fact that labor rates are increasing
at significant rates; or the fact that
the industry has significant new
aircraft on order; or the fact that
merger and acquisition activity is
likely to slow with another one
possible, or the fact that airlines
are again growing capacity in at
least the largest markets trying to
make up revenue on volume over
unit price; many indicators show
eerily similar to points in the past
when economic contraction begins.
All of the above data points define
What about air service in a
macroeconomic slowdown or even
a recessionary period? If pilot
supply is an issue, then forced
retirements at age 65 do not change
the calculus. The mainline carriers
may slow down some deliveries.
However, the demand for pilots
just to stay the same size remains
Historically, we always have seen
some pulldown in capacity during
recessionary periods, and I am
confident that the next one will be
no different. The network carriers
continue to rework frequencies and
seats at small and non-hub airports.
Those airports that are losing
frequencies and seats in 2016 versus
2015 should feel some vulnerability,
as clearly they are underperforming
markets relative to others.
Given the strength in airline
performance during this business
cycle, one would think that
airports would have benefitted
proportionally. Rather, it is a mixed
bag of winners and losers and the
shakeout likely is not done. As we
wind down this expansionary cycle,
many airports are surely asking: Is
this really as good as it gets?
William Swelbar is executive vice president
of InterVISTAS Consulting Inc. He may be
reached at email@example.com.