Caribbean Air Service: Building for the Future

Transcription

1 Caribbean Air Service: Buildin for the Future Mark Haneke Vice President, Network and Strateic Plannin CTC 30 The Next Generation Learnin from the Past, Preparin for the Future

2 Presentation Outline Air Service Situation Update Key Air Service Development Drivers Aviation-Related Opportunities for the Caribbean 2

3 Air Service Situation Update

4 Air Traffic Growth (Demand) Global and Caribbean Passener Traffic Index (1995=1) Asian Economic Flu Sept 11 and Economic Downturn 2006 Actual Passener Numbers World: 2.1 Billion Caribbean: 22.2 Million Global Caribbean 4 Source: International Civil Aviation Oranization (ICAO), Caribbean Tourism Oranization (CTO).

5 Air Capacity Growth (Supply) Global and Caribbean Air Capacity (Seats) Index (1995=1) Asian Economic Flu Sept 11 and Economic Downturn 2006 Actual Seat Capacity World: 3.3 Billion Caribbean: 30.2 Million Global Caribbean 5 Source: BACK Aviation Solutions Official Airline Guide (OAG).

6 Tourism Growth Forecast Growth in Visitor Arrivals Averae Annual Growth Rate (%) 8% 7% 6% 5% 4% 3% 2% 1% 0% 4.1% 4.3% 3.5% 3.0% 6.5% 5.5% World Caribbean U.S. Europe Asia Pacific Africa 6 Source: World Tourism Oranization (UNWTO).

7 Global Air Carriers Financial Performance $18,000 Global Air Carriers Operatin Profit/Loss US$ (millions) ($12,000) 7 Source: International Civil Aviation Oranization (ICAO).

8 Air Service Development Drivers

9 Key Drivers Market Demand DEMAND Product Air Service Development 9 Competition SUPPLY Airline Economics

10 Demand - Market Demand for Air Service 10

11 Demand - Product Demand for Air Service Hotel Attractions Home Room Portin Inventory 11

12 Supply Competition & Airline Economics Competition Emerin Destinations Airline Economics Profitability drives decision-makin 12

13 Aviation-Related Opportunities for the Caribbean

14 Aviation-Related Opportunities Overview 1. Low Cost Carrier Service 2. Reional Airline Development 3. New Generation Aircraft 4. New Technoloy for Improvin Airport Efficiency 5. Expandin Chinese Market 6. Air Policy Liberalisation 7. Security and Facilitation 8. Air Service Marketin 14

15 LCC Attributes Sinle-class aircraft Sinle aircraft fleet type Simplified airfare structure Open seatin Flyin to cheaper, less-conested secondary airports Minimal round time (quick-turns) Point-to-point flyin Direct ticket sales 15

16 Industry Transformation 16 Source: InterVISTAS Consultin Inc.

17 Growth of Low Cost Carriers in the Caribbean & Central America Vancouver Calary Edmonton Toronto Sacramento San Jose Los Aneles San Dieo Milwaukee Chicao Detroit Salt Lake City Denver Indianapolis Kansas City St. Louis Nashville Albuquerque Dallas/Ft. Worth New York Boston Bermuda January destinations flihts - 34,400 seats Los Cabos Mazatlan Puerto Vallarta Guadalajara Zihuatanejo Orlando Tampa Fort Lauderdale/Miami Freeport Nassau Providenciales Cancun Grand Turk Cozumel Santiao Grand Cayman Port-au-Prince Auadilla Monteo Bay Kinston Santo San Juan Punta Domino Ponce Cana January destinations - 2,260 flihts - 317,600 seats San Salvador Aruba 17

18 Low Cost Carrier Impact Route stimulation of 245% or more! New York to Auadilla 300,000 E/D Passeners 250, , , ,000 50, Trans World Airlines Continental Airlines JetBlue Airways 18 Source: U.S. DOT O&D Database.

19 Low Cost Carriers Capturin a larer and larer share of the market Now control: 30% of US domestic market 35% of Canadian domestic market 32% of Mexican domestic market 30% of Intra-European market 19

20 LCC - Future Lon-haul LCC Carriers are Emerin 20

21 Reional Airline Development More network (connection) traffic = more air services Network carriers seek incremental beyond traffic Evaluation of air services with derees of connectivity A B C D FLIGHT FREQUENCY US Oriin US Oriin US Oriin US Oriin Caribbean Destination Caribbean Destination Caribbean Destination Caribbean Destination Point to point Interlinin Code-sharin Reional Hub Connections 21 Reional connections mean more travel options to all Caribbean islands

22 New Generation Aircraft 15,200 km Reional A380 Jets 11,100 km 787 2,100 km 22 Very Liht Jets

23 New Generation Aircraft Reional Jets 5,600 km Narrowbody 4,500 km NG Reional Jet 23

24 Growth of Outbound Travel from China 120 $30,000 Number of Overniht Travellers (Million) Australia and New Zealand receives ADS in 1999 Quota system for travel to Hon Kon and Macau removed in December 2001 $25,000 $20,000 $15,000 $10,000 $5,000 Expenditures (US$ Million) f 2020f est Outbound Visitors Expenditures (US$ Million) $0 24 Source: China National Tourism Administration (CNTA). Forecast: National Tourism Bureau and Ministry of Forein Affairs

25 China Outbound Travel by Destination International, 25% Hon Kon/Macau, 50% Rest of Intra-Asia, 25% 25

26 China Motivations for Chinese Outbound Travel Relaxation New Experience Knowlede Shoppin Family Ties Other Source: UNWTO

27 China Travel Times to the Caribbean Spain Italy Beijin Shanhai Chicao New York/ Newark Eypt Dubai Thailand Hawaii United States Puerto Rico 27 Indonesia Australia Primary Air Services Between China and the Caribbean: - Require a connection in New York or Chicao - Distance of 8,500 miles - Total trip time of 20 to 23 hours - Many competin less distant destinations en-route

28 Air Policy Liberalisation Some liberalization has taken place durin the past decade Most notable examples: Introduction of US Open Skies Policy (nearly 90 Open Skies partners) EU-US Open Skies Areement (effective March 2008) EU Sinle Aviation Market which united the member countries of the EU and those of several neihbourin countries However, further international air policy liberalization is required Study by InterVISTAS in 2006 found that by liberalizin 320 bilateral areements (of the existin thousands) would create 24.1 million full-time jobs and enerate an additional $490 billion in Gross Domestic Product 28 Could enerate sinificant opportunities for airlines, consumers and shippers in the Caribbean reion

29 Technoloy and Airport Processin e-passports Biometrics RFID/advanced barcodes Electronic processin of bas and passeners Mobile tools 29 Improved security screenin

30 Airport Efficiency Initiatives Checked baae Off-site processin and screenin Home/office baae pick-up Self ba tain Baae bypass Passeners Mobile check-in Transfer departure facilities Self-service kiosks 30

31 Security and Facilitation Challenes: Security reulations Border/inspection processes Passport requirement for US nationals (WHTI) Opportunities: US pre-clearance Application of new technoloies Process re-enineerin 31

32 Air Service Development Process Market Research Required to quantify the true size of the existin air travel market ASD Stratey Deficiency analysis Identify route priorities and taret airlines Business Case Detailed route analysis Packae/present the information to airlines Evaluate and Neotiate Airline Incentives (if applicable) An appropriate incentive packae, in certain circumstances, assists airlines commit to new air services 32

33 Air Service Development Marketin Communities can influence airline plannin Air service development requires Sound market research A clear and rational stratey Solid business case for airlines Airline incentives move you up the Priority Board Aressive marketin ets results 33

34 Aviation-Related Opportunities Summary 1. Low Cost Carrier Service 2. Reional Airline Development 3. New Generation Aircraft 4. New Technoloy for Improvin Airport Efficiency 5. Expandin Chinese Market 6. Air Policy Liberalisation 7. Security and Facilitation 8. Air Service Marketin 34

35 Thank You InterVISTAS Consultin Inc. Airport Square - Suite West 73rd Avenue Vancouver, BC Canada V6P 6G5 Tel: Fax: