Outlook for Air Travel

Transcription

1 University of Massachusetts Amherst Amherst Tourism Travel and Research Association: Advancing Tourism Research Globally 2014 Marketing Outlook Forum - Outlook for 2015 Outlook for Air Travel Brad DiFiore Ailevon Pacific Follow this and additional works at: DiFiore, Brad, "Outlook for Air Travel" (2016). Tourism Travel and Research Association: Advancing Tourism Research Globally This Event is brought to you for free and open access by ScholarWorks@UMass Amherst. It has been accepted for inclusion in Tourism Travel and Research Association: Advancing Tourism Research Globally by an authorized administrator of ScholarWorks@UMass Amherst. For more information, please contact scholarworks@library.umass.edu.

2 Outlook for Air Travel TTRA Marketing Outlook Forum October 21, 2014

3 Consolidation Has Changed the Game = = + = + = = 2014

4 Four Carriers Dominate Domestic Air Travel Domestic O&D Revenue By Carrier 2004 vs In Millions USD $30 $25 $20 YE 1Q2004 Revenue YE 1Q2014 Revenue $15 $10 $5 $- Source: Diio Mi

5 The Big 4 Control 87% of Domestic Capacity U.S. Lower 48 Seat Share, August 2014 United, 17% JetBlue, 4% Alaska, 3% Southwest, 22% Spirit, 2% Frontier, 2% Allegiant, 1% Virgin, 1% Other, 1% 13% Delta, 23% American, 25% In Europe, it takes 39 carriers to reach the same level of capacity share! Source: Diio Mi

6 Domestic Action is in the Low-Cost Segment Legacy vs. Low-Fare Revenue 2004 versus 2014 (Billions) $80 Legacy Low-Fare $70 $60 $50 $9 $30 $40 $30 $20 $52 $41 $10 $- YE 3Q2004 Revenue YE 1Q2014 Revenue Source: Diio Mi

7 But Net Domestic Capacity Has Been Flat U.S. Lower 48 Capacity Trends Billions of Seats per Year Source: Diio Mi

8 Unit Revenues are Up on that Capacity Restraint U.S. Major Carrier RASM Trends Cents per Available Seat-Mile, Year-Ending Q1 per Year American Southwest Delta United Source: Diio Mi; Does not included merged en44es

9 And Now Record Profits After Decades of Losses U.S. Public Carrier Operating Margins Full-Year for ; Quarterly for % 2014 YTD 20% 15% 10% 5% 0% -5% -10% Q Q2 American Delta Southwest United JetBlue Alaska Spirit Allegiant Source: Diio; Airline Weekly from carrier reports; Does not included merged en44es

10 Planned 2015 Domestic Capacity Increase of 2.1% Domestic U.S. Airline Capacity 2014 vs Scheduled Seats 80,000, Seats 2015 Seats Schedules are loaded through September, but only considered firm through early Spring ,000,000 60,000,000 50,000,000 40,000,000 30,000,000 20,000,000 10,000,000 0 Source: Diio Mi

11 Planned 2015 Intl Capacity Increase of 3.7% International U.S. Airline Capacity 2014 vs Scheduled Seats 12,000, Seats 2015 Seats Schedules are loaded through September, but only considered firm through early Spring ,000,000 8,000,000 6,000,000 4,000,000 2,000,000 0 Source: Diio Mi

12 Carriers are Investing Again Better Onboard Products Improved On-Time Performance More Capital Investment Capital Improvements

13 50-Seat Regional Jets are Quickly Fading Away Post-9/11, the economics of RJs were superior to larger aircraft. Today that situation is reversed. As the fleet ages, it will be parked. Nearly 400 already are. And there are no true alternatives available today. Or tomorrow.

14 The Return of the Mainliner Bigger airplanes are part of the answer. High fuel prices assure this. But bigger airplanes at projected demand levels means that consolidation of traffic must occur. Fewer commercial airports. Fewer hubs. Fewer routes. Fewer flights.

15 Legacy Carrier Networks Have Been Re-Shaped 12 domestic hubs have all but disappeared SJC American LAS US Airways DFW Delta STL American MKE Midwest MEM Delta DAY US Airways CVG Delta BNA American CLE United PIT US Airways RDU American

16 Large Hubs and Gateways Now Dominate Seattle Alaska, Delta San Francisco Bay United, Southwest Virgin America Los Angeles American, Delta, Southwest, United Salt Lake City Delta Phoenix American, Southwest Most U.S. traffic growth is be driven to, from, or though, these large markets. Denver Frontier, Southwest, United International growth is key to this trend. Minneapolis/St. Paul Delta Dallas American, Southwest Houston Southwest, United Chicago American, Southwest, United Detroit Delta New York American, Delta, JetBlue, United PHL American Washington/Baltimore American, Southwest, United Atlanta Delta, Southwest Charlotte American Boston American, Delta, JetBlue Central Florida Allegiant, JetBlue, Southwest South Florida American, JetBlue, Spirit

17 But a New Breed of Carrier is Mixing Things Up

18 What the Airline Industry is Talking About Today Evolution of Southwest Airlines Dallas Love Field opens to the nation The Battle of Seattle More LCC growth in Boston, New York City and Washington D.C. Battle: Los Angeles The Middle East Three (ME3) shake up the globe America, the global airline industry s new dumping ground

19 Summary Consolidation has led to profits, for now Four airlines control the majority of capacity Airlines are happy with low supply and high fares Growth is coming from smaller carriers Profitability has brought improved customer satisfaction

20 Thank You Brad DiFiore Managing Director