ACI-NA Airport Board Members and Commissioners Annual Conference May 1, 2011 Tucson, AZ
Economic Indicators Remain Mixed While U.S. and Canadian GDP has been relatively healthy for the past year, unemployment remains at uncomfortable levels in both countries. Source: Wall Street Journal 2
U.S. Aviation Traffic: Signs of Hope? 2010 vs. 2009 2009 2010 Change Total Passengers 703.8 million 720.4 million 2.4% Domestic Passengers 618.0 million 629.5 million 1.8% International Passengers 85.8 million 90.9 million 5.9% Flights (thousands) 9,550.3 9,505.0-0.5% Available Seat Miles 957.1 billion 972.5 billion 1.6% Load Factor 80.4 percent 82.1 percent 1.7 pts. Flight Stage Length 717.5 miles 730.2 miles 1.8% For 2010, overall traffic grew at slightly over 2%. However, the international component grew at almost 6%. Capacity seems to have leveled out with carriers seemingly tweaking gauge rather than schedules. Record load factors continued to be posted. Source: BTS 3
U.S. Aviation Traffic: Signs of Hope? Jan. 2011 vs. Jan. 2010 Jan. 2010 Jan. 2011 Change Total Passengers 52.6 million 53.7 million 2.2% Domestic Passengers 45.5 million 46.3 million 1.8% International Passengers 7.1 million 7.4 million 4.2% Flights (thousands) 763.3 750.5-1.7% Available Seat Miles 77.5 billion 79.3 billion 2.3% Load Factor 75.7 percent 76.5 percent 0.8 pts. Flight Stage Length 727.1 miles 746.2 miles 2.6% To start 2011, growth seems to be maintaining about the same pace as 2010 with the domestic/international dichotomy still apparent. Carriers continue to up-gauge aircraft while maintaining very high load factors. Source: BTS 4
Millions Canadian Passengers: 2007-2010 Pax % Change YoY 14 12 10 8 10% 8% 6% 4% 2% 0% 6 4 2 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2007 2008 2009 2010 Canada has also outperformed the US in terms of passengers. 2010 saw passenger traffic increase over 4% compared to 2009. While final numbers have yet to come in, the US is likely to see only about 2% growth. -2% -4% -6% -8% -10% Source: Big 8 Airport Reporting 5
Capacity: Change in Scheduled Flights and Seats Jun-11 vs. Jun-10 as of March 15 th Flights Seats 7% 6% 5% 5.14% 6.31% 4% 3% 2.90% 2% 1.55% 1% 0% -1% -0.82% -0.08% -0.13% 0.02% -2% -3% -1.78% -2.36% Large Medium Small Non Canada Headwinds were already apparent in March with only large hubs expecting to see capacity gains, with remaining categories of airports expecting reduced operations albeit with about the same number of seats. Canada continued to demonstrate its strong recovery. Source: apgdat 6
Capacity: Change in Scheduled Flights and Seats Jun-11 vs. Jun-10 as of April 25 th Flights Seats 7% 6% 5.66% 5.70% 5% 4% 3% 2.67% 2% 1.37% 1% 0% -1% -2% -3% -1.28% -0.40% -2.27% -0.77% -0.82% -2.75% -4% Large Medium Small Non Canada However, only a month later, revised schedules show that carriers continue to pull back as the fuel environment remains volatile. Source: apgdat 7
Capacity: Change in Scheduled Flights and Seats Jun-11 vs. Jun-10 as of March 15 th In March most US carriers were already factoring rising fuel costs into their summer schedules. Southwest, who has traditionally had the most successful fuel hedging program in the industry, continues to show growth. Canadian carriers are also doing well. Source: apgdat 8
Capacity: Change in Scheduled Flights and Seats Jun-11 vs. Jun-10 as of April 25 th Flights Seats 8% 6% 6.1% 6.3% 4% 3.2% 3.2% 4.4% 4.4% 3.5% 2.8% 2% 0% -2% -4% -6% -5.9% -0.4% 0.2% -2.2% -2.1% -4.0% 1.7% 1.1% -8% AA CO DL UA US WN AC WS A month later, carriers continue to pare back their summer schedules. Continental has pulled out a full percent of its April flights in the last month. Air Canada has also significantly pulled back its June schedule, although still exhibiting strong growth. Source: apgdat 9
US Ticket Prices Third Quarter Each Year Average 3Q Fare % Change YoY $400 15% $350 10% $300 $250 5% 0% $200 $150 $100-5% -10% $50-15% $0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010-20% After dropping significantly in 2009, airfares increased 10.7% in the third quarter of 2010. However, they were only 0.9% higher than fares in 3Q2000 while over that time consumer inflation has increased 25.8% Source: BTS 10
Millions Airline Fees: Ancillary Revenue Continues to Rise Baggage Fees Other Ancillary Revenue $9,000 $8,000 $7,000 $6,000 $5,000 $5,111 $4,000 $3,534 $3,000 $4,330 $2,000 $3,086 $1,000 $0 $464 $1,150 $2,729 $2,570 2007 2008 2009 1-3Q2010 Ancillary revenue continues to be a boon for the airlines. Airline ancillary revenue has more than doubled since 2007 and is on pace to set a new record in 2010 (over $8 billion). Among major airlines, through September 2010 USAir had the highest per passenger baggage revenue at $9.99 per passenger. jetblue was the lowest at $2.38 per passenger. Source: BTS 11
Airline Finances Net Profit 2010 and 1Q2011 Carrier 2010 1Q2011 American -$389 million -$405 million AirTran $38.5 million TBA JetBlue $97 million $3 million Air Canada $107 (CAD) million May 5, 2011 WestJet $137 (CAD) million TBA UA-CO $253 million -$136 million Alaska $262.6 million $29.5 million US Airways $447 million -$110 million Southwest $459 million $20 million Delta $593 million -$-316 million The effect of fuel can clearly be seen in first quarter earnings as many carriers swung back into the red. Carriers reported increased fuel costs of as much as 30% compared to 1Q2010. Source: Airline Reporting 12
Crude and Jet Fuel Prices per Barrel (Monthly) Futures as of 4/25/11 Tensions in the Middle East and North Africa, along with the onset of the summer driving season, continue pushing fuel higher. Many carriers are reexamining their 2011 capacity strategies as a result. IATA has again revised its annual profits forecast for 2011 from $15.1 billion to $9.1 billion and now to $8.6 billion, mainly due to increased fuel costs. Source: EIA, Wall Street Journal 13
Crude and Jet Fuel Prices per Barrel (Daily) A closer look at the fuel situation highlights the ongoing crisis in Libya. While oil prices have and continue to rise, jet fuel prices have increased at an even higher rate. This reflects the fact that Libyan is the largest supplier of oil that is the preferred grade for refining into jet fuel. As it becomes scarce the crack spread for jet fuel has increased faster that the underlying commodity price. It currently stands around $25-$30 per barrel. Source: EIA, Wall Street Journal 14
United States Aviation Accident Statistics 2010 2010 Accidents 2010 Fatalities Jan 2011 Accidents Jan 2011 Fatalities All Fatal Total Aboard All Fatal Total U.S. air carriers operating under 14 CFR 121 - - - - - - - - Scheduled 26 0 0 0 0 0 0 - Nonscheduled 3 1 2 2 0 0 0 U.S. air carriers operating under 14 CFR 135 - - - - - - - - Commuter 6 0 0 0 1 0 0 - On-Demand 31 6 17 17 3 0 0 U.S. general aviation 1,435 267 450 447 73 13 19 Source: NTSB
Accident Statistics for U.S. Part 121 Airlines, Scheduled and Nonscheduled Accidents per Accidents per Accidents Fatalities 100,000 Departures 100,000 Flight Hours Year All Fatal Total Aboard All Fatal All Fatal 2000 56 3 92 92 0.488 0.026 0.306 0.016 2001* 46 6 531 525 0.383 0.018 0.236 0.011 2002 41 0 0 0 0.39-0.237-2003 54 2 22 21 0.518 0.019 0.309 0.011 2004 30 2 14 14 0.272 0.018 0.159 0.011 2005 40 3 22 20 0.359 0.027 0.206 0.015 2006 33 2 50 49 0.305 0.018 0.171 0.01 2007 28 1 1 1 0.256 0.009 0.143 0.005 2008 28 2 3 1 0.268 0.019 0.147 0.01 2009 30 2 52 51 0.29 0.019 0.167 0.011 2010 28 1 2 2 0.293 0.01 0.159 0.006 Source: NTSB
Accident Statistics for U.S. General Aviation Accidents Fatalities Accidents per 100,000 Year Flight Hours All Fatal Total Aboard Flight Hours All Fatal 2000 1,837 345 596 585 27,838,000 6.57 1.21 2001 1,727 325 562 558 25,431,000 6.78 1.27 2002 1,715 345 581 575 25,545,000 6.69 1.33 2003 1,741 352 633 630 25,998,000 6.68 1.34 2004 1,617 314 559 559 24,888,000 6.49 1.26 2005 1,670 321 563 558 23,168,000 7.2 1.38 2006 1,523 308 706 547 23,963,000 6.35 1.28 2007 1,652 288 496 491 23,819,000 6.93 1.2 2008 1,569 275 494 485 22,805,000 6.86 1.21 2009 1,480 275 478 469 20,862,000 7.08 1.32 2010 1,435 267 450 447 20,900,000 6.86 1.27 Source: NTSB
Canada Aviation Accident Statistics 2009, 2010, Jan-Mar 2011 January to December January to March 2009 2010 2011 2010 Canadian-Registered Aircraft Accidents 249 244 34 33 Aeroplanes Involved 215 211 29 30 Airliners 2 6 1 1 Commuters 5 6 1 0 Air Taxis 36 28 4 5 Aerial Work 11 18 1 2 State 2 3 1 0 Corporate 4 2 0 1 Private/Other 154 148 21 21 Helicopters Involved 32 29 6 3 Other Aircraft Involved 7 6 0 0 Fatal Accidents 28 31 3 2 Aeroplanes Involved 20 27 4 2 Airliners 0 0 0 0 Commuters 0 1 0 0 Air Taxis 5 7 1 0 Aerial Work 0 4 0 0 State 0 0 0 0 Corporate 0 0 0 0 Private/Other 15 15 3 2 Helicopters Involved 7 3 0 0 Other Aircraft Involved 1 1 0 0 Fatalities 64 64 4 2 Serious Injuries 34 31 8 6 Source: Canadian Transportation Safety Board
Source: Canadian Transportation Safety Board Canada Aviation Accident Statistics, 2000-2009 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Canadian-Registered Aircraft Accidents 320 295 274 295 252 259 262 285 252 249 Airliners 9 5 6 7 3 5 7 5 8 2 Commuter Aircraft 4 8 6 9 1 6 4 4 6 5 Air Taxi 45 37 41 35 43 33 31 39 41 36 Aerial Work 19 18 12 17 8 14 14 11 12 11 Corporate 5 4 2 2 4 6 2 7 4 4 State 1 3 4 3 2 1 4 1 3 2 Private/Other 175 168 139 169 145 141 146 170 127 154 Helicopters Involved 53 46 56 44 41 50 56 46 42 32 Other Aircraft Involved 12 9 10 12 9 8 4 5 13 7 Hours Flown (thousands) 3,982 3,885 3,713 3,790 3,961 3,979 4,059 4,180 4,432 4,171 Accident Rate (per 100 000 hours) 7.8 7.4 7.2 7.5 6.2 6.4 6.5 6.8 5.5 5.9 Fatal Accidents 38 33 31 32 24 34 31 33 26 28 Airliners 1 0 0 0 0 0 0 0 0 0 Commuter Aircraft 1 1 0 0 0 1 0 1 0 0 Air Taxi 3 5 5 5 3 6 5 5 3 5 Aerial Work 2 1 1 3 0 2 1 1 0 0 Corporate 0 1 0 0 0 0 0 1 2 0 State 1 0 2 0 0 0 1 0 0 0 Private/Other 18 17 15 18 15 13 16 17 11 15 Helicopters Involved 11 6 6 3 4 10 9 7 9 7 Other Aircraft Involved 1 3 3 4 2 2 0 2 1 1 Fatalities 65 59 51 60 37 55 52 49 51 64 Serious Injuries 53 37 42 42 27 37 40 56 38 34
U.S. DOT and FAA Policy Issues Passenger Protections Final Rule Another NPRM proposing that ancillary fees be displayed at all points of all expected to be issued January 2012 Wildlife Hazard Assessments and Management Safety Management Systems Part 139 Notice of Proposed Rulemaking Airport Badges for FAA Inspectors
Safety Management Systems NPRM Notice of Proposed Rulemaking issued by FAA on October 7, 2010 Would require all Part 139 U.S. certificated airports to develop and implement an airport SMS program ACI-NA raised significant concerns about lack of pertinent information in the NPRM and requested extensions. FAA agreed and extended comment deadline to July 5, 2011 ACI-NA filed technical clarifying questions with FAA Additional information to be provided by May 21 Responses to clarifying questions Pilot program summary report (Studies 1 & 2 only) Additional information about required SMS Implementation Plans
Key ACI-NA Comments Lack of sufficient information regarding SMS implementation plans, SMS manual contents, inspection procedures and other substantive elements of the NPRM Problematic regulation of non-movement areas, especially in light of tenant use & lease agreements Unsupported rejection of phased implementation approach contrary to several industry precedents Unrealistic implementation deadlines, especially in light of anticipated FAA staffing and resource constraints Lack of consideration of data protection, data ownership, and liability issues Lack of sufficient information regarding how the Airport SMS rule will interact with other FAA SMS programs/rules, most of which aren t finalized either
Additional Part 139 NPRM Issued February 1 On February 1, FAA issued a second NPRM proposing to amend 14 CFR Part 139 Safety training for personnel who access the airport non-movement area Pavement surface evaluations Surface Movement Guidance Control System (SMGCS) requirements ACI-NA concerns Safety justification for proposals unclear Costs underestimated Implementation issues not considered Unintended operational consequences ACI-NA will file comments by May 13 deadline 24
Airport Badging FAA has indicated it is unwilling to pay fees for airport badges for FAA employees that require access to secured areas of the airport to perform their duties Some FAA regions have implemented this policy prematurely ACI-NA believes that charging FAA fees for badges on a cost-recovery basis is legal We sent a letter to the FAA Chief Counsel s office on April 29 stating there is no legal basis for FAA s position and asking that the existing policy remain in place until the issue can be resolved Please let us know if FAA personnel refuse to pay badging fees at your airport
Special thanks to Diio s APGDat, BEA, DOT, FAA, BTS, and ATA for their contributions to this presentation. For comments or questions, please contact: Debby McElroy or A.J. Muldoon ACI-NA Center for Policy and Regulatory Affairs (202) 293-8500 dmcelroy@aci-na.org amuldoon@aci-na.org 26