air travel market report

8/3/2019 Air Travel Market Report

1/33

The Global Airline IndustryChallenges & Opportunities

For US Airports

Keep On Doing What Might Have Worked In The Past And Thats Exactly Where Itll Leave You

16th Annual Boyd Group

International Aviation Forecast Summitwww.AviationForecastSummit.com

All Contents 2011 Boyd Group International, Inc. All Rights Reserved
http://www.aviationforecastsummit.com/http://www.aviationforecastsummit.com/


2/33

Small Airports In The Economic Cross Hairs:

Airports with under 150,000 passengers are generally going to be

challenged by the new economics. But even some larger ones can be

threatened

Airlines want profitability, not flying to marginal markets, or markets

that dont fit their long term strategies

The number ofairline systems has shrunk materially in the last 20

years, and the fleets under their brand have changed, too

Tumble to it: Survival in the global economy means access from the

rest of the worldnot necessarily local air service to get toOrlando

Its not a matter of a route being profitableits a matter ofbeing

profitable and compatible with the airlines strategy
http://www.google.com/imgres?imgurl=http://www.saabhistory.com/blog/wp-content/uploads/2007/01/340_saab_small.jpg&imgrefurl=http://www.saabhistory.com/category/340/&usg=___Ndawgubq5cjN6OAnRetyzyySlI=&h=424&w=600&sz=45&hl=en&start=1&zoom=1&itbs=1&tbnid=EcXlO-hQMS8sgM:&tbnh=95&tbnw=135&prev=/images?q=Saab+340&hl=en&gbv=2&tbs=isch:1http://www.google.com/imgres?imgurl=http://www.saabhistory.com/blog/wp-content/uploads/2007/01/340_saab_small.jpg&imgrefurl=http://www.saabhistory.com/category/340/&usg=___Ndawgubq5cjN6OAnRetyzyySlI=&h=424&w=600&sz=45&hl=en&start=1&zoom=1&itbs=1&tbnid=EcXlO-hQMS8sgM:&tbnh=95&tbnw=135&prev=/images?q=Saab+340&hl=en&gbv=2&tbs=isch:1http://www.google.com/imgres?imgurl=http://www.saabhistory.com/blog/wp-content/uploads/2007/01/340_saab_small.jpg&imgrefurl=http://www.saabhistory.com/category/340/&usg=___Ndawgubq5cjN6OAnRetyzyySlI=&h=424&w=600&sz=45&hl=en&start=1&zoom=1&itbs=1&tbnid=EcXlO-hQMS8sgM:&tbnh=95&tbnw=135&prev=/images?q=Saab+340&hl=en&gbv=2&tbs=isch:1


3/33

Key Airline & Air Service Trends

Ignore The Hype Retaining Air Service Access - Not Necessarily Local Air Service - Will

Be The Future Challenge For Many Communities

Traffic Demand: Dont get misled by 2011 airline financials. Theywere strong because the industry adjusted to the economy, not becauseof a booming business environment.

Revenues: Driven by ancillary fees and tight control of capacity thiswill continue. Capacity monitoring reduces the potential for at-risk flyingto small & mid-size communities

Expansion: Airlines are capitalizing on their strengths, but are addingstrong, targeted markets that fit specific strategies

Low Fare Carriers: The revenue hurdles are going up by the dayand the WN/FL merger does not change that situation

The Future: Air Service Access May No Longer Be At The Local Airport.


4/33

Key Trends

Fleets:The industry is awash in excess 50-seat regional jets and that isnot an opportunity

Operator Conundrum: lose less flying em than parking them?

Conundrum: maintenance costs going up like a moon launch. At @40,000 hours they start to turn into financial pumpkins

Solution at least for now: high-yield feed markets. AAs foundmilitary points & EAS markets for Eaglebut theyre limited innumber, and not necessarily all-up profitable

Get pre-emptive: monitor RJ hub-feed performancedistance/local yield/flow contribution. Then make hard decisions


5/33

Key Trends

Air Access Is Via Network Carriers, At The Carriers Hubsites

Small communities need access to connecting hubs to aggregate enough traffic tosupport air service

Therefore, air access is by definition via a comprehensive network carrier system

These CNCs are less able to attain an adequate ROI at smaller airports

Independent airlines? Not a chance. No hub to aggregate traffic, then no chance ofsurvival.

Point: long term, local air service EAS or not that is not connective to a networkbrands hub connectivity, isnt air service. Its a waste of fuel.

The Only Alternative: Assuring global access at a regionalized airport that canaggregate sufficient traffic to support service that consumers particularly inboundconsumers will use. Can your airport fill this role?


6/33

There Are No Airline Alternatives

Travel Company Operators

Allegiant, Vision, & semi-charter operators are great to pursue

They generate lots of mostly net-new travel volumes

But they arent in business to fill a communitys air service needs

They focus on taking discretionary dollars from other sources

This type of operator is excellent for small airport revenue

streams, but dont do much to retain/recapture leakage to otherairports

Point: Keep on recruiting efforts. But dont get mislead into

believing this is access from the rest of the globe


7/33

Todays Cargo Cult Air Service Distractions

Like: Another leakage study to find out - yet again - that 70% of thetraffic is using another much larger airport 40 minutes away in some

cases, its not going to change

How bout: An internet survey to find where people want to fly

usually data that are a non sequitur the airline & hub access options

are clear before the first unscientific result is posted on the net.

E Pluribus Dumb: A Chamber of Commerce coalition to let an airline

know how much the community needs the airline, and how they need

lower fares

Goin Hollywood: A YouTube video, showing civic leaders imploring

the target airline to fly to the community these have all the impact

of a hostage video

Tumble to hard reality: its a matter of airlines no longer having

airplanes that can serve many smaller markets - period.

You sure thisll work better

than a travel bank?
http://www.google.com/imgres?imgurl=http://www.saabhistory.com/blog/wp-content/uploads/2007/01/340_saab_small.jpg&imgrefurl=http://www.saabhistory.com/category/340/&usg=___Ndawgubq5cjN6OAnRetyzyySlI=&h=424&w=600&sz=45&hl=en&start=1&zoom=1&itbs=1&tbnid=EcXlO-hQMS8sgM:&tbnh=95&tbnw=135&prev=/images?q=Saab+340&hl=en&gbv=2&tbs=isch:1http://www.google.com/imgres?imgurl=http://www.saabhistory.com/blog/wp-content/uploads/2007/01/340_saab_small.jpg&imgrefurl=http://www.saabhistory.com/category/340/&usg=___Ndawgubq5cjN6OAnRetyzyySlI=&h=424&w=600&sz=45&hl=en&start=1&zoom=1&itbs=1&tbnid=EcXlO-hQMS8sgM:&tbnh=95&tbnw=135&prev=/images?q=Saab+340&hl=en&gbv=2&tbs=isch:1http://www.google.com/imgres?imgurl=http://www.saabhistory.com/blog/wp-content/uploads/2007/01/340_saab_small.jpg&imgrefurl=http://www.saabhistory.com/category/340/&usg=___Ndawgubq5cjN6OAnRetyzyySlI=&h=424&w=600&sz=45&hl=en&start=1&zoom=1&itbs=1&tbnid=EcXlO-hQMS8sgM:&tbnh=95&tbnw=135&prev=/images?q=Saab+340&hl=en&gbv=2&tbs=isch:1http://www.google.com/imgres?imgurl=http://www.saabhistory.com/blog/wp-content/uploads/2007/01/340_saab_small.jpg&imgrefurl=http://www.saabhistory.com/category/340/&usg=___Ndawgubq5cjN6OAnRetyzyySlI=&h=424&w=600&sz=45&hl=en&start=1&zoom=1&itbs=1&tbnid=EcXlO-hQMS8sgM:&tbnh=95&tbnw=135&prev=/images?q=Saab+340&hl=en&gbv=2&tbs=isch:1http://www.google.com/imgres?imgurl=http://www.saabhistory.com/blog/wp-content/uploads/2007/01/340_saab_small.jpg&imgrefurl=http://www.saabhistory.com/category/340/&usg=___Ndawgubq5cjN6OAnRetyzyySlI=&h=424&w=600&sz=45&hl=en&start=1&zoom=1&itbs=1&tbnid=EcXlO-hQMS8sgM:&tbnh=95&tbnw=135&prev=/images?q=Saab+340&hl=en&gbv=2&tbs=isch:1


8/33

Lets Review Some of The Snake Oil

These flim-flam, go-nowhere schemes really happened:

A small, unserved airport, 40 minutes away from two low fare carriers, being told

they have local service potential for a hundred thousand passengers or more

A mid-size airport told that it can be a regional hub, fed by 9-seat airplanes, even

though no carriers bank flights there whatsoever

The Jet America fiasco: Communities persuaded to spend thousands marketing a non-

existent airline promising three flights a week to the East Coast

Communities advised that just getting more direct (read: nonstop) flights will

instantly spike demand by 40%....

Airports with barely 150,000 enplanements, being told they can lure a low costcarrier with a couple $K in incentives

These sorts of scams might make communities feel better, but they are just re-arranging

the deck chairs, not planning for the future
http://www.google.com/imgres?imgurl=http://www.saabhistory.com/blog/wp-content/uploads/2007/01/340_saab_small.jpg&imgrefurl=http://www.saabhistory.com/category/340/&usg=___Ndawgubq5cjN6OAnRetyzyySlI=&h=424&w=600&sz=45&hl=en&start=1&zoom=1&itbs=1&tbnid=EcXlO-hQMS8sgM:&tbnh=95&tbnw=135&prev=/images?q=Saab+340&hl=en&gbv=2&tbs=isch:1http://www.google.com/imgres?imgurl=http://www.saabhistory.com/blog/wp-content/uploads/2007/01/340_saab_small.jpg&imgrefurl=http://www.saabhistory.com/category/340/&usg=___Ndawgubq5cjN6OAnRetyzyySlI=&h=424&w=600&sz=45&hl=en&start=1&zoom=1&itbs=1&tbnid=EcXlO-hQMS8sgM:&tbnh=95&tbnw=135&prev=/images?q=Saab+340&hl=en&gbv=2&tbs=isch:1http://www.google.com/imgres?imgurl=http://www.saabhistory.com/blog/wp-content/uploads/2007/01/340_saab_small.jpg&imgrefurl=http://www.saabhistory.com/category/340/&usg=___Ndawgubq5cjN6OAnRetyzyySlI=&h=424&w=600&sz=45&hl=en&start=1&zoom=1&itbs=1&tbnid=EcXlO-hQMS8sgM:&tbnh=95&tbnw=135&prev=/images?q=Saab+340&hl=en&gbv=2&tbs=isch:1http://www.google.com/imgres?imgurl=http://www.saabhistory.com/blog/wp-content/uploads/2007/01/340_saab_small.jpg&imgrefurl=http://www.saabhistory.com/category/340/&usg=___Ndawgubq5cjN6OAnRetyzyySlI=&h=424&w=600&sz=45&hl=en&start=1&zoom=1&itbs=1&tbnid=EcXlO-hQMS8sgM:&tbnh=95&tbnw=135&prev=/images?q=Saab+340&hl=en&gbv=2&tbs=isch:1


9/33

Air Service: Its Subject To The Laws of Physics, Too

It went down strictly due to hard, physical realities

Conditions outside of its control changed factors that no

longer permitted it to float

No amount of consulting schemes or Black Magic could have

changed these realities

Hey, Captain Smith,

lets do a study and find the solution!!!

Scheduled air service is no differentthere are economic realities that cant

be reversed with another study or

survey the situation is clear, so

deal with it. Or go down with the ship.
http://www.google.com/imgres?imgurl=http://www.saabhistory.com/blog/wp-content/uploads/2007/01/340_saab_small.jpg&imgrefurl=http://www.saabhistory.com/category/340/&usg=___Ndawgubq5cjN6OAnRetyzyySlI=&h=424&w=600&sz=45&hl=en&start=1&zoom=1&itbs=1&tbnid=EcXlO-hQMS8sgM:&tbnh=95&tbnw=135&prev=/images?q=Saab+340&hl=en&gbv=2&tbs=isch:1


10/33

The Current State of Rural Air Service

The physical economic realities of air service have changed

The cost of flying airplanes across the sky has eclipsed the ability to

support it at many communities

The same economics are causing major airline systems to re-structure

Air service is no longer a matter of flights at the local airport.

It is whether whole regions have access to and from the rest of the world

Access & Regionalization are the trends of the future

For many communities, its time to get off that air service Titanic
http://www.google.com/imgres?imgurl=http://www.saabhistory.com/blog/wp-content/uploads/2007/01/340_saab_small.jpg&imgrefurl=http://www.saabhistory.com/category/340/&usg=___Ndawgubq5cjN6OAnRetyzyySlI=&h=424&w=600&sz=45&hl=en&start=1&zoom=1&itbs=1&tbnid=EcXlO-hQMS8sgM:&tbnh=95&tbnw=135&prev=/images?q=Saab+340&hl=en&gbv=2&tbs=isch:1http://www.google.com/imgres?imgurl=http://www.saabhistory.com/blog/wp-content/uploads/2007/01/340_saab_small.jpg&imgrefurl=http://www.saabhistory.com/category/340/&usg=___Ndawgubq5cjN6OAnRetyzyySlI=&h=424&w=600&sz=45&hl=en&start=1&zoom=1&itbs=1&tbnid=EcXlO-hQMS8sgM:&tbnh=95&tbnw=135&prev=/images?q=Saab+340&hl=en&gbv=2&tbs=isch:1


11/33

Its Not A Matter of Finding The Right Airline

Not a complete list.

Consumers couldbook & buy on at

least 21 large jetoperator brands,plus over twodozen independentregional airlinebrands.

Majors Regionals

AIR CAL AIR ILLINIOIS

ALASKA AIR MIDWEST

AMERICA WEST AIR NEW ORLEANS

AMERICAN AIR OREGON

CONTINENTAL AR WISCONSIN

DELTA ASA

EASTERN ASPEN

FRONTIER ATLANTIS

MIDWAY BAR HARBOR

NEW YORK AIR BRITT

NORTHWEST CASCADE

OZARK CHAPARRAL

PAN AM COMAIR

PIEDMONT IMPERIAL

PSA MALL

REPUBLIC MESA

SOUTHWEST METRO

TWA MIDSTATE

UNITED NEW AIR

US AIRWAYS PBA

WESTERN PLIGRIM

PRECISION

RIO

ROCKY MOUNTAIN

jetBLUE ROYALE

SPIRIT SKYWEST

Today, airports canturn to just nine

large jet operators.

And none of theregionals who werearound in 1983 arein the retail airlinebusiness.


12/33

The Fleet Bar Keeps Going Up

Entire Fleet Categories Have Disappeared

Not a complete list.


13/33

These Are Shrinking

They are already being retired

Gone already Lots of them retired more are in line for the desert sun

As we speak, in North America, there are close to 200 of these airplanes sitting

inactive, retired. They are economically obsolete.

In the 2Q of 2011, some airlines were paying, all-up, almost $4 per gallon for jet fuel.Spreading this over 50 seats (or less) gets real expensive, real quick.

And, again, theres that maintenance cost issue. Its a matter of time.
http://www.aerospace-technology.com/projects/erj145/


14/33

That Fleet/Revenue Bar Is Going Up

And no amount of denial will change it:

All 50-seaters are out of production and are getting older

Fuel costs on a per-seat basis are getting tougher

At 35K 40K hours, they get maintenance-costly

And no replacements the next cost-hurdle will be 100-seaters (like the E-190) - maybe

A Gift From The

People:

Most of the

development costs

for CRJ and ERJ

were borne by the

taxpayers of

Canada and Brazil

when the

manufacturerswere privatized.


15/33

The Future Is Clear In One Key Area

Long before 2020, most 50-seaters will become cost-prohibitive

Between now and 2020, most of these will be in the desert

Turboprops? Only 60-70 seaters still in production high ticket airplanes

Going out.

Avg Age Est Avg Hrs Age 2020Est Hrs

2020

CRJ-100/200 10.4 24,960 19.4 46,560

ERJ-135/145 8.8 21,120 17.8 42,720


16/33

Lets Summarize The Real Trends

Sheer costs are outrunning ability of markets to support air service locally,

so

The concentration of service IS gravitating to being regionalized

Airline resources = highest & best use only

Airline strategies: maximizing revenues v system costs shifting to

cooperative Alliance strategies

Key metric: revenue flows to/through the alliance is job #1

Going out.

Going up.


17/33

Its About Alliance Territory, Not Local Markets

Capturing and Defending Revenue Streams.

Based on each Alliances strategies, the goal is to capture revenues that buildand strengthen the system.

Globally, Growth By Adding Members, Not Expanding IncumbentsThe idea is to get regional strength through recruiting more regional players

Territorial

Alliances will stake out turf globally and ceded other turf

Concentration of Pooled Resources

Today independent fleets. By 2020 pooled fleets,

maintenance, purchasing, standards

Focus: Global Flows

Less ability to serve small & mid-size markets. Less interest, too.

Aggregation of traffic at fewer US airports is not just a trend it is

a certainty. Communities that ignore this put their economic

future at risk in a global economy

Don SkyTeam, the oneworld

family has given up SFO-

Australia to the Star family

should we make a move on

New ZealandLAX?...?


18/33

Yes, That Scraping Sound Is An Iceberg

Lets Recap Before We Head To The Lifeboats

The types of aircraft that are now serving many communities are

going away no question it is a mathematical certainty

There are no aircraft breakthroughs that will result in replacement for

regional jets. The 50-seat era is over. No manufacturer is taking therisk to develop a follow-on

There are no new airlines coming to the rescue and the LCC growth

era is over. Measured expansion, if any and not in rural areas

Deal with it: at least 100-125 non-EAS airports will lose

scheduled air service in the next 810 years

including many that today have over 150,000 O&D

Howling at the moon wont

change economic realities.

Neither will social media, best

practices, or another consumer

survey.

Communities must start making

contingency plans to assure air

service access and that may

mean regional cooperation.


19/33

Okay

Lets Move Into The FutureYear 2020


20/33

Fast Forward To Year 2020. Lets Look:

Passenger growth slow up 12% from today - to 517.6 million

Enplanements: up @ 10% to 799.1 million

Fleets: Smallest jet airliner: @ 100 seats

No 50-seat jets are left they are all run out

Traffic is concentrating into fewer airports

Local air service not always at the local airport

Regionalization of access

Service determined by potential for revenue capture, not passenger volume

Airports:USA forecasts indicate

that air passenger demand will

grow much slower than in the

past, and much more slowly than

FAA forecasts.

Remember? In 1992, the FAA

predicted enplanements to exceed

1 billion by 2001.

Now, their forecasts predict that

number to be reached after 2021


21/33

These Are Your 2020 Local Airline Brands


22/33

Year 2020 The Competitive Landscape

Fleets big iron only

The costs of design and development of a new small-capacity airliner simply

are too risky

Point: the enplanement bar will be up big time.

Competition

Three network carriers Star, oneworld, SkyTeam. A couple of independents

Southwest, JetBlue, etc.

Face it competition will be minimal the airline business will no longer beone with easy entry or viable return on investment


23/33

By 2020, The Traffic Requirements Will Be Much Higher

These are rough numbers, but indications of a roughfuture for local air service Figure what a basic

schedule will demand in terms of passengers

annually

Remember, therewill be no small jets

take it to the

bank

And it will be global

alliances that will be

driving strategy

Where an airline

schedules a $30

million airplane is

much different than

a $15 million unit.

Flights

Per Day

Equivalent

DaysWeeks Seats/Flt L/F Pax Rq

6 6 52 100 85.0% 155,938

Assumes three RT flights - six daily

segments - & 98% completion factor


24/33

The New Global Alliance Market Definition ModelWhere Might Your Airport Fit For Each Alliance?

Primary/Anchor Markets: Connecting Hub Portals: Star:

FRA/NRT/IAH, etc. In a very few cases, two alliances may have

the same Primary/Anchor market ORD & NRT are examples

Secondary Major Markets:Typically large metro airports,

including those where the Alliance needs presence at another

Alliances primary market. Example: Delta needs ATL-LHR as asecondary major market, even though oneworld is the

dominant alliance at Heathrow

Incremental: markets where strong feed is provided to the

Primary/Anchor airports, specific to each Alliance

Marginal:markets that provide Alliance presence, and/or feedthat is additive, but not critical to the Alliance strategy

Ceded Markets: Routings, and even regions where the Alliance

is not strong enough to maintain a brand presence.

Alliances have specificmarket systems that are

based on their individual

strategies & strengths.

One Alliances

Primary/Anchor marketcan be anothers secondary

or even incremental

market.

Point: Alliances are

splitting turf between

themselves and that turfincludes regions of the US

and Canada

It N t J t V S ll Ai t


25/33

Its Not Just Very Small Airports:

A Few Potential Examples Of Airports At Service-Risk

Airports With Over 50,000 Annual Passengers That AreLikely To Lose Scheduled Service By 2020

Abilene

Brownsville

Champaign

College Station

Fort Smith

Marquette

Redding

San Angelo

Springfield

Toledo

Tyler

Yakima

These do not include over 100 smaller airports whereretirement of small airliners will end service

Regionalization of Air Service The Traffic Is Still There


26/33

Regionalization of Air Service The Traffic Is Still There

Except There Is At Another Airport

Regionalization Is In ProgressPassengers Aren't Lost - Just Using Other Airports

Since 1990 passenger traffic has shifted to centralized Bloomington/Normal -The region has grown by 10% in air traffic, but Bloomington/Normal has now

grown by over 350%, capturing over 40% of the 5-airport region traffic - upfrom 9% in 1990 - 120,000 passengers O&D in 1990 to over 560,000 in 2010

Reason: Central location allows carriers to "regionalize" traffic capture atone airport.

Same dynamic in other regions of the country


27/33

Total traffic in the region is up 10%...

But regionalization has resulted in BMI

jumping 350%

Do All The Surveys Studies Best Practices And Other Voodoo You Want But:


28/33

Do All The Surveys, Studies, Best Practices And Other Voodoo You Want, But:

Its A Mathematical Certainty By 2020 Dozens of Local Airports Will Lose Service

Small Jet Airliner

Retirements 2011 2020

Mergers Have Reduced

Competitive Choices

Fuel Costs Raise Revenue

Requirement Bar Low Cost Carriers

Not Low Cost, Anymore

Global Alliance Strategies

Increasingly Focus onMaximizing Revenue Flows

Not Flying More Places.

Regional Airlines

which today are just

leasing aircraft to majors,

shrink dramatically

The New Air

Transportation

System:

100+ Fewer Cities With Local

Air Service

Capacity Aimed At Bottom

Line, Not More Passengers

Trend: Less Competition

Airline Capacity Additions

Very Slow &

Anticipatory To Economy

Code-Share & Frequent Flyer

Program Sharing Between

Alliance Partners Control

Consumer Brand Choice

Market Dynamics:


29/33

Yeahbutt New Airlines Will Pop Up

No, they wont

What will they fly? Retired RJs will be run-out anduneconomic at $3 - $4 a gallon for jet-A.

Economics make no sense for designers to try new-

generation small jets the R&D cost are prohibitive

There are no viable openings for new airlines trying

to fly to East Cupcake. Like inter-urban rail of the

early 20thcentury, its transportation mode that

cannot be supported any longer

Low Cost Carriers? Their cost is too high to take

advantage of the opportunities at Fort Smith or

Muskegon, or Champaign/Urbana

Passengers Are Not Being Lost -

There will be little opportunity

for new airlines to serve small

and mid-size airports the cost

of entry is high, the ROI is

abominable, and heres the

kicker

Those passengers lost at MKG

or CMI or PLN or PUB are still

flyingits just at other airports.

A new carrier to fill thesesupposed gaps in rural air

service would be taking on

incumbents, big time.


30/33

Factors Defining Future Regional Gateways

Strong Industrial Base. Particularly an international-focusedbusiness base: Montgomery Charleston WV etc.

Anchor Business W/ Big Travel Budget:Alliances will salivate at

getting the travel budget of major employer State Farm at

BMI

Surrounded By Smaller Markets Nearby: This is business,nothing personal. If strong traffic currently, your airport has as

good a chance as any as long as its current service is already

strong. Examples: Grand Rapids. Midland TX

Yields:This is one area where you want to have strong airline

fares. The goal is access from the rest of the globe. No center

ofel cheapo fares, thats the deal. Shreveport: your high fares

dont make airlines unhappy. And happy airlines bring service

to town

The main decisions on

where an airline alliance

will place lift comes from

the front office and you

cant always count on

logical decisions from thatarea

But there are factors that

make one airport more

attractive than others


31/33

Regional v Metro Peripheral Markets

Not all traffic will automatically funnel into regional gateways

Some markets are stand-alone: Traverse City. Saginaw. Flagstaff.

There are markets that have local traffic sufficient to maintain strong local service

particularly where local industry is strong and focused Binghamton. Lincoln. L.A. Basin.

Watch population & business trends Flint got strong access to migration out of Detroit.Toledo did not. It just moved north, not south nor west, toward Lansing

The move toward regionalization is driven by a combination of consumer & airline strategies,

so

Pro-Active regional planning will facilitate the process the region can control it or, it can be

haphazard, or not at all

The airlines of 2020 will be heavily-dependent on road hubbing markets with strong 4-

lane feeder systems will have the advantage


32/33

So, How To Plan

First: all of the financial factors have changed for the airline industry the air service recruitment techniques of2010 are now like tryingto put a vacuum tube into an iPad. Meeting and schmoozing with airline planners is nice, but now you have to have more than a travel

bank, a leakage study, or a slide deck of size to rival War & Peace. What revenue streams do you offer to the airline/alliance system?

Identify which category of market you fit into or can work to fit into for each alliance. Assume that individual airline brands will evolve

into an alliance identity US & UA will represent one alliance strategy

What type of regional role does your airport face? A true regional gateway? A stand-alone with strong industries to support future

service? A Metro-peripheral access point? Or, worst case, one that needs to plan for assuring access that may be at another airport in the

region. Civic hubris to avoid reality can be very expensive in the future.

What is your regional airport competition? Competitively awake? Asleep? Side-tracked with dumb air service schemes? Whats your most

likely path try to dominate the region, or recognize other airports have the advantage? What emerging industries are in the region, and

what value do the represent to the alliance carriers serving your airport?

If regional jets got replaced tomorrow with 100 seaters, where would you stand, revenue v cost? Load factors? Hub access. Facilities.

What is the distance to the current connecting hubs where you have service. The more distant, the more vulnerable.

Hard analysis: What are the airport alternatives in the region? What are the airline strategies at each? Are you a potential GRR? Or a

candidate for regionalization to other airports? Just a glance at where EAS airports are headed increasingly to single-engine, non-

connecting service is a harbinger for larger airports in the


33/33

More? Give Boyd Group International a callwell be up front about where we think we can help

crafting an aggressive air service plan that addresses these futurist issues. Well also be upfront regardingthe realities we see for your airport and your region.

Unlike other consultants, we turn down any assignments where the air service goals are inconsistent

with reality, and we let clients and potential clients know this right up front.

Air Service Success In The Global Economy Will Go To The CommunitiesThat Boldly Plan Within The Context of The Future Airline System.

For Straight Talk To Assist In Developing An Air Service Strategy That Fits The Future, Call

Us At (303) 674-2000. No Fluff. Well Give You The Facts As-Is & Where-Is

The 16th Annual International Aviation Forecast Summit

Albuquerque

air travel market report

Documents