Monday Insight – February 8, 2021

Airlines: Get Ready For Political Target Practice – On You

The perfunctory and necessary courtesies of the travel industry warmly welcoming a new Secretary of Transportation are behind us.

The question now is what is in future store for the U.S. airline industry.

We will be covering this shortly on our Aviation Unscripted video channel on Rumble.

But in the meantime, there are several things that the airline industry should be preparing for.

Environmental & Economic Regulation. Now that there are few political counter-balances, it could be open season for all manner of new “progressive” regulations. While U.S. airlines can accurately claim that they’re aggressively pursuing all possible paths to protecting the environment, the sad reality is that they use jet fuel, and in the emerging apparent thought-boxes in Washington, that puts airlines on the other side of the fence.

There are official dogmas that will be coming into play. It makes no difference regarding the potential future economic and environmental dangers that alternative power sources may represent. The verdict is quietly in: burning fossil fuel is in the cross-hairs.

Then there’s the “consumer” aspects that may be in play. That verdict may be coming soon: airlines must adhere to the “public need” – as defined by politicians who couldn’t pass an Econ 101 mid-term. Add to this, the ascendancy and near-certain acceptance of a whole passel of obsolete and inaccurate assumptions regarding air service, and the airline industry is in for some real challenges.

These are just a couple that may be over the 2021 horizon…

Higher Fuel Prices. Let’s not dance around this. The new inhabitants inside the Beltway are no fans of fossil fuels. The Keystone Pipeline is cancelled. Fracking on federal lands has been exec-ordered to stop. These are indications of what can be expected. Just at a time when traffic is way down, and costs are being adjusted, make no mistake, this type of stuff will jack up fuel prices.

Plan On More Fuel Taxes. There is no telling what the new regime may pursue, both for motor fuels and for aviation jet-A. The airline industry is a very convenient target as a general “polluter,” and it’s likely the political shooting will start in Congress in the next several weeks.

Regulated, Or Quasi-regulated Fares. We’ve noted in the past the ridiculous and fantasy concept of a national “average fare” – there is no such thing. But that won’t stop calls for regulation of ticket prices where they may exceed some percentage of what is concocted based on taking all passenger trips and dividing revenues accordingly. Communities where the local fares are higher will get relief, perhaps in the form of fare ceilings or some other mechanism. Maybe. Again, there are no longer many counter-balances to a lot of these “trendy” concepts.

Mandated Small Airport Service. Regardless of the economics and consumer preferences, there is the potential for righteous politicians who know nothing about air transportation economics and consumer preferences to badger the DOT to cobble together any number of initiatives to get more “air service” to small airports.  Not small communities – many of which have strong air service access – but at airports.

Even if the communities have excellent air access available at other airports, there is still the nonsense being spread that without scheduled flights – regardless of where they may go, or if they connect to anything other than a baggage claim area, at the local airport, the communities will economically crater. Lore.

But never underestimate what this new regime might pursue.This could take the form of more money wasted on EAS service that consumers won’t use, all the way up to even requiring network carriers to provide X% of all ASMs to DOT-determined airports at specific small cities. Or something else just as wasteful.

Stand by… more to come. We’ll be posting the new Aviation Unscripted video shortly.

In the meantime, if you haven’t checked out our latest Unscripted video, click here. We cover the how the Chinese Communist Party is literally celebrating the first anniversary of the pandemic they created, plus we take a look at the emerging dire issues facing Canada’s air transportation future.


Latest Airports:USA® 2021 Forecast

The New Airline Structure Is Taking Form.  A Smaller One.

Based on current projections, the Airports:USA® forecasts indicate a sluggish plateauing of U.S. enplanements through the remainder of 2021.

We’re analyzing both expected capacity and airline strategies, including re-fleeting. There are very few dynamics now in place that can support any return to 2019 enplanement levels before late 2023 – at the earliest.

Note that the airline industry has made it clear that when the federal support dollars run out, it’s a one-way ticket to furlough city for thousands of employees. It’s a smaller industry because the market base is smaller. In some aspects, that’s temporary. In others, permanent. The unknown is the size of the impact and where that impact will be in the marketplace.

The traffic isn’t rebounding, and the major reasons are based on bungling and uncertain state handling of the China-CCP pandemic and – far more fundamental to the situation – the role of air transportation as a communication modality has been permanently changed.

Regardless of the downsides, the raw cost advantages of electronic business cannot be argued with.

And, business consumers aren’t arguing. Or flying as much, either.

For airports looking to take advantage of the new future, click here to take a look at our Runway To The Future program. No, it’s not more market studies… it’s a review of the new realities that no other planning firms can match. Take a look…