spanky2
For God, Family, Country
- Joined
- Feb 7, 2003
- Posts
- 271
US Traffic Forecast: Deflation On The East Coast?
Mid-Size Airports: 2005 May Be A Tough Year
The latest update to The Boyd Group's Airports:USA forecast indicates that
there may be some rude enplanement surprises for a number of mid-size
airports along the Eastern Seaboard later this year.
Two words: Independence Air.
I-Air has just reported its latest results, and they're the financial
equivalent of a coyote date. Ugly. Cutting to the chase, the carrier would
need to maintain its current 68% load factor, and almost double its average
fares to break-even. Try that in an environment where consumers choke on a
$10 fare increase. I-Air reported ASM costs of over 18 cents a mile,
operating against airlines with costs less than half that figure.
The point of all this is that much of the 68% load factor has been generated
via low fares. Those low fares have in turn stimulated some impressive
enplanement gains at a number of airports. That part is great. The dodgy
part is that those fares - some as low as $29-$59 bucks - are unsustainable.
At some point, probably within the next three months, those fares are going
to evaporate. When that happens, a substantial part of the enplanement
growth at several airports will quickly disappear.
One hopes that's all that disappears. It's now obvious that the I-Air
experiment - high frequency with high-cost RJs - is a failure. While the
carrier correctly concluded that staying as a United Express operator was a
dead-end, the fact remains that the alternative model chosen by I-Air is
also a non-starter. The expansion of the airline's A-319 fleet may be a
route out of this quagmire. And maybe not. Not pleasant news, but reality is
reality. Independence Air got some really bad advice somewhere along the way.
Maybe the advice came from Fred "RJ" Reid ... former member of the Leo Club at Delta...and the originator of the high frequency with high-cost RJ experiment. This news will put a wrench in GG's works to sell DCI.
Mid-Size Airports: 2005 May Be A Tough Year
The latest update to The Boyd Group's Airports:USA forecast indicates that
there may be some rude enplanement surprises for a number of mid-size
airports along the Eastern Seaboard later this year.
Two words: Independence Air.
I-Air has just reported its latest results, and they're the financial
equivalent of a coyote date. Ugly. Cutting to the chase, the carrier would
need to maintain its current 68% load factor, and almost double its average
fares to break-even. Try that in an environment where consumers choke on a
$10 fare increase. I-Air reported ASM costs of over 18 cents a mile,
operating against airlines with costs less than half that figure.
The point of all this is that much of the 68% load factor has been generated
via low fares. Those low fares have in turn stimulated some impressive
enplanement gains at a number of airports. That part is great. The dodgy
part is that those fares - some as low as $29-$59 bucks - are unsustainable.
At some point, probably within the next three months, those fares are going
to evaporate. When that happens, a substantial part of the enplanement
growth at several airports will quickly disappear.
One hopes that's all that disappears. It's now obvious that the I-Air
experiment - high frequency with high-cost RJs - is a failure. While the
carrier correctly concluded that staying as a United Express operator was a
dead-end, the fact remains that the alternative model chosen by I-Air is
also a non-starter. The expansion of the airline's A-319 fleet may be a
route out of this quagmire. And maybe not. Not pleasant news, but reality is
reality. Independence Air got some really bad advice somewhere along the way.
Maybe the advice came from Fred "RJ" Reid ... former member of the Leo Club at Delta...and the originator of the high frequency with high-cost RJ experiment. This news will put a wrench in GG's works to sell DCI.
