Starting Out This Week…

Wait ‘Till Madison Avenue Gets Hold of This Account…

Coming from almost nothing, he expanded his market share by subjugating populations of entire countries. If the competition didn’t agree, he simply whacked them out of existence.

He was a master at building brand-identity… he gained great fame for imposing it from eastern Europe all the way to Korea.

He brooked no nonsense from his subordinates – or his competition, both of whom often ended up in some form of untimely, albeit usually innovative, demise or another.

He had outstanding inter-personal skills in dealing with differences of opinion. Heck, he and his generals once dined on a giant platform, designed specifically to settle slowly during the repast to squash into the next world several Russian princes who didn’t agree with him.

The man was a regular love machine.

Results were the only priority, even if it meant tossing whole kingdoms – and their subjects – into the dustbin of history. If his staff failed to deliver, they were history, too.

So, with all this, he’s a natural guy to represent a modern airline.

That’s right, that famous paragon of warm customer service, Genghis Khan, will have his own airline next year, based in the China Autonomous Region of Inner Mongolia.

The advertising program should be a real hoot… “We plunder low fares…” or, “Our service terrifies the competition … and our customers, too…”

Or, the inflight announcements… “Put your seats and tray tables in the full and upright position…disobey, and you’ll be most regretful…”

They have 25 ARJ-21s on order.

And, as a regional touch, they’ll probably allow Mongolian war ponies as emotional support animals in the cabins, too.

___________________________

Main Focus This Week…

Charleston – London: The New Paradigm

Airports:USA Trend Forecasts Validated

Air Access Planning Has New Metrics

It’s not a sprawling metropolis. It has a population of less than one million.

It is not at the confluence of several Interstate highways. It has virtually no smokestack industries.

And shortly, British Airways will begin nonstop flights from there to London.

It’s Charleston, South Carolina, and the decision to start service across the Pond flies in the face of traditional airline route planning. Which is exactly the point. There are new air transportation dynamics in play – “tradition” is out.

Global Economic Presence Now A Key Planning Metric. At the 23rd International Aviation Forecast Summit, August 19-21 in Denver, one of the forecast trend predictions was major UK/EU network carriers will be adding service to secondary non-hubsite airports on the Northeast and along the US East Coast.

We specifically and independently identified CHS as a prime target.

Boyd Group International’s Airports:USA forecast system is unique in that it goes way beyond historical data. It understands that global economic presence will now be a major determinant of where international network carriers decide to invest their aircraft resources.

Charleston – London, which is outside of any “traditional” market planning paradigms, is just one of the secondary cities the forecast identified.

Presented and discussed August 20th at the International Aviation Forecast Summit

Note: For clarity, BGI was not involved in the BA-CHS decision, nor with CHS. But the fact is that our forecast expertise independently identified the market opportunity, and it’s an example of the extensive research and global expertise we bring to our clients, from airports, to airlines, to financial institutions and more.

Identifying The New International Air Service Metrics. CHS is a poster child for the new future international air access metrics.

While its local population is comparatively small, that’s eclipsed by the global commercial make up of the Charleston region. It’s one of the largest and most efficient container-ship ports in the nation, and the growing presence of global-centric, high-tech industries such as Mercedes-Benz and Boeing, identified it in our forecasts as a key future feed point for European carriers.

Apparently British Airways came to the same conclusion.

New Aircraft Capabilities Open New Trans-Atlantic Opportunities. Markets such as Charleston are near-textbook (the new textbook) targets for new-generation aircraft such as the A-321LR and the B-787.

Here’s a clue for folks still using past DOT data in futile attempts to forecast the future: new airliner capabilities will drive new airliner mission applications. Past traffic data are essentially just anecdotal – at best.

As the header on the slide suggests, the other six airports will be well advised to get their FIS ready with a facility plan and – importantly – a CBP staffing plan to quickly handle arrivals of 160 or more passengers from the Old World.

It’s Core Business Traffic. Fare-Stim Less of A Factor. This is not to be confused with route expansion by low-fare wildcatter carriers, such as WOW and Norwegian.

They are only after price-generated net-new traffic, while British, Lufthansa (and even the SkyTeam/Delta system) are interested in tapping the growing international business market for feed through their hubsites on the other side of the Atlantic. Now, with new-capability airliners like the A-321LR, the 787, and new iterations of the 737, airports like those in the slides above need to think about the future in a different context.

Interested In Moving Your Planning Into The Future… We’re Ready. To be sure, there are no guarantees, but the message is clear – again – that traditional “air service development” analyses that wallow out obsolete “PDEW” data – particularly international data from the BTS – are a great way to stay in the past.

BGI is the only consulting and forecast firm that isn’t afraid of questioning traditional data and traditional thinking. As the slide above shows, and our 30-plus year track record verifies, Boyd Group International isn’t reticent to question ambient thinking.

As examples of how our approach has assisted clients in exploring new international opportunities click on the link at the end of this Update.  Look it over, and then hit the Contact Us button above, and let’s start discussing your new air service access plan.

 Soon – On-Line Airport Traffic & Trend Forcasts.

The identification of secondary targets for trans-Atlantic exemplifies the forecast and predictive analysis capabilities of the team at Boyd Group International.

Not Just Numbers. Insight. We’re now completing and beta-testing the first on-line, predictive trend and enplanement forecasts, Airports:USA On-Line .

It’s a product that is more than just forecast numbers. It also delivers cutting-edge insight regarding the current and expected changes in airline strategies and tactical market planning that airports need factor into future planning.

The above slide, along with the other insight presented at the IAFS Airports:USA session, are demonstrative examples of what the new, on-line program delivers. Key forecast trends will be a central part of the on-line program.

When there are dynamics that will affect an airport’s traffic levels, Airports:USA will flag it, and take the subscriber to a Dynamics page which will discuss the situation. It’s like having a forecast consultant with a couple of key strokes.

Available as an add-on feature for Aviation DataMiner subscribers, or as a stand-alone, Airports:USA will feature forecasts based on on-going updates in air service trends.

The New Norm – Capacity Volatility. With the “catch & release” route programs of some ULCCs, as well as new hub-term warning. This means that reliance on traditional metrics and methodologies to determine future traffic levels is simply not viable.

Over 140 of the nation’s airports are included, which comprise over 95% of all passenger traffic.

For more information on the new program, just click here and we’ll get you on the information list ASAP, and discuss how Airports:USA is the next generation in air service access planning.

And to explore our expertise in assisting clients in global projects, click here.

__________________

Skyhooks, The Easter Bunny…

…and Media Airport Fare Comparisons

These have one thing in common: they have nothing to do with reality.

BTS Data Is Out For The 2nd Q of 2018. One of the downsides of having raw federal data published is that too often folks in the Fourth Estate, completely without adult supervision, get their paws on it and then publish articles that once again prove that lack of knowledge of the subject matter is not a barrier to filling several column inches with intellectual sludge.

Data In The Hands of Amateurs. One of the most egregious is the dimbulb “fare comparisons” between airports that inevitably come out within hours of the BTS filing. It’s sort of like the recent headline that trumpeted something to the effect that “American has hubs in the top four connected US airports.” When the babble descends to that level, the media source is beyond help.

This is not to imply that there aren’t some really savvy and professional folks in the media covering air travel. The majority of network correspondents we talk to have an incredible grasp of the industry.

But every quarter when the DOT/BTS stats come out, there is a blizzard of articles from the lightweight Peanut Gallery that are amazingly devoid of any understanding of the subject matter whatsoever.

Air Travel Is A Set of Cost Factors At Each Airport. Here’s the bottom line: air transportation is not a single commodity, like a Big Mac or a gallon of unleaded, that can be compared from one city to another.

It’s a system where costs are the result of a range of factors specific to the destination. Things like the travel mix, the geographic location of the city, the destinational distribution – even the levels of ancillary fares at some carriers, which affect what’s reported as “fare revenue.”

Another problem is that the raw BTS data is based on per-passenger ticket-spend… which means that the mix of one-ways, round trips, and multi-leg itineraries are all tossed in together. These are factors that will vary by geographic location and are not consistent. The travel mix at Newark is very different than that at Charlotte, or at Shreveport.

We’ve compiled a comparison of the top 100 domestic O&D airports in the second quarter of 2018. It ranks airports by cost per mike, average length of haul, raw fares paid.

The top ten by passenger O&D are shown here.

However, the complete 100 O&D is available in an Excel spreadsheet, by clicking here and just requesting a copy.

In the meantime, take a gander at the rankings in the four key categories… particularly the average length of passenger haul. It varies by location and the economic and consumer factors at each.

Again, these data are not for folks that don’t have strong understanding of the airline industry. What’s reported by carriers as “ticket revenue” today is more like a down-payment, before ancillary charges. And those make ULCC-dominated airports – like SFB and PGV – a pool of intellectual quicksand for reporters who don’t understand the industry.

Subscribers to Aviation DataMiner™ and the Airport Quarterly & Short Term Forecasts, have this data in several report formats.

In airport planning – whether it’s facility projections, air access development, or making logical decisions on airline strategies – better data mean better planning for the future.

For more information on Aviation DataMiner™ – including the new and exclusive Airports:USA® forecast suite – click here.

Second Quarter 2018 O&D Data

Indications: A Strong 2018 & 2019 Ahead

Subscribers to Aviation DataMiner™ now have access to the full range of reports and analytical tools for the 2^nd quarter of 2018. Differing from other sources, we assist our subscribers in understanding what the numbers mean – and what they don’t mean.

First: Some of the overall data:

Stimulated Passenger Growth: It’s obvious that the robust economy, including the billions of dollars put back into consumers’ wallets due to the recent tax cuts, is translating into more spending on air travel. Almost nine million more people took air trips in the quarter compared to same quarter 2017.

Ticket Fares Slightly Down, But… Consumers on average paid base air fares almost 2% less than last year. What is not reflected are effects of ancillary fees – which, aside from going up in the past six months, can shift during the year due to consumer spend patterns. Conclusion: the cost of air travel is probably not really “down” – the ticket fare is just the down payment for many consumers. But in any case, it certainly has not increased markedly.

Prepare For The Media Shows. Typically, the usual suspects in the media – as well as some veneer analysts – will pull down this raw data and inevitably start to pontificate about the air travel as if they just got an official e-mail from St Peter’s route planning department.

Proving that having no understanding of source data is no barrier to writing news stories, there will be a parade of dimbulb headlines, like, “Newark (or wherever) has among the highest fares in the nation!” or “East Nobody-Goes-There Municipal Airport Consumers are paying XXX% more than the national average.”

‘Course, these types of profound analyses mean diddly. There is no set of consistent and comparable metrics that relate to computing an “average fare” that has any value as a comparison between airports.

Message to the media: The cost of air travel isn’t like that of a gallon of gas. The air service product itself at each airport is unique to that facility. Factors such as average trip length, size of the market, type of air service that the market can afford to support, and a whole passel of other factors make these media comparisons sheer amateur nonsense.

Key Trend Metrics. However, there are some data that can be mined to get a view of what’s changing… examples:

Denver in the quarter was the #3 domestic US-carrier O&D traffic airport… again, based on traffic carried by US airlines.

Atlanta? – it’s #5, and DFW – it’s #10.

Note the term “domestic” – international traffic carried by US carriers at these airports is in addition to the above. So is traffic carried by foreign carriers.

And here’s where the read-it-and-report-it media types – not to mention some “analysts”- fall off the trolley. It’s NOT airport data… it’s airline data, specifically, US airline data reported and sorted by airport.

So, O&D carried by foreign carriers is not specifically reported, although the obsolete and fuzzy BTS reporting system sometimes gets some of this traffic mixed in by error.

So, for the media and consultant crowd that purport that raw BTS/DOT data to be complete and comprehensive, they’re howling at the statistical moon.

There is a lot more data that needs to be put into the mix. Airports like ATL, JFK, SFO, LAX, ORD have substantial foreign carrier enplanement levels that change the mix and metrics entirely.

If You’re Not Using Aviation DataMiner™ – You’re Not Using The Right Analytical Tool. This is a reason that our subscribers have a better grasp of the trends in air transportation. Aviation DataMiner™ delivers the firepower to analyze all aspects of the air transportation industry. And, uniquely, that includes Airports:USA® the only enplanement forecasts accomplished in the private sector.

BGI will be issuing the Quarterly Traffic Trend & Short-Term Forecast to our subscribers shortly… better data, better insights.

If you’re interested in predictive analytics that go beyond just numbers, click here to request a free trial to Aviation DataMiner™.  Give it a try – and, unlike other sources, we’re always ready to assist our subscribers in development of custom reports.

Better analytics mean better futurist planning. We look forward to hearing from you!

_____________

To Start…

More Cuba Fallout

AA is dumping CLT-HAV. The 55% load factor was a great way of losing money.

Just the latest. Except for Havana, and even there with limited traffic, Cuba is a financial black hole.

Facts v Hyperbole & Fantasy. In 2009 and later in 2014-2015, when Obama reduced flight restrictions between the US and Cuba, BGI accomplished extensive analyses of the US-Cuba market.

We concluded that any route planner that suggested a domestic market with the dismal aspects of just about anyplace in Cuba would find it a career-limiting move.

But that ran counter to the rapture in just about all areas of the travel industry. Cuba!!! Huge, gigantic expectations of floods of traffic!

Travel industry gurus were touting the “pent up demand.” At least a couple of airlines licking their chops, thinking about all the new flow traffic over their hubs to places like Santiago, Santa Clara, and more! Socialist-leaning wackos decrying how it would degrade the near-perfection of the Castro Worker’s Paradise – (“Come to Cuba before it’s ruined by Capitalism!” – was an actual sales pitch.)

Boyd Group International was the only consulting firm that actually researched the subject.

We found that Cuba was far from ready for prime time, and most of the markets in Cuba had no chance of any viable US traffic. No infrastructure. No business base. A government that smothers freedom and free speech. Other than capturing the existing flows to Havana, our data found the market to be a dog.

And that’s exactly what’s happened.

Let’s Stop The Delusional Nonsense. Cuba Is A Dead Market. At Least For Now.The current convenient scapegoat is President Trump, who has tightened restrictions on travel. But that’s nonsense…. the market that was foreseen – hordes of visitors and huge business investment – was a complete pipe dream.

All Trump did was to tighten restrictions on a market that had no viability, anyway. The lack of hotels, poor transportation, lack of free speech, and Cuban incomes not enough to pay bag fees – even if they could freely travel – completely transcend any increased restrictions.

As a vacation destination, Cuba is a bow-wow compared to other venues. As a place for business investment, there is zero free market.

Until the corrupt socialist cleptocracy in Havana is dumped, Cuba will be at best an Havana side-show for US carriers.
___________________

Get Ready For The Show…

The Seat Size Festival Is About To Begin!

Now that the FAA funding bill will apparently include a mandate for the agency to determine standards for airline seat size, get ready for a flood of non-factual reporting from the usual media suspects.

Starting With Facts, Instead of Fake News, Would Be Nice. Still circulating is the inaccurate babble – at this point traced to a completely-bogus story a few years ago in USA Today, but maybe from other sources, too – that back in the mid 1980s, the narrowest seat in the US industry was 19 inches.

Some stories also accessorize this bit of concocted data with the statement that the average width in US economy cabins is now 16.5 inches.

Anyone with a modicum of knowledge of the industry knows that this is another reason to question a lot of the stuff that certain sectors of the fifth estate put out. Those stats are created out of some reporter’s imagination.

They are inaccurate, and in light of the all-too-obvious information any semi-literate high school dropout could easily find, they can only be ascribed to the reporter not being too concerned with finding the truth.

Average Seat Width Has Actually Increased. Here’s a little hint: the standard economy seating in Boeing narrow-body airliners has been 6-across since the first 707-100 entered service sixty years ago. It’s still 6-across. So, contrary to a lot of the sloppy reporting, narrowing it from the alleged 19 inches to where it is today (@17.5) wouldn’t do anything to increase seating capacity.

Some facts:

• The narrowest seat in the US major brand fleets is 17 inches wide – that’s on CRJ and ERJ airliners.
• The actual average width has actually grown in the past 30 years, with the increase in the number of A-320 series and E-170/190 airliners entering service, which have 18+ inch-wide seats in the economy cabin.
• The entry of the A-220 (nee CSeries) will increase this further, with economy seats even wider, and the middle seats at 19-inches.

This is not to say that seat pitch hasn’t shrunk. Indeed, it has actually atrophied – and that’s where the consumer angst is coming from, and it is mostly understandable. But it’s also fed by media stories that eagerly tend to generally equate airliner cabins with flying versions of the Black Hole of Calcutta.

But, it is a valid issue. To a large degree, the potential of flossing your teeth on the reclined seat-back in front of you isn’t too far from reality.

It is tight in many cases. The issue is whether it’s a health or safety issue. And that is a valid issue for discussion and illumination.

Consumers Complain. But They Don’t Vote With Their Wallets, This Time. Airlines certainly could go back to what was once 34-inch or higher seat pitch. But market realities are that this wouldn’t do anything to get more ridership. First, the currently-configured airliners in the US airline system are functionally full – 82% or higher, which means that during times folks travel, there aren’t many empty seats.

So, cutting out two rows of seats to gain more pitch in the rest of the cabin would be not only a revenue-losing proposition for airlines, but wouldn’t move the needle one centimeter toward getting more brand-loyalty. It’s been tried in the past – anybody remember American’s “More Room In Coach” program in the 1990s?

Prediction: Media Performances First. So, the matter is now front and center. We can look forward to lots of cheap theater at congressional hearings – bank on it, because it’s a chance for two-bit politicians who wouldn’t know “seat pitch” from a curve ball at Yankee Stadium, to clamber up on their soap-boxes and pander as being great protectors of safety and health.

Watch for the oh-so-outraged “consumerist” clowns to come in like the grand opening of a Barnum & Bailey circus. Of course, the usual lightweight-don’t-bother-with-facts contingent of the media will be posting lots of misinformation on seat configurations. Do prepare for lots of picto-grams of airplane cabins.

But don’t expect too much rational discussion.

FAA Response: Thank You For Sharing. And at the end of the festivities, the FAA will take all of this “under consideration,” wait the perfunctory post-hearing mourning period, and then issue a lengthy decision, relating their findings mostly to the issue of emergency evacuation. And buried under all of this babbling, there will be a de facto standard of probably 30-inches or maybe 31-inches for seat pitch. That will settle the matter.

That decision will be issued in the next 18 months.

In the meantime, plan for lots of cheap, but entertaining theater.

The Media Vox Deorum…

”..A new survey of hub connectivity shows that American Airlines operates hubs at three of the top four most highly connected U.S. hubs…”

Nice they picked those “connected hubs” to operate a hub.

Yikes.

__________________

China’s Tough Tariffs On US Airliners – Boeing’s Lovin’ It

A bit of reality.

Just in the past week, no fewer than a dozen new Boeing 737-800s were delivered across a customer base of eight Chinese airlines.

In addition, Shanghai Airlines received its first 787.

According to the prognostications of some experts last year, this should not be.

When President Trump implemented tariffs on some Chinese products, the folks in Beijing responded “aggressively” by supposedly implementing a 25% tariff on American airliners.

Some of the usual suspects in the media declared it was game-set-match for China and effectively warned about the need for massive expansion of the unemployment offices in the Seattle area.

Airbus, according to some of the “experts,” was fixin’ to see a flood of orders, while Boeing would now be shut out of the China market.

Gee, it didn’t turn out that way.

It’s All In The Fine Print. See, when China announced the tariff program, it took real media aviation experts, like Dan Reed, about fifteen minutes (assuming he took time to have a cup of coffee first) to illuminate that the imposed duties were based on airplane weight. And, carefully, the Chinese government put the limit at just short of the 787-800.

To the veneer analysts, China’s actions looked like a tough move. But in reality nobody in China has ordered -700s in years. (Matter of fact, some of the ones that were in China are now back in the US, acquired by Southwest.)

So the whole thing – like a lot of these retaliatory moves – was, at risk of cultural mix-and-match metaphors, Kabuki Theater.

Most of The Fleet Is New. Most of The Airliner Demand Is For Internal Growth. We just completed our 2018 Airports:China™ forecast, which again illuminated the incredible need for more lift in China.

Between 2013 and 2018 – just five years – passenger traffic at Chinese airports increased by over 68%. In 2018, we’re looking at another 8.6% – 10.3% according to our projections.

As we pointed out, China needs airliners. Big time. And they have no intention of cutting the flow – from any source – some media reports notwithstanding.

Trying to understand the China market requires adult supervision.