Cincinnati/Northern Kentucky International Airport 2035 Master Plan Update Table of Contents 3.1. Summary ......................................................................................................................... 1 1 3.1.1. Forecasting Methodology ......................................................................................... 1 3.1.1.1. Passenger Scenarios ............................................................................................ 1 3.1.1.2. Cargo Scenarios ................................................................................................... 2 3.1.1.3. General Aviation and Military Activity .................................................................... 3 3.1.2. Comparison to FAA TAF .......................................................................................... 3 3.2. Background – CVG and Cincinnati Region ...................................................................... 5 5 3.2.1. Catchment Area ....................................................................................................... 5 3.2.1.1. Cincinnati - Economic Statistics ...........................................................................10 3.2.1.2. Historical Enplaned Passenger Trends ................................................................11 3.2.1.3. Passenger Operations and Hub Trends ...............................................................12 3.2.1.4. Fleet Mix ..............................................................................................................14 3.2.1.5. International Operations and Passengers ............................................................14 3.2.1.6. Scheduled Service ...............................................................................................15 3.2.1.7. Top Markets .........................................................................................................17 3.2.1.8. Relationship Between Fares and O&D Traffic ......................................................19 3.2.1.9. O&D Traffic Ratio – CVG vs. Peer Airports ..........................................................20 3.2.1.10. Domestic Itinerary Fares ..................................................................................21 3.2.1.11. Background (CVG) - Summary .........................................................................22 3.2.2. Industry Outlook and Trends ...................................................................................22 3.2.2.1. U.S. Capacity and Demand Trends ......................................................................22 3.2.2.2. Service Trends at Top U.S. Airports .....................................................................24 3.2.2.3. U.S. Fleet Mix Trends ..........................................................................................25 3.2.2.4. FAA U.S. Short-Term Outlook ..............................................................................27 3.2.2.5. Industry Outlook – Summary ................................................................................28 3.3. Passenger Forecast – Discussion ..................................................................................29 29 3.3.1. Low Reliability of Traditional Trendline Methodology ...............................................29 3.3.2. Alternate Forecasting Methods ................................................................................30 3.3.2.1. Benchmarking Activity to Peer Airports (O&D traffic levels) ..................................31 3.3.2.2. Impact of LCC Entry at Large Airports .................................................................32 3.3.2.3. Discussion – Summary ........................................................................................37 3.3.3. Passenger Forecast – Approach and Results ..........................................................38 3.3.3.1. Dominant Carrier + LCC Scenario .......................................................................38 3.3.3.2. Multi-Carrier Scenario ..........................................................................................43 3.3.3.3. Forecast Development .........................................................................................43 3.3.3.4. Scenario Comparison ..........................................................................................47 3.3.4. Baseline Scenario ...................................................................................................48 3.3.4.1. Forecast Development .........................................................................................48 3.3.4.2. Comparison to Terminal Area Forecast................................................................50 3.3.5. Peak Period Activity ................................................................................................51 3.3.6. Military / General Aviation ........................................................................................60 3.3.7. Air Cargo .................................................................................................................60 3.3.7.1. CVG Air Cargo Overview .....................................................................................60 3-i Forecast of Aviation Activity June 2013 Cincinnati/Northern Kentucky International Airport 2035 Master Plan Update 3.3.7.2. Issues/Risk Factors/Demand Drivers ...................................................................63 3.3.7.3. Methodology ........................................................................................................63 3.4. Summary of Key Forecast Elements ..............................................................................74 3.5. Other Supporting Information .........................................................................................75 3.5.1. FAA 2011 Terminal Area Forecast for CVG .............................................................75 3.5.2. Cargo Industry Overview .........................................................................................76 3.5.2.1. Independent Cargo Industry Forecasts ................................................................78 3.5.2.2. Air Cargo Segments and Demand Drivers ...........................................................79 3.6. Sources ..........................................................................................................................81 List of Figures Figure 3 - 1: CVG Catchment Area Regional Population, 2010 .................................................. 7 Figure 3 - 2: Non-Stop Destinations Served by Airport in Region, Dec. 2011 ............................. 8 Figure 3 - 3: CVG Airport Catchment Area ................................................................................. 9 Figure 3 - 4: 2010 MSA Population Comparisons with Combined Cincinnati/Dayton .................. 9 Figure 3 - 5: Gross Regional Product, Cincinnati-Middletown MSA: 2001-10 ............................10 Figure 3 - 6: Fortune 500 Companies by U.S. City – 2011 ........................................................10 Figure 3 - 7: CVG 2010 Local Passenger Mix Profile by Month, 2010 .......................................12 Figure 3 - 8: CVG Annual Seats and Departures 2004 - 2010 ...................................................12 Figure 3 - 9: CVG Average Departures and Markets Served .....................................................13 Figure 3 - 10: 2010 CVG Fleet Mix ............................................................................................14 Figure 3 - 11: CVG International Passengers and Departures, 2004-10 ....................................15 Figure 3 - 12: CVG Local Fares and O&D Passengers – with National Average Fare ...............20 Figure 3 - 13: Total U.S. Domestic Departures: 2000-10 ...........................................................23 Figure 3 - 14: Monthly U.S. Schedule Domestic Departures: 2006-10 .......................................23 Figure 3 - 15: U.S. Domestic RPMSs, 1998-2010 .....................................................................24 Figure 3 - 16: 2010 vs. 2005 Departure Levels: Top 35 U.S. Airports ........................................25 Figure 3 - 17: Boeing North American Fleet Outlook, 2011 .......................................................26 Figure 3 - 18: U.S. Carriers System Load Factors: 2000-10 ......................................................27 Figure 3 - 19: 2010 FAA Enplanements Forecast, 2010 - 2031 .................................................28 Figure 3 - 20: Regression Analysis of CVG Originating Enplanements – 1991-2011 .................30 Figure 3 - 21: CVG Peer Group Airport Local O&D Trends, 1990-2035 ....................................32 Figure 3 - 22: CVG Fares vs. Peer Airport, 2002 - 2011 ............................................................33 3-ii Forecast of Aviation Activity June 2013 Cincinnati/Northern Kentucky International Airport 2035 Master Plan Update Figure 3 - 23: CVG Fares vs. Expanded Peer Airport Group, 2002 - 2011 ................................33 Figure 3 - 24: Elasticity Calculations: CVG Fares vs. O&D Passengers, 2002 - 2011 ...............34 Figure 3 - 25: Elasticity Impact of LCC Entry at PHL .................................................................35 Figure 3 - 26: Elasticity Impact of LCC Entry at PIT ..................................................................36 Figure 3 - 27: Multiple Airport LCC Entry/Elasticity Profile .........................................................37