Monday Insight – November 15, 2021

To Start:

Late Monday Insight Update:

The Cuts Are Starting

American has just cut 21% of its formerly-filed capacity for January, and 20% in February.

Some of the commentary will be that it’s based on “staff shortages” but most likely it’s due to booking shortages. It is possible that the combination of inflation and higher fare expectations are the main causes. If so, we again would note that our 2022 forecast is now for well under 800 million enplanements and starting to slide.

The question is where will this go in weeks ahead. We’ll be keeping subscribers at Airports:USA updated.
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Thanksgiving Traffic – It’s Emblematic of  The New Airline System

There have been some media stories trumpeting that this coming Thanksgiving holiday will be back to “normal” – i.e., pre-2020 levels.

Not quite… but actually, the term “normal” could be used. Based on data from our friends at Cirium, the USA will be seeing about 11% fewer flight departures over the holiday. That, coincidentally, is what we can expect in the full year 2022 – an air transportation system structurally smaller than 2019.

Let’s start with the upcoming holiday, and what it can tell us about the post-CCP-pandemic airline system.

For the period extending from the Tuesday before Thanksgiving through the following Monday, we took a look at data from 2019, 2020 and 2021.

The Real Message- New Fleets & New Revenue Requirements. These data are not just indicators of a holiday weekend but are emblematic of the fundamental shifts taking place in the air transportation system.

A pointer for future air service planning is the change in seat capacity – down @7% v a departure decline of 11%. Message: fleet changes are in progress in the airline industry. The average capacity per flight this year is down from 126 seats in 2019 to 120 seats – about 5%.

Not a lot on the surface, but it points to two accelerating trends. One is the faster retirement of 50-seat jets. The second has been more subtle and actually pretty much unnoticed – the upscaling in the fleet of single-aisle airliners at both mainline and ULCC carriers.

On Average There’ll Be Another 20 Seats To Fill At The Gate. Taking a look at current orderbooks, virtually all carriers are shifting narrow-body fleets upwards. Southwest is shifting to 737-800s and has pretty much exhausted the availability of used -700s across the globe. American is adding more A321s. Frontier has retired its last A319 and last week ordered another 91 A321s. Delta has been quietly digesting a fleet of additional 737-900s previously operated by Lion Air.

The trend is clear: In the USA the bar for supporting air service is going up. This is underscored by cuts in smaller feed markets at American and United. This will go into warp drive if (when) jet-A faces another 10%-15% price jump. The folks in Washington are quite comfortable with this, hoping it will spur more “sustainable” energy sources that don’t exist. A lot of smaller airports, unfortunately, will not be as enthusiastic.

Revenue Is The Goal. Even If  It Means Dumping Newark. Adding to this new fleet mix is the concurrent shift toward replacing brand loyalty with revenue generation as a core strategy. American has dumped a number of markets out of high-cost LGA and JFK. Frontier has waived goodbye to Newark, which just 18 months ago was intended to be a lynchpin in that carrier’s route system. There is more of this to come.

The Leisure Travel Vulnerability. We will be updating Airports:USA forecasts shortly to accommodate these shifts. Unfortunately, we do not see 2022 exceeding 800 million enplanements any longer. Plus, we are anticipating the emerging effect of higher inflation on air travel demand, particularly in the 2Q of 2022.

No More Trends. Just Episodic Shifts. Airports need to be ready to anticipate what these trends will do to enplanement levels.

This is the reason aviation leaders are becoming member/subscribers to Airports:USA®. It is the only source that monitors trends on a daily basis and translates them into traffic forecasts and future air service projections.

Take a look at www.Airports:USA.com. It delivers an eye on the future that’s current and reflects the real world.

 

Monday Insight – November 8, 2021

The Folks In Washington Are Fixin’ To Reshape Aviation

Planning Starts NOW… Or Should  Have Started Long Ago.

It is not another shopworn cliche – aviation in five years won’t look much like it does today. That GA ramp. That fuel farm. That passenger gate. The flying machines using the facility. Different in form, application and economic impact.

That means airport planning has to accept the fact that the role and the user base of airports will change as well.

These changes are not evolutionary. They are going to be episodic, and in some cases based on trendy political dogma, not solid futurist planning. In other cases, new emerging technology will be coming over the airborne transom in the near term.

Take a look at the following slide – one we use with our airport planning clients. It relates to just one of the major disruptions facing airports today, but is emblematic of the future.

A traditional thinker would just see two airplanes. One older, one newer. A futurist thinker would see indications of a complete change in the basic foundations of the airport industry.

See, the plane on the left, a Cessna 172, is indicative of the past. A past that may not hang on for too many more years.

The one on the right, an electric two-seater from Bye Aerospace, is indicative of an impending tsunami in what will be whole new financial demands on airports across the nation, whether it’s JFK International or a rural airport in Nebraska.

It’s just one of many foundational changes, but it is a clear one. Electric aircraft are coming. As we intimated in last week’s Touch & Go newsletter, traditional combustion-powered GA airplanes are going to have a targeted future… a shorter one than most people might think. Don’t sell this one short… if they can ban gasoline lawnmowers in California, recreational general aviation might not be far behind.

That means airports need to anticipate a lot of changes – complete changes – in traditional airport operations. Let’s explore just the surface issues…

Maintenance & Support. These new electric powerplants have nothing in common with the Lycomings on that light twin. But they are machines and they will need maintenance. A traditional A&P training program isn’t going to fit. Conclusions…?

CFR – what about safety and emergency response. A traditional emergency vehicle might have a difficult time extinguishing a battery fire, not to mention the need to train staff in safely approaching and handling such events. We’re talking about enough voltage to kill rescuers in the case of an accident.

While it’s not completely the same situation, there have been fires on Tesla automobiles that took thousands and thousands of gallons of water, using traditional equipment, to extinguish. What would be the case with some of these larger 50-seat electric airplanes already on order? What equipment will be needed – and it isn’t just another traditional rescue vehicle, either.

Battery Recycling. As of today, the expected retirement of used batteries still represents a huge future challenge. Regardless of all the sunshine stuff about battery power, there is a gap in regard to whether there will be sufficient – and environmentally-sound – recycling facilities for lithium ion batteries. Airports across the nation may be able to have a role in this.

Fuel Revenues. As we covered in last week’s Touch & Go newsletter to our friends and clients, the concept of internal combustion anything gets some folks all itchy and nasty.

When some of these trendy people get savvy about what the term “100LL” means, it can turn into the intellectual equivalent of a torch-carrying environmental lynch mob. So, even with conversion to mo-gas and diesel combustion, we can look toward fuel flowage not being a growth revenue stream.

Regulatory Dogma v Intelligent Planning. Heck, we actually are saddled with Secretary of Energy that literally snarled a condescending giggling response when questioned if she had any programs to reduce the cost of gasoline… “Are you kidding?” was the smarmy response. She was also the one that practically welcomed the terrorist attack on the Colonial Pipeline, stating it would encourage the purchase of electric vehicles.

So, let’s stop playing nice-nice and recognize there may be some very inept policies coming down the line from inside the Beltway.

Electrical Power Stations. At some point the concept of having places to plug-in these new aircraft has to come into not just facility planning, but revenue planning as well. A reordering between traditional revenue streams, particularly at high volume GA facilities, is likely going to be necessary, as a plug-in station isn’t likely to bring in the money petro-fuel does.

Opportunities… Not Brick Walls. 

What each of these dynamics represent – and they only cover the first pass of changes – is opportunity. The new technologies will require support and new infrastructure. New types of powerplant maintenance. New designs for hangar space and design. New training facility needs.

What every community in America should be doing now – right now – is revisiting its entire airport planning program. These types of opportunities are not restricted to the local user base.

For example, what about the support for electric aircraft? An electric powerplant overhaul facility can attract business from around the nation, for example. Technical training will be needed, too. There will be entirely new training requirements, and schools can be established just about anywhere.

What about rethinking the entire financial basis of the airport? What revenue sources will atrophy, and where are new opportunities based on these expected changes.

We can go on from here. And, by the way, that’s just what we’re doing.

At Boyd Group International, we understand that the entire role of airports as part of the nation’s communication system has changed. Based on this, we’re working to provide clients with what we call Runway To The Future, a program tailored to match an airport’s future planning trajectory with the types of emerging and disruptive technology and consumer trends represented by these and other shifts.

Give us a call, or just click on the contact tab, and we can get a discussion going.

A discussion of the future.

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This Week’s Aviation Unscripted Video –
Air Rage Incidents…
Airlines And Passengers
Are On The Same Side

There are more disgusting occurrences of in-flight air rage than ever before.

One reason is that consumers are on the raw edge after more than a year of constrictions, rules, dumb political decisions and simply being needled in all areas of their lives, due to the CCP-Wuhan pandemic.

There is no excuse for air rage, but the raw fact is that a lot of consumers are fed up and feeling helpless. Then in the cabin of an airplane, one-on-one with the flight attendants who are only trying to assure that the airline comply, bad stuff happens. Or, being on an emotional edge, lots of incivility between passengers can erupt.

Get the picture? The requirement to wear some membrane – with only a couple of exceptions, any kind of membrane – over one’s face is the main fuse to bad passenger attitudes. It can be a medical mask, an N94, or just one of those (sometimes defective) paper-and-string “masks” imported directly from the place with the government that started this pandemic.

The problem is that now airline staff – particularly flight attendants – are put in the role of enforcing these politically-driven face mandates that were imposed on the airline industry, without any consultation or medical justification. The core of the issue is the misconception (on both sides – passengers and employees) that the mask (really “face-covering”) mandate is an airline industry mandate.

It is not… essentially and actually, airlines and passengers are in the same victim situation of having to adhere to a federal dictum that is invasive, uncomfortable but also political in nature and of questionable value. That last comment – questionable value – is 100% accurate. It doesn’t take a degree from Johns Hopkins to see that there are no firm standards for what a “face mask” is, or how effective – or ineffective – it might be in any case on an eight hour flight. Passengers know that.

The airline industry is now carrying a different genre of passengers – a lot are fed up with two years of constrictions and impositions of rules from on High. So, when they get into an airplane cabin, the way that the mask mandate is expressed to them can either be just another dictum from what appears to be the feds, or information advising that this requirement is a federal one that the airline and passengers (who actually are on the same side of the victim fence) are required to follow, just as the crew is, too.

Unfortunately, it is typically expressed as just another airline rule, that passengers will follow at risk of being tossed off the airplane. Instead, it should be postured as just what it is – an FAA rule that airlines and passengers need to adhere to. This makes the consumer feel that the airline is fully understanding of the situation.,

Point: airlines must assure that passengers are compliant with this political rule, but they need not – and must not – convey it as part of the carrier’s wonderous program to protect the public. The whole mask thing – again, based on lack of standards of what a mask really is, not to mention how effective it is or isn’t on long flights – is not credible. Sorry if that offends traditional politically-correct obedience, but facts are facts.

It must actively and consistently and openly be expressed as an FAA/fed rule, and not that of the airline itself.

Click here, and join us… and if you have any thoughts or opinions, do let us know!

 

Monday Insights – November 1, 2021

More On Boeing…

Watching Global Effects At Three US Airports

The global economy, as we’ve pointed out in our Airports:USA forecast program, is a major underpinning of domestic air travel demand throughout the USA, and not just at major international gateway airports.

New On The Watch List: Three airports are now on Airports:USA forecast watch.

Seattle, Wichita and Charleston. Potential volatility.

All three are now being affected by what’s happening across conference tables (and virtual conference tables) in places like Dublin and Beijing.

In the Middle Kingdom – As we covered last week, Boeing is negotiating with the authorities in Beijing for a Get Out of Jail card that will free up delivery of around 180 737 Max orders on file for Chinese airlines. No guarantees, especially since China’s economy is flying like a lead balloon and its air transportation volume reflects it. The last thing that country’s airports need is more airliners. So, they may not be real incentivized to do any favors.

This Boeing backlog is especially challenged as more and more of the globe is recognizing that while China is a big market, it is also controlled by a government that’s falling from international favor due to things like genocide, forced labor, ghastly social services and little things like threatening to invade democratic Taiwan. International factories are starting to move out, and local ones are getting zapped by the CCP’s own Wuhan virus.

Not to mention that the real estate collapse is now threatening huge projects elsewhere in the world. The Chinese people are saddled with some real hoodlum losers running the place. In this context, Boeing is in a tough position.

On the other side of the world, now it comes out that Ryan Air has walked away from negotiations for 100 or more new Max 10 airliners, complaining that the price was increased “double digits” by Boeing.

For the folks watching the global economy home game, these two situations will have an effect on the the USA, as Boeing is a key exporter, and driver of a lot of jobs across the USA.

Three Big Centroids In The Crosshairs. The most obvious is the Seattle area, a key Boeing production region, but which due to civil events over the past year or so, isn’t on the top of any sane company’s expansion program, anyway.

The other two are Wichita and Charleston – the 787 factory at the latter location is reported down to just two airplanes a month. Wichita is the location that supplies the fuselages and other major components for the @180 737s not being delivered yet to China, not to mention the 100 or so Michael O’Leary wants to buy but won’t – at least for the foreseeable future.

Point: as Boeing goes, so does the economy of production supply regions like these three. The open forecast question is how much this situation will affect growth prospects. A lot of the damage has already been absorbed.

The open issue is whether it could go deeper. These three airports are on the Airports:USA watch list.

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FROM ALL OF US AT BOYD GROUP INTERNATIONAL, WE WISH YOU A HEALTHY AND PROSPEROUS WEEK AHEAD!

 

 

The Episodic Future For Rural Airports

Boyd Group International was honored to present the keynote at the annual meeting of the Aviation Council of Pennsylvania.

We covered how rural airports are facing a changing but exciting future, and how changes in communication channels now allow small communities to compete for industrial investment on a more level playing field with large metro areas. Click here for the complete presentation.

Monday Insight – October 25, 2021

China’s Air Traffic Hits A Brick Wall…
Is The USA In Similar Danger?

Let’s cut to the bottom line.

At BGI we monitor major trends in global aviation. One of these has been the economic hoedown in China, none of which is particularly comforting.

It is not comforting, either, that so much of the American economy is affected by events in a country run by the likes of the CCP, an organization that’s effectively the demon spawn of what was dreamed up in Nazi Germany. But it is what it is.

In the last week, some interesting data was published on the native language website of the Civil Aviation Administration of China, called the CAAC. It’s not on the English version, which is the reason many other consultants and analysts are still clueless. We found some interesting data that only a couple of other sources have even noticed.

China commercial air transportation is now officially in a freefall. It’s headed down like a lawn dart at a suburban barbecue party. Take a look… domestic traffic in millions:

Between July and August, domestic passenger volume fell by over 54%.

In one month.

Air travel spend is just one bellwether within any nation’s economic health. And, yes, China is pretty much unique. Between collapsing real estate scams that make selling Florida swampland in the 1920s look like charity programs, to power blackouts across the mis-governed nation, to a resurgence in the Wuhan/CCP Covid epidemic, to the closed factories and constricted ports, the economy of China is officially heading for the full upright and locked position.

But make no mistake, this will affect the global economy as well, including the U.S. and the dynamics that underpin commercial air traffic in the USA.

Boeing: 170+ Orders With No Place To Go. As we’ve pointed out, this only puts a bigger spotlight on Boeing’s China backlog, on which a lot of U.S. jobs depend. Essentially, it’s sort of like a grocery list for a supermarket that’s just been bulldozed. Boeing was already geopolitically cut off from the Chinese market months ago. Now, with the latest self-inflicted financial quicksand coming from Beijing, the last thing China needs is more airliners, whether from Boeing, Airbus or the domestic lead-sled C919s being huckstered by Comac.

Less Goods To Sell Over The Holidays… But let’s take this home to the local U.S. airport. This financial Gong Show in China will affect the American economy. There will be less on the shelves for sale this holiday season, which means financial hit to the retail industry. That will percolate down to falling retail sales, lower earnings for the retail sector, less local taxes, and a shower of other issues.

That Dollar Is Buying Less And Less – Including Air Travel. Then we have inflation. We pointed this out in last week’s Touch & Go newsletter… a year ago, inflation was less than 1.3 percent. Today, it’s heading for 6% and up. Heck, it’s so obvious that the clown running Twitter took time out from censoring free speech to announce that we’re heading for hyper-inflation.

We Really Want To Have Better News, But… adding all of these indicators together, it’s pretty clear that the demand for air transportation cannot but be affected. That means factoring these issues into the Airports:USA® forecast. The troubling aspect is that it would appear that some of the capacity to leisure destinations added in the past year may be in the crosshairs. Any reduction in discretionary dollars due to higher prices of other goods and services will hit air travel first.

Do not underestimate this. Not being able to see grandma in person can be addressed by a virtual meeting, as is the case with a lot of business travel. But experiencing the Vegas strip or the Keys can’t be done virtually… when it’s a matter of either that or filling the tank or putting dinner on the table, the choice is pretty clear.

Clear Time This Thursday, October 28. On the next Aviation Unscripted video, we’ll be revealing the revised Airports:USA® forecasts, which will address how these clouds might rain on the air transportation parade. We’ll be projecting trends and data that will assist in anticipating what may come down in the months ahead.

In the meantime, check out the current Aviation Unscripted video… it is a good lead-in as it discusses how a BGI Runway To The Future program can put an airport in the offensive position as these expected changes start to appear in the months ahead. Click here to take a look.

Monday Insight – October 18, 2021

Connectivity –The Real Challenge For Rural America

Let’s grab a third rail – a sacred belief – a mantra not to be questioned.

There’s a new air service structure in the USA – and it needs to be fully recognized.

Now, that statement threatens to break the rice bowl of a whole herd of consulting firms, which are working hard to “lure” airlines – heck, a duck with a chair on its back, anything – to bring “flights” to local small community airports around the country.

Here’s a hint: virtually every mode and channel of communication has changed in the past 20 years. No single one has been more transformed than air transportation.

Then toss in the economic, commercial and consumer changes seen as a result of the CCP-pandemic, and it’s more than obvious that the world is moving into a different communication structure. Air transportation has been transformed structurally by these changes.

The opportunity is in developing new approaches to working air transportation mode into the new milieu of faster and more effective communication channels.

Point: these changes actually put small and rural communities on a far more level economic-development playing field than ever before.

Heresy? Yes. But at Boyd Group International, we’re going to be doubling-down on outlining these new opportunities.

So, please log on to Aviation Unscripted this Thursday for a video that will challenge ambient assumptions about rural communication and outline new approaches that represent solutions for the future, not band-aids over past problems.

Our channel is at www.Rumble.com and can be accessed directly by clicking here.

Mark your calendar and join us this Thursday!

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Boeing – And U.S. Economy –
Getting Hit By China Economic Collapse

Sorry, we cannot get away from things happening in China.

Decisions made in Beijing will affect to varying degrees Bangor, Bozeman and Baltimore. The latest is the locked door that China has established against Boeing, which has a direct and indirect effect on businesses across the USA.

It’s amazing that the nation’s #1 single export producer has been left adrift by the people inside the Beltway.

China has not accepted or ordered a single 737 Max since 2019, when the aircraft was grounded. The rest of the world, mostly, has now approved the airliner and, although there have been some cancellations, new orders are being registered.

Except in the world’s #3 airliner market. China.

We covered this in an Aviation Unscripted video a few weeks ago. The 737 Max airliners that were grounded over two years ago by the CAAC are still parked. The more than 100 units on order are in never-never land. These were a key component of an agreement by Beijing during the Trump administration to purchase more goods from the U.S. to offset the trade balance.

Could Be That Boeing Is A Dirty Word In The Biden Clique. Recent discussions between the U.S. trade ambassador and the Chinese counterpart may as well have been an exchange of recipes instead of any hard stance on the part of the USA. If Boeing is looking for support from the Biden group, they may be disappointed. Politically, the people inside the White House may be cowering away from doing anything Boeing-related due to recent accusations against the company in regard to the Max debacle. Image, probably, even at the expense of jobs and the economy.

Even More Fun: A Chinese Travel Collapse. Aside from the geopolitical issues, there’s more bad news for Boeing’s fortunes – economic chaos in China.

Today, China needs more airliners like Egypt needs locusts. Air travel volume has plunged 24% in the past quarter. While the hoodlums in Beijing are planning an invasion of democratic Taiwan, the mainland Chinese economy is coming rapidly down.

Boeing and the suppliers on which it depends need to go back to the forecast drawing boards. The company recently forecast a need for 8,600 airliners in China over the next 20 years, with reliance on a rapid recovery from the CCP’s Covid pandemic.

Given the collapse of the housing Ponzi-bubble – which is gaining momentum – plus the inability of China to produce sufficient power to its factories (due to bad infrastructure, not “new demand”) it is very hard to understand Boeing’s long-term logic. And as for a rapid recovery from the CCP-Covid mess, today China appears to be going in the opposite direction. Big time.

The bottom line is that Boeing – and the suppliers that depend on that company – need to clearly tumble to the fact that the China market is closed to them. The U.S. will continue buying massive stuff from that country, but the criminals running the government can pick and choose import winners with impunity.

The American economy is the loser.

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And, In Regard To China & Airliners

This week’s Aviation Uncensored video addresses the issue of whether Chinese airliners can threaten Boeing and Airbus.

Actually, what the Chinese government is producing is an embarrassment to China… the C919, the CR929 and the ARJ-21 are nothing more than attempts to be just like existing airliners from the West.

Actually, they are a lot less in all regards.  There is no way these sleds are a threat to anybody except the Chinese economy itself.  When/if the China economy rebounds, reliance on these platforms will keep the Chinese air transportation industry years behind the rest of the world.

Log on here, or go to the home page to take a look.

Earlier Aviation Unscripted Videos

We cover in more detail the traffic generation dynamics that we’re discussing in the October 11 Monday Insight.

Log on and take a couple of minutes to see aviation’s new source of aviation commentary and perspectives.

While you’re there, do review the library of past Unscripted videos…

Our channel – Aviation Unscripted – is on Rumble.com. We moved it from YouTube due to their policies of muzzling free speech and free expression, under the dishonest guise of “accuracy.”

Boyd Group International has higher standards.

Monday Insight – October 11, 2021

Fourth Quarter, 2021…

After December,  The Deluge?

Air Traffic Demand 2021 – Saved By Momentum

… And Non-Refundable Tickets, Too

The new forecast for the last quarter of 2021: a total of 192-198 million enplanements at U.S. airports.

That’s more than 50% above the same period in disastrous 2020, but approximately 20% below enplanements before the CCP-pandemic in 2019.

The Role of Air Travel Has Indeed Changed. This fits with known and expected changes in the foundational drivers of air transportation demand. Even as some international traffic is being restored, it is unlikely to see the levels of leisure demand experienced prior to the pandemic rebound right away.

Business air travel will come back only to the extent that it is more effective as a communication modality than other emerging channels.

Therefore, enplanement levels approximating 85% – 90% of pre-CCP-Covid clearly could represent the new core demand for air travel in the USA for the rest of 2021.

After that, no guarantees.

Follow The Available Dollars… Or Decline of Same. What also needs to be observed is part of the underpinning of this core demand is based on leisure travel. Leisure travel is dependent on discretionary dollars in the economy.

It is also heavily based on advance travel decisions, where the economic factors when the trip takes place may be materially different from when the determination – and the actual spend – was made to take the journey. Non-refundable tickets and hotel reservations will tend to keep this spend in place, regardless of changes in consumer sentiment.

That is likely what will underpin air traffic volume in the 4Q of 2021, and into the 1Q of 2022. The money’s been committed (and typically spent) already, and a lot of it is simply not refundable. So, the “demand” is there… it was set there months ago, mostly, when economic factors were different.

Again, The Three Nasty Musketeers Of Economic Change. So, let’s get back to that concept of changing economic factors between time of travel decision and time of travel.

We have covered this in recent Touch & Go newsletters as well as in Aviation Unscripted videos… but let’s look once again at the changes that are becoming apparent now, and were not much so just 60 days ago…

Factor One: Inflation: Food prices just hit a seven year high, and it’s likely a trend, not a spike. Gasoline is up double digits since January, and is still climbing, with the incompetent people in the Marble Playpen in Washington actually contemplating a phalanx of stupid new regulations that will just drive it higher.

It does not take a high school diploma to figure out how this and other spiked commodity costs will affect decisions to take a leisure (or, business) trip in the future.

Factor Two: The CCP-Covid Political Fiasco. The politicization of the entire pandemic situation has made any attempt at logical thinking or free and open intellectual discussion impossible.

There are now political – not medical – dictums regarding how we must adhere to dealing with the disease. Masks, but no determination of what a mask really is, or what it does, or how to utilize them. Vaccinations – complete confusion, with any open discussion handled quickly by accusations of being anti-social. There has been no real explanation of the requirement – set by politicians, mainly – to wear a mask on a three-hour airplane trip.

The word came out this week that a requirement for all airline passengers to be vaccinated – regardless – is not yet on the table. It’s the “yet” that tells the story.

This does not engender propensity to take air trips – and these dynamics will affect such spend from this point on – affecting traffic volume in January and beyond. Bank on it.

Big Time Factor Three: The Coming Retail & Commercial Turbulence.  Coming very soon. Actually, already here, and it will be a barrier to air travel spend.

Sorry, we just can’t ignore the China thing – we’re connected at the economic hip, unfortunately.

This just in: major rain has curtailed output in two major coal production provinces in China. Nothing for us to be concerned about, right? Wrong. It is just one more part of a collapsing Chinese economy – one on which much of our retail sales and industrial output depends.

In addition to a spreading economic collapse and the CCP-Covid spreading also, China is also in a major energy crisis, with reportedly two thirds of the mis-governed country facing industrial-crippling blackouts. Whole cities, traffic lights, hospitals, the entire place, darkened. That means factory production – already curtailed by a major new spread of CCP-created Covid – will continue to decline.

And so will the physical ability to make and ship goods to the rest of the globe, including stores in Omaha and factories in Kentucky and North Carolina.

Not a good horizon, as the USA has become hugely dependent on China, which itself is undependable.

Point: The 2021 holiday retail season may be one well short of what’s typical. The iPhones may be on backorder. The clothing racks may be a bit thin at Target and Nordstrom and Macys. That new barbecue grill won’t be on display at Ace Hardware. That steering component from the factory at Zhengzhou won’t be available for the truck production line in Detroit. Take it from here.

Oh, yeah. The rare minerals to make the batteries for all those EVs and hybrids could come to a halt, too. The supply chain is largely Chinese-controlled.

Bottom Line: The Spend Is In Place For 4Q. But Wallets May Now Be Closed. United Airlines has announced that it’s adding what appears to be close to 3% more capacity for the remainder of 2021.

Paradoxically, it’s a sound move… because the travel spend has mostly been committed through the end of the year.

The real bellwether will be bookings for mid-January on.

Bottom Line. Yes, these are points that most analysts haven’t noticed. Yes, the stuff about China really seems way out, too. But it is real, and monitoring and being aware of these dynamics are critical to accurately forecasting the future traffic at airports across the USA.

We’d invite you to log on to www.AirportsUSA.com and take a look at the snapshot tab. We’ll be updating it weekly, as these events continue to unfold.

And for professional, futurist forecasts of aviation areas, Boyd Group International is ready.

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Monday Insight – October 4, 2021

Start-Up Airlines:
There’s A Difference Between “Then” And Now

Lots of media coverage regarding start-ups Avelo and Breeze.

Naturally what comes to mind is, well, whether these carriers are out of their minds. New airlines have had a checkered history. And here we are in the middle of a pandemic, too.

The reality is that these entities are for real, and their leaders have a solid track record of success to prove it. That puts them in a completely different category from the majority of start-up airlines of the past.

In fact, most of the failed airlines in the first 20 years after deregulation were established in a sudden business environment that had been a closed industry for decades. Exactly what opportunities were out there had to be explored. There was no track record to consult. No solid history of what might or might not work. No clear view of what consumers or competition might do.

Today Is Not The Same Air Transportation System. Putting this in context, the period roughly between 1979 and 1999 was one of air service experimentation. When airlines were deregulated, it then opened the ability to establish new carriers, try different service models and attempt to break into what has been a closed industry. This spawned a whole passel of entities trying to take advantage of what was suddenly a new business opportunity.

There were a number of successes… Allegiant, (the current) Frontier and Spirit are examples. But for each success, there were multiple airlines that went down in financial flames.

But, yikes… some of these were, well, colorful… as experiments were tried, and sometimes tried again.

…Remember Air South… instead of searching for an air service opportunity, they started the airline and then shopped it to the community that would pay the most incentives. Outcome was not in doubt. Then Access Air – promising jobs and investment at airports across the country, operating multi-stop routings coast to coast, like the airborne version of a local subway line, where consumers could “hopscotch” across the country. Presidential? They had more operational models than a Hollywood fashion show. Air One? They actually got hoodwinked into hiring a teenager as Chairman of the Board.

During that time, there was no shortage of sure-fire ideas and some really strange characters here and there.

But that era is over.

The air transportation system today is entirely different from when these experiments were burning up more cash than jet fuel. Today, there isn’t a lot of easy money to be had. There aren’t deserts full of cheap, almost ready-to-fly airliners, anymore. The current air transportation system actually meets the majority of consumer needs. The post deregulation uncertainty is over.

The key difference is today – across the airline industry including all genres of carriers – we’re dealing with highly-experienced management – with track records of accurately gauging new trends and establishing successful airline ventures, instead of a history of putting businesses into Chapter 7 court proceedings.

Let’s Take A Trip Back… Irreverently. To do a reality check, we looked at a review Boyd Group International did a few years ago, recounting a couple dozen of the major start-up failures in the immediate years after deregulation. Airplanes are involved, that’s where the similarities end with today’s start-ups. Back then, it was an uncertain business environment. Today it is not. Back then it was a world for entrepreneurs feeling their way. Today it is strictly the realm of industry professionals.

Click Here for some fun, if irreverent discussions of that 20 years after deregulation … and feel free to download the complete review, too. Clear some time, as it’s a compendium of bullet points covering over thirty airline misfires.

This compendium is by no means a complete list of the attempts at starting new airlines since 1978, but includes the ones that in retrospect within today’s understanding of air travel, offered business plans that might have better been left in a landfill.

And, if you have a moment, let us know your thoughts.
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Enhancements To Quarterly Outlook Program

It’s time for straight talk.

Planning for the future means focusing on the future

This is the reason our clients are subscribing to our exclusive Quarterly Outlook program. Instead of just dredging up BTS data that represents the past, this program delivers a clear, professional projection of your airport’s future.

Every quarter, a complete analytical report…enplanement forecasts… trend analyses… professional discussions of airline strategies pertinent to each airport. An unvarnished futurist review, based on the industry-leading Airports:USA forecast system.

Not Just A Report… A Full Discussion Presentation Meeting, Too. And now, the Quarterly Outlook program includes a live on-line discussion and strategy session every quarter to explore options and opportunities represented by the data.

Make it a planning event – bring in your staff, your airport board and other stakeholders to get a full and direct understanding of both the local air service situation, but also the dynamics of what can be expected nationally as well.

Click here for more information on this advanced planning tool and how to subscribe.

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Ed Beauvais

We are saddened by news of the passing of Ed Beauvais, the visionary who founded America West – a small start-up that was the foundation of what eventually grew, took over US Airways, and then merged into what is today’s American Airlines.

Plus, the position of Phoenix today being a hub for that carrier is due directly to the vision and innovation of Ed Beauvais.

Ed went on to start Western Pacific, another visionary airline, at Colorado Springs, one with great potential but which was unfortunately torpedoed by its own invasive investors. (We cover WestPac in our review of start-up airlines in today’s Monday Insight, by the way.)

We had the honor of working with Ed over the years. He was a person who shaped today’s airline industry.

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Monday Insight – September 27, 2021

DOT United Fine –
A Wake-Up Call For The Airline Industry

The lines are drawn, at least at the DOT.

It would be best that the U.S. airline industry fully get the message… they’re an easy target for politicians to use to appear as consumer commandos, coming to the aid of abused and beleaguered passengers across the nation.

It’s started. Airlines need to re-think all of their customer service “rules” to eliminate consumer confusion, and any even vague image of making passengers tow the line. Get real, they are there, and get real, the new DOT is fixin’ to make a media circus, wherever they can.

Find Something – Anything – And Do The Press Release. The DOT has fined United Airlines almost two million dollars for violating the sacred “tarmac rule” – digging back as far as five years to find 25 incidents where the airline supposedly trapped passengers against their will inside airplane cabins for more than three hours.

Now, the DOT will not make clear that the majority of these ghastly attacks on humankind were the unavoidable results of weather – such as when a snowstorm caused safety diversions from Chicago to alternative airports such as Madison.

In such cases, the DOT still will tell the great unwashed consumers that in such cases the airline must – must – allow passengers off flights if the delay is over 3 hours and provide snacks at some point in the delay.

Reality and any basic knowledge of airline safety need not apply. That would interfere with a great opportunity for political grandstanding.

Write The Story, But Don’t Question The DOT. Not one media story on this – not one – bothered to outline that in such cases, it is safety that takes priority, and when 20 airplanes or more have no alternative but to descend on a secondary airport when a major hubsite like ORD gets weathered in, it can be impossible to get passengers off planes safely in the three-hour period.

There often aren’t gates to deplane passengers, which could be literally several hundred passengers or more.

There isn’t ground equipment to bus folks off the flights. There aren’t terminal facilities to accommodate the throngs of diverted passengers. Sometimes, there are sterile area and security issues, and no TSA on duty. The concession services at diversion airports are not in existence to provide DOT-mandated “snacks.” In some cases, the airline might not even have customer service employees at the airport involved.

These are not screw-ups. They are part of the realities of air transportation. The bottom line is that due to the intrinsic nature of airline service, these incidents will occur. They are not, as the DOT and a lot of media lightweights will represent, avoidable in all cases.

Grandstand First. Facts, Later – Or Not At All. The political appointees at the top of the DOT don’t care… they’re all about making sure they’re playing the willing media to prove they’re not going to let airlines abuse passengers. Even when they have to concoct things.

Message To Airlines: Shift Your Posture.  Now, to be clear, there have been incidents where airline performance in the event of diversions has been truly shameful. That is not the norm. But this United fine signals a situation where the U.S. airline industry had better re-think all of their rules and policies concerning customer service.

It’s going to be open season on airlines in the next three years, and carriers need now to look at all of their sacred rules from the perspective of how the consumer might see them, and how they are administered and enforced. Too often, the “rules” are imparted as if directly from Gestapo headquarters. Or from far-away call centers in Asia where the person at the other end of the line couldn’t give a yak meat snack if the customer is satisfied or not.

Let’s not dance around the situation – a lot of airline policies appear or can be construed to appear to be consistent with what one would find at a minimum-security prison and enforced just as gently.

This means there is a need for a complete re-thinking of every consumer policy and a re-imaging of each. It is indeed necessary to have rules that consumers must follow when traveling. But it’s how they are administered, postured and enforced that makes the difference.

With the politicians on the warpath at the DOT, the airline industry had better think about circling the rules wagons to appear more consumer friendly. A couple of points…

Refunds. It can appear that the airline industry considers a booking to be a contractual obligation on the part of the consumer to travel. So, if there are reasons that the airline can’t operate consistent with the initial booking, the consumer is allowed to re-book within a tight set of requirements to fly another day. But in any case, the message is that you have to go, or forfeit your fare. Regardless of protestations to the contrary, that’s the message airlines send to their consumers in the event of major off-schedule situations. It comes across very arrogant and take-it-or-leave-it. Congress and the DOT could have a field day with this one.

Great. But consumers don’t book flights to take an airplane ride. They book to be somewhere on a certain or near certain time frame. Generously telling the customers they have three days to re-book (under a set of rules that can look like the start-up procedure for the space shuttle) does nothing when the airline’s inability to meet the initial booking means the consumer misses the funeral, the wedding, the business meeting, whatever.

Ancillary Fees. With the politicians on the warpath at the DOT, it is beyond belief that any airline would even think about not refunding baggage fees when they fail to deliver the bag with the passenger. It’s even more surprising when one considers how rare such a situation is today. But that’s what the DOT seems to think. Same with internet fees.

“Choice” Or “Prime” Economy Seat Fees. Another emerging cause celebre among the headline seekers in the Marble Playpen (Congress) is airlines that charge extra for specific seats in economy. All these life forms see is that there are situations where for a family to sit together, the airline will gouge them more for a “choice” seat if others are not available together. That “choiceness” might just be described as being closer to the door on arrival. But it’s a “fee” that may look great on the bottom line but for congress is like waving a pot roast at a hungry lion.

Change Fees. It’s likely Southwest is fervently praying that the rest of the industry doesn’t permanently stop charging ticket change fees once this CCP-Covid pandemic is over. That’s because it is likely that WN is getting enormous new revenue from passengers choosing them simply because they know they won’t have to call Zurich for a wire transfer should the need arise to change a reservation.

Please, major carriers, don’t even think about appearing at a congressional hearing and slobber out a lot of financial backroom gobbledy-gook that it really does cost the airline $200 when a passenger changes a booking. It won’t fly and makes airlines look like pirates.

Staffing. This is the biggie. It is a fact that an electronic check-in kiosk is never rude. Never in a bad mood. Never goes on break. Never calls the Teamsters for an organization ballot. Never calls in sick. Live employees are expensive and, in today’s world, are a lot less necessary to passenger processing.

Until the flight cancels.

Or worse, until the destination airport shuts down. Or the entire airport is hit with a blizzard, or just a major thunderstorm. I.e., things that do happen in the airline business.

This is when access to a human is essential. Yup, the wondrous rebooking system takes care of a lot of it, but there are still enough passengers with questions or concerns to make the airport look like a re-enactment of the Fall of Saigon when there is almost nobody to speak with. So call the airline, right?

In the last six months, there have been incidents where the wait time on the telephone can be several hours… hours. And finally at the other end is a contract agent in some remote country who could not care if you flew the airline or took Greyhound.

This is a challenge that events in the past three months have illuminated, big time. There is no easy solution, except training in interpersonal interaction under stress, the ability for front line staff to adjust rules, and refocus on assuring that channels of information are widened in such events. Easy to say, hard to implement… but recent events would indicate service shortfalls that the DOT will leap on.

Final Point: This is not a drill… airlines can either now take this aggressively in hand and make major changes in areas such as noted above, or they will be imposed by an unqualified set of political appointees at the DOT.

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Aviation Unscripted – A Review of 9/11 20-Year Coverage

This week’s Aviation Unscripted video looks beyond the events on that day, and the actions America took in reaction both then and since.

Amid all of the articles lauding how different and how much more secure our airports are, came a story from KCBS in Los Angeles. It noted an unauthorized incursion to the sterile AOA at LAX, and then found that there’s been such breaches at an average of almost one per month over the last six years.

Somehow, this was deemed to be great security by the head of the LAX police, who claimed that compared to the millions of people through the airport, that’s proof of great security. We covered this in last week’s Touch & Go newsletter for our clients.  (If you’d like to be added to the distribution, just send us an email.)

Terrorists Are Still In Control. In the video, we illuminate that right from the start, it has been a political process at the Department of Homeland Security and at the TSA. The first head of DHS was a state governor with absolutely no expertise in countering terrorism, let alone implementing programs to make America safer. Bush could have nominated a top orthodontist just as effectively, and given the results, maybe more so.

Now that the anniversary has past, it’s back to forgetting what happened on 9/11. The articles ranged from personal recollections to the usual babble about how well the TSA is doing. Some was disgusting political slop such as done by NPR, which made it all political, without pointing to the politicians responsible. But NPR is “free” – and worth every penny.

In any case, if you have not seen it yet, click here for the Aviation Unscripted video.

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