Chapter 3: Forecast of Aviation Demand

Transcription

1 DRAFT Chapter 3: Forecast of Aviation Demand Prepared for Montrose Regional Airport May 24, 2016 CH2M HILL 9191 South Jamaica Street Englewood, CO 80112

2

3 Contents Section Page 3 Forecast of Aviation Demand Purpose Data Sources U.S. Aviation Industry The Only Constant is Change Industry Consolidation Cost Control and Focus on Profitability Aircraft Fleet Changes Montrose Regional Airport Service Area Demographic and Economic Characteristics Montrose Economy: Tourism Driven Historical Commercial Air Service at MTJ Historical Passenger Demand Historical Capacity Departing Seats Historical Airline Load Factors Current Commercial Air Service at MTJ Current O&D Passenger Geographic Distribution Design Aircraft for Planning Purposes Current Design Aircraft Future Design Aircraft Commercial Forecast Methodology and Approach Factors Impacting Passenger Enplanement Forecasts Forecast Uncertainties Specific to Montrose Regional Airport Determination of Methodology Forecast Summary: Enplanement Forecast Comparison to 2015 TAF Projections Air Carrier Forecast Activity Peak Demand Monthly and Hourly Cargo Forecast Factors Affecting General Aviation Demand General Aviation Trends Unmanned Aircraft Systems Historical General Aviation Activity Previous Forecasts of Aviation Demand Future Forecast Scenarios Forecast Assumptions Forecast Methodologies Based Aircraft Forecast Based Aircraft Fleet Mix General Aviation Operations Forecast MTJ Historical Fuel Sales Critical Aircraft Determination Summary of MTJ Aviation Demand Forecast MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016 DRAFT iii

4 CONTENTS Tables Table 3-1. Montrose County Employment Categories Table 3-2. MTJ Traffic Seasonality Five Year Average: CY Table 3-3. MTJ Historical Scheduled Air Service CY 2000 Current Table 3-4. MTJ Top 10 Domestic O&D Markets YE Q Table 3-5. MTJ Current Aircraft Specifications Fleet Mix at MTJ CY Table 3-6. MTJ Future Aircraft Specifications Table 3-7: MTJ % Share of National Domestic Enplanements CY Table 3-8. MTJ Enplanements 10 Year CAGR vs. CO Western Slope & NW Mountain Region CY Table 3-9. Enplanement and Operational Summary CY Table Five Year Enplanement and Operations Comparison vs. TAF CY Table MTJ Peak Month/Day/Hour Passengers and Operations Table Cargo Freight/Mail Forecast (Lbs.) CY Table MTJ Historical Aviation Activity Table Previous Aviation Demand Forecasts Table Based Aircraft Trend Analysis Table MTJ Share of Surrounding Airport Based Aircraft Table MTJ Share of Based Aircraft in the State of Colorado Table Based Aircraft Forecast Summary Table Based Aircraft Fleet Mix Forecast Table Previous Master Plan Forecast Table MTJ Share of Surrounding Airport Annual Operations Table MTJ Share of Colorado GA Operations Table General Aviation Operations Comparison Table Local/Itinerant Operations Splits Table General Aviation Design Aircraft Table Combined Design Aircraft Table TAF Comparison Table Table MTJ Aviation Demand Forecast Summary iv DRAFT MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016

5 CONTENTS Section Figures Figure 3-1. Montrose Regional Airport Primary and Secondary Service Areas Figure 3-2. Montrose County Population Growth Figure 3-3. Montrose County Total Employment Growth Figure 3-4. MTJ Five Year Enplanement Trend CY Figure 3-5. MTJ Departing Seats Five Year Trend CY Figure 3-6. MTJ Load Factor Performance Five Year Trend CY Figure 3-7. MTJ Route Map and Current Air Service CY Figure 3-8. Population Driven Enplanement Forecast CY Figure 3-9. Per Capita Income Driven Enplanement Forecast CY Figure FAA Domestic Enplanement Forecast CY Figure NW Mountain Region Driven Enplanement Forecast CY Figure Enplanement Forecast Comparison CY Figure Avg. Daily Departures and Seats per Departure CY Figure MJT Peak Passengers by Month 5 year Average CY (% of Annual Total) Figure MTJ Peak Operations by Month 5 Year Average CY (% of Annual Total) Figure Based Aircraft Forecast Comparison Figure OPBA Forecast Scenarios Figure General Aviation Operations Comparison Figure MTJ Historical Jet A Fuel Sales Figure MTJ Historical AvGas Sales Page MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016 DRAFT v

6 3 Forecast of Aviation Demand Purpose This chapter provides a 20-year forecast of commercial and general aviation activity at Montrose Regional Airport (MTJ). The forecasts and related data are intended for inclusion in the airport s master plan that is currently being prepared for the years Data Sources In preparing the commercial aviation forecasts contained herein, a number of data sources were consulted. These include, but were not limited to, the following: FAA Terminal Area Forecast (TAF): The FAA issued Terminal Area Forecast Summary for Fiscal Years was consulted for this forecasting process. Additionally, the APO Terminal Area Forecast Detail Report issued in January 2016 was also utilized for comparative purposes. FAA Advisory Circular 150/5070-6B, Airport Master Plans: This document was consulted to ensure that the methodology employed and forecasts produced were in compliance with FAA requirements for development of airport master plans. FAA Aerospace Forecast: Fiscal Years : This document was utilized to analyze the Montrose Regional Airport s percent of enplanements of the national enplanement forecast. This forecasting methodology is referred to as share analysis. Aviation DataMiner Software: This is proprietary software of Boyd Group International that analyzes a range of aviation data, including traffic, capacity, and average fare, reported to the U.S. Department of Transportation by the airline industry on forms DB1B and T-100. The system also forecasts airline fleet changes and additions on an on-going basis. Innovata, LLC: Innovata, LLC is the official source that IATA requires airlines to report flight schedule data. Data from Innovata, LLC was utilized to review current and historical airline flight schedule data. Forecasting Aviation Activity by Airport : Released by the FAA in July 2001, followed with subsequent updates and revisions, Forecasting Aviation Activity by Airport provided supplemental guidance to ensure that contained forecasts were prepared in compliance with FAA requirements. Woods & Poole Economics: Historical and forecast socioeconomic data for the Montrose Regional Airport service area and the United States was obtained from Woods & Poole Economics of Washington, DC. Use of this data source is recommended by the FAA in the Forecasting Aviation Activity by Airports. Montrose Regional Airport Statistics: Airport reported statistics such as enplanements and operations were utilized primarily as a means to cross-reference other data sources such as T-100 data. 3-6 DRAFT MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016

7 Other information was obtained from organizations on the worldwide web for economic data (e.g., Montrose Economic Development Council, the Office of Business and Tourism, etc.) and company websites e.g.., aircraft manufacturers, airlines, etc.) for information specific to operations at the Montrose Regional Airport. Additionally, Boyd Group International utilized its internal library and databases of regional airport markets collected during the course of three decades of completing work on behalf of various airports. U.S. Aviation Industry The Only Constant is Change Major changes have occurred over the last several years in the U.S. aviation industry that underscore the fact that this ever-changing environment will impact the future of air service in the U.S. These changes will most certainly affect air service at regional airports such as MTJ. The following themes will be at the forefront of airline decision making processes over the next several years. Industry Consolidation The following mergers have occurred in the U.S. airline industry, fundamentally changing airline strategies and levels of air service across the nation. Delta Air Lines merged with Northwest Airlines United Airlines merged with Continental Airlines Southwest Airlines merged with AirTran Airways American Airlines merged with US Airways The net result of this industry consolidation has been a decrease in scheduled air service across the nation, often impacting regional airports more drastically than larger hub metropolitan airports. Competition for available resources (aircraft/crew) amongst airports across the nation has increased significantly since the aforementioned mergers were consummated. The airports that offer the greatest return on the airline s assets will attract new air service. Those airports that cannot offer strong returns to the airlines will likely experience decreased levels of air service over the next five to ten years. 1 Cost Control and Focus on Profitability Cost control has become a major theme among airlines since consolidation. A driving force behind the mergers was the prevailing thought in the industry that there was too much capacity in the U.S. market, and therefore the competition was too great for most of the carriers to successfully and profitably compete on a sustainable basis. Operating an airline is extremely cost intensive between aircraft, pilots and flight attendants, management personnel, and fuel costs airlines needed to manage their costs. 1 Numerous airports have experienced decreased air service in the last few years. Some small airports have lost air service altogether due to regionalization of air service into one airport within a region. MTJ has been minimally impacted due to its profitability for airlines and generally isolated geographic location. MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016 DRAFT 3-7

8 One of the easiest ways to control variable operating costs was through less flying and a specific focus on profitable routes. Gone are the days when airlines battled each other for market share (passenger share). Today s industry is focused quite simply on one metric profitability. As previously mentioned, airports that provide airlines with the greatest return on investment for the use of its assets (airplanes/crew) will flourish in the new U.S. aviation industry. Aircraft Fleet Changes During the 1990s and most of the 2000s, the prevalence of the 50-seat regional jet and other small turboprop and jet aircraft were ubiquitous in the U.S. However, as oil prices continued to climb, the aircraft aged and became less and less efficient. Today, every airline that utilized these jets extensively in the past has focused on retiring these aircraft and replacing them with 65+ seat regional jet aircraft and smaller mainline aircraft ( seats). The efficiencies of the newer planes help the airlines control their operational costs, while the additional seat capacity maximizes revenue opportunities. Airlines operate fewer flights in order to limit costs and allow for maximum profitability potential. The impact on the nation s airports as a whole is fewer departures and seats, although with the upgauging in aircraft from the 50-seat and smaller aircraft to larger aircraft, seat capacity is showing less of a percentage decline than departures. Overall, these themes are necessary to understand and comprehend when forecasting enplanements and operations at MTJ over the next twenty years. Fortunately for MTJ, their return on investment to the airlines serving the region is high, and the airport should be relatively isolated from the trends of decreased service at regional airports over the next twenty years Montrose Regional Airport Service Area The Montrose Regional Airport is a main gateway to the Colorado western slope. The primary and secondary service areas for MTJ was determined by identifying 60 and 90 minute drive times to the airport. The service area encompasses a resident population of approximately 70,000. In addition to agriculture, the region is a major recreational destination. A large resort industry is dependent on Montrose Regional Airport for access to and from the rest of the nation and the globe. The local population is based along the north/south US 50/550 corridor, bordered by Delta, Colorado in the north, and Ouray/Red Mountain Pass to the south. Because of the rural nature of the region, Montrose Regional Airport draws travelers from a wide primary and secondary service area. The closest competing airports to MTJ include Grand Junction Regional Airport to the north (65 miles), Durango-La Plata County Airport to the south (124 miles), and Gunnison-Crested Butte Regional Airport to the east (65 miles). 3-8 DRAFT MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016

9 Figure 3-1. Montrose Regional Airport Primary and Secondary Service Areas Source: Microsoft MapPoint Demographic and Economic Characteristics Consideration of a community s demographic and economic characteristics is important to the determination of commercial and general aviation activity. Prior to developing the forecasts in this document, current and projected economic trends and population projections for Montrose County were examined. Montrose County has experienced gradual population growth at a compounded annual rate of approximately 1.0% between 2005 and This is slightly higher than the overall U.S. growth rate. Between 2016 and 2035 the population of Montrose County is expecting modest growth at 0.9% average annual growth rate, from approximately 42,000 to 50,000. This, too, is generally in line with the greater U.S. growth rate trend during this time period. MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016 DRAFT 3-9

10 Figure 3-2. Montrose County Population Growth Montrose County Population (000) Historical Forecast Population is forecast to grow at an average annual growth rate of 0.9% between 2016 and 2035 Source: Woods & Poole Economics While demographic and economic trends certainly play a significant role in commercial and general aviation activity within a community, Montrose Regional Airport is somewhat unique in that it is largely a destination airport for inbound travelers. As will be further illuminated upon in later sections, the average true origination of MTJ passengers has been approximately 27% from the local catchment area and 73% from other airports. Said differently, of the annual passengers at MTJ, approximately three quarters are inbound travelers, generally visitors taking advantage of the outdoor activities in the region. One quarter of the passengers originate from the MTJ service area. This would indicate that the passenger traffic at MTJ is more closely tied to the overall U.S. population and economic status than that of its immediate service area. This concept will be explored in depth throughout this document. Because one quarter of all passengers at MTJ originate their trip at Montrose, further examination of economic indicators is appropriate for this analysis. Montrose County total employment is projected to grow at an average of 1.2% between 2016 and 2035, from approximately 22,800 to 29,000 employed DRAFT MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016

11 Figure 3-3. Montrose County Total Employment Growth Montrose County Employment (000) Historical Forecast Total Employment is forecast to grow at an average annual growth rate of 1.2% between 2016 and 2035 Source: Woods & Poole Economics Retail Trade, State and Local Government, Healthcare, and Construction account for over 40% of the total Montrose County employment as of The mix of top employment categories during 2015 is not expected to change significantly between 2016 and Table 3-1. Montrose County Employment Categories INDUSTRY 2015 EMPLOYMENT (000) INDUSTRY 2015 EMPLOYMENT (000) RETAIL TRADE 2.7 TRANSPORTATION and WAREHOUSING 0.7 STATE and LOCAL GOVERNMENT 2.7 WHOLESALE TRADE 0.5 HEALTH CARE and SOCIAL ASSISTANCE 2.2 ARTS, ENTERTAINMENT, and RECREATION 0.4 CONSTRUCTION 2.1 FORESTRY, FISHING, RELATED ACTIVITIES 0.3 MANUFACTURING 1.5 FEDERAL CIVILIAN GOVERNMENT 0.3 OTHER SERVICES, EXCEPT PUBLIC ADMIN 1.5 MINING 0.3 REAL ESTATE and RENTAL and LEASE 1.3 UTILITIES 0.2 ACCOMMODATION and FOOD SERVICES 1.3 INFORMATION 0.2 FARM 1.2 MANAGEMENT of COMPANIES/ENTERPRISES 0.2 PROFESSIONAL and TECHNICAL SERVICES 1.0 EDUCATIONAL SERVICES 0.1 MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016 DRAFT 3-11

12 ADMINISTRATIVE and WASTE SERVICES 0.9 FEDERAL MILITARY 0.1 FINANCE and INSURANCE 0.9 TOTAL 22.8 Source: Woods & Poole Economics Montrose Economy: Tourism Driven Montrose County and the Montrose Regional Airport service area are characterized as highly dependent on tourism economy. Air service access that MTJ provides is a critical component to the economic livelihood of the region. World class ski resorts are within close proximity to Montrose, and the scheduled air service seasonality and corresponding passenger traffic seasonality indicates that the winter months (Q1) are the most popular for MTJ. For example, over the last five years ( ), approximately 47% of all passenger traffic at MTJ occurred in the first quarter of each year. As the table below indicates, Q1 and Q3 are the most popular times for air travel at MTJ, with Q2 and Q4 much less popular. Table 3-2. MTJ Traffic Seasonality Five Year Average: CY Q1 Q2 Q3 Q4 TOTAL Passenger Traffic Seasonality 46.8% 13.3% 23.6% 16.2% 100.0% Source: BTS T-100 Data Winter activities such as skiing, snowmobiling, snowshoeing, and ice climbing draw visitors to the Montrose region, and MTJ is the regional gateway for these travelers who rely on the air service access. Historical Commercial Air Service at MTJ Over the last 15 years, Montrose Regional Airport has benefitted from several different air carriers providing winter seasonal, summer seasonal, and/or year round nonstop service to numerous connecting hubs throughout the U.S. The primary year round service is provided by United Airlines via its Denver International Airport (DEN) hub, which connects both domestic and international passengers seamlessly and efficiently. As the following table indicates, the vast majority of nonstop routes other than United s DEN service have been either winter or summer seasonal service. Due to the seasonal nature of the Montrose market, this is not expected to change materially over the next twenty years DRAFT MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016

13 Table 3-3. MTJ Historical Scheduled Air Service CY 2000 Current Service Period Between MTJ and - Carrier From To Atlanta* Delta Air Lines Jan-07 Current Chicago* American Airlines Dec-01 Mar-11 Chicago* American Airlines Dec-15 Current Chicago* United Airlines Dec-08 Current Chicago** United Airlines Jul-15 Current Dallas-Ft. Worth* American Airlines Dec-00 Current Dallas-Ft. Worth** American Airlines Jun-07 Current Denver United Airlines Jan-00 Current Houston* United/Continental Airlines Jan-00 Current Houston** United/Continental Airlines May-06 Current Las Vegas* Allegiant Air Dec-15 Current Los Angeles* Allegiant Air Jan-14 Current Los Angeles** Allegiant Air Jun-15 Aug-15 Los Angeles* Continental Airlines Dec-04 Mar-06 Los Angeles* United Airlines Jan-07 Current Los Angeles* American Airlines Dec-15 Current Los Angeles** American Airlines Jun-16 Current Newark* United/Continental Airlines Jan-00 Current Oakland* Allegiant Air Dec-12 Mar-13 Phoenix America West Oct-02 Aug-03 Phoenix* US Airways/American Airlines Dec-14 Current Phoenix* Allegiant Air Dec-12 Mar-15 Salt Lake City* Delta Air Lines Jan-07 Mar-10 Salt Lake City** Delta Air Lines May-07 Sep-10 San Francisco* United Airlines Dec-14 Current Source: BTS T-100 Data *Winter Seasonal Service **Summer Seasonal Service Historical Passenger Demand Passenger demand has increased by approximately 21% between 2011 and 2015, with 2015 culminating in an all-time record for enplanements at MTJ. However, taking a broader view over a longer period of time, between 2001 and 2015, the compounded annual growth rate for enplanements at MTJ is approximately 2.5% (2001 = 70,457; 2015 = 102,637). MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016 DRAFT 3-13

14 Figure 3-4. MTJ Five Year Enplanement Trend CY Enplanements 120, ,000 80,000 60,000 40,000 84,701 73,320 80,173 86,728 MTJ Enplanements increased by approximately 21% between 2011 and 2015, making 2015 a record year at MTJ 102,637 20,000 0 Source: BTS T-100 Data Historical Capacity Departing Seats In addition to the enplanement growth over the last five years at MTJ, departing seat capacity has increased during this timeframe. Departing seats increased by approximately 10% between 2011 and Much like the enplanement growth at MTJ, when analyzing the longer term trend ( ) the departing seats compounded annual growth rate is approximately 3%. Figure 3-5. MTJ Departing Seats Five Year Trend CY DRAFT MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016

15 Departing Seats 160, , , ,000 80,000 60,000 40, , , , ,209 MTJ Seat Capacity has increased at MTJ by 10% between 2011 and ,941 20, Source: BTS T-100 Data Historical Airline Load Factors Load factor performance has remained relatively consistent at MTJ over the last five years. Coming off a low of 65.8% in 2011, load factors have averaged approximately 72% between 2012 and Figure 3-6. MTJ Load Factor Performance Five Year Trend CY % MTJ Load Factor performance illustrates that demand has been keeping pace with the incremental capacity growth at MTJ 70.0% 65.8% 73.1% 70.3% 71.6% 72.8% Load Factor (%) 60.0% 50.0% 40.0% Source: BTS T-100 Data MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016 DRAFT 3-15

16 Current Commercial Air Service at MTJ Currently, Montrose Regional Airport has air service from three legacy network carriers (Delta, United and American) and one travel company, Allegiant Air, who provide low cost, high value travel packages. As of January 2016, MTJ had nonstop service to/from eleven distinct markets: Denver, New York City, Newark, Chicago, Dallas Ft. Worth, Los Angeles, Phoenix, Atlanta, Las Vegas, Houston and San Francisco. United s Denver nonstops are the only year-round service at MTJ, while the other markets are served on a seasonal basis. Figure 3-7. MTJ Route Map and Current Air Service CY DRAFT MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016

17 Departures Seats Carrier Dest American ,685 DFW ,990 LAX 57 4,194 ORD 34 2,431 PHX 71 4,070 Delta 34 4,948 ATL 32 4,618 LAX Allegiant 52 8,424 LAS 26 4,212 LAX 26 4,212 United 1,615 97,600 DEN 1,166 64,600 EWR 20 2,400 IAH ,620 LAX 26 1,820 LGA 13 1,560 ORD ,850 SFO 25 1,750 Total 2, ,657 Source: Innovata, LLC Current O&D Passenger Geographic Distribution As of year-end Q3 2015, the top domestic origin and destination markets at MTJ were Houston, Los Angeles, Newark, Dallas Ft. Worth, and Chicago. Of the top ten domestic markets, the only market without seasonal nonstop service during this timeframe was Boston. As is indicated by the table below, the top ten markets accounted for approximately 47% of all MTJ passengers as of year-end Q Furthermore, only 23% of these passengers originated their trip at MTJ, meaning the vast majority were inbound visitors traveling to the Montrose region primarily for recreational activities. Table 3-4. MTJ Top 10 Domestic O&D Markets YE Q Rank Market Passengers In & Out Passengers Daily Each Way (PDEW) % MTJ % of Total Passengers 1 IAH 14, % 7.3% 2 LAX 13, % 6.9% 3 EWR 11, % 5.7% 4 DFW 11, % 5.7% 5 ORD 10, % 5.3% 6 LGA 8, % 4.5% 7 SFO 6, % 3.1% 8 DEN 6, % 3.1% 9 BOS 5, % 2.8% 10 ATL 5, % 2.8% Total 93, % 47.2% Source: BTS DB1B Data MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016 DRAFT 3-17

18 The passenger traffic mix and destination distribution is dependent on the markets that have seasonal nonstop service at MTJ. Since the region is highly geared toward inbound tourism, the traffic mix and markets will depend on whether nonstop service exists. At this time, there is no reason to expect that markets with seasonal nonstop service will change materially in the near future. Design Aircraft for Planning Purposes As discussed in detail in Chapter 2 Inventory of Existing Conditions, the FAA uses a coding system, the Airport Reference Code (ARC), to relate airport design criteria to the operational and physical characteristics of aircraft intended to operate at the airport. There are two components to the ARC. The first, depicted by a letter (A, B, C, D & E) relates the aircraft Approach Category (approach speed), and the second component is depicted by a Roman numeral (I, II, III, IV, V & VI) is the aircraft Design Group category (length, wingspan, and tail height). These categories, when combined, result in the ARC based on a design aircraft (or group of aircraft), which is the largest aircraft having (or forecast to have) a minimum of 500 annual operations (or 250 departures) at the airport. In some cases, there may be two design aircraft, one for geometric standards and another for runway strength. Current Design Aircraft The existing design aircraft for MTJ is a combination of the Boeing (C-IV) and Gulfstream IV (D- II), which combines for an ARC of D-IV. The current mix of aircraft in use during the scheduled 2016 operations at MTJ is varied and wide ranging from 50-seat regional jets to 166-seat MD-80 aircraft. The most commonly used aircraft currently in the 2016 scheduled operations is the 50-seat CRJ-200 regional jet and the 50-seat Embraer E-145. Together, these two aircraft account for approximately 55% of all 2016 operations at MTJ. The next most commonly utilized aircraft in the 2016 schedule is the dual class CRJ-700, with seating capacity between seats. The CRJ-700 are scheduled to operate approximately 25% of all 2016 MTJ operations. Combined, the 50-seat and seat regional jet category of aircraft are approximately 80% of all scheduled operations at MTJ. The remainders are a mixture of seat dual class regional jets, 74-seat turboprop aircraft, and mainline aircraft. The following page identifies all currently scheduled aircraft for 2016 at MTJ. Table 3-5. MTJ Current Aircraft Specifications Fleet Mix at MTJ CY 2016 Current Current Current Current Aircraft Model Bombardier CRJ-200 Bombardier CRJ-700 Bombardier CRJ-900 Bombardier Q-400 Length Overall 87 feet 10 inches 106 feet 1 inches 118 feet 11 inches 107 feet 9 inches Wingspan 69 feet 7 inches 76 feet 3 inches 81 feet 7 inches 93 feet 3 inches Height Overall 20 feet 5 inches 24 feet 10 inches 24 feet 7 inches 27 feet 5 inches Maximum Ramp Weight 51,250 lbs 73,000 lbs 80,750 lbs 63,250 lbs Typical Approach Speed 125 knots 125 knots 125 knots 125 knots Approach Speed Category C C C C 3-18 DRAFT MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016

19 Airplane Design Group 3 FORECAST OF AVIATION DEMAND II II III III Current Current Current Current Aircraft Model Embraer E-145 Embraer E-175 Airbus A319 Airbus A320 Length Overall 98 feet 0 inches 103 feet 11 inches 111 feet 0 inches 123 feet 3 inches Wingspan 65 feet 9 inches 94 feet 2 inches 117 feet 5 inches 117 feet 5 inches Height Overall 22 feet 2 inches 31 feet 11 inches 38 feet 7 inches 38 feet 7 inches Maximum Ramp Weight 45,635 lbs 83,026 lbs 167,300 lbs 172,800 lbs Typical Approach Speed 125 knots 125 knots 134 knots 134 knots Approach Speed Category C C C C Airplane Design Group II III III III Current Current Current Current McDonnell Douglas MD- Boeing Boeing Aircraft Model 88 Boeing Length Overall 110 feet 3 inches 129 feet 5 inches 147 feet 10 inches 155 feet 3 inches Wingspan 117 feet 4 inches 112 feet 6 inches 107 feet 10 inches 124 feet 8 inches Height Overall 41 feet 6 inches 41 feet 4 inches 30 feet 6 inches 45 feet 1 inches Maximum Ramp Weight 153,500 lbs 156,000 lbs 150,500 lbs 221,000 lbs Typical Approach Speed 130 knots 142 knots 144 knots 137 knots Approach Speed Category C D D C Airplane Design Group III III III IV Source: Aircraft Manufacturers Future Design Aircraft Commercial A wide variety of commercial aircraft will continue to operating at Montrose Regional Airport in the future as shown in Table 3-6. The most demanding commercial critical design aircraft expected to operate at the airport in the future is the Boeing (C-IV). Table 3-6. MTJ Future Aircraft Specifications Future Future Future Future Aircraft Model Embraer E-195 Boeing ER Boeing Airbus A321 Length Overall 126 feet 10 inches 138 feet 2 inches 155 feet 3 inches 146 feet 0 inches Wingspan 94 feet 3 inches 112 feet 6 inches 124 feet 8 inches 117 feet 5 inches Height Overall 34 feet 7 inches 41 feet 4 inches 45 feet 1 inches 38 feet 7 inches Maximum Ramp Weight 107,916 lbs 188,200 lbs 221,000 lbs 207,000 lbs Typical Approach Speed 125 knots 141 knots 137 knots 142 knots Approach Speed Category C D C D MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016 DRAFT 3-19

20 Airplane Design Group II III IV III Source: Aircraft Manufacturers Forecast Methodology and Approach Montrose Regional Airport is unique, in that it is highly seasonal and relies heavily on inbound traffic due to its tourism based economy. While the last few years have shown rapidly increasing levels of scheduled air service and corresponding enplanements, it is expected that these sharp increases will level over the forecast period. Below are some macro and micro factors impacting enplanement forecasts. Factors Impacting Passenger Enplanement Forecasts Demand for commercial air service and enplanement levels at airports are affected by a variety of factors, including but not limited to the following: General Economic Environment: The macroeconomic environment in the United States impacts demand for air travel, including economic growth, levels of disposable income, and consumer confidence. In addition to macro-level factors, the economic environment of an airport service area is also an important element in forecasting demand. This includes trends in local employment levels, stability of the core economic base, and emerging trends in economic activity (e.g., energy business, biotechnology, etc.). The nature of traffic in a given market, whether it is premium-fare business traffic or discretionary demand dependent on disposable income, will play a role in carrier decisions with respect to service levels. Population and Demographics: Generally speaking, positive trends in socioeconomic and demographic factors in an airport service area generate a direct correlated increase in demand for air transportation. As will be discussed in further detail in the following section, while this is an important factor for MTJ service levels, it is not as critical as it is for other airports due to the inbound tourism element of the passenger traffic pattern at MTJ. Airline Strategies: The strategic decisions of airlines play a major role in stimulating or, conversely, suppressing passenger demand at an airport. Such strategy decisions can relate to pricing models, frequency, schedules, aircraft type, destinations, etc. Service at Neighboring Airports: The presence of superior or inferior service levels at neighboring airports can affect the enplanements at a local airport. For example, as Southwest Airlines serves Denver, some travelers generated in the Montrose Regional Airport service area will drive to DEN if ticket prices at MTJ do not equal those at DEN. However, due to the very long drive (five hours), this leakage dynamic is likely low DRAFT MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016

21 Forecast Uncertainties Specific to Montrose Regional Airport 3 FORECAST OF AVIATION DEMAND Air passenger traffic is affected by a range of economic and other factors. Specific to Montrose, we would note the following: Inbound Tourism Destination and General Economic Conditions: Due to the inbound nature of the passenger traffic at MTJ and the outdoor leisure activities that the region has to offer, this type of travel can be sensitive to the general economic conditions in the U.S. If a recession were to occur, there is typically less propensity to travel due to worsening economic conditions and the impact on the typical household. Colorado Flights Alliance Participation in MTJ Air Service: Colorado Flights Alliance is an organization that leads economic development on Colorado s western slope by attracting and retaining air service through risk mitigation partnerships. Funding for such activities comes from a variety of sources across the region. Currently, they partner with Delta, United, American, and Allegiant on various seasonal nonstop service. While Colorado Flights Alliance provides an excellent benefit to the region, it is uncertain if future funding levels will be available to continue to subsidize air service. Fuel Prices: There is no certainty in regard to the cost of jet fuel. As we have seen over the last several years, there can be rapid and volatile shifts in the price of crude oil, which directly impacts the price of jet fuel. Given that approximately 55% of the 2016 scheduled operations at MTJ are with 50-seat regional jets, increasing fuel prices negatively impacts the profitability of these aircraft more than newer dual class regional jets and mainline aircraft. Service levels may be affected if fuel prices increase precipitously in the future. Airline Capacity Discipline: As a result of numerous airline bankruptcies and subsequent mergers between several airlines over the last ten years, air carriers are operating much more rationally than ever before. The primary focus for airlines is on profitability, not passenger share. While this may seem logical, it was the latter that was the primary focus of airlines for many years (the defending the turf mentality) that led to poor network planning decisions and unprofitable routes. Now that airlines are run more efficiently, each aircraft in an airline s fleet will be deployed in markets where there is the greatest potential for profitability. This may impact Montrose should an airline decide that the aircraft is more suitable for a different market. Determination of Methodology Four different methodologies were analyzed for the Montrose Regional Airport enplanement forecast. These include the following: Population Driven Forecast Per Capita Personal Income Driven Forecast Percent Share of National Enplanements Driven Forecast Northwest Mountain Region Enplanement Growth Driven Forecast MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016 DRAFT 3-21

22 Each methodology is examined in greater detail below. Population Driven Forecast Methodology Population driven forecasts are a common methodology that often yields reasonable and reliable forecast trends for many U.S. airports. As previously mentioned, approximately 72% of all passenger traffic at MTJ is inbound traffic; typically, leisure travelers coming to the area for recreational opportunities. Twenty-eight percent of the traffic is outbound, which is more closely tied to the population growth in the region. The formula to calculate the population driven forecast utilized the U.S. population growth projections from and multiplied the CAGR of approximately 0.85% for 72% of the enplanements at MTJ over the forecast period. The other 28% of the forecasted enplanements utilized the CAGR for the same time period for population growth in Montrose County, which is very similar to the U.S. average, at 0.89%. The resulting forecast begins in 2016 with 103,610 enplanements and ends with 122,995 in Furthermore, when analyzing the correlation between MTJ enplanements and the population growth of Montrose County population between 2005 and 2015, the resulting R-Squared is.32, indicating very little correlation between population growth of the county and enplanements. When using the same technique to analyze the correlation between MTJ enplanements and the population growth of the U.S. between 2005 and 2015, the resulting R-Squared is.18, indicating even less correlation between population and MTJ enplanements. For these reasons, population growth is not viewed as the most appropriate measure for forecasting MTJ enplanements for this Master Plan forecast. Figure 3-8. Population Driven Enplanement Forecast CY , , ,000 75,000 50, DRAFT MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016

23 Source: Boyd Group International Per Capita Income Driven Forecast Methodology Per capita income is another common and often used forecasting methodology for enplanements at U.S. airports. As income rises, propensity to travel typically rises as well, thus generating a metric for enplanement estimation. The per capita income CAGR for the U.S. and for Montrose County is approximately 1.2% using 2009 chained dollars. When using this percentage to forecast enplanement growth, the result is slightly higher than using the population methodology. The per capita income driven enplanement forecast for 2016 is 103,903 and it culminates with 2035 enplanements forecasted at 131,145. Similar to the population based methodology, the correlation between per capita income and MTJ enplanements is very low for the years between 2005 and Regression analysis indicates that the R- Squared, when predicting enplanements based on per capita income of Montrose County is.04, which shows essentially no correlation between the two variables. Likewise, when predicting 2005 through 2015 MTJ enplanements using the U.S. per capita income between 2005 and 2015, the R-Squared is.06. Due to the lack of correlation, per capita income driven methodology of forecasting future MTJ enplanements is not viewed as an appropriate measure for this Master Plan forecast. Figure 3-9. Per Capita Income Driven Enplanement Forecast CY , , ,000 75,000 50,000 MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016 DRAFT 3-23

24 Source: Boyd Group International Percent Share of National Enplanements Forecast Methodology The percent share of national enplanement methodology is dependent upon having a forecast of national enplanements for the period ( ). The Federal Aviation Administration issues its FAA Aerospace Forecast each year, which has a domestic enplanement forecast for the stated time period. This forecast has been utilized as a basis for the MTJ percent share of national enplanements going forward. Historically, MTJ enplanements have ranged between.012% and.015% of the national enplanements. The ten year average of the percent share of national enplanements is.0136%. Table 3-7: MTJ % Share of National Domestic Enplanements CY Year Average MTJ Enplanements National Domestic 658, , , , , , , , , , ,206 Enplanements MTJ % Share of Nat'l Domestic Enplanements Source: BTS T-100 Data % % % % % % % % % % % (000s) When further analyzing the MTJ percent share of national enplanements, it becomes clear that this is not an appropriate methodology for forecasting future MTJ enplanements. The FAA national domestic enplanement forecast is as follows: Figure FAA Domestic Enplanement Forecast CY , DRAFT MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016

25 Source: FAA Aerospace Forecast Fiscal Years Based on the FAA domestic enplanement forecast, utilizing the.0136% ten year average of MTJ enplanements as a percentage of national enplanements results in MTJ figures that are inconsistent with recent trends at the airport. Furthermore, MTJ enplanements do not necessarily correlate to national trends. For example, national enplanements have increased by approximately 9% between 2011 and 2015 (638 million vs million), based on BTS T-100 data. However, MTJ enplanements have increased by approximately 21% during this same five year timeframe. Clearly, there is little correlation between the national trends and the current MTJ trends. For these reasons, it has been determined that MTJ enplanements as a percent share of the national enplanements is not an appropriate methodology for forecasting at MTJ. Northwest Mountain Region Enplanement Growth Forecast Methodology The Northwest Mountain is the Federal Aviation Administration classification of airports in the following states: Colorado Idaho Montana Oregon Utah Washington Wyoming The analysis of enplanement trends in these seven states indicate the growth rate for the region as a whole compared to Montrose Regional Airport. In addition to comparing the growth rate of the entire Northwest Mountain region to MTJ, the growth rate of the CO Western Slope airports were compared to that of MTJ as well. This provided insight into how the greater region and immediate region are performing vs. MTJ. Table 3-8. MTJ Enplanements 10 Year CAGR vs. CO Western Slope & NW Mountain Region CY Airport DRO 113, , , , , , , , , , % GJT 159, , , , , , , , , , % MTJ 81,047 91,358 85,468 92,025 96,626 87,558 74,516 83,443 90, , % GUC 48,065 42,480 35,930 42,104 37,285 36,511 31,147 30,568 31,719 34, % TEX 16,329 16,177 13,137 6,522 9,192 10,911 7,550 6,052 3, % CO Western Slope 418, , , , , , , , , , % Northwest Mountain Region 62,986,336 66,055,832 65,736,556 63,582,128 65,419,904 66,563,936 67,114,484 67,548,174 70,434,723 73,313, % Source: BTS T-100 Data Based on the BTS T-100 data, a common pattern arises between MTJ enplanement growth over the last ten years when compared to both the Western Slope airports and the Northwest Mountain region. MTJ s 10 year CAGR for enplanement growth is 2.4%, compared to a 2.5% growth rate for the five CO Western Slope airports. The 10 year CAGR for the entire Northwest Mountain region airports is 1.5% 10 Year CAGR MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016 DRAFT 3-25

26 during this same timeframe. MTJ, GJT, and DRO are clearly the preferred airports on the Western Slope. GUC has a -3.3% per year CAGR and TEX has lost scheduled commercial service altogether, resulting in a -51% per year CAGR. MTJ has benefited from the unfortunate trends at GUC and TEX. Due to the realities of airline strategies in the U.S., this will likely continue into the future. As a conservative measure, it has been determined that the most appropriate methodology for forecasting future MTJ enplanements for the years is to extrapolate the Northwest Mountain region growth rate of 1.5% to MTJ enplanement growth. While the CO Western Slope growth rate is significantly higher at 2.5%, a conservative approach is the suitable methodology for this forecast. Figure NW Mountain Region Driven Enplanement Forecast CY , , ,000 75,000 50,000 Source: Boyd Group International Forecast Summary: The methodologies analyzed for the MTJ enplanement forecast, in addition to a comparison to the Terminal Area Forecast, are illustrated on the graph below: Figure Enplanement Forecast Comparison CY DRAFT MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016

27 175,000 MTJ enplanements are projected to grow from approximately 104,000 in 2016 to 139,000 in ,000 Historical Forecast 125, ,000 75,000 50,000 TAF NW Mountain Enpl. Growth Driven CO Western Slope Enpl. Growth Driven Population Driven Personal Income Per Capita Source: Boyd Group International The population growth, per capita income, and Northwest Mountain region methodologies yielded relatively similar results. Due to the lack of correlation between population growth, per capita income growth and MTJ enplanements between the years 2005 and 2015, the most appropriate methodology for projecting MTJ enplanements is the Northwest Mountain region enplanement growth. For comparison purposes, the CO Western Slope ten year CAGR methodology is also depicted on the graph, which is considered aggressive at this time, even though that has been the previous ten year trend. The conservative methodology was used to project the Northwest Mountain region ten year CAGR approach. Annual departures, average seats per departure, departing seats, and projected load factor are outlined below for the period Table 3-9. Enplanement and Operational Summary CY MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016 DRAFT 3-27

28 Year Passenger Enplanements YOY % Change Annual Departures YOY % Change Avg. Seats Per Departure Departing Seats Load Factor Historical ,701 2, , % , % 1, % , % , % 1, % , % , % 1, % , % , % 1, % , % Projection , % 2, % , % , % 2, % , % , % 2, % , % , % 2, % , % , % 2, % , % , % 2, % , % , % 2, % , % , % 2, % , % , % 2, % , % , % 2, % , % , % 2, % , % , % 2, % , % , % 2, % , % , % 2, % , % , % 2, % , % , % 2, % , % , % 2, % , % , % 2, % , % , % 2, % , % , % 2, % , % Source: BTS T-100 Data; Innovata, LCC Enplanement Forecast Comparison to 2015 TAF Projections A comparison for each five year increment between the airport enplanement forecast and the Terminal Area Forecast illustrates that the airport forecast is within 10% of the TAF for the five year forecast period (8.6%) and 15% within the 10 year forecast period (14.7%). The commercial operations (departures and arrivals) show large variances. The reason for this is unknown, as the TAF shows 5,435 commercial operations for 2015, when BTS T-100 data results in 3,764 total commercial operations. While both the forecast and the TAF commercial operations increase by 1% each year between 2015 and 2035, they start with very different base year operations for DRAFT MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016

29 Table Five Year Commercial Enplanement and Operations Comparison vs. TAF CY Year Airport Forecast (AF) Terminal Area Forecast (TAF) AF/TAF % Difference Passenger Enplanements Base Year ,637 99, % Base Year + 5 yrs , , % Base Year + 10 yrs , , % Base Year + 15 yrs , , % Base Year + 20 yrs , , % Commercial Operations Base Year ,764 5, % Base Year + 5 yrs ,408 5, % Base Year + 10 yrs ,633 5, % Base Year + 15 yrs ,869 6, % Base Year + 20 yrs ,118 6, % Source: BTS T-100 Data for Base yr.and FAA Terminal Area Forecast Air Carrier Forecast Activity Average daily departures and average seats per departure are expected to increase gradually over the twenty year forecast period. In 2016, it is estimated that average daily departures will be 5.8 at MTJ. In the final year of the forecast, average daily departures are expected to reach 7.0. Average seats per departure in 2016 are estimated to be 68.8, while the 2035 forecast shows average seats per departure being MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016 DRAFT 3-29

30 Figure Avg. Daily Departures and Seats per Departure CY Avg. Daily Departures Historical Forecast Avg. Seats Per Departure Avg. Seats Per Departure Avg. Daily Departures Source: Boyd Group International Peak Demand Monthly and Hourly Historically, Montrose Regional Airport has had seasonal patterns of service throughout the year. The seasonality of air service and passenger traffic is closely correlated, with Q1 of each year accounting for almost 50% of all passenger traffic and airline capacity DRAFT MONTROSE REGIONAL AIRPORT MASTER PLAN UPDATE 2016