Predicting Airline Growth

With capacity holding steady, air service focus turns to international, ‘high-value’.

SARASOTA, FL — Airline and airport analyst Mike Boyd predicts mixed blessings for the aviation industry. Speaking at The Boyd Group’s annual Aviation Industry Forecasting Conference in October, he observed that “everything’s going to be very different in the way things are done, where they’re done, how they’re done — and most of the news is good.” Boyd says U.S. airports should be looking at how they connect internationally, which may present new opportunities. He remains a critic of air traffic control modernization, and calls for a rethinking of the Essential Air Service program. High on his radar is the changing complexion of the low-cost carriers, led by Southwest and Frontier.

To really be a player anymore, Boyd says, airports have to be connected to the global network in some way, shape, or form.

“America is no longer the center of the universe,” Boyd says. “And what’s happening is, global transport, global trends are what’s going to be driving things, not just in New York City, but they’ll being driving things in Gainesville, they’ll be driving things in Fresno.

“We are part of a global industry. And for aviation, that’s going to be critical going forward.”

Garnering international traffic, Boyd says, is one the best ways to stay relevant. “Communities that are connected, air service development-wise, to the rest of the globe are going to grow,” Boyd says. “Those that are not, are not going to grow. It’s just as simple as that. That’s why economic growth is going to be very critical at international connections to get air traffic growth.”

China, as usual, will be a big part of re-thinking traffic flows in the United States. Says Boyd, “There’s a tremendous amount of traffic between growing trade routes between Latin America and China.

“There’s probably enough people to fly non-stop between Sao Paulo and Beijing, if an airplane can make it, but you’re talking about a lot of secondary cities. How do you get those people back and forth? You can’t fly non-stop from Chihuaha to Beijing, it ain’t going to happen.”

The answer for U.S. airports, Boyd says, is to become ‘global portals’ connecting not just domestic regions but global regions as well. “Look at a globe and draw a line from Rio de Janeiro to Beijing. You’re going right over the United States,” Boyd says.

Boyd envisions Detroit, Houston, and Dallas-Fort Worth as all being good global portals candidates, which in turn will help drive domestic travel to smaller U.S. cities. The Boyd Group also has been studying other international traffic flows within the United States.

“India is a prime example,” Boyd says. “Over 2 million Indians are living in the United States. Of them, 60 percent, according to the Indian government, have maintained their Indian citizenship. In other words, you’ve got one-point-something million people living in this country, but they’re Indian citizens.

“What that means is they travel. Another point they have is they’re about 25 percent above the average in the U.S. in terms of income. It’s a very lucrative market, and it travels back forth.”

Air traffic and the Hill
“Air traffic management in aviation is going to be an ongoing problem,” Boyd says. “We really don’t have leadership. Until we do, there’s going to be more and more constriction on our air transportation system in the United States.”

And the airlines are at least partially to blame. “ATA comes out saying they want to work with the FAA,” Boyd says. “Fine, you want to work with your captor.”

“Forget NextGen. That’s yesterday-gen. The FAA’s own annual report said ‘all our programs are on track. Our wide-area augmentation system will do this, this, and this.’

“They left out that the wide area augmentation system is 13 years late. The reason it’s on track; they just gave it a new schedule. Which is like arriving on a flight three hours late and the pilot telling you ‘we’re on time, we changed the schedule in-flight.”

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