Passengers chasing seats Air service in New York State

Transcription

1 Passengers chasing seats Air service in New York State NYAMA Annual Conference September 20, 2012

2 InterVISTAS Consulting Group: The Transportation and Tourism Business Airline Business Air Service Development PPP, Commercial & Finance Economics & Strategic Planning Planning, Borders, & Security Airline Strategy and, Business Planning Aircraft Finance MRO Transformation Production Planning and Integrated Operations Route and Network Analysis and Scheduling Market Analysis Leakage Analysis Route Strategy Business Case Development Incentive Evaluation Negotiation Transportation Infrastructure Privatization Financial Modeling/Due Diligence Commercial Development Retail Transportation Policy Economics & Regulatory Expert Witness Logistics & Supply Chains Development Economics Strategic Planning Border Facilitation Aviation & Transportation Security Aviation Safety Airport & Transportation Planning Revenue Management Ancillary Revenue Development Food & Beverage Parking Airport Cities Tourism Development Environment Market Analysis Benchmarking/ Consumer Research 1

3 The September 2009 Question: Have we reached bottom yet? There are signs of recovery from the recession Uneven recovery by region and by sector Slow recovery of jobs Air travel sector also senses an impending recovery, but Consumer confidence still low Carriers continue capacity squeeze in face of soft demand Low yields due to price competition Concern that jet fuel prices will spike again Changed by 2012 Changed by 2012 The deployment of airline capacity in 2010 will largely define when, where and how traffic rebounds 2

4 Economic conditions typically drive air travel demand, and thus air service Economic conditions, and air travel demand, vary greatly by region and sector Stronger in Asia and Latin America (especially emerging markets) Weaker in North America and Europe (especially mature markets) Variable by economic sector Airlines are making progress toward profitability Lowering unit costs where they can Cautiously controlling capacity Using consolidations, alliances and regional partners to mitigate risk Establishing pricing power where possible 3

5 The global airline industry has recently returned to modest profitability Source: IATA 4

6 Airline financial performance varies dramatically by region Source: IATA 5

7 US airlines severely reduced capacity during the Great Recession 2009: Largest US airline capacity reduction since 1942 Source: ATA 6

8 Most recently, US airlines have carefully calibrated capacity with demand Key factors: Sluggish US recovery Fuel price risk Corporate consolidation Seasonal flexibility (1.1) (1.8) 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 Source: Official Airline Guide,

9 Airline business models have adapted to market and competitive conditions Legacy network Legacy point-to-point New model LCC New model ULCC Regional feeder Regional at risk Tour operator ACMI lift providers 8

10 Airline common denominators in the current U.S. market environment Concentration and/or partnership Specialized business models Fleet and route rationalization Revenue management Risk aversion Profit (not market share) 9

11 NYC s Big 3 : Domestic seat capacity is recovering, but unevenly Source: Official Airline Guide 10

12 NYC s Big 3 : International seat capacity is rising at JFK Source: Official Airline Guide 11

13 Upstate s Big 4 : Less capacity, even as regional economies grow Source: Official Airline Guide 12

14 Regional airports are steady, but some are growing (i.e. Plattsburgh and Elmira) Source: Official Airline Guide 13

15 Passengers chasing seats Airlines have the seats that your passengers want: So how do you get them? 14

16 Passengers chasing seats Airlines have the seats that your passengers want: So how do you get them? Understand your market, your competition and the industry dynamics impacting your situation Educate airlines about how your airport relates to their market opportunities Match market opportunities to carriers through compelling business cases for their business models Maximize regional stakeholder involvement and support that is led and coordinated by the airport Have a strategy that is balanced: realistic, aggressive and proactive 15

17 Thank You!