passengers chasing seats - air service in new york state
DESCRIPTION
Presentation by Barney Parrella at the NYAMA Annual Conference, September 20, 2012TRANSCRIPT
Passengers chasing seatsAir service in New York State
NYAMA Annual ConferenceSeptember 20, 2012
1
Airline Business
Air Service Development
PPP, Commercial & Finance
Economics & Strategic Planning
Planning, Borders, &
Security
• Airline Strategy and, Business Planning
• Aircraft Finance
• MRO Transformation
• Production Planning and Integrated Operations
• Route and Network Analysis and Scheduling
• Revenue Management
• Ancillary Revenue Development
• Market Analysis
• Leakage Analysis
• Route Strategy
• Business Case Development
• Incentive Evaluation
• Negotiation
• Transportation InfrastructurePrivatization
• Financial Modeling/Due Diligence
• CommercialDevelopment
• Retail
• Food & Beverage
• Parking
• Airport Cities
• Transportation Policy
• Economics & Regulatory
• Expert Witness• Logistics &
Supply Chains
• Development Economics
• Strategic Planning
• Tourism Development
• Environment
• Market Analysis
• Benchmarking/ Consumer Research
• Border Facilitation
• Aviation &TransportationSecurity
• Aviation Safety
• Airport &Transportation Planning
InterVISTAS Consulting Group:The Transportation and Tourism Business
The September 2009 Question:Have we reached bottom yet?
There are signs of recovery from the recessionUneven recovery by region and by sectorSlow recovery of jobs
• Air travel sector also senses an impending recovery, but…
• Consumer confidence still low• Carriers continue capacity squeeze in face of soft demand• Low yields due to price competition • Concern that jet fuel prices will spike again
The deployment of airline capacity in 2010 will largely define when, where and how traffic rebounds
Changed by 2012Changed by 2012
Changed by 2012Changed by 2012
2
Economic conditions typically driveair 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
Source: ATA
2009: Largest US airline capacity reduction since 1942
6
Most recently, US airlines have carefully calibrated capacity with demand
0.2
1.6
2.6
3.8
2.3 2.4
1.0
(1.8)
(1.1)
0.0
0.9
1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12
Source: Official Airline Guide, 2010-2012
Key factors:• Sluggish US recovery• Fuel price risk• Corporate consolidation• Seasonal flexibility
7
Airline business models have adaptedto market and competitive conditions
Legacy networkLegacy point-to-pointNew model LCCNew model ULCCRegional feederRegional at riskTour operatorACMI lift providers
8
Airline common denominators in the current U.S. market environment
Concentration and/or partnershipSpecialized business modelsFleet and route rationalizationRevenue managementRisk aversionProfit (not market share)
9
NYC’s “Big 3”: Domestic seat capacityis recovering, but unevenly
10Source: Official Airline Guide
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NYC’s “Big 3”: International seatcapacity is rising at JFK
Source: Official Airline Guide
Upstate’s “Big 4”: Less capacity,even as regional economies grow
12Source: Official Airline Guide
Regional airports are steady, but someare growing (i.e. Plattsburgh and Elmira)
13Source: Official Airline Guide
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 situationEducate airlines about how your airport relates to their
market opportunitiesMatch market opportunities to carriers through
compelling business cases for their business modelsMaximize regional stakeholder involvement and
support that is led and coordinated by the airportHave a strategy that is balanced: realistic, aggressive
and proactive 15
