Update: Tuesday May 29…
Recognizing US Memorial Day Holiday
Media Stories On Aviation. Caveat Reader.
There are, in fact, several outstanding media professionals reporting on the airline industry. A number of them are experts on the subject, and by themselves are outstanding sources of knowledge and insight.
However, they are denigrated by a few others in the Fourth Estate who really need to find alternative employment.
In the last few weeks…
Quoting Great Sources…When a JetBlue flight returned to Buffalo after it hit a bird, a random passenger tweeted that the plane hit a seagull – specifically that species – and cracked a turbine blade.
Incredibly, a Fox News story just repeated it. Like, as if it had any informational value. This was regardless of the fact that there was no visual damage to the engine, and the passenger involved probably wouldn’t know a turbine blade from a popsicle.
Yet that was included as a key part of the story. Sources, anyone?
Stretching Hyperbole To The Non-Factual. The New York Times ran an article on how empty Memphis International Airport is, with lots of discussion and pictures of gates left over from when Delta had a connecting hub there.
The tone was vaguely in the direction that the place was a dying, crumbling ghost airport. Actually called it a White Elephant – a term that implies that the airport has somehow screwed up.
But the New York Times conveniently left out the major air service changes at MEM since the elimination of Delta hub operation, such as Southwest, Allegiant and Frontier coming to town.
Further misinforming the reader, the story showed a picture of airplane models on a shelf in the director’s office with this flatly stupid, and unprofessional comment: “Scott Brockman, the airport’s chief executive, can often see more planes on his office shelves than at his terminal’s gates.” An absolutely inane comment that has nothing to do with the status of the airport.
Also missed by the New York Times… local traffic at MEM is actually up from when those now-empty gates were clogged with passengers, most of them connecting on Delta.
Oh, yeah – and MEM fares today, adjusted for inflation, are down 15%.
Consumers and readers would be more interested in these statistics than the contents of the airport director’s office shelves.
Gotta ask: what else in this newspaper is vapor-brain reporting? Or intentionally slanted….
Going Trendy Instead of Factual. And there’ve been the oft-repeated stories on how US airline seats have shrunk in width over the years, this sometimes coming from supposedly-prestigious financial mediums.
A commonly-reported statistic across the media is that seats are now averaging 16.5 inches across in US airliners. It’s flat out not accurate, but it makes great reading. Fiction often does.
If It’s On In Prime Time, You Shouldn’t Question It. No need to touch on the 60 Minutes story on Allegiant. There have been a number of aviation folks who have taken it on.
Quoting Numbers That They Are Clueless About. Then we have the nonsense reports every quarter after BTS data is posted, when reporters without a clue start confusing “passenger spend” with “average fares” and then compare them across the nation, assuring that nobody gets informed.
Creating “Trends” That Aren’t… How about recent stories regarding “why airliner windows keep cracking,” in light of the Southwest accident and a few other reports since. The fact that none of these events have any causal relationship to one another is blissfully missed.
Point: while the majority of aviation coverage intends to be direct and factual, there are a some decaying apples in the media basket.
Some are just misinformed.
Others, apparently, intend to misinform.
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International Aviation Forecast Summit News
United President To Participate At The IAFS™
Once again, we are honored to announce that Scott Kirby, President of United, will be joining us at the International Aviation Forecast Summit in Denver, August 19-21.
Mr. Kirby joins CEOs and senior executives from air carriers across the market spectrum and across the globe who will be at the IAFS™ and helping us explore the future.
What sets the IAFS™ apart from other events is that we don’t do boring, rambling and unfocused “panels” of attendees. Instead we focus on free-form one-on-one discussions with the distinguished industry leaders who attend.
If you haven’t registered yet, we’d suggest you do so now. Click here to review the tentative agenda, and then make the decision to come to Denver this August.
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Announcing!
Special Reception & Presentations –
Boom Supersonic
If you can get to Denver a day early, you can get an additional view of the future.
Boom Supersonic is hosting a special reception on Saturday, August 18, at its new headquarters and research center at Centennial Airport.
Blake Scholl and his team will be outlining the progress of the 55-seat, 2.2 Mach Boom airliner, as well as the one-third scale “Baby Boom” research and proof-of-concept aircraft that will fly in 2019.
Japan Airlines is on-board. So is Virgin Atlantic. So is Ctrip – China’s largest travel-related company.
The world is getting on board. Join us August 18 and discover why
For more information on the Summit, and to register, click here.
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Monday Update – May 21, 2018
The Cuba Accident – Be Careful of The Political Spin
In the wake of the tragic crash in Havana, there have been several corollary stories outlining how the national airline – Cubana – is a safety question mark.
It certainly is.
Their fleet is reportedly in a state of functionality just ahead of a Budweiser display, and their operational record is also reported to be a world-beater – in the wrong direction. This has been illuminated in several follow-up stories.
Unfortunately, these articles about Cubana occasionally have been accessorized by completely inaccurate implications that this flying junkyard (once one of the Western Hemisphere’s best airlines, by the way) is due to the embargo on US trade with Cuba.
The political spin: It’s at least partially the fault of the US that Cuba doesn’t have a safe airline.
According to the lore, the US embargo is restricting access to parts for their current fleet, and cuts them off from Western financing for new airliners, which would be easy to get were it not for the nasty embargo. And, according to the spin in one major city newspaper, the embargo forces Cubana to have to wet lease airplanes from second-rate, semi-reputable operators, like the one involved in the Havana crash.
That is all fake news.
Havana Accident: It Was A Mexican Airline… Let’s start with the Havana event… The 737 that crashed was wet-leased from a Mexican operator. There are no US prohibitions or trade embargos or airplane parts deprivation policies that apply to Mexican airlines.
So, if that company had a safety problem, it has nothing to do with any US policy toward Cuba. It’s the Cuban government that hired this airline and its 737-200 that originally entered service with Piedmont in 1979.
An article in the New York Times spun this, implying that this was Cubana’s only option: lease from operators on the edge.
Which is fake – the Times knows that there are lots of companies that wet-lease airliners, and most are safe. It was Cubana’s decision to put its passengers at risk by using the company involved.
Let’s Talk Cubana. It has been reported that just last week a substantial part of Cubana’s fleet was grounded for safety reasons.
Some implications have been made that it’s due to lack of parts, and again, the distant if not direct allegation that it’s due to the US embargo. Cubana, supposedly, can’t get stuff to fix their fleet, and it’s the nasty USA that’s the reason.
The torpedo of truth in this case is that the airplanes that Cubana has sitting grounded – a total of 16 flying machines – include just four – count them, four – western airplanes, all ATR-42/72 turboprops.
The rest are a motley collection of Soviet-designed junk, from TU-204s, to a single IL-96, to several An-158s.
If Cuba’s shopping for airplane parts in the US, they’re out of luck, with or without an embargo.
Check it out… there aren’t a lot of vendors in the US that support the Soloviev PS-90 engines that are hanging on the four TU-204s (nee 757-ski) that are now rotting away on the ramp at Havana. If it’s parts that grounded them, it’s a matter between Cuba and some factory in Russia.
Then there are the stories regarding the recent grounding of Cubana’s fleet of AN-158s, which for the record is a blatant Soviet-era copy of the BAe-146, except with two engines instead of four, neither of which, apparently, work very well.
In any case, the Cuban feds pulled the plug on these contraptions, claiming they have “design and manufacturing flaws.”
They seemed to leave out anything about the US embargo causing those flaws.
Tough To Get US Aircraft? Yes. But There’s That Little Issue of Lender Risk. Yes, Cubana may have had a bear of a time getting parts – from the factories in Russia and the Ukraine that originally screwed these airplanes together.
Now, the fact is that most new airliners do have a lot of US content, and that can muddy the ability to order a fleet of new A-320s or CSeries, or even a fleet of COMAC C919s from China. But that does not have anything to do with Cubana operating Soviet-era airplanes that their own government has declared to have design flaws.
Embargo notwithstanding, the US content apparently didn’t stop the acquisition of seven ATRs, four of which are still in operation at Cubana. Plus, Cubana over the years has wet-leased in fleets of 767s, DC-10s and A-320s – all of which are eons ahead of the stuff they’ve gotten from the fine folks in Russia and the Ukraine.
Furthermore, because Cuba has fully attained a 4th world economy – with a population that’s generally not able to leave the country (let alone have the income to do so) Cubana isn’t a great potential generator of traffic, beyond bargain-rates for EU and Canadian holiday travelers. So, there’s an open question whether it is a viable finance risk.
The point is that Cuba’s economic model, and that of Cubana’s traffic base, probably would make access to Western aircraft financing very difficult… Cubana’s traffic model is as corroded as the rest of the Cuban economy.
Cuba: Years Away From Prime Time. As BGI studies have pointed out, Cuba is potentially an explosive new revenue source for US airlines. But it’s several years and a full government change away.
Four US carriers have given up on this supposedly pent-up opportunity. It’s a lead-pipe cinch that the remaining US airlines will re-structure some existing flying. Not much traffic to Santa Clara or Santiago.
While a couple of carriers have picked up some the vacated Havana slot capacity, the fact remains that, according to our analyses, most of the traffic is coming from MIA/FLL, and as much as two thirds is Florida-generated – and almost all of that is to Havana.
Plus, the load factors from some US points are really embarrassing.
It all gets back to the core issue… Cuba is a basket case because its own government has chosen to pursue policies that keep what could be a prosperous nation trapped in the economic Crane fixture.
Maybe they can’t get grain from North Dakota, or automobiles from Detroit… but they can get just about anything they want from places other than the US.
The state of its national airline is just one part of this.
And it has zero to do with the US embargo.
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May 14, 2018
BGI Announces Major White Paper
Reconciling Air Service Access Planning
To The New Airline Economic Realities
Mark the date – August 19, 2018
That’s the day that BGI will formally issue a new, comprehensive White Paper on the status of the US air transportation system.
We’ll be cutting new territory and questioning a lot of ambient and obsolete assumptions in the area of air access and airline service.
The White Paper will compare the structural and fundamental changes in the air transportation industry, with the shifts that will be critical in airport and air service access planning.
As will be illuminated in the paper, the nation is a long way from where we need to be. We can plan for the future only by recognizing and accepting it. That’s not the case today.
The fact is that most of the assumptions used in air service planning – from the FAA down to local airports – relate to an airline industry that no longer exists.
Take just a cursory look.
… The FAA still ranks airports in “hub” categories when most have no such relationship to any activities represented by that term.
… The FAA still thinks there is an independent regional airline system, when it’s been gone for two decades.
… The FAA – and most other forecast sources – still believe that enplanements are the direct result of simple econometric factors.
… FAA data collection is out of date, but consistent with the computer power that was available 40 years ago.
… O&D and other metrics represent the past, but not the future. Increasingly, there is a complete disconnect between historic airline planning and what is represented by the new mission applications of airliners delivering discretionary consumer products, in addition to “air service.”
… Too many communities and airports are misled into believing that there are lots of airlines, and just a massive consultant “market study,” and an appearance or two at a couple of speed-date events will do the trick to “luring” more air service.
It’s time to call these things for what they are. Obsolete fantasy that relates little to the air transportation system of the future.
Traditional Air Service Planning – Rig For Depth Charges. Reality Is Coming
The 100-page White Paper – The New Air Service Paradigm – Time For New Thinking – pulls no punches. It’s been developed based on the need to discard current obsolete thinking regarding how air transportation will shape the future.
Not Just Information, But A Planning Document. The White Paper is a working document that goes beyond data and into functional planning changes that airports, community planners and financial institutions need to consider if they want to match the trajectory of change taking place in the air transportation system.
The White Paper will cover the hot button issues, including:
The New Foundations of Air Service. Today, it’s more than just local “demand.” The report analyzes the emerging shifts in how airlines are plumbing new revenue sources with their fleets.
Obsolete Government Data & Related Systems – the need for new metrics, and exactly what those need to be. Relying on FAA forecasts, and the airline industry they describe, has no relationship to today.
Government Programs Aimed At Reversing The Calendar. Let’s get real, EAS and SCASDP programs need replacement. The White Paper discusses new approaches that are necessary.
Regionalization of Air Access. It’s here and it will demand major changes in airport planning.
Internationalization. – It’s an opportunity and a challenge for all US airports.
New Fleets. Next-phase airliners will change and improve access… plan on it. New fleet capabilities represent changes in aircraft missions.
Developing New Planning Programs. The White Paper will outline the specific areas that airports and the regions they serve must address to optimize the future… the air transportation system will be different, and strategic and tactical planning must evolve as well.
Available August 19 & Showcased At A Special Workshop.
The White Paper will be issued on August 19, at the 23rd Boyd Group International Aviation Forecast Summit, in Denver. The price for this comprehensive air transportation White Paper will be $795, and a press synopsis will be available to bona fide media.
Attend The Special IAFS Airport Planning Workshop. However, at the Summit, we’re planning an hour-long pre-event Workshop on August 19, covering the White Paper. IAFS™ delegates who attend this Workshop will be provided with a complimentary copy.
As always, the media is welcome to attend.
This Workshop is another reason that the IAFS delivers more actionable insight and information than any other aviation event… any other. Click here to register!
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BGI Assists Ithaca In Pursuing Larger China Presence
Spearheaded by Ithaca Tompkins Regional Airport, and sponsored by the Tompkins County Chamber of Commerce, Visit Ithaca and a host of local businesses, BGI and its partners at China Ni Hao, LLC recently delivered a comprehensive China-Welcome™ Symposium to civic leaders in Central New York.
The region is already one of the most Sino-aware in the nation, with over 2.000 local Chinese students and faculty combined at Cornell and Ithaca College. BGI’s Airports:China™ data indicate over 58,000 annual O&D between Central New York and China, with approximately 50% captured at Southern Tier airports.
The Symposium Team delivered data, information and consulting regarding the evolving nature of the China travel situation, including shifts in demographics and the expectations of Chinese visitors and potential Chinese considering attending US universities.
China-Welcome™ Is Needed In China, Too. BGI/CNH China-Welcome™ Symposiums are different from other “China ready” programs, in that our team understands that efforts must be made on both sides of the Pacific to be competitive.
BGI and the team – which includes the former #1 China-US tour generator, the global leader in developing digital programs in China, and the leading expertise in China aviation forecasting – tailor each Symposium to the specific situation at each client.
We illuminate what communities can do to be more competitive to attract more Chinese traffic. We discuss cultural differences, effective wayfinding techniques, and the need to have brochures in Chinese to inform visitors of US-specific travel factors. The team can develop complete China outreach programs.
Professional Communication. The Chinese visitors – be they leisure, business, or education-focused – are highly sophisticated. For this reason, it’s unfortunate how many airports, communities and venues get hornswaggled into adding “instant” translation options to their websites.
We always advise against having any Google or machine translations of the local website, which are so inept as to be outright insulting. It conveys that the venue is sloppy and unprofessional. Always have materials created in Chinese, and never “translated” from English.
The BGI/CNH Team assists our clients in development of professionally-developed outreach programs that convey a welcoming image.
Every Region Has A China Opportunity. BGI/CNH have delivered tailored China-Welcome programs at communities of all sizes. There will be over 23 million leisure visitors from China in the next five years – and where they will visit will be determined by the level of awareness they have of communities and regions.
If your region is interested in moving ahead of the competition for this business, give us a call.
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May 7, 2018
Congratulations To Our Partner, St Vincent & The Grenadines!
Boyd Group International is excited to note that American Airlines will initiate service to the world’s newest international airport, Argyle International, from Miami on December 15.
We are proud to have worked with St. Vincent & The Grenadines for the past seven years, from a time when the airport was not much more than an enormous construction site, leveling mountains and filling in valleys.
BGI has assisted the Argyle project in a range of projects, from crafting air access strategies for American and other carriers, to accomplishing the starting-point operating budget for the facility.
This is just the start for this unique Caribbean nation with a population less than that of a third of Nassau County, and a venue that is really unique in the Caribbean.
Boyd Group International is now working hard to build additional air access to St. Vincent & The Grenadines – stand by for film at 11.
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New Forecast:
St. Louis Lambert Now Re-Classified As A Connecting Hubsite
There’s A Message Here Regarding The New Airline Industry
Boyd Group International’s Airports:USA® forecast system – the only airport enplanement projections accomplished in the private sector – now has re-classified STL as an established connecting hub airport.
Airports:USA® defines a connecting hubsite as an airport where a single airline has strategically applied resources with the objective of inter-connecting passengers, and where the result is that 25% or more of the total airport’s enplanements are connect-driven.
With the pull-down of the AA hub, the percentage of passengers being flowed over STL naturally tended to evaporate to very low teens. It was no longer a hubsite.
As of today, however, Southwest has again made the airport a true connecting hub, with over 25% of all passengers (mostly WN-driven) now simply using the facility to connect.
Please Don’t Get Confused By Outdated FAA Classifications. This, obviously, is counter to the ridiculous and obsolete use of the term “hub” in FAA nomenclature. Their description of “small, medium and large” hubs has nothing – zero – to do with anything vaguely resembling connecting passengers, and nothing whatsoever to do with any industry definition of the word “hub.” Actually, it is shameful that FAA data is founded on such ancient nonsense.
This causes unending entertainment from the media and some consumer entities who posture themselves as experts because, lo! they can pull down FAA/DOT data off the internet, and assume it has all the veracity of what Moses got off those tablets on Mount Sinai.
It does the nation no favors for the FAA to cling to these nonsensical, mislabeled descriptions. Not only veneer media types are taken for a ride, but even some of the dragon-level organizations in Washington have their policy-planning taken into the weeds by not recognizing that FAA data and classifications are strictly from the days when Lucy was doing pratfalls on Sunday night television.
One very large Washington organization actually asked us to rank “small” FAA-defined “hubs” by the percentage of connecting passengers at each.
It was a very short list.
Like, none. But there was a level of resentment when they were advised that the FAA definition was misleading them. These were their buddies across town, after all. This is the damage done when federal agencies refuse to recognize that the air transportation system isn’t a static part of the communication network.
If You Rely On Accurate Forecasts, Be In Denver August 19-21. The new STL forecast is part of the 2019-2028 Airports:USA enplanement forecasts that will be used and discussed at the 23rd International Aviation Forecast Summit in Denver, August 19-23. We’ll be exploring the trends – and their effects – on traffic levels at airports across the nation.
Any aviation entity that relies on accurate futurist forecast data should be at the Summit. In addition to clear and independent projections of enplanement trends across the nation, the Summit delivers trend and projection forecasts from the key players in the airline, aircraft manufacturing, and financial sectors.
It’s clear that FAA forecasts aren’t reliable – year after year, they have confidently mis-projected not only traffic growth, but have been mired in assuming that air traffic is just the caboose on a complex train of economic factors.
It’s Airline Strategies That Are What’s Driving Expansion. Ask any airport where Frontier or another ULCC has suddenly and unexpectedly announced they’re coming to town. The FAA’s forecasts were on another planet. That’s understandable – because airlines are now independently and unilaterally making expansion decisions that bear no resemblance to the antediluvian and inaccurate forecast methodology used by the FAA.
And that’s another dynamic that will be explored at the Summit – it’s airlines, internally and unilaterally, that are more and more calling the expansion shots.
Those 60-page consultant “studies” and ridiculous “leakage analyses” – which typically have no relationship whatsoever to consumer trends, airline fleet strategies and other issues – are no longer the driver of airline route expansion.
This means having a professional and ruthless understanding of airline strategies is a lot more important than doing some bogus “true market” study to “lure” an airline to the local airport.
Solid Data & Exploration of The Future. No other event delivers what the IAFS does… no milquetoast panel discussions, wandering aimlessly around issues. No cookie-cutter sessions delivered by wooden federal officials spouting the party line – one that’s the same at every event, and is verbatim from what’s on that department’s website.
The IAFS delivers solid futurist perspectives from the industry leaders making the decisions. Click here and take a look at the distinguished industry CEOs and senior executives who will be joining us.
Networking? No event delivers the interaction opportunities of the International Aviation Forecast Summit. The sessions are all-business, but the breaks and the outstanding evening events planned by our hosts, Denver International Airport, will be ones that no other event can match.
If you haven’t registered, we’d suggest you clear your calendar and do so now.
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April 30, 2018
Starting Point This Week:
Airliner Seat Size Lore:
Be Nice If Some In The Media Relied On Facts
Seat Size: More Media Misinformation… The House version of the FAA reauthorization bill requires the FAA to investigate setting size minimums for airline seats.
USA TODAY, reporting on the story, advises us that this is important because average width of airline seats has declined from 18 inches to just 16.5 inches.
That, not surprisingly, is a blatant falsehood. Untrue, non-factual, sloppy reporting.
Let’s go to the fact sheet, again. The narrowest seats in US airline system operations today (save a couple of small-aircraft air taxi operators) is 17 inches, and all 737s have 17.2 in economy (memo to USA TODAY, they always have been that width in standard 6-across configuration), as well as A-320s and E-170/190s are over 18 inches.
There is no way that seats have shrunk in width to 16.5. Mathematically impossible.
As we’ve seen recently with other airline reporting – such as the 60 Minutes selective-data “investigative report” on Allegiant – what shows up in the media isn’t always gospel.
Caveat consumer.
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Supersonic Air Travel…
It’s coming. And It’s Going To Be Positively Disruptive
China’s largest travel company – Ctrip – has announced that it intends to make a major investment in Boom Supersonic, the developer of a new 50-55 seat, 2.2 Mach airliner.
If you haven’t heard of Ctrip, it’s a $3 billion dollar – and growing – global travel conglomerate based in Shanghai.
They join a range of other global players that have invested in Boom – all of them sophisticated entities that are known for looking to the future. This new machine is expected to cut flight times in half on long-haul intercontinental routes, and do so at operating costs that will accommodate today’s range of business/first fare levels.
Not Just Faster, But A New Air Transportation Mode. Boyd Group International has completed fleet demand forecasts for Boom Supersonic, and we see not only “demand” but major disruption in airline product structure.
Very disruptive – to just about every segment of air transportation – airlines, airports, suppliers, financial institutions and – importantly – to consumers who will have a whole new travel/communication channel.
On one hand, it will offer a superior option to the existing business/first passenger segment, with travel time being far superior. On the other hand, in markets such as New York – London a 3.3. hour flight time will likely represent stimulation of demand.
Then, let’s think about effects on global airports and competitiveness of airports. Those that may be slot-restricted might be left at a disadvantage – meaning that some sectors of consumer travel will find alternative access points where airlines operate the Boom airliner.
Opening China. Then we have emerging markets such as China… there is no guarantee that the Middle Kingdom will have restrictions on the (low) sonic boom. That means enormous potential for both domestic and international supersonic service to and from interior commercial points such as Chengdu, Kunming, Zhengzhou – at a dozen other new-market opportunities. Point: lots of potential demand for this airliner.
Example: Florida-Latin America: the attractiveness of this aircraft could well deliver nonstops to key commercial points in South America… remember, this new modality focuses on high-yield business traffic. The businessman from Manaus needing to get to Central or Northern Florida could now have viable service to/from Sarasota or Jacksonville… avoiding the congestion at other gateways.
Not Just An Airliner. A Competitive Imperative. The 50-55 seat airplane, aimed at capturing and moving today’s premium first/business segment at 2.2 Mach, at fare levels similar to those currently offered, will effectively be a giant marketing hacksaw, slicing off the front cabins of current intercontinental airliners.
If a business traveler can get from New York to London (as just one of many example markets) in 3.3 hours compared to 6.5, at a similar fare, it’s a no brainer which mode he or she will choose.
But it appears that much of the inbred aviation cognoscenti fit into that category. For now, the dogma is decided… this airliner won’t work.
But give it 12 months, and the dogma will do a 180. It always does, when things get obvious.
A Competitive Necessity. BGI is the only consulting firm that has researched the Boom concept – and from the gitgo, we found that the concept has enormous merit. Globally, our forecast is for 1,300 units over the period from operational start (2024) through the following ten year period.
‘Course, the usual mamma-guy analysts (google it, if you must) have assured us from the start that the Boom concept was a pipedream – mostly based on their recollection of the Concorde, which came out before half of today’s world population were born.
Comfortable group-think lore… the usual suspects have circled the wagons.
“No cost-efficient or fuel-efficient engines exist…,” some have assured us, completely oblivious of any expertise on the subject, beyond what “everybody knows.” They do exist.
“It’s the noise issue,” was another warning, not aware that the projected sonic boom will approximate that of a car door shutting, and way below the racket made by trash trucks rumbling down Madison Avenue at 5AM, or that of a 737 on approach over Jackson Heights into LGA.
(This is not to imply that the US FAA will ever have the gumption to explore over-land use of any supersonic airliner – regardless of what the decibel levels might be, the political response would be quick, ugly and aggressive. It’s a battle they won’t take on. But the trans-ocean route opportunities are more than can gobble up 1,300 global airliners.)
Save Time? Be More Efficient? Nonsense! Customers Want Perks, Not Speed. Then there is the all-time most creative “reason” espoused by some of the all-knowing analysts to prove that the supersonic business class concept won’t work.
The argument: premium passengers want to stay in the sky longer.
They contend that the 55-seat Boom airliner, equipped only with wide, individualized recliner seats and footrests, will not be able to take long-haul premium traffic from existing-generation widebody alternatives, because it will get them to the destination too fast.
According to this argument, this premium business segment will prefer longer flight times – to get work done, and to rest up and be fresh when they arrive. (To repeat, we are not making this up – these comments have been made with straight faces…)
See, the fantasy goes, premium class passengers will prefer the option of luxuriating in the sky for several extra hours, enjoying premium cocktails, wolfing down fine wine, dining on gourmet meals, enjoying a lavish dessert accompanied by a snifter of Courvoisier, before spreading out on a lie-flat seat to enjoy first-rate in-flight entertainment (IFE) on a giant flat TV, all warm and comfy under a lush duvet adorned by the name of some fancy designer.
Sure, getting to London hours earlier, and not having the time to wallow in luxury on the way to Heathrow will be a real deal-killer for Boom.
Funny, but there are certainly a lot of aggressive corporate executives who would rather get ahead of the competition, instead of swilling wine and playing with a 14-way lie-flat seat for seven hours.
The Current Business/First Competition Will Be Decimated. By the way, anybody who believes in this more-time-in-the-sky stuff, probably hasn’t really seen the long-haul front-cabin service shtick that some carriers pass off as “premium.” (We won’t mention carrier nationalities… but take a guess.)
Take a look… from boarding to deplaning, it’s not necessarily what’s portrayed in the advertising…
…the four-color menus passed out before departure showcase a lush level of high-livin’ vittles… but actual delivery sometimes falls a bit short…
Like, “premium cocktails” made with hooch barely a step above what’s in the bar-well at a roadside honky-tonk. Oops, that fine vintage wine selection that’s touted on the menu might not be on today’s flight. “But we do have some other options that are substantially better than Mad-Dog 20/20…” The gourmet entrée is likely to be plunked down on a pre-packaged plate or casserole dish, a la coach meals in the 1970s.
Oh, yeah, that plush duvet. When the passenger stretches out to relax, that duvet has no more utility than a blanket, embroidered designer name notwithstanding. And the viewing enjoyment available on the IFE system might resemble titles obtained in the last stages of a bankruptcy clearance at Blockbuster.
Point: The fare-paying segment that’s sitting in the front cabin today wants to get there. When the fare is the same, they’ll get on the fastest piece of warm iron leaving town. That is going to leave a lot of front-end wide-body real estate empty and seeking some type of re-development. Major international carriers would do well to start exploring this now.
Get Ready – The Airliner Demand Game Is Fixin’ To Change. The point is that this Boom Technologies airliner is going to change how airlines market their product, and how premium-segment customers fly.
It will also materially change fleet decisions and fleet applications for global international carriers. It is going to get sudden attention from other airframe manufacturers. (And once it’s safe to do so, it will get swooning attention from the oh-so-negative aviation analyst crowd, too.)
And don’t discount more Chinese interest. The one industry where they are materially behind the curve is in airliners. Their current and planned platforms (such as the C919, C929 and ARJ-21) are a decade late and several yuan short. A relationship with a product that Boeing and Airbus can’t duplicate would give Chinese aircraft companies and aviation suppliers a lot more access to airline front offices.
This means that as more major aviation and travel-related companies get acquainted with what this airliner will do, there’s going to the plenty more disruption.
Want To Get A View Of The New Future? Join Us In Denver this August for the 23rd Boyd Group International Aviation Forecast Summit, and get up close and personal with this next dimension in air transportation.
Not only will Boom be participating in the Summit, but we are jointly planning an exciting event to introduce this new airliner to the attendees… details coming soon.
In the meantime, if you haven’t registered for the 2018 IAFS™ – click here to reserve your space now.
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April 23, 2018
Fourth Quarter 2017 Fare & Enplanement Data…
Let The Media Circus Begin
The DOT has finally issued O&D traffic data for the last quarter of 2017.
Subscribers to Aviation DataMiner™ now have full access, and subscribers to the Quarterly Airport Performance Summaries will be receiving their copies in the next few days.
Just Because It’s From The Gov’ment Doesn’t Mean It’s Accurate. BGI’s Aviation DataMiner™ system has scanned and filtered the numbers to cull out the typical reporting errors, and we’ve reconciled the raw data against other sources, including airport-reported information.
The 10% sampling system still used by the DOT delivers a lot of misleading data – particularly at smaller airports and in less-dense O&D markets.
Just in passing – a GAO report noted that the 10% sample was originally necessary due to the fact that in ancient times – the 1960s & 1970s – computer power was a fraction of what was currently available. They recommended that the DOT go to a 100% audit of airline itineraries.
That report is now old enough to vote – it was issued in 1997. And here we still are. It’s the reason the Boyd Group International’s Aviation DataMiner™ is more accurate than any other source. We recognize that a 10% sample can send a lot planning into the weeds.
Now, let’s take a look at the 4Q of 2017…
First, regardless of the panting “reports” declaring airport had the “highest fares” or had the biggest spike or decline, here’s some rain on the media parade….
There is no accurate way of comparing fares between airports.
Write that down… comparing fare levels – by almost any metric – between airports or between markets, is just plain inaccurate and, in many cases, indicative of amateur-act analyses.
Fares: The Drivers Are Different From Airport To Airport. In fact, the fares at each airport are the result of .factors that vary materially, based on the economic base, the geographic location of the airport, the levels of service, population, and other issues. The metrics are not consistent.
This is because the factors that contribute to what passengers pay vary materially from airport to airport.
For the 4Q 2017, we took airports with over 1 million quarterly enplanements, and ranked the top 15 by local O&D domestic passengers…
The fare trap that a lot of reporters, amateur consultants and analysts fall into is demonstrated very easily by comparing #1 LAX to #2 Denver.
Denver, to the uninformed, has much lower fares than does LAX. But take a look at what passengers are paying on a per mile basis… Denver has an average yield that’s nearly 18% higher than LAX. Reason? Take a gander at the length of haul. The consumer travel patterns represent a length of passenger trip at LAX that’s about 30% more than at Denver.
Therefore, comparisons of these fares are useless… because the travel mix is completely different.
Passenger Travel Mix Is Not Comparable. Below we look at 15 airports that had the “highest fares” in the 4Q of 2017…
Take a look… the average fare (here expressed as one-way, federal fees and taxes included) is clearly driven by the average length of passenger trip (LOH)… i.e., the geographic location is a factor that is not equal or comparable by airport.
Okay, how about what consumers are paying for air travel on a per-mile basis… we took the same airports (those over 1M quarterly passengers) and compared the cost per mile of the top 15…
The cost per mile is high in most of these markets because the nature of the traffic tends to be shorter haul… and, note too, that these markets are served also by Southwest, which according to media lore, always drives fares down.
They can, but even at STL, which is again now classified by Airports:USA® as a (Southwest) connecting hub, is the airport with the fifth highest per-mile fares.
Reason: the make up of the traffic results in relatively short consumer trips… hence, higher per-mile fares.
BTS “Fare” Data Reports – Approach With Caution. A lot of media stories will come out, spouting the BTS “fare rankings.” Actually these are “air travel spend” ratings. They take the total passenger itineraries, and divide the total spend – including one-ways, multi-leg journeys, and round trip – and produce an “average.”
But just as consumer air travel patterns vary from airport to airport, so, too does things like the percentage of round trips in a market, or the percentage of multi-leg itineraries. Result… these are not accurate comparisons of “fares” between airport, because what consumers are “buying” will vary from city to city.
Want Better Analytical Firepower? The New Standard Is Aviation DataMiner™. What separates BGI from the rest of the suppliers of data is that we understand not only the shortfalls in raw BTS information, but we also are at the cutting edge of research on the trends that drive changes in air transportation.
Before you subscribe to any other source, check out Aviation DataMiner™ by clicking here… better analytics from Boyd Group International.
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Air Safety… Another Viewpoint
With all the media coverage of several areas of air safety, we came across a very interesting blog.
It’s a take on the recent 60 Minutes story on Allegiant Air, and it’s from a stand-up professional who is a source that doesn’t have a dog in the fight.
He reviews hard data, devoid of emotion and sensationalism. Fresh air.
In the interests of gaining additional perspectives, click here to give it a read.
It has several data-sourced conclusions that widen the discussion beyond mere repetition of what was originally presented in the 60 Minutes program.
Take a look – it presents a new set of analyses that that need to be brought into the discussion.
By the way, every airport director where Allegiant provides service should read the FAA’s response to the 60 Minutes attack on Allegiant.
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April 16, 2018
2019 – 2028 Airport Traffic Forecast:
Everything’s Unhinged
Big changes. Bigger uncertainties.
Here are some basic findings for next year, from the Boyd Group International 2019-2028 Airports:USA™ enplanement forecasts. It’s the only such data source compiled entirely independently in the private sector.
Traffic: up 4.5% – 5.0%
Among The Top Growth, Percentage-Wise: AUS, COS, SJC, RDU, SRQ.
Changes of Note: STL regains connecting hub status. (True)
Main Forecast Characteristic: Massive Volatility – plan on several airports seeing rapid and unforeseen double-digit spikes and declines. In fact, currently-indicated growth centers could disappear by August 21st, when the final 2019-2028 forecast is issued.
The #1 forecast finding, however, is what BGI has outlined for the last ten years: traditional forecast methodologies are today about as effective as a warped Ouija board.
Future Factor: The Value-Equation of Air Transportation Is Evolving. This is a major challenge for airport and regional economic planners… air transportation is no longer a utility… it’s increasingly a consumer option, and volume is more and more the result of where airlines make the corporate decision to increase – or reduce – capacity.
Business travel is today affected by changes in other communication channels. The ability to meet and do transactions electronically is rendering air transportation as too slow and too cumbersome and too expensive in many cases. This is one reason that a lot of attempts at tossing scheduled flights into small community airports are DOA. They don’t truly represent time-effective communication options.
Leisure travel is being spiked and stimulated in specific O&D markets via application of ultra-low fares. That new kitchen remodel can get put off a year, with the family budget shifted to an unplanned air trip to visit Florida, or even grandma in Philadelphia, due to the sudden presence of low fares.
Airline Expansion & Contraction: Strategically-Driven. Historically, national and even local air traffic forecasting was mostly a matter of doing some regression analyses based on a couple of economic metrics, and, poof! – all was well.
The assumption was – and, at the FAA, still is – that air travel demand was simply a static component of the economy. The “spend” on air travel was assumed to be concretely and linearly driven by economic factors.
It isn’t – at least not anymore.
The ULCC Product – Changing The Traditional Nature of Air Travel Volume. As we’ve seen with the expansion of ULCCs – Allegiant, Spirit and Frontier – the places where they suddenly expand capacity has nearly zero to do with static econometric data.
And often, little to do with whatever the current levels of service may be. For example, Spirit’s new Seattle expansion is right in the face of two legacy carriers, both doing quite well. There is not any capacity shortfall at SEA – particularly on the routes planned by NK.
This illuminates the new dynamic that puts a spread of torpedoes directly into the rusted hull of traditional traffic forecast methodologies. It’s the fact that the expansion of these carriers isn’t to fill “air service gaps” or address “unmet” consumer demand.
Instead, it’s all about offering a new option for consumer spending… in short, most of the ULCC expansion is all about creating net-new revenue, instead of fighting for “market share.”
Air travel is now a consumer option, and consumer decisions are wildly volatile. Even the definition of “demand” is increasingly a mathematical greased pig – it’s now the result of a whole range of constantly shifting factors that are specific to each market.
But at the end of the day, it’s whether there’s capacity for sale, and it’s revenue generation – not just high load factors – that determines whether a ULCC continues to operate a route, or cuts bait and moves on.
The challenge is forecasting where this type of growth will take place – it can’t be done with any traditional mathematical model.
That’s because the decisions are based on subjective corporate strategies on the part of these ULCCs in regard to where they can get the highest and best use of aircraft.
There is no model that would have predicted Spirit’s expansion at Seattle. Or Frontier’s new capacity at Colorado Springs or San Jose. Or Frontier expansion at RDU.
As we illuminated last week, the entire concept of relying on historical DOT data is useless as a planning tool in this new air transportation environment.
Strictly Business. Nothing Personal. Because the objective is to offer an alternative spending option, the ULCC model is transient. If a given market doesn’t work sufficiently – or if another appears to be able to generate more revenue – the ULCC responds rapidly to shift resources. Read: pull out of town, and fast.
And when they do, most of the traffic they generated evaporates.
In fact, we’ve seen this clearly in the past. When Southwest opted to delete SRQ from the AirTran system subsequent to their merger, virtually all of the more than 300,000 annual passengers disappeared. They didn’t show up at Tampa or at Orlando or at Fort Myers… they were gone with the capacity. Same with the situation at Newport News – neither Richmond nor Norfolk got a tsunami of new passengers. It was simply gone.
It’s been in play for the past 18 months. ULCC markets with what would appear to have high load factors are suddenly dropped – because it’s now revenue-factors that count. We’ve even seen newly-announced markets dropped before they were ever started.
New Close-In Forecast Methodologies. The bottom line is that traditional approaches to forecasting are out. The future is based on determining where there’s potential for air travel to be a new discretionary spend product.
Join Us At The IAFS™ To Explore This New Future. On August 19-21, at the International Aviation Forecast Summit in Denver, this new air transportation future will be front and center in our discussions with airline and aviation industry CEOs and executives.
In addition, the Airports:USA® session on August 21 will be covering the new range of core trends that will change how airlines apply their resources, and the factors to consider in regard to making logical projections within an entirely new and evolving airline industry.
Airports: Bring Your Board Members… and maybe the mayor, too. This event delivers data, forecasts and perspectives that will give them a clear perspective of the future. Judging by a lot of the semi-ethical “ASD” schemes being peddled to unwary small communities, this event will assist in keeping civic leaders from being misled into the planning weeds.
Click here for more information and to register. We look forward to seeing you in Denver!
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April 9, 2018
Air Service Planning Assumptions – Unhinged
Traditional thinking. Historical experience. DOT-reported data.
And of, course reliance on what “everybody knows.”
These approaches are leading a lot of today’s aviation planning into the deep weeds. They’re the very foundation of most of what is passed off today as “air service development.”
And they are increasingly bogus in dealing with the future.
Traditional Air Travel Concepts Getting Ignored. In the past few weeks, air transportation news has been tush-deep in route announcements from ULCCs that represent outright burn-‘em-at-the-stake-heresy in regard to the accepted norms of air service planning.
Allegiant. Frontier. Spirit. They are directly standing counter to the norms we once held dear. The ones we’ve always found as bedrock planning. These airlines are being very disruptive.
Harrisburg-RDU nonstops… With A-320s? Yikes! Or, Syracuse – Nashville? And more.
Nonstops operated with 160+ seat airliners just 2-3 days per work week? And not even in leisure markets.
Goodness, whatever are these carriers thinking?
Friends and neighbors, these are absolute anathema to the sacred foundations of air service planning. No way there’s enough demand to fill those flying machines… we have the sources to prove it, right?
Quickly, let us repair to the sacred scripture – a.k.a., DOT O&D tables – and gain enlightenment to counter such ULCC blasphemy against accepted “air service development” norms. We all know that these data – coming from the deep maws of the federal government – are the horn of truth, right?
Relief! The data are beyond being clear.
See, as just one example, they tell us that there are not enough passengers reported daily each way between MDT and RDU to fill one and a half rows of seats on that airliner. Literally.
There’s A New Travel Paradigm – One That’s Consistent With Consumer Shifts. But these flights are coming, and they are not being scheduled by folks who just fell off a turnip truck.
What this represents is what Boyd Group International has identified as the new “unhinged” aviation future.
Here’s a fact: the traditional air service thinking, as well as accepted planning and forecasting methodologies, have become unhinged from the past. There is a new emerging air transportation market…and we’re seeing the start of it.
The Oracle At DOT – A Lot Of Smoke From Yesterday. Let’s start with this tidbit of iconoclasm: DOT data is merely reflective of air transportation based on a set of complex factors, and determined largely by what airlines are offering.
These data have little to do with illuminating “demand” – because air travel is not like taking the rainfall in the Midwest and then being able to forecast the water flow on the Mississippi.
Air Travel: A Consumer Spending Option. No longer can air traffic forecasts be founded on the assumption that passenger levels are merely the caboose on the GDP growth train. We’ve been slowly unhinged from that since airline deregulation, 40 years ago.
True, GDP projections are the traditional way of forecasting. But it’s now completely outside of air transportation system realities. (Sorry, FAA. Your annual reports look very nice, but they’re the equivalent of a giant vacuum tube in a digital world.)
The number of consumers who will take to the skies, to the contrary, is based on a lot of variables, and DOT data only reflect (often imprecisely) the results of the travel channels that exist.
What that means is that the data are not reflective of what could be, should some fundamentals of air travel be shifted.
Shifted – like tossing day-of-week flights between mid-size cities within a region.
It’s Total Travel Time That Counts. Let’s consider this: air travel choices are made based on issues of convenience, cost, and – missed in a lot of the ASD schemes foisted on smaller airports – the travel-time factor, i.e., how long the total trip will take.
Like we’ve seen in failed attempts to bring local network airline service to places like Laughlin, Youngstown, Cheyenne, Naples and others, it’s the total travel time compared to alternative options that drives consumer choices.
It’s not the location of the local airport, either. A 60-minute drive to MCI from Topeka to get a nonstop flight is time-superior to shoehorning an itinerary to accommodate two local departures making a connection at ORD. Been there, done that.
That same overriding consumer dynamic can also apply to the attractiveness of new mission applications such as we’re seeing coming from Frontier, Spirit and Allegiant. The travel-time superiority is demonstrable, and that could override the concept of frequency. Whether the traffic will develop will depend on a lot of factors, but one thing is certain – past consumer trends are not indicative of the future.
Travel Decisions May Adjust To Superior Elapsed-Time Schedules. Let’s take the BNA-SYR market. There could be a lot of latent demand in that market, if the travel-time and cost factors were significantly better than the current hub-connect options. We don’t have any historical data to prove it one way or another. It’s up to the consumer in each affected market.
And, we all assume that convenience drives a lot of the travel decisions. We assume that one or two weekly round trips won’t be convenient. Really? Compared to a circuitous connection over ORD?
What is to counter the argument that, faced with time-gobbling and expensive hub-connect options, consumer travel patterns – and business meeting schedules – might shift to accommodate the existence of a nonstop, low fare flight on Tuesdays and Thursdays.
This is not to imply that all of these new markets will be a success. But it is to say that there may be a whole air system developing. It’s what Boyd Group International has defined as the Parallel Airline Universe.
Get A Jump On The Unhinged Aviation Future. Enough talk. The fact is that we are at a major turn in the air transportation system in the US, one that addresses functional and time-barriers to getting between major points.
One that, carefully crafted and applied, may create enormous additional air traffic.
One that is completely unhinged from traditional thinking.
So, if you’re interested in getting up to speed on this, join your colleagues at the International Aviation Forecast Summit, August 19-21, and get the straight facts from the CEOs and executives driving this change.
We’re honored to welcome Barry Biffle, CEO of Frontier… Robert Fornaro, CEO of Spirit. Jude Bricker, CEO of Sun Country. Lukas Johnson, SVP of Allegiant. Plus Andrew Watterson, EVP of Southwest… and this is just part of the line-up.
We’ll have one-on-one discussions with these and other airline executives from across the globe.
Hosted by Denver International Airport, you can register by clicking here.
And bring your staff, too… it’s two days of solid data, forecasts, and new perspectives that no other aviation event can even get close to.
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And, Finally…
Annual Rite – The Annual Airline “Quality” Reports
Spring.
It’s when birds and bees get social. Flowers pop up out of formerly frozen ground. College students head to Daytona for all manner of on-beach rituals.
And, of course, we have the usual suspects in the media doing literary back-flips reporting on the latest airline “quality” reports. No questions are ever asked about source data or the actual “quality” of the conclusions.
It comes from academia, don’t ya’ know.
Again, plan for some in the media to inaccurately and sloppily refer this stuff as a new “survey” – when it’s really just rejiggering DOT data – which any high school kid can access. Just put it through some type of mathematical formula, and, voila! we have a report. One that is postured to be strong research.
Not A Clue Regarding The Airline Industry Structure. Not much here, especially from a “quality” report that doesn’t know the difference between a “certificated operator” and an “airline.” Point: it’s not of much value to consumers.
For example, regurgitating federal data regarding “bumping” rates on operators such as ExpressJet or SkyWest – which mainly lease planes and crews to various major brand airline systems and which have little or no control over booking rates – is just ill-informed.
Which is where these tomes leave the consumer.
But, again, it’s spring.
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April 2, 2018
The New Realities of Small Community Air Access
Shock. Outrage. Denunciations.
That’s pretty much a description of civic leaders at communities where the local airport is now devoid of scheduled flights, due to the shutdown of Great Lakes Airlines.
They resemble Captain Louis Renault’s famous line in Casablanca. They are shocked!
Shocked to find local air service was headed into goodbye gear. They should have seen this coming, and they did nothing to deal with what caused Great Lakes to go under.
We’re talking about the Sacred Scripture. The Dogma of Truth, a.k.a., the 1,500-hour requirement for entry to the commercial pilot profession. It is the direct result (or more accurately, reaction) to the crash of Continental Express flight 3407 in 2009.
Nails In Already-Inevitable Air Service Coffins. This pilot-experience requirement is the direct and proximate cause of places like Prescott and Cheyenne now finding themselves with no scheduled passenger flights at the local airport, and even less chance of a major airline brand coming to town.
It’s also a reason that local airports at places like Naples, Topeka, Youngstown, and others may as well howl at the moon (instead of tossing money on more “studies”) in regard to attracting viable, long-term connective air service from a major airline system at the local airport.
One main reason is that local consumers at these cities already have far better air access options than what can be supported at the local airport. So not having flights at the local gates isn’t the major economic hit that civic leaders think it is.
The hard fact is that for airports such as these, the “pilot shortage” has only accelerated the inevitable, and put an earlier nail in the local air service coffin.
So, let’s call it for what it is. It’s not a shortage.
It’s the new economics of air transportation. It’s the new structure of air transportation in the US. Regionalization of air access was already an emerging dynamic – and now “regionalization” of pilot resources has accelerated this process.
A Rule With No Positive Benefits. The sad fact is that the 1,500 hour requirement is worshipped and aggressively-protected, regardless of the truth that were it in effect when the flight 3407 accident occurred, it would not have made any difference whatsoever to the outcome of that tragic night.
Both of the pilots of that aircraft had more than 1,500 hours, and this now-in-sacred-stone requirement in itself addresses none of the core findings of the NTSB report on flight 3407.
Regardless, the 1,500 hour requirement has become a third rail nobody dares touch, apparently. No other alternatives are to be discussed. Those that even suggest such things are burned at the stake of public opinion – they are the anti-safety, money-grubbing running dogs of greedy airlines.
Don’t Dare Criticize The Scripture. So, this is the situation, and the air transportation system will adjust. And constrict. It seems nobody wants to stand front and center and call for exploration of viable alternatives.
The now oh-so-outraged civic leaders decrying the demise of GLA should have seen this coming. Instead, they sat on their hands, not offering to help support exploration of alternatives to the 1,500 hour rule.
Most politicians avoid discussing it. One nudnik congresswoman actually stated that because there have been no fatal accidents since the rule was implemented, it proves it has increased safety.
Even a recent “task force” set up by the DOT to explore “solutions” to small community air service failed to take the 1,500 rule on. Instead, there were several pages that wallowed around suggesting other methods of meeting the rule, but not much along the lines of clearly stating that it needed to be completely reconsidered.
Constriction of Viable Air Service Demand. Loss of scheduled flights at points with almost no passengers isn’t a huge hit.
More damaging, however, is the reduced ability of major airline systems to access hub flows from midsize “small” airports, directly because they do not have sufficient pilot resources.
At extreme risk are airports with roughly 500,000 to one million enplanements. They have viable traffic, but their economies are threatened by the inability of major airline systems to adequately access this revenue due to limited pilot resources. This is a threat that local civic leaders can ignore at their peril.
Let’s state it. The 1,500 hour rule has not in itself increased air safety. But it is doing a great job of constricting economic growth and global access across the US.
There are better ways to be explored. But the discussions of such are simply not tolerated.
That’s the situation.
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March 26, 2018
China-US Tariff & Trade Issues…
Effects On Boeing & China-US Travel: Minimal
The Wall Street Chicken-Littles Are Very Ill-Informed
With a supposed trade war coming with China, Boeing’s in line for some tough times.
At least that’s what we are told.
The financial-sector gurus are out in full force, many predicting dire outcomes for China-US aviation as a result of the imposition of tariffs on certain goods from China.
We’re pretty much assured, according to the implications of some of the reporting, that the US consumer and the US economy are going to take it in the keester, because China will retaliate.
Already we’ve seen dire stories coming from other sectors of the economy… supposedly.
One financial media source recounted in an editorial how one small manufacturer has had to lay off staff due to the increase in steel prices, even though they supposedly were using US-made metal.
The bottom line was that, because underpriced Chinese steel was going away, US sources no longer had that price-pressure. Meaning, they didn’t have the market imperative to respond to unfair import competition.
But that wasn’t the take in the article… which curiously recounted something that supposedly took place within days of the announcement – not the actual implementation – of the tariffs on cheap Chinese steel. But the story was positioned as sort of the harbinger of things to come.
China & Boeing: This Isn’t Econ 101. It’s Global Inter-Dependence 401. Unfortunately, there’s a lot more to this than what’s coming from many of the Wall Street shamans, some of whom probably couldn’t tell “China” from a gift-set of Melmac.
The fodder of choice, it seems, tends to be dire warnings of this economic conflict hammering Boeing, and in the process zapping the entire supply chain, sending US workers to the unemployment line.
The Chinese, according to some of the supposed experts, can just switch to Airbus and leave Boeing bone-dry in the exploding China aviation market. Any look at production rates at Airbus would embarrass the folks putting this stuff out.
Or – watch the newswires, this one’s coming – the warning that China could just rely on buying indigenous airliners such as the C-919, oblivious of the fact that this machine won’t be market-ready for at least three years.
Indeed, these prognostications have reportedly caused Boeing stock to drop by over 5%, regardless of the fact that most of these stories are not based on hard market analyses… just Econ 101 assumptions.
Industry Expertise Not Needed. One financial media source last week actually warned that China has an immediate replacement for their orders for Boeing airliners. See, there are over 900 airliners coming off lease in the future, the story confidently reported, and then told the readers that China could simply “swoop in” and take those units in the place of buying new Boeing products.
Sure. Just pick’em up right off the desert showroom. No need to consider age, condition, engine configuration, airframe and component time, pending maintenance bulletins and a.d’s, maintenance bridging, compatibility with existing fleets, etc. Nor the fact that historically, China has not bought used aircraft.
But, such considerations are not important – nor is industry knowledge – when the goal is to fill several column inches.
It’s this type of veneer reporting that causes runs on stock prices… and misleads the public.
It’s not “fake news” – that’s when somebody actually knows the facts and reports something dishonestly different. This, however is simply irresponsible and amateur opinions represented as expertise.
Some Facts Not In Evidence. What a lot of this reporting doesn’t understand is that Boeing aircraft are global in scope. Parts, components and technology of their products come from all over the planet. While China is not a major direct sub-contractor for, say, the 787, Boeing does have a finishing center in China, and components for its aircraft coming out of the factory in Renton are certainly sourced in China by sub-contractors.
Another point: China is in need of lift. BGI’s Airports:China™ forecasts illuminate the fact that the domestic Chinese airline system is nowhere near reaching its stride in regard to meeting current demand.
The China market is such that there is no true US-style hub-and-spoke system, which takes passengers from several points and aggregates them on other flights. While on paper, it appears that there are plenty of options for connections at some airports, a closer review shows that today, the vast majority of traffic is between cities.
Aggregation between Mianyang and Kunming isn’t needed. Just capacity. The vast demand between large commercial centers is a long way from being met… which means that China cannot economically afford to cut Boeing off… they need the lift.
It’s Boeing Or Loss of Economic Growth. Underscoring this, last week – amid all the dire shallow-fact stories warning about Boeing’s “problem,” China Southern confirmed orders for 30 more 737s, and Xiamen Airlines did the same for an equal number of units.
It’s unfortunate that so many of the folks in the financial media are simply not versed in the dynamics of the Chinese air transportation system. They just assume that the orders for new jets can be turned off and on.
Point Made: The two airlines noted above need the lift that these Boeings will deliver… and they do not have easy alternatives. They could cancel the order, but that would self-inflict huge economic damage to a nation that needs this capacity – as soon as possible.
Conclusion: The last thing China can afford is choking off Boeing. Airbus can’t fill the gap – not to mention for several Chinese Boeing operators, that would mean introduction of an entirely new sub-fleet, which is not an easy thing to do.
China & US – Partners. It’s Not Two Separate Markets, Anymore. Plan on this: The emerging Kabuki Theater between the US and China is not one where China holds all or even most of the cards. They are a producer nation – with @18% of their exports coming to the US. That’s a chunk of business they cannot do without.
Plus, some of the tit-for-tat tariffs proposed by China don’t make much sense within the inter-connected global economy. One example is the Chinese threat to put a tariff on pork from the US.
Oops, two little problems… pork is a major food item in China, and the supplies from the US are critical to that supply. Not to split hairs, but it’s China importing pork from the US, because it’s a needed food staple. So, it’s Chinese consumers who get zapped at the dinner table.
The second leeetle problem is that much of the US pork industry is now owned by, yes, Chinese companies. So, they get the short end, too.
Okay, What About China-US Passenger Traffic? We’ve seen where political disagreements have resulted in dictums from the Chinese government that have decimated the strong tourist traffic between China and Korea. And China and Taiwan.
This certainly could be an option in regard to retaliation for the US tariff program.
But, it’s not likely. First, the current channels of capacity between China and the US are essentially choked due to a variety of factors – one being lack of nonstops from interior Chinese cities, and another being the non-existence of a true hub-and spoke system that could develop more nonstops.
BGI Airports:China™ forecasts indicate that outside of Beijing, Shanghai and Guangzhou, the rest of China is generating less than 10% of the demand that can be expected with increased capacity channels. Regardless of actions to blunt Chinese from visiting the US, the demand is such that it would not likely be noticed.
Furthermore, the China-US relationship has progressed well beyond the simple tourist-group stage, which is the case with Chinese traffic to places like Korea, Taiwan and Thailand.
Between business travel and the demand generated by the @400,000 Chinese students in the US, passenger movements between the two nations is much more solid and fundamental that just folks wanting to take a vacation. It’s far from being just discretionary travel.
Don’t Buy Into The Financial Chicken-Littles. Boeing Needs China. But China Needs Boeing. China respects strength. The US is finally addressing imbalances in the trade relationship – which the Chinese government will rail about, but which internally they understand.
So, regardless of all the me-too stories about Boeing being in line for huge damage due to the US tariff moves, the hard underlying fundamentals show that this is one area that China will be very reticent to mess with.
Regardless of what the “experts” on Wall Street are telling us.
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March 19, 2018
Before We Start…
New Programs For Future-Focused Airports & Communities…
Boyd Group International and its China partners are now offering programs to assist airports and communities in attracting more of the burgeoning Chinese investment in the USA, as well as the 23 million Chinese leisure travelers coming here in the next five years.
As an example, we recently delivered a China air service and business symposium for industry leaders in North Carolina.
Sponsored by the forward-thinkers at Raleigh-Durham International Airport, the program presentation is available by clicking here… it gives perspective on not only the issue of new China air service to the US, but also the industry-leading research of BGI in regard to China aviation. No other consulting firm has be depth in this area as does BGI, including our Airports:China forecasts.
If your airport and community are interested in exploring the China opportunity, and gaining industry-leading expertise on how to optimize it, click on the China button above, or send us an e-mail to discuss your objectives.
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Air Traffic Control. “Reform” Is Dead.
Actually, Reform Never Was On The Table
Based on what’s recently come out of the fog in Washington, US Air Traffic Control (ATC) “privatization” – which is mischaracterized and mislabeled as “reform” – is off the table.
That means it will be business as usual in regard to the Next-Gen naked emperor.
No changes, no accountability for failure or for implying that project failures are really successes.
Billions Spent… And Project Goals Slipping Into The Future. Yes, business as usual. The same ATC system that – even now with all those iconic vacuum tubes and old equipment already replaced – can’t handle current or future air transportation volume – will wallow on.
Any “improvements” in airline on-schedule reliability will depend on airlines continuing to shift schedules to allow more published sector time, and more turn time on the ground. An expensive concession to an ATC NextGen upgrade system that’s the poster-child of federal incompetence.
Note The Skies Are Not More Crowded. Do keep in mind that today there are 12% fewer airline flights in the sky than in 2007… that alone should have spiked “on-time” performance. It hasn’t.
Point: anyone awake, sober and with more than a grammar-school education can see that what’s gone on in the FAA in regard to ATC over the last 20 years has been a string of missed deadlines and pompous FAA Administrators getting away with it by telling swooning groupie-like network correspondents of how “successful” NextGen is.
Again, if NextGen were a private-industry program, funded by stock offerings, the leaders of this mess would be wearing orange jump suits. NextGen is a fraud.
Sorry if this offends all the cognoscenti in the industry who line up behind NextGen like the rhythm guitar section of a third-string country band, but the truth and the facts are that the FAA’s performance in regard to ATC has been shameful and a failure.
When “Reform” Is Really Just More Expensive Status-Quo. But the truth is that the folks who called for “reform” actually were suggesting nothing of the kind.
They, too, were intent on keeping the status-quo, at least in regard to accountability and dimbulb management. Other than governance, there’s been nothing else mentioned. In fact, it’s obvious that the “reform” supporters also support the management system that’s responsible for years of missed deadlines and bungled programs.
“Reform” only meant shifting the ATC system to a privatized structure, governed by a board that would come from across the aviation spectrum. That, according to the lore, would make the ATC system run smoother – and run by the same incompetent management and the same misdirected programs that have hamstringed progress for the last two to three decades.
Funny, but this same industry “spectrum” of entities that would be directing a “reformed” ATC has a group have never – never ever – dared aggressively and openly called for any functional and complete reform of the ATC system.
Never.
They, apparently have been quite satisfied with the non-performance of the FAA, and seem to imply that just “privatizing” the program will lead to consistent funding and smooth skies ahead. The dogma is that it’s only been a lack of money that has held the ATC system back.
That contention is bogus. Wrong. Misleading. Not accurate.
Most of the GAO and DOT IG reports on NextGen have pointed to far more fundamental issues. Like, lack of clear objectives. Like, lack of strong direction and management. Like, NextGen not at all being “transformational.”
Take a gander, nobody on either side of this embarrassing Kabuki Theater has ever come out and called for any “reform” in regard to decades of missed deadlines and bogus goals.
None were, and none are, being planned.
The Anti-Reform Segment Wasn’t Focused On Demanding Results, Either. But as far as any fundamental changes, it makes no difference.
Remember, most of the entities that were against this “reform” only focused on the supposed disaster for rural communities if greedy airlines got their paws on the ATC tiller. Regardless of whether that fear was valid or not, the fact remains that the amen-corner for status-quo has been silent in demanding that the creaky management directing NextGen be advised to find a new set of careers.
Truth be known, “reform” – as curiously defined in this matter – is dead. As defined in the real world we all live in, it never was a proposal.
Both sides really wanted the same outcome… keeping the functional status quo, and shielding the FAA from any accountability for NextGen failures.
Move on, everybody, nothing to see here.
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March 12, 2018
Definition: Unhinged
uhn-hinjd
Unstable, off-balance, uncertain, disconnected from past options,
Disoriented, confused regarding situational changes
Also see: Aviation Future Planning
Today, with all the emerging and fundamental shifts in the industry, it’s a fact… traditional planning approaches are, by definition, coming unhinged – i.e., disconnected from the emerging aviation industry.
Many of the traditional approaches and planning options have little or no bearing on the new emerging dynamics that are engulfing the industry. They are galaxies away from what’s unfolding in aviation.
Join Aviation Leaders At the IAFS™ And Get Whole New Perspectives. On August 19-21, the decision-makers in the industry will be candidly exploring the new structures of aviation… big changes in the works.
Let’s take a look at just a couple of areas…
US Air Transportation System & Structure – one major change is the Parallel Airline Universe – a.k.a. ULCCs (Allegiant, Frontier, Spirit, Sun Country) – they’re expanding with marketing models that are completely contrary to what were in place three years ago.
Running periodic but high-density flights between places like Nashville and Richmond, or Philadelphia-Grand Rapids or Memphis-Oakland, with price intended to trump frequency, is an approach not seen before.
Face it, the competitive issues this represents to the four major network incumbents are, yes, uncertain and disconnected from past options. Unhinged from past experience.
And just offering another bare-bones-you-board-last-and-don’t-get-overhead-space fare bucket isn’t likely going to be a meaningful competitive response.
By the end of 2018, the Airports:USA™ forecast from Boyd Group International indicates that ULCC capacity will be in excess of eight per cent of the US total – a very disruptive factor… one that unhinges traditional competitive options and unhinges the traditional definition of “air travel” from meeting a need, to providing a consumer spending option.
The problem is, the two different models are on a collision course.
Traditional competitive responses are not going to be effective. Pulling otherwise-expected service features to implement another low-fare bucket is problematic. Adding an optional fee to get into a “priority boarding” line that starts to build an hour before departure, and can stretch 80 or more people down the hall, isn’t necessarily a strong response, either.
In regard to competitive responses to the Parallel Airline Universe, most of what’s in the traditional book of service options is out of date. Unhinged as solutions to the current challenges.
Small Community Air Access. Take a look around. Let’s tell this just like it is.
Nowhere is traditional aviation planning more “unhinged” from today’s realities.
There are probably dozens of small communities trying to restore or add to “air service” at the local airport, when the new economic structure of the airline industry – and consumer preferences – now make a lot of these efforts akin to latter-day cargo cults. (Google it if you need.)
But even though the realities – and the emerging structure of the air transportation industry – are crystal clear, many communities are still squandering money on “market studies” and “drive analyses” and “task forces” to “find more airlines” when, like in the case of South Pacific cargo cults – nothing’s coming.
In the context of the emerging air transportation system, and its role as part of the communication system, a lot of these efforts – some quite costly – are the equivalent of voodoo.
In short, the approaches to assuring access from the rest of the global economy can no longer focus on just having flights at the local airport.
The traditional methodologies of just collecting lots of data – much of which are often nonsensical assumptions – will not create a connective airline industry that no longer exists. Building a stick model of an airplane and putting at the end of the runway will be just as effective.
Save The Tuition. Another giant waste of money is sending staff to attend generalized “training classes” that purport to represent that “air service development” is just a matter of doing the right data, and airlines will come a-running. Today, there is no drive-up window for air service, and just doing all the “right” analyses won’t bring them to town. The structure of the US air transportation industry is no mystery. Jive training that covers lots of past hypotheticals that have zero relationship with the US system is useless.
Point: traditional “ASD” approaches like this are on another planet from the future, instead, they are unstable, and functionally disoriented… i.e., unhnged from the new realities.
Fleets & Fleet Applications. Standby for huge disruption here. The traditional service models and applications of long-haul international air service are in for a total revision.
First, the days of the small “regional” jets are still limited. Changes in fuel costs and a near-boom in US travel demand have slowed retirements. But, make no mistake… they are getting older, and the next step up on the fleet chain is going to be most unpleasant for a number of local airports.
These communities need to move away from chasing elixirs and magic that are unhinged from an air transportation system and consumer preferences that are fundamentally different from just ten years ago.
Second, there are enormously disruptive new airliners in the pipeline. The 787 was just a minor taste of what’s coming.
At the 2016 International Aviation Forecast Summit, held at Reno/Tahoe, we showcased the new Boom Technologies 45-50 seat supersonic airliner. At the time, the usual cognoscenti advised us that since the Concorde (which rolled out when Gunsmoke was the #1 TV show, and smoking Raleighs for those valuable coupons was the in thing) didn’t work, that meant that this new airplane was also doomed.
Today, the Boom Technologies airliner has over 130 orders, and support from Japan Airlines, Virgin, and several major component suppliers…
The unhinged effect of the Boom Airliner is that it will – will – have the effect of functionally moving the high-yield business/first customer segments off of the front ends of 777s, A-350s, and A-330s.
Then, we may want to get into the issue of new powerplant technologies… maybe.
Regionalization. Reality is only starting to hit some mid-size regional airports. The traditional do-a-study-lure-an-airline-to-a-new-route approaches are now largely disconnected from the past… unhinged.
The fact is that changes in fleets and raw economics have laid bare the nonsense foisted on many airport that if they want certain new service, it’s just a matter of reaching out for one of the faceless many airlines out there.
One Midwest community recently touted that it had over 31,000 annual O&D in the Boston market, and therefore, it was a slam dunk to “lure” an airline into nonstop flights.
The fact that this number – if all were boarded on a single flight – represents less than a 50% load factor on the smallest airliner of the only (and not identified) airline that could have a snow cone’s chance in Havana of even considering such a route. Apparently, that part of the “route analysis” was somehow left out.
Point: this example is not rare, anymore. Traditional air access planning is increasingly devoid of any relationship with new air transportation realities… it’s unhinged.
Internationalization. It was Boyd Group International in 2008 that first outlined the value of internal, non-hubsite US airports to EU carrier systems.
Today, that trend is well underway. Nashville, Indianapolis, Austin, New Orleans… and more. Plus, Boston even now has nonstops from China.
What this represents is the need for every mid-size and large airport to become more internationally-focused. No, nonstops to Heathrow aren’t in the cards for Ithaca… but access-planning for effective connectivity to US gateways is a future imperative. (One, by the way, they are pursuing.)
Join Us In Denver & Get A Grip On The Future. It’s a new aviation industry – unhinged… unstable, unplotted, un-experienced, and yes, confusing.
But it’s reality – and that’s what we’ll be exploring at the International Aviation Forecast Summit – no wandering “panels” – instead, sessions that will illuminate the future.
We’ll be discussing the unhinged future with airline CEOs, aircraft manufacturers, suppliers, and financial experts… uncovering what aviation will emerge into in the coming years. If you can attend only one conference this year, the IAFS™ should be the one.
If you’re not registered, click here for more information and to get the early registration rate.
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March 5, 2018
Before We Start, An Exciting Announcement
Southwest Airlines Joins As Platinum Sponsor of The
International Aviation Forecast Summit
Airline Industry Leaders To Be A Key Part of the #1 Industry Event.
We are honored to announce that Southwest Airlines will be a platinum sponsor of the 23rd Boyd Group International Aviation Forecast Summit.
Andrew Watterson, Executive Vice President & Chief Revenue Officer, will be joining us at the Summit, and outlining the new aggressive directions of Southwest. He will be joined by several other staff from Southwest, too.
This year, the Summit will again eclipse any other aviation event for insight and futurist perspectives.
We’ll be hearing from senior decision-executives from across the entire aviation spectrum… delivering new perspectives that won’t be found at any other aviation event. Perspectives that can improve and hone long-term planning, regardless of the sector of the industry you’re in.
Where Are Airlines Headed In The Future? … Join Us & Hear It From The People Making the Decisions. As the name implies, the Summit really is all about forecasts – trend projections, traffic growth, fleet shifts, and airline strategies.
One of the key areas we’ll be addressing is the major changes to the US air transportation system due to massive increases in expansion of ULCC service.
Boyd Group International has defined this new dynamic as the Parallel Airline Universe – because the basic model is one founded on very different business objectives from traditional airline planning.
More and more, the objective is to position air travel as a consumer spend option, right along with other discretionary options. This means the traditional air service planning approaches need to be materially revised. It also means that traditional views of “air service” can no longer be approached as in the past.
More Industry Leaders – More Business Intelligence. At the Summit, we’ll be joined by Barry Biffle, CEO of Frontier, Robert Fornaro, CEO of Spirit, and Jude Bricker, CEO of Sun Country – and these are just for starters. And if you’re looking for networking, the IAFS hosts more airline planning and management staff than any other event.
For more information on this #1 aviation forecast and networking event, click here, and register while early rates are still in effect.
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Revision: Third-Quarter 2018 –
Stronger Enplanement Growth Forecasted
The strengthening economy is translating in to stronger traffic growth.
A revised Airports:USA enplanement forecast indicates that we will see 2018 trending toward 3.9% and 4.4% growth in the third quarter, and the potential for as much as 5.2% in the last three months of 2018.
But, as we forecasted earlier, the growth will be uneven, and accompanied by huge percentage spikes at some mid-size airports.
Comparing capacity plans for the third quarter of 2018 v 2017, the US airline industry will be adding just over 4.2% more seats… but that’s not the same as “more capacity” spread over a static traffic demand flow.
The Traditional Airline sector will continue to see measured growth, some of which will be the result of fleet changes.
This will also be accompanied by rapid percentage expansion of the Parallel Airline system as it moves to position air travel as a discretionary spending option.
Separating the two models, and looking at the third quarter of 2018, the Parallel segment is planning strong percentage expansion, but it’s not “excess capacity” that some Wall Street dwellers fear, because it’s mostly on routes that have little of no nonstop service, and where the fare will determine the “demand.”
It’s putting airline seats on the consumer shelf, competing with Home Depot more than with United, Delta, American or Southwest.
In the third quarter of 2018, the three Parallel carriers will account for almost 7% of total US capacity – but it will be mostly in markets that are not directly competitively-aligned to take share from the six traditional-model carrier systems.
In most of the recent expansion announced by Frontier, for example, it’s clear that they are after developing new consumer flows, instead of invading existing ones.
Another Player Expected. Note that this data does not include Sun Country, which is expected to enter the fray aggressively by the end of the year.
For now, this represents low competitive threat to the traditional airline model, because it’s not just new capacity tossed on top of existing seats, as some in the financial world are contending.
Get Ready For Disruption – Particularly At Mid-Size Airports. It’s also very clear from the track record of the last 18 months that the Parallel Airline system is fluid… if a new route doesn’t develop quickly, the airline goes into goodbye gear.
Islip (which, by the way, is no more an access point to New York City than is Allentown) has seen this in spades in the last year.
Remember, many of the expansion routes these Parallel Airlines are entering are strictly Captain Kirk territory – where no airline has gone before, at least in the last decade.
Join ULCC Leaders In Denver, August 19-21, And Hear It From ULCC CEOs. At the International Aviation Forecast Summit this August, we’re going to be discussing this new model – and how it will evolve as a core part of the air transportation system – directly with the CEOs that are driving it.
No rambling boring panels… just direct interaction with the thought-leaders that will shape the future.
The IAFS delivers forecasts and business intelligence that eclipses any other aviation event. Data and information that relates to the real-world and that delivers the competitive planning edge for all sectors of the industry.
Click here for the latest on the International Aviation Forecast Summit, and to register at the special early rate.
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February 26, 2018
The Seat Size Controversy… More Inaccurate Media Reporting
This past week there were a couple of stories on how some of the inhabitants of congress want to pressure the FAA into legislating seat dimensions.
To “fix” a problem requires having a knowledge of the problem. That’s not the case here.
There is no question that seat “pitch” – simply put, space between rows – has gotten much tighter in the last 20 years… particularly in the last five.
But that’s not the same as seat-width, which truth be known, has actually – on average – grown in the last 20 years in US skies.
Don’t Check The Source – Especially If It Agrees With The Reporter’s Pre-Conceived Conclusion. These articles are often embellished by the oh-so-righteous statement that seat-width has also shrunken from an average of 18.5 inches a few years ago (whenever that was) to an average of 17 inches today. The articles then attribute the source of this statistic to one consumer group or another…
Fake news lives. It’s a flat-out false statistic, at least for US airlines.
Here’s a fact to ponder…. In the US, the smallest seat width in economy cabins at US airlines is 17 inches. (This does not include any smattering left of air taxis or third-tier carriers flying very small aircraft.)
That’s the smallest, and in the US it is found only on categories of “regional” jets.
New Airliners Have Changed The Mix. Let’s take a look …despite what some media sources mis-report, the B-737/757 has exactly the same fuselage width as the first 707s that entered service in 1958.
The cross-cabin seat density in normal economy has always been six… so shrinking the width of the actual seat would gain nothing in regard to more passenger density. It’s been around 17.5 inches since 1958. So even if it were originally at 18.5 (which is bogus), there’s no way shrinking the width would deliver more capacity.
Most of the reporters who spread this inaccurate drivel have no clue of the subject matter.
In fact, there has been some increase in seat density on some widebody airliners, but none in US operation are less than 17 inches wide.
(For the record, airlines have tried different seating configurations… in the 1960s, United dabbled with a second economy cabin with 5 across, It didn’t survive.)
Actually, the average width of the US economy seat has grown in the past 20 years. The expansion of the A-320 family actually has increased average tush width in US economy cabins… they have an average of 18 inches. The Embraer E-170/190 airliners have seats at approximately 18.2, and the new CSeries coming on line at Delta will have some seats at 19.
So here’s the bottom line… since the narrowest seats in US fleets are at 17 – and these are just on smaller “regional” jets – and virtually all other narrow-body airliners in US skies are above that, it doesn’t take an advanced degree in fractal geometry to conclude that the “average” today simply cannot be 17 inches. The pandering consumer groups and the reporters who blindly rely on them have a credibility problem.
Simply put, the consumer gadfly organizations and their media groupies are passing out bad information. One wonders about the accuracy of the rest of their reporting. The congressional inhabitants who might repeat this garbage are in the same category.
So, the folks that are reporting a decline in average seat width – particularly in narrow-body US fleets – need to do some homework. Or find another profession.
Again, this is not to imply that seat pitch hasn’t declined. It has.
But the story demands facts, not innuendo.
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BGI Delivers China Symposium At Raleigh-Durham
The Boyd Group International/China Ni Hao professionals were honored to be teamed with the Raleigh-Durham International Airport to deliver a comprehensive Symposium to North Carolina industry, civic, and government leaders, outlining the opportunities for China air service.
With the enormous Chinese business investment in the region, including Lenovo, Tencent, Smithfield Foods, and Triangle Tires, the North Carolina Research Triangle supports over 160,000 annual air travelers from China, according to BGI’s Airports:China forecasts.
The objective of the Symposium was to illuminate the realities of gaining nonstop access to China, which today does not yet have a fully-developed hub-and-spoke system that compares to that in the US. Indeed, today, the largest single airline operation is the China Southern system in Guangzhou, which is in southern China. It has @ 350 daily flights… compare that to some US connecting hubs, with between 600 and 900 departures. This will evolve in the years ahead.
In the meantime, there’s lots of aggressive planning and outreach that needs to be pursued by US regions and airports to meet the China future.
At the event, BGI staff outlined the future evolution of the Chinese airline industry as it will affect RDU, as well as key data regarding where the communities of business interests will develop between North Carolina and China in the coming years. BGI is the leader in China-US air traffic and trend data,
We were honored to work with the team at RDU to deliver this program.
The China Era Is Here – And It’s An Opportunity for Regions Across America.
We would note that Boyd Group International and its team of China experts stand ready to assist communities and airports in developing aggressive China-Welcome programs.
Welcome & Wayfinding Programs – Chinese leisure and business visitors will prefer and gravitate to locations that make an effort to welcome them with basic but professional materials such as key communication touch-point signage, and making certain parts of the venue fully China-Welcome…
Professionally-Created Chinese Support Materials. BGI can craft a tailored program for any venue to assure that Chinese visitors – particularly business visitors – have the materials and informational guidance they need to have an anxiety-free visit, and to know that their hosts respect their business…
Local China-Welcome Outreach. If you are relying on machine-translated versions of your website and promotional documents, delete them immediately! They are usually very sloppy, inaccurate and in some cases offensive. Let BGI’s experts develop and create the message professionally…
Digital Outreach. BGI’s team has established WeChat, Baidu and other digital programs for US companies and organizations. We can literally put your airport or community in the pockets of millions of Chinese consumers…
China-Welcome Programs. Just as at the North Carolina Research Triangle, BGI can deliver incisive and informative programs on-site, designed to inform and fire-up the region to become more competitive for the billions in China-US investment and the more than 23 million Chinese leisure visitors expected to see the US over the next five years.
Point: If your region is interested in looking to the China future, we’re ready.
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February 19, 2018
Make Security Incompetence Great Again!
Let’s Toss More Money At The TSA
The airline industry alphabet groups are on the warpath…
They should be. The Administration is proposing to add more ticket fees to fund the TSA.
This is essentially the same as tossing the money down a rat hole. Maybe worse… at least the rats could make a nest of it. The TSA management is a national embarrassment.
The management of the Transportation Security Administrarion has been a consistent embarrassment, right from the start, when the first TSA Administrator spend a reported $400K right up front to redecorate his office. Then the millions spent on screening devices that the TSA ultimately had to pay somebody to take away as scrap. And the proposed 16,000 staff is now well over 60,000.
Then the reported 80% to 96% failures in screening accuracy – which the TSA tries to keep secret, and which is just taken as a blip in what they call “layered” security. Layered like a roll of Charmin.
Message To The Oval Office: What the TSA needs is a complete floor to ceiling management clean-out. They don’t need more money.
Surprising. As a tough businessman who is known for demanding results, it is incredible that Trump would support more consumer dollars diverted to a bureaucracy that is famous for incompetence. Like out-of-control spending, no accountability for failure, and no comprehensive anticipative “security” beyond screening for pointy objects.
The same Administration that touts how a new tax program will put more money into consumer spending now wants to hit up airline passengers to give some of it back… without any justification.
Media reports indicate that some of the inhabitants of the Marble Playpen, a.k.a. congress, are thrilled with the proposed fee, because it’ll buy more whiz-bang airport contraptions that’ll weed out more proscribed items in carry-on luggage.
The fact that incidents such as the baggage area shooting at Ft. Lauderdale and the electrical failure at Atlanta prove that the nation has no cohesive and professional post-event security and crowd protection whatsoever, isn’t a concern, apparently.
Paying For Things Make Sense… Unless They’re Losers. This whole TSA issue runs counter to several otherwise-valid points made by the Administration:
Strong arguments can be made for increasing the PFC cap – because those bucks are tightly controlled and are 100% beneficial in funding logical infrastructure.
Strong arguments can be made for curtailing much of the Essential Air Service program… which is mostly funding flights that have no utility at all and which consumers won’t use.
But the willy-nilly suggestion to add more fees for a bureaucracy that’s proven to be a financial and administrative cesspool is nothing short of irresponsible.
And misuse of taxpayer dollars.
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February 12, 2018
And You Thought Twilight Zone Was Off The Air…
“By all legal means.”
This is the vow made by a lawyer in regard to getting justice for his young student client, who, he claims, was dreadfully treated by Spirit Airlines.
Seems that at the airport, it’s alleged that the airline told the kid that she couldn’t take her “emotional support” hamster on a flight. Compounding this outrage, the kid claims that the airline advised her to flush the dearly-loved rodent down the toilet
Which, she admits, she dutifully did.
Now, the media has run with this story – in most part because it’s so outrageously stupid. But beyond this specific incident, the stories are rife about “emotional support” animals – birds, pigs, rodents, lizards and whatever else might be found in a re-run of River Monsters – being passed off as necessary to the passenger’s well-being.
In this politically correct world, a lot of the media really is reticent to go through the stupid criticism if they cover it directly as the silly nonsense that it represents… not to mention the fact that it’s a ridiculous story in the first place.
If somebody needs a peacock to travel emotionally under control, it’s not a trip to Miami that he or she really needs. Besides, legroom is short enough without having an emotional support python curled up in front of 13B.
In this case, between the student, the lawyer, and the (very few) media reporters who actually think this is serious stuff, it appears that the only player in this mess that might have had a clue ended up going down the loo.
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The Parallel Airline Universe –
Quantum Expansion. Quantum Disruption of The Status Quo
The game is on… the parallel airline universe is growing.
Frontier just announced a massive expansion across the US… low fare, point-to-point flying involving mostly non-hubsite, mid-size airports.
Spirit last week switched a 20-unit order for A-320NEOs to sooner-available A-320CEOs.
Sun Country is making moves in the same direction as Frontier and Spirit
The US air transportation system is changing fundamentally.
Note that most of the markets just announced by Frontier are not all in direct competition with the First Universe. RDU-BUF, and CHS-AUS were not likely at the top of the in-boxes at American, Delta or United… nor will they be anytime soon. This represents a major new direction in air transportation in the US.
This also represents using high-density narrow-bodies to stimulate traffic between secondary, mid-size commercial centers.
Message To Wall Street: Developing New Revenue Is Not “Over Expansion.” These new strategies on the part of both Universes point to a situation where the outdated Wall Street definition of “over-capacity” gets tossed into the trash bin of history. There are no dynamics in play that rule out that the type of expansion by the Parallel Airline Universe won’t be not only successful, but also actually additive to total air transportation ridership.
Naturally, no guarantees, but the knee-jerk denunciations from the financial gurus that any capacity additions are bad for the industry should be taken within this new context.
The Magic Studies Are No Longer Needed. There’s another clear indication coming from these expansions on the part of both Universes… they know where they are headed, and outside input is increasingly a day late and a fleet-announcement short. The concept that airline planners are sitting in lonely cubicles waiting for some consultant’s magum-opus “market study” to give them some sense of direction is dead.
These latest expansion moves were generated entirely within the confines of the carriers themselves.
The days of a consultant marching in with a 60-page boiler-plate compendium of charts and graphs that will have any effect on airline planners are over. They are making their own decisions, and it’s fantasy that doing a regional “survey” or “drive analysis” will materially shift their planning.
Today, for any community, the approach must be to first identify the carrier’s specific strategy, and determine if a market makes sense or not for them. The starting point is the carrier’s strategic direction – before tossing $30K at a generic study. Or doing a blind 20-minute session at a speed-date event.
Come Hear The Facts From The CEOs Making The Decisions. At the 23rd Annual International Aviation Forecast Summit, we’ll be exploring the new future of air transportation in America.
We’re excited that the CEOs of Frontier, Spirit and Sun Country will be participating and presenting their views of how the airline system will evolve in the next five years. And, we’ll be exploring the views of the First Universe, with executives from carriers across the industry and across the globe.
This year, the Boyd Group International Airports:USA forecast session will focus on how this emerging air transportation system will directly affect community air access… the concept of regionalization will expand, and there will be shifts in consumer travel patterns. Get ready for projections and trend analyses that no other event will even get close to.
There’s lots more to the IAFS this year – the range of futurist business intelligence represents the competitive edge for every sector of aviation.
We’ll be covering new concepts – new aircraft, new international traffic flows, new consumer directions, the effects of changes in communication channels on air service, and much more.
Before committing to any other aviation event this year, check out the IAFS. Our regular attendees will tell you that it delivers more insight, more actionable data, and better networking.
To register and find out the latest on the IAFS, click here … and join your colleagues August 19-21 in Denver.
Also, we’re planning on announcing some exiting related events on that week-end that will make your visit to Colorado and the Mile High City a very special event.
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February 5, 2018
The US Air Transportation System of 2028
Preparing For The Future Means First Accepting It
One of the biggest challenges to the future is accepting the fact that the future is the sum outcome of a wide range of anticipated and episodic changes in the economic environment.
Many of them uncomfortable and disruptive.
Unfortunately, the result of trying to avoid the discomfort of change is today demonstrated in the fact that much of the nation’s infrastructure planning is based on what was needed for yesterday and today’s economic systems.
As Boyd Group International has pointed out, our entire communication systems have changed over the past 30 years, and that includes the air transportation channel.
Unfortunately, this reality is too often totally ignored.
Take a look at rearview mirror boondoggles like “high speed rail” that – in most proposed applications – tend to ignore just about every earthly reality – evolving consumer travel patterns, cost issues, alternative emerging communication trends, and the realities of a political system that spends first and asks intelligent questions later.
Moving to aviation – let’s look at today v ten years ago… we compare the US airline system in 2018 with that of 2008. It’s different.
The trends are clear and obvious… yet much of the “ASD” programs currently seen are oblivious… they assume the past is just the same as the future.
Regardless, the fact is that the entire air transportation system is fundamentally different from just ten years ago.
The multi-fleet, full-network systems – American, Delta and United – have consolidated into larger aircraft, and fewer departures. The rest of the industry is also evolving into larger units of capacity, including the parallel airline universe represented by Allegiant, Frontier, Spirit and Sun Country.
Economics, changing consumer patterns, reduced value of intra-regional air service, new fleets, and the emergence of alternative communication systems, have structurally changed air transportation’s role in the US economy.
So, where will the system evolve in the next ten years?
Let’s Fast Forward Ten Years And Look Back. At the 23rd International Aviation Forecast Summit, August 19-21 in Denver, we’ll be exploring this. We’ll be looking at the expected fleets that will be in operation in 2028, based on not only BGI forecasts, but those of the major manufacturers.
We’ll be looking at issues such as the emergence of new-technology propulsion systems, such as hybrid and electric. We’ll again have Ben Brockwell of OPIS, the leading expert in fuel trends, at the Summit to deliver his company’s often iconoclastic but usually accurate projections of how oil prices will redirect air transportation.
Most importantly, we’ll be exploring the one factor that most ASD studies avoid – changes in consumer travel and communication patterns that we can expect by 2028. Just as the last ten years have changed air transportation, you can be assured that by 2028 things will be fundamentally different – and disruptive.
This is the type of no-holds-barred data and forecasts that has made the Summit the most prestigious event in aviation. Leaders don’t go by the book – they write the book, and this defines the attendees at the IAFS.
So, if you are planning for the future, join us and industry decision-makers from around the globe in Denver this August. Regardless of the sector of aviation you may be in, the Summit delivers insight and perspectives that are available at no other event.
Click here for the latest on the IAFS and to register.
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January 29, 2018 Update
To Start Off This Week…
Just two days left for the New Year’s Registration rate for the 23rd annual International Aviation Forecast Summit.
This year will be the most comprehensive and most valuable ever. Whatever sector of aviation you’re in, the Summit delivers the insights and perspectives you need for the future – right from the industry decision-makers.
We’re glad to announce that Barry Biffle, CEO of Frontier will be joining us this year, adding to the distinguished array of discussion sessions and forecast segments.
We are also planning some very exciting special social events for the Summit.
With the New Year’s rate, the Summit – which delivers information and perspectives from leaders across the industry – is actually less than what some second-tier “speed date” events are charging.
So, click here and register – join us in Denver August 19-21 and get ahead of the competition.
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Wall Street & United Expansion Strategy:
… Chicken Little Lives!
“Because that’s where the money is.”
According to lore, this was the answer when a reporter asked 1950s hold-up man Willie Sutton why he strictly targeted banks.
It’s also the answer that United Airlines is accurately and candidly delivering when people from the financial world angrily demand to know why the airline is currently “adding capacity” with new or expanded service to mid-size (not small, by the way) airports.
It’s unfortunate that the money-gurus aren’t listening to the answers.
If they did, they might see the future. But right now, the trendy thing is to babble about the evils of adding “capacity.” Any increase is like letting anthrax in the financial door, to hear what these gurus are saying.
But the truth is that the apparent strategy of UA is far more connected to emerging realities than what’s being expressed in many analysts’ reports.
Let’s take stock…
The year 2017 was a banner year for air travel in the USA…
Airport enplanements went up over 3.3%. But it wasn’t across the board.
Air access in 2017 continued to regionalize, with many smaller airports experiencing the realities of airline economics (read, loss of service that was unsupportable) as consumers opted for more total-time-efficient itineraries at larger airports… many of them “mid-size.”
The proof of this is demonstrated by the record (and near-record) enplanements at over three dozen (and counting as 2017 data comes in) mid-size airports, from Des Moines, To Norfolk, To Missoula, to Boise, to Kalispell. Add in Bangor, Scranton, Traverse City, and Fort Wayne. For starters.
Load factors are high, yields are stable, and the traffic growth is organic to the airport. There is core traffic demand at these points – almost all of which are at or well above filling more than 80% the seats leaving the gates. Mid-size airports is where the growth is.
So, for network airlines, it’s also where the money is.
In addition, the four major network carriers – American, Delta, Southwest and United – all registered load factors at their hubsites that represent what Boyd Group International defines as “hub-choke,” based on current capacity. There is a lot more revenue out there, and carefully adding more spokes to their connecting hubs will access it.
That is exactly what United is doing… because that’s where the money is.
So, the trends are obvious… passenger demand spiking at midsize airports, plus hub capacity maxed. Legitimate organic demand at many mid-size airports is exceeding capacity.
United is going after that revenue opportunity. Because that’s where the money is.
When their strategy is analyzed in the context of the emerging dynamics and economics of the air transportation business, it makes enormous sense. It tracks with the consumer trend of regionalizing air access into mid-size airports. It is aimed at maximizing system revenue.
In addition, these new revenue streams make United more formidable in dealing with the ULCC model, which is entirely one that depends on point-to-point traffic, mostly in high-density markets, and dependent largely on stimulating impulse demand.
Let’s bang on the financial industry’s cage. Here’s a fact: United Airlines faces a lot more strong domestic growth opportunities than it has airplanes.
The data are obvious, and United’s strategy is sound business.
But, the “experts” are in a tizzy. To listen to these people, they are misrepresenting that United is just tossing more seats on top of what’s there already, which, supposedly will lead to a situation where United will need to slash fares to sell them.
In the context of airline industry and consumer trends, that conclusion is garbage. Trendy, but still really off-the-bubble nonsense.
The problem is that many of these self-appointed gurus on Wall Street think that an airline ASK/ASM is just another product that has to be sold inside some single giant seat store. So, according to their Econ 101 textbook, the more capacity produced, the danger is a massive fare war.
Fantasy land.
For the financial industry cognoscenti, jumping on this stuck-in-the-mud band wagon is now the thing to do. Denouncing United, the comments from the usual suspects in the stock-and-paper world resulted in a hit to United’s stock price.
“Warning, Warning! This is not a drill! The sky is falling, and United Airlines is the one pulling it down!”
Here’s a typical comment from the all-knowing media…
“… United said it expects to increase capacity between 4 percent and 6 percent in 2018, adding it sees a similar growth rate in 2019 and 2020. This move could impact United’s profit margins as it tries to compete with lower fares offered by competing airlines as it will have to pay to operate those flights or potentially offer competitive fares to entice passengers on board. It could also lead other airlines down a similar path…”
Hello earthlings tied to hard reality. These conclusions are uninformed nonsense. These suggestions of “over capacity” have no – zero, nada, zip, mei-you – relationship to the context of what United, and to a lesser extent, American, are doing.
What United is pursuing is strengthening its revenue streams, which is very different from willy-nilly putting out seats that will need to be sold at fire-sale prices. Yet that’s the myopic babble coming out of some of these august financial houses.
In the above quote – actually it’s from one of the otherwise most professional financial media outlets – the comment about having to lower fares to “entice passengers on board…” is the leper’s bell of a report that has no connection to today’s airline industry.
To imply this – without any analysis of where and how United is expanding – is simply monkey-hear, monkey-say reporting.
Suggestion: Tumble To The Fact That There’s A Revenue Side, Too. Here’s a factoid – just about every new hub-spoke United is adding is at an airport where ambient load factors are over 80% – in many cases, well over that figure. When that happens, it usually means that there is additional – and revenue-viable – traffic demand.
In short, it’s where the money is.
Furthermore, this program will strengthen United’s competitiveness v the ULCC model. A feed flight from Norfolk will deliver more traffic through Denver, and free up additional seats on their now nearly-full Norfolk-Chicago flights (over 85%) to a hub operation at ORD that’s also at 85% capacity.
This is not excess capacity… it’s sound market planning. And, yes, it’s where the money is.
Point: the lemming stuff coming out of the financial industry isn’t expert advice, by a long shot.
Soild Planning. Regardless of Kibitzing From Wall Street. In a rational world, inhabited by “experts” that really understood the airline business, the program at United Airlines would be lauded, instead of getting knee-jerk responses from people in the business of commenting on how they can move stock prices.
That’s a blunt statement, but it’s accurate.
Conclusion: The stuff from the alleged financial experts is off-base. United is pursuing a well-planned and professional strategy that will benefit employees and shareholders.
They apparently are running an airline for the future… not for tomorrow’s closing bell.
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January 22, 2018 Update
US Air Service Policy & High Speed Rail…
A Lot In Common, Besides Ignoring The Future
In various media stories this past week, there were a couple of nasty wake-up calls in regard to US communication planning for the future.
Passenger transportation is part of the communication system, but today it’s still considered anything but. Every other mode of communication has evolved and conformed to new technologies and new consumer patterns.
In the USA, conceptual planning and policy, however, is working hard to make sure that passenger transportation systems don’t evolve consistent with these new dynamics, but instead stay comfortably in the context and needs of the 1950s.
Wake Up Call #1 – California’s Obsolete High Speed Rail Program. We had the revelation last week that the planned California high-speed rail boondoggle continues to come off its financial wheels. Now, it seems that the estimated cost of the first planned 119 miles has jumped from a promised $6 billion to over $10 billion.
That involves only about 20% of the total mileage planned, and is only for a section that’s mostly in rural areas. The other 80% should be lots of financial fun.
Wake-Up Call #2. Local Small Community Air Service. The second wake-up call was the message conveyed in several media stories of small community airports planning to attend “speed date” events to “lure” more airlines to town.
Now, we’re referring to the many small airports that have no airline targets in particular. No specific connectivity contemplated. The goal is just to get in front of the supposed faceless mass of carriers that can put a scheduled flight at the gate – regardless of where it’s headed.
Two Different Modalities. The Same Ostrich-Level Planning. High speed rail on one hand and the “need” for air service at local airports – these two seemingly disparate areas are really part and parcel of a single major issue:
Much of America’s infrastructure planning is about passenger transportation, instead of the futurist imperative of developing new forms of efficient communication. In fact, much of the transportation planning has very little connection with consumer needs and trends in the 21st century. Transportation is just a part of the total communication system, and it is imperative that it be planned consistent with changes in other areas of communication – changes which alter the utility and value equation of the physical demands to move people from A to B.
In the case of high speed rail as well as that of air service at local small community airports, the flaw is the same: they both assume that consumer travel and communication trends are static. They both ignore new communication trends, as well as alternative consumer options.
Indeed, high-speed rail and much of the efforts to bring scheduled air service to some small community local airports have a lot in common: they are based on obsolete assumptions that gravitate around obsolete thinking and dead technologies that actually inhibit America from moving aggressively into the future.
High-speed rail – as planned in California – is as outdated as trying to re-establish passenger riverboats on the Mississippi. The cost issue – which almost universally originates with “studies” that are about as credible as a rigged carny game – represents a barrier that in most cases makes the whole concept a joke.
Then there is the nonsense about “high speed” – defined as over 200 miles per hour average. If it’s a line between, say, Las Vegas and Los Angeles, with no stops through the uninhabited desert, then it might work – assuming that the “Los Angeles” end of the line isn’t a two hour drive from, well, Los Angeles.
But between Los Angeles and San Francisco, or Chicago and Minneapolis, only someone just back from Pluto could believe that the politicians at every town on the route won’t demand it stop there. That will kill the “high-speed” part. Hint: it takes a lot of distance to get a train up to 200 MPH and a lot more to get it back down to stop at East Cupcake.
Now, related to this is the issue of small community air service. Today, most of the discussions, planning, and “accepted thinking” in this regard focuses on “small airports” – and not on solutions for assuring rural access from the global economy.
That’s the giant fly in the current planning ointment – the sheer political nonsense that it’s all about keeping service at the local aerodrome, and not on looking to keep rural America connected to the global economy.
And that’s where the “speed date” event comes into play. It can be massively misconceived as a panacea for small airports, when there is no such future for re-establishing air service.
Let’s be clear: most of these speed-date get-togethers have clear and demonstrative benefits. To have the opportunity to tag up with a carrier that is already in town, or has a clear corporate strategy that makes sense for new service, is a very cost-effective way of building future communication.
But too often, small communities get hornswoggled into going to one of these events with virtually no understanding of the structure of the airline industry, or with the misguided notion that they will find an airline – any airline – to fly to town. It’s just to talk to the supposed faceless mass of airlines, and convince one or two to start service.
To fly to where? Many of these small communities come to the event not really sure, except that maybe a recent “market analysis” clearly showed that a lot of people want to go to Washington… or Dallas… or Chicago. No scientific data, and zero research on the existing consumer alternative options that will compete with the supposed point-to-point 9-seat departures at the local airport.
Sometimes this expensive misconception is just local lack of understanding of the structure and economics of air transportation. And, sometimes it’s the result of semi-ethical “studies” that fail to advise the client of the realities of air transportation. But, boy that $20K report has lots of cool data and charts and heat maps.
To state it bluntly, a large part of today’s air service development schemes is based on making sure no mention is ever made regarding the structural realities of the air transportation system – the most egregious being hiding the fact from small communities that there isn’t a giant pot of airlines at the end of the speed-date rainbow. To do otherwise would kill off the project.
That’s not any different from much of the body of “studies” of the potential for high-speed rail. Key realities, such as the low-balled cost estimates, the political pressures, not to mention the dismal economics, tend to get glossed over amid flashy pictures of racy locomotives and glorious claims about reducing “carbon footprints” or vanquishing “climate change.”
Also not considered is whether ridership estimates are within several galaxies of reality. Travel patterns change. Just take a look at air markets such as DAL/DFW- Austin, or ALB-BUF. You can take it to your bookie with confidence that the passenger volumes for “high speed” rail are directly out of fantasy land, just as are the conclusions in a lot of “market studies” done for small airports.
The Future Is In Building New Communication Channels. Local Air Service May Not Always Be A Part of It. The chase after “high speed rail” is a blood-brother to the bogus and obsolete – and impossible – concept of keeping air service at every local airport.
Regardless of the political and trendy stories and fantasies surrounding these issues, economic gravity cannot be reversed.
Let’s Move Transportation Planning Into The Future. What US planning needs to focus on are the levels of communication that regions of the nation have with the global economy. In some cases, there will be huge challenges – particularly on the relatively few cases where the population bases cannot support even regionalized air access.
We need to candidly recognize that tossing airplanes into small airports at communities where consumers have better alternatives, or building rail lines that are based on past travel and communication modalities, are heading the US into the past, not the future.
Join Us For More Straight Talk. Naturally, this isn’t consistent with “consensus” or “ambient” thinking. But it does open issues that a lot of folks in public policy planning aren’t too keen to discuss.
On August 19-21, at the 23rd Boyd Group International Aviation Forecast Summit, we’ll be openly exploring these and other global issues that will affect aviation planning.
As our regular attendees know, this event does not allow political correctness in the door. The industry leaders from across the industry and across the world will be there to tackle the issues that will shape how aviation will evolve as part of the global communication system.
For more information, and to get the special New Year’s registration rate, click here.
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More About The IAFS…
International Aviation Forecast Summit…
The special New Year’s rate is still in place through January 31.
Next week. we’ll be announcing the airline CEOs that will be joining us to share their views of the future of global aviation.
This week, we are excited to announce Embraer will be a major sponsor of the 2018 IAFS.
In addition, in the sessions we’re in the process of monitoring airline and economic trends to be covered at the Airport:USA enplanement forecasts, as well as where we can expect to see major shifts in air service in the US.
More Regionalization – More Internal Airline Determination of Market Changes. The recent route announcements from American, United and Frontier signal a fundamental shift in how airlines will be pursuing changes in their route systems – changes that dictate major changes in how airports will need to address “air service development” in the future. It’s a new ball game, where jive-time “market studies” from the outside carry even less impact than in the past.
This is just one area that the IAFS will be covering. We’d again point out that the New Year’s rate is even less than registration at some speed date events – which deliver zero in terms of planning for the future.
More information & to register, click here.
We’ll see you in Denver, August 19-21!
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January 15, 2018 Update
News: International Aviation Forecast Summit.
The New Year’s Special Early Registration rates are in effect through January 31.
The #1 Event – And The #1 Investment In The Future. Take a look… to attend the IAFS, the #1 industry event, with input and interaction from CEOs and executives from airlines and aviation companies around the world, is actually less expensive than attending some second-tier “speed date” events.
At the IAFS, attendees network with dozens of airline staff, as well as the leaders who will be shaping the future.
In addition, the forecasts delivered at the IAFS – including airline trends, airport traffic, fleet applications and more – represent business intelligence that is of competitive value to all players in aviation.
So, before you commit to any aviation event for 2018, check out the IAFS, and join the industry leaders gathering in Denver, August 19-21.
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If US Carriers Want A Piece of The US-China Action…
They’d Best Understand It Isn’t Just Another International Market
One of the hottest social media threads in China last week was about Delta Air Lines.
And it wasn’t positive.
But it reflects a consistent issue regarding US companies and venues trying to do business with China. The problem: lack of attention to the sensitivities and needs of the Chinese market.
This latest event is not a minor issue – the Chinese government itself is ticked off, and when that happens, Chinese consumers make alternate decisions.
Farming Out China Programs To Unqualified Companies Can Be Dangerous. It seems that whoever developed Delta’s website was clueless about China.
Incredibly, they listed “countries” (“国家”) that included showing Taiwan as an independent, stand-alone nation. This is a lot more than just a minor typo.
The government of the PRC is not real happy about having a whole region of its nation being represented as a foreign country.
While not much of a story here in the US – yet – it has resulted in very serious warnings to Delta directly from the PRC government.
Poor China Focus = Business Vulnerabilities. See, the people in China (not to mention even the Nationalists they tossed off the Mainland in 1949) staunchly hold that Taiwan has always been and always will be a province of China, regardless of what the governmental structures may be.
Whatever vendor did this website is not a friend of Delta. And it sure is not in line for any business from anybody in the Middle Kingdom, either. But it does have Delta in some hot water.
The Dragon Wants Answers… The China Civil Aviation Bureau has issued to Delta what is a lot more than a pro-forma nastygram.
They’re demanding to immediately “arrange talks” directly with the Delta staff responsible, in order to “rectify and reform” this insult. Finally, they are demanding that Delta “make a public apology”, presumably to the entire Chinese people.
And since this is bubbling on Chinese social media, it’s not going to help build China-generated O&D for Delta. That this situation could arise is especially strange, since Delta has actually invested in China Eastern Airlines.
Developing a China Strategy Depends On China-Knowledge. On Delta’s part, there certainly was no intent to slight China, or get involved in internal matters such as the status of Taiwan.
But the problem is that the airline obviously relied on “expertise” regarding China that was anything but.
We’ve pointed out other areas where the US travel industry is way behind the curve in accommodating – or even bothering to try to understand – the China market:
Customs Facilities. Most of our FIS facilities are an embarrassment – where there is official Customs signage in Chinese, it’s in a version not used in China itself. That’s an insult to consumers and visitors from the PRC.
Lack of Understanding of The Chinese Market. Many US carriers’ Chinese translations, such as on domestic-flight emergency cards, often don’t bother to use the simplified system used in mainland China. Whatever sloppy vendors they use still assume that traditional Chinese is used there. But it is still used on Taiwan, which could be another embarrassing PR time bomb, if the PRC concludes that this is a de facto indication that the airline still thinks the Nationalists are the real China. In any case, it is an insult to visitors from the PRC.
Near-Zero Attention To Specific Needs of Chinese Visitors. Airport wayfinding for Chinese entering the US is abominable. Sure, every major airport will say they’re “China ready” – but the reality is that for Chinese trying to make a connection, they are on their own.
Amateur-Act Website “Translations” – Many US airports and communities continue to insult Chinese travelers with raw machine-done website “translations” that read like the Chinese version of the Clampetts wrote them. Web designers peddling these add-ons are not doing the client any favors.
Lack of Professional Outreach In China. As for outreach in China, just having a cookie-cutter Brand USA website doesn’t deliver much more than generic eye-candy. There are better options.
Getting Taken For A Pedicab Ride. There’s a lot of charlatan-stuff going on, too. One US gateway airport proudly showed us their WeChat app some vendor developed for them. Lovely, except it isn’t a China-registered business version. Almost useless.
China-Welcome™ Takes China Expertise Plus Travel Expertise. Boyd Group International and its partners at China Ni Hao, LLC represent the new professional standard in assisting airports, airlines, travel companies, and communities in crafting appropriate and tailored programs to attract and maintain more of this important and growing traffic. It’s not rocket science – it’s simply having expertise in China-outreach.
We’re developing China-Welcome™ programs and symposiums for clients across the US. If you’re interested in effective outreach to attract more visitors and investment from the Middle Kingdom, click here and take a look at the services we offer.
We produce results… not complaint letters from the Chinese government.
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January 8, 2018 Update
Before We Start… The IAFS
We’d note that New Years Early Registration for the 23rd International Aviation Forecast Summit is available through 31 January.
This year, we’re planning another record-setting IAFS, and as always, we’ll be exploring the future with the executives from across the industry who will be making the decisions. Click here for more information and to register!
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BTS Data – Built For Yesterday
O&D, T-100, Fares, Yields, Etc… Just A Starting Point – And Not Always An Accurate One, Either.
Hard, actionable business intelligence.
It’s not what’s available from Washington.
Here’s a bit of a bummer for all those folks who go to the BTS website (or a vendor using raw BTS numbers), pull down all sorts of reports and tables, and then log off thinking that they’ve just visited an electronic Delphi.
You may have numbers but you don’t have accurate business intelligence. Worse, it tells nothing about the future – because increasingly that’s driven by subjective corporate decisions.
Perfect For The Air Transportation System of 1975. The fact is that the DOT/FAA/BTS reporting systems are decades behind the total evolution of the airline industry over the past 35 years. As a result, much of the information in its raw form is flat inaccurate.
But that only means that professionals in aviation understand that such data are only starting points… amateurs take it as gospel.
A System Long Gone: Reporting “Major” And “Regional” Carrier Data. We’ll start with this. The FAA reporting is completely in the past. They do not understand the structure of the airline industry.
They still think that there is a “regional airline” industry, separate and distinct from “major airlines” – and they still separate the two as categories in much of their reporting.
FAA is oblivious that these once-independent carriers are now mostly leasing planes and crews to majors.
Splitting out the data is not only misleading but incompetent. It is a red flag to planning professionals to understand that the rest of the reporting is also affected by a woeful lack of knowledge of the current airline system.
From Certificated Carriers To Airline Brand Systems. This leads to the core of the problem with the outdated and obsolete data coming from the DOT/FAA/BTS: in the last three decades, the airline system has evolved from independent “certificated operators” to brand-systems comprised of several certificated operators.
Yet most of the reporting is still based on the inaccurate assumption that, for example, SkyWest is a consumer-brand, by virtue of the fact that it’s a “certificated carrier.” Actually, SkyWest leases aircraft and crews under its own certificate to American, United, Delta, and Alaska. Almost nothing is done under the SkyWest brand itself, anymore.
But that’s not how the data are collected and reported.
That means that much of the data reported for “American Airlines” does not include all of the brand system of AA – just the parts that are not outsourced to lift providers such as SkyWest, Envoy, Piedmont, Air Wisconsin, etc. The portion of American’s flights operated under its certificate is less than 65% of their total system.
Another big problem comes up when the same lift provider, such as SkyWest, operates the same market for more than one major brand. Just taking the raw BTS data, without further analysis, does not always break these traffic streams out separately.
Oversale & “On-Time” Reports – Partial & Misleading. Going into other areas it gets muddier and more useless.
“Oversale” data are particularly misleading, because, again, they’re still reported by certificated carrier. That means that the total oversale rate for United or American or Delta or Alaska isn’t compiled.
Worse, the capacity and booking rates for flights operated by these lift providers – as are schedules – set by the major brand to which it leases its aircraft, and the lift provider has little control over what gets oversold.
As for “on-time” – BTS does not yet include all on-time by brand. Worse, entities such as Air Wisconsin, which operates nothing over 50 seats, is not required to report schedule performance… that’s more than 60 airplanes with the AA brand.
Amateurs who don’t understand the data – and the shortfalls of the reporting – don’t recognize this. Yet, year after year, we’re regaled silly and inaccurate “quality reports” that list the data by certificated carrier, not disclosing that this is useless to the consumer.
More Data Fun – The O&D “Survey.” As for traffic statistics, the “O&D” reports are still reported based on the capabilities of data collection systems being used long before Steve Jobs started tinkering in his garage.
That’s the reason that it’s based on just a 10% “sample” – in the 1960s and 1970s, there was no way the data could be complied on a 100% basis. Historically, it was done by using tickets with the number ending in “0”, and also group tickets. (This is really ancient stuff.)
The problem today – although electronically reported – is that this sample can be massively inaccurate – particularly as the market sizes get smaller.
Worse, there can be other challenges with the current reporting system, such as determining itinerary breaks, and projecting traffic flows. Indeed, there have been data that show connecting passengers flowing through Bangor – which is patently inaccurate, and actually, impossible.
No Fix In Sight. In 1997 – two decades ago – the GAO noted that this 10% sampling was inaccurate and misleading, and should be replaced by full 100% reporting.
Today, Boyd Group International’s Aviation DataMiner™ – unlike some sources – has the capacity to easily manage a full reporting system, and we fully endorse the recommendation, which, by the way, has pretty much been ignored.
What’s amazing is that most vendors and re-sellers of aviation data make no effort to either address these shortfalls or even advise their clients of them. That’s not surprising in that many of these re-sellers have no idea of the issue in the first place.
O&D Confused With Consumer Demand. Another bit of quicksand that “air service development” programs tend to get into is confusing reported O&D as being hard and fast core consumer demand.
It’s not. Maybe in the regulated 1950s, but not today.
O&D traffic today is the result of a range of factors that go beyond organic consumer demand. Levels of capacity, fares, competition with other carriers and airline corporate strategies affect traffic levels, and all are constantly in flux.
Therefore, comments like, “the O&D survey shows 85 PDEW to LAX” (passengers per day each way) are meaningless if the factors driving it are not fully analyzed.
If Allegiant is in the market, that means there’s impulse traffic, which is very different from core demand. If the ambient fares are high, or the access is constricted due to hub-choke, the real potential “demand” might be double current traffic levels. Just using reported O&D data does not address any of this.
Fare Data – Cost v Ticket Spend. Every month, left without adult supervision, media types get BTS fare data reports, and put out stories comparing “ticket prices” between various airports.
Nice. But stories like this are completely ignorant of the basis of the data.
First, in most cases, the BTS data doesn’t relate to comparing cost of travel, per se, but instead, average ticket spend. That’s a metric affected by a whole lot of variables – such as geographic location, local economy, population base, and much more.
For example, the average “ticket price” at Atlanta is $198.75. At LAX, it’s $219.70. (Including federal fees and taxes, first half of 2017.)
Now, the uninformed, and soon-to-misinform-the-public reporter, would grab this kernel of info and trumpet that Atlanta’s “ticket prices” are 10% below that of LAX.
But what the reporter doesn’t bother with are the factors behind this one factoid.
For one thing, the two data points are not comparable… Atlanta’s average domestic passenger trip is 895 miles. For LAX, it’s 1,548 miles – the average “ticket” is for an itinerary 72% longer than that at Atlanta, so the “ticket price” is higher due to material differences in the traffic base.
Another leeetle point that most in the media would miss, is that the average domestic fare per mile at LAX is 12.5 cents… at ATL it 19.9 cents. That’s 60% higher… but it has to do with the traffic mix, not whether airlines are charging more at one airport or another.
Sometimes the dominant industry in a region will drive traffic patterns, as therefore, the average ticket spend. Midland, Texas, for example, has business traffic patterns that are strongly affected by the oil business, resulting in disproportionate traffic to shorter-haul destinations, and therefore higher reported per-mile fares, but relatively low “ticket prices.”
The take away here is that comparing one airport’s average fares with those at other airports is strictly an amateur act. It’s unfortunate that it tends to be a staple in most traditional ASD reports.
Point: Unrefined Data Is Just That… It Needs Work. DOT/FAA/BTS data are only starting points, but without a professional understanding of the air transportation system AND the actual reporting systems, they are like the difference between crude oil and refined gasoline.
It’s Not Data That’s Important… It’s What It Represents Within Future Contexts. At Boyd Group International, our Aviation DataMiner™ system was developed simply because we needed a lot more than BTS numbers to assist our clients as well as accomplish forecasts and research projects.
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January 2, 2018 Update
Happy New Year!
Let’s Look at 2018 – Beyond The Consensus
The 2018 Boyd Group International Aviation Trend Outlook is now available.
In the document, we cover several areas where evolutionary and episodic change can be expected in the coming year and beyond.
Prepare For Some New Futurist Concepts. Boyd Group International has a track record of forecasting trends that are missed by other sources. The reason is simple: we do not accept at face value the “consensus” or what may be described as “ambient thinking.”
Those terms are just alternative descriptions of making sure that there are no risks taken and there’s no potential of challenging the entrenched thinking of the status-quo.
For more than three decades, Boyd Group International has built a track record of assisting clients from across aviation and across the globe in identifying new future opportunities. In doing so, we don’t go by the book. We write the future book, which is what we’ve done with this year’s Outlook.
Below are just a few basic subject synopses of the 2018 predictions and trend projections in this year’s BGI Aviation Trend Outlook. To view and download the complete document, just click here, and we’ll get it to you ASAP.
If you have any questions or input regarding this document, please let us know.
And, of course, if you need futurist aviation research, forecasting or consulting, we stand ready to assist. We would point out that many of the trends outlined herein are indicative of the scope and structure that will be delivered at the 23rd International Aviation Forecast Summit, August 19-23, 2018, hosted by Denver International Airport.
CEOs and senior executives from across the industry and across the globe will be here to openly discuss the future. No boring “panels.” Instead, direct discussion and exploration of the future from those who are shaping it.
To reserve your space and for more information: www.AviationForecastSummit.com Special New Year registration rates are now offered.
2018: Looking To A Strong, But Global 2018
Touching Briefly On Just Some of What’s Covered In the 2018 Aviation Trend Outlook…
Traffic Trend: Fundamental Growth… Plus More Impulse-Buy Capacity
Let’s put it on the line.
The hand-wringing from some in the financial world about airlines adding too much capacity in 2018 is strictly Chicken Little. Capacity discipline is firmly in control.
Look For @ 4% More Seats, But Less Than 3.5% More Flying. As of January 1, US carriers are scheduling a 3.9% increase in capacity for the first six months, compared to the same time period in 2017. Most of the reporting on this implies that carriers are simply adding flights on top of existing ones.
In some cases that is accurate, based on very high load factors, and particularly in cases where the carriers’ connecting hubs experience “hub-choke” – when there is demand for more feed through the hub, but the connecting banks to major destinations are functionally fully-booked.
But in other cases, much of the increase in capacity is based on network carriers (American, Delta, United and Southwest) adding new markets – particularly trans-border and international.
Also adding to the capacity picture is the expansion of the “parallel airline universe” – ULCCs expanding and offering fares that transcend ambient market “demand” and establish the travel product as an alternative application of discretionary dollars.
Wildcard: In any case, the recent reduction in the corporate tax rate, could result in carriers adding more capacity to meet newly-generated demand in the fourth quarter of 2018.
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2018 Trend: Hub-Choke Increasingly To Affect Route Planning
For airlines, experiencing very high load factors in key major markets to and from the carrier’s hubsite operations are generally positive.
However, this dynamic also represents some traffic spill – where consumers in, say, Abilene find it difficult to find space on the connecting flights from DFW. In some cases, carriers will use sophisticated analytical systems to build highest and best use scheduling – in effect weeding out feed markets that are the least revenue-productive for limited hub capacity. Expect more of this in the coming year.
Enter New Fleets: With the phase out of what turboprops are left at American and United, and upgrade to increasingly cost-inefficient but larger 50-seat jets, more planning pressure will be but on network carriers to again review which small-airport routes make the most sense in light of the major routes to which they feed being at or near functional capacity.
Now add in the new dynamic of AA, DL and UA creating new “basic fare” buckets, which are applied mainly to retain and attract more nonstop O&D traffic in key major (read: nonstop hub) markets. This will further put a strain on the availability of capacity for smaller communities that depend on connect access at the hubsite.
The result is that, in many small-community feed markets, a load factor of 65% to the airline’s hubsite is functionally a “full” flight. There simply are no more seats available through the connecting hub.
This will continue to be an issue for smaller communities dependent on air access through a fully-booked hubsite operation. In many cases, these airports will be more than able to support the additional capacity to the connecting hub. Some, however, may be facing a potential pull-down in service.
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2018 Trend: Small Community Air Access: Fantasy Is No Longer An Option
Many small communities need to come to grips with the three major and largely irreversible trends that are shaping air access from the globe.
Hub-Choke. This we cover above, but what should not be ignored is that there is often no alternative airline to enter the a small community from an additional connecting hub. For example, when the distance to the UA/IAH hubsite represents more cost and more airplane time than the revenues that the market can generate, no amount of “market studies” will create more airlines or change economic realities. This is a reality that many smaller communities face.
Eclipsing Costs. The emerging “floor” for feed fleets to network systems is the 50-seat jet. It is being retired – slowly, now that fuel costs are where they are – but they do represent a higher revenue bar for communities to meet.
Consumer Preferences & Alternatives. Increasingly, within the emerging economics of airline operations, the type of scheduled air service that some smaller communities can support at the local airport is DOA. That’s because in many cases such service is consumer-inferior, less time-efficient, and actually less convenient than an hour’s drive (or even in some cases, even a 90-minute) drive to an alternative airport where the population (or an airline’s connecting hub) can support much wider flight access. This is another dynamic that no amount to civic hubris or more expensive and misleading “studies” will change. Regionalization of air access is an emerging reality in some parts of the US. It should be recognized and embraced, because the air transportation system isn’t returning to the 1980s.
That’s because in many cases such service is consumer-inferior, less time-efficient, and actually less convenient than an hour’s drive (or even as we note in the Outlook in some cases, even a 90-minute drive) to an alternative airport where the population (or an airline’s connecting hub) can support much wider flight access.
In the Outlook we discuss how regionalization of air access is an emerging reality in some parts of the US. It should be recognized and embraced, because the air transportation system isn’t returning to the 1980s.
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2018 Trend: More EU Nonstops From The Heartland
A major dynamic discussed in the Outlook is the value that major non-hubsite US airports now represent to foreign carriers.
As was first outlined at the 2013 International Aviation Forecast Summit, key non-hubsite major US airports are prime candidates for EU carriers to add to their global systems.
For network carrier system such as British, Air France and Lufthansa, the traffic feed to their hubs in Europe from large US cities such as New Orleans, Indianapolis, Nashville, etc., can be very attractive.
The key factors for this service are generally, 1) a strong local population base, 2) very strong installed base of internationally-focused industry, and 3) – most important – strong highway network access from a wide population region.
This latter factor is important, as a nonstop London flight from, for example, New Orleans, is more convenient for folks to drive to from Gulfport, compared to the complexity of making a flight connection over IAH or ATL. This trend then tends to increase the profile of the larger airport as an alternative access point.
In addition, the massive expansion of impulse service to the Continent by WOW and Norwegian will open even more access. In these cases, however, the US point will be more of a destination, as opposed to a generator of feed traffic.
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Potential Trend: China Moving To Acquire Foreign Aircraft Manufacturers
In the Outlook, we step into uncharted territory by looking at the Chinese airliner industry, and making some bottom line projections on strategic planning that may be coming from the folks in Beijing in 2018.
What this means is that Boyd Group International research in the China aviation market indicates that we may see very significant and elsewhere-unforecasted moves by China to expand its global presence in the aircraft manufacturing sector.
In particular, there is a very real potential for Chinese entities to make a move to acquire either Bombardier or, more likely, Embraer. We believe the recent Boeing outreach to Embraer is at least partially a pre-emptive move.
Point: China is intent on becoming a major player in the airliner sector. Its current indigenous platforms are not going to be able to accomplish this. Therefore, an acquisition of Embraer or Bombardier (or, possibly another player we won’t mention right now) is not out of the question.
The potential shifts in relationships this could drive among suppliers, and the impact on the commercial direction of the US airframe and powerplant sectors would be very far-reaching in broadening the presence of Chinese business in America.
Getting Ready For China Can Make The Difference In Site-Selection. Moving on in that area, BGI predicts that more US airports and venues will need to become more welcoming to the Chinese leisure and business visitor. To be sure, just about every US gateway airport claims it is ready for these travelers… but in most cases, Mars has better wayfinding and welcome than US facilities.
It goes beyond having a Mandarin speaker on-site, and it goes beyond veneer things like not offering ice water in restaurants. In regard to China communication, we also point out that the poor misled airports that have been sold an “international translation” website feature that includes Chinese, are simply making themselves look really amateur and silly to the Chinese consumer. The raw machine translations are insulting and tell the web visitor that the airport/community is out to lunch when it comes to professional outreach.
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Fuel & Labor Issues
It is understandable for financial analysts to be concerned regarding the potential effects of changes in these two key cost factors on airline bottom lines,
From a rational perspective, these are important to watch, and it is near-certain that in the next 18 months, labor costs will impact the bottom line at a number of carriers. However, given the expected robust demand, there are no thunderstorms on the horizon for 2018.
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These just scratch the surface of what to expect in 2018…There’s a lot more to explore.
To view and download the complete 2018 Aviation Trend Outlook, just click here, and we’ll get it to you ASAP.
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