Monday Insight – February 28, 2022

The Ukraine Mess – Air Service Fallout Is Coming Home To USA
And It May Keep Some Travel Dollars Home, Too

Let’s cut to the chase. This isn’t ‘Vegas.

What’s happening in the Ukraine won’t stay in the Ukraine, at least as far as the effects on air transportation go.

Airlines Will Be Re-Thinking International Capacity, Again. Just when places like the U.K. and Germany and other countries were loosening or eliminating travel-choking CCP-Covid restrictions, a nasty regional war comes into play. Not pretty, and maybe not so regional.

The Darth Vader running Russia has put his nuclear forces on alert, He’s warned Finland and Sweden of military action. Even Switzerland is talking about taking sides against Russia.

Oh, yeah, time to take the kids to see Paris. Not.

Take it to the bank, trans-Atlantic travel isn’t going to rebound this summer. It’s going to decline further. Beyond that, traffic flows between Europe and the Far East will be materially flummoxed due to near-certain constrictions of routings involving overflight of Russia and nearby regions. Inter-global air service is in for a hit.

Draw the picture. Total US-generated international travel is heading for a major decline, again. We already could see that trans-Pacific travel will be a fraction of pre-pandemic levels, mainly due to the complete collapse of China-USA air travel, That will affect not only places like LAX and SFO, but also other major airports where China traffic, while not huge, was a flow factor. Think RDU and DEN in particular.

Now, this Ukraine war has just put 86 on a lot of tentative consumer travel plans across the Atlantic. Then toss in the mess that Trudeau has put Canada in, and it’s pretty certain that a lot of planned leisure trips to that country are red-penciled.

Secondary US-EU Markets In The Crosshairs. Most vulnerable: secondary US airport trans-Atlantic flights. With connectivity demand slashed at hubs like BA/LHR, and LH/FRA and AF/CDG, it will be nonstops from secondary USA airports that will likely get hit square on the cancellation bulls-eye. While this is not pleasant to forecast, we need to look at trans-Atlantic service in operation or planned at places like AUS, PIT, CVG, STL getting the temporary ax at least for the near term.

Idle Leisure Travel Dollars Represent Domestic Opportunities? All of this chaos taking place outside of the USA may well divert planned travel spend to USA destinations. People will be looking for new travel experiences… this could be a huge opportunity for places in the United States. Think Flathead Lake. Think Thousand Islands. Think Big Bend. Think Outer Banks. Think Lexington. Think Bar Harbor.

Actually, it’s up to the powers that be in places like this to go into high gear now to posture for these otherwise latent travel dollars. It’s an opportunity – big time.

One thing is certain: This is not going to be a happy summer for international carriers.


Getting Ready For The New Air Service System

We’re Challenging The Status Quo

Let’s take a look…

Consolidation and regionalization are reducing or eliminating local flights at small community airports.

American, Delta and United cutting markets like CWA, TOL, ABI, LAN, AZO, etc. out of their various hub systems. There will be more… a lot more.

Capacity across the board still hovering at 10%-12% down compared to 2019.

Smaller jets being retired from fleets, accelerating regionalization.

Yup, tough times.

And, according the lore and most of the media coverage, it’s all due to pilot shortages and the outcome of the CCP-Covid pandemic. When these are addressed, all will be restored.

And Santa Claus will be coming down the chimney, too.

The Economic Meteor Was On The Way, Anyway. The hard reality is that the core dynamics delivering these changes were in progress before the pilot shortage. And long before the virus cover-ups in Wuhan delivered a pandemic to America. These just accelerated the effects of material and fundamental shifts in air transportation as a communication channel.

The air service that’s been pulled isn’t coming back… Santa Claus isn’t either.

Take A Look At The Future. Swelbar-Zhong Consulting and Boyd Group International have issued a new Thought Paper that, based on hard, clear data, illuminates the need for restructuring the entire approach to assuring communicative connectivity for all areas of the nation.

The Real Third Rail Issue is a paper that does not dance around the issues. Air service access is changing, yet many communities are still stuck trying to recreate the past, wallowing in nonsensical exercises like “peer airport comparisons” (just measuring passengers, not air travel dynamics) or “average fares” (there is no such thing) or “catchment studies” (catchment is driven by consumer options not geography.)

Air travel dynamics have changed. Fleets have changed. The consumer has changed. Raw economics have changed. Yet communities are running to get back to the 1980s. This Thought Paper – The Real Third Rail Issue – addresses the facts, and outlines the solutions and opportunities that are coming.

This is not a passing report. Standby… we’ll be talking in the weeks ahead in a wide range of venues, exploring solutions and new directions. Yes, it will ruffle some feathers… but facts are facts.

If you want to take a hard unvarnished look at the future, just send us an email and we’ll get it off to you.

The future belongs to those who accept that the past is over.