Idaho Intrastate Passenger Air Service Study

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Idaho Intrastate Passenger Air Service Study INTRASTATE COMMERCIAL AIR SERVICE COMMITTEE Idaho Intrastate Passenger Air Service Study JANUARY 2021 TABLE OF CONTENTS INTRODUCTION .............................................................. 1 ROUTE FORECASTS AND AIRLINES ........................... 28 Methodology ..................................................................................... 28 EXECUTIVE SUMMARY .................................................. 3 Regional Aircraft Availability ............................................................. 30 CURRENT AND HISTORICAL AIR SERVICE .................. 5 Types of Aircraft Analyzed ............................................................... 31 Current Air Service ............................................................................ 5 Route Forecasts ............................................................................... 33 Historical Air Service .......................................................................... 6 Regional Airlines .............................................................................. 37 Seasonality ........................................................................................ 9 Route Conclusions ........................................................................... 40 Domestic Revenue and Fare Trends ................................................10 Domestic Load Factor Trends ...........................................................12 AIR SERVICE COMPARISONS ..................................... 41 Existing Regional/Intrastate Service ................................................. 41 Revenue Per Available Seat Mile Trends .........................................13 Historical Regional/Intrastate Service............................................... 43 Historical Intrastate Service ..............................................................14 AIR SERVICE DEVELOPMENT BEST PRACTICES ...... 44 PASSENGER DEMAND ASSESSMENT ........................ 18 Community Role ............................................................................... 44 Methodology and Data Sources ........................................................18 Barriers To Entry .............................................................................. 45 Factors Affecting Travel Demand .....................................................19 Airline Risk Mitigation ....................................................................... 46 True Visitation Estimate To Boise .....................................................20 Airline Incentive Summary ................................................................ 52 True Visitation Estimate From Boise .................................................22 Combined True Visitation Estimate ...................................................23 CONTENTS CONCLUSIONS AND NEXT STEPS .............................. 53 Proxy Market Analysis ......................................................................24 Propensity to Fly Model ....................................................................25 GLOSSARY .................................................................... 55 1 INTRODUCTION INTRODUCTION The Idaho Legislature created the Intrastate Commercial Air Service Committee (Committee) through Senate Concurrent Resolution 125 in 2020. The Committee's objective is to study intrastate commercial air service and develop a long-term, viable strategy for sustainable intrastate commercial air service in the state of Idaho. The Committee consists of a diverse group of leaders in commercial air service, travel and the business community. The Committee was granted approval to hire a consultant who is familiar with commercial airline service and with the capability to provide economic or additional research. Mead & Hunt was selected to complete the Idaho Intrastate Passenger Air Service Study (Study). Convenient access to the national air transportation system is a top priority for many businesses and tourists across the U.S. It is important that Idaho's major population, business and tourism centers have commercial airline service to meet the needs of urban and rural users. Idaho businesses rely on the commercial airline industry to support day-to-day activities, and Idaho's tourism industry relies heavily on commercial airline service. Idaho's rural landscape needs safe, efficient, reliable and accessible passenger air service. This Study focuses on the state of passenger air service throughout Idaho, an assessment of intrastate air service passenger demand, potential routes/airlines for intrastate commercial air service and best practices to recruit new air service. The following airports/communities are included in the Study: • Boise Airport (BOI) – Boise, Idaho • Magic Valley Regional Airport (TWF) – • Coeur d'Alene Airport (COE) – Hayden, Idaho Twin Falls, Idaho • Friedman Memorial Airport (SUN) – • McCall Municipal Airport (MYL) – McCall, Idaho Hailey-Sun Valley, Idaho • Pocatello Regional Airport (PIH) – Pocatello, Idaho • Idaho Falls Regional Airport (IDA) – • Pullman-Moscow Regional Airport (PUW) – Idaho Falls, Idaho Pullman-Moscow, Washington-Idaho • Lewiston-Nez Perce County Regional Airport (LWS) – Lewiston, Idaho 1 1 INTRODUCTION Achieving intrastate air service success requires thoroughly understanding the market and the needs of local stakeholders, airlines, and trends impacting the state and aviation industry. Air service development efforts are most effective when they follow a plan consistent with industry trends, the air service needs of communities and specific strategies of target airlines for additional air service. The Study airports are subject to several trends that impact air service efforts, including: • Airline mergers have concentrated industry capacity with the “big four” airlines controlling over 80 percent of the U.S. domestic market. • Smaller regional aircraft continue to be replaced by larger regional aircraft at an accelerated rate driven in part by a regional airline pilot shortage. • Connecting passengers are funneled through fewer major hubs and short-haul markets were reduced or eliminated by select carriers. • Competition for air service has increased with incentives and community partnerships becoming more important to the airline decision-making process. • Low-cost carriers and ultra-low-cost carriers, as a group, are growing steadily in domestic markets, and the reaction and competition from traditional network carriers is evolving rapidly. • Airlines reduced flying by up to 90 percent and eliminated service to select communities during the early phase of the pandemic. This Study was developed as the Coronavirus Disease 2019 (referred to as COVID-19 or pandemic) continued to have devastating effects on the airline industry throughout the world. This Study reviews historical trends and intrastate travel to/from Boise as it existed through December 31, 2019. While the ultimate impact on the airline industry is yet to be determined, there will be a recovery period before the U.S. demand for air travel returns to normal conditions. Assumptions about the pandemic-affected air travel environment have not been incorporated because there is not currently a clear view to where this evolving situation will lead. However, as with every other challenge to industry demand (e.g., September 11, 2001, swine flu, the Great Recession), the industry is expected to rebound, and air travel will continue to be a vital and growing element for economic development throughout the U.S. While the currently changing environment will certainly create some temporary setbacks or delay potential expansion plans, the observations and recommendations of this Study are still valid and important for long-term air service development. 2 2 EXECUTIVE SUMMARY EXECUTIVE SUMMARY DATA SOURCES seats than in 2019, the Study airports fared population and drive time. The larger the Global Positioning System (GPS)-based much better than the national average, which population size, typically the higher overall tracking data from smartphone devices was experienced a seat reduction of 38 percent. visitation. The lower the drive time between combined with data from other travel-related each market and Boise, the higher the number databases to create a true visitation estimate to Several carriers have provided intrastate Idaho of visits per person. The highest visitation quantify the visitation to/from Boise. The true service over the past 20 years. Current service, intrastate was Twin Falls to/from Boise, visitation estimates include all travel between however, is limited to Gem Air between Salmon followed by McCall, Pocatello, Idaho Falls, two points by any form of transportation (e.g., and Boise, operating an average of twice Hailey-Sun Valley, Pullman-Moscow, car, bus and aircraft). Due to impacts of COVID- weekly in 2019 on nine-seat aircraft. Big Sky Coeur d’Alene and Lewiston. 19 in calendar year 2020, this analysis is based Airlines and SeaPort Airlines previously offered on data for the year ended December 31, 2019. brief intrastate service, but services were Portland, Oregon, was used as a proxy to cancelled following relatively poor performance. model the propensity to fly for markets with HISTORICAL/CURRENT SERVICE The primary intrastate service was operated by nonstop air service. It was determined that the Alaska Airlines/Horizon Air. Over the years, propensity to fly was greatly reduced for Of the nine Study airports, seven currently have Alaska/Horizon served Pullman-Moscow, markets under a three-hour
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