regional airline, business aviation and ga industry reviews prepared for: regional airport planning...
TRANSCRIPT
REGIONAL AIRLINE, BUSINESS AVIATION AND GA INDUSTRY REVIEWS
Prepared for:Regional Airport Planning Committee
Oakland, CAJanuary 26, 2007
Prepared by:Gerald Bernstein
PartnerThe Velocity Group
Washington Orlando San Francisco Tokyo
22
A Couple Measures of Magnitude
Mainline Airline Widebody Aircraft 560 Mainline Narrowbody Aircraft 3380 Regional Jets 1120 Regional Turboprops and Piston 1760 Rotorcraft (Turbine and Piston) 7600 Business Jets and Turboprops 16,660 GA Piston 162,000
Air Carriers (Mainline and LCCs) 13.5 M Commuters and Air Taxis 12.6 M General Aviation (Turbine and Piston) 34.1 M Military 2.9 M
Source: FAA Forecast, 2006
Operations at Airports with Control Towers
Fleets
33
General Aviation
Three Topics will be Addressed
Business Aviation
Regional Aviation
44
Regionals Have Grown from 10% to 22% of Domestic Enplanements in 15 Years
0
100
200
300
400
500
600
700
EN
PL
AN
EM
EN
TS
(M
ILL
)
1990 1995 2000 2005
DOMESTIC REGIONAL AND MAINLINE EMPLANEMENT GROWTH (MILLIONS)
Regional
Mainline
Sources: RAA, ATA, FAA
55
Why All This Success?
Lower Cost Ability to match aircraft with traffic
(new routes, turboprop upgrades, mainline downsize (frequency), off-peak service)
Competitive Tool (raiding competitors territory)
66
Airlines use these Aircraft as a Competitive Tool (DL Connection Routes, Jan 05)
77
Local Perspective on Regional Service
American Eagle (#1 Nationwide, American) Skywest (#4 Nationwide, United, Delta) Mesa (#5 Nationwide, America West/US Air) Horizon (#11 Nationwide, Alaska)
Oakland (5 Routes) San Francisco (30 Routes) San Jose (10 Routes)
Regional Airlines Serving the Bay Area
Airports Served
88
Traditional Regional Aircraft have been 35-, 50- and 70-Seat Jets (and Turboprops)
99
We Expect the New Embraer Aircraft to be a “Game Changer”
70- to 105-seats 6’5” headroom, bins capable of fitting wheelies Watch Air Canada, JetBlue and USAir
1010
General Aviation
Regional Aviation
Business Aviation
1111
Business Aircraft Fleets Have Been Growing Steadily Since the 1960s
GROWTH OF TURBINE POWERED BUSINESS AIRCRAFT FLEET (USA)APPROXIMATELY 12,000 OPERATORS
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
1990 1995 2000 2005
AIR
CR
AF
T
TURBOPROPS
JETS
1212
We are in the Midst of an Historic Boom in Sales (Jets)
WORLD BUSINESS JET DELIVERIES
0
100
200
300
400
500
600
700
800
900
1000
1965 1970 1975 1980 1985 1990 1995 2000 2005
AN
NU
AL
DE
LIV
ER
IES
(U
NIT
S)
JETLINERS
LARGE
MEDIUM
SMALL
1313
A New Class of “Very Light Jets” is Expected to Expand Production
HondaJetEmbraer Phenom 100
Eclipse 500 Cessna Mustang
1414
A Number of Favorable Influences Has Supported Business Aviation Growth
Interest and Ability to Purchase
- Strong Corporate Profits the past few years
- ESPECIALLY in the oil industry which is a major buyer
Government Policies (Taxes and Access)
- No major tax changes (this is changing…)
- Can also include fees and charges
Competitive Alternatives
- New Aircraft introductions with improved economics and customer appeal
- Lousy airline service
- New Ownership models and options, including:
-- Fractional Ownership
-- “Card” programs (eg, 25 hours use)
-- Air Taxis ?????
1515
Over 5000 Owners Participate in Fractional Programs
FRACTIONAL PROGRAM SHARES AND SHAREHOLDERS(WORLDWIDE)
0
1000
2000
3000
4000
5000
6000
7000
1985 1990 1995 2000
NU
MB
ER
Shareholders
Shares
1616
Some Local Business Jet Operators
Bank of America Bechtel Charles Schwab Chevron-Texaco eBay First Republic HP Oracle (Ellison) PG&E QUALCOMM Sun Williams-Sonoma World Savings
Asset Management Co Marmalade Skies Matador Management
Investments Medical Air Transport Stage III Technologies XO Jet
TAG Aviation Kaiser Air San Jose Jet Center
1717
Regional Aviation
Business Aviation
General Aviation
1818
GA Piston Aircraft Have Many Uses
GA PISTON AIRCRAFT HOURS BY USE, 2004
119,350
169,251
316,226
450,497
770,479
860,378
1,036,556
2,337,904
3,609,847
8,471,765
Sight Seeing
Other/Work
Corporate
Other
Aerial App.
Aerial Obs.& Other
Part 135 Taxi/Tours/Med
Business
Instruction
Personal
HOURS
Hours (2004)
1919
Sales of these Aircraft Have Grown Recently-- But Nowhere Near Historic Levels
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
YEAR
AIR
CR
AFT
Twin-Engine
Single Engine
2020
The FAA Forecasts the GA Piston Fleet to Remain More-or-Less Stable
ACTIVE SINGLE-ENGINE PISTON AIRCRAFT(THOUSANDS)
0.0
50.0
100.0
150.0
200.0
1980 1985 1990 1995 2000 2005 2010 2015
YEAR
NU
MB
ER
AIR
CR
AF
T (
000
)
FORECASTHISTORICAL
2121
The Decline in Pilots is the Major Challenge for the Industry
US ACTIVE PILOT CERTIFICATES HELD
STUDENT
PRIVATE
COMMERCIAL
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
Source: FAA; excludes Transport and Helicopter pilots
2222
At Least 60,000 New Students are Needed Annually to Maintain the Pilot Pool
NEW STUDENT PILOT CERTIFICATES
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005
YEAR
AN
NU
AL
CE
RT
IFIC
AT
ES
IS
SU
ED
Source: FAA; 1960 - 1964 estimated
2323
Closing Thoughts
All segments of the aviation industry contribute to the productive movement of persons and goods, for pleasure or for profit
Each segment is characterized by its own driving forces Each segment meets the needs of a particular user group As demand grows, the growth in (and funding for) system capacity
expansion becomes increasingly politicized-- between aviation and other users, as well as between the various aviation segments themselves
2424
The Velocity GroupThe Velocity Group236 W. Portal Ave., #359236 W. Portal Ave., #359San Francisco, CA 94127San Francisco, CA 94127
(415) 242-9296(415) 242-9296www.velocity-group.comwww.velocity-group.com