Published on HamptonRoads.com | PilotOnline.com (http://hamptonroads.com)
Norfolk airport primed to ride out turbulence in aviation industry

Skyrocketing oil prices likely will kill off some of the direct flights using regional jets that customers of Norfolk International Airport now enjoy, an airline industry expert said Wednesday.

The airport will weather the tumultuous changes sweeping the industry, however, because of the hub system that airlines rely on to deliver passengers around the world, said Michael J. Boyd, president of The Boyd Group, an aviation consulting and forecasting company.

The hub system, which uses strategically placed airports fed by smaller operations such as Norfolk, is likely to remain because it works well for the airlines, he said.

But airlines that offer direct flights using regional jets are in trouble because the cost of operating those jets is becoming prohibitive. For example, the direct flights from Norfolk to New York's LaGuardia and Boston may not last much longer, he said.

No aircraft flying today was designed with oil costing more than $100 a barrel, he said. And with regional jets holding only 50 passengers, plus a full crew, they are too small to recover those costs.

Many national carriers operate regional jets under contract, and Boyd predicted that many of those contracts will allow carriers to discontinue operations later this year or next.

Boyd made his remarks to the Hampton Roads Norfolk Airport Task Force, a group of community leaders who advocate on behalf of the airport.

As with all sectors of the nation's economy, the rising price of crude oil will impose wrenching changes throughout the airline industry, from travel to logistics, he said.

Higher fuel costs will challenge the manufacturing industry's "just in time" production models, he said. Moving goods continuously and timing their arrival to a factory at the moment they're needed may need to be rethought because they're using interstates as warehouses, he said.

He pointed to a laptop he was using to make his presentation. He said the various components needed to assemble it involved 25 border crossings into the United States. That amount of embedded transportation costs may have to change if the costs of transportation exceed the cost of production.

"We may go back to more traditional warehousing," he said.

Tom Holden, (757) 446-2331, tom.holden@pilotonline.com


Source URL (retrieved on 10/06/2008 - 19:51): http://hamptonroads.com/2008/05/norfolk-airport-primed-ride-out-turbulence-aviation-industry