North American Aviation: By the Numbers Dr. Mike Tretheway InterVISTAS Consulting Chief Strategy Officer Chief Economist 6 February 2014 Presentation to ACI-NA CEO Forum
TRAFFIC GROWTH
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Time Series of US Air Passenger Traffic US Air Passenger Traffic 1960-2012 Enplaned Passengers 900 800 Passengers (Millions)
700 600 500
International
400
Domestic
300 200 100 0 1960
1965
1970
1975
1980
1985
1990 Page 3
Source:1960-2006 ATA , 2007-2012 BTS
1995
2000
2005
2010
Time Series of Canada Air Passenger Traffic Canada Air Passenger Traffic 1988-2012 Enplaned/Deplaned 140
Passengers (Millions)
120 100
International Transborder Domestic
80 60 40 20 0 1988
1993
1999
2004 Page 4
Source: Air Carrier Traffic at Canadian Airports. Statistics Canada
2009
US vs Canada Pax Traffic 1990-2012 Passenger Growth in United States and Canada 200 180
Index Base 1990
160 140 120 100
US Canada
80 60 40 20
Source: InterVISTAS Calculations with data from: Canada: Air Carrier Traffic at Canadian Airports, Statistics Canada. US: 1960-2006 ATA, 2007-2012 BTS.
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2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1995
1990
0
Canada Air Passenger Traffic Share of Transborder and Other International Passengers 25%
20%
15%
Transborder % of Total International % of Total
10%
5%
0% 1988
1993
1998
2003
2008
2011 Page 6
Source: Air Carrier Traffic at Canadian Airports. Statistics Canada
2012
Canada Air Passenger Traffic Share of Transborder and Other International Passengers 25%
20%
15%
Transborder % of Total International % of Total
10%
5%
28%
40%
0% 1988
1993
1998
2003
2008
2011 Page 7
Source: Air Carrier Traffic at Canadian Airports. Statistics Canada
2012
SUSTAINING GROWTH - AIRCRAFT ORDERS
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Aircraft Deliveries – Boeing & Airbus 650 600
Total Annual Aircraft Deliveries
550 500 450 Airbus Boeing
400 350 300 250 200 2003
2004
2005
2006
2007
2008 Page 9
Source: Boeing and Airbus Delivery Reports
2009
2010
2011
2012
2013
Aircraft Deliveries – Bombardier & Embraer 240
Total Annual Commercial Deliveries
220 200 180 160 Embraer
140
Bombardier 120 100 80 60 40 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: Bombardier and Embraer Delivery Reports and Press Releases
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Aircraft Orders Aircrafts on Order Airbus, Boeing and Embraer 1400
Total aircraft on order
1200 1000 800 600 400 200 0 2014
2015
2016
2017
Note: Estimates of orders as of January 23, 2014 Page 11
Source: Diio Mi Fleet Current Summary
2018
2019
2020
2021
2022
AVIATION GROWTH WHILE AUTO DECLINES Page 12
Car Ownership per Capita U.S. 1960-2011 900
800
Vehicles per 1,000 inhabitants
700
600
500
400
300
200
100
0 1960
1965
1970
1975
1980
Page1985 13
1990
1995
2000
2005
2010
Car Ownership per Capita Canada 1984-2010 900
800
Vehicles per 1,000 inhabitants
700
600
500
400
300
200
100
0 1984
1987
1990
1993
199614 Page
1999
2002
2005
2008
Breaking Link Between Auto and GDP
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Breaking the Auto – GDP Link
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Coastal Ferry Traffic
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GENERAL AVIATION
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NTSB data from earlier than 1999 is not available
Trends in US GA Hours Flown 2000-2010
120.0
100.0
Index to Year 2000 = 100
80.0
60.0
40.0 Schedule Airline (FAR121) General Aviation
20.0
2000 2001 Source: NTSB
2002
2003
2004
2005
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2006
2007
2008
2009
2010
Trends in US GA Hours Flown 2000-2010
120
Scheduled Airlines: +8.8% to 2007 +0.0% to 2010 100
Index to Year 2000 = 100
GA-turbine /Business&Corp: 17.2% 80
Total GA incl. Piston : -27.1% 60
40
20 Business & Corporate Schedule Airline (FAR121) Total GA incl. Piston 0 2000
2001
2002
2003
2004
2005
2006
2007
Source: GA from FAA General Aviation and Air Taxi Activity (GAATA) surveys, 2000-2010 Scheduled Airline from www.ntsb.gov/aviation/table6.htm
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2008
2009
2010
Total GA Movements for Canada Total GA Movements 4
Million aircraft movements
3.5 3 2.5 2 1.5 1 0.5 0
1997
Source: Statistics Canada, Table 401-007, 401-0015 and 401-0021.
2002
2007
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2012
REGIONAL AIRCRAFT DEVELOPMENTS Page 22
Small Regional Aircraft Phase Out? The average age of Air Canada’s Dash-8-100 fleet is
12
10
6
4
2
0 0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Age in Years Source: Planespotters.net Current fleet for AC/Jazz, http://www.planespotters.net/Airline/Jazz-Air accessed on 30 May 2013 Page 23
Number of Aircraft
25years
8
Small Regional Aircraft Phase Out? The average age of Air Canada’s Dash-8-300 fleet is
14
12
8
6
4
2
0 0
1
2
3
4
5
6
7
8
9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30
Age in Years Source: Planespotters.net Current fleet for AC/Jazz, http://www.planespotters.net/Airline/Jazz-Air accessed on 30 May 2013 Page 24
Number of Aircraft
23years
10
Dash 8 – 100/300 Phase Out Within 3-10 years • Aircraft will reach maximum cycles • Cost of rebuild not economic Bombardier has no 35-50 seat aircraft in production ATR only has the aging ATR 142 • Very few on order, no one wants to buy Carrier “Solutions” • Phase out 35-50 seat aircraft • Buy low cycle used aircraft Page 25
SUPPLY-DRIVEN GROWTH
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Supply Driven Air Service 1. Traditional: demand driven air service
Convince carrier market can support a route (or service upgrade) Carrier would invest in aircraft and add service Bottom up driver of airline capacity Challenge: in recession, excess capacity would drive losses
2. Today: supply driven capacity
Top down
Carrier decides how much total capacity/fleet it can support through business cycle
Only routes with highest profitability chosen
Viable routes of lower profitability not served Less willingness to experiment with new services
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27
Factors Causing Capacity Discipline •
Greater capacity discipline is observed • • • •
•
6.2% reduction in U.S. domestic capacity in 2009 largest reduction since 1942 (WW II) carriers making sustainable air service decisions few carriers are rapidly growing air service
Key factors • • •
volatility of air travel demand / airline revenues higher operating costs increased competitive pressure from LCCs/ULCCs
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28
Capacity Discipline
Source: airlines.org via A4A Annual Operations and Financial Results for U.S. airlines Page 29
29
Decline in Air Service Connectivity
Source: Bill Swelbar: MIT Small Community Air Service White Paper No. 2, June 2013 Page 30
30
Decline in Air Service Connectivity
Source: MIT Small Community Air Service White Paper No. 2, June 2013 Source: Bill Swelbar: MIT Small Community Air Service White Paper No. 2, June 2013 Page 31
31
Key Consequences Challenge for community air service
Carriers now limit total fleet capacity
Focus on risk avoidance And financial sustainability across business cycle Airlines opt for “less is more”
Markets with weak demand may be underserved and under-stimulated
Communities must demonstrate true market size and potential to attract air service
Carriers expect communities to reduce airline financial risk Page 32
32
Scheduled Flight Frequency: Domestic Canada Domestic Canada Scheduled Non-Stop Frequency Annual Turboprop + Regional Jet Percentages 1,000,000
79%
67%
70%
70%
900,000
Annual Flight Frequency
800,000 700,000
Widebody
600,000
Regional Jet Narrow
500,000
Turboprop
400,000 300,000 200,000 100,000 0
1998
2004
Source: Official Airline Guide Schedule Data, full year data for 1998; Diio Mi Schedule Data ,full year data for 2004, 2008, 2013.
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2008
2013
Scheduled Seat Capacity: Domestic Canada Domestic Canada Scheduled Non-Stop Seats Annual Turboprop + Regional Jet Percentages 60,000,000
49%
30%
37%
41%
Annual Seat Capacity
50,000,000
Widebody
40,000,000
Regional Jet Narrowbody 30,000,000
Turboprop
20,000,000
10,000,000
0
1998 Source: Official Airline Guide Schedule Data, full year data for 1998; Diio Mi Schedule Data ,full year data for 2004, 2008, 2013.
2004 Page 34
2008
2013
CARBON IMPACT
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US Commercial Carbon Emissions Commercial Aircraft Greenhouse Gas Emissions United States 1990-2011 160
140
Million Tons of CO2 Equivalent
120
100
80
60
40
20
0 1990
1993
1996
1999
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2002
2005
2008
2011
US Fuel Consumption Airline Fuel Consumption United States 1977-2012 25
Billions of Gallons
20
15
10
5
1977
1982
1987
1992
1997 Page 37
2002
2007
2012
Canada Commercial Carbon Emissions Aviation Greenhouse Gas Emissions Canada 1990-2008 18
16
Millions of tonnes of CO2 Equivalent
14
12
10
8
6
4
2
0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999Page 2000 38 2001 2002 2003 2004 2005 2006 2007 2008
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