Monday Update – February 17, 2020

February 17 Update

737 MAX – A Kiwi Until The Fall?

According to reports, the scrutiny of the 737 MAX may have uncovered some additional issues that could delay the return of these aircraft to the global skies.

For American and United, not great news, but they do have other single-aisle airliners coming on line, both new and used, operated both in-house and outsourced. The lightweight media stories about cancellations are misleading… these are seats that aren’t being put into the schedule in the first place.

Southwest, as of now, has no real options. Even prior to Max issue, they’d already scoured the earth for used -700s, and maybe looking at used -800s, although there are not many out there on the market.


Bombardier Exits Airliner Business – After Shaking It Up Big Time

Bombardier of Canada – once arguably the #3 global airliner manufacturer – has now divested itself of most of its involvement in the aircraft business.

At least it goes out with an increasingly loud bang, and one enormous legacy.

Bombardier’s CSeries – now the Airbus A220 – already has 764 orders on the books, with over 300 of these from carriers in North America.

Teething problems attendant to any new airliner aside, the A220 is the game changer that pushed industry giants Airbus into the A320Neo program and Boeing into the 737MAX.

Not too shabby for a relatively small company in Canada.


Coronavirus & U.S. Airport Readiness…

We can start with this: for the time being, most U.S. airports and airlines have no real immediate threat from the coronavirus epidemic.

Overall, the U.S. has pursued an aggressive and pro-active program to identify potential entry points for the disease. And it is a nasty, highly-contagious and highly deadly disease.

One sometimes-repeated bit of nonsense is that it’s no worse than the common flu… and buttressed by the non sequitur and stupid statistic that more people died from it than coronavirus. That bit of malarkey has gone silent now that the “official” death tally in China is over 1,600. (Take that and treble it, and you’ll still probably be short of the real number.)

People don’t fall down dead or almost dead on the streets of Omaha due to the common flu. But that’s happening in cities across China.

China Air Transportation System: It’s Not Going To Fully Recover. For airports across China, this is a nightmare… Based on reports from inside China, domestic air traffic right now is down as much a 70%, depending on the source.

Don’t buy into the babble from the usual “analyst” suspects that this will be just like the effects of the 2003 SARS epidemic – the traffic will bounce back soon after the crisis is over.

No way… this is a whole different situation than 17 years ago. For one thing, airports in China were handling less than 300,000 passengers then. In 2019, that figure was 1.4 billion. For another thing, this epidemic has likely exacerbated the challenges that were already facing the Chinese economy.

Lots of Open Gates. Lots of Room On The Great Wall. As of this date and with the information at hand, our Airports:China™ forecast is for China’s airports to handle over 400 million fewer passengers in 2020 – a 30% decline, after a decade of 10% annual growth.

And that’s a best-case scenario.

We cover this in an update at The situation is dire, and the formerly exciting expectations for China-U.S. air traffic of just a year ago are gone.

You Betcha – Flying Is “Safe” In China– Just Don’t Get Close To Anybody. The bungling – or, worse the cover-ups – in handling this epidemic by the Chinese Communist Party – has been shameful.

Even as they are quarantining millions, they publicly are denouncing countries that are cutting off air service. This whole mess started because they let millions of people travel from Wuhan – after they knew full well that there was a virus epidemic. Political correctness and avoiding embarrassment, don’t ya know.

This isn’t doing Chinese airlines – which have increasingly earned global reputations for first-rate air service – any favors. But is putting the kibosh on a lot of future air travel to China. Given the shenanigans of the PRC government, there’s going to be a “enter at your own risk” sign on the national door for a long time to come.

One ridiculous missive recently put out in China states that it’s safe to take an airplane trip – in fact, it’s the safest way to travel, they tell us – as long as you don’t sit too close to others, as transmission of the virus is unlikely more than a couple seats away. Oh, and a window seat will give you the least exposure, too.

They must think we all just fell off a turnip truck to believe this malarkey.

North American Carriers: Limited Effect on Bottom Lines. What will bounce back, however, are the three U.S. airline systems that have found it necessary to cancel all service to China. While this is a short-term fleet planning disruption, American, Delta and United have other opportunities with that capacity.

Perspective: In 2019, there were approximately 7.8 million air trips between the U.S. and China, via all routings – nonstop and over other Asian connect hubs. That’s within approximately 560 million total U.S. air trips. (Trips, not enplanements, by the way.)

To get some information on the coronavirus as it is affecting air service, take a look at our latest updates on BoydGroupChina,com. Click here.

There are a couple of insights that a lot of the media have entirely missed.