Monday Flash – August 15, 2016
Global Carriers – Breaking News:
Your Premium Passengers Are Up For Grabs
There’s a disruptive technology advancement coming that will materially alter how intercontinental airlines structure their product and their fleet configurations.
Front-End Traffic May Not Stay There. Today, global carriers depend heavily on high-yield “front cabin” traffic as a major part of the revenue streams that support long-haul transcontinental routes.
These customers sitting up front are the people who disproportionately pay the freight.
Front-Cabin Is Where The Revenue Is. Call it what they will, there is a declining differentiation at airlines between “business” and“first” class airline products. Basically, the distinction has disappeared. The battle for “business” class has stumbled carriers into upgrading these cabins to a product basically parallel to what was “first” class.
It’s pretty obvious how important these customers are to major airlines. They want to keep them coming back. Therefore, gee-gaws and fancy service is important to these folks, who pay between four times and eight times as much as the great unwashed sitting in economy on the same flight.
So, they luxuriate in whiz-bang, lie-flat seats that have more electronics than a Best Buy store at Christmastime, and each can cost as much as a tract home in rural Ohio. Those seats also gobble up a lot of cabin real estate, reducing capacity, making each seat more critical to sell.
The vittles and hooch served on a trans-Atlantic flight can cost as much as $100 a passenger, all-up. Other competitive amenities, such as dedicated airport lounges, add to the expense of attracting and keeping these customers loyal to the airline.
After all, the business class honchos will be sitting on board for 7 to 10 hours, so there’s plenty of time to lavish fine wines and culinary delights on them. But the fares more than make up for these expenses.
Critical To Airline Sector And System Revenues. Whatever the moniker – first, business, or whatever –the high yields this segment delivers are critical to the revenue mix that supports the 200 or so folks sitting in 17-inch wide seats behind the curtain, and, partially thanks to the customers up front swilling down French wine, lobster and Cointreau, they enjoy fares that might be much higher than otherwise.
It’s a balance. The front cabin helps make the economy section more affordable on many intercontinental routes.
That’s the status-quo of current long-haul flying at major global airlines. It’s fixin’ to change.
Vulnerability: Emptying The Front End of The 777. But what if there were new fleet entrants that diverted these front-cabin passengers? Took them away. Offered a superior product at the same fare?
What if today’s front-cabin traffic had a superior alternative compared to riding in today’s opulent 777s and A-350s for the equivalent of the better part of a whole work day? An alternative that deliver a superior product in the one factor most important to high-yield business-class passengers.
That factor is not a soft duvet on the lie-flat. It’s not the three-course meal. It’s not early boarding and a welcome cocktail. It’s time.
That’s what we’re going to be exploring at the 21st Boyd Group International Aviation Forecast Summit.
We’re going to outline a whole new category of airliner that will change both airline fleets and airline revenue equations.
Within ten years, we can expect new-technology supersonic jetliners that will slice travel times in half or more, and deliver performance that will allow whole new market expansion. For business class passengers, it will be the choice, and global airlines will find themselves losing this segment unless they have these new airliners in their fleets.
Join Your Colleagues For Some Facts & Revolution. Boom Technology has an airliner that airlines, airports, suppliers and financial institutions will be following in the immediate future. A design that will shift airline fleet strategies.
It already has ten options from Virgin… and, based on its cabin, speed, and economics, will be the new “front cabin’ for major international carriers.
The open question is that, with diversion of these high revenue customers off of traditional twin-aisle airliners, what will be the effects on future growth in the economy segment.
For attendees at the Summit, we’re going to be exploring this new disruptive entrant – one that the rest of the analyst category will be “discovering” months or years from now.
‘Nuff said. The Supersonic Revolution will be part of the IAFS™ and our attendee will be the first to get an in-depth discussion of this coming dynamic in air travel.
Register By August 20 & Be Part of This New Future. By the way, IAFS™ paid attendees who are registered by August 20, will be eligible for a drawing to win a model of the Boom airliner, and an invitation to the roll-out/early flight of the airplane. It means clearing your calendar for some time in 2020, but it will be worth the wait.
To register for the Summit, and reserve you space at the Resort at Squaw Creek, click here.
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August 1, 2016
IAFS Forecast Flashes…
At the International Aviation Forecast Summit, September 18-20, we will be reviewing the latest revisions to the Airports:USA® enplanement forecasts.
Not just numbers, but the trends that are driving them.
Among the many forecast points that will be covered…
US-EU Traffic: On The Precipice. Big Time.
Paris. Brussels. Frankfurt. Saint-Etienne-du-Rouvray.
Sites of terrorist attacks.
It’s the last one – Saint-Etienne-du-Rouvray – that’s the alarm bell in regard to future trans-Atlantic traffic shifts. A small town in Normandy. At a church, not a metro downtown area or a major crowded shopping center.
Accomplished by a person who had actually passed a background check to work at the local airport.
Terror is no longer just confined to large, high-profile targets, anymore. It’s spreading across the EU.
If It’s Tuesday, It Might Not Be Belgium. What all this points to is that there will likely be a lot of second-thoughts among consumers looking to take the family on a European vacation.
As it stands, this could slam trans-Atlantic leisure traffic in 2017. The Airports:USA® data indicate that it’s possible that this sector could be hit by 25% or more. Since international traffic is directly or indirectly the driver for 29% of US airport enplanements, the effects of this will be felt across the US.
We will be reviewing which airports should be ready for this dynamic, and which airlines and alliances could be slashing capacity.
New Fleets – New Opportunities For Mid-Size US Airports
On the domestic side, the Airports:USA® forecast indicates enormous new potential for air service expansion at mid-size US airports in he post-2018 period.
It’s More Than Loss of RJs. New fleets are being introduced, delivering major changes in capacity mixes and airline strategies. Yes, smaller jets and turboprops are heading for the desert.
The fallout from these fleet changes has largely been missed entirely, with the focus on the fact that scheduled passenger service at a lot of small airports is less and less viable.
That’s true. The “floor” in regard to departure capacity is gravitating toward 75+ seats. This has set up the din about smaller communities losing flights at the local airport. And all manner of useless tail-chasing locally and nationally to reverse the trend – which is like trying to reverse gravity.
Circumstances Change. Planning Must Change. True enough, this is going to accelerate. But as we’ll be covering in the pre-Summit Workshop on the need for Patton-like air access planning, future circumstances won’t be anything like today’s.
These changes in fleet mix will also be positive for communities that address the future, instead of trying to re-create the past.
At the Summit, we’ll be forecasting the real effects of new fleets – and they are strongly positive for growth and expansion in mid-size airport service.
What most analysts focus on are things like the great economies airlines will get with new-generation aircraft such as the A-320NEO, the 737MAX, the CSeries, the Embraer E2s, and the Mitsubishi MRJ.
They are missing the main benefit and the main outcome when higher efficiency flying machines take to the skies.
It’s After 2017-2018, But It’s Coming. History is being ignored. The opportunity is being ignored. So, anybody want to take a guess at what this all represents for air access in the US?
Not to worry, we’ll be covering this – and which airports are in line for new air service opportunities in the future – at the Airports:USA® session of the IAFS™.
This will also be touched on during the Global Airliner Demand sessions, where Embraer, Airbus, Boeing, Bombardier and Mitsubishi will be presenting their product forecasts. We’ll cover it, too, in the Boyd Group International Fleet Trend & Demand Forecast.
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The IASF™ App Is Now Up And Available
We have an exciting – and useful – new app for the 2016 International Aviation Forecast Summit.
Yes, it covers the latest information on the Summit, including the agenda, and the free transportation from RNO to the Squaw Valley Resort, provided by our hosts, the Reno-Tahoe International Airport.
But it’s also now a functional forecast app, too.
Check out the Updates tab on the app, which will provide insights on the forecast trends that are emerging in aviation. This week, we touch on the potential plunge in US-EU traffic. Throughout the week, it will be updated with other aviation forecast flashes.
So download the app via the QR code, and move into the future. It can also be accessed at the Apple app store.
It’s your glimpse into the future – and the pulse of the industry’s #1 event! Register now!
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