State of The Airline Industry What Do We Do Now? November 15, PDF Free Download

State of The Airline Industry What Do We Do Now? November 15, 2012

Founded in 1929 as the Airport Division of Pan American World Airways Pioneered several aviation industries including: Private Airport Management Air Service Development Airport Marketing One of the longest continuously operating aviation facility operators in the world Headquartered in Dulles, Virginia with regional offices in: Allentown, Pennsylvania Lincoln, Nebraska Newburg, New York Orange County, California Roanoke, Texas Teterboro, New Jersey Shares common ownership with AFCO (Aviation Facilities Corporation) AvPORTS A COMMERICAL AVIATION PIONEER

MEET YOUR TEAM Oswin Moore President and Chief Executive Officer John Harden Executive Vice President Chief Operating Officer Bruce Tarletsky Director of Airport Marketing Project Manager Charles Kurtz Vice President, Engineering and Development Barry Clark Senior Consultant Fredrick Davis Senior Consultant Thomas Reich Director of Air Service Development Susan Kittle Director of External Affairs Brian D Amico Air Service Development Analyst Passenger Development Services

MEET YOUR PROJECT MANAGER Bruce Tarletsky Director of Airport Marketing Over 30 years of total marketing experience, with the past 20 years in the aviation/airport industry both a nationally and globally. Recent industry focus has been in the niche leisure carrier arena. As an air service marketing professional Mr. Tarletsky: Assists communities with air service and airport marketing, developing strategies to attain new or improved air service and identifying regional traffic and revenue leakage. Provides support to airport clients in all aspects of community outreach and airport marketing to stimulate new passenger demand and secure new air service. Specializes in a wide-range of air service related skills including: Catchment Area Analysis Market Assessment Route Forecasting & Proposals Marketing and Advertising Strategic Planning and Implementation Establishment of Air Service Incentive Plans ACI-NA National Leadership Award: In recognition of outstanding leadership and exemplary service on behalf of the United States Region Airports, Airports Council International-North America.

AvPORTS/AFCO FULL-SERVICE CAPABILITIES

AIRPORT CLIENT PORFOLIO Albany Stewart Scranton White Plains Allentown Harrisburg Atlantic City Provo Sonoma Ogden St. George Moline Lincoln Indianapolis Ft. Collins/Loveland Colorado Springs Rhode Island Airports New Haven Farmingdale Newark (Terminal A) Teterboro Parkersburg Charleston Newport News Wichita Ontario Long Beach Tulsa El Dorado Atlanta South Regional Airport Airport Management & ASD Clients Austin Gulfport/Biloxi AvPORTS ASD Clients F. Davis & B. Clark ASD Clients Airport Management Clients Harlingen

AvPORTS/THE SATTELITE AIRPORT SPECIALIST Near BDL Provo Sonoma Near OAK & SFO Ogden Youngstown Near SLC Lincoln Ft. Collins/Loveland St. George Near CLE & PIT Stewart White Plains New Haven Near EWR, LGA, JFK & PHL Atlantic City Allentown Near OMA Near DEN Newport News Colorado Springs Near ORF & RIC Near LAS Ontario Long Beach Near LAX & SNA Gulfport/Biloxi Near MSY Near BRO & MFE Harlingen

WHAT MAKES AVPORTS UNIQUE SATELLITE AIRPORTS ARE OUR SPECIALTY AvPORTS longest standing airport contract is at the Westchester County Airport (HPN) located less than 30 miles from New York City. We have been managing ever aspect of the airport since deregulation in 1978. Over half of this team s air service development client airports (18 of 30) are satellite airports to larger hubs, the highest number of any air service development firm. Our techniques for growing satellite airports are tried and tested, we re not practicing air service development, we ve crafted it to a science. UNDERSTANDING YOUR AIRPORT IS PART OF OUR DNA AvPORTS is more than just air service development, we manage airports, FBOs and other aviation facilities. We can speak your language like no other firm because we walk in your shoes every day. No matter your problem, we can always get you the answer. We have the largest and most diverse airport focused staff in the nation.

21 DIFFERENT 146 NEW & EXPANDED ROUTES FROM 21 DIFFERENT AIRLINES SINCE MARCH 2007 HPN HPN HPN HPN HPN HPN HPN HPN HPN AVP AVP AVP AVP AVP AVP AVP AVP AVP PIA PIA PIA PIA PIA PIA PIA PIA PIA PHF PHF PHF PHF PHF PHF PHF PHF PHF MLI MLI MLI MLI MLI MLI MLI MLI MLI MDT MDT MDT MDT MDT MDT MDT MDT MDT ABE ABE ABE ABE ABE ABE ABE ABE ABE SDF SDF SDF SDF SDF SDF SDF SDF SDF ORD ORD ORD ORD ORD ORD ORD ORD ORD M DW M DW M DW M DW M DW M DW M DW M DW M DW CMH CMH CMH CMH CMH CMH CMH CMH CMH YNG YNG YNG YNG YNG YNG YNG YNG YNG DTW DTW DTW DTW DTW DTW DTW DTW DTW ACY ACY ACY ACY ACY ACY ACY ACY ACY SWF SWF SWF SWF SWF SWF SWF SWF SWF ELM ELM ELM ELM ELM ELM ELM ELM ELM ICT ICT ICT ICT ICT ICT ICT ICT ICT FSM FSM FSM FSM FSM FSM FSM FSM FSM OKC OKC OKC OKC OKC OKC OKC OKC OKC XNA XNA XNA XNA XNA XNA XNA XNA TUL XNA TUL TUL TUL TUL TUL TUL TUL TUL MCI MCI MCI MCI MCI MCI MCI MCI MCI GSO GSO GSO GSO GSO GSO GSO GSO GSO ATL ATL ATL ATL ATL ATL ATL ATL ATL CLT CLT CLT CLT CLT CLT CLT CLT CLT YYZ YYZ YYZ YYZ YYZ YYZ YYZ YYZ YYZ BDL BDL BDL BDL BDL BDL BDL BDL BDL BED BED BED BED BED BED BED BED BED MYR MYR MYR MYR MYR MYR MYR MYR MYR RDU RDU RDU RDU RDU RDU RDU RDU RDU ACK ACK ACK ACK ACK ACK ACK ACK ACK MVY MVY MVY MVY MVY MVY MVY MVY MVY HVN HVN HVN HVN HVN HVN HVN HVN HVN ALB ALB ALB ALB ALB ALB ALB ALB ALB COS COS COS COS COS COS COS COS COS BHM BHM BHM BHM BHM BHM BHM BHM BHM MCO MCO MCO MCO MCO MCO MCO MCO MCO GPT GPT GPT GPT GPT GPT GPT GPT GPT DFW DFW DFW DFW DFW DFW DFW DFW DFW AUS AUS AUS AUS AUS AUS AUS AUS AUS LAS LAS LAS LAS LAS LAS LAS LAS LAS ONT ONT ONT ONT ONT ONT ONT ONT ONT SAN SAN SAN SAN SAN SAN SAN SAN SAN SGU SGU SGU SGU SGU SGU SGU SGU SGU AZA AZA AZA AZA AZA AZA AZA AZA AZA TUS TUS TUS TUS TUS TUS TUS TUS TUS RNO RNO RNO RNO RNO RNO RNO RNO RNO PVU PVU PVU PVU PVU PVU PVU PVU PVU ABQ ABQ ABQ ABQ ABQ ABQ ABQ ABQ ABQ OGD OGD OGD OGD OGD OGD OGD OGD OGD CPR CPR CPR CPR CPR CPR CPR CPR CPR DAL DAL DAL DAL DAL DAL DAL DAL DAL ELD ELD ELD ELD ELD ELD ELD ELD ELD TPA TPA TPA TPA TPA TPA TPA TPA TPA CRP CRP CRP CRP CRP CRP CRP CRP CRP To: GDL To: GDL To: GDL To: GDL To: GDL To: GDL To: GDL To: GDL To: GDL PGD PGD PGD PGD PGD PGD PGD PGD PGD RSW RSW RSW RSW RSW RSW RSW RSW RSW SAT SAT SAT SAT SAT SAT SAT SAT SAT BOI BOI BOI BOI BOI BOI BOI BOI BOI MSY MSY MSY MSY MSY MSY MSY MSY MSY PIE PIE PIE PIE PIE PIE PIE PIE PIE SEA SEA SEA SEA SEA SEA SEA SEA SEA GEG GEG GEG GEG GEG GEG GEG GEG GEG M RY M RY M RY M RY M RY M RY M RY M RY M RY SJC SJC SJC SJC SJC SJC SJC SJC SJC SFO SFO SFO SFO SFO SFO SFO SFO SFO LGB LGB LGB LGB LGB LGB LGB LGB LGB LAX LAX LAX LAX LAX LAX LAX LAX LAX FAT FAT FAT FAT FAT FAT FAT FAT FAT SMF SMF SMF SMF SMF SMF SMF SMF SMF To: PVR To: PVR To: PVR To: PVR To: PVR To: PVR To: PVR To: PVR To: PVR PDX PDX PDX PDX PDX PDX PDX PDX PDX FLL FLL FLL FLL FLL FLL FLL FLL FLL To: OGG To: OGG To: OGG To: OGG To: OGG To: OGG To: OGG To: OGG To: OGG STS STS STS STS STS STS STS STS STS MTY MTY MTY MTY MTY MTY MTY MTY MTY To: CUN To: CUN To: CUN To: CUN To: CUN To: CUN To: CUN To: CUN To: CUN HRL HRL HRL HRL HRL HRL HRL HRL HRL NAS NAS NAS NAS NAS NAS NAS NAS NAS BWI BWI BWI BWI BWI BWI BWI BWI BWI SJD SJD SJD SJD SJD SJD SJD SJD SJD OMA OMA OMA OMA OMA OMA OMA OMA OMA DEN DEN DEN DEN DEN DEN DEN DEN DEN JAX JAX JAX JAX JAX JAX JAX JAX JAX ELP ELP ELP ELP ELP ELP ELP ELP ELP PBI PBI PBI PBI PBI PBI PBI PBI PBI SLC SLC SLC SLC SLC SLC SLC SLC SLC SFB SFB SFB SFB SFB SFB SFB SFB SFB New Service Expanded Service Upgraded Service One-Stop Service Client Airport

State of The Airline Industry What Do We Do Now? November 15, 2012

William S. Swelbar MIT International Center for Air Transportation Isn t It Interesting? The US airline industry is marginally profitable when Economic trends are weak Consumer confidence is anything but Manufacturing activity showing little to no expansion Passenger traffic up; cargo traffic is in decline European economic activity troubled Premium travel trends are exhibiting little growth IN THE AIRLINE INDUSTRY IT S ALWAYS SOMETHING

Source: William S. Swelbar, MIT International Center for Air Transportation

Source: ACI-NA Economic Bulletin, July, 2012 & U.S. Energy Information Administration Crude Oil Vs. Jet Fuel Cost (Per Barrel)

Source: ACI-NA Economic Bulletin Timeline of Recent Mergers & Acquisitions

Source: ACI-NA Economic Bulletin, & Diio Mi M&A Airlines Market Summary

Source: ACI-NA Economic Bulletin, & U.S.DOT O&D Survey M&A Domestic Air Fare

Source: William S. Swelbar, MIT International Center for Air Transportation

Aeronautical Vs. Non-Aeronautical Revenue for U.S. Airports Source: ACI-NA Economic Bulletin, & FAA ASS-400: CATS: Report 127

Source: ACI-NA Economic Bulletin, & Diio Mi Airport Costs as a Percentage of Airline Operating Expenses

Concluding Thoughts Airline actions to ensure sustainability run contrary to airport interests None more so than capacity cutting Consolidation is a second order effect negatively impacting airports -Airports need to establish more passenger development strategies -Airports need to continue shifting the revenue share away from Airline dependent revenue -Airports need to identify international connection passenger opportunities, especially with beyond markets with alliance carriers -Airports must continue to build alternative risk abatement programs with their communities

Concluding Thoughts Airline winners and losers are being identified Airport winners and losers less understood although the market is at work Seasonal capacity adjustments are likely to be a bigger part of the vernacular

Old School

New School What Do We Do Now?

What We Are Doing Now November 15, 2012

GENERAL OVERVIEW OF ENGAGEMENT AND DELIVERABLES OBJECTIVE To assist FNL in the development and implementation of a comprehensive Air Service Development & Marketing Strategic Plan that will give direction and recommendations to the Fort Collins/Loveland communities to regain commercial passenger air service. The Plan will make the recommendation that FNL will re-position its service area, through in-depth market research, and be the Airport of choice for Northern Colorado, Southeastern Wyoming and Southwest Nebraska. Furthermore, will assist FNL to promote new commercial air service by creating a detailed new air service development, communications, and marketing plan focused on attracting out-bound business passengers and in-bound leisure passengers. Will also work to improve the quality of air service for residents of the Fort Collins Loveland Municipal Airport (FNL) catchment area by studying and developing a wingless flight program that allows FNL to serve as an offsite location for ticketing, check-in, and security screening for flights originating at Denver.

PROJECT WORK PLAN PHASE ONE INITIAL PROJECT SURVEY FNL WORK PLAN O C T NOV Phase 1 Initial Project Survey Planned Start Planned Finish Duratio n Status 1.1 Kick-off Meeting with FNL Officials 10/23/2012 10/25/2012 2 Started 1.2 Initial Defining of Catchment Area 10/17/2012 11/2/2012 12 Started Acquisition of Global Point of Sale GDS Data & Other Needed 1.3 Data 10/26/2012 11/30/2112 26 Started 1.4 Initial Discussion of Action Plan with FNL Stakeholders 11/12/2012 11/16/2012 3 Started 1.5 Updated Overall Project Schedule 11/12/2012 11/16/2012 3 Started PHASE ONE - COMPLETED

PROJECT WORK PLAN PHASE TWO STRATEGIC ANALYSIS Phase 2 Strategic Analysis 11/5/2012 12/3/2012 29 Started 2.1 SWOT Analysis 11/5/2012 11/23/2012 19 Started 2.2 Inventory of Airport Assets and Issues as they relate to International Revenues 11/5/2012 11/16/2012 12 Started 2.3 Assessment of Airport's Current Performance and Trends 11/12/2012 11/16/2012 5 Started 2.4 2.5 Assessment of Airport's Competitive Position as it Relates to Passenger Demand Opportunites in Northern Colorado 11/19/2012 11/27/2012 9 Started Preliminary Point of Sale Analysis (International & Domestic) 11/19/2012 12/7/2012 19 Started 2.6 Updated Overall Project Schedule 12/10/2012 12/13/2012 4 Started

PROJECT WORK PLAN PHASE THREE REALISITIC AREAS OF INTEREST Phase 3 Formulating Realistic Areas of Interest 12/5/2012 1/3/2012 26 Started Re-Evaluation of Original Interest Areas (Air Service, 3.1 Wingless Flight Initiative, Contract Tower, In-Bound Destination Strategy) 12/5/2012 12/10/2012 5 Started Identification of Target International & Domestic Revenue 3.2 Markets and Global Point of Sale Activity 12/7/2012 12/17/2012 8 Started 3.3 Identification of Achievable Objectives 3.4 Preliminary Marketing Strategies Overview 3.5 Development of a Corporate Outreach Program Designed to Support Efforts 3.6 Initial Community & Business Research (Field Interviews) 3.7 Establish Corporate/Community Out Reach Task Force Blue Print 12/14/2012 12/20/2012 5 12/14/2012 12/20/2012 5 Started Started 10/31/2012 11/08/2012 7 Started 1/3/2012 1/25/2013 19 Started 10/31/2012 11/08/2012 4 Started Updated Overall Project Schedule 12/27/2012 12/31/2012 3 Started

STRATEGIC COMMUNITY BASED WORKING GROUP PLAN

PROJECT WORK PLAN PHASE FOUR PLAN DEVELOPMENT Phase 4 4.1 4.2 4.3 Plan Development 1/4/2013 2/8/2013 26 Draft of Preliminary Top International Connecting Revenues to Pursue 1/4/2013 1/8/2013 3 Draft of Preliminary TopDomestic Revenues (markets) to Pursue 1/4/2013 1/8/2013 3 Draft of Preliminary Targeted Corporations Based on Field Research & GDS Global Point of Sale Data 1/4/2013 1/11/2013 5 4.4 Marketing Concepts and Proposals 1/8/2013 1/14/2013 5 4.5 Recommendations for Business Growth/Retention Incentives 1/8/2013 1/11/2013 3 4.6 Recommend Next Steps for Securing Financial Resources 1/14/2013 1/18/2013 2 4.7 Strategic Air Service Development Plan 4.8 1/14/2013 1/31/2013 13 Updated Overall Project Schedule 2/1/2013 2/5/2013 3 Started Started Started Started Started Started Started Started Started

Economic and Fiscal Impact of AirTran Airways on the Wichita MSA February 2008 COMMERCIAL AIR SERVICE ROR ON INVESTMENT WICHITA CASE STUDY Good airline service is an important factor in urban economic development. Frequent service to a variety of destinations at competitive rates are reflected in a high level of passenger enplanements, which facilitates easy face-to-face contact with businesses in other cities, attracting new firms to the metro area and stimulating employment at established companies. Recognizing the importance of air service to the area s economic growth, business and government leaders spearheaded the development of the FairFares program in the spring of 2002. As a joint public/private initiative between the city of Wichita and local businesses, the FairFares program was designed to attract and retain new low-cost carriers to Wichita s Mid-Continent Airport through the use of subsidies. Prepared by Center for Economic Development and Business Research W. Frank Barton School of Business Wichita State University Janet Harrah, Director Kasey Jolly, Regional Economic Analyst Wichita State University, 1845 Fairmount St., Wichita, KS 67260-0121 Telephone: (316) 978-3225 Fax: (316) 978-3950 www.wichita.edu/cedbr

COMMERCIAL AIR SERVICE ROR ON INVESTMENT WICHITA CASE STUDY Low-cost carrier AirTran Airway s, entrance into the Wichita market generated positive economic and fiscal impacts for the Wichita MSA. The economic impact of low-cost air service occurs in a number of ways including: Increased sales, wages and employment generated by business activity. In the case of this analysis, the operations of AirTran were analyzed including the firm s Wichita employment, payroll, and expenditures of AirTran flight crews on overnight stays. Increased airport activity measured by enplanements and increased airport spending, such as increased concession and parking revenues. Decreased ticket prices as a result of increased competition, benefiting all Mid-Continent passengers whether flying AirTran or not. Taking into account multiplier impacts, the average annual number of Wichita metro area jobs attributed to low-cost carrier AirTran Airways entrance into the Wichita market totaled 9,720 during the six-year analysis period from 2002 through 2007. The average annual payroll for these jobs totaled $283.4 million. Economic and Fiscal Impact of AirTran Airways on the Wichita MSA February 2008 Prepared by Center for Economic Development and Business Research W. Frank Barton School of Business Wichita State University Janet Harrah, Director Kasey Jolly, Regional Economic Analyst Wichita State University, 1845 Fairmount St., Wichita, KS 67260-0121 Telephone: (316) 978-3225 Fax: (316) 978-3950 www.wichita.edu/cedbr

Economic and Fiscal Impact of AirTran Airways on the Wichita MSA February 2008 COMMERCIAL AIR SERVICE ROR ON INVESTMENT WICHITA CASE STUDY Prepared by Center for Economic Development and Business Research W. Frank Barton School of Business Wichita State University Janet Harrah, Director Kasey Jolly, Regional Economic Analyst Wichita State University, 1845 Fairmount St., Wichita, KS 67260-0121 Telephone: (316) 978-3225 Fax: (316) 978-3950 www.wichita.edu/cedbr

PROJECT WORK PLAN PHASE FIVE PLAN OF ACTION Phase 5 Plan of Action 1/11/2013 3/7/2013 40 5.1 Marketing Strategies (Short and Long Term) 1/11/2013 1/15/2013 5 5.2 Marketing Tools Identification and Recommendations 1/11/2013 1/15/2013 5 Development of an Airline 5.3 Presentation Packages Based on Plan Recommendations 1/18/2013 1/25/2013 6 5.4 Final Draft of Document 5.5 Final Document 1/25/2013 2/8/2013 11 2/11/2013 2/20/2013 8 5.6 PowerPoint Plan Presentation 2/25/2012 2/27/2012 3 Next Step Recommendations with 5.7 Airline Targets and Meetings 2/25/2012 2/27/2012 3 Started Started Started Started Started Started Started Started

Tomorrow

Thank You.