BUILDING THE WENATCHEE MARKET PANGBORN MEMORIAL AIRPORT AUGUST 2018 THIS IS A CENTERED DATELINE 1
VOLAIRE S ROUTES TO SUCCESS BLI SEA PQI MSP RST PBG SJC GJT DEN PUB MCI SGF PIA BLV CGI ORD CMI IND SDF CLE PIT LCK CKB LWB SHD BWI IAD DCA EWR SBP LAX IFP PHX AZA MEI CLT MYR TUS AUS VPS UST PIE FLL 2
AGENDA OUR PROGRESS BAY AREA RECRUITMENT WINS PASSENGER GROWTH IMPROVING TRENDS THE AIR SERVICE LANDSCAPE MERGERS, MERGERS, AND SOME MERGERS PILOT SHORTAGE STRATEGY FOR FUTURE AIR SERVICE AIRLINE STRATEGY TARGETS AND TIMELINE 3
TOPIC ONE OUR PROGRESS 4
OUR GUARANTEE IS $1.1 MILLION 5
WENATCHEE CAPUTRES 19% MORE PASSENGERS THAN IT DID IN 2013, WITH VERY SIMILAR SERVICE, AS MORE PEOPLE FLY LOCAL WENATCHEE (EAT) PASSENGERS PER DAY EACH WAY (PDEW) 2013 VS. 2017 2013 Seattle Wenatchee 140 Spokane Pasco Portland 0 20 40 60 80 100 120 140 160 SOURCE: VOLAIRE AVIATION CONSULTING ANALYSIS 6
WENATCHEE CAPUTRES 19% MORE PASSENGERS THAN IT DID IN 2013, WITH VERY SIMILAR SERVICE, AS MORE PEOPLE FLY LOCAL WENATCHEE (EAT) PASSENGERS PER DAY EACH WAY (PDEW) 2013 VS. 2017 2013 2017 Seattle Seattle Wenatchee 140 Wenatchee 166 Spokane Spokane Pasco Pasco Portland Portland 0 20 40 60 80 100 120 140 160 0 20 40 60 80 100 120 140 160 180 SOURCE: VOLAIRE AVIATION CONSULTING ANALYSIS 7
THE WENATCHEE MARKET GENERATES 30% MORE PASSENGERS THAN IT DID FIVE YEARS AGO ENOUGH TO FILL 13 FLIGHTS/DAY WENATCHEE CATCHMENT AREA PASSENGERS PER DAY EACH WAY (PDEW) BY AIRPORT USED 2013 VS. 2017 2013 2017 Seattle 441 Seattle 577 Wenatchee 140 Wenatchee 166 Spokane 97 Spokane 166 Pasco 41 Pasco 45 Portland 25 TOTAL: 744 TOTAL: 968 Portland 14 0 50 100 150 200 250 300 350 400 450 500 0 100 200 300 400 500 600 700 SOURCE: VOLAIRE AVIATION CONSULTING ANALYSIS 9
SINCE FLY WENATCHEE DEBUTED, PANGBORN AIRPORT HAS SEEN ITS STRONGEST-EVER LOAD FACTORS 90.0% 80.0% AVERAGE LOAD FACTOR AT PANGBORN MEMORIAL AIRPORT YEAR ENDED FIRST QUARTER 2010 YEAR ENDED FIRST QUARTER 2018 Load Factor 70.0% 60.0% 50.0% 40.0% 30.0% 60.1% 61.6% 64.4% 62.0% 68.2% 73.6% 77.2% 81.3% 80.8% 20.0% 10.0% RE-BRAND AND MARKETING PROGRAM 0.0% YE1Q10 YE1Q11 YE1Q12 YE1Q13 YE1Q14 YE1Q15 YE1Q16 YE1Q17 YE1Q18 SOURCE: AIRLINE DATA, INC. 10
TOPIC TWO THE AIR SERVICE LANDSCAPE 12
US AIRLINES IN THE 1980s 13
REMAINING MAJORS 14
MAJORS PLUS NEW ENTRANTS 15
STEPS ALONG THE PLANNING PATH MUST FIND STRATEGY FIT MUST BELIEVE IN LONG TERM SUCCESS MUST FIND AIRCRAFT TIME MUST FIND GATE SPACE AT HUB 16
STEPS ALONG THE PLANNING PATH MUST FIND STRATEGY FIT MUST BELIEVE IN LONG TERM SUCCESS MUST FIND AIRCRAFT TIME MUST FIND GATE SPACE AT HUB MUST FIND CREW 17
PILOT SHORTAGE IS WORSENING CUMULATIVE SHORTAGE OF US AIRLINE PILOTS FORECAST FOR 2017 2026 16000 14000 12000 Cumulative Pilot Shortage 8.3 PILOTS REQUIRED PER AIRCRAFT 1,800 AIRCRAFT AT RISK BY 2026 10000 8000 6000 4000 2000 0 15,150 12,900 10,650 8,600 6,500 4,800 3,100 1,900 400 520 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 SOURCES: REGIONAL AIRLINE ASSOCIATION AND UNIVERSITY OF NORTH DAKOTA 18
FEWER FLIGHTS, LARGER AIRCRAFT DAILY US DEPARTURES AND SEATS PER DEPARTURE YEAR ENDED SECOND QUARTER 2008 YEAR ENDED SECOND QUARTER 2017 Departures/Day Seats per Departure 68,000 66,000 64,000 62,000 60,000 58,000 65,850 1.2 1 0.8 0.6 56,000 54,000 52,000 60,217 58,664 59,171 58,678 57,304 56,585 56,479 57,181 57,010 0.4 0.2 50,000 YE2Q08 YE2Q09 YE2Q10 YE2Q11 YE2Q12 YE2Q13 YE2Q14 YE2Q15 YE2Q16 YE2Q17 SOURCE: AIRLINE DATA, INC. 0 19
FEWER FLIGHTS, LARGER AIRCRAFT DAILY US DEPARTURES AND SEATS PER DEPARTURE YEAR ENDED SECOND QUARTER 2008 YEAR ENDED SECOND QUARTER 2017 Departures/Day Seats per Departure 68,000 115.0 66,000 64,000 DEPARTURES DOWN 13.5% AIRCRAFT SIZE UP 18.1% 109.5 111.8 110.0 62,000 105.7 105.0 60,000 58,000 56,000 54,000 52,000 65,850 94.7 96.6 60,217 97.9 95.7 96.7 58,664 59,171 58,678 99.9 57,304 102.3 56,585 56,479 57,181 57,010 100.0 95.0 90.0 50,000 YE2Q08 YE2Q09 YE2Q10 YE2Q11 YE2Q12 YE2Q13 YE2Q14 YE2Q15 YE2Q16 YE2Q17 SOURCE: AIRLINE DATA, INC. 85.0 20
TOPIC THREE STRATEGY FOR FUTURE AIR SERVICE 21
NEW SERVICE TARGETS EAT MAIN TARGET: BAY AREA San Francisco Bay Area SOURCE: VOLAIRE AVIATION ANALYSIS 22
NEW SERVICE TARGETS EAT MAIN TARGET: BAY AREA OTHER NETWORK CARRIER TARGET: DENVER Denver San Francisco Bay Area SOURCE: VOLAIRE AVIATION ANALYSIS 23
NEW SERVICE TARGETS EAT San Francisco Bay Area Las Vegas Denver MAIN TARGET: BAY AREA OTHER NETWORK CARRIER TARGET: DENVER LOW COST CARRIER TARGETS: LAS VEGAS PHOENIX Phoenix SOURCE: VOLAIRE AVIATION ANALYSIS 24
REFINING SERVICE OPTIONS AIRLINE STRATEGY MORE IMPORTANT THAN OUR PREFERENCE SFO OAK SJC SOURCE: VOLAIRE AVIATION ANALYSIS 25
REFINING SERVICE OPTIONS AIRLINE STRATEGY MORE IMPORTANT THAN OUR PREFERENCE SAN FRANCISCO (SFO): SFO OAK SJC SOURCE: VOLAIRE AVIATION ANALYSIS 26
REFINING SERVICE OPTIONS AIRLINE STRATEGY MORE IMPORTANT THAN OUR PREFERENCE SAN FRANCISCO (SFO): SAN JOSE (SJC): SFO OAK SJC SOURCE: VOLAIRE AVIATION ANALYSIS 27
REFINING SERVICE OPTIONS AIRLINE STRATEGY MORE IMPORTANT THAN OUR PREFERENCE SAN FRANCISCO (SFO): SAN JOSE (SJC): SFO OAK OAKLAND (OAK): SJC SOURCE: VOLAIRE AVIATION ANALYSIS 28
THE UNITED HUB AT SFO OFFERS CONNECTIONS TO 77 CITIES, ACCESSING 689 PAX/DAY AT A $181 AVERAGE ONE WAY FARE SOURCE: VOLAIRE AVIATION ANALYSIS 29
THE ALASKA OPERATION AT SJCOFFERS CONNECTIONS TO 14 CITIES, ACCESSING 292 PAX/DAY AT A $165 ONE WAY FARE SOURCE: VOLAIRE AVIATION ANALYSIS 30
COST OF PROVIDING SERVICE EAT WENATCHEE SAN FRANCISCO/SAN JOSE 1.9 BLOCK HOURS $7,800 PER SEGMENT ONCE-DAILY CRJ200 OR EQUIVALENT $5.7 MILLION PER YEAR San Francisco Bay Area SOURCE: VOLAIRE AVIATION ANALYSIS 31
OUR RISK MITIGATION PACKAGE MINIMUM REVENUE GUARANTEE $401,395 IN LOCAL CASH CONTRIBUTIONS $750,000 SCASD GRANT FUNDING $1,151,395 TOTAL FUNDING REPRESENTS 10% OF TWO-YEAR RISK AIRPORT INCENTIVES FEE WAIVERS AND MARKETING TBA COMMUNITY INCENTIVES NEEDED IN-KIND AND MARKETING SUPPORT SOURCE: VOLAIRE AVIATION ANALYSIS 32
STRATEGY AND TIMELINE AIRLINE INTERFACE/MEETINGS NOW SPRING HQ MEETINGS FALL 2018 CONFERENCES TAKEOFF, MEMPHIS OCTOBER 2018 ROUTES, QUEBEC CITY FEBRUARY 2019 VOLAIRE, TUCSON APRIL 2019 JUMPSTART, NASHVILLE JUNE 2019 DEVELOP MARKETING PLAN/FUNDING AIRPORT, PORT, AND PARTNERS NOW SPRING BEST CASE SERVICE LAUNCH JUNE 2019 SOURCE: VOLAIRE AVIATION ANALYSIS 33
JACK PENNING MANAGING PARTNER VOLAIRE AVIATION PORTLAND, OREGON JACK.PENNING@VOLAIREAVIATION.COM THIS IS A CENTERED DATELINE 34