Beware the Ides of March 2010 - USA Air Transport Infrastructure

With apologies to Will S.

McKinsey - never one to be shy in trotting out bucket loads of information, has recently published a study on private investment in public transportation infrastructure.

http://www.mckinseyquarterly.com/PDFDownload.aspx?L2=19&L3=69&ar=1987&srid=17&gp=0

One of the trends the InTheKno team follow is the slow build up and saturation of Air Transport infrastructure. 2007 will rank up there as one of the worst years on record for delays and infrastructure hiccoughs. With no new airports and only few runway or terminals (O'Hare excepted) planned for the next 10 years in the USA - it is not hard to see how by 2010 we will be in deep kaka when we have a boom year.

However the US has two coming fact collisions which are going to exacerbate the problem. With nearly 700 million pax a year - the US market is the world's largest. Definitely by any measurement you put on it. But its growth has been stunted in recent years. Two constraints are now rapidly approaching, one is a capacity constraint, the other a major expansion of traffic.

The US Air Traffic Management system is probably the laughing stock of the world. Only the dedicated Controllers using improvised solutions keep the system running. Congress sees no need (and the Bush Administration would rather spend the money on wars) to upgrade the creaking system. It will break down and we will have problems. This is inevitable without serious attention now. Just look at Brazil if you don’t think it can have a serious impact.

The other capacity influence will be the growth of VLJ's - Very Light Jets. These new planes will be added to the market occupying the same air space footprint as RJs and smaller mainline passenger and cargo jets. The problem is a bit like a Freeway (Motorway, Autoroute, Autobahn, Autostrada...) where you have a metered on ramp at major population points. But imagine if you will - adding double the number of people using the Freeway coupled with a 5x number of on ramps. You don’t need to be a hydraulics engineer to see how this will disrupt traffic flows leading to more bunching and backups.

Will the USA double the number of ATC controllers to meet this demand? Will they order new radar equipment (that is BTW easily available) will they introduce an economic pricing model to match this demand hike?

Not for the next 2 years. which means given the lead times necessary to implement this - we will be having a crisis - oh in about Q1 2010.

Don’t say we didn’t warn you...

Cheers

The InTheKno Team