Jackson Hole Airport Overview
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Air Service Trends at Commercial Airports (WY) Stephen D. Van Beek Select Air Service Committee September 2019 Image Source: Jackson Hole Airport National Aviation Trends in 2019: A Dynamic Industry Sees Accelerating Change What’s In What’s Out Air taxis A-380s Landside Congestion Airside Congestion Metering Roadways and Curbs Providing Free Access 30-year concessions 30-year airline agreements United Airlines Air Transat A220s Bombardier 100/200 Flexible Fixed Non-aeronautical revenues PFCs 2 | September 2019 Air Service Trends at Commercial Airports (WY) Air Service Trends at Commercial Airports 1. Introduction 2. The National Air Service Picture 3. Small Community Air Service: Trends and an Agenda? 4. Air Service: Wyoming Trends 5. Future Air Service Challenges and Policy Ideas to Consider 6. Airport Revenues: Aeronautical and Nonaeronautical 7. An Airport 2020 Agenda 8. Questions and Discussion 3 | September 2019 Air Service Trends at Commercial Airports (WY) The Airport Industry’s SWOT 2019 Strengths Opportunities • Traffic at airport gateways & large hubs (e.g. DEN, DFW) • Passenger growth and low rates providing historic • Airline orderbook of long-haul, fuel efficient, aircraft opportunity for airport capital investments • Liberalization / global traffic diversification • New equity and developer players providing options for • Growing airports’ economic performance development • Dollar easing for some inbound travelers • Technology applications enabling airports to improve the passenger experience and raise new revenues • Low fuel prices permitting aviation growth • Ground transportation offering new options and efficiencies but requiring new models (e.g. garage pick- up/drop-off for efficient operations) Weaknesses Threats • U.S. DOT and FAA abdicating public funding model, • Recession as well as interest rate and fuel price increases challenging airports with large capital investments • Airport debt loads • Airport industry’s relative political position • Reversal of trend of air service liberalization and • Diversion of security and facilitation revenues tightening of visa policy hurting levels of service • Further airline consolidation (Canada 60%?) • High cost of adding even marginal new capacity • Political pressure by outside interests seeking new • Connectivity for smaller airports challenged regulations and to capture airports’ value without paying • Boeing 737-Max for it (e.g. curb access) • Air traffic control interruptions 4 | September 2019 Air Service Trends at Commercial Airports (WY) Airline Traffic Delivering More Frequency and More Pax Per Operation With competition …. … and larger aircraft Airline departures at SEA 737 Max-10, up to 230 seats 5 | September 2019 Air Service Trends at Commercial Airports (WY) The National Air Service Picture Change in departing seats across U.S. airports 2000-2019 Departing Seat Capacity Growth of U.S. Hubs % Change of Departing Seats (Relative to 2000, Full Year – 2019 Forecast) 20% 12% 10% 3% 0% -10% -10% -20% -21% -30% -40% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Large Medium Small Non-Hub Overall 7 | September 2019 Air Service Trends at Commercial Airports (WY) Domestic seat growth driven by non-legacy carriers (2009-2019) Modest but stable growth from legacy carriers (e.g. American, Delta, United) Million Domestic Seats (January to September) Compound Annual Growth Rates Category 2013-19 2009-19 Legacy Carriers +2.3% +1.1% Other Full Service Carriers +6.5% +3.3% Low Cost Carriers +4.3% +4.2% All Airlines +3.2% +1.8% Source: Steer Analysis (2019) of OAG Schedule Analyzer (2019) and U.S. Federal Aviation Administration (2018) Note: Reported years measure seat capacity from January to September and may be subject to change Legacy Carriers include American Airlines, Delta Air Lines, and United Air Lines (merged airline groups) 8 | September 2019 Air Service Trends at Commercial Airports (WY) International growth also driven by full service and low-cost carriers Modest, but stable growth from U.S. legacy carriers (e.g. American, Delta, United) Million U.S./International Seats (January to September) Compound Annual Growth Rates Category 2013-19 2009-19 U.S. Legacy Carriers +1.5% +0.8% Other Full Service Carriers +5.7% +4.4% Low Cost Carriers +15.1% +16.3% All Airlines +5.1% +3.9% Source: Steer Analysis (2019) of OAG Schedule Analyzer (2019) and U.S. Federal Aviation Administration (2018) Note: Reported years measure seat capacity from January to September and may be subject to change U.S. Legacy Carriers include American Airlines, Delta Air Lines, and United Air Lines (merged airline groups) 9 | September 2019 Air Service Trends at Commercial Airports (WY) ULCC capacity has replaced some of the lost seat capacity Seat capacity only slightly down at Small Hubs, still lower than 2008 highs despite strong growth in traffic nationwide Million Departing Seats from Small Hubs Compound Annual Growth Rates Category 2008-18 Ultra Low Cost Carriers +12.0% Network Carriers -0.6% Other Large Carriers -1.2% Other Carriers -16.0% All Airlines -0.1% Source: Steer Analysis (2019) of OAG Schedule Analyzer (2019) 10 | September 2019 Air Service Trends at Commercial Airports (WY) Non Hubs airline mix has stayed more constant, with significant growth in ULCC capacity Network carriers continue to operate 70% of seat capacity to non-hubs, an essential part of the future of small airports Million Departing Seats from Non-Hubs Compound Annual Growth Rates Category 2008-18 Ultra Low Cost Carriers +8.0% Network Carriers -0.5% Other Large Carriers -2.6% Other Carriers -3.7% All Airlines -0.4% Source: Steer Analysis (2019) of OAG Schedule Analyzer (2019) 11 | September 2019 Air Service Trends at Commercial Airports (WY) Growth in Capacity (Seats) compared to Domestic GDP Departing Seat Capacity year on year growth of U.S. Hubs % Change of Departing Seats (Relative to 2000, Full Year – 2019 Forecast) Source: Steer Analysis (2019) of OAG Schedule Analyzer (2019) and U.S. Federal Aviation Administration (2018) Note: Reported years measure seat capacity from January to September and may be subject to change 12 | September 2019 Air Service Trends at Commercial Airports (WY) Domestic Traffic: Market Share of Airlines (2019) Share of Domestic Seats by Carrier Type (January to September 2019) Low Cost Legacy Carriers Others 34% 58% 8% Source: Steer Analysis (2019) of OAG Schedule Analyzer (2019) and U.S. Federal Aviation Administration (2018) Note: Reported years measure seat capacity from January to September and may be subject to change 13 | September 2019 Air Service Trends at Commercial Airports (WY) International Traffic: Market Shares of U.S. and Foreign Carriers (2019) Share of U.S./International Seats by Carrier Type (January to September 2019) Legacy Carriers Other Full Service Carriers (Top 5) Low Cost Carriers (Top 5) 38% 45% 17% Volaris 9% Westjet 11% Source: Steer Analysis (2019) of OAG Schedule Analyzer (2019) and U.S. Federal Aviation Administration (2018) Note: Reported years measure seat capacity from January to September and may be subject to change 14 | September 2019 Air Service Trends at Commercial Airports (WY) Global Domestic Products in Comparison (2017) National Gross Domestic Products (2018) 15 | September 2019 Air Service Trends at Commercial Airports (WY) Small Community Air Service: Trends and an Agenda? Factors Behind Small Airport Services Challenges Airports have focused on several industry trends that are placing pressure on small community air service: • Pilot Shortage, exacerbated by 1500 hour rule • Accelerated retirement, and lack of production, of 50-seat RJs and other metal • Fuel prices (volatility, how long will they stay historically low?) • Scope clauses (< 86,000lb MTOW) • Legacy airlines focus on flying from, and feeding, their gateway hubs There has been less focus on airline business models and the effects policy has had on air service: • Mergers and Consolidation • Consolidation of traffic into gateways and hubs Focus • Growth of ULCCs • Decline of secondary hubs and access points for “spokes” These are the principal factors behind the loss of connectivity. 17 | September 2019 Air Service Trends at Commercial Airports (WY) Definitions of Airports and Airlines The landscape for smaller airports in the United States is changing. Smaller airports are defined as those FAA Hub Categorization airports with less than 2.2 million FAA Definition Number of enplanements in 2017 and are Category (National Annual Passenger Boardings) Annual Enplanements Airports categorized by the FAA as: Large Hub Over 1% 8,657,340+ 30 • Small Hubs Medium Hub Between 0.25 and 1% 2,164,365 – 8,657,340 31 • Non Hubs Small Hub Between 0.05 and 0.25% 432,867 – 2,164,364 70 • Commercial Service Airports Non Hub Over 10,000 but less than 0.05% 10,001 – 435,866 259 Commercial Services Less than 10,000 1 – 10,000 742 Airlines have been classified into Airline Classifications 4 service categories in order to Definition Example Airlines understand the changing mix of service at Ultra Low Cost Carriers Allegiant, Frontier, Spirit and Sun Country small airports Network Carriers American, Delta, and United Other Large Airlines Southwest, Alaska, JetBlue and Hawaiian Others All other carriers – primarily small operators 18 | September 2019 Air Service Trends at Commercial Airports (WY) The mix of service has changed – small airports have seen a significant drop in flights The positive industry trends for larger Seats from Small and