Monday Insight – April 10, 2023

The System & Aviation – Political Go Along To Get Along.
It Was A Lot More Ugly In The Past.

Just thinkin’

In light of the political involvement and sometimes rancorous discord regarding the Phil Washington nomination, maybe a quick look back can put things in perspective.

In this matter, there were strong opinions. In the past, sometimes the then-regulated airline industry would get tossed into the nasty maw of real political extortion. Thought it might be instructive to look at one such event.

To start, aviation is an industry that is completely subject to regulation.

Regulation means the humans running aviation-related businesses need to be cognizant of the wishes and demands of those in control of oversite and in administering regulations. In the real world, these considerations are often based on the need to get along with politically involved oversight.

This part of the equation is still reality. As long as it doesn’t get anybody tossed into the Big House, the process is one of collaboration with political realities.

Today, it may not be outright extortion, but it does mean that aviation entities must recognize political realities. Nevertheless, what goes on today isn’t corrupt, but it ain’t like a sequel to Mr. Smith Goes To Washington, either. (Google it, if you must.) It’s more a case of Say It Ain’t So, Joe. (And Google that, if you must.) It is rough-and-tumble.

It’s not necessarily a system based on pristine motives and righteous intents. To some degree or another, the ugly bacteria of political self-interest is involved.

It sounds somewhat cynical, but we all know how the system works. There are special interests, and most are honorable. But when it comes to powerful deals, well, let’s not be naive. Arm-twisting is sometimes in play. In the past, however, breaking an economic kneecap or two was probably a potential.

This Is Nothing New. It’s part of what any government system inherently represents. Been that way for thousands of years. Probably, the Dead Sea Scrolls will eventually reveal that the Pharaoh’s brother-in-law got the pay phone concession at the Pyramids on a rigged no-bid deal.

Or something like that.

So let’s recount how it used to be, sometimes. The FAA administrator situation was actually one that represents open discussion, instead of backroom political deals. It was clean.

Aviation Is Historically Vulnerable. The process wasn’t always clean. In ancient times, say, back in the 1960s, there was a situation where a high-level operative of the Nixon campaign casually and quietly approached airline leaders. He supposedly made clear that there would be a lot of exciting new international route authorities under consideration, and all had to be approved and signed by the president. Being a supporter of the president was, well, a nice thing when these decisions were made.

Now, as the discussions apparently outlined, wouldn’t it be expedient to show the airline’s support for the president with a contribution, albeit through channels that might be outside of the realm of the law?  Translation: contribute or your CAB proposal for that Tokyo route will end up in a landfill. Guaranteed.

It’s all  pretty fuzzy in regard to exact details. Close to half a century ago, and most of the players are long gone. We don’t know how many airlines were approached, nor how many saw the wisdom of the suggestion. But from subsequent events, it appeared that both American and Braniff might have gone along with the program. It was the equivalent of political extortion.

All was fine. Money was probably channeled, based on what we know now.

But then a few years later things stared to unravel. The Israeli Air Force bombed Beirut. (Stay with me on this one.)

A couple of Convair 990s were blown to bits. Convair 990s that were previously owned by American. Convair 990s, where the insurance follow-up illuminated strange financial ties that seemed to indicate that some long green got funneled back, like, maybe to the Nixon campaign. Not sure.

Braniff, which back then was one of the most internationally savvy airlines, was also accused of moving money in the direction of Nixon. But Braniff was far more sophisticated than American. The dough theoretically was moved in and out and back again within currencies and accounting of countries where Braniff operated in South America. Real complicated stuff. Maybe moving through Argentine pesos, to Paraguayan guaraní, to ticket sales in Panama, to complex refunds in Peru, maybe miscellaneous charge orders (MCOs) based non-passenger revenues in Columbia, and all sorts of other mechanisms.  Maybe.

When interrogated by the feds, the Braniff financial folks were highly cooperative, volunteering a tour through the byzantine world of airline revenue accounting. How the process of ticket revenues involved things like paid-less-used, population-minus-sample, projected exchange rates, maybe presentations regarding how international ticketing was affected by the Maui Fence and the global fare break point at Denpasar. Then there was the computation of unearned revenue, complying with CAB-standard 2160-01 requirements, establishment of quarterly trial balances adjusting prior estimates, and all sorts of other parochial stuff.

What exactly went down is not clear, but it was likely close to this. Data softballs in all directions.

If they had presented this in fluent Northern Swahili it might have made as much sense to the investigators. The congressional investigators were left clueless. And very frustrated. A comment made to one BN executive: “We know you did it. We just can prove it!”

The feds knew this type of situation quite well, as it was intellectually consistent with a lot of their own activities.

In the end, no convictions. No admitting guilt. Nevertheless, both American and Braniff agreed to take necessary actions to make sure that any untoward financial shenanigans in the future would never take place. No admission of guilt. Just good intentions to cooperate with the feds.

Braniff agreed that it would never – never – provide anyone free things, even down to upgrades to customers without payment, which could represent bribery. (‘Course, any gate agent in Lubbock knew how to get around this stuff, to take care of prime customers.)

American did the same type of changes, among which were assurances that all passenger refunds would be absolutely in compliance with tariff rules, and any that were outside of these would need executive approval and sign-off. So, naturally, AA assigned that function to a first-level supervisor in the depths of the refund department, who every morning spent ten minutes drinking coffee and initialing a few dozen such documents, and then went on with his day.

The point here was that the administration was extorting political contributions. And like the small bar owner in Queens getting squeezed for a twenty every week by guys in dark shirts and white ties, trying to report the situation wouldn’t have seen the light of day. It was “the system.”

These types of political interventions in airline operations may or may not have been widespread. They don’t exist today.

But in the context of this past, the recent brouhaha regarding the FAA administrator was open, free and above-board. The facts were on the table. The facts were discussed.

Regardless of what stand on my have in the matter, the system worked.


Reminder: Why The Term “CCP Covid?”

We get questions regarding the use of the term “CCP-Covid” to describe the virus that is at the core of the pandemic that has killed millions and inflicted trillions in economic damage to the globe.

“CCP” stands for the people who are fully – 100% – responsible, the Chinese Communist Party. Regardless of the supposed smoke screen debate about whether it came from the Wuhan Virology facility, it is a clear fact that when it started to spread, the CCP intentionally and willfully attempted to cover it up for weeks or actually, months.

This included an active campaign for weeks encouraging – encouraging and holding – huge public interactions and a clear propaganda effort to convince the people and the globe that there was no human-to-human transmission of the virus. These are not in dispute, except by some in the media who’s moral values are at cesspool levels.

This included convincing the corrupt World Health Organization, which actually put out missives agreeing with this criminal behavior on the part of the CCP.

The unfortunate part of this is that many USA businesses want to whitewash this and give the CCP criminals a pass… there’s a lot of money to be made in China, see.

The sad situation is that any business done in China, whether it’s buying a set of headphones over the internet or supporting the 2022 Olympics, is a vote for the most vile un-elected government since the Nazis in Germany.

Presentation To Pennsylvania Airports Roundtable

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

Click here to see the presentation.

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

CCP-Covid Traffic Challenge- LAX, SFO, SEA

Now that the usual suspects in the media can no longer gloss over the overwhelming evidence that the CCP – the un-elected criminals running China – were indeed responsible for the Covid pandemic – both the start and the cover-up – there could be some very fundamental additional changes the air relationship between China and the USA.

As a major researcher of Chinese aviation, we’ll be following this in the weeks ahead. We already know that the 8+ million China-USA O&D seen in 2019 will be more like 1 million in the next three years – a hit for US carriers, but more for Chinese airlines that had over 65% of the traffic.

Airports in line of fire for further enplanement adjustments: LAX, SFO, SEA, all former gateways for Chinese air carriers.

Monday Insight – March 15, 2021

The Traffic Picture – U.S. Positive. International Not So

We can start with this: the U.S. airline industry is in better shape than any other in the world. One reason is that, aside from China, it is the only one that’s based on a huge domestic demand.
A recovery is starting to show… the capacity knife was used a lot less on the originally-filed schedules for March… as it stands, it appears that this may be the case with April and beyond.

The latest Airports:USA® short term forecast:

If the trend holds, if the economy holds, if new taxes are not imposed, if the increasing constriction on petro-production on the part of the inhabitants in Washington doesn’t jack the price of jet-A up, the traffic recovery will be quicker than estimated three months. A lot of ifs.

The Welcome Signs Are Coming Up. A number of states have made the decision to completely or almost completely opened up. The requirements to cover one’s nose and mouth – regardless with what (N95 or a used hankie are both regulatory-satisfactory), and regardless of where one is, or how effective it may be – are being lifted in several states.

This removes the barrier and uncertainty of traveling to major places such as Texas and Florida. Other states are still in a state of CCP-Covid confusion. Nevertheless, the picture is clearing.
That’s in the United States. Not so in the E.U. or the U.K. Latest news is that Italy may shut down, and it appears that guy with the run-away hairdo who’s running Merry Olde England is clueless. Canada is still constricted. Same with other parts of the globe.

A New U.S. Air Transportation System. New Airline Strategies. Amid all this, the restructuring of the U.S. air transportation system will continue. The main apparent trends are:

• Expansion of Leisure Destinations… Florida is the main recipient, but any flows that can be identified as having potential leisure stimulation are in play. Montana is another opportunity. The goal is to plumb into some of the money not spent over the last year.

• Major City – Secondary City O&D Market Spokes. Big markets such as Los Angeles can offer potential of stimulating day-of-week or low frequency service to mid-size airports that in pre-CCP-Covid days weren’t really opportunities. In regard to Los Angeles – and California in general – it will all depend on some regulatory consistency coming into the picture.

• Expansion of Hub Flows. American in particular is bulking up on accessing secondary airport flows, particularly at CLT. Great news for some regions… how fleet changes will affect this in the long term is uncertain.

The U.S. airline industry went into full metal jacket mode almost immediately upon the arrival of this gift from the CCP in Wuhan. It’s clear that every airline now has an aggressive and internally-generated strategy to deal with the effects of the pandemic and the sometimes herkie-jerk responses on the part of some state governors.

Meantime, Back In The Old Countries… The situation in the rest of the world is not encouraging. As noted above, Europe is completely in planning chaos. Australia is still restricted in regard to international access.

Asia is not only affected by the CCP virus, but by widespread and very uncertain political issues, mostly driven by the 21st century Nazis running China. (The chief Don of this criminal enterprise has instructed his army to prepare for war. It may be more than the usual doggerel, based on infighting between factions in China. Think Kinmen or even Taiwan as “points of interest” in the next 12 months.)

The point is this… the main reason for the plunge in domestic air traffic in the USA was first fear of the disease, and then the uncertainty of whether entire cities might be shut down. Both of those factors are receding. Domestic traffic levels will rebound faster than recently forecasted.

But the emerging national and global air transportation systems are still structured for the world of 2019. That’s dead… the roles and utility of air travel have been shifted. Leisure, business and international travel patterns have changed and that means airlines are facing new fleet imperatives.

As noted last week, the era of the “regional jet” – defined as 70-seats and below – is over. The next big trend will be in the single aisle category, with A320neo, 737 MAX and A220 variants opening secondary airports to a much wider set of new market opportunities.

The only uncertainty is how the economic plans being ginned up by the inhabitants of the Marble Play Pen will slow all this down. The indicators are not positive.


Latest Aviation Unscripted

The 12-Month Forecast…
Airports Must Plan Now For A Different Future

The nation will be missing 365 million enplanements over the next 12 months, thanks to the CCP-Covid pandemic. That’s a $6 billion financial hit, just with loss of PFCs and direct consumer spend at airports. Loss of concession revenues, rents and airline fees are in addition. We’ll be covering our Airports:USA enplanement forecast for the near term as well as in immediate next five years.

This is another reason you need to be in Cincinnati USA October 11-13 for the International Aviation Forecast Summit! Click here for the agenda and details.

Mitsubishi Out of The Airliner Game?

Mitsubishi has reportedly closed its U.S. offices and has grounded its fleet of test MRJ/SpaceJet airliners.

It is unclear if this is temporary, or if the company is just throwing in the towel. The challenge is for the company to break into a global market that already has filled competitors order books. While potentially a fine airliner, the now-renamed M90 does not represent any real performance breakthroughs – particularly since the new market entry date is three years away.

Mitsubishi has acquired the global support network for the CRJ series from Bombardier. In light of the M90 situation, there has been some speculation that this could be an acquisition target for China’s COMAC, to support sales of its C919 and ARJ-21 airliners.

Not in the cards – COMAC’s products are not market ready or market-compatible.

But stay tuned, particularly since Embraer’s airliner business is still independent and very viable, following the collapse of the Boeing acquisition. Lots of potential variations are in the cards.

Monday Update – March 16, 2020

How Do You Say “Chutzpah” In Mandarin?

This Is The Chinese Pandemic. Let’s Stop Playing Politics

Concerned about massive restrictions in air travel and business activity due to the COVID-19 pandemic? Concerned about the damage that’s being done to the US economy?

Keep being concerned. What started this rodeo is still alive and well and a threat.

That’s because not a single action has been taken – by any nation – to recognize, admit and prevent the foundational causes that first created the coronavirus, and of the actions that turned it into what now must – must – be called the China COVID-19 pandemic.

What happened in Wuhan, China is not water under the bridge… that river is still flowing.

A Human-Caused Epidemic. All the businesses across the world that are shutting down, all the airlines that are nearly going out of business, and all the people who have died from this pandemic are victims of a human-caused event.

Repeat: despite how some in politics and the media are painting it, this is not a “natural” catastrophe, like an earthquake or typhoon or tsunami. If we want to avoid this in the future – i.e., learn from the tragedy – one cannot ethically ignore the timeline of events and dishonest shenanigans that brought the world into a pandemic situation.

The disgusting pap that “we must work with China” to find solutions is like hiring Typhoid Mary as a health consultant.

This event is the direct result of political corruption and incompetent handling by the Chinese government. Not the Chinese people, but the thugs running the Chinese Communist Party. The facts are clear.

Delay Any Action – No, Prohibit Any Action – For Weeks. Then, Let Infected People Travel. Here’s fact-based timeline that the PRC government is trying to smokescreen with a flood of recent fictional and self-serving PR stunts to absolve it from taking full responsibility for this pandemic.

It started in Wuhan. Based on the location of the first set of victims, it was due to the filth and disgusting hygiene at a typical “wet market.” Medical authorities were aware of this virus at least by mid-December, with some reports indicating earlier.

Intentional actions were taken by the Chinese government to keep the local public in Wuhan – like, 11 million people – uninformed. The Party did not want it known that there was an epidemic. Face, and all that stuff.

• Doctors were threatened by the Chinese government and literally forced to sign “confessions” admitting that that they were spreading anti-social rumors by reporting on the virus.

• Medical evidence of the communicative nature of the virus was not only covered up by the Chinese government, but medical professionals were threatened with imprisonment if they didn’t stop discussing it.

• The Chinese government intentionally tried to mislead the public, telling them that the virus was not communicative, even to the point of holding massive shows and community meals, to “prove” there was no epidemic.

• The Chinese government, with full knowledge of the contagious nature of the virus, freely allowed millions of Wuhan residents to leave the city to travel across China and the world for the Lunar New Year migrations. That is what differentiated this epidemic from SARS and others.

• The Chinese government knowingly allowed this virus to spread for over two months, before starting – just starting – to take action.

  • The Chinese government has steadfastly kept medical professionals from other countries away… with the exception of hacks from the W.H.O.

What’s the thread here?

The Chinese government was completely complicit in allowing – and facilitating – this virus to spread and create a pandemic across the world

The W.H.O.? Okay, Guess Which Nation Is A Major Member. Now, there are the comments from the head of the World Health Organization (WHO) that China acted quickly and aggressively to respond to the first knowledge of the coronavirus, limiting the spread of the virus.

That is a lie, refuted by facts. Remember, China is a major member – a cohort – of the W.H.O.

All The Causal Factors Are Still Operative. The shocking part of all this is that the root causes of the virus – filth and poor hygiene – still exists in China’s open air markets, and the political system whose policies allowed the virus to spread also still exists.

Yes, the wet market in Wuhan where the virus is thought to have started has been closed, but the retail system of which it was a part still exists all across China. And the Party clowns who prohibited early medical action in Wuhan, and actually allowed its spread, are still in power, lavishing kudos on themselves for their bold decisions. And making as sure as they can that no real facts get on the ‘net.

China is excited to build aircraft carriers and missiles, but outside of huge new cities, its public facilities don’t generally even have soap or toilet paper.

The Timeline: They Let It Spread. Incredibly, the disgusting actions of the Chinese government – literally prohibiting medical staff to even professionally converse about the virus, let alone take actions to contain it – have gotten a walk from the rest of the world.

They will do it again – heck, they are still doing it. There’s no free press in China, and they try to scrub the internet.

Indeed, the public social events the Party put on in the days just prior to finally having to admit there was an epidemic, including giant communal meals and entertainment events, as well as staged news videos of citizens dancing around demonstrating no need for masks, chanting “No fear!” – these represent flat out criminal behavior.

Briefly put, even after dozens of reported cases, and muzzling medical professionals, the Chinese government still encouraged such communal events through January 21. Meanwhile, millions of people – many no doubt infected – continued to leave Wuhan, crowding on buses, trains and airplanes, to visit family throughout China for the New Year.

Two days later, after continually claiming there was no communicative virus, the Chinese government did a sudden U-turn and put Wuhan under quarantine – but only after millions had already left. They couldn’t hide it anymore – the virus was popping up all over China. And the world.

Even then, citizens were still being arrested and publicly shamed for discussing the virus and threatening social order.

The outbreak was smack at the start of the Lunar New Year (Spring) festival migration. But the truth remains that the Chinese government withheld information from the public, and did little to stem the travel tide.

Yes, It Is The China Epidemic. There are some in the media and some pandering US politicians that claim calling this honestly for what it is – China’s Pandemic – is xenophobic or even racist.

Apparently, they put veneer political correctness above identifying the truth, which is that it was the actions of the Chinese government that first repressed actions to contain the virus, and then allowed populations they knew to be infected to spread across China and the world.

It’s called responsibility. Again, this is not an event of nature. It is a human-caused event, and the humans responsible are the Chinese Communist Party which is the government of China.

The Chinese people are victims, just as the folks in France, Spain, Korea, the Philippines, Italy and the USA. But make no mistake, it is the thugs running the CCP that bear the responsibility and culpability.

Lie About It And Hope The World Buys It. Actually, regardless of the Mandarin translation of chutzpah, now the Chinese government is spreading rumors just as dangerous as the virus itself… that it’s the US that started the epidemic, and it’s China that is the victim.

The story is that the Party must be lauded for boldly and decisively taking heroic actions to protect the people. That, too is a blatant lie.

The Future: A Different Economic Relationship. This now strips bare the image that China had been nurturing across the globe as a nation of vibrant and emerging growth. Despite a couple of decades of apparent economic progress, this China virus event shows that at its heart, China is run by the same Party that mowed down student protesters in Tiananmen Square in 1989, with zero care for human life over the Party.

Wanna talk xenophobic, politicians?

All That Travel Enthusiasm Is Vaporized. Business Investment In China, Too. Going forward, the relationship between the US and China (and between other nations and China) will be very different.

At BGI, we’ve seen a total 180. Things are fundamentally and completely different from 2016, when we were enthusiastically out-reaching to China for more tourists, and preparing China-Welcome programs for airports and communities. That entire environment is gone.

There is no going back to thousands of Americans taking vacations to visit Guilin, a boat trip up the Yangtze, or seeing Shanghai, or Xi’an. The Party has made it clear that Americans aren’t welcome. They have stirred up public sentiment that America is some evil place.

As for Chinese tourism to the USA – write it off. Not only has the Party vilified the US, but China’s balloon economy is zapping a lot of the discretionary yuan that was formerly in Chinese consumers’ pockets.

But one thing to keep in mind – every one of the major dynamics that caused the COVID-19 pandemic is still in place. And they’re all in China.

Let’s label it honestly, to perhaps prevent another pandemic.