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Air Service Development Realities For 2024:
The Rasputins Are Running Out of Steam.
Summary: The new realities of air service economics and consumer trends are coming home to roost in 2024. The days of just promising undefined "air service" or "more airlines" has been the playground for spell-binding consultant Rasputins. That's ending.
As I alluded to last week, a lot of air service development approaches can be compared to roller-coasters and latter-day Rasputins. There are parallels, actually.
Roller-Coasters & ULCCS: Delivering Leisure Fun, Not Air Access. A roller-coaster takes folks up for a good time, and at the end of the experience they’re back to where they started.
Gee, that defines most ULCC service. It is mostly focused on price-impulse leisure traffic to a specific destination and is not in the business of connecting communities to the air transportation system. It's great, but there is still the issue of access to the rest of the world.
Today’s Rasputins Are Delivering Voodoo Guidance. Then there are consultants that fail to inform airports and communities on the true structure and economics of the air transportation system, such as defining the difference between ULCC service and network connectivity. Such as not outlining clearly and up front the concrete economic realities specific to the community.
Objectives often are simply "finding more airlines," or "more air service." These are complete jive when not accompanied by specific targets.
Unfortunately, many airports aren’t informed that “air service” is access from the rest of the globe. That "access" is potentially available from a clearly-obvious set of airline targets specific to the community. Also, that access may not be economically possible from the local airport.
Things that Rasputin forgets to include in the final report, usually.
Miasmic goals like "recruiting an airline for Dallas" are nonsense as such within a hub system that makes the airline target obvious, and the need for connecting traffic to support the route imperative. Hence, you have Frontier, American and Southwest, and each have specific strategies that will bear on whether the market can support service.
ULCC service is not access, but represents a new spend option for the community. A day-of-week flight to Florida is a conveyance to usually a single leisure destination, which has zero to do with air service access. Like the roller-coaster, the consumers end up back where they started. The business applications of airliners are entirely different.
There are strong parallels between this Russian guy and a lot of today’s air service consulting. He was worshiped by the by the Russian Royal Family who swooned on his every word, the expert of all. Rasputin was gifted in selling the Czar lots and lots of bogus information promising great things that mostly wasted money, and at the end of the day only led His Highness to getting whacked by a firing squad.
Yikes. There are some airports well into almost a decade or more, shelling out lots of money to Rasputin after Rasputin, with connective air service results usually being zip. The realities are clear, but the fantasy is maintained with study after study, speed-date meeting after speed date meeting, and lots of promising fantasy data. We’ll get that air service, the community demands, even if we don’t know what it is! When one Rasputin doesn’t deliver, well, hire a different one.
Take a look at most of the studies from this genre: they’re all about how airlines can be recruited, with not a shred of discussion of the challenges generated by shifting fleets and cost-shattering economic changes. Ethics, friends.
Fact 2024: Regionalization of Access Is Consumer-Driven. The difference between just getting “flights” at the local small community airport and air service access will become too obvious in the coming year. Truth can no longer be smoke screened by another “true market study” peddled to convince the community to keep on tossing money to recruit airlines that no longer even have fleets appropriate to the market.
The fact will hit home that the raw cost of scheduled connective passenger service is eclipsing the ability to support scheduled flights at some small community local airports. It’s a matter of adjusting to new consumer patterns that cannot be reversed. It's a matter of the need to consider a different strategy.
The fact is that network air service access is being affected by the retirement of smaller airliners. Basically, the floor will be 76 seats. Not only that, but only a finite number of these airliners will be operated, and even their economics will eventually be affected by the next fact:
The fact is that airlines are now “pattern bargaining” where compensation for pilots, cabin safety staff, mechanics and other classifications are headed up like a moon launch. That raises the revenue bar for air service.
One example: Southwest’s new contract jumps pilot pay immediately up by almost 30%. This is not a one-off. Labor costs will raise the bar for air service recruitment across the board beyond the reach of more and more small community local airports. Not fun to hear, but it is truth.
The fact is that consumers – regardless of local civic hubris – will continue to opt for the air travel options that are the most time-convenient. In many cases, the local small airport cannot support anywhere near the frequencies and fares necessary to keep them from driving to a larger airport. “Convenience” is a factor that local airports often cannot deliver.
The fact is that regionalization cannot be fully reversed. Examples: Toledo has great air service at nearby Detroit. Newport News (which actually fired their airport director for “failure” to recruit more service) has Norfolk. Dubuque has Cedar Rapids. And more.
Planning For The Future Demands Understanding The Future. By and large, with changes in airline fleets, communities such as these need to tumble to reality, plan accordingly, and avoid the spell of Rasputin-like approaches.
As I’ve noted and which we point out to our clients, the communication role of air transportation has materially shifted, and will continue to do so.
Short-haul business trips have been mostly replaced by electronic communications. Intra-regional O&D demand no longer can bear the cost of such service. On the other side, mid-size airports will gain more regional suction as airlines expand fleets of A220s and A321XLRs and add more long-haul markets.
It is simply a set of raw economics which cannot be addressed when communities are misled into believing that air service is just about "luring" more airlines, without a clue of who they might be or what access they may deliver.
That's not an exaggeration. This past week at least two airports announced that they are paying some Rasputins to "find more airlines" with no discussion of the specific economic needs of the region. Just "more airlines." Which is the reason these efforts will fail.
It is no different from demanding "more roads" with no idea to where. But they'll get that new study and final glowing report.
In 2024, it’s a matter of having the community fully informed, and not allowed to wallow in air service fantasies. Small airports – actually, all airports – have new opportunities for economic impact.
Think logistics. Think economic investment.
But, for heaven’s sake, think about the emerging economics of air service.
Solution: Air Service Triage. Yes, I am aware that this will not sit well with some airports. The siren call of another study or leakage analysis is strong. Airport directors are under the gun.
Some airport boards want that service, or else. Otherwise it’s the economic firing squad, as happened to the director at Newport News – which, by the way is just 29-35 minutes from Norfolk, and has failed to even support day-of-week leisure ULCC service. Message here.
But we deal in truth, not wishful thinking. We deal in recognizing the shifts in airline strategies and economics. We don’t engage in bromides and distant promises.
There are alternative approaches and options. Specific-industry targeting, for example, which is essentially what Southern Airways discovered at Purdue. Not going to be traffic that chokes the terminal, but it does target specific Boilermaker travel sectors.
Then there is the need for analysis of the potential for third-level logistics. And other paths.
Open To New Thinking & Approaches? Call Us. In 2024, we will be implementing a new program, called Runway to The Future™, and it is geared to discussing economic air service opportunities and realities for specific airports. Hard projections of incumbent strategies, analysis of regional traffic potential, and a clear picture of how major carriers and their fleets will affect the airport.
Hard, no nonsense facts. At the least, a second opinion for the future that will deliver specifics, not wishful thinking.
Interested? Click here and let us know.
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