US Labor Day Holiday…

The weekly update – and exciting information and data from the 24th Annual International Aviation Forecast Summit – will be posted next Monday, September 9, 2019…

In addition to the enormous insights from the airline and aviation CEOs, we’ll be covering:

How $3-power per hour electric aircraft may totally change pilot training…

An outline of America’s airport system advantages in the global economy… elsewhere, they certainly have impressive and important airports at Beijing and Istanbul and Singapore. But we have Worland, Wyoming – and 3,500 more

How rural and isolated airports will become a contradiction in terms

How US enplanements will grow almost 33% by 2029…

The long-term fleet views from Airbus, Boeing, Embraer and Boom.

And a lot more!.

In the meantime, click here to take a look at the opening video of the 2019 IAFS – it will give an idea of the scope and direction of this year’s event.

Disruptive Opportunities In Aviation’s Future

If you’re joining aviation leaders at the International Aviation Forecast Summit, August 25-27, come prepared for some serious  heresy…

The global and industry media will be there, too, so it’s all on the record.

Global Manufacturing & Logistics – New Metrics for US Aviation. Traditional channels of global trade are changing.Fundamentally – in a decade they will barely resemble what we see today.

Hint: the value of time will increasingly be the new metric – replacing labor cost – which is starting to get zapped off the advantage list with expanding robotic manufacturing.

The latent advantages of the US aviation system as a distribution and communication system has been missed entirely.  The assumption is that sweatshops in backward nations have an unshakable lock on manufacturing. Think again. And new aviation channels will be a foundational part of it.

Traffic Growth Profiles Have Shifted: U.S. air traffic, coming off of a 5.5% expansion in 2018, is tracking close to 4% this year, and indications for nearly 3% annually in the next decade. One reason: it’s no longer just “air service.” Airlines are increasing posturing air travel as a discretionary spend. That tosses traditional forecast methodologies into the land fill.

The Fleet Pain Is Over. Most of the downsides attendant to airline fleet shifts – such as the continuing reduction on 50-seat fleets – have already been registered.  The small airport air service issue has been decided already.

New Facilities at Istanbul, Shanghai and Beijing. But We Already Have An Airport at Worland, Wyoming – and over 3,500 more. Don’t laugh. It’s a pertinent point. Reality: the U.S. is today prepared for the new global manufacturing, trade and logistics systems that will emerge in the next decade.  We’re covering it at the IAFS.

New Powerplant Technology – Can Electric Make A Difference? Maybe sooner than we think. Extension cords not required.

New Business Intelligence Channels – New Metrics Needed. The new aviation industry needs new metrics… because it’s a new set of businesses.

And these just cover a  couple of the highlights of the IAFS…

Mind-Challenging Concepts  and Perspectives That Go Beyond Droning Panels

The Boyd Group International Aviation Forecast Summit is just a bit more than a week away. It promises to be the most exciting, innovative, and thought-disruptive in our 24 years of the event.

First, we want to thank all of our sponsors of this year’s IAFS™ including our Platinum Sponsors, Southwest Airlines and United Airlines.

We want to acknowledge the teams that are participating in the pre-Summit Workshop program on Sunday afternoon. These offer more insight than other conferences in their entirely.

All are exciting, and the Cirium Workshop – What A Difference A Data Makes – will set whole new perspectives in aviation data and planning.

IAFS™ – The Only Event Entirely Focused On The Future

The entire IAFS™ is engineered to illuminate the futurist views of the thought-leaders shaping aviation. It’s all about exploration, based on their views – not pre-canned subject panels that are cookie-cutter sessions at other conferences.

In addition to the incisive views from aviation leaders, there’s a range of forecasts that no other event even gets close to.

Let’s touch on them…

Traffic & Trend Forecasts – We Have The Future Surrounded

First, Airports:USA™ – these are the only airport forecasts accomplished entirely independently in the private sector. No political interference, and no second-agendas. Most importantly, Airports:USA™ is based on real-world traffic factors, not the methodologies used by the FAA, which were largely founded on the airline industry that existed back when Dwight and Mamie were ensconced at 1600 Pennsylvania. They don’t work today.

We’ll be covering the new drivers of passenger growth – how econometrics alone are not reliable, and how aviation planners can look to the new factors that generate air traffic.

Expect a couple of sacred cows to get barbecued – we’re going to illuminate how a number of traditional traffic-enhancement assumptions – a.k.a. some “air service development” approaches – are now like attempting to get a cadaver ready for a ballroom dance competition.

Key Factor: We’ll be outlining where spikes in growth will take place due to changing global logistics channels, and how the U.S. airport system puts the USA in the crosshairs to benefit. Big time.

New Airport Planning. Contrarian – But Accurate – Thinking. Yes, there are great airports built elsewhere in the world, like the new Istanbul facility, Singapore Changi, Shanghai Pudong’s new 83-gate addition, and the soon to be opened Beijing Daxing International. Big money being invested now – elsewhere in the world. Don’t hear much about what’s going on here… because it’s already happened.

“Other countries are investing in the future, and we’re not!” the pundits announce, typically with the cliché comparison to the old LGA terminal. A wonderful terrarium of closed thinking. Nothing like the safety of group-think.

Here’s a rap-stopper for their next cocktail party. The USA has indeed invested billions in a robust airport system. It’s in place and ready for the new emerging global business environment.

Yup. Airports like Worland, Lynchburg, Merced, Pittsfield, Gaylord, Thief River and Glendive, and 3,500 more such facilities – whether commercially-served or not – are our future global advantage, particularly in light of major, structural and fundamental changes in global manufacturing, trade and logistics, which, again, we’ll discuss at the IAFS.

We’ll be outlining the how’s and whys. One idea: don’t miss the pre-Summit Workshop on the future of drones – they are a key part of the new future.

Yes, this would appear to be lunacy… and it certainly can be called that, within the context of today.

But the Summit is all about the future.

Get your heresy freak on, and join us at the Airports:USA® session.

A4A & IATA At The Summit. And, not to worry, there will be lots of additional forecast perspectives at the IAFS™.

We are honored to have John Heimlich, Chief Economist of Airlines 4 America, with his ten-year forecast. For the international perspective, IATA will have Andrew Matters, Deputy Chief Economist at the Summit.

Then toss in our exclusive Airports:China™ projection of that nation’s traffic at its 200 largest airports, including potential new U.S. gateways to China, and we’re coming at global and domestic forecasts from all sides.

Airline Fleets – Planning For New Air Travel Dimensions

Aviation and global logistics will be affected by the fleets that will be coming into operation in the future.

As usual, we have our friends from Airbus, Boeing, Embraer, Boom Supersonic and Rolls-Royce presenting their individual perspectives of the future fleets and operating systems we’ll be seeing in the next ten years.

But this year, we’re excited to have two more dimensions added.

Electric... On the smaller end – Bye Aerospace will present the future and the opportunities of electric aircraft. Battery technology is making huge strides.

Hypersonic – On the more futurist end – Hermeus Hypersonic will be at the Summit to outline the potential for travel at 5X the speed of sound. For military applications, this concept barely gets any notice. But for passenger air travel, well, people just roll their eyes.  AJ Piplica,  founder of Hermeus,will probably have some visions that no other aviation event can get close to.

Fuel Forecast – It’s More Than Just Supply & Demand

This year again we welcome Mr. Ben Brockwell, Director of Oil Price Information Services, to discuss the dynamics that will determine what airlines will be paying for fuel. It’s more than just the price of the stuff coming out of the ground… it has to do with other demands on middle distillates, the current and expected shifts in regional usage, changes in refinery capacity, and a lot more.

Networking? Bring Lots of Business Cards

Aviation leaders from across the industry and the world will be at the Summit. It’s the people that will be making the future happening.

Plus, in addition to the CEOs and senior executives from carriers across the globe, there will be over 60 attendees from airlines such as Southwest, American, Delta, Spirit, and many more. So, get ready to network at breaks and the exiting receptions on Sunday and Monday evenings.

Finally, The Fourth Estate, Covering The IAFS

The IAFS is a globally-respected aviation forecast event.

So, it’s actively covered by global media, including outlets such as the Wall Street Journal, Reuters, Bloomberg, CNBC, CBS, and professionals in print and electronic channels across the aviation spectrum. This year, Peter Greenburg will be holding his Worldwide CBS travel show, with recorded broadcasts from the IAFS.

Lots More, Too

If you haven’t registered, click here and plan on being at the Wynn/Encore August 25-27.

We look forward to seeing you and discussing the future!

Before We Start This Week…

Jumping Into The Future…

At the International Aviation Forecast Summit, we have the future covered…

Boom Supersonic will be presenting its views of the near future with its 70-75 seat Overture supersonic jetliner, which is on the near-horizon for operation ion the mid-2020s. It will engender changes in the way global airlines operate.

The supersonic demonstrator is well down the production process at the company’s Denver facility.

Now, How About Hypersonic… Further down the time line, there is also the concept of hypersonic airliners.

This is the reason the IAFS is excited to welcome Hermeus Corporation, which will be outlining the potential and future of airliners that can fly 5X the speed of sound… whole new technologies and a really over the horizon view of the future.

It’s another reason that aviation leaders will be in Las Vegas August 25-27…it’s alwasys cutting-edge…. just take a gander at the agenda – no other event exposes attendees to this number and level of aviation leaders.

Join us – and get real forecasts of the exciting and very different future we’ll be seeing in the coming decade!

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The Global Airliner Industry –

New Changes At The Gate – And At The Orderbook

There’s been lots of speculation regarding how the 737 MAX grounding might be the start of opportunities for other manufacturers.

China Not In The Play. One trendy suggestion commonly mentioned is China, which has the 76-seat ARJ-21 and the 150+ seat C919 airliners on the deck.

The only problem is that neither of these platforms have a snowball’s chance in the South China Sea of being globally-competitive.

The challenge is breaking into the global airliner business with products that are, at best, just more-of-the-same. In fact, of the 705 orders for the C919, the majority are from leasing and finance companies, and all but a handful are from companies inside China.

In the past 40 years, China has successfully wowed the world by establishing itself as a leader or near-leader in a whole range of industries. Airliners, unfortunately, is not one of them.

But beyond this, there is one other factor that’s been unnoticed in regard to the global commercial airliner business…

It’s not a long-term growth business that is attractive to new entrants.

Manufacturer Challenge: Carefully Plan Production Rates. In fact, by 2028, our forecasts indicate that the annual global demand for turbojet airliners will decline by more than 40%.

It’s still going to be a robust business.  Even with this decline, there’s still the better part of 1,800 airliners forecast to be annually needed. But, given the amount of investment and capital necessary to barge into this sector, it’s probably one left to the current players.

Replacement Demand v Growth Demand. Here’s the issue: Today, the global airline industry is in the midst of ordering airliners based on re-fleeting. They want new-generation Airbus and Boeing and Embraer aircraft to replace older ones. This part of the equation will take another 4-5 years.

And when that’s completed, the annual demand will settle into one driven mostly by changes in passenger growth. And even here. the traditional methodologies of using economic and demographic metrics are increasingly problematic. New entrant carriers – particularly in Asia – are changing how airliners are used – spiking the market.

The Future – It’s A Jump Ball.  The Boyd Group International Aviation Forecast Summit will be covering this, with our Global Airliner Trend & Demand Forecast, projecting out 2019 through 2028.

And we’re honored to also have the forecasts of Boeing, Airbus and Embraer at the IAFS™, too, which may well counter these projections, and will certainly bring wider perspectives. It’s what the IAFS™ is all about – exploration of new perspectives.

Supersonic? Yes… Another near-term disruptive wild card in this area is Boom Supersonic, which is producing a 70-75 seat airliner that is projected to have the economics to profitably carry business-class passengers at today’s fares, and will be in operation roughly in the mid-2020s.

This machine could literally clear out the front ends of existing wide-body international flights, thereby allowing more cabin real estate for “premium economy” (nee, “business class” circa 1985), which is the next frontier in revenue generation for major global carriers.

Back To The 1980s? Well, Maybe Outside of North America. One other consideration that runs counter to ambient thinking, not to mention demonstrable fleet history, is the potential future demand for next-generation turboprops.

In the U.S., they are DOA at the gate. But in other areas of the globe, 50-80 seat turboprops with the performance capabilities to meet the needs of rural growth regions, such as in Asia and particularly China, may have a new set of market potentialities.

Join The Exploration At the IAFS™. Lots of changes coming in the next ten years. At the International Aviation Forecast Summit, airliner and fleet issues are just a part of the exploration.

Furthermore, the airline and industry CEOs and senior executives at the Summit deliver what they believe is important to the future – and that means perspectives that no other aviation event can get close to.

If you haven’t registered yet, do so now by clicking here.

Before We Get Started This Week…

International Aviation Forecast Summit Update:

Turkish Airlines VP To Present. We are honored to have Mustafa Doğan, Vice President (Americas) providing his airline’s views of the global aviation scene. This is an airline that’s aggressively expanding across the globe from its hub at the new giant Istanbul Airport, and US airports are in the cross-hairs.

Note that what sets the IAFS apart is that the global leaders such as Mr. Doğan make the determination regarding the areas they feel are most important – it’s free form exploration at the Summit, not canned subject “panels.”

New China-US Forecast: Forget the trade war – it’s just another indication of how important the two countries are to each other, and expanded air service is a part of it… China-US traffic is entering a whole new phase, and all US airports are in the play. Some of the forecast findings:

Growth: China air traffic growth is slowing, but not traffic to the US, which today is less than 15% of what can develop in the next 5 years…

American Airlines In The Beijing Pole Position: Why AA and its US destinations will be the major immediate beneficiaries of the new Beijing Daxing Airport…

The #1 Air Market Earlier Than Expected – plan on mid 2021 for China to surpass the US…

New Hubsites In China: Today, there are no true US-style connecting hub operations in China. But that’ll change by 2023. Chinese carriers and their US alliance partner hubs will open easy access from all of the US to all of China… and more.

This will be presented in detail at the Airports:China session at the IAFS. Any airport that’s looking at connectivity with China should not miss it.

Sunday Afternoon Workshops Now Announced

Get in a bit early… because at 1PM sharp, the exciting optional pre-Summit Workshop Program begins… Five sessions covering subjects other events don’t even get near.

• Boyd Group International: Airports:2025 – Leveraging America’s Globe-Leading Aviation System
• Tencent & IM2China:  Capturing Chinese Business With New Access Channels
• Captain John Cox: SMS: Optimizing Safety in Airport & Aviation Operations
• UAS: Drones the Next Communication System
• Cirium: What a Difference a Data Makes: From QSI to Consumer Analytics & Back

To see the entire exciting IAFS agenda and to register, click here.

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The MAX Grounding – Four Airlines Now Re-Thinking Fleet Deployment

Everything From 50-Seaters To 787s Are In the Play

Okay, now, it’s a real problem.

One that’s fixin’ to affect air service access at a lot of US airports.

A Couple of Metrics: 1.57 million annual passengers. $210.6 million in annual fare revenue. Toss in ancillaries, and it could be as much as a quarter billion dollars.

That’s what Southwest is giving up with its cessation of service at Newark Liberty International.

They need the airplanes elsewhere, and with the new fleet imperatives represented by the MAX grounding, the airline determined that EWR suddenly was simply non-performing.

Even with a million and half passengers.

The message for any US airport served by one or more of the four Max-operator airlines is clear. These carriers are sharpening their red pencils. They have no choice.

Background: the Boeing 737 MAX situation, originally assumed to be a relatively fixable software blip, has now escalated in one that will affect communities across the nation – whether they have 737 service or not.

Just as at Newark, the standard of highest and best use of aircraft has gone up, as affected carriers look to address the shortfall in planned capacity. Way up.

Here’s some more dismal news. If the operational go-ahead for MAX operations is granted in January, that’s not the end of this mess. It’s a lot more than sticking keys in the ignition and flying these machines back to their owners. It’s just the start of what could be another six months to get all of the grounded fleets back in the air.

Southwest is the most severely affected, in that, unlike American, United and Alaska, it has only 737s in its fleet.  AA is taking delivery of A-321s and some used A-319s. United has a fleet of used 737-700s already contracted, and also some used A-319s. Both are taking mainline-cabin Embraer-175s and leasing them to surrogate “regional” partners. Furthermore, both AA and UA have substantial route and revenue streams generated by international and widebody flying.

Regardless, with a grounding for the rest of the year, all four of these airlines will still increasingly be way short of the aircraft – and the revenue generation – that they had anticipated, and will be taking a hard look at redeploying their fleets to maximize revenue streams in the absence of MAX aircraft. We have already seen Southwest drop an airport that represented almost 40% of its presence in the New York metro – and also reduce some frequencies elsewhere in their system.

At all four carriers, there will be a ripple effect across entire route planning and aircraft resource applications, and at AA. UA and AS, the review will encompass 50-seaters through intercontinental wide-bodies. More threat of red pencil usage in the market planning department.

Crunch Time Only Just Starts With An FAA Approval. At the time of the grounding in March, it involved just 35 airplanes in the US. However, by the end of the year – which is now the estimate for any regulatory approval involving the MAX – the situation will represent close to 130 airplanes that would otherwise be in service at American, United, Southwest and Alaska.

Not only that, but by that time, Boeing will be facing approximately 600 737 MAXs that have been sitting like big potted plants on the ground, stored. About half of these were parked immediately upon leaving the factory, either at Boeing or flown to another storage field. The rest are scattered across the globe. Just getting them out of a storage mode represents time and effort.

All will then be subject to whatever the ultimate approved “fix” is determined to be. But some of the ones just out of the factory likely will also need some substantial finishing not yet done– such as interiors and airline-specific equipment.

This work, in addition to whatever FAA-directed modifications are ordered, will need to addressed, and digesting this grounded flock of 737s could take additional months of metering the airliners through the Boeing facility.

Another unknown is the potential changes that may be required for additional or supplemental pilot training. Simulator time may be in big demand – and up until now, much of this was accomplished in 737NG simulators. As for MAX-specific simulators – there are less than 20 in the world right now.

Revaluing Aircraft Mission Applications. What all this means is that the four carriers affected will be re-thinking their market and route planning. There could be more, albeit less obvious, “Newarks” from the red pencil department. Reductions in frequency. Changes in fleet gauge on certain routes. Elimination of what are suddenly non-performing markets in light of the MAX shortage.

It’s a lead-pipe cinch that a lot of what these carriers were planning back in March is now in the round file. It’s a near certainly that some of the expansion that may have been on the books earlier this year is now on hold, or eliminated completely.

Getting Perspective on The MAX Issue at Your Airport

It is logical for the community, local media and airport boards to have concerns regarding how this situation may affect local and regional air access.

We are now reviewing the strategic and tactical fallout from the MAX situation at a number of our client airports.

Our understanding of airline trends and strategies is unrivaled and, while there’s no crystal ball, there are logical metrics that can be analyzed to determine the vulnerability of a given airport to MAX-driven redeployment of airline fleets.

Tactically, Boyd Group International is now working with client airports to analyze carefully-crafted outreach programs to these carriers. Therefore, any airports served by these airlines need now to carefully review their market performance – and that means revenue performance, competitive aspects, hub flows, and other metrics specific to the carrier, and not necessarily just load factors. Then, formulate a clear outreach plan to assure that the carrier(s) understand the value of the market.

At any airport that has service from one or more of the MAX-affected carriers, it would be prudent to get some visioning now on what fleet redeployment may represent. The objective is to explore how to proactively liaise with the carrier(s) to shortstop any wayward red pencil activity in the route planning department.

Remember, Newark, with close to a quarter billion in revenues, sank below the line. So, there should be concern at smaller airports, too. If you’re interested in a very concise analysis in this regard, give us a call, or click here.

In the meantime, a lot or red pencils are being sharpened as we speak.

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Where Will You Be On August 25?

IAFS™ Attendees Will Be Visiting The Future

One of the unique features of the International Aviation Forecast Summit is that it’s focused entirely on exploring the future of aviation… the future as aviation leaders – CEOs and senior executives from across the airline, airport and aircraft sectors – each see it unfolding.

That’s the difference at the IAFS™. These thought-leaders join us to discuss their perspectives.

No droning “panels” straight-jacketed into talking about pre-determined subjects that conference organizers have unilaterally determined to be the latest trendy concepts in group-think.

In that regard, many IAFS™ attendees join us for our exclusive optional pre-Summit Workshop program, this year on Sunday afternoon, August 25.

Over just a few exciting hours, this program delivers more insight and futurist thinking than other aviation events in their entirety.

And they tend to rattle a few cages of traditional thinking.

Here’s an outline of just one of the Workshops…

Airports:2025 –

Leveraging America’s Globe-Leading Aviation System

There’s lots of media babble about how the United States has a deteriorating airport system compared to the rest of the world. It’s dogma.

This wallow in factual myopia typically takes new airports in, say China, or in Turkey, or they showcase Singapore, and then compares them to the old New York LaGuardia, and arrogantly concludes that America is sinking into the Third World of aviation.

Wrong. Flat wrong. Fake news.

The fact is that this country already has the most advanced airport system in the world… one that’s ready to deliver all of the resources of the USA – rural, regional, and metro – to compete in the global economy. These media stories – even in the aviation sector, which should know better – are oblivious to the functional role and economic importance of airports.

On August 25, turn down the lights in the room. In this Workshop, we’re teleporting to January 1, 2025.

Let’s explore. It’s a world where there’s a whole new logistics system in place – one in which airports of all sizes have new roles and new economic opportunities.

Now, here in 2025, airports – whether in major metro areas or in the rural West – are now a vibrant part of the global economy. Things are very different from today.

Your Cell Phone Might Be Made In Nebraska. One of the key things we notice as we enter 2025 is that manufacturing has changed fundamentally. The rest of the world is recognizing that an electronics plant in places like Scottsbluff and Waco are superior options to facilities in Vietnam or Mexico. 

One major change is that the advantage of “low labor costs” (read: workers paid two-bits an hour working 12 hours a day without benefits) cannot compete with the economics of new manufacturing technologies represented by robotics.

From Factory To Consumer In 90% Less Time. Next, we’ll find that the new logistics systems in place can deliver these goods faster to distribution centers at lower cost than schlepping them by boat from Cambodia, having them wait for three days at the clogged Port of Los Angeles and then be trans-shipped by rail to another location to be shifted again onto truck transport.

In this, UAVs are a key part of the new system, too, with remote command centers directing just-in-time deliveries, vastly lowering distribution costs and opening many of America’s 4,000 airports to new logistical roles.

See, that drone technology that can plop a major piece of ordinance on top of some terrorist bozo in the Middle East, is also viable for moving goods – and in many cases at a total cost less than ground transport, too.

Different – Very Different – Air Access. Air passenger travel will also be materially evolved.

Commercial centers such as Albany, Columbus and Louisville will be enjoying nonstops to key hubs in the E.U., opening new investment and commercial activity from all across Europe and Asia.

No, we won’t see a return of the 1980s regional air system. No, there won’t be a new resurgence of scheduled flights at all small airports – by 2025 that pipe dream will be replaced by the reality of regional access – instead of wasting money chasing local airport air service that’s politically-desired but consumer non-competitive.

Instead of rural passenger air service at the local airport that doesn’t economically work, in 2025 the new channels of communication and logistics will kick the economic gates open at small communities across the nation.

Our Airport System Is Functional… Not Flashy. At this Workshop, we are going to illuminate how the U.S. airport system is already the most advanced in the world.

Sure, that glowing high-end shopping experience of Singapore Changi, and the engineering wonder of the new Beijing Daxing International, and the wonderous new Istanbul airport are all impressive.

But when it comes to being ready to deliver the goods (literally and figuratively), these facilities pale against the value and economic power of the U.S. airport system of over 4,000 viable airports ready to take advantage of the future of global logistics technology.

Join Us For More… This is just one of the Workshops being held on August 25, at the Wynn/Encore Las Vegas. They are just the prelude to the data, information, and futurist forecasts delivered at the Summit itself.

Click here for more information. The specific agenda of presentations is being posted shortly, and the outlines of the other pre-Summit optional workshops are now shown.

If you’re into banging on the cages of traditional and outmoded aviation thinking, let’s get together August 25-27.

We look forward to seeing you!

The Plot Thickens…Airport Planning Take Note

Now, A Fourth US Carrier Suffers Parked 737 MAX Fleets…

… and All Four Are Affected Differently.

Boeing 737 MAX 8, S/N 44079, has taken its place in an aircraft parking lot somewhere in North America. A second unit, S/N 44080 will be there shortly, too.

With that, Alaska has now joined American, Southwest and United in having its fleet plan affected by the grounding. These are the first of five scheduled for delivery this year to the airline.

Now that it may be the New Year before the MAX fleet is back in the sky, let’s cut to the bottom line regarding what airports can expect in regard to air service shifts.

A Financial Hit. Not A Torpedo. None of these carriers are facing any financial danger as a result of not taking on the numbers of MAX airliners planned. Their “hit” is that they could be filling these extra airplanes, as well as gaining some efficiencies in operations.

Fleets Are Still Growing – With One Exception. Also, all four of these airlines will be operating fewer departures than planned, but that does not translate necessarily into less flying than a year ago, nor cancellations in the retail consumer sense.

The flights just won’t be in the schedule, and those passengers that may have been in for long-advance bookings face the same resolution as when routine schedule changes affect operations. They generally get rebooked.

Most of AA/UA System Departures Are Not Directly Affected. Today, less than half of all United and American branded system flights are actually operated by these carriers. The rest are outsourced to entities such as SkyWest, Trans States, Air Wisconsin, etc.

Over 55% of United-branded flights are operated by other than mainline United, and almost one third of departing seats are there, too. Numbers are very similar at American.

Only Southwest doesn’t have any other new aircraft coming into its fleets… AA, UA and AS all have other aircraft on order, and being delivered, both mainline and to outsourced lift providers.

AA and UA are accepting previously-ordered Airbus aircraft, and both continue to be actively adding used A-319s. Plus, they are also placing mainline-cabin E-175s, many owned and leased out to outsourced operators such as SkyWest.

They are also continuing to add widebody aircraft – new and used. United recently completed taking 767s formerly operated by Hawaiian. 787-10s are coming on line, too.

Point: The MAX grounding is a giant financial headache, but will not cause chaos at the nation’s airports. However, that could be the operative word in front offices when it comes to determining the potential revenue being forgone at the four affected airlines.

American Airlines

They had to park 24 active aircraft in March, and not take delivery of an estimated 16 more since then. Previously-planned deliveries would indicate that by the end of the year, American will not have the services of approximately 55-60 737 MAX airliners.

They currently operate a narrow-body fleet of approximately 725 airliners (not including 757s), assuming that the last MD-80s are retired. There are no strong indications that, other than 20 E-190s, any major part of the current fleet may be in line for near to mid-term retirement.

Therefore, beyond filling some of the MD-80 gap, most of the new MAX capacity was likely to contribute to new additional revenue generation. But it isn’t a situation that stops the airline in its tracks. The airline has a solid 117 A-320/321s on firm order, plus the E-175s continuing to be placed at surrogate operators.

Prognosis: AA will likely continue to re-think any near-term expansion – re-think, not necessarily eliminate.

United Airlines

The airline has 14 MAX-9 airliners parked with another 151 of all categories – 8,9,10-  on order. This is within a current narrow-body fleet of 494 airliners. As time passes, these missing deliveries will become more apparent in the carrier’s route planning.

However, as with American, 55% of the United-branded departures are not affected directly, as they are operated by outsourced “regional” (misnomer) partners.

Prognosis: United, like American, is actively adding used A-319s to its fleet, but these are essentially a dribble in regard to new capacity. Assume that any expansion or capacity additions involving narrow-body flying will shift to a back burner for the near term.

Southwest

With only 737 MAX airliners on order, Southwest faces a situation where any new expansion will be very tough to accomplish until the situation is resolved.

They have 291 MAX units ordered, including the 34 that were taken out of the fleet. The airline does not have a “regional” (misnomer) set of operators to which to shift any capacity.

The limited options for Southwest are illustrated when we look at the capacity planned for the three carriers July through September

Alaska, United and American have some alternative fleet flexibility to take advantage of the growth in air travel due to the strong economy.

Southwest has less, and is holding the line compared to last year. It is likely that any retirement of -700s that may have been contemplated will be postponed– to the maximum extent possible, based on overhaul cycles.

It is likely that the anticipated domestic expansion of WN in late 2020 will likely be delayed into 2021. In addition, depending on how long this fleet-deprivation continues, the carrier will probably sharpen route-planning pencils in regard to current markets.

Bottom Line – Digesting Fleets, Post-Grounding

As it stands, AA, AS, UA are facing the frustrating situation of seeing new revenue and not being fully able to tap it. But they do have expansion aircraft in the pipeline.

Southwest will be marking expansion time for the next six months.

Further, digesting these airplanes when the FAA releases them will not be immediate.

Taking on  a couple dozen or more 737s all at one gulp isn’t possible – it will take weeks.

The real winners in this will be flight simulator facilities… remember, when the FAA gives the go-ahead, there literally will immediately be hundreds of airliners ready to fly… and it’s very likely that demand for sim time will be standing room only. And as for MAX-specific simulators, there are currently less than 25 in the world.

Every department at the affected airlines will be in full metal jacket mode.

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Post-Script – China & The MAX – Capacity Relief?

This MAX delay may not be totally unwelcome in China.

As of today, there are approximately 300 MAX airliners ordered by Chinese entities. The delay in deliveries may be a benefit, as it is beginning to appear that historic growth rates are falling in line with the decline in China’s GDP growth – and other issues.

Boyd Group International is now completing the 2019-2020 Airports:China™ forecast of traffic in the Middle Kingdom, covering each of the top 200 airports in the nation. There are some very interesting revelations.

Yes, there is huge latent demand for air transportation… but with the economic downturn in China (and, a lot has not been accurately covered due to media-spin regarding the “trade war”) nationwide passenger growth is slowing materially to under 8% and maybe lower – that’s from well over 10% for the last decade.

One of the other forecast issues is secondary Chinese airports, where load factors are not as strong as in the top 25 commercial centers. In fact, the domestic Chinese airline system is in some areas woefully mis-fleeted, with a focus on 737/A320 narrow bodies, when many of the emerging airports cannot support such capacity.

It is interesting that China has very few small airliners in its fleets. The native 76-seat ARJ-21 is becoming a challenge if not an embarrassment – 18 in operation since it rolled out more than ten years ago. ATR has been able to place some -42 turboprops, but only with onerous capacity restrictions. The locally-produced MA60 and MA600 platforms are not widely used in China itself. Nor elsewhere.

The conclusion is that China needs to re-fleet domestically.   More 160-180 seat airliners can be placed, but when many airports of under roughly 5 million passengers are seeing load factors in the 65% -70% (or less) range, and which need Beijing government and provincial financial support, a delay in acceptance of several dozen MAX airliners may not be any economic hit to China.

The Airports:China™ forecast is now being completed, with highlights to be posted shortly at www.BoydGroupChina.com, and full details to be outlined at the 24^th International Aviation Forecast Summit in Las Vegas, August 25-27.

The Summit is the only forum that actually is focused on aviation forecasts – trends, dynamics, traffic growth, fleets, and airline strategies. It is also the only event with independent US enplanement trend forecasts, too. Clear discussions and unscripted Q&A with airline and aviation CEOs and senior executives.

Lots of networking opportunities, too.

If you haven’t registered yet, we’d suggest you click here and take a look. Then clear your calendar and join your colleagues at the IAFS.

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The Seven New Realities of Air Service Planning

We’ve pointed it out before.

Every form of communication has changed over the past 30 years, including the structure, economics and mission applications of air transportation.

We hear – accurately – about the challenges some communities face in assuring connectivity to the global air transportation network. In some cases of truly rural communities – fewer than typically thought – it really is a situation where the economics of air service simply do not work.

Nevertheless, this should not overshadow the fact that the air transportation system on the whole in the US faces very robust growth and a robust increase in global connectivity.

But it will be airports that are willing to ditch old thinking and toss out obsolete methodologies that will have the advantage.

There are new fleets coming on line, and new airline strategies, that illuminate several areas where airports and communities need to shift focus and shift air service planning. Now.

At Boyd Group International, we’ve compiled the Seven New Realities In Air Service Planning for communities to understand and pursue to take advantage of the evolving air transportation system.

Things like how geographic leakage concepts are inaccurate and outdated… why accommodation of international traffic flows, even at small airports will be important… understanding that raw DOT/BTS data are a roadmap into the planning weeds… how small jet retirements in the next five years will actually be positive for small and mid-size airports, and the need to deal with air service misconceptions, particularly from the media.

The Seven New Realities In Air Service Planning deals with some sacred cows (hamburgers, anyone?) and outlines how airports can get ahead of their competition for new and enhanced air service.

The report is just about 6 pages and an easy but insightful read.  It will suggest new ways of approaching the challenge of optimizing the advantages of the emerging air transportation system. And it’s an example of the type of approach that we’ll be seeing at the 24th International Aviation Forecast Summit in Las Vegas, August 25-27.

To download your complimentary copy of The Seven New Realities In Air Service Planning , just click here.

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Forecast Projections At The IAFS…

A Robust 2019 Second Half – A Disruptive 2020

While the Max saga continues, the US will still be looking at very strong traffic growth for the remainder of 2019.

As it stands today, the US airline industry is planning to put nearly 5% more flights and seats into the domestic skies over the next six months.

On the surface, this indicates stability in the air transportation system… but a deeper look indicates a lot more disruption than expected.

Disruption: What these data don’t show is that the distribution of this growth will continue to change the air service picture – it isn’t a level playing field across the board.

A foundation is being laid for some very fundamental changes in the US air transportation system for 2020. For starters:

Rural/Small Community Air Service: Economic Gravity Will Finally Take Hold.  At the 2019 International Aviation Forecast Summit, we’ll be exploring how global connectivity will begin to replace the Luddite schemes to establish air service at small airports that have zero chance of supporting it.

This race has been run… the desperate attempts at jive studies to “lure” airlines to small airports will finally start to shift toward planning to assure regional connectivity to the global economy. This means waking up and smelling the fumes on the interstate highways… air travel is multi-modal, and the assumption that air service is essential at every local airport is bogus. And impossible to achieve.

Geographic “Catchment Areas” – Replaced By Consumer Access Stratas. The obsolete approach of drawing a perimeter around a small or medium airport, and declaring it a “catchment area” sounds logical. But it flies in the face of consumer realities and airline system economics. The name of the new game is determining the specific stratas of consumer capture that an airport can achieve, based on the service levels it can support.

In no case is it 100%, and in no case is it any longer a geographic issue alone.

Depending on the range of alternative consumer options, the “catchment” is now based on consumer needs. The local service at a small airport will meet some of these needs. But when there is access to dozens of LCC flights at another airport 75 minutes away, to believe that all local consumer travel “belongs” to the local airport is malarkey.  This service meets the needs of some local consumers, but to imply that those that don’t take flights at the local airport are “leakage” is not accurate and not productive to futurist access planning. In many cases, the local area is part of that distant airport’s catchment- consumer access – region.

Regional Preference Shifts Due To New International Service.  We’ve noted how EU and UK airlines (and in some cases, their US airline alliance partners) will be adding hub spokes to US non-hubsite and secondary cities. But having more international flights out of airports, such as for example, Louisville, will raise their profile and role as a regional gateway for domestic service as well.

Discretionary Spend Shifts – The ULCC Roller-Coaster. Day-of-week ULCC service at mid-size airports, based on providing an alternative use of discretionary dollars, can come and go in a near heartbeat. In regions with strong influx of new industry – plan on traffic spikes.  But do watch regions were local industry is moving out. ULCC service can move with it.

Plus, it’s important to understand that most ULCC service is not based on core air service demand, but instead on creating net-new traffic based on a new spend option. That spend can be exhausted – and the  ULCC can and will move on.

Join Us At The International Aviation Forecast Summit To Explore More. Certainly, American Airlines, United, Delta, Southwest, Spirit, and more than a dozen other airline CEOs and executives have their own perspectives on these and other issues that will shape the future… so join your colleagues August 25-27 in Las Vegas, and hear them.

New visions, new concepts… this is what the IAFS is all about.  If you haven’t registered, click here to do so now.

It’s going to be a very different 2020 – we look forward to discussing it with you.

Marketing Genius of The Week…

This’ll Get Airlines To Start Buying…

The manufacturer, touting the delivery of the second 76-seat ARJ-21 into China’s new Genghis Khan Airlines, is cutting new territory in personal comfort.

“Each seat is equipped with a USB charging interface, making it comfortable to ride.”

Ouch. Wonder if  Genghis Khan had this feature on the saddles of his Mongolian war ponies? No wonder his troops had such bad attitudes when pillaging the countryside from China to Europe.

But who knows, tush-charging may be the next big thing in inflight entertainment.

By the way, the ARJ-21 first rolled out in 2008. They’ve built 18.

Not exactly a big seller. In what will be the world’s #1 domestic airline market within the next 15 months, that sends messages.

Without any need for a USB port.

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Delta’s “Focus City” Concept.

An Approach Finally In Place – After 30 Years

Bear with us for some background verification, and maybe a tinge of promotion.

One of the factors that sets Boyd Group International apart from other consulting firms is that we are actively and independently engaged in research and forecasting of emerging trends in aviation. We are expert in airline, fleet and market strategy shifts. Our enplanement forecasts – Airports:USA – rely on analyses of the air service trends evolving at each of 146 airports.

No trend-lining and no reliance whatsoever on federal data, the forecasting reliability of which is somewhere south of a defective Quija board.

Most other consultants just pull down numbers from laughable government sources, such as completely brain-dead FAA Terminal Area Forecasts.

One example of our independent approach was a study in 1989 that outlined how new market mission capabilities differentiated planned 50-seat jets from similar-capacity turboprops. Back then, that was not understood. Lots of folks simply concluded that 50 seats was 50 seats, regardless of powerplant – an outlook that ignored mission-capability.

Fast forward a dozen years later, after Bombardier and Embraer order-books were practically dog-eared from the all the 50-seat business, BGI was alone in forecasting that the demand for these machines had been fully met, and new orders would be scarce.

At the time, forecasts from other companies showed these machines to have orders well into the next couple decades. These weren’t forecasts. They were blind trendlines.

Then, we could touch on our 2009 and 2014 forecasts of the US-Cuba air service potential – which, to guffaws of the travel industry, were alone in accurately describing the realities of the market, and pretty much that’s what’s transpired.

Same Concept. Different Airline System. Now we have another example.

There’s been a lot of accurate discussion regarding the aggressive “focus city” strategy in place now at Delta Air Lines. It makes sense in both providing access between “secondary” commercial centers, delivering a better product to the consumer, and in freeing up facilities at Atlanta.

One thing we’d like to point out… We outlined this concept – and we were the first to use the term “focus city” – just a bit over 30 years ago.

Then and now, a bit different in implementation, but not in application.

Back then there still existed remnants of a robust independently branded and independently operating regional airline system – with fleets of 19-seat to-30 seat aircraft that had the potential of providing quick nonstops between secondary commercial centers, avoiding major carrier hubsite airports.

Back then, consumers were not averse to riding these machines on intra-regional routes, such as Abilene – Austin, Shreveport-New Orleans, Albany – Islip, and the like. So “focusing” on potential nonstops between mid-size commercial cities made sense – on paper. The idea of delivering nonstop routes – O&D – for places like OKC and OMA and BHM – using small and low sector-cost airplanes had potential.

Like, what Delta is doing today was conceptually viable back them, only the economics and the fleets and the market sizes have changed in scope. It was logical to expect that these then-strong independent regional carriers could well expand such a system into secondary airports across the nation. A shadow system for such airports, concentrating on a specific and defined consumer segment. Back then, they had lots of new airliners on order, and the prognosis was strong expansion.

It was a system that had great growth potential.

Well, at least until the independent regional airline industry was incorporated into major carriers’s systems, due to the advent, DOT approval, and ultimately transformation of the concept of code-sharing.

In a few short years, the application of code-sharing steamrollered from simply putting a major airline booking code on a regional’s flights, to completely shifting the regional’s aircraft into the major’s route planning. In a couple of years time, these small airlines simply were suppliers of lift, and had no specific route system or market brand of their own.

That process, by the mid 1990s, totally eliminated the brand identity and market planning – of regional carriers. Actually, it ultimately eliminated regional airlines as an independent air transportation system.

The transformation was strictly business – one that made more economic opportunity for the former regional and its shareholders than trying to operate as an independent brand.

Today, those “regionals” that are still in business have morphed into highly professional companies leasing crews and aircraft to major carriers. Heck, the largest such entities are operating E-175s and other planes owned by the major carrier.

As it evolved, code-sharing completely erased the entire independent regional airline industry, and along with it a lot of the air service that it once provided. Poof! went any potential for an independent regional to go, well, independent. So, building a hub-bypass “focus city” program operated by independent regional airlines was out.

But Delta is doing it today – with apparently strong results. The city pairs are larger, due to larger jet aircraft. The focus city model is additive to the hub-connect system, not a replacement.

Different Economics. Different Communication Systems. Evolved Consumer Needs. The interesting observation is that today, the few random independent commuters that are left (mostly focused on EAS, and not proprietary route systems) no longer have any real consumer brand-awareness. That’s another change from 30 years ago… consumers generally don’t support independent carriers with small aircraft. Also, a lot of the need for travel between the cities envisioned in 1989 has been eliminated by other forms of communication.

The recent failure of Via Air underscores this. (Contrary to reports, they had a “passenger shortage” more than a lack of pilots.)

Today, the Delta strategy is very similar in template to what was outlined by BGI three decades ago… it’s just on a much larger scale, and cities like Shreveport are not in the play.

Interested In More Heresy? Join Your Colleagues At The IAFS. Aviation is anything but a stable playing ground… dynamics like the above shift constantly. This is why you need to be in Las Vegas August 25-27 for the International Aviation Forecast Summit.

Over 20 airline CEOs and senior executives will be there, each outlining what he or she sees at the critical challenges for the industry. In addition, there will be dozens of airline staff in attendance, which will mean plenty of time for networking, too.

The agenda is now posted. If you haven’t registered yet, click here for more information

The IAFS is the only true forecast event in the industry. It’s also the more incisive in regard to exploring new and emerging trends.

This year, we’ll be covering the trends that the rest of the industry will be noticing five years from now… but our attendees will be way ahead of that.

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Top Five Airline Trends – 2020-2024

At the International Aviation Forecast Summit, dozens of airline staff attend every year, allowing extensive interaction with our attendees throughout the event. Networking is a key part of the event.

But just as importantly, we’re hosting almost two dozen CEOs and senior executives from across the entire airline industry.

Each will be discussing the issues and trends that he or she feel to be the most pertinent to the future. They determine what’s most critical to explore – they’re not shoe-horned in to addressing one predetermined subject area, as is done at most other conferences.

Plus, our fireside chat format allows further unscripted exploration of key trends and industry dynamics.

In addition, Boyd Group International opens the Summit with an incisive Forecast Mapping Session, that illuminates what we feel to be the hot button aviation planning issues for the next five years.

We thought we might bullet-point a few of the most pertinent dynamics that will be affecting aviation in the next three years…

Strong US Enplanement Growth – But Now Airline-Driven.

We are forecasting steady 3.0% to 3.5% enplanement growing annually in the next five years. It will be the result of subjective airline capacity and strategic determinations.

This means that “air service development” needs to evolve into far more sophisticated systems that accurately focus on airline strategies, instead of the wonders of the local economy. If the community isn’t a fit for the airline – based on professional understanding of the target carrier – it won’t come to town. That sounds natural – but a lot of today’s ASD programs ignore the need to understand the airline first.

Increased Secondary City Access

At one end of the spectrum – small rural airports, true local access will continue to decline. Or, in many cases, it won’t decline at all – it’s already gone, and EAS notwithstanding, won’t come back. Indication: the day of single-engine, independent-brand airline service is coming to an end.

The reason is one that most “market studies” foisted on small airports completely side-step: the community can’t support service levels or quality that local consumers will use.

On the other end of the spectrum, mid-size communities – those that now generate 100,000 or more enplanements – are in line for increased major airline hub access. The feed traffic value has already been discovered at places such as Traverse City and Springfield – and as long as the US economy remains strong, this will continue.

ULCC Dynamics – The Growing Parallel Airline System

The use of airliners to offer alternative discretionary spend options – as opposed to meeting demonstrated existing air service demand – will continue to be a unique and growing dynamic in the US. It’s not “air service” in the traditional mode, but instead another leisure outlet for consumers.

Our Airports:USA® and our fleet forecasts indicate that this ULCC system will grow from @7% of the total US capacity to nearly 15% by 2022. But the point is that it will still be a system that is separate and distinct from traditional airlines… they offer a spend-option, not air service access to the nation or globe.

Increased Trans-Atlantic Access

The arrival of new-technology long-range airliners such as the A-321LR and XLR will open EU destinations from secondary US points such as Albany, Jacksonville, Columbus, and Grand Rapids. The traffic demand is there already – and the feed through EU carrier’s hubs can be substantial.

China – New US Business Investment. Rapidly Declining Leisure Visitation

This will be a sucker punch for communities and airports putting any dependence on future Chinese service and investment. China is the #2 global economy and what happens in Beijing affects a lot of what goes on in the USA.

In regard to China-US travel, a complete strategy change is in order. Now.

Forget the politically-correct nonsense that the “trade war” is reducing China-US travel. The decline is caused by a whole range of complex changes in the Chinese economy that have just emerged into the light of day in the last six months. The trade issues haven’t even begun to move the needle.

Shifting from prior expectations of nearly-unstoppable growth in Chinese leisure travel to the US, the Airports:China™ forecasts show that these folks increasingly are running out of money… it’s now clear that the China real estate boom – and others – were a recipe for the fun Wall Street had in 1929.

Much of the new-found discretionary money is now discovered to be based on air… air that is deflating.

There are two major shifts that are important to US airport and air service planners.

The first is that leisure travel will drop by approximately 10% in 2019, and will see a further decline of at least another 10% in 2020. This will be exacerbated in the future, certainly, by rhetoric coming out of China, warning about the US being a dangerous place to travel, but the core reason for the decline will be found in the Chinese economy.

This means that US leisure venues that depended on Chinese visitor-spend now need to rapidly re-think the future. The millions paid to tour operators to funnel Chinese bus tours into specific shopping malls and sight-seeing spots will go down the ceramic fixture.

The second is counter-intuitive. But since China is declining as a growth economy, and some companies are pulling factories out, the US is becoming increasingly attractive for Chinese businesses to invest and expand – and keep their capital safe.

This means that communities reaching out to gain more Chinese investment need to re-strategize and rethink their approach. The days are over of lavish “trade missions” that give the mayor bragging rights and picture on his wall of him doing a robust gan bei with the Chinese Minister of Nobody-Can-Remember-What-Department-But-He’s-Been-Purged-Anyway.

“Refugee Capital.” In the next two to three years, there will be new channels emerging regarding Chinese investment in the US… it will be a lot more productive and secure than in that Development Zone in western China that features an entire city that looks like Paris but is completely empty.

Airports and communities are facing huge new investment opportunities if they professionally assure that they have a clear profile of their opportunity among Chinese industry, and that they demonstrate it with a clear and focused China welcome program.

At the IAFS this year, we’re honored to have a Workshop from Tencent and our partner, IM2China, that will outline new approaches to attracting and keeping Chinese business.
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And More at the IAFS this year… These are just starters of the dynamics that we can expect aviation leaders to dive into at the IAFS.

By the way, Early Registration is now extended to June 19th. So click here and join your colleagues in shaping the future.