ACI-NA 19th ANNUAL CONFERENCE EXHIBITION

Transcription

1 ACI-NA 19th ANNUAL CONFERENCE EXHIBITION Air Service Reality Check Ed Faberman Air Carrier Association of America September 28, 2010

2 GOOD TO BE IN PITTSBURGH!!! 2

3 Airline Industry Challenges Future of Competition/ Few New Carriers Congestion Mergers/ Alliances Restricted Airports ATC System Issues Increasing Costs Business Travel Down 3

4 Mergers/Alliances Continue Mergers Other Airline Relationships UA/CO AA/JetBlue Slot Trade US? part of UA/CO? (LH Ownership) DL/NW AA/BA/Iberia Air France/KLM AA/Alaska Mexico Codeshare DOT refused to approve Virgin Blue/ Air New Zealand/Delta alliance Airline Alliances CO/UA US/LH/B6 DL/NW/Air France AA/BA/Iberia 4

5 Airline Alliances Skyteam Aeroflot Aeromexico Air France Alitalia China Southern CSA Czech Airlines Delta Air Lines (NW) KLM Korean Air Air Europe Copa Airlines Kenya Airways Next China Airlines 5

6 Airline Alliances Star Alliance Air Canada Air China Air New Zealand ANA Asian Airlines Austrian Airlines bmi Egyptair LOT Polish Airlines Lufthansa (JetBlue) SAS Scandinavian Airlines Shanghai Airlines Singapore Airlines South African Airways Spanair SWISS TAM TAP Air Portugal Thai Airways International Turkish Airlines United Airways/Continental US Airways 6

7 Airline Alliances One World Alliance American Airlines American Connection American Eagle British Airways BA Cityflyer Comair Sun-Air Iberia Air Nostrum Cathay Pacific Dragonair Finnair LAN LAN Express LAN Peru LAN Ecuador LAN Argentina Qantas QantasLink Jetconnect Royal Jordanian Japan Airlines JALways JAL Express J-Air Japan Transocean Air Malév Mexicana 7

8 Can Individual Airlines Compete With Alliances? Possible Next Merger US Airways Doug Parker statement Further consolidation is needed. Consolidation is one of the keys to bringing the sector back to profitability. Alliances Attract Additional Loyalty Frequent Flier Benefits USA today More fliers loyal to alliance, not airline. Upgrades Multiple Flight Options Can A Carrier Be Competitive If Not In An Alliance? YES Offer low fares/good service Independent Carriers Entering New Airports Reasonable number of flights Business and leisure markets Airports Airports have authority to support steps to expand competition and add new service (FAA Guidebook) 8

9 Support for New Service Airport/Community Support Leisure and Business Markets LGA/DCA International Markets Government Action Other Issues that Impact Competition Closed Airports/Cancelled Flights Require carriers to replace cancelled flights 9

10 Next Steps For Air Service Impact of Mergers/Alliances Fewer hubs and downsizing at hubs MEM, CIN, CLE (UA/CO Agreement) Reduced Flight Options Some Hubs Lose Service (CLE?) Expand Competitive Options Open restricted markets to expand competition Southwest at Newark International Airport What about LGA, DCA and hubs Limits on mergers/alliance partners (with approval of UA/CO, all have been approved) Gates/facilities Fees/services Increase costs for some operations 10

11 -- Southwest gets into Newark I cry for these poor, poor, sad dominant carriers. I must not allow any competition for them. DOJ/DOT 11

12 Closed Airports Lose Income Fewer Flights Fewer Passengers Increased use of Regional Jets Regional Jet Replacement of Full Size Jets Landing Fees CRJ 700 B 737 LGA $7.95/1,000 lbs = $ = $1, Excise Tax (7.5%) 6,100* x $.075 = $ ,000* x $.075 = $ PFC/Segment ($6.10) 60 (passengers) x $6.10 = $ (passengers) x $6.10 = $ *Ticket Sales RJ Contributions $1, Jet Contributions $2, Options Higher PFCs and Excise Taxes Higher Landing Fees Security Fees New Charges 12

13 Bright Side for American Travelers - Growth of LCCs Southwest AirTran Spirit JetBlue International Options? New Service Markets Akron Canton, Ft. Myers, Indianapolis, Sarasota, Rochester Carriers AirTran, Southwest 13

14 Edward P. Faberman Air Carrier Association of America 1776 K Street, NW Washington, DC epfaberman@acaaa1.com 14