Passenger Core Market Analysis Snohomish County Airport/Paine Field Ev erett, Washington Report prepared by 28829 Lockheed Drive, Suite 2A Eugene, Oregon 97402 Phone: 541/689-9997 Email: [email protected] www.meadhunt.com September 14, 2004 Table of contents Table of contents Page Section 1. Introduction............................................................................1 Objectives.............................................................................................1 Methodology..........................................................................................1 Section 2. Executive summary................................................................3 Section 3. Airport catchment area, activity, and use...............................5 Airport catchment area...........................................................................5 Competing airport departures.................................................................6 Competing airport available seats...........................................................7 Passenger trends...................................................................................8 Section 4. Destinations...........................................................................9 Itinerary type.........................................................................................9 Catchment area top 25 destinations......................................................10 Nonstop service to top destinations.......................................................11 Travel time comparison........................................................................12 Federal Aviation Administration (FAA) geographic regions......................13 Regional distribution of catchment area travelers...................................14 Distribution of international travel..........................................................15 Section 5. Airlines.................................................................................16 Airlines used........................................................................................16 Section 6. Airfares................................................................................17 U.S. DOT reported airfares...................................................................17 Ten-year average fare trend.................................................................18 Section 7. True market estimate...........................................................19 Methodology – market share ................................................................19 Methodology – passengers...................................................................20 True market.........................................................................................20 Retention rate sensitivity......................................................................21 Section 8. Situation analysis.................................................................22 Table of contents Appendices Page Appendix A. Glossary..............................................................................24 Appendix B. True market estimate – top 50 markets..................................26 Tables Table 3.1 Seattle-Tacoma International Airport weekly departures...............6 Table 3.2 Seattle-Tacoma International Airport weekly available seats.........7 Table 4.1 Catchment area destination patterns...........................................9 Table 4.2 Catchment area top 25 destinations..........................................10 Table 4.3 Nonstop service at Seattle-Tacoma International Airport.............11 Table 4.4 Time comparison (minutes to the aircraft gate)...........................12 Table 4.5 Regional distribution of travel....................................................14 Table 4.6 Regional distribution of international passengers........................15 Table 5.1 Airlines used............................................................................16 Table 6.1 U.S. DOT average fares...........................................................17 Table 7.1 True market estimates – top 10 markets....................................20 Table 7.2 Retention rate sensitivity...........................................................21 Exhibits Exhibit 3.1 Catchment area by zip code......................................................5 Exhibit 3.2 Origin and destination passenger trend......................................8 Exhibit 4.1 Itinerary type............................................................................9 Exhibit 4.2 FAA geographic regions.........................................................13 Exhibit 4.3 Regional distribution of travel ..................................................14 Exhibit 4.4 Regional distribution of international travel...............................15 Exhibit 6.1 Ten-year average fare trend....................................................18 Exhibit 6.2 Ten-year average fare trend (1994 dollars) ..............................18 Exhibit 7.1 Seattle-Tacoma International Airport catchment area................19 Section 1 Introduction Section 1. Introduction Snohomi sh County Government i s i nterested in understandi ng the market for commercial ai r servi ce at Pai ne Fiel d. A key el ement of thi s effort i s the generati on and development of credible information that can be used to evaluate current air service to the area and identify opportunities for improvement. The Passenger Core Market Analysis provides objective information on air travel in the region that cannot be accessed from other sources. Thi s i s especiall y important for Snohomi sh County si nce the Ai rport has no consi stent commercial air se rvi ce hi sto ry. As the domesti c ai rline industry continues to undergo considerable change, it is prudent for county leaders to understand the local air travel market. Airlines make service decisions based on two primary factors: return on investment and company strategy. In large markets li ke the Seattle area, ai rport and ai r space capaci ty/congestion are al so key considerations. Passenger Core Market Anal ysis information provides objecti ve background data for evaluating and analyzi ng service gaps and market vi abili ty. Ai rline staff members often review Passenger Core Market Anal ysis data as one element of the overall assessment of market potential. Objectives The primary objective of the Passenger Core Market Anal ysi s is to develop informati on on the travel patterns of local ai rline passengers that reside in the geographi c area that could potenti all y be served by Snohomi sh County Ai rport/Paine Field. Included i n the i nformation to be devel oped are: • Estimated passenger traffic associated with the target catchment area • Passenger traffic and related destinations • Airlines used by local air travelers • Average ai rfares by originati ng/destination ai rport • An estimate of the size of the true market for airline passengers in the region A total of 136,634 airline bookings were tabulated and included in the Passenger Core Market Anal ysis. Airline booking informati on was coll ected for a one-year period from March 1, 2003 to February 29, 2004. The reader should keep in mind that the data used i s a sample of ai rline bookings NOT all booki ngs wi thi n the one-year period. Over 98.2 percent of sample bookings originated from Seattle-Tacoma International Airport. The remaining sample booking information from other competing airports in the region was excluded from the Passenger Core Market Analysis due to the limited use of these airports by air travelers from the Snohomish County Airport/Paine Field catchment area. Methodology Thi s analysi s combines Marketing Information Data Tape (MIDT ) booki ng information from the Global Di stribution Systems (GDS), which i s used by travel agencies, and U.S. Department of T ransportation (DOT ) airline data to provide a comprehensive overview of the air service market in this region. The information coll ected i ncl udes originating ai rports, destinati ons, and ai rli nes used. The data i s anal yzed to accompli sh the objectives of the Passenger Core Market Analysis. Page 1 Section 1 Introduction For the purposes of this study, MIDT includes bookings made by travel agencies in the defined Snohomish County Airport/Paine Field catchment area. It does not capture passenger bookings issued directly by airline websites (i.e., www.alaskaair.com, www.southwest.com, etc.), agency Internet sites (i.e., www.travelocity.com, www.expedia.com, www.priceline.com, etc.), or directly through airline reservation offices. Data from agency Internet sites was not used in this study since MIDT is sorted by zip code. Internet sites record all bookings as originating from the zip code in which the server resides. For example, all bookings for www.travelocity.com are recorded with a Southlake, TX zip code regardless of the air traveler’s location. Given this, retention/diversion information cannot be derived from Internet site bookings. Moreover, the data used in this analysis is a sample of travel agency airline bookings and does not include all bookings within the survey period. The near elimination of commissions paid by airlines to travel agencies has reduced the number of tickets written by travel agencies. Although this development has reduced the number of tickets written by travel agencies, the sample size is sufficiently large that it represents a statistically valid portrayal of the local travel market. The data sample of local