The future of commercial aviation (originaly written 10/01)
What follows are my opinions of where commercial aviation is headed in this country. There will be those that wont like the future I see and will counter my assertations to buoy their hopes of returning things back to the way they were but these people will hope in vain. Just remember, simply because you don’t like something doesn’t mean it wont happen and the scenario I see playing out already has much to support its direction.
First, America West is going to die if it doesn’t tighten up the reigns and figure out how to make money. Mesa Airlines has already been granted the rights to 50, 70, and 90 seat RJ’s. You will see an increase of these airplanes on America West’s unprofitable routes initially followed by expansion to new locations possibly including the opening of new hubs using these 50 through 90 seaters.
You can pretty much ditto the above scenario for US Airways as it burns through the last of its cash and goes into restructuring mode. The good news is that with aggressive changes and the strategic use of RJ’s these carriers can survive.
Now look down the road 24 months and you will see that companies that have accepted and even embraced the avalanche of changes that are occurring including the use of RJs are not only surviving but also starting to flourish. You will see route structures similar to that of Southwest Airlines with RJ’s zigzagging the country with a much diminished use of the spoke and hub system. You will see companies such as JetBlue and Southwest expanding parallel to this large movement of RJ’s and in some cases feeling slightly like United or American does on routes against Southwest right now. Having said that, look for the Southwest style carriers to be expanding and thriving in the new, more efficient air traffic network crisscrossing the North American continent.
Where does this leave the “Majors”? Initially the local unions will fight concessions and changes in scope. In fact, a couple who are well known for their stubborn “make the company pay” type behavior will take the attitude that they would rather drive the company in to the ground than give in to these concessions. These companies will fail. The other Major Airline pilots will watch in disbelief and soon after take concessions and agree to changes that need to be made to survive. Along with this they will not only desire, but demand a “one list” situation allowing them access to the large growth of what will become a booming market of 30 to 119 seat RJ’s (Embraer has a 119 seat RJ on the drawing board right now and is waiting for orders). The barriers of international flying will continue to fall and along with the huge feed that they receive from their RJ infrastructure these carriers will see a lot of growth in the 777 size international flying. Five to ten years down the road expect to see a large increase of airplanes such as the Boeing Sonic Cruiser flying internationally.
Basically, over the next five years a process of natural selection or “survival of the fittest” efficiency will eliminate the lame ducks and the strategic, nimble airlines that choose to flow toward efficiency will quickly fill in the gaps. Flame Away!
I wrote this last year about a month after 911 and still think most my predictions are pretty close...we will see. What do you think? One thing I failed to factor in was the increase in corporate flying. I knew they were expanding but I had no idea at what rate. I just read the following posted at
http://www.aviationcareer.net/features/fa_10012002_01.cfm
"Executive Jet Aviation has hired 50 to 80 pilots every month since last fall and that pace is set to continue. "We're planning on adding 500 pilots this year and 600 next year," says Jerry McDermand, director of flight crew resources. An aggressive delivery schedule is the fuel behind the pilot hiring frenzy. In the last six years, Executive Jet has ordered 941 new aircraft for the NetJets fractional ownership program totaling more than $17 billion. This represents more than 40 percent of the total business aircraft ordered.
Executive Jet is the world's largest operator of private business jets and the leader in fractional operations with 2,000 owners. Executive Jet manages 345 aircraft, with more than 596 aircraft on order. In 2001, NetJets flew more than 200,000 flights for NetJets owners to more than 92 countries."
It would seem that the Major carriers are getting hit from above and below. Corporate operations are symphoning away the high dollar business travelers which represents the bread and butter profits of Major airlines such as UAL,AA, DAL.... and the low cost guys continue to grow, moving in on territory never contested by a low cost guy with staying power such as SWA. As Don Carty said AA will need to make radical changes to their operating structure and basically have to re-invent themselves. Unfortunately Don isn't all brains because he also discounted JB's chances for success stating that they will not be around in a year or two. He may want to rethink that statement. At any rate things have changed forever and will probably never be exactly the same. Lastly, the average person's ability to shop low fare prices on the internet, is also having a profound impact on how savy Americans choose travel and who they travel with. There is one clear directive going out to the Major Airlines...Change or Die!
Comments anyone????
What follows are my opinions of where commercial aviation is headed in this country. There will be those that wont like the future I see and will counter my assertations to buoy their hopes of returning things back to the way they were but these people will hope in vain. Just remember, simply because you don’t like something doesn’t mean it wont happen and the scenario I see playing out already has much to support its direction.
First, America West is going to die if it doesn’t tighten up the reigns and figure out how to make money. Mesa Airlines has already been granted the rights to 50, 70, and 90 seat RJ’s. You will see an increase of these airplanes on America West’s unprofitable routes initially followed by expansion to new locations possibly including the opening of new hubs using these 50 through 90 seaters.
You can pretty much ditto the above scenario for US Airways as it burns through the last of its cash and goes into restructuring mode. The good news is that with aggressive changes and the strategic use of RJ’s these carriers can survive.
Now look down the road 24 months and you will see that companies that have accepted and even embraced the avalanche of changes that are occurring including the use of RJs are not only surviving but also starting to flourish. You will see route structures similar to that of Southwest Airlines with RJ’s zigzagging the country with a much diminished use of the spoke and hub system. You will see companies such as JetBlue and Southwest expanding parallel to this large movement of RJ’s and in some cases feeling slightly like United or American does on routes against Southwest right now. Having said that, look for the Southwest style carriers to be expanding and thriving in the new, more efficient air traffic network crisscrossing the North American continent.
Where does this leave the “Majors”? Initially the local unions will fight concessions and changes in scope. In fact, a couple who are well known for their stubborn “make the company pay” type behavior will take the attitude that they would rather drive the company in to the ground than give in to these concessions. These companies will fail. The other Major Airline pilots will watch in disbelief and soon after take concessions and agree to changes that need to be made to survive. Along with this they will not only desire, but demand a “one list” situation allowing them access to the large growth of what will become a booming market of 30 to 119 seat RJ’s (Embraer has a 119 seat RJ on the drawing board right now and is waiting for orders). The barriers of international flying will continue to fall and along with the huge feed that they receive from their RJ infrastructure these carriers will see a lot of growth in the 777 size international flying. Five to ten years down the road expect to see a large increase of airplanes such as the Boeing Sonic Cruiser flying internationally.
Basically, over the next five years a process of natural selection or “survival of the fittest” efficiency will eliminate the lame ducks and the strategic, nimble airlines that choose to flow toward efficiency will quickly fill in the gaps. Flame Away!
I wrote this last year about a month after 911 and still think most my predictions are pretty close...we will see. What do you think? One thing I failed to factor in was the increase in corporate flying. I knew they were expanding but I had no idea at what rate. I just read the following posted at
http://www.aviationcareer.net/features/fa_10012002_01.cfm
"Executive Jet Aviation has hired 50 to 80 pilots every month since last fall and that pace is set to continue. "We're planning on adding 500 pilots this year and 600 next year," says Jerry McDermand, director of flight crew resources. An aggressive delivery schedule is the fuel behind the pilot hiring frenzy. In the last six years, Executive Jet has ordered 941 new aircraft for the NetJets fractional ownership program totaling more than $17 billion. This represents more than 40 percent of the total business aircraft ordered.
Executive Jet is the world's largest operator of private business jets and the leader in fractional operations with 2,000 owners. Executive Jet manages 345 aircraft, with more than 596 aircraft on order. In 2001, NetJets flew more than 200,000 flights for NetJets owners to more than 92 countries."
It would seem that the Major carriers are getting hit from above and below. Corporate operations are symphoning away the high dollar business travelers which represents the bread and butter profits of Major airlines such as UAL,AA, DAL.... and the low cost guys continue to grow, moving in on territory never contested by a low cost guy with staying power such as SWA. As Don Carty said AA will need to make radical changes to their operating structure and basically have to re-invent themselves. Unfortunately Don isn't all brains because he also discounted JB's chances for success stating that they will not be around in a year or two. He may want to rethink that statement. At any rate things have changed forever and will probably never be exactly the same. Lastly, the average person's ability to shop low fare prices on the internet, is also having a profound impact on how savy Americans choose travel and who they travel with. There is one clear directive going out to the Major Airlines...Change or Die!
Comments anyone????
