Passengers chasing seats Air service in New York State NYAMA Annual Conference September 20, 2012
InterVISTAS Consulting Group: The Transportation and Tourism Business Airline Business •
Airline Strategy and, Business Planning
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Aircraft Finance
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MRO Transformation
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Production Planning and Integrated Operations
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Route and Network Analysis and Scheduling Revenue Management Ancillary Revenue Development
PPP, Commercial & Finance
Air Service Development •
Market Analysis
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Leakage Analysis
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Route Strategy
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Transportation Infrastructure Privatization
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Transportation Policy
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Border Facilitation
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Economics & Regulatory
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Financial Modeling/Due Diligence
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Expert Witness Logistics & Supply Chains
Aviation & Transportation Security
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Aviation Safety
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Commercial Development
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Development Economics
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Airport & Transportation Planning
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Retail
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Strategic Planning
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Food & Beverage
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Tourism Development
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Parking •
Environment
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Market Analysis
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Benchmarking/ Consumer Research
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Business Case Development
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Incentive Evaluation
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Negotiation
Planning, Borders, & Security
Economics & Strategic Planning
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Airport Cities
1
The September 2009 Question: Have we reached bottom yet? There are signs of recovery from the recession Uneven Slow
recovery by region and by sector
recovery of jobs
• Air travel sector also senses an impending recovery, but… Changed by 2012
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Consumer confidence still low
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Carriers continue capacity squeeze in face of soft demand
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Low yields due to price competition
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Concern that jet fuel prices will spike again
Changed by 2012
The deployment of airline capacity in 2010 will largely define when, where and how traffic rebounds 2
Economic conditions typically drive air travel demand, and thus air service Economic conditions, and air travel demand, vary greatly by region and sector Stronger in Asia and Latin America (especially emerging markets) Weaker in North America and Europe (especially mature markets) Variable by economic sector
Airlines are making progress toward profitability Lowering unit costs where they can Cautiously controlling capacity Using consolidations, alliances and regional partners to mitigate risk Establishing pricing power where possible 3
The global airline industry has recently returned to modest profitability
Source: IATA
4
Airline financial performance varies dramatically by region
Source: IATA
5
US airlines severely reduced capacity during the Great Recession
2009: Largest US airline capacity reduction since 1942
Source: ATA
6
Most recently, US airlines have carefully calibrated capacity with demand
3.8 2.6
2.3
Key factors: • Sluggish US recovery • Fuel price risk • Corporate consolidation • Seasonal flexibility
2.4
1.6 1.0
0.9
0.2
0.0
(1.1) (1.8)
1Q10
2Q10
3Q10
4Q10
Source: Official Airline Guide, 2010-2012
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
7
Airline business models have adapted to market and competitive conditions Legacy network Legacy point-to-point New model LCC New model ULCC Regional feeder Regional at risk Tour operator ACMI lift providers
8
Airline common denominators in the current U.S. market environment Concentration and/or partnership Specialized business models Fleet and route rationalization Revenue management Risk aversion Profit (not market share)
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NYC’s “Big 3”: Domestic seat capacity is recovering, but unevenly
Source: Official Airline Guide 10
NYC’s “Big 3”: International seat capacity is rising at JFK
Source: Official Airline Guide 11
Upstate’s “Big 4”: Less capacity, even as regional economies grow
Source: Official Airline Guide 12
Regional airports are steady, but some are growing (i.e. Plattsburgh and Elmira)
Source: Official Airline Guide 13
Passengers chasing seats‌  Airlines have the seats that your passengers want: So how do you get them?
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Passengers chasing seats… Airlines have the seats that your passengers want: So how do you get them? Understand your market, your competition and the industry dynamics impacting your situation Educate airlines about how your airport relates to their market opportunities Match market opportunities to carriers through compelling business cases for their business models Maximize regional stakeholder involvement and support that is led and coordinated by the airport Have a strategy that is balanced: realistic, aggressive and proactive 15
Thank You! www.InterVISTAS.com barney.parrella@intervistas.com