Air Service Development 101

Transcription

1 ACI-NA Marketing & Communications Air Service Development 101 Carol Hewitt Director, Route Development Edmonton International Airport

2 Topics of Discussion What Is Air Service Development? Why is Air Service Development Important? Fundamentals ASD Sales Process ASD Cycle Duration / Time Investment 2

3 Industry Terms Airline Speak PDEW passengers daily each way ASM available seat mile, how airlines quantify service levels CASM cost per available seat, per mile RASM revenue per available seat, per mile Yield Measure of average fare paid per mile, per passenger, calculated by dividing passenger revenue by revenue passenger miles Load factor percentage of seats filled 3

4 What is Air Service Development? 4

5 What is Air Service Development? Attracting and maintaining air carrier business to your airport and community Attracting: New nonstop routes Additional frequencies or capacity on existing routes Improved aircraft (gauge) or schedule (timing) Maintaining Supporting existing routes Understanding competition Recapture leakage 5

6 Why Should You Have ASD? Help influence your own destiny To establish market position and potential To bring awareness of your region not just your airport To build your own network To compete with other airports To maximize all airports spin-off benefits To increase the asset value of the business To make money! 6

7 Why is ASD Important? Air Service is why most commercial airports exist. Period Enhance airport revenue streams Makes your region a more attractive business location Helps your business community save time, money, resources Makes your region a more attractive leisure destination Low fares or not It provides access to your community 7

8 Fundamentals Every airport can have ASD Size doesn t matter Do what fits your airport best Eg. In-house staff, consultants Relationships matter airlines, other airports creating, building, maintaining 8

9 Fundamentals It is a highly competitive environment Airplanes are moveable assets Different sized airports have different goals & challenges Understand the industry Align your airport strategy with the airlines strategy Know who to ask for what 9

10 ASD Process flow chart 10

11 Market Assessment Determine airport catchment area Where are our customers coming from? Primary & Secondary Market size and leakage assessment data driven with XXX provider local intelligence, corporate data Identify demand / opportunities Large unserved local markets, How are customers getting there now? Be realistic Don t overstate your position, source all data 11

12 Research - Feasibility and Viable Carriers Identify potential air service providers Assess the feasibility of obtaining service from those carriers Does your strategy align with theirs? Financial stability Network development timing Is the airline already carrying the customer Do they have the means to implement service Available aircraft, correct aircraft type Route forecast in house or third party data Network contribution Traffic stimulation are new customers available? Why? 12

13 Airline Approach Options Airports must select an appropriate venue to meet with airlines and present the business case ASD forums (JumpStart, Routes etc.) are effective for developing relationships and learning about airline network planning strategy These forums are ice breakers to establish if a carrier has interest in your proposal A scaled down version of your proposal will likely be delivered at these forums Joint airport presentations may be delivered the other end of the route 13

14 Airline Approach Options Airline headquarters meetings are generally the appropriate venue to ensure sufficient time for discussion and participation by the relevant airline planning personnel These generally occur after an ASD Forum event...the carrier has shown interest in your proposal These meetings will also occur with airlines you have already engaged and have established relationships or are currently serving your airport 14

15 Relationship Building / Maintaining After initial HQ or Forum meeting, the objective is to provide the carrier any additional data or information they require You will want to continue dialogue and exchange of information Another objective is to gain access to the decision makers and influencers at the carrier for future HQ meeting Each carrier may require a different approach 15

16 The HQ Meeting Include appropriate airport partners in joint meetings if applicable Large locally based business with vested interest in the route Tourism entity interested in attracting visitors who would use the route Be cautious about inviting Politicians (Mayors, Councilmen, County Commissioners). These participants should only attend if an airline government counterpart or executive is attending a network planning meeting is no place for these people... 16

17 Negotiation Overall Terms Negotiation the airline telling you what s going to happen Incentives may be offered Revenue guarantee, waived fees, marketing aids, etc. SCASD grant Real Estate offering Term of agreement gates, counters, offices, hangers, operational costs 17

18 Negotiation - Incentives Airports have become increasingly aggressive in pursuing new air services and are offering financial incentives to induce airlines to serve their community. Many airlines want zero risk on new routes so seek financial risk sharing during the start-up phase of a new air service There is NOT a one size fits all approach 18

19 When the Airline calls you with good news 19

20 Planning and Launch of Service Announcement / Launch Joint press releases Inaugural planning Media event / gate event Marketing Campaign creative Media buy Trade mission Economic Development connection Tourism connection Now the real work begins Performance & Sustainability! 20

21 ASD Cycle Duration Variables impacting ASD time Route Carrier Airline internal strategy Industry and global economics Aircraft availability (manufacturers) Examples of time required for route acquisition: International Long Haul 4-7 years Domestic 1-3 years Small airports

22 Discussion Questions & Comments 22