonstrable traffic and revenue forecasts that identify real market opportunities - opportunities the carrier can immediately see will pad their bottom line.

Boyd Group International has been more successful than any other consultant in assisting communities in winning SCASD grants. We've also been more successful in turning grants into real air service. There is no assurance that the SCASD program will actually see the light of day in 2009. However, if the docket is announced, plan on a very short timeframe for grant filing.

In the meantime, if your community is considering applying for a grant, give Mike Mooney a call at (303) 674-2000. He'll give you the straight story if your concept has a strong chance, and if not, suggest alternatives.

If the money gets appropriated, we'll help you get your share.
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More Southwest Lore

The announcement of Southwest entering Boston/Logan has generated another mini-blizzard of media stories about how WN is "fundamentally changing" it's business model. And how it now must enter big airports to claw share and get passengers.

The former is only partially accurate. The latter - the need to go after share in key markets - has been in place for at least four years. It's just that it's appeared in the rearview mirror and is safe for the usual suspects to now confidently "forecast" as a future trend.

One of the most trendy comments, again based mostly on the fact it's repeated like a mantra at a Haight-Asbury pot party, generally is something like,

"Southwest has always concentrated on flying to smaller and secondary airports, avoiding the big airports..."

Which, factually, is an airline industry fairy-tale.

Back in 1993, at the airline commission hearings established by the Clinton Administration, there was a now-famous interaction between Herb Kelleher and a college professor on the commission who made a similar statement about Southwest. Cross-examining the learned professor, Kelleher asked if places like Los Angeles International, and Seattle, and Detroit were "secondary airports." (The professor had also made the pronouncement that Southwest was protected at Houston Hobby by the Wright Amendment.)

When the interaction was over, the professor was intellectual confetti.

Southwest is addressing changes in the industry. But it has never has followed a single monolithic strategy - except the one about treating passengers like guests instead of unruly inmates at a minimum security prison. Whether it's LAX or Jackson, or Denver, the carrier has adjusted its strategies to meet the situation.

We covered this earlier. Click here for some facts, not lore.
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DataFlash
Airline System Load Factors - November

This week's DataFlash outlines airline system load factors for the month of November 2008. Unlike other sources that don't know the difference between "certificated carrier" and "airline," the data shows the load factors for the airline's total fleet - including leased-in lift. Click here.
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DataMiner Subscriber Update...

November 2008 T-100 load factor and capacity data are now available to subscribers. In addition, there have been a few minor revisions to the airline financial data. Finally, the airport enplanement forecast module now has been updated to reflect effects of potential shifts in Southwest capacity at key cities.
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Hot Flash - Tuesday, February 17, 2009

The Aviation De-Stimulation Program:
Making The Industry A Political Foil

Barnum & Bailey. Mao Tse-Tung. Ed Sullivan. Gerald Ford.

All of 'em should be enjoying the Washington show, from whatever venue they may be at in the Great Beyond. We're referring to, of course, Tales From The Stimulus Package, a hit show that's unfolding in Washington D.C.

Barnum & Bailey are in giggles, watching three-ring performances from politicians on both sides of the aisle, dancing around like trained bears, denouncing the stimulus, or lauding it, or just sitting on the sidelines slobbering on the floor.

Mao would recognize the way that the stimulus bill was railroaded through passage. Put on a show. Make it look patriotic. But don't let the public see the final legislation that came out of the Senate/House Conference. Surround the deal with right-now panic: "Those that delay the act are enemies of the People!" - "there's no time for the people to see and read our great wisdom." It was done just like the sham kangaroo legislation that Mao used to engineer in the People's Congress in Beijing - a place where the people were intentionally kept in the dark about what was going on. Just like in the case of this stimulus bill.

Ed Sullivan made his career in showcasing second-rate TV schtick - magic acts, schlocky comedians, and singers who couldn't hit the right note with a music sheet in front of them. That perfectly describes congress. Like the bazillions of various politicians holding press conferences, ventriloquist acts speaking through wooden dummies, (a.k.a press secretaries), well-rehearsed talk show extravaganzas, ad-hoc Capitol steps meetings, and the other political theater we've seen over the past weeks. It could have filled at least an entire season of mindless Sunday night variety shows.

Gerald Ford, who was fairly or unfairly characterized for making verbal screw-ups, can easily recognize his successor, Barack Obama, who seems to be intent on becoming the nation's first Eloquent Klutz. He makes a speech denouncing companies that hold meetings in Las Vegas (which thrilled one of his strongest supporters, the Mayor of 'Vegas), and then signs a bill that's going to stimulate us all by spending $8 billion constructing a rail line from Disneyland to, yes, Las Vegas.

And then there was Obama's chant about the "impending need to get the bill passed fast" - no time to waste. The economy's going down like a rock! (Plus, we don't want that pesky media reading the thing and reporting that it's got enough pork to keep Jimmy Dean in business for a decade.) But after it's passed, Obama forgot about all that right-now-there's-no-time-to-waist doggerel, and waited a leisurely three days before doing a photo-op signing ceremony. No time to let the public read the final bill, but plenty of time to get around to signing it into law.

Millions For Show. And What For Aviation? And amid all this, we really don't have any hard idea what money is in this bill for aviation, or how it's going to get spent. We know Amtrak will get more money so it can rumble a couple of empty long-haul passenger trains late across the plains. We know that there's money for preventing sexually transmitted diseases. We've heard that there's stuff in the bill that addresses health care. But nothing substantive about upgrading ATC. Or implementing a real essential air service program. Or a real reauthorization funding program for the FAA. Nothing.

Forget The Stimulus. Here Come The Clowns. But stimulus or not, one thing the aviation industry had best prepare for is the coming onslaught of the lamebrains. In effect, it will be the Aviation De-Stimulus Program of 2009.

Aviation is a great foil for two-bit political bully/cowards to showcase pet schemes. Business aviation is just for, well, those rich folks. The same greedy ones that stole all our money, tossed people out of their homes, and then flew off in their G450s. Airlines, well, we all know they just gouge us and then trap us on "tarmacs" for hours just for yucks and grins.

Business Jets: Threatening Small Children. Last week, at a hearing where bank CEOs testified, one congressional mediocrity asked the executives, "how many of you have corporately-owned or corporately-leased private jets?" The pompous, self-righteous tone was exactly like, "how many of you guys mess around with hookers?" Then, when the CEOs responded with a show of hands, the congressman gleefully stated, "let the record show that all but one answered affirmatively." His point: private jets are right up there with prostitutes. And he proudly uncovered it, right in front of the C-Span cameras. The look on his face was as if he had just nailed Al Capone.

So, the stage is set. General aviation is one industry that is fixin' to get de-stimulated. And, remember, this comes not just from congress, but directly from Obama, too. All you folks in the business aviation sector who have or who are about to lose your jobs, you can take solace in the fact that, well, it's patriotic not to have a business aviation industry.

Airline Industry. You're In The Crosshairs. The airline industry had best tumble to reality: this is a new Washington - one where crusading nitwits now are now in a position to slam really stupid and inept legislation on carriers. The "go along to get along" stuff isn't going to work anymore. A lot of those Washington offices are now occupied by intellectual savages who've decided that airlines are the Evil Empire that must be tamed. No reasoning or discussion is needed.

You can plan on proposals for carbon-offset schemes. 'Course, these are nothing more than the latest in trendy voodoo that comes and goes in the elite circles of intelligentsia. (Like, remember "acid rain" that was killing all the moose in Ontario? That was the 1980s cause celebre that was not to be questioned. Carbon is today's "in" crusade.)

Mandated Flying. There are yay-hoos in congress that want to force airlines to fly to those small communities that were so cavalierly abandoned on the basis of greed. So what if there isn't enough passenger demand in East Upchuck to fill a four-door Yugo? Or if there's a viable airport the people are already using that's an hour drive away? Or if there simply are no really viable airliners that can economically serve such markets, even if there is some demand? The cheap pandering politicians don't care.

Bills of Rights. This is a congress that won't miss the chance to use the airline industry to demonstrate how concerned they are about the consumer. There are a number of consumerist-wannabes lobbying congress for legislation on the basis that the airline industry is nothing more than greedy fat cats who intentionally trap passengers on airplanes, overcharge them, then strand them in far off places. There's the common belief espoused by some talk show hosts that airlines intentionally pull off the gate to show "on time" and then sit for hours with passengers trapped on board. Facts and industry knowledge are not required. This is a sacred mission, don't ya know.

The problem here is that the industry largely stumbles into giving these people a lot of ammunition. There was the event two years ago, where United dumped two E-170 loads of passengers at Cheyenne, where they have no staff, and initially left them to their own devices to get home. Or, the ridiculous, and now-gone scheme of having a customer care line outsourced to an independent company in India. Or, airlines imposing rules that sometimes make no sense to their own employees, let alone the customer. (It's tough for a flight attendant to tell mom that her thirsty 5-year old will have to cough up $2 if he gets thirsty on a 3-hour flight.)

If the airline industry wants to get through the next four years without being legislated into the second-coming of Aeroflot, it will need to re-think how it is perceived by the public at large. Right now, due to inept and sometimes biased media coverage, aided by what are in some cases poorly-conceived airline policies, Darth Vader would beat airlines in a popularity contest.

Aviation Industry: Circle The Wagons. Make no mistake, the current regime in Washington is not aviation-friendly. Quite the contrary. Their general direction will be to stimulate their political egos by making a punching-bag out of the industry. That means all sectors of aviation need to develop aggressive and pro-active public relations programs. Milquetoast ads about the economic impact of business aviation ain't going to accomplish dukey. Airlines attempting another across-the-board PR stunt like the "12 Rules" of passenger service, like they they tried ten years ago, won't work, either.

Fire needs to be met with fire. That congressional twit who asked the bankers to admit to private jet usage must be confronted. On-a-rampage talk show hosts who take cheap shots and unsubstantiated claims about airlines need to be confronted, too. But what need not - and should not - be confronted are the self-appointed consumer morons who clearly are on a jihad to hurt airlines, not fix the problem. These idiots only get more profile and credibility when the airline industry recognizes them.

Stop Feeding Them Ammunition. And if airlines want to avoid all kinds of stupid legislation (most of which will harm the consumer) they'd better start - now - to rethink what customers go through when they need to take an air trip. And that means fundamental change, not a task-team-continuous-improvement-let's-sing-coom-bye-ya internal approach. Getting consumers on the airlines' side is the key. Right now, they are not the seething masses of revolutionary anger that some paint them as. But they'd have no problem having the airline industry burned at the political stake, either.

So, regardless of what the stimulus bill may contain, one thing is certain: aviation is in line for legislative and political de-stimulation.

Unless, that is, the industry goes on the offensive. And, maybe gets a bit offensive to its critics.

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

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Hot Flash - Monday, February 9, 2009

More Disturbing News From Washington
Ethical Free-Fall?

The indications coming from the new administration don't bode well at all for aviation.

The clearly pork-and-politics "stimulus" plan has almost zip for the aviation industry. The disingenuous political hacks interviewed by the media speak from obviously prepared "talking points" and cannot substantively tell us what this monkey business will do for any industry, let alone aviation.

Now there are ugly smoke-signals that the senior direction of the DOT may remain consistent with prior administrations - i.e., ineffective, politicized and ethically-challenged, indicating that the Obama juggernaught may be veering off the path of righteousness.

As noted earlier, during the post-election transition phase, the new president opted to surround himself with some "advisors" whose ethical and political baggage could rival a Samsonite factory. Federico Pena, for example - the former DOT head under whom airline safety numbers were doctored, allowing Valujet to operate until - and even after - it killed 110 people. Not the sort of person our new president should be hob-nobbing with.

And then, there was another proven loser on the transition team - Jane Garvey, the former FAA Administrator who over and over ignored warnings from FAA Red Team inspectors about bad airport security before 9/11. These included specific and detailed warnings about the potential for an imminent attack. Garvey did nothing.

Garvey wasn't only incompetent, but outright negligent. Under her watch - or lack of same - her sloppy patronage-rigged FAA security system allowed four airplanes to be hijacked, killing 3,000 people. But instead of being held responsible, the Bush Administration praised her "fine work."

Now, it appears that the Obama administration may be following the appalling lack of judgement of its predecessor. According to some media reports, Ms. Garvey may be in line to be the #2 at the Department of Transportation. Yessir, one heartbeat from running the whole show. Yessir, a position that'll give Garvey strong input in policy and planning.

The same Jane Garvey who botched FAA security.

The same Jane Garvey under whose watch the air traffic control system continued to deteriorate.

The same Jane Garvey who, at the 9/11 Commission hearings, showed she didn't have a clue.

Turned Her Back On Security Warnings. As FAA Administrator, Garvey had lots of warnings. One highly-respected FAA security inspector, Brian Sullivan, advised in writing that security at Boston/Logan was so lax that the concept of multiple hijackings at that airport was entirely possible. He did this five months before 9/11. A rational person would assume that the FAA Administrator would take this seriously. But Garvey and her team ignored it. (Mr. Sullivan also took the matter to Senator John Kerry who, for all intents and purposes, ignored it too.)

Garvey's performance was illuminated clearly in the 9/11 Commission Report:

"… the FAA's intelligence unit did not receive much attention from the agency's leadership. Neither Administrator Jane Garvey nor her deputy routinely reviewed daily intelligence, and what they did see was screened for them. She was unaware of a great amount of hijacking threat information from her own intelligence unit, which, in turn, was not deeply involved in the agency's policymaking process. Historically, decisive security action took place only after a disaster had occurred or a specific plot had been discovered."

Translation: Garvey did an unconscionably bad job. She was negligent in her duties. Asleep at the switch. Garvey ignored repeated security warnings. Garvey failed. She should have been removed from office by 5PM on the afternoon of 9/11.

With this in mind, it's Kafka-esque to even think that somebody would consider making Jane Garvey Deputy Secretary of Transportation. Given her performance, only the sleaziest, or stupidest, or most ignorant political types would dare suggest it. (Strong words. Got a problem with it? Then go back and look at the pictures of hapless victims jumping to their deaths from the World Trade Center.) It should enrage any honest citizen.

And let's discount the connected Washington insider-sycophants who'll protest - "We worked with Administrator Garvey and she was instrumental in getting (fill in the blank) accomplished for us! She's really a very good person..." Yup, a really good person who ignored security warnings consistently before 3,000 people lost their lives on 9/11. A really good person that didn't do her job.

A Watershed For Obama. A Garvey appointment will gut any further pretense of the Obama White House as being a new "change" from the past. It will literally spit on the victims of 9/11. It will make Ray LaHood exactly what one of his predecessors - Norman Mineta - was. Just a martinet political eunuch, doing what he's told, parroting the cribsheets handed to him by administration handlers.

If Garvey gets appointed, there's no way LaHood can talk his way out of this one. And if it's the case that Garvey is being forced on him, he either fights it or he can resign. He has no other ethical options.

AWOL: The Oh-So-Concerned Activists. And where are all these organizations that supposedly represent families of 9/11 victims? The ones that so loudly protested the Bush Administration's failure in regard to pre-event security. Jane Garvey's incompetence represents a key part of the comprehensive failure which contributed to the deaths of their loved ones. Now a Democrat administration is reportedly about to give her the second spot at the DOT. All of these victims groups should be marching on the White House. Instead, silence. Says volumes about what some of these groups really stand for.

If Jane Garvey is appointed to any position in this administration, it will clearly show that President Obama is neither the leader nor the squeaky-clean ethical person the media portrays him as.

Just Be A Good Little Citizen & Keep Quiet. The airline industry should be speaking out. Labor groups should be speaking out - union members lost their lives that Tuesday morning. Politics-as-usual let incompetents like Garvey get appointed in the first place. If we want to avoid another 9/11, rewarding federal failures isn't the way to do it. Appointing Garvey to anything is nothing less than a cover-up for the people who let 9/11 happen.

If you really were enraged by 9/11, we'd urge you contact LaHood and your congressional delegation, and urge them not to dishonor the victims, nor reward the negligence that let the event happen. Call the DOT: 1-866-377-8642. Better, e-mail LaHood.

Or, we can be good little sheep. Waiting to get sheared by corrupt politicians.
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Airports:USA DataMiner Update
First Three Quarters Of DOT Data Revised

DOT has just released revised O&D traffic data. Not only for the 3Q of 2008, but also for the second quarter. In addition, there will be revisions to the first quarter 2008 O&D, too. DataMiner subscribers will find these revised data on-line later this afternoon.

Carriers sometimes report partial or inaccurate data to the DOT, or provide revisions to prior filings. This necessitates re-issuance of quarterly statistics - sometimes months later. In the current instance, the revisions include substantial amounts of past data previously withheld by Virgin America, ExpressJet, Alaska, and Republic. In addition, analyses of the 1Q data indicate that confusion over the proper airport code understated considerable traffic at Phoenix/Mesa.

DOT data, as well as other aviation data such as airline financials, fleet mixes, and operational statistics, are dynamic and fluid. It's the reason that "quarterly" traffic reports can and often do represent misleading and inaccurate planning information. When revisions are made - and often, as is the case now, they are extensive revisions - that printed document on the desk is immediately rendered inaccurate and useless as a planning tool.

Adding to their questionable reliability, some other sources of these printed subscriptions just buy the numbers from an intermediate vendor, print them, and pass them on, errors, under-reported data, and all.

On the other hand, Airports:USA DataMiner is on-line, and always encompasses the most current data. When there are reporting problems or errors, our subscribers are immediately kept advised. More importantly, when data are corrected, they've got it right on-line. That's because we direct-source the data, our staff review it, and our software identifies shortfalls and errors.

For information and examples of better, more cost-effective and more professional aviation information, click here.

But in any case, if you've paid for expensive printed "quarterly" traffic reports for the first three quarters of 2008, you'd best toss them in the direction of the nearest landfill.

Because incomplete and inaccurate data may be more dangerous than no data at all.

(c) 2009 Boyd Group International

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Hot Flash - Monday, February 2, 2009

Actually, It's Going To Make Industry Troubles Worse
This "Stimulus" Bill Isn't Going
To Do Diddly For The Airline Business

Year 2009 is going to be a very tough year for airlines, airports, and vendors.

The ambient belief is that the airline industry, supposedly basking in "low" fuel prices, will have a much easier 2009. For certain comprehensive network carriers, such as Continental, American, and Delta, the year almost certainly will be positive. But that's not because of any sunny shifts in the market. The fact is that the market is starting to decline, and it's these carriers that have the wherewithal to materially adjust, and maybe, if things don't go Postal, do fairly well.

Some carriers don't have that luxury. Make no mistake: 2009 is going to be a tough year for the airline business, and if the planets align just right, it could be a very nasty experience.

What may make it worse is this sham "stimulus" program. Aside from being a joke without a punchline, it's accessorized with promotion from Washington that is literally telling the consumer not to spend. That's a real danger to the aviation industry.

Here's the deal: The US will see a drop of over 40 million air passengers in 2009. That's the Baseline forecast. The Low forecast is much uglier. Even the best case High forecast scenario represents a material drop in business.

Boyd Group International today has issued a Research Review covering the Airports:USA Enplanement Forecast for 2009 - 2014, and discusses the effects of this traffic downturn on airports, airlines, infrastructure, and industry revenues.

The Research Paper can be accessed by clicking here. It's blunt and to the point, like all the work we do. So if you're into milquetoast political correctness, and don't like hearing things as they are, don't go there.

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Airports:USA DataMiner Update

The DOT has issued third quarter 2008 traffic statistics. Three times, as a matter of fact, over the past week.

The reason is that Virgin America data has finally been included, the carrier having lost its appeal to keep the data confidential. This also releases Republic and Alaska data, as both carriers wanted their information withheld in protest of the Virgin action.

But the new 3Q data is on the way, and will be on-line for DataMiner subscribers later this week.

By the way, if you still subscribe to one of those hard copy printed airport quarterly data services (some of whom just buy the tables from another vendor and pass it on, as-is), you've probably received inaccurate information that doesn't reflect the actual data of these three airlines.

This is one of the advantages of Airports:USA DataMiner- being on-line, any post-issuance revisions from the DOT are immediately added and are available. If you're looking for better aviation data and information, click here to learn how DataMiner can give you the competitive edge.

(c) 2009 Boyd Group International
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Hot Flash - Monday, January 26, 2009

Toledo - Copenhagen Nonstops Are Now Possible!
US-EU Open Skies:
- Open To What?

It's largely just another aviation myth.

We're referring to the wonders and the joys and the new competition that the US-EU agreement will bring to the consumer. The concept - allowing any EU carrier to fly to any US point, and vice-versa - looks great on paper. The conclusions drawn have been that now, the shackles are off of carriers on both sides of the Atlantic. Now, there's going to be real competition. Now, all those US markets that have cried out for European nonstops will have it. Same with those huddled masses in the EU, longing to spend their Euros across the Fruited Plain.

That's based on the assumption that there are actually a whole lot of un-served and under-served EU-US markets. There aren't.

Accessing A Vacuum. It's entirely correct that the bureaucratic hurdles inflicted on EU and US carriers seeking to cross the Atlantic may be thing of the past. But with the exception of expanded US access to London Heathrow, there really are few new trans-Atlantic markets where Open Skies will have any material effect on increasing competition. What's a hoot is that it's US carriers that get most of the (limited) benefits of the deal.

A couple of points. First, there really aren't many markets where Open Skies will unleash huge pent-up demand. Virtually all US-EU markets where nonstop service can be supported already have it. In most cases, the current operators are doing so with a connecting hub at one end or the other. And - tellingly - the connecting flow traffic that these hubs provide is necessary to make the nonstop Atlantic segment revenue-viable.

Then there's the belief that there's great potential for new flights between secondary markets in the EU on one hand, and secondary markets the US on the other. For charter flying, maybe. But for scheduled service, it's a license to lose a lot of money. Yes, it is accurate that the lucrative Omaha to Turin market is now officially open for any US/EU carrier. Only problem is to find a carrier interested in carrying full loads of sailboat fuel across the Pond.

New Competition? Not Much. What about the big markets, say, New York - Paris? Or Chicago - London? Not much there, either. Most of the eager Open Skies entrants trying to jump into these routes will face incumbents that have, a) already captured most of the local O&D, and b) have the route cross-subsidized by connecting feed. We already have some harbingers of how much opportunity there really is: EOS, MaxJet, Silverjet.

It's Not Two Separate Players, Either. Aside from assuming traffic demand not in evidence, Open Skies is based on the fantasy that the US and the EU are two distinct "countries" - each with their own national airlines. It's a half-baked assumption - one that mostly benefits US carriers.

See, the US really is a single nation - American consumers will use Delta from ATL, or AA from DFW, or Continental from EWR, to fly to Europe. It's all Americans flying on national US carriers. But the EU, regardless of the Open Skies concept, isn't one country. It's a consortium of distinct nations and distinct cultures - most of which until comparatively recently have historically been at each other's throats. A consumer in Italy doesn't really think of LOT as his national airline. The fly in the Open Skies ointment is that carriers based in the EU are still parochial national carriers. The guy in Paris thinks of himself as a Frenchman, not a Euroista. He really doesn't consider SAS as an airline choice to get to the US.

For example, Air France has found that there aren't a whole lot of Brits hankerin' to get on a French airliner to fly out of London to the US. British Airways has started a new carrier, named, with great innovation and insight, "Open Skies", to attempt to be a cross-national entity. The jury's out on its potential.

US Carriers: Outsourcing Risk To EU Airlines . United, apparently, has scored a coup of sorts using Open Skies. Aer Lingus will operate a code-shared flight between Madrid and Washington/IAD. For United, which will market the service, there is zero downside. UA gets a MAD leg from its IAD hub, plus the incremental US-generated feed, and, according to reports, Aer Lingus will take most of the financial risk. UA will do the US-side marketing. For United: it's zero risk and some sound upside. Furthermore, if the Aer Lingus operation shows real potential for MAD-IAD, United can enter it later, with the Irish carrier having developed it for them.

The Irish carrier had better hope that United's crack marketing team does a bang-up job, because most of the trip originations are going to be in the US. On the other side of the Atlantic, the local brand power of Aer Lingus in Madrid is probably right up there with a bottle of Bud on a Haj flight.

Bottom line: Open Skies has some incremental upsides. If you're a US carrier, that is.
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DataFlash: Bangor

While airline capacity is being cut overall, some markets will see year-over-year growth this spring. This week, we've generated a report comparing March 2009 with last year at Bangor, Maine.

One of the clear conclusions is that the Delta/Northwest deal is not reducing capacity at BGR, contrary to some amateurs on the edges of the industry warning that the merger will put small communities' air service at risk.

This report is just one of hundreds that subscribers of Airports:USA(R) DataMiner can quickly access. Aviation is in real flux, and planning based on bad data can be very costly. The information firepower of DataMiner gives our clients the competitive edge they need. Click here to view this week's DataFlash.

(c) 2009, Boyd Group International. All Rights Reserved.
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Hot Flash - Monday, January 19, 2009

More Airline Capacity Cuts Coming...
Guess Where The "Bright" Side Is?

Listening to the politicians and the media stories, we all might want to abandon the farm, pile Ma, the kids, Grandma and the furniture into the dilapidated pick-up, and head out across the financial Dust Bowl. Even the new president claims a long downturn and lots of pain. Joe Biden, somehow having escaped from the Home, last month found an open microphone, and declared we may be facing a new Depression.

Real cheerleaders, these guys. In this type of media hysteria about politically-connected banks and financial institutions needing government bucks to bail out their incompetent management and maintain end-of-year executive bonuses, anything that encourages the consumer to enter a bunker spending mentality only makes things worse - particularly for air travel.

Advice to the new White House regime: don't quit your day jobs and try to go into suicide intervention as a sideline. With your bedside manner, you'll have people all across the nation doing one-and-a-half gainers out of 20th-floor windows.

So there isn't great news for consumer spending on air travel, at least on the surface.

Airlines Preparing. But How Fast The Demand Drop? But below that thin panic veneer, it appears that the airline industry is adjusting and preparing well for a big decline in air traffic demand. We compared currently-filed June 2009 capacity for major airline systems with that of June 2008. (Data in 000s, and the numbers reflect the entire carriers' systems). Interesting perspectives:

When we take out Southwest, the comprehensive network carriers (AA, CO, DL, UA) will be tossing approximately 9.6% fewer seats into the US skies this year. This tends to buttress the Airports:USA(R) forecasts predicting an enplanement drop of approximately 10.2% to 10.5% in 2009. With all the doom-and-gloom babble coming from Washington effectively urging consumers not to spend money, it's a near-certainty that further cuts in overall airline capacity will be necessary by the time June rolls around.

It can be done. But not by all carriers. Fleet flexibility and diversity of revenue streams will be strengths. Lack of same will be vulnerabilities. That means, if consumers take a clue from our friends in Washington, this summer and autumn may be particularly severe for some LCCs. The current and now-obvious trend of capacity cuts in traditionally leisure-focused markets will accelerate - severely - by then.

Merger Mania - The Cabbage Patch Doll Craze of 2003 - 2007. Who can forget the all-knowing, all-wise Wall Street analysts over the past two years confidently telling investors and industry-watchers that airline mergers were the magic that was "necessary and inevitable" to pull excess seats out of the system. Mergers were the elixir - the only elixir - that will eliminate capacity like rats at a d-Con party, they assured us.

But it was all just a dimbulb media craze - an intellectual stampede to get in front of the camera or in print to look really in-the-know by proclaiming the certainty of airline mergers. In reality, it was information and commentary direct from the Bernie Madoff school of financial analysis. An unquestioned truism with lots of flash, but often stated with zero industry knowledge, and even less intellectual scrutiny.

True, airlines are now slashing capacity, but that's due to projections of declining demand. And, tellingly, it didn't require a rush into mergers to accomplish it, much contrary to the media parrots.

In The CNC Class, It's The Merged Carrier That's Shrinking The Least. The one carrier system - at least as of now - that's cutting back the least is Delta/Northwest. Like, remember, the one that merged. In light of our independent Airports:USA enplanement forecasts of a 10.2% year-over-year drop in demand, a 5.6% capacity cut at Delta is effectively an attempt to comparatively grow - a strategy to gain more share, not follow the bogus merger-mania textbook and cut back with a scheduling hacksaw.

No surprise here. Last year, Boyd Group International accomplished independent analyses of the DL/NW combination, and found very little overlap. It was pretty clear from the start that this deal was about increasing strength and hub-reach. It's unfortunate that some in the media and in the industry unprofessionally attempted to paint this deal as being detrimental to small airports served by the two carriers.

Too bad they didn't bother to do any analyses. Sort of like what Madoff did.

Going forward, we can expect additional cuts in capacity, with focus on highly-discretionary Florida markets, Las Vegas, and Hawaii. The financial neutron-bomb, however will be in the area of premium, front-of-the-curtain traffic in international markets. If this sector falls off severely - which is uncertain at this point - there will be a machete taken to a whole passel of secondary trans-Atlantic routes, and a corollary hit to domestic feed as well.

Ominously, how far demand drops, and how much more capacity will need to come out of the airline system all depends on how badly the folks in Washington continue to tinker with market forces. Right now - and let's stop the political correctness of being forbidden to criticize the new president (nobody felt that noble about Bush) - the reality is that we've got amateurs at the helm.

So, plan on more airline capacity cuts this summer and fall.

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Hot Flash - Monday, January 12, 2009

Airline Priorities - 2009
Taking The Offensive In Washington

The airline industry is not heading for the financial sweetness and light in 2009 that seems to be the current consensus.

Comprehensive network carriers such as American, Continental, and Delta have the wherewithal to adjust and get through the next 12 months of real and perceived economic downturn, simply because they have the management and the fleets that are flexible enough to adjust. LCCs, with less pliable fleet mixes, on the other hand, will be more challenged. It still may be a profitable year, but not anywhere near what was expected just three months ago.

What's been missed are the effects of what may be a very steep decline in both domestic leisure passengers and in front-cabin demand on key international routes. Yup, oil prices are down. It's the revenue side that's getting sticky.

Now Come The Barbarians. Another side that threatens the airline business is misguided legislation to "protect" passengers from the natural downsides of air travel. Like, delays, which are caused mainly by the FAA's inept air traffic control system, not by the carriers themselves. But up until now, airlines have willingly accepted blame, being careful not to criticize the nudniks mismanaging the FAA. That has opened up a huge void for consumerist nitwits and their friends in the media to jump into.

Bluntly, time's run out. This administration and its hangers-on will be in full metal jacket mode to push through a "bill of rights" that will essentially turn airlines into consumerist punching-bags. Unless the airline industry changes its approach, it can count on getting zapped in the next congress. And its passengers will get zapped right along with them.

The only way that'll get stopped is if the airline industry begins a whole new strategy, one that puts the FAA on notice that the old days of schmooze and kiss are over. Airlines need to turn the tables - instead of being the FAA's buddy and friend, they need to let the world know that it's the Agency's failure in the ATC program that really needs a "bill of rights."

A Four-Point Solution. So, here's a simple 4-Point program that actually might result in happier campers in the coach cabin. Just four points that will deal with the issues that ultimately result in angry consumers.

These very same points were made on this site eight years ago. They remain valid today.

Point One: Take FAA Away From Politicians. The Airline industry must demand that the FAA be completely re-structured from a patronage-managed cesspool of political intrigue into an efficient, properly-run overseer of aviation safety. Daily, millions of airline passengers are put at risk because of the incompetence of the political-appointees at the top of FAA. The mis-management of this agency directly affects consumers. Take last summer's scandal with the MD-80 wiring fiasco. A stunt that affected over a quarter million passengers.

Point Two: Airlines Stop "Working" With The FAA. Airlines must start to treat the FAA for what it really is - a vendor, and an agency with unaccountable, politically-appointed senior leadership that abuses airlines and their passengers, not to mention their own employees. Airlines have not demanded that the ATC system be replaced now, instead of more monkeying around with "NextGen" - a program that's more fraud than substance. Instead they still babble about "working" with the FAA to deal with the problem, which is like collaborating with Tony Soprano on eliminating the numbers racket.

Point Three. Leadership, Not Committees. Joint FAA/airline industry ATC "task teams" and committees have produced nothing but cozy relationships between FAA staff and key airline ATC people. These inbred teams meet, discuss, schmooze, and write love letters to one other. Meanwhile, system inefficiencies are skyrocketing. The customer base of airlines is being abused. Airlines need to define the specific results they want, and demand the FAA deliver. Period.

Point Four: Simplify The Travel Process. Airlines (as a whole, as there are some exceptions) have not sufficiently considered what are the real causes of consumer anger. It's not oversales, it's not lost baggage. It's not delays, per se. It's the arrogance of making it difficult or confusing for passengers to do business with them. It's because of consumer anxiety in dealing with a system they don't understand and which is unnecessarily confusing and threatening. Fix that, and it will pull the rug out from under the amateur-act consumer terrorists that want to put airlines and their management in legislative chains.

Simple. But it's not going to happen, probably. Mustn't upset the pecking order in Washington, don't ya know.

That's why we can pretty much bank on a "bill of rights" that'll zap airlines, and consumers in 2009.
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Factoid:
Small Lift Providers - Brand Percentages

A quick review was made of the percent of each airline system that is operated by small lift providers, a.k.a. "regional" airlines. We compared January of 2007 to the schedule filed with our partner Innovata, LLC, for March 2009, reviewing the percentage of departures and seats operated by SLPs under each airline brand.

American has actually reduced its dependence on this leased-in lift over the past two years, and has the lowest percentage of both departures and seats outsourced to small lift providers.

This will ultimately be a competitive advantage, as fleet demand forecasts accomplished by Boyd Group International point to an over-fleeting of small jets, particularly 50-seat RJs. (It's the economics - even at $50 oil.) American is well ahead of the curve in this regard.
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The First 2009 Aviation Trivia Contest

The first - and probably last - Boyd Group International aviation trivia contest of 2009 has a winner. Or, actually, three winners.

The question was, what automaker in the 1960s actually owned an airline? The answer: Studebaker. At the time a budding and profitable conglomerate, Studebaker owned Trans International Airlines.

It was part of a diversification strategy. Despite building some great automobiles, Studebaker Corporation concluded that it didn't have the horsepower or capital to compete successfully any longer against much better postured companies. (Funny, does that seem to describe today's GM and Chrysler?)

So it made the decision to drop the auto business entirely and concentrate on its other lines of business, which by 1964 included the airline, a chemical company, a tractor manufacturer, and several other subsidiaries.

Studebaker also had the good judgement to skidaddle out of the airline business. It sold Trans International and the airline ultimately took the name of its last owner, Trans America Corporation. It was shut down in the mid-1980s. Studebaker went on to acquire and get merged with a number of other companies.

Enough trivia. Congratulations to Stuart Bruins of JAL, Jim Nichols of Delta Air Lines, and Adam Tennant of Central Illinois Regional Airport, who were the first three to get the right answer. Lovely parting gifts are in the mail.
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DataFlash - Gulf Coast Markets

This week, we take a look at the Gulf Coast, and the shares of traffic captured by MOB, VPS, PFN, and PNS.

Some interesting findings. Click here to review.

(c) 2009, Boyd Group International. All Rights Reserved.

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Hot Flash - Monday, January 5, 2009

Year 2009 Overview:
It's A New Game: The Cards Are Stacked.
And The Casino's Burning Down.

At the Boyd Group International Aviation Forecast Summit in October, the US traffic forecast contemplated an approximate 7.8% drop in 2009 enplanements.

As of today, we should be so lucky. Since then, the economic and political pictures have completely changed. The indications are ugly: The nation's financial underpinnings are starting to look like a scene from the beginning episode of This Old House. The federal bail-out program has become a hydrant to hose money toward any politically-connected company.

Finally, the new Obama Administration is starting to shape up like a bad soap opera. Already, one of his tentative cabinet choices has backed out amid a pay-for-play scandal. One can only wonder what other shortfalls in due-diligence may surface in what some in the media would have us believe is the second coming of Camelot.

Economic Picture: A Give-Away Free-For-All. The bailout was supposed to restore consumer confidence. This, in turn, would be expected to retain and enhance air traffic demand. Ain't happening.

The initial idea behind the bailout program was to have the feds inject money into the banking industry to restore consumer and housing industry credit. It's degenerated into a free-for-all fiasco that would make any Third World kleptocracy proud. Billions given to politically-wired companies, but, see, they won't tell us exactly who got the dough, for "security" reasons.

It all depends who you know if you have any chance of cashing-in on the bailout bonanza. Last week, we overheard some congresswoman from Colorado espousing the need for a bail-out of the newspaper industry, probably to keep in business the ones that endorse her. Obama advisor Robert Rubin's former employer Citi Group got $200 billion without a blink. And the good folks at Citi then proceeded take the money and ship more American jobs off to India. If GM does that, it's bad. But if a company with the right connections does, well, it's just not noticed.

Inmates Running The Criminal Justice System. For the gullible and weak-minded who still think that there's change in the air, it's time to come back to rational reality. Remember, the very same smarmy politicians (like, Barney Frank, Chris Dodd, and Chuck Schumer) who for years and even up to six months ago angrily rejected any and all warnings about the coming collapse of Freddy Mac and Fannie Mae, are the same bozos who're now in charge of fixing the mess.

Other than lavishing newly-printed money on politically-anointed companies, there's nothing on the horizon that points to enhancement of consumer confidence - and that's critical to passenger demand. Cut out the Pollyanna nonsense and the blind media idolatry surrounding this new president: The scene in Washington is starting to look like what Nero serenaded.

And that doesn't bode well for the airline industry.

Aviation: No Good News Here. Amid the media adulation of the new administration, the cognoscenti have now fully embraced the FAA's NextGen ATC program as the cause celebre that must be pursued by the Obama Administration. 'Course, most of these folks wouldn't know NextGen from the new menu at Taco Bell. They've just heard that it's the thing that'll fix everything in the sky. So they're parroting it to give the impression that they're in the know.

Unfortunately, that's probably the case with the prospective DOT Secretary, Ray LaHood. He has almost no background in aviation (which, to be fair, is not much different from his predecessors) so when he takes the job he'll defer to the honchos at the top of the FAA for guidance. And that means, yes! consistency in policy. Which means LaHood will come out with all the bromides about the great job these honchos are doing and the wondrous progress in the NextGen program. And nothing will get done - just like the last 20 years.

Bread & Circuses: This Time It's Airlines That'll Face The Lions. Airlines, unfortunately, are not as politically-fragrant as banks, newspapers and other industries. So, in 2009 they can expect that it will continue to be open-season on them, with politicians, nitwit consumerists, and some journalists-without-a-clue, all proposing crackpot consumer rules, regulations and punishments for the slightest inconveniences that might be inflicted on consumers. It will be wonderful entertainment that will distract attention from the real nonsense going on in congress.

Preliminary Observations. Full 2009 Predictions are still in the works. However, watch for the following:

Air Service Goes More Political. What with all the free money being tossed around, and the need for upgrading "infrastructure" we can expect more heavy gelt being tossed willy-nilly at EAS. On the positive side, there might even be a resuscitation of the Small Community Air Service Development Program (SCASD).

Comprehensive Network Carriers - Best Postured. As traffic demand falls, carriers that can most cost-effectively reduce capacity without gutting their entire revenue streams are those that will not only survive, but prosper. In some question: LCCs.

Billions More Flushed Down The NextGen Fixture. NextGen has now been elevated from just a clumsy set of FAA programs into a not-to-be-questioned sacred mission. Big dollars will be appropriated with - and you can take it to the bank - virtually no material results.

Business Aviation: Toast. What with the Kabuki Theater that took place after auto executives flew corporate jets to meet with Congress, it has become a tenet of political faith to decry business jets. Symbols of greed and avarice. Enemies of the people. That means companies building, supporting, or servicing these Inventions of The Devil can expect a very dry 2009. Apparently, entities such as NBAA and GAMA seem to be afraid to come out swinging. Unless they do, general aviation is in a world of hurt. Jobs lost. Economic impact evaporating all around this portion of the industry. All because congress and their little, uninformed friends have become a self-righteous lynch mob.

Airports: Jump On The Bandwagon. Now. The Obama Administration indicates it wants to spend billions for new infrastructure. That means any airport with any long term plan for expansion should elbow itself into line for some of those dollars. Move that terminal expansion up a couple of years, dust off the plans, and go for the dough. At least at airports there's a pressing need that can't be ignored.

Final point: Make no mistake, 2009 is not going to be the rosy year for airlines predicted just as recently as last fall.
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Trivia Question - Auto Companies & Airlines

Speaking of the current economic maelstrom surrounding auto execs, business jets and air travel, there are some precedents in history that might lend some perspective.

Question: what auto manufacturer in the early 1960s owned an airline? Here's a trick hint: the airline was eventually sold off, and ultimately went out of business many years later. The 1960s parent company stayed in business, and might be an unlikely but possible example of what General Motors may need to do in the future.

Again, it's trivia, and a trick question. But the first three correct - completely correct - responses from bona fide airline, aircraft manufacturer, or airport staff (only - no exceptions - we're in this to build business, remember?) received dated Monday January 5, will get a Boyd Group International 2009 Calendar mouse pad. We only have a couple left from the Aviation Forecast Summit. Name the companies and the outcomes.

We reserve the right to modify this deal, expand it, shrink it, change it, and to make the final decision regarding winners and losers. (Sort of like what congress is doing with the the TARP program, only the stakes here are a whole lot lower.) If you have the answer, click here.
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DataFlash
March 2009 v 2008:
Southwest Reduces Flights At 75% Of Their Cities

This week, we queried Airports:USA DataMiner to compare Southwest's city-by-city departures and seat capacity for March 2009 v March 2008.

While total system flight departures are down 2.8%, the real insight is that the airline is cutting departures at over 75% of the cities it serves. Furthermore, the data shows that Southwest is flexibly adding service where it can get the best return, regardless of size of metro market. Heartburn for the competition.

Click here to go to the DataFlash.

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(c) 2009 Boyd Group International, Inc. All Rights Reserved
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Hot Flash - Monday, December 29, 2008

Year 2009 Predictions
That Expected Black Ink Is Starting
To Turn A Shade of Purple

Following the danger signs from November traffic, and reviewing the data starting to pop up for December, the initial Boyd Group International 2008 Aviation Predictions are being revised in light of what could be a much faster and more pronounced decline in air travel.

We are beginning to get anecdotal indications that 2009 isn't going to be the easy ride for the airline industry that was envisioned last fall. Resort travel bookings are either soft, or are being done much closer to date of use. Some isolated international demand is evaporating, too - particularly the front-cabin, premium passengers.

Conclusion: There's been a change in air transportation demand drivers. How much it may affect 2009 is not clear, yet. But without question, this change is starting to hit the airline business.

In the meantime, enjoy the stories by usual suspects in the media who've read repeatedly that 2009 will be a great year, and repeat it because "everybody knows" it's true. Plan on this being the mantra for the next couple of weeks. Then, plan on the possibility of the mantra doing a 180, as soon as reality appears in the rearview mirror.

Fundamentals May Have Changed. Two weeks ago, it was clear that the combination of cost cuts, capacity trims, in the face of continued robust demand for air travel would carry the US airline industry to a profitable 2009. It's the last factor that's now in question.

A lot of new smoke signals have appeared on the horizon, including what may be a consumer base that's literally being told to curtail spending to prepare for the tough times ahead - although most consumers don't see or feel much of the "pain" emanating from the nonsense and financial dishonesty that unfolded this fall among Congress's little friends in the financial world.

Chicken Little Lives. And May Be Right, This Time. The news is overflowing about poor old GM and Chrysler - gee, if they go under, the entire economy will, too. Or so the Cassandras in the media seem to be repeating. Further helping encourage consumers to put their wallets away is the tsunami of me-too media stories about the "plunge" in holiday retail sales (like, as of 27 December, it was claimed to be down 4%, not exactly a free-fall). The point: these types of dynamics encourage consumers not to spend dollars on travel. They encourage businesses to cut investment and expenses.

And the politicians are not helping. Note that even the President-elect pronounced that things "will get worse before they get better." Great vote of confidence, guy. Makes one want to go out and book that Florida vacation, right? Then there's the VP-elect, who somehow escaped from political house-arrest, found an open microphone, and told the media we might be facing another depression. Really strong encouragement for consumers to get out there and do some shopping to boost the economy. Or, book airline travel.

Some Carrier Systems Will Do Well. This is not to say that the airline industry cannot adjust. But some carriers will have a more difficult time than others. The magic is to be able to cut costs by flying less in the face of declining demand, all the while keeping unit fares up and making sure the revenue base is not hollowed out to the point that system synergies collapse.

This gets back to diversity of revenue streams. The hard reality is that American, Delta, Continental, et al, have the least exposure, because they have more diverse revenue streams. LCCs - they are the ones that will be most challenged. The level to which a carrier can rely on non-discretionary, non-impulse consumer dollars will determine how badly it gets hit in the event consumers believe the President-elect that "things are going to get worse."

If they do, the airline industry is in for a very challenging 2009.

Next week, a Research Paper on the subject. As it stands now, it won't track with the sunshine stories about 2009. The clouds may have rolled in.

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DataFlash: AirTran Atlanta Traffic

This week, the DataFlash ranks AirTran load factors at Atlanta for the first half of 2008. It's just one of the dozens of instant research reports that subscribers to Airports:USA DataMiner can access.
Click here.

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Hot Flash - Monday, December 22, 2008

Not All Capacity Cuts Are Created Equal

As of latest airline schedule data, filed last Wednesday, US airline capacity in January will be down 8.1% from January 2008.

Looking at the numbers, analyzed from data derived from our partner Innovata LLC, essentially every carrier except Hawaiian is slashing capacity, and even there, HA is just partially filling the gap left by the demise of Aloha back in March. The additional Hawaiian Air capacity is less than 40% of that lost when AQ went to airline heaven last March.

Target: Regional Jet Fleets. The Annual Global Fleet Demand & Trend Forecast accomplished by Boyd Group International for 2009 - 2018 (and currently under revision) initially indicated over 800 CRJ/ERJ airliners coming out of fleets by the end of the forecast period. Pushing this, obviously, was the spike in jet-A prices toward $4, which made the economics of 50-seat and smaller jets about as attractive as Janet Reno in the swimsuit competition.

Now that fuel is finally below $2 - well below, as a matter of fact, one might conclude that the pressure is off to park large numbers of sub 51-seat jets from US fleets. It is, but only temporarily and the numbers of these jets heading for the sunny climes of the Arizona desert will still be fairly substantial. Well before the beginning of the post-2006 oil spiral the US airline industry had a glut of 50-seat jets. That glut continues, even at $1.50 fuel.

Another point is that even at $1.50 go-juice, the range of economic RJ missions is still severely limited. This is particularly true for units under 50 seats. Segment profitability analyses accomplished in various Boyd Group International projects indicate a disturbing number of red, bracketed numbers where RJs are being utilized.

The question comes back - and from some quarters it's almost an accusation - that "large numbers of RJs simply cannot get parked," because "airlines cannot cut capacity that much." Here's a hint: they sure can when that capacity loses money. In fact, airlines are doing it now. Take a gander at the above chart. The percent decline in departures exceeds the percent decline in seats. That means smaller airliners are getting the ax.

Air Service: Less Affected Than It May Seem. Remember, this capacity is coming out of mission applications that don't bring home the bacon anymore. That means the 9PM fill-in flight between IAH and ORD that was operated with an RJ. Or some of the nonstop markets over 600 miles that produced red ink in trying to feed a connecting hub. Or the RJ-on-top-of-the-717 flying that was in place for competitive harassment, but may now be getting a bit pricey. Or the nonstop 37-seaters from LGA to BOS. (You fill in the actual airline brands involved.) A lot of airplane hours are tied up in these types of flying, in addition to markets where frequency is reduced, but not eliminated entirely.

The point is that the majority of the RJ missions being eliminated are not going to result in small and mid-size airports having to convert their runways into dragstrips.

Shooting The Messenger Won't Change Reality. Needless to say, some folks in some corners of aviation really don't like our forecast. But it's strictly business.

We tell our clients what we find, not what they want to hear. Boyd Group International has a proven track record of accurately forecasting aircraft demand trends that went counter to "the consensus." In the early 1990s, some our clients involved in the manufacture and support of turboprop airliners were uncomfortable with our forecasts that net-new unit demand was going to hit a brick wall, and that economics of 19-seaters in particular were going to be very problematic. Both proved right, and were at the time very contrary to the sacred "consensus."

Take it to the bank: we will see significant numbers of "regional jets" pulled from service over the next 24 months. But there will be plenty left flying across the US skies.
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Wonder Why Wall Street Goes Bonkers Occasionally?

Below is Yahoo news for the airline industry, queried on December 21, 2008 for the latest airline articles...

Remember the "United's Going Bust" fiasco of last summer when the word went out, based on an old story, that the carrier was filing bankruptcy? Wonder how many bozos on the 'Street are trying to short ATA stock this morning?

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Aviation Data Flash:
Hawaiian Airlines Operational Performance

Starting today, we will be adding a weekly Data Flash that will look at various areas of aviation, sometimes with some commentary. Sometimes not, when the data are self-explanatory.

This week, we've taken Hawaiian Airlines full-year data through 2Q 2008, and reviewed in by key performance areas. Actually, Airports:USA DataMiner is doing the analysis and the parsing. The data you'll see is actually one of the many analytical reports that DataMiner subscribers get with just a few key strokes.

It's one example of how DataMiner(TM) is different from other sources. Most others just give tables of data, some of which may be the raw numbers without any review for accuracy. Airports:USA provides immediate industry intelligence - Competitive Firepower. It's also an example of the analytical resources that are brought to bear for our clients.

Click here to go to the report.

(c) 2008 Boyd Group International, Inc. All Rights Reserved

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Hot Flash - Monday, December 15, 2008

More Disturbing Demand Indications
Deeper Capacity Cuts In 1st Quarter?
Latest Data Now Available At Airports:USA.com

All indicators now are pointing to a need for the airline industry to proactively yank even more capacity out of the system in the first and second quarters of 2009. Regardless of falling oil prices, the industry cannot take any chances on getting stuck with excess seats that have to be fire-sold, thereby destroying whatever pricing traction that's been gained over the past three months.

Newsflash: Traffic Had Better Be Down This Holiday. We're being regaled by the headlines: "Holiday Traffic Expected to Plunge 8%!" or "Airline Industry Girding for Shrinking Passenger Loads!" Really with-it reporting.

Here's a hint for the editors dreaming up these headlines: the holiday 2008-2009 traffic has to be down about 8%, or the airlines should start right now installing hand straps from the cabin ceilings, like the 7th Avenue subway. That's because year-over-year airline capacity is down about 8%.

Consumers: Finger On The Spending Trigger? That much said, January is the unknown quantity. The doomsday reports about the auto industry, job losses, banks being bailed out, and people fearing for their jobs are somewhat countered by scattered reports of retail spending not declining, and malls appearing full of shoppers.

When the November new jobless claims are given at least a cursory review, it appears that the damage is not - at least yet - consistent across the economy - a huge proportion of these losses revolve around financial-related industries. Nevertheless, prudent planning would indicate that carriers will cut capacity first and take a chance they might spill some demand.

Watch International Demand. As in the past, any sudden cuts will be adjustments - not wholesale slashing of mainline routes. Additional RJ feed capacity pulled down, and frequency reductions in some major markets. Another area to watch is international - particularly secondary destinations that need strong hub feed to be viable. China demand is looking problematic as well. This puts Northwest (Delta) and United in less trans-Pacific jeopardy. These two airlines can pull down some Asian nonstop flying and flow it over their Tokyo connecting hubs. US carriers that only have linear routes to points such as Shanghai have much less flexibility in the event of a major downturn in demand.

Monitor Capacity Changes Weekly At Airports:USA. Historically, the lag time between filing a schedule and actual operation usually demands that carriers plan several months out. But if they see a rapid booking decline, they can - and will - make schedule and capacity adjustments very quickly.

Boyd Group International's Airports:USA DataMiner has a unique interactive capacity map that will give you the latest capacity data at the click of a mouse. It's not a static report, but state-by-state and airport-by-airport data updated weekly from airline schedule changes filed with our partner Innovata, LLC. The map covers every commercially served airport in the US, and gives you changes in both seats and departures for each of the next three months. The example above shows the overall February year-over-year capacity change for Texas airports. A click of the mouse will give you changes in departures, too.

To access the DataMiner Interactive Capacity Map, click here.
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Ignore The Academics. We're A Lot Better Off
Airline Deregulation - Thirty Years On

December 15, 1978. The day that the process began to free airlines to go where they wanted and charge what they wanted, without having to go though CAB approvals.

Amid all the financial and political news, it's an event that's not likely to be mentioned much in the media. That's probably a good thing, because it will save the public from hearing an enormous amount of ignorant babble, mostly from academics who haven't hit a lick in private industry but think govenment regulation is a great thing. Or from business contributors who are "experts" because, golly-gee, they travel a lot, and besides, they experienced an hour delay last week at Chicago.

But the fact is that thirty years after Carter signed the law, the nation is better off.

It's About The Economy. Not The Airline Industry. Needless to say, there are the usual suspects who will proclaim airline deregulation to be a failure.

Look at the mess that's taken place in the airline industry. Carriers coming, going, entering Chapter 11 so many times there's a need for slot controls at the bankruptcy court. How many airlines have gone out of business? And, we mustn't forget that now-common factoid that airlines have lost more money since deregulation than they've made since Wilbur first misplaced Orville's luggage at Kitty Hawk.

Look at the wreckage! TWA, Eastern, Braniff, all gone!. Ozark, Piedmont, Republic, all gone!

All true, probably. But who cares. All that stuff is a non-sequitur. Wake up and smell the flight frequencies - Deregulation was about the consumer, not about ensuring jobs within the airline industry, which anybody working in the industry knows never happened and is a long way from today's reality. While the chaos in the industry has been very difficult, the free market has worked: The consumer is far better off today.

True, some communities have lost service. The fact is that most of these couldn't support the costs of the service, and the vast majority have alternative air access, albeit in some cases a bit of a drive. That's economic reality, not the result of airline deregulation.

But countering this, vastly more communities have vastly more air service access than in 1978. Take Bloomington/Normal, Illinois. In 1978, it basically had service from one major carrier - Ozark, which could multi-stop or interline the 35,000 annual enplaned passengers at BMI. Today, the market's around 250,000 enplanements, with service by four airlines, accessing five connecting hub operations. Deregulation made it possible, and the service has engendered enormous economic growth in Central Illinois. And there's a lot more competition, too.

Another factoid often intentionally ignored by the folks who want the feds to do their black magic to the airline industry: Between 1978 and 2004 (when oil prices started heading up) the average per-mile cost of air travel, adjusted for inflation, dropped in half. Sorry, that would not have happened without the Deregulation Act.

Nothing's Perfect. But Politicians Getting Involved Is Entirely Imperfect. Most of the complaints about Deregulation center around wanting the government to step in and do what they did so well for years with Fannie Mae and Freddy Mac: try to defy economic gravity.

Without question, the free market, combined with vastly-changed airline economics, has produced results that some people don't like. But deal with it: letting the likes of Barney Frank, Chuck Schumer, John McCain, Ron Wyden and the rest of the stellar Peanut Gallery in congress get their paws on the airline industry will result in a political free for all that nobody will win.

Just like they did with the financial industry.

The Deregulation Act was supposed to be the catalyst for new airlines popping up all over the country. In fact, that actually did happen, but there's been a lot of failures. Many of them were crackpot schemes - the Deregulation Act had no provisions to protect idiots from themselves in starting airlines.

Boyd Group International has dusted off a review of some of the more innovative post-deregulation airline start-up failures. Click here to review it.

(c) 2008 Boyd Group International, Inc. All Rights Reserved

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Hot Flash - Monday, December 8, 2008

Disturbing ASM/RPM/Yield Results
November: Traffic Stumbles Big-Time
Is Free-Fall The Future For 2009?

The November 2008 airline traffic numbers reported so far indicate that the recession - or fear of recession - has finally reached the ticket counter.

Until Now, Capacity Cuts Outran The Grim Reaper. Over the past year, and particularly the last six months, the US airline industry has been reducing capacity in the face of strong demand, i.e., pulling out seats faster than any potential decline in core demand. ASMs dropped faster than RPMs, keeping load factors high, and - at least theoretically - giving carriers some traction to get unit fares up.

Until now, the main impetus for the reductions was not falling demand, but increased fuel expense. As oil prices headed up past $90 and toward the planet Mars, many formerly-profitable applications of scheduled air service became non-economic. Contrary to some of the lightweight media reporting, major airlines were not "slashing unprofitable routes." More accurately, they were merely trimming capacity, pulling down some longer-haul regional jet-operated feed routes, and re-structuring connecting hubs.

Also contrary to some widespread lore, major carrier systems have not cut and run from any large domestic O&D markets, and - destroying another myth accepted by some as if it came directly from Moses on his way home from Mount Sinai - major carriers have not been pulling down capacity due to alleged strong competition from "low fare carriers." in fact, LCCs (a very imprecise term, but it's clear which carriers it includes) are all in reverse-capacity gear, too. More accurately - and missed by many in financial world - LCCs may now represent the single most troubled part of the retail airline business:

Consumers Are Spooked. Is Traffic Heading For A Free-Fall? But November traffic data clearly show that demand may now be falling much faster than carriers are cutting capacity. The consumer and his wallet may be shifting to a bunker mentality, based maybe not on hard data, but on the wave of bad news trumpeted nightly across the air waves.

The leaderless lunacy and political free-for-all on Capitol Hill aren't helping, either. Washington has degenerated into the legislative version of Somalia - nobody's really in control and the vacuum has been filled by various political warlords, i.e., committee chairmen holding vigilante hearings in front of C-Span cameras for their own cheap political ends, all of which portend that the financial end is near. Each warlord has his/her own tinpan solution - usually hanging a corporate executive from the Capitol yardarm, while completely ignoring or even elevating financial industry pirates who've sunk the economy, but just happen to have big political connections.

In this environment, businesses are likely slashing travel budgets. Consumers are putting off purchases, and that now includes air travel. As was discussed at the Boyd Group International Aviation Forecast Summit in October, the annual vacation to Disney World, or the summer trip to visit Grandma, may be postponed this year. What is very clear from November data is that air travel demand could be heading for very significant and immediate monthly declines.

Some Carriers Are Prepared. Others Aren't. This in turn will affect various airlines differently. Some, such as American, appear to be well positioned to adjust. Others, such as United, may be facing tougher times due to questionable fleet decisions. And the LCC sector may be in for a battering that they've never seen before and are ill-prepared to deal with.

Boyd Group International has completed a brief Research Review Paper for its clients, outlining what may be in store for US carriers in the coming months. Click here to download the pdf file. Get prepared. What's in that Paper will be what a lot of those sharp Wall Street "analysts" will be "predicting" - months from now, after it's already obvious.

(c) 2008 Boyd Group International, Inc. All Rights Reserved

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Hot Flash - Monday, December 1, 2008

The New Symbols of Evil -
Business Jets - Threatening Humanity

When you're afraid to state and defend the truth, good and right always lose.

It is particularly so when the fear is based on being politically-incorrect. Deal with it: political correctness is nothing more than mob mentality - disagree, and at the least you will be shouted down in one form or another, and at worst burned at the political stake. It's marginally less extreme than how terrorists treat infidels, but the core concept is the same: disagree with the dogma, and you will be punished.

Never was this more clearly demonstrated than in the case of the Big Three auto executives who showed up in the Marble Playpen, a.k.a. Congress, to plead their case for a federal bailout.

Forget Lack of Consumer Credit. The Media Found The Real Problem. The hearings were embarrassing. The CEOs looked like Team Nebbish From The Planet Motown. But the real story came later. A vigilant TV network correspondent discovered, no doubt after five minutes of earnest research and a cab ride to Reagan National, that the CEOs, coming to Washington to ask for taxpayer money actually flew, yes!, private jets!

The outrage! They're losing billions, and they have the fat-cat crust to fly in private corporate jets down to Washington to beg for money! The fat pigs! They could have flown commercial, just like the rest of us! Congress, don't give 'em diddly.

And that became the fodder for every indignant talk show host on the air. Nobody dared ask any questions. It was now dogma, and don't argue: These CEOs are pigs who have killed off their companies, then run to Washington in luxurious private jets asking for our hard-earned dollars.

Well, here's a flash for the intellectual fundamentalists who are so righteously calling for these CEOs' heads, based on the mob-belief that they sipped champagne and smoked Davidoff 25s on the way to Washington, while the rest of us were having our toiletries examined in the TSA line at DCA: Those executives did the right thing. They should have taken those corporate aircraft to Washington.

Of course, based on their prior decision to be congressional punching-bag photo-ops, we can bet that they won't stand up for themselves. But here's a letter that one or all of these CEOs should have written to Congress, but won't.

Dear Senator Snort:

I understand there is considerable uproar about my mode of transportation when I came to Washington to testify in regard to the challenges facing my company and the US auto industry in general.

It is completely accurate that I utilized a business jet owned by my company. It is also accurate that this mode of transportation is more expensive than commercial flights would have been. I can understand the public perception, particularly in light of how the story was spun in the media.

Let me provide you with some facts.

First, we have a corporate flight department because in many instances it allows us to move our people far more efficiently than commercial air. Time in our business can be critically expensive.When we need to move a team of production engineers from Lansing to our plant in Shreveport to fix a line problem, commercial flights would take all day - or, depending on the time the failure takes place, more than a day. Our corporate flights would be less than 3 hours to get to the site and begin to fix the problem.

In my case, yes, I did utilize corporate aviation assets to get to Washington. I fully intend to do so again should a similar event arise. To do otherwise would be irresponsible to my shareholders, employees and investors. I report to them, not to gadfly reporters, or to inept agenda-laden "environmentalists" who would be happy to see us all live in nice clean caves.

As you must certainly know, this is a crisis for my firm and the entire US auto industry. Immediate attention is needed, including my full-time efforts on the matter. You seem to forget that the rapid rise in gasoline prices - brought on, I may add, by Washington's continued lack of cohesive energy policy - caused a corresponding decline in demand for substantial parts of our product line. Then credit dried up over the past year, again reducing auto demand. Our product line wasn't the proximate problem. Your lack of energy policy and sloppy oversight of the financial industry led us to this.

As for the "big SUVs" you tend to vilify, here's a flash for you, Senator: we were building those because that's what the public wanted. There has not been a single Chevrolet Suburban sold at the point of a gun. At least not in this country. Another flash, Senator: amid your adulation for Japanese companies supposedly only building small cars, you've missed the facts. Until very recently, these companies were scrambling to put up factories in Texas and Mississippi to build large trucks and SUVs. But in regard to the current crisis, let's get it straight: demand has fallen over 30% - and there's no company that can easily or quickly adjust.

Back to the corporate jet. I have a company in crisis and must be in touch at all times. On the corporate jet I have communication with all parts of my company at all times. I conduct business while on that airplane. This being a crisis, I find that is far more effective than being out of pocket, lining up at Detroit Metro, waiting in line at the TSA that you toss money at regardless of its effectiveness, then waiting again to board the flight. Then there is the sloppy air traffic control system you inflict on the public, which requires airlines to fly in excess of the time they really need to, and gives me a 20% chance of not arriving on schedule, anyway.

This is a crisis. I had a meeting with you and your committee that was crucial to my company. Use of the corporate jet was necessary and the best use of my time. Again referring to the ATC system you seem to tolerate, it was the best use of your committee's time too, assuring I would be there when the hearings started.

Funny, but I don't seem to have been able to find your outrage on others' use of private jets. Take Robert Rubin - he's the guy that got paid over $100 million by Citi Group just before it tanked and congress, almost without a peep, bailed it out for $200 billion - far more than my industry is looking for. (How many manufacturing jobs does Citi provide, by the way?) I'm sure Mr. Rubin is using private jets for some of his transportation needs. After all, isn't he also an advisor to the President-Elect?

You're calling my use of a corporate jet "hypocrisy" - yet I cannot locate any such outrage on your part regarding Ai Gore's continued use of such aircraft. And isn't he the one constantly babbling about "carbon footprints" and "global warming" and other not-to-be-questioned voodoo?

I regret the media circus. I regret the situation my industry is in at the moment. But we need to focus on solutions and on facts, not innuendo. This corporate jet thing is nonsense. I will use the resources I have to make my company as efficient as possible. The corporate flight department is part of those resources.

Sincerely

Auto Industry CEO

Make no mistake: corporate and business aviation are now in the cross-hairs of a new administration that has a ready ear to people who want it cut or eliminated, on the basis of it being "elitist" or "environmentally-irresponsible."

It's going to be an interesting four years. So, where's the NBAA when we need them?

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Hot Flash - Monday, November 24, 2008

The Holiday Media Circus

This year's real Thanksgiving entertainment will be no different than in past years.

We're not talking about the Macy's Parade. We're referring to the three-ring circus a lot of the media builds every year around the "surge" of humanity cramming itself into airports and onto "jam-packed" airplanes. In one sense, it is like the Macy's Parade, the one with all the floats. They both involve a lot of hot air.

We've already had the perfunctory performance by the non-incumbent in the White House, who suddenly appeared and again this year boldly declared military air space open for, as one newspaper described it, the crush of holiday flights. Neither W nor the media seems to understand that air travel over Thanksgiving isn't like I-95 heading out of New York: there is no crush of flights - it's essentially the same number of airplanes in the air as any other Thursday.

So this opening of military airspace is a stunt only. (Funny, we're in the most dire financial crisis in 70 years, and the most we've seen from W is this pathetic lame duck attempt to look like he's in control by trying to reduce flight delays.)

No More People - Less, Actually. We'll be entertained by the 6PM Eyewitless News Reporter, Victoria Vaporlock, reporting live from East Upchuck International Airport. Amid crowds in the background, she'll repeat mindless statistics she's entirely incapable of understanding from ATA, or AAA, or whoever. What she'll not understand is that there aren't substantially more people flying. Airlines have been operating at 80% or more for the last three years, anyway. And this year, there are no more airplanes in the sky than any other week-end. Less, actually.

Not mentioned, probably, by Vickie and her crack investigative team back at the studio: there will be fewer flights and fewer seats this Thanksgiving. And if they do know this, it's a leadpipe cinch the story twist will be something like, "and that means even more crowded airplanes..." Hint to Vickie: airplanes are not subway cars. They get full. They don't get "jammed." When all seats are all occupied, as they have tended to be over the last three years, that's it.

But fear not. There will be the vapid interviews of Daddy, Mommy, and little Jimmy standing in the airport security line, commenting on how they're up to the challenge of getting through this minefield-like travel experience.

We can also probably expect one news network or another to put a correspondent live at the FAA control center in Virginia, to report back instantly on any developing flight delays, sort of an imbedded reporter at the battle front of airline chaos.

Enjoy the show.

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The End of The Southwest Effect...

No business model is immune from the need to evolve. And that includes Southwest Airlines.

Businesses that fail to understand this go under. Some, like, say, Skybus, whose business model needed to "evolve" (like, into the trash bin) before it started, go down fast. Others, like in ancient times, PanAm, die over time, because it refused to evolve - or maybe couldn't evolve. Next destination: Glub City. On the other hand, there are examples of airlines that saw the writing on the financial wall, tossed their business plan into the nearest shredder, and evolved. Frontier Airlines is one example.

Apparently, Southwest certainly does understand the need to evolve, which is the reason that it will remain a dire threat to its competition. But it won't be the same airline - and certainly not the mythical one that many in the media and in academia talk about.

The Single-Strategy Myth. First, despite the lore, Southwest has not had any single model or strategy in regard to where it operates. If it had, it would be dead today.

There's the babble from some financial analysts that "Southwest only flies to secondary airports..." Run from these people, and for crying out loud don't invest any money with them. Right, Southwest flies to "secondary airports" like LAX, DTW, SEA, TPA, etc. The reality is that Southwest has applied various innovative market strategies depending on the region, the competition, and its own corporate objectives. This has been the basis of its success. And it is the reason other carriers had best not assume that Southwest will be what the Volkswagen was in the 1960s - a product that believed it was invulnerable.

Easy Pickin's Are Gone. And The Competition's No Longer Easy Meat. But one thing has changed: in the past Southwest has had what it describes as "low hanging fruit" to go after - places where conditions were right for quickly stimulating new traffic with low fares as well as in some cases, secondarily grabbing some market share from incumbents. That meant Detroit/Metro. Or, San Jose. Or, Albany. Or, Jackson. Places where it could create market share, not necessarily have to fight to the death for it. Take ALB and BUF - with just two airports, Southwest accesses at least 80% of all of the ex metro-NYC population in New York State by having service at both ends of the New York Thruway. That was the "Southwest effect" - find an opportunity and spike the market upward. Plus, WN's lower fares would have consumers driving in from other cities.

But those days and those opportunities are pretty much over. And, based on its strategic moves over the last three years, Southwest clearly knows it. Quietly, it is evolving, safely and serendipitously behind the smokescreen of lore being issued by the usual suspects in the media and on Wall Street who don't hear thunder and confidently predict things long after they've already taken place.

Recognizing The Problem: Then It's Already Half-Solved. Entry into DEN, MSP, PHL, IAD, and now, LGA, does indeed signal a change. These are not "low-hanging" traffic fruit. They are places where Southwest must claw and fight for market share. They are places where, contrary to the myth, the outcome is not certain profitability and success. Competitors match fares. Competitors are now not wildly out of line in terms of their cost/revenue ratios. Competitors often have a wider product - advance seat selection, in-flight entertainment, etc. Competitors are no longer easy meat. Mostly.

Southwest also has cost issues. Labor, which due to decades of excellent management-employee cooperation, high management integrity, and a team spirit other carriers can only dream of, is more like the loyal opposition than a bitter adversary. But it's now coming back to the bargaining table and won't likely leave without some meaningful pay kibble. Fuel hedge advantages are eroding, with the gradual expiration of the agreements and the drop in fuel costs at competitors.

It's Not Just Costs. It's Revenue Streams, Too. The fleet - two 737 platform variants - offers some efficiencies, but does limit the diversity of revenue streams. American can carry Mr. Chiang in from China. Southwest can't. Then Mr. Chiang is likely to take three to four domestic trips on AA before he heads back to Shanghai. He can visit his plant in Shreveport and his investment advisor in Bloomington. All at very healthy yields. Southwest doesn't get that business. Delta can access those pipe equipment salesmen heading from Detroit to the Paccar truck plant in Columbus, MS. Southwest's fleet cannot plumb that deeply into these types of emerging business flows. And these are where much of the emerging revenue future of the airline business will be found.

Then, right when it appeared ripe for Southwest to plunge into strong and relatively good-yield markets in the Caribbean and Mexico, the economy takes a powder.

All this points to one thing: the Southwest models are going to have to continue to evolve. Today, at many of the mid-size airports served by WN, as much as 50% or more of the passengers are not point-to-point. They're either on multi-stop trips or connecting. That can thin out the net yield margins. It also points to a need for WN to barge into markets that only a few years ago they indicated they wouldn't consider on a bet. Like Denver. Now, slotted and congested LGA.

Bottom line: Southwest is an airline facing very real challenges in 2009. The basic strategy will probably be to massively increase system revenue by plumbing into markets where there is strong potential for massively increasing system revenues. That means larger metro airports, even if they have to fight for market share.

And it will be a fight.
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Community Team Building Programs

With all that's going on in the airline industry, Boyd Group International has been honored to provide Community Team Building programs at a number of airports around the nation over the past three months.

The CTB program is a tailored analysis of the client community's current service, current and expected airline trends, forecasted traffic and capacity projections, and clear outlines of the future. The program draws on Boyd Group International's industry-leading traffic and capacity database, Airports:USA DataMiner, as well as the firm's independent forecasts of future enplanements.

Presented on-site to civic and government meetings by professionals from Boyd Group International, the CTB program focuses not only on the challenges of the future, but the opportunities as well. In particular, we've identified a number of traffic and revenue opportunities for communities as a result of the Delta-Northwest combination.

The CTB program has been utilized by communities over the years to build civic support, provide clear information on current and potential air service, and manage local expectations. Communities that have had a CTB program tailored to their specific situation will confirm that it results in positive increased support for the local airport. The reason is simple: people respond to straight, no nonsense accurate information. And that's what we've been providing in our CTB programs for over a decade.

We still have a few dates in January and in February available for on-site CTB presentations. For more information, please click here. Or give Mike Mooney a call at (303) 674-2000 to discuss your specific needs.

Hot Flash - Monday, November 17, 2008

Airports & Financial Institutions: Take Note
Airliner Demand -
A New Day. And It's A Cloudy One

Boyd Group International is now revising its 2009-2018 Global Airliner Fleet and Trend Forecast. Reason: it's becoming clear that the check has arrived at the table for Chinese and Indian airlines. And it's one they might not want to pay in full right away.

This will mean a lot more than a revised production line at Everett or Toulouse. It could be the start of events that may fundamentally shift the aircraft manufacturing industry.

Asia: The Fuse Is Lit. The Indian airline industry, while traffic-robust and growing, has defied financial gravity for years. Cracks are beginning to show. Kingfisher - one of the strongest of the players - saw its stock jump with the announcement of a potential outside buy-in. The rest of the Indian airline industry makes the early 2002 dot-com mess look like a friendly game of Monopoly. In China, China Eastern and China Southern - the latter being somewhat of a star in the Middle Kingdom airline game - have asked for bail-outs from the Chinese government. Things are not very transparent there, but one thing's clear: the airline industry is re-structuring, which is airlinese for cutting back.

What all this means is that much of the expected new aircraft demand in this region may be starting to glory-hole into a giant crater of cancelled or deferred orders. That could be more than just a decline in near-term airliner demand.

Great News For US Carriers? The potential collapse - or partial collapse - of airliner demand in Asia could lead to a number of fundamental changes in the structure of the airliner industry. The usual suspects in the financial world will simplistically conclude that this will lead to major problems at Boeing and Airbus. Thank you, Captains Obvious. These "analysts" generally have forecast horizons that are only several inches beyond their noses.

A decline in airliner demand in Asia, plus a long strike, will put Boeing into a corner, and this could put some US carriers - particularly American - in the driver's seat (or cockpit, so as not to mix metaphors). That fleet of AA MD-80s at $60 oil is no longer a financial dagger aimed at AA's financial heart. Nor one that has anywhere the need for immediate replacement. (These are those "fuel guzzling" airliners oft mentioned by some in the media who couldn't recognize an MD-80 from a '53 DeSoto). AA can now wheel and deal with Boeing for new 737s. (Don't take too much from the belief that there may be problems getting financing. Where there's a big order, there's going to be financing for a company like AMR).

United, strategically-adrift, has no - zero - new airliners on order. That makes sense for an entity that's being managed mostly to take advantage of the merger-mania that never existed in the first place. If they get a new management team and with Boeing and Airbus trying to fill holes in their single-aisle airliner production lines, UA could also cut some very tough and favorable deals.

Is There A Bombardier In Your Future? The fallout from the decline or collapse in Asian airliner demand could also benefit Bombardier. Boeing and Airbus will be scrambling to shore up existing product lines. Having the only next-generation airliner in the 100 - 150 seat class, and assuming that it comes out as advertised, GTF engines included, the Bombardier C-Series could evolve into the replacement platform for a lot of the world's 737s and A-320s.

Smaller Sigle-Aisle Demand? We're also revisiting the issue of the sub 100-seat category. Forecasts by Boyd Group International show a very difficult market for smaller airliners. RJs are dead as Tasmanian dodos. But we can find very limited demand in any region of the world for any thing under 90 seats. As of today, that projection has not changed.

The revised 2009-2018 Global Airliner Fleet and Trend Forecast is expected to be ready by December 1. For more details on the structure and scope, and to order, please click here.
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In Passing: Mid-America Empty Again

Allegiant has announced it is dropping its two weekly flights out of Mid-America Airport in southern Illinois.

The airport opened as an extension of Scott AFB in 1998, amid a flurry of enough glowing consultant reports and studies and analyses to fill the fiction section of Barnes & Noble. It would take all that overflow traffic from STL. It would be an economic generator. Mid-America was to be a beacon for the concept of reliever airports across the nation. It was a slam-dunk.

That was ten years ago.

The place is still empty and a financial loser. The latest scheme is to make it an international cargo hub, which makes one wonder who did the studies that led them to build a beautiful new passenger terminal. This follows a reported scheme last year to make it a gateway for feed or seeds (?) or other weird stuff from Indonesia.

Mid-America is today a beacon for what not to do in regard to airport capacity. (Not to worry - they do have one weekly flight from Bogota, delivering flowers. Right when fuel is making such operations dicey and consumer spending is dropping.)

Boyd Group International is proud that it was the only aviation consulting firm that openly advised against the project - a suggestion not well received at the time by the State of Illinois. We're proud that we are the only consulting firm that independently told it like it was - and how it would turn out. The rest of the consulting industry hid under their intellectual rocks.

We point this out because we sometimes take hits for stating facts that other consultants will not, including some all-knowing sneers from some of those very consultants. But that's our job - keeping our clients from making mistakes, regardless of what the ambient "experts" might be promoting.

Like Mid-America.
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Airports:USA Forecasts Are Now On-Line

We're excited to announce that the Airports:USA Forecasts, published since 1992, has now been upgraded to the nation's only interactive, continually-updated web-based forecast source.

Built on the Microsoft SQL Server 8 platform, Airports:USA gives users instant access to year-by-year enplanement and traffic trend forecasts for 147 of the nation's airports, representing over 98% of all US passengers. In addition, this will be upped to 188 airports, effective in January.

Airports:USA provides the only enplanement forecasts accomplished entirely independently in the private sector. Each airport forecast is accomplished on a bottom-up basis, reviewing local and national economic factors, plus specific airline capacity and strategic estimates for each airport. Unlike FAA forecasts, it is not a trend-lined set of numbers that reflect market factors that are out of date.

Reflective of Today. Not Last Year. Unlike other forecast sources, Airports:USA is not a snapshot in time. It is updated consistently throughout the year. For example, when Southwest announced service at MSP, professionals at Boyd Group International immediately analyzed the effects on enplanements, and updated the 2009 and later forecasts. Within a week of ExpressJet canceling its branded service, the forecast was revised at the airports affected. This makes Airports:USA a unique planning tool.

Airports:USA Forecasts are cost-effective. Now airports, airlines, aviation authorities, suppliers and financial institutions have immediate access to traffic data that can be an invaluable planning tool.

Airports now have a source that tells them right away what to expect and plan for when airlines make schedule, capacity or fleet shifts.

Vendors and concessionaires will have a window to the future revenue flows through an airport, as well as corollary facilities, such as rental car facilities. (And, Boyd Group International can also assist concessionaires with analyses of concourse-specific and terminal-specific passenger flows. Give us a call for details.)

Financial institutions now have a source of airport forecasts independent of FAA data, and independent of the airport itself. Airports:USA forecasts are accomplished entirely in-house, without any secondary agendas that can sometimes color forecasts from other sources.

Airlines find Airports:USA to be an alternative, outside review of traffic flows and enplanement trends at both currently-operated airports as well as those in the planning stage.

Airports:USA Forecasts on-line is part of a set of aviation planning tools from Boyd Group International. Airports:USA DataMiner has already become the new advanced source for traffic, financial, and capacity data. Like the online Forecasts, DataMiner is based on the most advanced software platform available, giving subscribers easy and fast access to the information they need to plan for the future.

For more information on Airports:USA Forecasts, click here. Or give us a call. Trial subscriptions are available to qualified candidates.
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Hot Flash - Monday, November 10, 2008

Aviation Forecast Summit At Aspen Update

In about three weeks we'll be receiving and shipping out to attendees the Summit-themed CRJ models so generously provided by Bombardier. And, we're including an additional gift, which attendees will find when the airliners arrive.

We're excited about the 14th Annual Boyd International Aviation Forecast Summit. Lexington Blue Grass Airport is our host, and we expect an even more incisive and exciting event. Boyd Group International is the leader in following and forecasting emerging aviation trends.

With the shifts expected in national policy with a new administration, and the major strategic shifts at airlines, manufacturers, suppliers, and financial institutions, the Lexington Aviation Forecast Summit is a must-attend event for 2009.

In the coming days, we'll be outlining early registration rates and more details. But as our repeat attendees know, this is the one event that actually provides forecast data and information that addresses the future. Clear your calendar for October 4-6, 2009.
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Schedule Snapshot - LaGuardia

An Airports:USA DataMiner comparison of 1Q 2009 schedules at New York LaGuardia shows a 7.1% reduction in seat capacity, compared to 1Q 2008. Analyzing data from our partner Innovata, LLC, the clear conclusion is that incumbents will be tweaking, not hacking their schedules. Expressed on an average daily basis, only one carrier system is making material changes to its capacity.

That carrier is, obviously, American. Approximately 20 nonstop markets are gone from the year earlier period, mostly O&D RJ flying. But most of the other carriers' reductions represent one or two fewer departures, not wholesale slashing of service.

This type of fast, easy analysis is being utilized as a competitive advantage by subscribers of Airports:USA DataMiner, with the schedules option. The information is updated with the latest airline filings each week. For information on Airports:USA DataMiner, and to apply for a free trial, click here.

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"Change" Isn't Exactly Obvious So Far
The Obama Regime & Aviation:
Is The Clinton Administration Going Into Re-Runs?

Let's just consider the following like an exit poll: all the votes aren't counted yet, but there are some indications of the outcome.

It's just been a week. But all the campaign pabulum notwithstanding, the preliminary indications from the Obama camp - or, more fairly, reported as being from the Obama camp - do not bode well for aviation, nor for the changes a lot of voters want.

Priorities: Economy. Security. Aviation's Several Pages Down. First, whether you like the guy or not, face it: Obama's a neophyte with near-zero exposure and zero experience in any major area of national importance. Only 11 weeks until he gets sworn in, so he's on a rapid learning curve.

That means he's going to do two things. One is drag in advisors to get him up to speed, some of whom will almost certainly be has-beens and political retreads from past administrations. The second is that he'll have to prioritize. The most important areas, like national security, Russians threatening a US military facility in Poland, the financial melt-down, and the economy will, appropriately, get his time.

Everything else - make book on it - he's going to delegate to somebody else. That includes transportation and aviation policy. The first reports are not good. Really, really troubling, in fact.

Consulting John Gotti On Crime-Prevention. One disturbing report is that he's tapped Federico Pena, the former DOT Secretary under Clinton, as part of his transition team. For an administration that's supposed to be postured as a 90-degree shift from the past, toward openness and integrity, this is like a day care center hiring Michael Jackson as playground monitor. Pena's tenure as DOT Secretary was riddled with sleaze.

Like, the ever-famous "Low Fare Revolution" report that touted his supposed responsibility for having brought safe, new low-fare service to America. Only problem was that the safety data was engineered to cover up the major mess at ValuJet. Then when ValuJet's sloppy operation resulted in a crash near Miami, Pena rushed to the Everglades and declared the airline to be "safe" - a painfully obvious and insensitive lie to get media spin. Months later, at the NTSB hearings, FAA inspectors testified that they wanted to shut VJ down before it killed people, but were told by their superiors to "bury" the reports. All under Pena's reign.

It is difficult to believe that this is the guy that Obama reportedly wants to help implement "change." But there's more...

At Least She's Well Versed On Ineffectiveness. Media reports indicate that for DOT secretary, they're actually considering Jane Garvey. You remember Jane. She's the former FAA Administrator that ignored Security Red Team warnings about major security lapses at airports before 9/11. The same Jane Garvey under whose leadership the air traffic control system sank further into bureaucratic deterioration. The same Jane Garvey whose stumbling and bumbling testimony at the 9/11 Commission proved beyond doubt she was totally clueless.

That the Obama team would be even considering Garvey for anything more than a crossing guard tends to indicate that "change" isn't really in play here - at least not yet. It's political hackism as usual.

Appoint A Token Or Two From The Loyal Opposition. Then there's reported suggestions that former New Jersey Governor Thomas Kean may be considered for Homeland Security. Whether this accurate, or just the musings of a dingbat reporter with hallucinations of professionalism, is not clear. But it could have some basis - Kean was co-chair of the 9/11 Commission, and, he'd be a good token Republican in the administration.

The fact that Kean & friends' 9/11 Commission report completely left out testimony from FAA Security Inspectors on how warning after warning was ignored (including one that specifically noted the possibility of multiple hijackings) isn't a consideration. After all, such facts would have embarrassed one political side or the other, and that wasn't the intent of the Commission. But appointing a member or two of the opposite party - like Kean - to high positions is now a tradition. These guys make great photo-ops, they don't get in the way, and they do what they're told. Politically, it's nothing new. Ancient Chinese dynasties found it to be a valuable strategy, too. 'Cept back then the appointees were real eunuchs, not just political ones.

Give It Time. In the dictionary, "change" means something new, and a variance from the past. But the initial reports - and they are just reports so far - would indicates that as far as transportation policy is concerned, change is being defined as regressing back to people and policies that gave new meaning to the concept of incompetence.

But, again, it's only been a week, and these may be not indicative of what's to come.

But if they are, aviation, the airline industry, and the flying public are in for four more years of years of complete continuity with the last eight - and the eight before that.

In other words, no change.

(c) 2008 Boyd Group International, Inc. All Rights Reserved
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Hot Flash - Monday, Novmber 3, 2008

Airports:USA Forecast:
Some Traffic Isn't Coming Back

We can start with one stark statistic: two hundred fewer airliners in the sky.

That's the decline in US airline fleets projected between now and 2010. Actually, from 6,233 jet airliners down to 6,011 - a decline of 222 units. That's based on the Boyd Group International Annual Global Fleet Forecast, which has been published since 1992, and is relied upon by a range of manufacturers, financial institutions, and suppliers.

It's all the result of adjusting for fuel - a lot of missions where airliners made money in the past just can't do so at oil prices of $60 a barrel. (At $120 a barrel, it was raw panic time in airline front offices. At $60, it's just a reduction in the incoming cost barrage - but it still demands major re-structuring of how airlines operate.)

One part of that re-structuring involves a reduction in certain types of airliners - particularly anything under 51 seats and has "CRJ" or "ERJ" in the title. It's a trend clients of Boyd Group International saw as early as 2000, when the glut of RJs was first outlined in our forecasts. Toss in $60 oil, and the glut becomes a plague. It's so obvious now that even some other consulting firms are starting to "predict" it. (Just don't take any tips from these guys at the track - they'll give you the name of the nag that won the last race, not the next one.)

The US airline industry is in line for a profitable 2009 - as long as the economy and demand do not completely collapse. But it's a smaller 2009, and, based on our 2009-2018 Airports:USA enplanement forecasts, there will be a re-bound, but a return to 2006 levels of passengers is many years away - the fleets just aren't there anymore. That's because there are a lot of airliners that just aren't profitable in as many missions, anymore.

There are no forecast factors on the horizon that point to a return of enplanement growth in the 3.5% - 5.0% range. It's not an issue of demand - it's an issue of materially different airline operating economics.

And, fewer airplanes in the sky.

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(c) 2008 The Boyd Group, Inc. All Rights Reserved

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