Monday Insight – July 26, 2021

Four Trends To Watch In The Fourth Quarter

The news, generally, is good… as of today.

Passenger numbers are coming back on a national basis. Airlines appear confident, with financial results delivering solid positive direction.

The media coverage is accurate, at least as far as what is apparent today. But that’s not what’s on the very near-term horizon.

Not to rain on this parade, but there are nasty clouds starting to become obvious.

Here are what we believe to be the ones to watch over the next six weeks as we approach post-summer booking trends. Already this week we are seeing certain carriers yanking capacity down from what was filed for September. August is expected to be @ 86% of the capacity in the same month in 2019, and September is indicating it may be below that comparative metric.

Being prepared is being armed for the future.

Rising Inflation

This is the #1 growth stopper on the horizon, and one that may be starting to roost already in booking levels for the 4Q.

The current rebound in traffic is focused on leisure traffic. Leisure traffic is discretionary-driven. When discretionary dollars are reduced due to higher costs of living, that means leisure air travel is going to flatten or decline.

Inflation has already started. It’s in progress. Big time.

Jet-Fuel Prices

The USA has shifted policy away from energy independence.

The current policy is anti-petroleum, and hence the supply of such will be constricted to comply with political considerations. This is one reason that the price of gasoline nationally has jumped by a dollar from last year, even in light of strong potential supply.

Heck, when a terrorist attack was made on Colonial Pipeline, affecting the economy of the East Coast, the current Secretary of Energy was not concerned… according to her, it would have the effect of encouraging use of electric vehicles. Anything to reduce use of fossil fuels, don’t ya know.

Jet-A is not immune. Toss in the current distribution issues being seen across the western USA, and it is a leadpipe cinch that fuel is going up and that means fares, too.

In the foreseeable future, too.

The Delta Variant of The CCP Covid Disease

The gift to the world from the criminals imposing themselves on China and the world, the CCP, seems to just keep on coming. Now we have reports of a new strain of the CCP’s handiwork supposedly spreading, and causing uncertainty about safety of air travel.

Surveys are now coming out that consumers are less likely to fly due to the new variant of the virus.

‘Course, nobody seems to want to question whether such surveys are valid. See, when the question is framed as, “there’s a new strain of Covid that people are getting… would that deter you from taking an air trip?”

Even if the respondent has never heard of such an event, and is given no data to determine the scope of the new virus, the natural response would be, given the supposition of a new killer on the loose, that they’d stay away from any congested venue. But the full discussion of what the Delta strain is, and how it responds to vaccines, and the raw number of Delta infections, are not disclosed.

With the track record of yo-yo truth in CCP-Covid reporting over the past year, nothing is certain. But uncertainty keeps people from flying.

It’s a factor that is already gaining traction.

Restructuring of Demand Generation

The latest research at Airports:USA® clearly indicates that demographic factors are in play in air transportation demand.

Historical and traditional geographic air traffic levels are changing. That’s because of a number of factors, but mainly because there are regions of the nation that are no longer competitive in regard to both business location and quality of life.

Take the Middle-Atlantic region. It has been coasting along economically over the last 20 years due to historical inertia as a desired region for commercial activities and quality of life. No more. The civil unrest, trendy politics, rising crime and other experiences over the last year don’t exactly play well in videos promoting New York City as a place to raise a business, not to mention a family.

On the other side of the country, it’s now indicated that the combined capital gains taxes in California will approach 60% in the future. Capital investment won’t be flowing into that state.

These are just starting points. Therefore, air traffic demand growth will be very slow – or negative – in several large metro areas, while concurrently booming in other regions.

We’ve covered this in the publicly-accessible Snapshot section of

Planning Insight That Goes Beyond Consensus Thinking

These trend reviews are unique to the business philosophy of Boyd Group International.

We focus on the future… the future of our clients across aviation. We are not reticent to state the facts as they are, even when they are counter to “consensus” thinking.

Our research has assisted airlines, airports, financial institutions, manufacturers and suppliers in gaining the competitive edge and in optimizing change.

So, if you’re looking for new perspectives that step beyond yesterday’s consensus thinking, give us a call or send a quick email.

We look forward to working with you – and tackling the future together!