TWFirst
Topic Author
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7 Oct. NY Times Article - Future Of Air Travel

Tue Oct 07, 2003 10:56 pm

This was in the NY Times today... notice the error at the end of the article: It's ATA that's starting EWR-SFO, not AirTran (just another example of how the brands continually get confused... if I were ATA, I'd take notice that this chance for free publicity was blown due to a confusing/weak brand, but I digress).

Anyone like Boyd?? My opinion is that "aviation consultants" like Boyd and Trippler charge a lot of money to say pretty simple and obvious things.... maybe my perception is inaccurate, but it seems to me that there are many users here that have much more insight and knowledge of the industry than what I've witnessed from Boyd.


MAJOR CHANGE FORESEEN IN AIR TRAVEL
By Joe Sharkey
New York Times, October 7, 2003

NASHVILLE -- "There are fewer people flying, and they're paying less per person," and that trend is here to stay, Michael J. Boyd, an aviation consultant, told an industry conference on Monday.

In case the significance of that simple statement did not quite register on the roomful of industry representatives gathered for the Aviation Forecast Conference, Mr. Boyd put it another way.

For a domestic air transportation system facing that reality, he said, the changes would be on the magnitude of the shifts from "analog to digital; from the buggy whip to the transistor." The conference was sponsored by Mr. Boyd's company, the Boyd Group of Colorado.

Among the changes coming as the airlines adapt to a new world environment, Mr. Boyd and other industry experts said, are these:

¶ A sharply accelerating decline in air service to rural, small and even some medium-sized airports, as major airlines abandon them to consolidate market strength in their best-performing hubs and scale back operations at some secondary hubs, like St. Louis.

¶ Far less passenger growth, even without a new terrorist incident, than forecast by the Federal Aviation Administration and other government agencies. Total domestic passenger traffic will not match 2000 levels of about 694 million annual passengers until 2008, says the Boyd forecast, which is to be released on Tuesday.

¶ A permanent change in the way business travelers plan most trips, to take advantage of low fares originally tailored to lure leisure travelers. "The business traveler has taken a powder" from dependence on the top-level walk-up fares that once supported the finances of major airlines, Mr. Boyd said, and airline executives who think the old fare structures will come back are deluding themselves.

¶ A continuing virtual consolidation of major airlines through the growth of code-share alliances, which permit one airline to book its passengers on a competing airline to expand the reach of its routes. Mr. Boyd said these alliances reflect a strategy of "competitive cooperation." Another speaker, Jamie Baker, an aviation analyst with J. P. Morgan who is bullish on major airline stocks, described the alliances as a "near merger strategy" that would help airlines financially while hastening the decline of weaker hubs.

¶ The likelihood of continuing fare wars on popular regional and transcontinental business-travel routes where big network airlines are desperately trying to fend off what Mr. Boyd called aggressive "cherry-picking" by rapidly growing low-fare airlines like Southwest, JetBlue, Air Tran and Frontier. The customer appeal of low-fare airlines has grown so strong that low-fare competition can be devastating to a major airline operating at an airport as much as 200 miles away, Mr. Boyd said. Some customers will drive "three hours or more to get a lower fare," he said.

¶ Sharp growth in once-sleepy airports near major cities. Passenger traffic at the airport in Long Beach, Calif., near Los Angeles, is expected to increase fivefold by 2008 over the 312,000 passengers handled in 2000, Mr. Boyd said. During that same period, the second-most-rapidly growing domestic airport will be the one in Flint, Mich., where passenger traffic is expected to rise 84 percent.

¶ A flattening in the recent heavy demand for small regional jets of 51 seats or fewer, in favor of bigger airplanes, including more cost-efficient regional jets with 100 or more seats. Consumer demand for more comfort on regional jets, including the addition of jetways, is partly driving that trend.

¶ A looming shakeout among small regional airlines, as they abandon unprofitable point-to-point service and evolve into companies competing with one another to provide regional jet service as subcontractors for big airlines.

¶ In general, a growing demand for better customer service from low-cost airlines and major network companies alike, but with a persistent resistance to higher fares and, for the industry, a long-term disappearance of about 20 percent of the overall revenue seen before Sept. 11, 2001.

During a morning question and answer session, Mr. Baker, the J. P. Morgan analyst, said he was amazed that the managers of network airlines "by and large are not doing nearly enough to combat" the ever-growing competitive threat they face from rapidly expanding low-fare competitors, or to "take a leadership role" in making fundamental changes in fare structures.

By 2006, he said, at least 40 percent of commercial domestic aircraft taking off "are going to have Southwest, JetBlue, Air Tran or some other discount name painted on their side."

Meanwhile, the low-fare airlines will continue to muscle in wherever they see an opportunity, rejiggering fare structures and driving their old-line competitors into matching their much lower prices on a route-by-route basis.

"In three weeks, the walk-up fare between Newark and San Francisco is going to go from $1,230 to no more than $450 on Continental," Mr. Boyd said. Why? Because Air Tran, a low-fare airline, is entering that market, he said.
An unexamined life isn't worth living.
 
prosa
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RE: 7 Oct. NY Times Article - Future Of Air Travel

Tue Oct 07, 2003 11:00 pm

Keep in mind this old joke: forecasts are quite reliable, as long as they don't involve the future. It's entirely possible that almost everything which people think will happen won't actually happen.
"Let me think about it" = the coward's way of saying "no"
 
KateAV8
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RE: 7 Oct. NY Times Article - Future Of Air Travel

Tue Oct 07, 2003 11:16 pm

Hmmm...seems like the only thing we can ever count on is perpetual change. I think this is just a phase in a never-ending cycle. Next year that guy will probably write an article stating the complete opposite.

Have a great day!  Smile/happy/getting dizzy

Kate
The only justification for looking down on someone is to help them up
 
UA744Flagship
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RE: 7 Oct. NY Times Article - Future Of Air Travel

Wed Oct 08, 2003 12:18 am

Ahhhh Mikey.

AirTran is not entering EWR-SFO, it's ATA.

While I do agree with all of what Boyd says, the fool sometimes doesn't think before he makes quotes in the papers.

He has often contradicated himself, even in the same story, and in cases like this, simply hasn't got enough appreciation for fact to use it right.
no wire hangers!
 
DCA-ROCguy
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RE: 7 Oct. NY Times Article - Future Of Air Travel

Wed Oct 08, 2003 2:06 am

Anyone care to offer evidence for their snide dismissals of the points in the article? Yes, Boyd often comes across as a know-it-all (especially to UA supporters, since he's such a scathing UA critic), but I didn't see any forecasts in this particular article that seemed outlandish or out of keeping with what other major airline-related analysts have been saying. (Which is itself interesting because Boyd often promotes himself as having unique insight.)

Boyd's especially right that corporate America's tolerance for 1990's high walkup fares is gone and *not* coming back. The Cartel-Network carriers are spitting in the wind if they think they can keep transcon fares like they were in the 1990's. LCC service has come to that sector and will only keep growing for a long time.

This article in today's Aviation Daily from Aviation Week offers corrobration on the point about corporate America's travel spending patterns. The Business Travel Coalition is not a fringe group and its findings carry some weight.

http://www.aviationnow.com/avnow/news/channel_aviationdaily_story.jsp?id=news/bot10073.xml

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
KateAV8
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RE: 7 Oct. NY Times Article - Future Of Air Travel

Wed Oct 08, 2003 2:14 am

I wasn't trying to be snide, just optimistic.  Innocent
The only justification for looking down on someone is to help them up
 
luv2fly
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RE: 7 Oct. NY Times Article - Future Of Air Travel

Wed Oct 08, 2003 2:26 am

DCA-ROCguy

I agree that the majors still are missing and or hoping the business travelers paying the high last minute fares are coming back. Also I think the internet has had a change on business fares as now the business flyers can check fares and not rely on a travel agent who might have had a deal with airline XYZ and was always pushing and or quoting that airline.
You can cut the irony with a knife
 
bobrayner
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RE: 7 Oct. NY Times Article - Future Of Air Travel

Wed Oct 08, 2003 2:28 am

It seems a little inconsistent.

If the future holds low fares, intense competition, and tiny margins - then why forecast that carriers will abandon modest rural routes to chase ever-smaller returns on the most crowded routes?

Far less passenger growth, even without a new terrorist incident, than forecast by the Federal Aviation Administration and other government agencies. Total domestic passenger traffic will not match 2000 levels of about 694 million annual passengers until 2008, says the Boyd forecast, which is to be released on Tuesday.

If GDP increases (not quickly, but better than nothing), and prices drop drastically, then why would consumption not increase? Seems pessimistic to me.

A permanent change in the way business travelers plan most trips, to take advantage of low fares originally tailored to lure leisure travelers.

Why now? Business travellers could have saved millions by flocking to tourist-price tickets 2 or 3 decades ago. They didn't, because they were willing to pay for better treatment and more flexibility; many want the same now. Mainstream airlines can - and will - continue to charge a premium for this, and they'll continue to get customers.

Recently I had to pay an obscene multiple of the bargain-bucket price to get a business class walk-up ticket, just because I needed the flexibility; being an RJ there wasn't even a difference in the snack or the seating. There will always be the same market segment willing to pay extra; good, non-flat-fare airlines will always find a way to milk that extra cash.

A flattening in the recent heavy demand for small regional jets of 51 seats or fewer, in favor of bigger airplanes, including more cost-efficient regional jets with 100 or more seats.

Hmm. They'll need bigger airliners when passenger numbers stagnate and competition intensifies?

Consumer demand for more comfort on regional jets, including the addition of jetways, is partly driving that trend

Are those the same economy customers who drive 200 miles for a cheaper ticket? Or are they the same business travellers who are now cutting back their travel budgets?

Other than that, I agree with it.  Big grin


[Edited 2003-10-07 19:29:54]
Cunning linguist
 
DCA-ROCguy
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RE: 7 Oct. NY Times Article - Future Of Air Travel

Wed Oct 08, 2003 3:57 am

Why now? Business travellers could have saved millions by flocking to tourist-price tickets 2 or 3 decades ago. They didn't, because they were willing to pay for better treatment and more flexibility; many want the same now. Mainstream airlines can - and will - continue to charge a premium for this, and they'll continue to get customers.

Not as many as they used to. In the flush 1990's economy, business travelers were in the pilot's seat, as it were. Their companies were raking in money and could afford to indulge their demands for first class seats on the high-CASM network airline whose FF program they belonged to. Now, the economy has soured, and more than that, it is restructuring again. Corporate travel departments--who have the actual final say--are telling their road warriors, get in the cattle line at Southwest. And smaller businesses, who never had big corporate travel depts to begin with, have by most accounts (AvWeek and others) been more open to LCC's all along.

No, the network carriers will *not* continue to get as many customers at obscene walkup fares as they used to. The economy is changing--even tech is going through big overseas outsourcing now--and companies aren't going to have money to spend on all those ridiculous fares, even when things improve.

Those who *do* fly network carriers--who will probably continue to have around half of air travel--want the comfort of RJ's with jetways for regional flights, not props. That's what Boyd is talking about there. I'm not ready to write 19-30 seat props off as completely as Boyd is, though; some places and routes seem to support them (eg Continental Connection in the Northeast) but they will be more of a niche product.

Jim
Need a new airline paint scheme? Better call Saul! (Bass that is)
 
LambertMan
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RE: 7 Oct. NY Times Article - Future Of Air Travel

Wed Oct 08, 2003 5:09 am

UA744flagship, he does say that it is ATA starting the service, re-read it, I nearly posted the same thing you did. Big thumbs up
 
TWFirst
Topic Author
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RE: LambertMan

Wed Oct 08, 2003 5:16 am

What are you reading LambertMan?? Because when I read the last paragraph of the article, I'm seeing the words "AirTran".
An unexamined life isn't worth living.
 
planemaker
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RE: 7 Oct. NY Times Article - Future Of Air Travel

Wed Oct 08, 2003 7:36 am

There is a similar Topic in the Forum: US Airline Industry 10 Years From Now?

http://www.airliners.net/discussions/general_aviation/read.main/1217243/

Regarding the Boyd, below are links to additional coverage of the conference:

http://www.dallasnews.com/sharedcontent/dallas/business/stories/100703dnbusairahead.9db09.html

http://www.usatoday.com/money/biztravel/2003-10-06-travforecast_x.htm
Nationalism is an infantile disease. It is the measles of mankind. - A. Einstein
 
UA744Flagship
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RE: 7 Oct. NY Times Article - Future Of Air Travel

Wed Oct 08, 2003 8:13 am

"In three weeks, the walk-up fare between Newark and San Francisco is going to go from $1,230 to no more than $450 on Continental," Mr. Boyd said. Why? Because Air Tran, a low-fare airline, is entering that market, he said.

Oh really now?  Smile
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