Those were among the key messages in an insightful presentation by Teal Group VP and aviation analyst Richard Aboulafia at an Aero Club luncheon in Washington on Friday.

Aboulafia sees a “big bull market” for the neo and MAX in 2016-2017, especially in North America as airlines, spurred (and horrified) by $100+ per gallon prices for fuel, rush to replace their legacy fleets.

“If you are still flying a 737-300 and the other guy is flying a neo or MAX, then you are toast,” he said.

He said fuel burn and technology were the only things left to US carriers to further cut costs, having stripped out all excess cost items, such as blankets, in the system-wide endeavor to become low cost carriers.

Aboulafia acknowledged there could be a bit of a dip in orders in the 2014-2015 period, but said there was would be really fast ramp-up after that.

Third-party financing will be critical to this boom, he added.

But Aboulafia had only pessimism for the outlook for regional jets. “Who are the losers? Oh my God, the regionals,” he said. The days of multiple regional-jet hubs across North America are not coming back and the focus will be on getting out of the regional market, with the exception of the Russians. Bombardier has a potential window of opportunity with its C-Series, but it has to act now. “This refleeting thing will be a tipping point,” he said.

TNT is not an inconsequential player globally, with a presence in China and Brazil in particular, and UPS/FedEx will mull the international assets when contemplating bids. But much of this is about the European express delivery market. UPS by acquiring TNT, Europe’s number two player, could increase its presence in the market to nearly on par with DHL, the continent’s number one player, while relegating FedEx to distant, second-tier status.

FedEx, with the buy, would instantly become a big player in Europe (something it is not now), but not big enough to vanquish UPS or really approach DHL. And Europe is a dreary market currently with limited growth potential, certainly near-term. Is it worth it for FedEx to take an expensive stand by outbidding its rival UPS for TNT, which, after all, is a loss-making company? TNT incurred a €270 million ($357.2 million) 2011 net loss.

But the conditions exist for tit-for-tat bidding. UPS and FedEx are well-off companies with cash to spend on acquisitions they deem worthwhile. How much is Europe worth to them?

What was different this time? Battle weariness, for one. FAA’s authorization officially lapsed Sept. 30, 2007, but the debate in Congress over reauthorization started in earnest a couple of years prior to that date. Everyone was tired of the FAA issue after six years of back and forth under two Presidents and multiple Congresses. The concerns central to FAA operations, particularly regarding the provisioning of ATC, are by and large not well understood by members of Congress, enough of whom finally came to the conclusion they wanted to put FAA reauthorization to bed with November elections on the horizon.

As Senate Commerce, Science and Transportation Committee chairman Jay Rockefeller (D-W.Va.) said, nobody got everything they wanted in the compromise legislation. But everyone does get something that had been sorely lacking: more certainty over airport construction projects, ATC modernization and FAA’s authority more generally. That lack of certainty had started to vex the US business community, which put out the signal recently that it was time to pass an FAA bill, even an imperfect one. 

Also, the ultimate playing card in FAA negotiations—a partial shutdown of the agency—was dealt last summer and turned out to be an across-the-board public relations fiasco. Once one shutdown occurred, and embarrassed everyone, no one in Congress could credibly use the prospect of one as a negotiating ploy any longer. It did take six months from the shutdown last summer to the passage of a bill this winter, but the correlation is hard to deny.

In essence, Congress did pass an FAA reauthorization bill in the 2007 fall—a haphazard, four-plus year bill characterized by threatened stops and starts in funding, unclear agency strategy and little accounting for changes in technology and industry circumstances since the last FAA reauthorization legislation was cleared in 2003. Now can the agency use this new bill as a springboard to accelerating the implementation of a truly wide scale NextGen ATC system that brings US air transport to the satellite era?

McNerney responded that the carrier’s Chapter 11 filing is good news for Boeing. “Chapter 11 probably strengthens the likelihood of that [order] being [firmly] booked,” he explained. “American will emerge from that process more able to execute those orders than if they hadn’t gone through it.”

Of course, McNerney is making perfect sense. Indeed, American considers the pending 737 order (which is coupled with a commitment for 260 Airbus A320 family aircraft including 130 re-engined A320neos) as its trump card in the bankruptcy process. The unprecedented financing terms offered by Boeing and Airbus last July (the manufacturers will finance at least the first 230 of the 460 total aircraft) were designed with the strong possibility of an American Chapter 11 filing in mind. The massive split order is largely protected from the bankruptcy process and, as McNerney points out, a leaner American with less debt and lower costs is more, not less, likely to be able to take delivery of new aircraft. Airbus probably feels similarly about its side of American’s narrowbody fleet renewal.

But it certainly says something about the byzantine world of commercial aircraft sales that a key customer falling into bankruptcy is a positive for the major aircraft manufacturers.

There is a lot of back patting on Capitol Hill over putting the National Mediation Board airline unionization voting rule issue to rest with a compromise brokered last week between Senate Majority Leader Harry Reid (D-Nevada) and House Speaker John Boehner (R-Ohio). But the NMB issue only emerged as a stumbling block last year.

Lawmakers spent years (under various configurations of party control in the White House, House and Senate) arguing over FAA reauthorization prior to determining how to count votes in airline unionization elections became the BIG ISSUE preventing an FAA bill from being passed.

That’s because every time one BIG ISSUE is put aside, another emerges. (Remember when drug testing at foreign repair stations and FedEx’s labor classification were BIG ISSUES stopping FAA reauthorization?) Or various smaller issues conspire to slow or stall negotiations.

There may be reason for optimism. The US business community has let House Republicans know that they’re increasingly unhappy that funding for NextGen ATC and airport construction projects remains in limbo. Republicans and Democrats are weary after a series of bitter flights over the past year on budget and tax issues and may want to put FAA reauthorization to the side so they can get on with bigger battles leading up to November’s elections. And the FAA partial shutdown card has already been played. It was a public relations disaster for all involved.

Still, while the threat of another partial shutdown looks to have receded, reaching agreement on an FAA bill that takes the agency through, say, 2016 could prove to be too heavy a lift for this Congress. A fallback could be either a long extension (at least through November’s elections and perhaps into 2013) or a short reauthorization (a two-year bill that would be a de facto long extension but may contain a few broad policy provisions that a 9-12 month extension likely would not).

The FAA reauthorization battle has extended through two presidents of different parties and four Congresses of varying partisan configurations. It’s hard to believe it can now be wrapped up over the next three-plus weeks. I’ll believe a long-term FAA bill has been passed only when I see President Obama sign it into law. An announcement of a broad compromise on a single issue (even one as contenious as unionization voting rules) is far different than both chambers of Congress actually passing identical, comprehensive legislation and sending it to the president’s desk.

Kelly conceded to analysts and reporters that the company is following a “conservative” fleet strategy that eschews growth in favor of boosting unit revenue. But he described the current economy as “a very good environment. The macro-[economic] environment feels better now [compared to mid-year 2011], much more stable, much more consistent.”

Nevertheless, growing capacity continues to be verboten for Southwest and most other US airlines.

If you can’t grow capacity following a year in which PRASM increased 8.2%, overall revenue lifted 12.7% and your cross-town rival (and competitor on numerous routes) is occupied with Chapter 11 reorganization, when can you? Kelly’s response is that high fuel costs (up 35% year-over-year in 2011) have driven up expenses and prevented Southwest from reaching its profit targets. Absent hitting and exceeding profit targets, Southwest doesn’t grow capacity. Period.

For much of its history, of course, the carrier did hit profit targets and grew capacity at a fairly steady pace. Not so in recent years (though, of course, acquiring AirTran does increase the company’s size, but neither Southwest nor AirTran is growing ASMs).

Southwest’s discipline has always been one of its hallmarks; even if profits were down last year, earning positive net income for 39 straight years in the US air transport market is quite an achievement, one that likely wouldn’t have been accomplished without sticking religiously to the credo that revenue must outpace costs, a simple business philosophy that has often been ignored by US airlines.

The rest of the US industry, however, appears to have also finally accepted that basic supply/demand operating strategy over the last couple of years. SWA’s opening salvo in US carriers’ 2011 earnings reporting season likely previews a trend: US airlines are making money, the economic environment is showing noticeable signs of improvement, BUT the industry won’t actually grow again until it is near-certain that the growth will pay off on the balance sheet.

Boeing announced just eight days earlier, in a Jan. 4 statement, that it will close the Wichita plant where it converts airliner frames into military tankers by the end of next year,  thus abandoning the Kansas city.

Boeing says in a press release  that the visit will allow people at Wichita-based Spirit Aerosystems and Boeing  employees to see the Dreamliner. Given the new uncertainty about the future of their jobs among those more than 2,100 Boeing Wichita employees, however, the local mood to Dream may be absent.

But even supposing that employees are happy to get a first-hand look at the 787, Kansas lawmakers and local officials may be less willing to celebrate. Many are complaining publicly that they were instrumental in helping win the U.S. Air Force’s new tanker program because they understood from Boeing that it would guarantee continued jobs in the area; some are accusing Boeing of breaking its promise.

Yes, in Canada (where, by law, airlines since 2008 have had to give severely overweight passengers two seats for the price of one), a skyscraping architect has spent the last year trying to make Air Canada sell him a “preferred” economy seat (mainly exit row seats with extra leg room) for the price of a regular economy seat with standard leg room.

In petitioning the Canadian Transportation Agency, the Edmonton man said his 6 ft. 7 in. height is a disability when it comes to flying. The agency rejected his claim. That’s unfair and inconsistent with the agency’s past ruling on obesity, the tall passenger explained in this account in The Toronto Star, because “you can, to some degree, control [obesity], whereas height, you don’t have much you can do about it.”

Airline X has set a record for annual passengers carried in eight of the last nine years, with traffic up 5.1% year-over-year in its most recent full year and up 43.8% compared to 2000. Base flight ticket revenue is increasing at an even faster pace, rising 8.5% year-over-year in the most recent full year. Ticket revenue is up 73.4% compared to 2000. On the carrier’s most important route, which comprises about one-third of its traffic and revenue, passengers rose 5.1% in the most recent full year and ticket revenue increased 9.4%. Business-class ticket revenue on the route heightened 11.7% year-over-year.

Airline X must be highly successful financially, or at the very least, must easily earn a profit, you say. What if I told you that, in addition, the country in which Airline X is based believes the carrier to be so vital that it supplements the airline’s nearly $2 billion annual revenue with another $1.4 billion in subsidies yearly? This is fiction, you say, such an airline does not exist. And if it does, Airline X’s executives must wake up daily with smiles on their faces; in the capricious air transport sector, they have found the perfect operating environment.

Airline X does not exist. But what I have described above is US rail line Amtrak’s figures and circumstances. And despite the rising traffic, growing revenue and steady flow of government subsidies, Amtrak loses big year after year. Freakonomics recently posted an interesting collection of opinions on why Amtrak can’t make money and whether it ever can.

Total US aviation-related fatalities in 2010 were 472, below total fatalities from boating (733), rail (813) and roadway (33,883). Nearly all of the aviation fatalities occurred in the general aviation sector (450), while just two occurred in the commercial segment and they were cargo pilots flying the UPS 747-400F that tragically crashed 50 min. after takeoff from Dubai International. There were no passenger fatalities, as was the case in 2007 and 2008 (the Colgan Air Q400 crash killing 52 people occurred in 2009 and remains the sole fatal US passenger airline accident of the last five years).

To put things in perspective, 44 people died in bus accidents in the US in 2010 while 618 died in bicycle accidents. Some 4,280 pedestrians were killed in US road accidents in 2010.