Airline Business Development Update June 22, 2017
Office of Airline Business Development s Primary Mission Expanding Air Service at Dulles International and Discouraging New Flights at Reagan National
Stemming from Obligations within the Airports Authority Lease Article 11.B The Airports Authority shall operate, maintain, protect, promote and develop the Metropolitan Washington Airports as a unit and as primary airports serving the Metropolitan Washington Area. 3
Managing the Federal Government s Assets Reagan and Dulles Airports federal airports turned over in 1987 Transfer Act to MWAA to manage as a unit. Rationale: Capital investments in the two airports needed Access to the bond markets critical Congress directed: Reagan - short-haul, origin/destination airport Dulles - long-haul, growth airport Passenger activity at Reagan National was steady from1987 until 2000 when Congress began adding slots and beyond perimeter flights. In the past 25 years, the character of the two airports has changed due to commercial transactions and regulatory changes. 4
Changing Character of Reagan and Dulles Over 25 Years 30.0 Total Passenger Activity (Millions) 25.0 20.0 15.0 10.0 5.0 0.0 Reagan Dulles 5
2016 Marked 2 nd Year of Growth in Both Domestic and International Activity at Dulles International Total enplanements increased 1.4% over 2015: domestic and international enplanements increased 0.1% and 4.0%, respectively, in 2016 United s domestic enplanements increased 4.2% over 2015, the first increase since 2010 Dulles International served a record 3.7 million international enplaned passengers in 2016 - the 13 th consecutive year of international traffic growth 12 10 8 6 4 2 - Dulles International Enplanements (1) (in millions) 11.74 11.52 11.17 10.86 10.68 10.71 10.86 73% 72% 70% 68% 67% 67% 66% 27% 28% 30% 32% 33% 33% 34% 2010 2011 2012 2013 2014 2015 2016 Domestic International AND THE GROWTH CONTINUES: In April 2017, overall passenger activity at Dulles rose for the 11 th consecutive month with an increase of 10.7% (182k passengers) from a year ago to 1.9 million. Domestic traffic increased 8.9% (103k passengers) primarily due to robust growth by United, which had a 12.3% (106k passengers) increase in domestic activity. International activity also rose 14.9% (81k passengers) Top Carriers 2015 2016 United 62.4% 63.6% American 4.8% 4.6% Delta 4.4% 4.4% Southwest 2.5% 2.4% Virgin America Foreign Flag 1.8% 1.8% 19.1% 20.1% Other 5.0% 3.1% 1 - Excludes general aviation and military enplanements.
Domestic Passengers (millions) Slot Changes at Reagan National and Uncontrollable Outside Factors Have Challenged Dulles Domestic Service AIR-21 FAA Reauth. (24 new DCA slots- 12 within/12 outside perimeter) 15.9 9/11 terrorist attacks Recession 14.0 United files for bankruptcy 13.1 VISION 100 FAA Reauth. (20 new DCA slots- 8 within/12 outside perimeter) Independence Air begins IAD service US Airways files for bankruptcy 18.2 22.1 Independence Air dissolution United emerges from bankruptcy Delta files for bankruptcy 17.8 18.8 Recession Delta / Northwest merger 17.6 17.0 United / Continental merger 17.2 Southwest / AirTran merger American files for bankruptcy Delta / US Airways DCA slot swap JetBlue slot purchase doubles DCA service FAA Reauth. 8 new outside perimeter slots/8 converted outside perimeter slots 16.7 15.9 15.0 US Airways / American merger 14.4 14.5 14.5 12.9 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 7
Expanding Air Service at Dulles International Airport Operators work hard to influence BUT Airlines decide where to fly Incentives Incentives Costs Costs Market Market Recruiting Air Service - The Paradigm Has Shifted Market Revenue, Operating Costs and Incentives are All Key Factors Airlines Consider When Deciding on New Routes
Marketing Dulles International Market Revenue - The Washington-Baltimore Combined Statistical Area (CSA) is the one of the top 5 largest CSA s in the country, and home to one of the wealthiest regions of the country. Costs - Airports Authority aggressive efforts have reduced Cost per Enplanement. Incentives - Airports Authority Airline Incentive Programs are available only at Dulles.
Dulles International s catchment area spans both the Washington and Baltimore MSAs - a population of 8.5 million MSA Population MSA Population Percent of Total Washington 5,776,833 68% Baltimore 2,713,747 32% Total 8,490,580 100% Washington-Arlington-Alexandria DC-VA-MD-WV MSA Source: ARC Data, InterVISTAS Analysis, CY 2015 Baltimore-Columbia-Towson MD MSA
Dulles International is Conveniently Located in the Most Affluent Area of the Region 7 of the top 15 wealthiest counties in the U.S. surround Dulles
Cost per Enplanement is Carefully Managed Cost per Enplanement $30 Historical Forecast $26 $22 $18 $14 $10 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Historical Forecast DCA IAD Airport System 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 DCA $12.79 $13.39 $11.26 $13.32 $13.44 IAD 25.01 26.47 26.55 23.67 21.00 Domestic 21.62 22.98 22.21 19.27 17.66 International 37.44 38.12 38.62 31.98 27.51 DCA $12.73 (1) $12.27 (2) $13.70 (3) $13.18 (4) $13.85 (5) $13.79 (6) $12.81 (6) $12.94 (6) $11.76 (6) $13.46 (6) $14.63 (6) IAD 27.46 (1) 28.39 (2) 28.52 (3) 24.60 (4) 21.15 (5) 17.57 (6) 19.68 (6) 21.18 (6) 22.23 (6) 23.17 (6) 22.64 (6) Domestic 13.90* 15.52* 17.09* 17.97* 18.69* 18.13 International 24.71* 27.77* 29.13* 30.51* 31.86* 31.41 Airports System (Historical/Forecast 5 ) $19.29 $20.11 $18.96 $18.30 $17.06 $15.60 $16.13 $16.94 $16.88 $18.24 $18.60 (1) From 2011 ROAC Forecast (2) From 2013 ROAC Forecast (3) From 2014 ROAC Forecast (4) From 2015 ROAC Forecast (5) From 2016 ROAC Forecast (6) From 2017 ROAC Forecast CPE lower than forecast $50 million grant impact * Internal estimates Source: Report of the Airport Consultant (2011, 2013, 2014, 2015, 2016, 2017) 12
Non-Airline Revenue Growth Reduces Airline Costs and
Improving Access Silver Line Express bus connects the Metrorail Silver Line to Dulles. Non-stop service between Dulles and Wiehle-Reston East for just $5 Ridership has exceeded expectations 14
New Airlines at Dulles May 2016 Air Canada began three daily flights between Dulles International and Toronto Pearson International Airport. LATAM began three weekly flights from Dulles International to Lima, Peru. September 2016 Royal Air Maroc began three weekly flights between Dulles International and Casablanca, Morocco July 2017 Air India will begin three weekly flights between Dulles International and Delhi, India
New Air Service by Existing Airlines April 21: 4 weekly flights to Austin and a daily flight to Denver. July 10: Daily summer seasonal service to Colorado Springs; and these flights will also provide one-stop, same plane service to San Diego in both directions. July 16: Daily service to Las Vegas. June 4: Daily service to Fort Lauderdale. April 24: Daily flight to Salt Lake City. June 19: Daily service to Montreal. April 4: Rome daily seasonal service resumes. May 5: Lisbon and Madrid daily service resumes. May 24: Barcelona daily service resumes. June 8: Fort Lauderdale extended through summer. United has also announced it will increase frequency to Jacksonville, Providence, Portland (Maine) and Roanoke.
The Airports Authority works closely with local governments, chambers and other groups to support Dulles International
Discouraging New Flights at Reagan National Members of Congress regularly attempt to stretch the perimeter further. The latest attempt came just last week, when members from Texas proposed expanding the perimeter to include San Antonio. An attempt to add San Antonio failed last year, when it was blocked in a House Committee through the bi-partisan teamwork of Barbara Comstock and Eleanor Holmes Norton. It was killed again in Committee several days ago. Then it appeared in an amendment to a Defense bill, where it also was defeated. Currently, the Texas members are trying to push a perimeter-expanding amendment onto a bill in the Senate Commerce Committee. It s an issue that never seems to go away and MWAA is working to defeat it again.
What Can You Do to Help? Advocate to your appointing elected officials that they need to support NO MORE CHANGE to Reagan National allowing growth. & Fly Dulles!
Thank You Mike Stewart Vice President, Airline Business Development Metropolitan Washington Airports Authority mike.stewart@mwaa.com