Major Fleet Shifts & Small Capacity Crunch On The Horizon

If the economic recovery continues – even at a slower pace – air traffic volume will follow strongly.

But the air transportation system won’t be the same.

As part of the update of the Boyd Group International Global Fleet Trend & Forecast, as well as the update to Airports:USA® it is becoming clear that in the USA, the CCP-Covid pandemic will result in a different fleet mixes at network airlines, which will support different route strategies.

First, it is likely that the post-CARES route and market shifts may result in AA/DL/UA revising their hub feed systems. It is likely that, based on whole new strategies and smaller fleets, they each will quit-claim a number of secondary hub-feed markets.

The fleet data indicate that the U.S. airline industry will be somewhere on either side of 300 excess airliners. Within this, there are open questions on the current fleets of airliners with 100 seats and less.

We’re covering this in more detail in this week’s Aviation Unscripted video… it sets out the importance of understanding airline fleet strategies as the basis for future air service access planning.

Aviation and air service planning will be based on whole new metrics… past traffic data is now a lot less reliable, because the airline industry that created them has changed fundamentally.

Click here to go to Aviation Unscripted. The latest video is there, along with earlier insights. Feel free to browse.

China-US Traffic: O&D With An Increasing Global Pariah

Let’s put this in context…

Does anybody inside the Beltway still have a pulse?

Here’s the situation – incredibly…

… If some no-name plastic factory in some rural corner of North Dakota inadvertently spews some unpronounceable chemical into some turgid stream, threatening some stupid species of endangered water spiders that normal people would spray with a can of Raid, the EPA loses regulatory bladder control.

The fines and penalties – sometimes criminal – come like the Marines storming Iwo Jima.

It’s a big deal. Pollution is not to be tolerated – especially if it threatens wildlife.

And if the factory tried to doctor data, or withhold information, the folks running the place would have a change of wardrobe into bright orange jumpsuits.

One Giant Global Polluter – China’s Government. But now we’ve seen our entire economy, not just some rural creek, polluted by a virus a million times more dangerous to the health and well-being of our nation – and it’s all due to one entity… the unelected hoodlums running China.

This bunch of thugs discovered – or, as the evidence increasingly indicates, created in a virology lab – a vile contagious disease in Wuhan. Due to sloppy institute management, which was documented previously – the virus got out and spread.

So, to cover themselves, they continued to let it spread, as all the while more and more evidence showed this to be a dangerous highly contagious epidemic.

For several weeks, likely two months or more, they lied about it to their own citizens, muzzled medical staff, suppressed and arrested anyone who spoke of it, and then, to “prove” it wasn’t contagious, actually encouraged citizens to intermingle by holding huge communal events, just before 5 million citizens – many now infected – left town to points across the globe for the annual Chinese New Year (Spring) diaspora. They knew all this, but to save embarrassment within the varying levels of the CCP mob, they caused all this to happen.

Not Just A Rural Creek, But The Entire U.S. Economy Is Polluted. The result is that today, the U.S. economy has been trashed by the CCP-Covid pandemic. Our economy was shut down, 40 million people are out of work, and entire industries – such as restaurants and hotels – are on the ropes.

As for the aviation industry, past roadmaps are now obsolete. New fleets – as we’ve covered at Aviation Unscripted – will result in less air access at points across the country, revenues at airports destroyed, and thousands of airline, airport and supplier employees with careers destroyed.

The destruction of the economic lives of thousands of U.S. citizens has already been registered.

The Chinese government is polluter, just like that hypothetical factory in North Dakota. ‘Cept it’s not some rare bug that’s been endangered. It’s the entire U.S. economy.

Different Ethical Standards, When There’s A Political Play To Be Made. So, where is the outrage? Where are the politicians that are oh-so-concerned about endangered rodents, when the entire nation has been economically devastated by the pollution inflicted by China?

Yet, looking at the inhabitants of Washington, dozens – more like hundreds – of these examples of walking protoplasm say absolutely nothing about this global polluter – the Chinese government.

Where is the outrage? The USA has been attacked. Where are the measures to hold the dishonest criminal thugs in Beijing accountable? Answer, nowhere.

Somehow, the inhabitants of the Marble Playpen, a.k.a. Congress, aren’t too concerned with dealing with the culprits that caused this. The economic lives of citizens have less interest than a threat to snake darters.

Instead, they want to use the pandemic as a political play. Let the President dare point out the fact that the CCP is responsible, and the response is a barrage of accusations from politicians and the media that it’s “racist.”

That is every bit as sleazy as declaring Roosevelt’s speech to congress on December 8, 1941 as being “xenophobic.”

Protecting Business Revenues That No Longer Exist. To the contrary, the current general direction in political circles – and supported by strong business circles – is to protect the Chinese government. See, there were billions to be made in China, and taking the actions appropriate to hold them accountable might, in terms of a Chinese metaphor, break these corporations’ and U.S. businesses’ rice bowls.

That is the current situation – protect China and that will eventually restore the pre-pandemic revenue flows and business levels with China.

Here’s a hint: That’s not going to happen. China is sinking economically. Forget the jive numbers coming out of Beijing. From sluggish factory production, to deflating real estate bubbles, to a collapsing banking system, the China of the last five years no longer exists.

U.S. Airlines: The China Traffic Bonanza Is Gone. For the U.S. airline industry, our recommendation is caution, so when considering restoration of service to China, review the realities of the market.

First, as was clear before this pandemic rodeo got started, it was Chinese carriers that had the upper hand. United or Delta or American had no chance of developing sufficient traffic from all but the top 5 or 6 Chinese airports.

But more importantly, the entire China-USA O&D has now collapsed. The tourist trade is dead as the terra-cotta warriors in Xi’an. Business traffic is going to atrophy, too, as the Chinese economy sinks, and the CCP continues to become a pariah on the global scene due to human rights outrages and the fallout from the thuggery that caused the global pandemic.

Bottom line: The 8.2 million O&D that was seen between the USA and China in 2019 will be lucky to see one million anytime in the next 3-5 years.

We will be talking more about these developments in the weeks ahead.

One thing is clear: China has polluted the globe, and there will be an economic price to pay – sooner than later.

More Facts: If you’re interested in some further timelines and information on how the Chinese government intentionally polluted the globe’s economy, click here.

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The China Travel Restrictions…

When It Comes To Accurate Information… Caveat Reader

It is amazing the amount of misinformation that can be found in some corners of the media.

One recent example is a media story, trumpeting the “discovery” that the restrictions on Chinese visitors to the U.S. implemented by the Trump Administration was really more like a “giant sieve.”

According to these sleuth journalists, they found that as many as 8,000 people from China may have been able to ferret their way into the country in the first three months after the restrictions became effective.

This is another reason that many, if not most, Americans simply don’t trust a lot of the news that gets printed and broadcast.

In this case, the bogus implication is that the travel ban was a failure. That is concocted. Not only that, but the numbers actually prove how effective the program has been.

Here’s a couple of facts, from our Airports:China™ database.

Based on 2019 O&D, there were approximately 2.65 million inbound Chinese air passengers to the USA, by both nonstop and connect itineraries.

Cull that down to a monthly average, and the giant sieve that the media refers to cut off 98.8% of the previous volume, assuming that the 8,000 figure is accurate, which it probably is not. Given the scope of the traffic channels, such as travel over secondary intermediate points, that’s hardly a “sieve.”

Funny, though. Back in January, many of these media sources eagerly carried one-sided stories, denouncing the travel ban, in lockstep with the unelected officials in the Chinese government and the proven charlatans at the WHO. The point, many of these articles contended, was it not necessary and – even “racist.”

At the time and for weeks afterwards – well into March – there were lots of stories covering high-level folks in Congress who were actively encouraging people to intermingle, take cruises, and go see movies… and maintaining that a travel ban from the very country that engendered and spread this disease was completely unnecessary.

Again, caveat reader.

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Pakistan International:

Are There More of Them Out There?

Pakistan International has been banned in the European Union after the discovery that something like 30% of its pilots were on phony or doctored licenses.

Upon this discovery, which came after two incompetent pilots bounced a gear-up A320 on its engines down the runway at Karachi, killing almost 100 people, the airline announced that it was grounding bogus-certificate pilots “immediately.”

The other question is, what other documentation has been jimmied at PIA… maintenance, perhaps.

The current fleet of 10 PIA A320s are on average 14 years old… its six 777s are closer to 15 years old. That in itself is no red flag, normally.

But an airline with a management team that allowed 30% of its pilots to operate with bogus qualifications, it raises questions regarding compliance with routine maintenance, let alone all of the ADs that have been issued over that time.

The real question is is how long has PIA operated this way, and how many other airlines around the globe may be doing just what they’ve been doing.

Probably more than a couple.

The Return of the 737 MAX…

Lots of Messages For Airport Planning

It’s been reported that the FAA will begin comprehensive flight testing of the Boeing 737 Max very shortly.

Some Ready For Prime Time Later Than Others. Of the approximately 800 Max airliners parked, just about half of them have come off the production line after the March 2019 grounding, and likely still have a lot or a little finish work to be accomplished.

But the other 400 were already in service, and can be yanked from storage fairly quickly, depending on the level of FAA modifications determined to be needed.

While the opinions seem to be that in any case the FAA process won’t be completed until the fall, this still begs the question whether global airlines will be able to quickly absorb an immediate 400 more narrow-body airliners (the ones in fleets when the grounding occurred), when they might still have dozens of earlier model 737s already stored due to the CCP-COVID pandemic.

A somewhat contrarian conclusion would be that the last quarter of 2020 would be an optimum time for re-entry of the MAX. And if there is any reasonable expectation of these machines returning to operational status in the fall, that may be an incentive for carriers to simply leave many of the earlier 737-800 versions in the desert.

The Age Mix of Stored 737-800s. A review of the inventory of the 2,046 737-800s that are currently in storage indicates that while the average age is about 9 years, there are only 339 that are at five years or less. More than half of the 737-800s reported as parked are over ten years in age.

It’s possible that fleet planning departments at the carriers involved might recommend leaving these older units out of the schedule as demand returns, pending the arrival of new Max units.

A Mountain of Theoretical Maybes. There’s a lot of complex factors here, such as lease terms on existing fleets, relative position in component maintenance cycles, the need to generate revenues quickly, and – critically – training of pilots and technicians to operate the Max. Bookings for time in Max-specific simulators will be at a premium, depending on what the new training requirements may be.

But the point remains that the Max could return to service at a point in time where operators might opt to early-retire older 737-800s, even if it means spilling some near-term demand recovery.

Another Factor That Points To Fleet Trends Driving Air Service. The fleet groundings due to the CCP-COVID pandemic have tossed traditional “air service development” approaches into the landfill.

The type of back-to-clean-sheet fleet planning that’s illustrated by the 737Max situation, is in process at every major carrier involving every airplane type. As one example, we’ve seen a complete restructuring of Delta’s narrow body fleet, as well as the retirement of 777s, all aimed at simplifying fleet types. These shifts will materially change Delta’s revenue objectives and reflect a different route map.

Air service access programs must now first focus on the new fleets and mission applications at each carrier, before tossing money at more jive-time “true market studies” that have no bearing on anything unless the conclusions first and foremost tightly match airline fleet strategies.

Naturally, this makes the challenge of building air access planning a lot more granular.

It means that piles of historic O&D tables are reflective only of an air transportation system that no longer exists. As we’ve pointed out recently, that also means that “road hubbing” – collecting more leakage from cities peripheral to each carriers’ connecting hubs – will be a near-term recovery strategy.

Join Industry Leaders At The IAFS™ For Futurist Fleet Projections. The new fleet strategies – which will vary airline to airline- will be one of the major focus areas at the 25^th International Aviation Forecast Summit, August 23-25.

This will be the first major event that will explore the post-CCP-COVID aviation industry. We will be having discussions with aircraft manufacturers regarding how they see the future. We’ll be outlining the new factors and imperatives necessary in forecasting demand and consumer trends.

Airlines will be there to deliver their perspectives of the new future. Plus, we’ll be covering incisive forecasts of air service trends and the consumer-driven factors (usually ignored in most such projections) that will frame future air access programs across the nation.

Click here to get the latest and to register for the 25^th Boyd group International Aviation Forecast Summit.

Before We Start…

Southwest. Spirit. Sun Country.

Joining Aviation Leaders At the IAFS

On August 23-25, the first post-Covid aviation event will take place at Cincinnati, USA.

The 25th International Aviation Forecast Summit is on, and it’s going to be exploring the new realities – and new opportunities – the industry faces in the aftermath of the CCP-Covid global pandemic.

We will be discussing the future with the industry thought-leaders and innovators.

The leisure sector is the first to see a rebound. And we’ll be hearing from CEOs and top executives from airlines across the globe as well as from other sectors of the industry.

We are excited to announce that Mr. Ted Christie, CEO of Spirit, Mr. Jude Bricker, CEO of Sun Country, and Mr. Andrew Watterson, Executive VP & Chief Commercial Officer of Southwest will be with us, each with their perspectives of the future.

The IAFS will be looking over the horizon, not rehashing the past. The sessions will be incisive and direct, and we’re planning a pre-Summit Workshop session to be illuminated shortly. Click here to reserve your space.

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Just One More Thing… Before We Start…

Announcing the new aviation channel on YouTube…

Boyd Group International is implementing a new access point for clear and incisive perspectives of the future. Aviation Unscripted will have a new video each Friday morning, covering topics that will be thought-provoking, fun, and interesting. All intended to be about ten active minutes or less. No holds barred.

This week, we’re tacking the changes expected as the airline industry continues to rebound… so log on and join in.

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Okay – The Monday Update

The Pandemic:

It’s Put D.O.A. On Russian & Chinese Airliner Hopes

The CCP-Covid pandemic has sent a volley of torpedoes into the global airliner manufacturing industry.

One unexpected consequence is that these changes have completely left the global airliner business in the solid hands of just Boeing, Airbus, and depending on corporate decisions, Embraer.

Take this to the bank: any potential for new players has been now put to bed. Specifically, this now eliminates the infinitesimal chances of either Russia or China getting into the market.

Some background…

In the past year, dozens of orders for 737MAX variants have been cancelled, and while there hasn’t been a corresponding hit to the A320 platform, the fact is that with the economic damage of the CCP pandemic, they both face new de facto competitors from available orphaned 737-800s, and even some A320neos that are all dressed up with nowhere to go.

Flickers Of Hope… On the surface, there recently are some positive indications. Last week, one leasing company “confirmed” previously unannounced orders for 16 737MAX units. Looks great, but just a dent in the order for 80 that was cancelled by the same customer back in March. In the meantime, Airbus continues to deliver A320 and A350 aircraft across the globe. Emerging changes in new fleet needs have not been fully registered – yet. As we’ve pointed out earlier, the multi-mission capabilities of aircraft such as the A321XLR and A220-300 will be a major factor in fleet planning at global airlines.

Russia & China: Cadaver Programs On Life Support, Still, unnoticed in all of this is now the certainty in regard to new-entrant airliner platforms from Russia and China. They are dead.

Long before China’s CCP did its handiwork in allowing the corona virus to spread across the globe, it was already pretty obvious that the airliner programs from both countries were political pipe dreams. Just me-too designs, and me-too performance and me-too economics, with backlogs relegated to mostly forced orders from domestic captive airlines and financial institutions.

The platforms under development are strictly retro-1980s upgraded to glass cockpits. In China, we have the 70-seat or so ARJ-21. It came out of the factory in 2008. Today, a dozen years on, there are only about 25 flying with Chinese airlines. Not exactly a line of carriers in front of the sales office.

A decade late and a lot of yuan short, it’s entering a market sector that’s already died out. The CRJ series is winding down, and it appears that the Mitsubishi M90, nee MRJ, has been iced.

Then there is the Chinese COMAC C919, a very rudimentary attempt to build something approximating the A320 or B737. The certification process has been a circus. That’s not surprising, when politics, not market need, drives airliner programs. Then we can get into the allegations of intellectual theft – which, if accurate, would indicate the stuff stolen wasn’t of much value, based on the projected performance of the C919.

If the manufacturer, COMAC, had actually been left to its own devices, the world might have seen another disruptive new entrant – such as was the Bombardier CSeries (now A220)  – an airliner designed from the start to swing for the performance fences. Didn’t happen.

Russia has the Sukhoi SuperJet – a one-off platform – in the same dead segment as the CRJ and M90. It did have “success” outside of Russia – with a fleet of hangar queens sold to Interjet of Mexico. The fact that the crack Sukhoi sales team flew a demo into an Indonesian mountain a few years ago didn’t do much to get the phone ringing at the sales department back in Mother Russia.

Russia and China have the CRAIC 929 – a joint venture seeking a 2025 debut to compete with the likes of the Boeing 787. Nothing like being a couple years late and a platform short, since the initial market demand bubble for the 787 has already come and gone, and the supposed superiority of the 929 isn’t anything to get excitement going in the front offices of IAG or American or any Western operator.

Russia has the United Aircraft MC-21, which is another attempt to grab share from the 737 and A320. The potential success of placing another aircraft type that is only marginally better than incumbents (which the MC-21 has no guarantee of being) is not likely.

With the structural changes in the airline industry now unfolding, these airplanes from Russia and China are somewhere just beyond Mars in regard to market need. It was a snowball’s chance before. Now, it’s zero chance.

Dedicated To Political Vapor Holes. One comforting factor for Boeing and Airbus is that the airliner projects in both China and Russia are economic flytraps that will keep these countries engaged in dead-end programs for years to come.

Politically, they cannot easily reverse paths, admit these are dog programs and start over. With all the hype and financial investment, they are now wedded to going forward in futile efforts to make good on obsolete airliner programs.

Conclusion: There will be lots of stories about how these new airliners will be a threat to the major duopoly of Boeing and Airbus, and to Embraer.

One look at market realities paints a different picture.

One More U.S. Victim of the CCP’s Corona Virus

Another Reason for Airports to Pursue Recompense – But There Will Be Push-back From Unexpected Corners

The CPP-COVID virus may be slowing its expansion, but the financial damage continues to spread.

Here’s another example – a small footnote in the newspapers, but another indication of the range of the damage this pandemic continues to inflict on the lives of thousands of people.

The Commonwealth of the Northern Mariana Islands is facing a revenue crisis, big time.

The cessation of tourist flights from China to Saipan has hit the airport system with a nearly 50% cut in total revenues. Not inconsequential, and the immediate proximate cause is the CCP-COVID pandemic, and secondarily, the emerging and continuing political thuggery of the CCP toward the Chinese people, plus a concerted program to convince the Chinese public that the USA is responsible for the emerging economic plunge starting to manifest across their country.

The CNMI government has petitioned the DOT to exempt them from the restriction on flights from China and Hong Kong, noting that this traffic is critical to the Commonwealth’s economy.

Here’s some troubling news for our friends at Saipan and the region: with or without allowance of additional frequencies, this traffic segment – Chinese tourists – is toast. They aren’t coming back.

The reality is that the Chinese Communist Party has been working very hard to vilify the United States and convince Chinese citizens that it would be unpatriotic to travel to the USA. That includes Saipan and Guam, just like Harrisburg, Moab and Las Vegas.

Point: the CNMI, as well as other formerly-favored destinations on the part of Chinese visitors, need to find other revenue sources. This one is kaput.

A Complete Change in Just 36 Months. We would point out that this is a complete 180 from the situation just three years ago.

Back then, before the Xi Jinping clique fully put the dogma screws to the Chinese public, the market appeared to be almost unlimited. BGI was at the forefront of this, with our ChinaNiHao team. We were working on both sides of the Pacific to make China-U.S. travel continue to expand.

Not anymore. The China-U.S. leisure market is gone. President Xi and his sinister team of un-elected government hoodlums have seen to that.

For those interested in updates on the China-US aviation situation, bookmark www.BoydGroupChina.com. We’re developing the site into an independent source on China, including the criminal culpability of the Chinese government in the COVID-19 pandemic.

Second-Agenda Media Protectors – Don’t Expect Hard Facts. Keep in mind that some American news sources have a lot of dogs in the fight and money invested in China offices, not to mention associates there that can be subject to “discussions” with CCP authorities, should an article appear that they don’t agree with.

So, in a very real sense, a lot of these entities are defenders of the CCP in the USA, whether they intend so or not. They are part of a de facto fifth column that Beijing can depend on to cloud the facts.

Let’s not dance around the politically-correct maypole. A few of these supposedly unbiased media channels will at the least have the tendency to sugarcoat the stories, leaving out facts and points that are unfavorable to the CCP. Or, more blatantly, like 60 Minutes, righteously mislead the public, implying that it’s disinformation to blame the Wuhan Virology facility for the virus. Not true.

In March, one major American financial journal published an article covering how various global regions were responding to the pandemic. The online edition included a video purporting to explain how the virus spread in the first place. It completely sidestepped any real facts on what happened in Wuhan. It simply noted that the Wuhan authorities had discovered the contagious nature of the virus, and then the video skipped to telling the readers that an infected person was then found in Thailand, and then others elsewhere in Asia. This was their story on how the spread of the disease got started.

The financial journal’s video completely left out the events and actions in Wuhan and in China that were the direct causes of the spread. Not inconsequential. In light of what was clearly known at the time, it was a whitewash, or else the product of really amateur journalism.

No mention was made of the cover-up and direct misinformation to the citizens of Wuhan, who they encouraged to participate in enormous communal New Year feasts and other events, right up to 48 hours before they gave up the ruse and declared the epidemic. The reporters for the august financial journal didn’t mention the efforts by the CCP Wuhan government to convince residents that the virus was not transmittable, including videos of happy citizens dancing around without masks, singing “bu pa!” – not afraid. The respected journal made no mention of the muzzling of medical staff to not report the danger.

The respected financial journal didn’t focus on how, even when knowing the contagious nature of the virus, the CCP allowed millions to travel from Wuhan for the New Year festival to points all around China and the globe. They just pretty much jumped to the infected guy discovered in Thailand.

It’s like reporting on how the U.S. got into WWII and skipping the part about Pearl Harbor.

At best, sloppy journalism. And even that is a hard one to swallow. In any case, it shamefully misled and misinformed the public. It served to protect the CCP from any hint of the massive and criminal malfeasance they engaged in. We did e-mail the writer of the article, noting several facts missed in the video. Naturally, the people who put it together never responded.

Thinly-Veiled Paid Advertising For The CCP, Postured To Look Like Reliable Facts. Not only that, but, incredibly, in the past week it has come to light that several U.S. media channels have accepted payments – some in the millions – in exchange for printing “advertisements” that although have “advertisement” on the header, still look a lot like articles, provided by the China Daily.   It’s a newspaper run by the propaganda department of the Chinese Communist Party. Over the last four years, they’ve paid at least one major U.S. financial journal $6 million dollars to place these “ads.” Therefore, they are a customer of the media channels they do business with.

The question comes up whether in stories done covering China, this business relationship – the CCP being a more than million dollar annual (on average) advertiser – should be disclosed. Furthermore, due to the clear nature of the CCP, and its repressive nature toward free speech and human rights, it might be suggested that the propaganda nature of the inserts should be clearly illuminated, and not just routinely placed, along with ads for watches or automobiles or expensive clothing.

These and the invested interests still doing business in China are financial dragons that a lot of people on this side of the Pacific do not want to get gored.

Another issue of caveat reader.

How Badly Has Your Airport Been Hit? A final point. The CNMI is not alone. Airports across the USA – from ALB  to YUM – have suffered enormous financial losses, specifically and directly due to the CCP. Hundreds of millions.

At some point, Congress will implement mechanisms that can be pursued to demand recompense. It’s not about suing a foreign country. Remember, just about all Chinese investments in the U.S. are actually connected to the Chinese Communist Party. They run China, but they themselves are not a sovereign nation. Theoretically, then, there’s close to $150 billion in CCP assets in the USA.

Now, we are talking about federal channels that may be developing. This is not a matter for the late nite TV ads with law firms trolling to find clients to participate in semi-ethical class action suits that will line the lawyers’ pockets first and leave victims with peanuts. This situation is not like a defective weed killer or an obscure acne medicine that caused peoples faces to fall off. This is a nationwide matter that has affected all citizens, and it’s well beyond the scope of legal firms trolling for quick business. It will be the feds that run the show.

Boyd Group International is ready to assist airports and communities in developing accurate, supportable and professional projections of damage done directly by the CCP-COVID pandemic. There are direct revenue losses. There are job and economic losses. There are market opportunity damages as a direct result of the CCP-pandemic. The key is to have a clear set of defendable projections.

We can help. Having this information now will be a benefit when (not if) the federal government takes action to hold the CCP accountable. Remember, anything that threatens the CCP will bring on the the type of nonsense journalism described above. Hard and unshakable data is the only protection.

Make no mistake, at some point in the near future, it will be time to drag the CCP dragon into court.

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Rebound Check

It’s real.

Traffic demand is returning along with the rebound in the economy.

First, consumer sentiment is pushing well into the “let’s take a trip” mode. Second, the airline industry is clearly seeing this and pulling more aircraft out of storage.

This is all great news. But there is a lot more capacity and demand that will be put into the system in the next six months. Here is a snapshot of active v stored mainline aircraft at AA/DL/UA, along with the percentage of departures and ASMs that are scheduled to be operated in-house in July, as opposed to use of fleets of contract carriers (the mis-named “regional airlines” which are essentially in the business of leasing aircraft operations).

Without getting too deep into the numbers – which are changing daily – it’s clear that the three systems have different rebound and fleet strategies. (Note that the Delta data for stored aircraft do not include recently retired fleets of MD-88, MD-90, and soon to go B717s.)

New Air Service Access Dynamics – A New Playbook

However, we will need in the future to recognize three key emerging dynamics within the post-CCP-COVID air transportation world.

Airlines have taken, and are continuing to take, a financial hammering. The fact is that the financial underpinnings of the U.S. airline system will be very different. Carrier systems have had to bring in a lot of new debt. This means that route and market planning will be different.

That $1 million SCASD grant in 2021 likely won’t be enough to get them to answer the phone – assuming the skeleton planning staff has time to even pick up the receiver. It means the curtain of reality will be continually pulled open at some smaller airports, revealing Oz-like nonsense being peddled on them to “find more airlines” when there aren’t any to start with.

Consolidation of route systems will be very apparent. We are going to experience more regionalization of access – particularly hitting smaller airports and metro-peripheral airports.

Airlines will not be as interested in wallowing through more “true market studies” that belabor a whole lot of data that are inconsequential to the fleet and strategic realities of the new air transportation system. As for “leakage” studies, the answer will increasingly be, “Yup, know that. And we’re after more. We’re focused on continuing to regionalize access. Thanks for sharing.”

New fleets will emerge – with new mission envelopes. With the accelerated retirements of parts of airlines’ fleet mix, the replacements will focus on new multi-mission-capable narrow-body airliners such as the A220-300 and the A321XLR. Stand by for more foreign invasion of interior U.S. airports.

Along with this, the capacity floor at major carrier systems will gravitate to 76-seats and above. Plan on seeing fleets of 50-70 seat jets pulled out in the next 24 months.

The key to developing the new-future air service access program will be in understanding airline fleet plans.

The markets will adjust to these, not the other way around.

Re-Planning The Future. For airports now reassessing their air access development plans, Boyd Group International stands out. Our focus is on identifying emerging trends in fleet mix, expansion strategies, and consumer preferences that have been affected by the shutdown of the system due to the CCP pandemic. Past traffic and demand data are now only fractionally valuable in the planning process, because the industry is rebounding with different financial dynamics.

To get a fresh view of the future, give us a call or a quick e-mail and we can discuss .

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The International Aviation Forecast Summit Is On!

This will be the first post-CCP-Pandemic event that will cover the future the industry faces.

We will not rehashing what’s happened, but looking at how we can optimize coming out of the economic wreckage foisted on the air transportation system.

Clear your calendar for August 23-25 and join aviation leaders in Cincinnati, USA to get a jump on the future. Click on the icon to register.

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

The Rebound Is In Progress, Big Time

We were sort of out on a limb, according to some in the industry.

That’s referring to our April forecasts that indicated a return to 85% traffic, month compared, year-over-year by the end of 2020.

Apparently that was not as far out as it may have appeared to a lot of traditional forecasting approaches, as well as professional opinions from very respected analysts elsewhere in our industry. One of the usual suspects is claiming it will take three or four years to get back to 2019 levels.

It’s what happens when consultants rely on “models” instead of having a grasp of industry trends.

For The Cassandras, Read’em And Weep. The indicators now are all very strong. We have seen Frontier adding new markets, Allegiant taking back airliners from the desert, American noting they will be back to 55% of pre-CCP-COVID capacity. We see Delta’s July schedule filings indicating a 70% increase in departures over June, and 146% more ASMs. Spirit is restoring capacity, also.

The fact is that the economy is coming back, and it is taking air transportation demand along with it.

The latest jobs numbers show that. The description of this CCP-inflicted pandemic as being an episodic event rather than a structural decline, is accurate. Actually, air travel is more of an intrinsic part of the economy than other industries, some of which may take longer to regain pre-pandemic revenues. It’s closer to the restaurant industry… when they reopen, people come in and order.

Warning: Routes & Markets – No Return To The Prior Status Quo. This does not mean that the air transportation system will have the same structure. The pandemic-inflicted damage has shifted both fleet strategies and market tactics. While traffic levels will recover domestically, not all airports will be back on airline route maps until later in 2021 – and some simply won’t be there at all. In the coming week, we’ll be covering this in our Touch & Go news flash to our clients.

Just An Observation. Apparently, These Data Aren’t Welcome In Some Corners. These changes in airline demand due to the economy coming back on line are material, and very positive indicators of the direction of the economy. They were unexpected among the supposed cognoscenti in both the mainline and aviation media. Clearly great news. They indicate positive and important directions in the economy.

Yet, funny, you’re hard pressed to find any real coverage of this in much of the media. Wonder why… maybe some folks aren’t rooting for positive recovery.

Forecasting Is Analyzing The Dynamics Shaping The Future, Not Entering Data Into Static Models. In any case, when you need forecasting expertise – domestic, international, trend, fleets, master plans – give us a call. We help our clients identify the future. We don’t follow the crowd, and neither do our clients.

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Don’t Miss This – Fantasy Lives!

Social Distancing & Outright Claptrap

Suggestions From An Airline At The Source

Let’s again get real. Air travel and social distancing. The two concepts are mutually exclusive.

The stuff about leaving seats open or putting plexiglass dividers between seats are malarkey. Actually, we are seeing the “solution” we are now already experiencing it, with the downward trend in lethal infections.

But, speaking of malarkey and vapor-thinking, we thought we might review some of the brilliant actions that one airline suggested to make the trip health-safe, even when the pandemic was at its peak and spreading fast. Not surprisingly, it’s from a carrier owned by the Chinese government, an organization that would make the Corlene family look like Cub Scouts.

When Nobody Can Give Feedback, You Can Say Anything. Back in February, at the height of the start of the spread of this deadly virus – due to the cover-ups by the Chinese government – one Chinese airline – again, government owned, don’t ya know – issued a list of actions that passengers could take to make sure that they would be safe flying across the friendly, albeit infected, skies of the Middle Kingdom. This was at the height of the rampant spread of the corona virus.

The babble put out is beyond incredible, but in the CCP-governed thought-bubble, there’s never much room for any counter-feedback. That was tried on a big scale back at Tienanmen Square in 1989, and didn’t work well. So, any attempt at correcting things to do with what the CCP puts out isn’t particularly high on any citizen’s to-do list.

But, it still makes a good read. Our review of recommendations issued by an “expert” from Xiamen Airlines can be found here… it’s a short fun read, and it’s still pertinent to what’s going on today, four months later.

By the way, this is part of BoydGroupChina.com, which we are developing into a portal of independent information on aviation in China. The Intelligence Tab is updated regularly, and our summary of airport forecasts is the only one published anywhere outside of China, where data are political first, and accurate second… or third.

Again, click here to get the gems of air service wisdom from right at the source of the pandemic.

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ALL OF US AT BOYD GROUP INTERNATIONAL WISH YOU A HEALTHY AND PROSPEROUS WEEK!

Preparing For A Future That Does Not Exist?

Face masks. Temperature checks. Plexiglass barriers wherever transactions take place. Mandatory social distancing in airplane cabins.

This is the stuff that is sometimes repeated in the media as being the permanent “new normal” for air travel. That’s because, according to at least one article, we are now in the “virus era” of air transportation.

Actually, we are in the me-too era of media reporting. That’s when the source tends to be a compendium of “what everybody knows” instead of hard fact checking.

The more we know about the China-inflicted corona virus, the more we are finding that while contagious, for the majority of the population, it is not lethal. Yes for some sectors, such as nursing homes, it is a proven killer… but so have been other viruses.

That can be managed without the entire population of America doing a re-run of The Flintstones, living in caves. The main challenge now for airports is in crafting pro-tem measures that not only deal with curbing the spread of the virus, but addressing the demands for politically-acceptable facility changes… changes that in a year won’t be needed.

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Rebound Is Accelerating – Air Fleets Leaving The Desert

Fleet composition reports are daily indicating a return of more airliners into both U.S. and global fleets.

Southwest, which was reported to bring another 70 737-700s back into service on Friday, has indicated that it will be back in full operation by the end of the year. Frontier has announced a number of expansion markets to be implemented in the coming weeks. United is pulling more aircraft into service.

Delta continues to retire MD-88s, MD-90s and B717s. However, it is clear that this was a process in the works before the CCP-COVID pandemic.

Add to this reports of increasing traffic through airports, and it is becoming clear that air transportation will be part of the economy that will see an early return.

We are still confident of our Airports:USA® forecast of a return to 85% of 2019 year-over-year traffic by the end of the 4Q 2020.

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New Airline Economics – New Metrics Needed

 Below are O&D numbers for a few markets in the Northeast. They tell a compelling message in regard to crafting future air service access planning.

There are similar examples across the nation, but these provide a stark example of how the value and time-efficiency of air transportation have changed over time

The 1980 numbers are estimated based on past schedules and other factors. Back then, “commuter” airlines filed data with the CAB on a different table, and sometimes didn’t file at all. The 2000 and 2019 numbers are as analyzed by our friends at Cirium. Data reported under 200 passengers in any market can be considered as “noise” due to the outdated reporting systems in use by the DOT.

Toss in the enormous time-inefficiency of air travel in markets such as these, and – take it to the bank – this sector of aviation history is dead. It’s just one sector that’s now completely changed – and not all are negative. Not that the loss of routes such as those above is negative – it’s just a reflection of shifts in consumer and business preferences.

Positive Shifts Are In The Works. As we’ve pointed out before, there are fleet changes in play that will generate a new set of long-haul routes from interior U.S. non-hubsite airports, including international. Our advice is to put down the past data, and start forecasting and projecting what the new fleets and new airline strategies will be.

Changes in global trade patterns will emerge. Don’t buy into the assumption that post-CCP-COVID air travel will be the same as before. Take it to the bank, as just one example, substantial FDI in manufacturing and heavy industry will shift away from China, which is becoming a global pariah due to their malfeasance that inflicted corona virus on the world. These will also change airline strategies, domestic and international.

Take it to the bank, too, that new efficient airline fleets will extend hub reach materially in the next five years. Take it to the bank that airports such as Norfolk, Albany, Grand Rapids and Columbus will have trans-Atlantic nonstops.

Post CCP-COVID pandemic, the structure and the strategies of the U.S. airline industry will represent a new set of planning metrics.

Join Us In Cincinnati To Explore This New Future. The aviation industry is now in line for the greatest set of changes in history.

The CCP-COVID pandemic has completely changed the global air transportation system. Across the globe, airlines have disappeared… others face new opportunities. Super longhaul flights will have an effect on traffic flows over airports such as Singapore, Dubai and Istanbul – all different in scope today but all in the crosshairs of change, too.

More regionalization of air access will be in play. But increased growth of ULCCs will continue to develop new traffic flows from airports that formerly had little or no passenger traffic at all.

Fleet changes and near-term excess airliners on the ground will pose both challenges and opportunities for OEMs and for aviation suppliers. Airports across the USA could be in line for new investment.

And, sometimes not fully understood, we have the UAS segment – drones.

Forget the four-rotor toys used by real estate agencies to take pictures of fixer-uppers, we are looking at the development of “dronelines” that could network the nation with a new logistics delivery system using aircraft that are a whole lot more that amateur curiosities. For the first time, rural airports may well be in line for a new role in aviation.

The IAFS™ will be the first major post CCP-COVID event and one that will outline the future of the new aviation industry.

We will be exploring the real future – not rehashing what’s happened. This is a forecast event, and that’s the exclusive direction we’re taking. Airline strategies will be different… fleet demand will change things from facility needs to communication systems… logistic shifts will positively affect airports, particularly rural airports… and past planning metrics and programs will be obsolete.

We’re going to be tapping the expertise of a range of industry thought leaders, and we’ll be outlining the agenda shortly. For 25 years, it has been at the IAFS™ where new trends and breakthroughs in air transportation have been first illuminated. This year will be even more so.

So, clear your calendar and join us and your colleagues August 23-25 in Cincinnati, USA for the 25^th International Aviation Forecast Summit. Click here for more information and to register.

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FROM ALL OF US AT BOYD GROUP INTERNATIONAL, BEST WISHES FOR A GREAT & PROSPEROUS WEEK!