Monday Insight – September 20, 2021

Change of Insight Direction…
“Fall” May Be Not Just In The Air…

… But At The Nation’s Airports, Too – More Danger Signs

Boyd Group International is now forecasting that the combination of inflation, CCP-Covid, and now a potential global economic downturn due to a collapsing China economy could combine into a significant decline in air transportation demand in the late fourth quarter and into the first half of 2022.

It’s not arrived yet, but it is on the radar screen.

The good news is that the airline industry clearly has control of the capacity lever, and we are seeing some clear indications of pullbacks emerging for the next 4 months.

Let’s look at the three main threats to air traffic recovery.

The Potential Big One – A China Collapse

Yes, a collapse of large parts of the Chinese economy will ultimately affect air travel demand in the USA… by causing lots of corollary damage to the USA economy.

This is one that is being completely missed, even though the stock market just got gob smacked by it last week and is still being affected.

To start, the air transportation business isn’t like ‘Vegas. What happens in Beijing doesn’t stay in Beijing and can affect Bangor and Boise and Billings. As demonstrated by the stock market, it’s already happening.

One of the advantages we have at Boyd Group International is that we understand that air travel demand in the USA is affected by a range of global economic factors. Another advantage is that BGI is the only aviation consulting firm that has an active China research practice. What we see today is that the creaky house of cards called the Chinese economy is potentially on the verge of coming down like a baby grand out the 8th floor window.

Most folks have never heard of Evergrande. But it’s a large real estate developer that’s bazillions of billions in debt and about to sleep with the fishes. (A big part of the Chinese economy is largely based on Ponzi scheme real estate programs that are essentially “buy & flip” schemes. It’s been propped up by corrupt local officials and by the CCP itself, but that’s about to change.)

A collapse or near-collapse of Evergrande could start an avalanche of business failures across China and the globe, not to mention civic chaos in China that could engender more Tiananmen Square events. Don’t laugh – it’s already affected values on Wall Street. Main street could be next.

When this house of corrupt cards comes down, in addition to the usual fallout in other world markets and in multi-national companies that have invested in China, it could also accelerate a major decline in China’s factory output. That means there may be lots of things that won’t be on store shelves this holiday season. Read: lower retail sales in the USA. When the coffee makers and hair dryers and toys don’t arrive, they can’t be sold.

Now, morally, consumers should not be buying anything made in China, because these companies all benefit the Chinese Communist Party, and every purchase ultimately supports this unelected thug regime that would make Adolf Hitler look like a perfect prom date. But in many cases, there are no alternatives.

So when that production line in Guangzhou making blenders, or generators, or barbecue grills – or major components for Boeing airliners – shuts down, it does not take an MBA degree from Wharton to figure out the economic impact on the U.S. economy… and how that can affect propensity to travel on airplanes.

Yup, this sounds like a far-out prediction. But stand by, it’s not.

Inflation

Basic Econ 101 will tell us that when overall prices go up, spend patterns change.

Kroger has advised that consumers should be prepared for material increases in food costs in the near future. Gasoline is going up, and based on current energy policies from Washington, will continue that trajectory. This means that all three air travel sectors – leisure, personal and business – will have less in the kitty. And let’s cut the political pablum – what’s going on and what’s planned in Washington is going to put inflation on the fast track.

Now, the enplanement effects of inflation won’t be evenly spread across the board. Some U.S. airports will still see strong traffic growth due to economic and demographic migrations,  while others – paradoxically those in large commercial metros that depend on both leisure and business travel – will likely see substantial reductions in air travel demand. For them, it’s a double-whammy: inbound leisure travel will drop, and business-generated demand, both in and out, will begin to decline.

Our Airports:USA® system has identified a number of airports that need to start considering how to deal with the potential of major traffic declines.

CCP-Covid

Never has the U.S. seen any crisis so expertly and intentionally confused by any number of political persuasions. Masks are essential, some say, with no explanation of what they do or why. It’s a hoot seeing diligent, obedient, and with-the-program citizens alone in their automobiles, sporting a mask, apparently protecting the car’s cruise control knobs from contracting a deadly infection.

We have no guidance on what a “mask” really consists of.

Vaccine passports are a hot item. The borders with Canada and Mexico are tightly CCP-Covid restricted – except for thousands of unscreened illegal aliens pouring in and being literally distributed to cities across the country by the Biden folks. Yessir, they’re on it.

Point: nobody can take the people in Washington seriously in regard to CCP-Covid, and that means travel uncertainty.  Travel uncertainty keeps people from booking flights – or, worse, cancelling ones already made.

Declining Economic Growth Plus Inflation: Air Travel Demand Quicksand.

We can’t ignore this. It’s like an oncoming hurricane. We can hope that its track will change, but it’s not good judgement to ignore it.

At Airports:USA® we’ll be keeping our clients updated on where these dynamics are headed. For more information on the only independent enplanement forecasts accomplished entirely in the private sector, click here – and then join us as subscriber members.

Planning for the future means clearly understanding that past metrics and thinking are great ways of staying there – stuck in the past.

 

 

 

Monday Insight – September 13, 2021

Airports:USA® Fourth Quarter 2021 Forecast Revised
… Downward

  • Inflation has reportedly hit 8% this past week…
  • One major grocery chain has warned of much higher prices to come
  • Not only are there indications of soft future bookings, airlines are seeing actual cancellations of current bookings…
  • The CCP-Covid information circus confusion continues…

These are no longer vague tea leaves on the future of air traffic in the USA. The indications are that we will be seeing more than seasonal demand decline in the coming 12 weeks.

As a result, Boyd Group International’s Airports:USA® will be publishing a contingency-driven forecast this week, outlining the airports that are likely to be most exposed to the factors above.

A Decline Or A Plunge? From preliminary projections developed in the last week, it is possible that the year 2021 could clock in with under 650 million enplanements, way down from the 670 that were estimated based on trends as recent as July.

The concern is that with the appalling kabuki theater Washington has made in regard to vaccinations, masks, new revelations on high level officials having actually been involved in Wuhan-related research, and now major inflation, the number one fallout is consumer uncertainty.

Consumer uncertainty is always certain to curtail air transportation demand… and apparently that’s already in progress.

Weakening Demand Points – But Not Across The Board. Paradoxically, what we can expect is that different travel demand sectors will be hit differently.

While it is logical that leisure traffic would be the first – and it will be – the decline will not be evenly spread across the board, and will affect weaker sub-sectors of this category first. High-end leisure travel such as ski vacations will be hit the least (at first), while purely personal (VFR) traffic will see near immediate downturn.

As for business travel, which some analysts seem to think is the enormous revenue cavalry about to burst over the hill with lots of new traffic, please, please, write this down – it isn’t coming. As we’ve pointed out in the past, most of what’s going to be returning has already done so.

This is in addition to the reality that not only has the value of air transportation been partially eclipsed as a business tool (due to more efficient communication channels), but the diaspora of many corporate offices has dispersed the enplanement generation of such travel. That three floors of workers in New York are now working from “home” which can be anywhere across the nation, and not necessarily concentrated near LaGuardia.

Basically, what to watch for in the coming weeks…

Circling The Airline Hubsite Wagons. Some pull back in weaker feed markets. United is already culling and trimming its feed system, dropping places like Tallahassee, Abilene, San Angelo and Rochester, and “postponing” expansion at other points. Watch for more of this at other carriers.

The Sustainable Jet-A Dragon On The Way? The demand mix for jet fuel has been affected by declines in travel in the rest of the world. However, between supply and demand eventually stabilizing and – unmentioned in the trendy news – the higher costs due to the push for “sustainable” alternative sources, the cost of airline fuel will be going up. Along with other inflation-driven factors.

Less Trans-Atlantic Flying. Some planned restoration of international capacity will be quietly cut back. The E.U. is a game board of different CCP-Covid responses. Denmark has dropped all restrictions, while the E.U. itself is recommending restrictions on travel from the USA. Bank on it, that fun vacation to the South of France will be 86’d.

Some Demand Transfer To USA Destinations. That brings up the other paradox. Some of that long green that was planned for a vacation to Europe will shift to domestic destinations, in part shoring up some of the decline in domestic leisure travel.

Airports:USA® Subscribers: More Updates This Week. We will be honing the new alternative enplanement projections and advising our subscribers.

Plan on a lot of complex volatility.

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9/11 Anniversary Review

As expected, 99% of the coverage of the 20th anniversary of 9/11 was focused on retrospectives on where people were, how they coped, and how air travel is sooooo different today.

Unfortunately, many of these stories were accessorized with vapor-brain reviews of how wonderful airport screening is today, usually with a discussion of all the proscribed items that have been intercepted. Not terrorists intercepted. Just items. No discussion of other security aspects.

This Thursday, the Aviation Unscripted™ video will do a wrap up directly addressing what actions were taken after 9/11, and how well they addressed the threat.

Mark your calendar.

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Boeing, China & Other Issues

We had planned to review the general prospects for Boeing, in light of the 787 issues and its precarious position in regard to selling more aircraft in the #2 market – China.

We’ll be getting to that in the future. Here’s a hint: in the wider perspective of the future global airliner market, Boeing is in a lot better shape for the long term than the news stories are (accurately) indicating where it is right now.

And we’ll get into the potential enplanement effects on some specific U.S. airports as the relationship between the USA and China continues to deteriorate.

The rapidly-evolving dynamics regarding enplanement demand simply gobbled up a lot more time than we expected.
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FROM ALL OF US AT BOYD GROUP INTERNATIONAL, HAVE A GREAT WEEK!

Presentation To Pennsylvania Airports Roundtable

We were honored to outline our vision of the future to 45 Pennsylvania airport leaders on September 7, 2021.

Click here to see the presentation.

LOOKING FOR FRESH FUTURIST INSIGHT? And, we’re always ready to discuss futurist aviation issues. If your organization is interested in exploring new perspectives for the future, just click here and we can talk about a presentation tailored to your airport or community.
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Monday Insight – September 6, 2021

The Monday Insight is observing the U.S. Labor Day holiday,
and will return next week.

Be Sure To Join Us… here’s what we’re looking at:

Boeing: We’ll be reviewing the situation at Boeing and how it may affect the U.S. economy… the nation’s single largest manufacturing exporter appears to be cut out of China for single-aisle airliners, has just lost a potential huge order (pro-tem?) for 737MAX-10s from Ryan Air, and now reports upwards of $25 billion tied up in @ 100 parked & undelivered 787s due to concerns of quality control issues that are being investigated. What this may mean to the U.S. airline industry will be explored.

China & Taiwan & Louisville: Now that China believes it has a clear picture of the quality of the folks directing the U.S. military, due to the Afghanistan debacle, there are increased incursions into the Taiwan air defense zone. Toss in major political and economic challenges for the president of China, which may encourage a big political stunt, and the combination may result in the criminal leadership of China attempting a quick invasion of Taiwan.

If that happens, plan on a major economic plunge and a resulting decimation of air traffic demand. We’ll explain how a CCP landing Kaohsiung would almost immediately affect the traffic at Knoxville, and how U.S. regions with strong China-owned commercial operations may be in for some unexpected economic turbulence.

The Latest Airports:USA 4Q Traffic Projections. Mixed signals. Hawaii has essentially put out a “Do Not Enter” sign just at the time when it is hugely situated in regard to new consumer spend projections. Points in the E.U. are seeing an uptick in the CCP-Covid spread, while Denmark has reportedly dropped all CCP-Covid restrictions. And, of course there is the CCP in China which has declared they have the disease under complete control, with no new infections late last week… out of over a billion people. All of this will affect air service demand internationally and in the USA. We’ll deliver some details.

Follow-up 9/11: Where The Nation’s Security Really Stands. How the 20th anniversary of 9/11 is covered in the media, particularly in regard to how AVSEC has been handled in the last two decades, will give some strong indication of how aware the nation really is in regard to terrorist threats.

Already, the administration is playing political games, claiming that the real danger is from “domestic” terrorists, with zero real data to back it up.

That is completely consistent with the incompetence in allowing the recent influx of over 100,000 largely unvetted and unidentified people from a terror-generating Afghanistan.

So far, it is not encouraging… there have been lots of veneer media pap stories on “how 9/11 has changed how we travel” – but almost none independently investigating what’s actually been done in regard to national security, not just AVSEC, since then.

To read this sunshine, we have no real threats… our Department of Homeland Security is on the case.

If you haven’t done so, click here or on the icon for the latest Aviation Unscripted video. Some straight talk that addresses facts, not trendy group think.

Log on next week, and we’ll see you then!

Monday Insight – August 30, 2021

Fallout From Afghanistan Could Hit Our Airports
For Real

“Several Thousands.”

That was the indication from the people in Washington regarding the number of prisoners who have been apparently released by the Taliban from confinement at the abandoned U.S. Bagram air base.

The administration didn’t have any idea of the exact number. Not too comforting since originally it was our prison.

These are not street hoods doing time for boosting a liquor store. These are dedicated killers. Dedicated terrorists… as are the rest of the animals now apparently in charge in Afghanistan. And they are now back in circulation under a regime that actually has cautioned citizens that its savage neanderthal members are not trained to deal with women, so, ladies, please stay home.

Add to this the disturbing indications that many or even most of the tens of thousands of Afghans being airlifted to the U.S. have not been fully vetted. Not just for CCP-Covid, but for any traces of being involved with the Taliban itself.

There Is No Plan – None. If this is the official competence of the security program for evacuating Afghanistan, a place rife with terrorists, give some thought regarding just how competent the security at our domestic airports might be.

The open question is whether the combination of the Taliban back in charge in Kabul, plus thousands of unvetted people from Afghanistan being funneled into the U.S., and also materially open borders in the south, could combine into increased threats of terrorism on our air transportation system.

Draw your own conclusions.

Identification. Anticipation, Contingency Planning. Event Mitigation. These are commonsense foundations of aggressive security awareness. Are they in place across the nation’s infrastructure?

Based on the responses to the last major terrorist attack – the Colonial Pipeline event – the indications are clear that Homeland Security is clueless to the four basics above. Talk about identification… these political appointees didn’t even think that a terrorist event which partially shut down fuel distribution to the East Coast was a “security incident.” No explosions. No violence. So, it wasn’t any big deal.

For the record, the current occupants of the White House even indicated that the pipeline event and the chaos it caused were positive – it would support the administration’s plan to encourage people to buy battery-powered cars.

Yup. Real security awareness.

What To Expect… More Layers of Hype. The increased threat is not vapor, but we can likely plan on the responses from the TSA to be pretty much that. Security won’t be enhanced, but high-visual stunts will be the order of the day…

Elimination of Pre-Check. This will be a platform for the TSA to show they are tightening screening. Yessir, having more people take off their shoes will more than make up for not having clue about what innovative new approaches terrorists might take to attacking our airports.

More Random Passenger Checks. Look for a return of having randomly chosen passengers nailed for additional screening at boarding gates. The operative word is “random” – as far as enhancing security, it’s the equivalent of just shooting blindly into the woods and calling it deer hunting.

Scrutiny of Passengers on One-Way Itineraries. The post-9/11 assumption that a terrorist intent on a suicide bombing would certainly be cost-conscious enough not to buy a return ticket. This part of the Kabuki security theater may return.

Log On This Thursday To Aviation Unscripted… Some Accurate And Disturbing Facts. The next Aviation Unscripted video is planned to review where the USA has come since 9/11 and give a candid picture of what we can expect as the political appointees at the top of DHS and TSA try to figure out what to do next.

We’ve had 20 years since 9/11.

Judging by the response to Colonial Pipeline and the fiasco in Afghanistan, there is the legitimate question that it’s been wasted.

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And, Keeping Up With Traffic Demand Trends…

If you haven’t done so yet, log on to This Week’s Aviation Unscripted Video to get some new insight regarding what we can expect in the next four months in regard to enplanements across the nation.

We discuss the impending effects of continuing inflation on the three main air traffic segments – business, personal and leisure. Consumer price increases are in full swing, making air travel dollars more scarce. One factor giving us a temporary break is that due to globe issues, jet-A has not yet seen major spikes.

We grab the CCP-Covid third rail – the increasing confusion regarding the delta strain of the CCP’s gift to the world, as well as the issue of masks and social restrictions is starting to affect future bookings.

We look at  the latest Airports:USA® projection of the coming changes in the role of the nation’s 24 airline connecting hubsites – which are expected to grow, and which are expected to see flat or even declining traffic through 2025.

Invest the 14 minutes to join us at Aviation Unscripted – It’s insight and perspectives not found anywhere else.  Go there now.

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BEST REGARDS FOR A PROSPEROUS AND EXCITING WEEK AHEAD!

Monday Insight – August 23, 2021

Latest Aviation Unscripted Video:
More Evidence of Traffic Slowdown

“…  the company believes the recent negative effects of the pandemic on August and September revenue trends will make it difficult for the company to be profitable in third-quarter 2021.”

Southwest Airlines

That’s the word from one major airline. There are other indications as well. The good news is that the U.S. airline industry is not being suddenly blind-sided by the factors threatening current load factors. They are obviously not lulled into a cushy euphoria due to the growth in traffic this summer.

In the latest Aviation Unscripted video, we go into how this may change.  It’s insight about the next six months that hasn’t been addressed. Yet.

Click here to get a view of what we may be facing, including a review the latest Airports:USA® short-term enplanement forecasts and how regional demand shifts are already taking place.

BGI is the only aviation consulting and research firm that has identified the economic drivers we can expect in this 3Q-4Q traffic demand shift.

We don’t go by the “consensus,” which is always months behind and a system that smothers independent thought. What we cover in this video is what other consultants will be trumpeting only after it’s already obvious. Click on the icon above and join us.

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Random Aviation Points This Week

Boeing 737MAX – Maybe Getting Resuscitated In China…
… And Maybe Not. It’s Important To Renton Economy.

We pointed out a couple weeks ago that it was starting to be clear that Boeing was being shut out of China, at least in the single-aisle market.

In the last week, two indicators of interest. Boeing is reported to have flown a test plane 737-MAX7 to its (probably very quiet) completion facility in Zhoushan. In addition, China Eastern shifted a single 737MAX8 it has on the order books to one of its subsidiary airlines earlier in the week. No indication of what that might mean.

The fly in the fleet ointment is that the Chinese air transportation system right now doesn’t need the dozens of now-parked 737MAX units, not to mention the ones still on order, as the CCP-generated Covid virus has been shutting down whole airports and constricting travel across the country. So a quick return to accepting new 737s may not be in the near term.

Airbus Is In The Cockpit Seat. Meanwhile deliveries of new Airbus narrowbodies continue. The indications are that China may be on the margins of Boeing demand for the foreseeable future.

This does have future economic indications for the USA and for Renton. Reportedly, a quarter of Boeing’s production was at one point aimed at China.

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Air Travel – It’s Just Like A Loaf of Bread, The Survey Says

A recent article in the Columbus Dispatch trumpeted a new survey that identified Rickenbacker as having some of the lowest airfares in the nation. Didn’t do much to check the source or the accuracy… the headline was apparently too exciting, even if at used-car-lot levels of inaccuracy.

Memo: Air Transportation Is A Modality, Not a Product. Some “research firm” got into DOT data, and ranked airports by average fares, assuming that air service at places like Rickenbacker or St. Louis or LGA or Phoenix Mesa was a consistent product, like a gallon of unleaded or a watermelon, or a bunch of seedless grapes. They also assumed that the reporting of “air fares” is derived from a consistent methodology across all airlines. Caveat Reader.

Actually, this is just like the news stories that come out every quarter, with eager reporters comparing “ticket prices” between airports. Or the nonsensical discussions in air service development “studies” claiming an airport may have “higher than average” air fares, which even the DOT thinks is a metric.

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This Week’s Airports:USA® Forecast Snapshot

We’ll be posting a key metric on Airports:USA®  each week that gives insight regarding air transportation and airport trends.

This week, we take a look at the 25 Fastest Growth Large Non-Hubsite Airports through 2025.

This is another area where Airports:USA® is far more advanced than traditional FAA forecast methodologies. The Agency still ranks airports on the percentage of total enplanements. That was great in the 1960s, but today the role an airport plays in the air transportation system is a far more meaningful category metric.

Airport Classifications That Relate To Reality. Tor the FAA to continue to categorize airports as variants of a “hub” is completely outside of air transportation system realities. Airports:USA® categorizes airports at regional, large non-hubsite, and hubsite. The latter category represents airports where 25% of the total enplanements are generated by connecting passengers as a result of an airline or airlines intentionally scheduling flights to inter-connect.

Large Non-Hubsite Airports are those that experience more than 4 million enplanements annually and where no airline has established a connecting hub operation. Just click on the snapshot tab.

Click here to take a look. Just click on the snapshot tab on the website.

 

 

Monday Insight – August 16, 2021

Enplanement Projections Reduced by 30 Million:

Airports:USA® Now Reflects Growing Travel Uncertainty

Even If Contained Here, The CCP-Virus Elsewhere May Hit The US Economy

Yikes.

It would be really great if we could point to some exciting, across-the-board indications for the rest of 2021. But as a research and forecasting firm, BGI simply tells it as it is.

It just means identifying emerging trends and planning accordingly. Right now, the overall picture is very mixed and the national air traffic demand fundamentals are not encouraging at the  moment.

Okay… today’s quiz.

What do Stevie Nicks, Lynyrd Skynrd, Foo Fighters – and, of course, the annual North Carolina Food Truck Rodeo (?) – have to do with air traffic forecast methodology?

A whole lot – particularly when we are being bombarded by me-too media stories trumpeting the “comeback” in air travel. See, these are just some of the entities across the country that have cancelled or postponed events due to fears of the CCP-Covid pandemic. They are one clear set of harbingers for the near future of enplanements across the USA.

‘Course, all the disappointed loyal followers of the Foo Fighters wouldn’t fill the rest room capacity at a mid-size airport. But it’s now clear that a lot of the country is starting to consider closing down again, due to the uncertainty, contradictory reporting, and outright political game-playing regarding the CCP-Covid pandemic.

Shaving 30 Million Forecast Enplanements. Looking at the latest data from Airports:USA®, the prediction is for a tailing off on air transportation demand in the 4Q, tallying @642 million enplanements, down from an earlier estimate of over 670 million.

Does Anybody Have A CCP-Covid Clue? Hearing what’s in various media sources is certain to keep consumers totally befuddled in regard to what is happening around the country, as well as what this round of infections actually represent. That breeds uncertainty and confusion, which keeps people home.

Unfortunately, the fourth quarter is now in line to see the effects of this…

… On one hand, we have data from Johns Hopkins indicating that the fatality rate has reached a new low. On the other hand, we have the occupant of the White House reportedly researching whether he has the legal authority to force everybody to wear masks, or more correctly, to simply cover nose and mouth with just about anything, in a show of subservience to the Regime. Or, maybe two masks at the same time, which was indicated as his preference in the past.

Then we have other news. Some carriers in the E.U. are considering requiring passengers to use professional-grade medical masks, instead of the hokey talisman stuff that is just there to cover-your-face-to-show-loyalty, as is demanded by the CDC.

Spreading Again Where It Started – And Threatening The US Economy. More troubling news, mostly ignored, swept under the rug, or just missed, is that China is now in a full-blown pandemic eruption. That can affect the American economy, and hence, the dollars available for air travel.

Anybody remember the lifeforms in the media that dishonestly spread the fiction last year of how quickly the unelected regime in China moved to stop the spread of the Covid disease when it initially broke out in Wuhan?  Well, today, the pandemic is spreading across the Middle Kingdom, replete with lower-level CCP hacks getting tossed under the political bus, blamed for not doing enough. It is not “regional” – it is all over China.

That’s probably considered as a big “so what” to most people – it’s an event thousands of miles away.

But it’s also an indication that the CCP-virus is spreading wildly and possibly out of control across the factories where our hardware stores get a lot of the tools they sell. Where many of the appliances sold in department stores are made. Where a lot of the furniture we’re sitting on is made. Where a big percentage of anything that requires a double-A battery is made. Where a huge part of our supply chain is now vulnerable to being threatened.

Go to any store and take a look.. if the flow of goods gets constricted from China due to massive spread of the pandemic, a lot of the shelves will be devoid of product, with devastating effects on business. It is a terrible indictment that much of our supply chains are tied to a country where everything produced benefits a criminal government, but right now many companies in the USA have not moved aggressively – at least on a moral basis – to shift away from dependence on this system.

Think that’s a stretch? It is.  But air cargo capacity is already being cut between the US and China as a result of the spread of the disease. That cuts volume and can raise prices. Next may come ocean traffic.

Stretch or not, this is still a nasty possibility that will affect the US economy, and demand for air travel. Keep an eye on this.

Danger Signs. Back home, the storm clouds are already forming. We have already had two airlines indicate that bookings after Labor Day are softening. There will likely be more. It is noted that one carrier system has dropped service or plans for service at three smaller airports. Plus, it is likely that some pandemic-induced O&D leisure routes could be on the chopping block shortly.

Higher Grocery Costs, Higher Prices At The Pump. Commodities Going Up. Then there is the inflation dragon coming out of its cave. Based on the spending and other largess planned by the inhabitants of the Marble Playpen in Washington, one has to be very much in mental left field or vacationing on Pluto to assume that this is just temporary. This means that there will be less money available for both leisure and business travel than we otherwise expected two months ago.

Log On To Airports:USA® for the latest forecast snapshot updates, more of which will be added this week. While there, check out our exclusive Quarterly Outlook product, which delivers the future for airport planning.

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Aviation Unscripted Video This Week

Stand by… with the 20th year since 9/11, we are going to be hitting hard on the fact that the nation’s air transportation system is no more secure than before that horrid event. Log on to our channel on Thursday.

Matter of fact, if you haven’t done so in the past, log on now and take a look at our library.

Great Input. We want to thank the folks commenting on our video last week of the Cuba air service situation. We would note that Boyd Group International is the only aviation/airport consulting firm that tackled the nonsense that surrounded the “opening” of Cuba-US air service in 2014-2015.

Plus, we’ve had more feedback on our earlier Unscripted Video regarding the fallacies and dangers of a headlong dive into battery power as an environmental solution.

It is a potential disaster, unless there are major changes in battery manufacturing technology and the development of safe ways of handling the waste represented by used-up lithium-ion batteries.

Click here to go to the Aviation Unscripted channel on Rumble.com… which is just one of the portals for visitors to Unscripted. Peruse our past insights, and let us know your thoughts.

We’re celebrating our one-year anniversary this month, and looking forward to a fun year ahead.

Monday Insight – August 9, 2021

Cuba – U.S. Air Traffic

Revisiting The Mirage

In Boyd Group International’s 2009-2015 air service demand studies on Cuba, it was determined that Cuba was likely the biggest single new revenue potential facing American carriers. Figure maybe over one million visitors from the USA. But the operative word is “potential” – it’s not here yet.

Not by a long shot.

Message To U.S. Travel Industry: Freedom Demonstrations Aren’t Tourist Draws. Last month, thousands of citizens across Cuba took to the streets to rally for a couple of things that most people in a free country take for granted.

Little things like freedom of speech, the liberty to run their lives outside the control of a Communist government cleptocracy, and be outside the watchful eye of a Stasi-styled secret police. Plus, maybe not get zapped from time to time with things like caloric-rationing and shortages of basic food stuffs.

Enter The Air Service Mirage. Let’s go back to 2014, when the Obama Administration boldly decided to change U.S. policy and embrace the people running the Communist Cuban Government.

The president of the United States flew to Havana and had a whole spasm of photo ops, schmoozing up to the dictator of Cuba and his various Capos. After more than half a century, the U.S. had seen the error if its ways, and would seek to be friends with the Castro government.  Yessir, after one million Cubans escaped to the USA, and thousands more wanted out, it was time for the Obama administration to set things straight.

In all that hoopla, it was announced that for the first time since 1961, air service would be re-established between the two countries.

The raw enthusiasm for air travel demand between the USA and Cuba swept the travel industry like 1960s teenagers anticipating the arrival of the Beatles. We heard all about the “pent up demand” for Cuba travel (?) … and the Obama administration was fixin’ to open those floodgates. Hundreds of thousands of new passengers would be crowding through airline hubsites, hankering to connect get to Havana, Matanzas, Santiago and other places.

Back then, any Luddite suggestion that this may have been cheerleading for a team not yet on the field was strictly ignored. Like, the fact that Cubans by and large didn’t have sufficient incomes to pay for baggage fees, let alone a vacation to see Disneyland. Or if they did, even being allowed to leave the workers’ paradise.

How ‘bout hotels for the Normandy-like invasion of expected U.S. visitors. Or rental cars? Or “resorts” that could even begin to compete with other Caribbean venues? It was clear as a blemish on prom night that the vast majority of the revenues would be U.S.-generated. One-sided traffic generation.

That troubling bit of O&D reality was buttressed by the fact that it would be only U.S. carriers in this game. Any arriving Cuban flight would be greeted by attorneys even before the lav truck could arrive, attaching the airliner due to standing lawsuits against the Castro regime. So much for two-way travel.

The point is that the boom never happened, mainly because there is no business or leisure base in Cuba. (And, for folks still wallowing in political myopia, Cuba’s mess is not due to the U.S. embargo. Cuba has no prohibitions on freely buying anything from the rest of the world.)

The travel groupies missed the fact that the infrastructure and resorts in Cuba couldn’t match the competition in the rest of the Caribbean. The panting politicians expecting huge business and commercial trade with Cuba never bothered to really get informed before issuing drippy-drooly congratulatory press releases about the brilliance of the move to play up to a Communist dictatorship. There is no business base in Cuba, because it’s all government-run.

The Future – A Bonanza Is Still Possible – Likely, Actually. In 2019, the Trump Administration effectively restricted scheduleD flights to only Havana. Airlines that had won rights to other Cuban cities should have sent thank-you notes, as most of the routes turned out to be dogs… due to lack of traffic, high costs (many “off invoice”), or both. Now, they can wait until things change in Havana.

The street demonstrations in early July are a strong indicator that this may be in the cards.

Boyd Group International has covered this in more detail in the latest Aviation Unscripted video, which can be accessed on Rumble by clicking here.

BUT DO BE PREPARED – THE UNSCRIPTED VIDEO GOES INTO AREAS THAT THE MEDIA HAVE NOT TOUCHED… INCLUDING VERY DISTURBING PICTURES OF THE US PRESIDENT’S 2014 VISIT TO HAVANA… VERY DISTURBING, especially in light of recent events in Cuba. Click on and take a couple minutes for perspectives that are left out of most narratives covering 2014.

And our 2015 study is still (unfortunately) an accurate depiction of the Cuba travel picture. Copies can be ordered through the contact button on this site.
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WE WANT TO WISH ALL OF OUR CLIENTS AND FRIENDS A HEALTHY AND PROSPEROUS WEEK AHEAD!

Monday Insight – August 2, 2021

Well, There’s At Least One Thing
Reimposing Mask Mandates Can Stop…

… A Rebound In Air Traffic

Uncertainty. Misinformation. Innuendo.

Great ways to kill off consumer confidence in regard to travel.

Ken Kute & Barbie Airhead On The 6PM News Are In Full Swing. On one hand, we have evening news anchors earnestly advising that the CCP-Covid disease is spreading, with the clear and intended innuendo that a new body count is inevitable. No bother to discuss further data on the severity or nature of the reported infections. Just the implications of doom.

On the other hand, there are data indicating that deaths from CCP-Covid are at a new low.

Who to believe? It doesn’t make any difference to a consumer – it is uncertainty, and uncertainty leads to cancelling travel.

Surprise! Confusion In The White House. On July 30, it was reported that Joe Biden stated that “stricter rules” and maybe stay at home orders were a “probability” due to a reported expansion on CCP-Covid infections.

Then, as quickly as it came, it was “clarified” by his White House handlers, noting that there are other “tools in the belt” to handle the situation.

What’s Next… A New Run On Toilet Paper? Meanwhile another White House advisor – Dr. Fauci – indicated a need for expanding orders to wear masks.

Regardless of the pros, cons, accuracy, hype or whatever, these types of news articles are not inducive to generating air travel – particularly discretionary trips. As we pointed out in a recent Aviation Unscripted video, the circled firing squad approach from Washington isn’t going to encourage new travel.

The Medical Solution: Show Complete Obedience. Yessir. Let’s don those masks. Let’s see…  A quick geography lesson regarding the sheer effectiveness of mask-wearing is of value.

Beijing. Guangzhou. Nanjing, Mianyang.

Everybody in these huge Chinese cities has been wearing masks for over a year. Dutifully. Enforced. No exceptions. Forget the police, you will be beaten up in the subway by other riders if you don’t wear one. It’s been part of the Chinese consumer anatomy.

Yet, these are all places where, apparently, the CCP-Covid virus is again having its way with Chinese citizens. These aren’t isolated burgs in the Chinese boondocks – one glance at a map, and it’s clear that China is crawling with the fruits of the Covid labors accomplished by the hoodlums in charge.

Huh? We Were Told That The CCP Was The Virus-Control Varsity. Gee, remember the network media automatons instructing us last year that the Chinese government was exemplary in quickly preventing the spread of a disease they created?

“Youbetcha,” the slimy hacks at the WHO chimed in, lauding what were the most criminal government actions since the Tiananmen Square massacre.  The WHO lied and the media just kept playing rhythm guitar to this scam… China’s CCP had brought the pandemic to its knees, and we were instructed to accept this malarkey as fact.

‘Course, like so much of what we’re told, it was complete dishonest garbage. But this propaganda was swallowed by major news sources like fish tossed out to trained seals. Some in the media – especially outlets with in-China bureaus – still pass on this dishonesty.

But now whole areas of Chinese cities are being quarantined, usually with all the smooth courtesy of a lock-down after a riot at maximum security prison.

So, With The News From China, Why Masks? Bringing this back to local USA relevance, remember, these hundreds of thousand or maybe millions of victims now infected by the CCP-virus were just about all wearing masks. Everywhere.

Did a lot of good. So, according to the politicians, the USA should do the same. It’s like betting on a football instant replay, hoping for a different outcome.

No Indication of The Severity or Danger or Nature. Just Accept. Yes, it appears that the Wuhan gift is still giving.

So, toss in panting stories on the evening news about infections in the U.S., and things are not looking positive for the future of free and open airline travel. The challenge now is that we cannot really trust what’s coming off the airwaves.

Again, more accurately, the situation is that we must show subservience to our glorious, all-knowing leaders and don the symbol of obedience – covering our nose and mouth. And not breathing normally.

Effective? Nobody Knows. Now, amid the oh-so-sanctimonious demands to once again wear masks, it don’t make no nevermind what we use or how effective it may be – an N94, or a handkerchief, a dirty bandana, or one of those defective paper masks imported from very country whose creepy government created the pandemic.

These zoo keepers will tell us to just do it and show obedience. Cover your face. Or be accused of being a killer.

Write The Air Traffic Recovery Over, If… Aside from all this, the life forms inside the Beltway have deemed it necessary to continue to masks in airports and airplanes. No justification. No hard science. Just obey.

That’s just like in China, where the same policies have apparently done diddly to prevent this latest spread.

If this stuff is expanded back to other venues in America, it will – will – put a drag on air travel demand.

We’ll keep an eye on this… but if wider mask requirements are implemented and traffic drops materially post Labor Day, it will be self-inflicted.

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Now…

The Quarterly Outlook™ –
Beyond The Numbers & Into The Future

It’s not easy for airports and communities to plan for the future amid the constantly-shifting dynamics of air transportation.

The new Quarterly Outlook™ from Airports:USA™ is the solution. Not just numbers, but hard and incisive data and professional enplanement forecasts, with perspectives that go beyond the numbers, specific to the client airport.

Changes & New Paradigms – The Quarterly OutlookIs On It. What will the consumer do, post Labor Day? Business travel will see some return, but it won’t be in the same regions as before, because the structure of that sector has changed.

Major East Coast airports that were mainly dependent on business and personal travel generation will see less traffic volume rebound than secondary cities where there are emerging major demographic in-migrations.

To survive, airlines continue to deftly shift strategies and directions faster than a performance of the Bolshoi ballet. In-concrete route and market plans from just six months ago are now in the round fixture. Airports where an airline definitely red-lined service pre-CCP-Covid are getting service that they literally didn’t expect.

So, amid this volatile and unsettled market, Airports:USA® is now offering subscribers an exciting and incisive planning tool… the Quarterly Outlook™.

Forecast Enplanements & The Airline Trends Driving Them.The Quarterly Outlook delivers the latest short-term Airports:USA® month by month enplanement forecasts, along with the specific trends and dynamics driving them. This includes discussion of known and expected strategies on the part of incumbent – and potential incumbent – airlines at the specific airport.

And, it also includes an overview of the national traffic trends for the USA, based on the full Airports:USA® forecast covering 168 airports representing over 97% of all enplanements.

The Quarterly Outlook™ delivers what you need to know, directly and concisely with perspectives an airport needs to not only plan the air traffic future, but to keep the community informed.

It takes subscribers behind the numbers. And into the future.

For more information… click here. Then subscribe and get with the future… your airport’s future.

Monday Insight – July 26, 2021

Four Trends To Watch In The Fourth Quarter

The news, generally, is good… as of today.

Passenger numbers are coming back on a national basis. Airlines appear confident, with financial results delivering solid positive direction.

The media coverage is accurate, at least as far as what is apparent today. But that’s not what’s on the very near-term horizon.

Not to rain on this parade, but there are nasty clouds starting to become obvious.

Here are what we believe to be the ones to watch over the next six weeks as we approach post-summer booking trends. Already this week we are seeing certain carriers yanking capacity down from what was filed for September. August is expected to be @ 86% of the capacity in the same month in 2019, and September is indicating it may be below that comparative metric.

Being prepared is being armed for the future.

Rising Inflation

This is the #1 growth stopper on the horizon, and one that may be starting to roost already in booking levels for the 4Q.

The current rebound in traffic is focused on leisure traffic. Leisure traffic is discretionary-driven. When discretionary dollars are reduced due to higher costs of living, that means leisure air travel is going to flatten or decline.

Inflation has already started. It’s in progress. Big time.

Jet-Fuel Prices

The USA has shifted policy away from energy independence.

The current policy is anti-petroleum, and hence the supply of such will be constricted to comply with political considerations. This is one reason that the price of gasoline nationally has jumped by a dollar from last year, even in light of strong potential supply.

Heck, when a terrorist attack was made on Colonial Pipeline, affecting the economy of the East Coast, the current Secretary of Energy was not concerned… according to her, it would have the effect of encouraging use of electric vehicles. Anything to reduce use of fossil fuels, don’t ya know.

Jet-A is not immune. Toss in the current distribution issues being seen across the western USA, and it is a leadpipe cinch that fuel is going up and that means fares, too.

In the foreseeable future, too.

The Delta Variant of The CCP Covid Disease

The gift to the world from the criminals imposing themselves on China and the world, the CCP, seems to just keep on coming. Now we have reports of a new strain of the CCP’s handiwork supposedly spreading, and causing uncertainty about safety of air travel.

Surveys are now coming out that consumers are less likely to fly due to the new variant of the virus.

‘Course, nobody seems to want to question whether such surveys are valid. See, when the question is framed as, “there’s a new strain of Covid that people are getting… would that deter you from taking an air trip?”

Even if the respondent has never heard of such an event, and is given no data to determine the scope of the new virus, the natural response would be, given the supposition of a new killer on the loose, that they’d stay away from any congested venue. But the full discussion of what the Delta strain is, and how it responds to vaccines, and the raw number of Delta infections, are not disclosed.

With the track record of yo-yo truth in CCP-Covid reporting over the past year, nothing is certain. But uncertainty keeps people from flying.

It’s a factor that is already gaining traction.

Restructuring of Demand Generation

The latest research at Airports:USA® clearly indicates that demographic factors are in play in air transportation demand.

Historical and traditional geographic air traffic levels are changing. That’s because of a number of factors, but mainly because there are regions of the nation that are no longer competitive in regard to both business location and quality of life.

Take the Middle-Atlantic region. It has been coasting along economically over the last 20 years due to historical inertia as a desired region for commercial activities and quality of life. No more. The civil unrest, trendy politics, rising crime and other experiences over the last year don’t exactly play well in videos promoting New York City as a place to raise a business, not to mention a family.

On the other side of the country, it’s now indicated that the combined capital gains taxes in California will approach 60% in the future. Capital investment won’t be flowing into that state.

These are just starting points. Therefore, air traffic demand growth will be very slow – or negative – in several large metro areas, while concurrently booming in other regions.

We’ve covered this in the publicly-accessible Snapshot section of AirportsUSA.com.

Planning Insight That Goes Beyond Consensus Thinking

These trend reviews are unique to the business philosophy of Boyd Group International.

We focus on the future… the future of our clients across aviation. We are not reticent to state the facts as they are, even when they are counter to “consensus” thinking.

Our research has assisted airlines, airports, financial institutions, manufacturers and suppliers in gaining the competitive edge and in optimizing change.

So, if you’re looking for new perspectives that step beyond yesterday’s consensus thinking, give us a call or send a quick email.

We look forward to working with you – and tackling the future together!