Monday Insight – June 13, 2022

Goodness! Aeroflot Is Going To An All-Russian Fleet!

Boeing Isn’t Likely Shell Shocked

Yessir, with their whole fleets of Boeing and Airbus airliners bottled up due to Ukraine-related sanctions, Russia’s airlines are finding parts hard to find.

So Aeroflot is reportedly getting ready to order 300 new airliners built right there in Mother Russia. It’s probably the start of all of the country’s carriers going in the same direction.

Flying Bow-Wows. The MC-21 is in line, we are told, for a big order. An A320/737 wannabe, it’s first flight was five years ago, and they are still messing around trying to get it delivered to an airline operator. That’s notwithstanding the reality that there is as yet no indigenous Russian powerplant ready for the thing.

Then there is the Sukhoi Superjet – under 100 seats – which will make up a fleet of over 100 of these lead sleds for one of Aeroflot’s spin offs.

The MC-21 has been flying for five years and it’s still not ready for prime airline time. After an ugly experience with a Mexican airline, not to mention a global sales tour a few years ago when one flew smooth into a mountain in Indonesia, nobody is much interested in the Sukhoi airplane, either.

The good news is that Aeroflot and other Russian airlines aren’t facing much competition for slots on the production line. Like, no competition.

Lots of Demand Should Global Carriers Want  To Go Retrograde. There has been some drivel from some in the financial world that in light of Boeing’s stumbles and the tight orderbook at Airbus, there are strong global opportunities for both Russian and Chinese airliners.

That would be true if either country had a viable airliner program. Neither does. In a recent Aviation Unscripted video, we covered the fiasco surrounding the CCP in China chasing its tail with world-beating embarrassments like the C919 and ARJ-21.

Russia is about the same. (Click here to take a look.)


Revised Airports:USA Enplanement Forecast

Reduced Airline Capacity Expected To Slow Growth.

Inflation Might Slow It To A Stop.

The latest Airports:USA® enplanement forecast shows another 2022 decline to 863 million. That will still be over 30% up from last year. But there are nasty noises coming from this diving economy.

This forecast is based on airline capacity estimates by Boyd Group International. These data do not yet contemplate consumer spending reactions to continued inflation and the specter suggested now in the financial world of a potential recession.

This Is A Moving Target. We have run some tentative forecast scenarios based on potential reductions in demand – well beyond the operationally-driven capacity cuts being announced at this time. These indicate that another 19 to 23 million enplanements could come off the currently estimated number.

We need to be blunt and start acknowledging that the current economic situation is not conducive to continued robust traffic growth. There is no logical way that average $5 unleaded and $7 diesel won’t be raising all sorts of mayhem with consumer spend patterns.

It’s Hard To Get Revenge When The Consumer Is Financially Disarmed. There’s the talk of the dynamic of “revenge travel” – all those people cooped up during the pandemic are supposedly now jumping on airplanes, taking trips that were verboten in 2020-2021. That may be, but revenge to get to ‘Vegas or Boca can get tempered really quick when, as reported in some surveys, 40% of households are digging into savings to pay the bills.

Leisure & Impulse Travel… Watch For A Deflating Bubble. It doesn’t take a Cray computer to determine that when discretionary dollars go short, any impulse spending goes down.

Airports dependent on high volumes of impulse and leisure traffic could well find traffic later in the fourth quarter to hit a brick wall. This puts some Florida points and Las Vegas in the crosshairs. The unknown is the vulnerability of the specific leisure product. High level spend at ski resort destinations such as Aspen or Bozeman are a whole lot less endangered than low-fare flights to Las Vegas intended to get customers out of their Lazyboys.

Give Us A Call For A Granular Future Forecast. There are myriad ways that what’s coming in the next six months will affect specific airports. At BGI, our Airports:USA® forecast program will deliver perspectives that traditional systems miss.

Click here – and let’s collaborate for the future.