As we near the four year anniversary of the onset of the pandemic, the U.S. commercial airline industry continues to approach full normalization with limited remaining postpandemic impacts. With notable exceptions, drivers of airline industry health have returned to more traditional dynamics.
Summer 2023 was highlighted by demand for international travel in the first full summer without a Covid testing requirement to enter the U.S. by air. International travel likely limited growth in the U.S. domestic market, although domestic travel also remained generally strong. More recently, U.S. Thanksgiving holiday outbound travel volume exceeded 2019 levels per preliminary data from the TSA.
Forward-looking industry focus has now shifted to a softening of consumer demand, particularly in off-peak periods and/or for budget airlines. Airline financial performance in the third quarter reflected these trends. Leisure traveler demand patterns continue to revert towards pre-pandemic norms following the “revenge travel” bubbles from the last two years.
U.S. domestic business traffic continues to vary by geography and industry. Large corporate traffic has plateaued at 75-85% of prepandemic levels with specific industries (big tech) and geographies (major coastal metros) of weakness. This figure has been relatively consistent across 2023, suggesting a potential longer-term change in traveler behavior. Business traffic across small and midsize firms appears to have generally normalized.
Airline capacity growth is moderating - driven in part by the demand issues discussed above - just as supply chain and labor issues have begun to ease. U.S. domestic airline scheduled seat capacity for the first half (1H24) is up just 5% from pre-pandemic 2019 with departures down 9%.
U.S. domestic airline fares increased significantly through 2022 as passenger demand outpaced gains in airline seat capacity. Preliminary data indicates that this trend has plateaued this year, with year-over-year fare declines in the U.S. domestic market in recent months.
Throughout this section we access a range of sources including actual data supplied by the U.S. Department of Transportation, estimated data from travel industry provider Sabre, and other
DECEMBER 2023
QUARTERLY SUMMARY
sources including airline industry group Airlines for America (A4A). We examine the industry through the lens of the following market segments:
Domestic leisure traffic cooled this summer as passenger focus shifted towards the first restriction-free international travel summer since 2019. Demand appears to have cooled even further through the off-peak fall season, particularly among budget-conscious travelers.
Domestic business travel continues to lag within major corporate accounts and specific sectors while thriving across smaller companies. Recent optimism that major corporate accounts would rebound this fall has waned as recovery trends have remained stagnant.
International leisure travel thrived through this summer, as three years of pent-up demand among U.S. travelers spurred strong traffic. We expect this trend to normalize through the coming months.
International business recovery has begun to accelerate, including some growth in the U.S. – Asia market. Limited seat capacity will slow recovery in some geographies.
DECEMBER 2023
QUARTERLY SUMMARY
2. PASSENGER TRAFFIC OVERVIEW
U.S. domestic passenger traffic has finally achieved pre-pandemic levels as shown in Figure 1.
FIGURE 1
MONTHLY U.S. DOMESTIC O&D PASSENGER TRENDS vs. SAME MONTH 2019
Note: “O&D passengers” refers to individual passenger journeys regardless of itinerary/connections
U.S. - international traffic surpassed pre-pandemic levels for the first time this summer (Figure 2) as the removal of U.S. testing re-entry requirements drove a surge of pent-up vacation demand.
FIGURE 2
MONTHLY U.S.-INTERNATIONAL PASSENGER TRENDS vs. SAME MONTH 2019
DECEMBER 2023
QUARTERLY SUMMARY
Recovery trends continue to vary significantly across regions (Figure 3).
FIGURE 3
U.S. MAY-JULY 2023 INTERNATIONAL AIRLINE PASSENGERS
vs. MAY-JULY 2019 BY COUNTRY
Several slower recovering markets – including Canada and Japan –showed moderating trends this summer. Although recovery to Asia is accelerating, China is likely to remain a longer-term outlier for reasons including limited airline seat capacity, geopolitical concerns, and potential economic softness.
3. U.S. FARE AND PRICING ENVIRONMENT
Airline ticket pricing is of equal importance to an airline’s revenue equation as load factor and passenger volumes. In the period just before Covid – and again by Spring 2022 - airlines filled a relatively consistent 84-85% of their seats with paying passengers using existing revenue management and distribution technologies. In periods of weaker demand, airlines can lower fares - and/or manage low fare availability through revenue management techniques – to maximize the amount of paying passengers on each airplane. Ancillary revenue from items such as bag fees also contribute.
The onset of Covid disrupted these basic rules of airline economics as no amount of price reduction could stimulate passengers onto airplanes. As a result, load factors and passenger volume plummeted. However, domestic load factors have now caught pre-Covid norms with fare levels again the leading indicator of airline revenue quality.
By Summer 2022, demand for U.S. air travel had outstripped airlines’ ability to generate additional seat capacity resulting in higher domestic airfares (Figure 4). However, the domestic fare environment began to cool this summer and likely softened further through the fall.
DECEMBER 2023
QUARTERLY SUMMARY
FIGURE 4
AVERAGE AIRFARE FOR A U.S. DOMESTIC 1,000 MILE TRIP COMPARED TO SAME QUARTER 2019
The data in Figure 5 below reflects the average U.S. domestic fare for a 1,000 mile trip over each rolling four quarter period. The final two bars below reflect the first twelve-month periods without significant pandemic impact on passenger demand.
FIGURE 5
ROLLING FOUR QUARTER AVERAGE U.S. DOMESTIC AIRFARE FOR A 1,000 MILE TRIP
4. FUEL/LABOR/OTHER AIRLINE OPERATING EXPENSES
The price of oil was in the $75-$80 barrel range as of the drafting of this document – down slightly in recent months but still significantly higher than 2019. Softening passenger demand may limit airlines’ ability to cover this additional expense through the near-term.
DECEMBER 2023
QUARTERLY SUMMARY
Airlines have also not been immune to supply chain and inflationary impacts. Staffing shortages – including but not limited to pilots – limited carriers’ ability to increase seat capacity through 2022. These dynamics have eased throughout 2023 with the pilot shortage in particular abating significantly (although longer-term pressures remain).
A large driver in the easing of pilot staffing constraints has been a series of recent airline labor contracts involving large pay raises. American, Delta, and United have each agreed to contracts driving $7-$10 billion (respectively) in additional expense. These contracts will put additional pressure on airline earnings for years to come.
5. U.S. SCHEDULE AND CAPACITY TRENDS
2023 represents the initial year in which domestic seat capacity exceeded 2019 levels (Figure 6). Ultra low-cost airline seat capacity increased from 6% to 11% of the domestic total between 2016-2023.
6
U.S. DOMESTIC SEAT CAPACITY (2016-2023) BY AIRLINE TYPE
FIGURE
DECEMBER 2023
QUARTERLY SUMMARY
U.S. domestic airline seats have shown increases from 2019 levels since the beginning of 2023 (Figure 7).
FIGURE 7
QUARTERLY CHANGE IN U.S. DOMESTIC SEAT CAPACITY vs. SAME QUARTER IN 2019
6. AIRLINE FINANCIAL PERFORMANCE
The years preceding the pandemic were the most profitable for the U.S. domestic airline industry since the industry’s 1978 deregulation. The cash accumulated during this period - along with direct U.S. government payroll support - aided U.S. airlines in weathering the pandemic period.
Airlines generally returned to profitability in early 2023 before the softening of passenger demand and surge of international-focused travel negatively impacted budget and domestically focused airlines. Data below (Figure 8) reflects performance for the third quarter of 2023, which includes two peak summer months (July and August). Some of the losses shown below are particularly significant for this heavily peak season period.
DECEMBER 2023
QUARTERLY SUMMARY
FIGURE 8
3Q23 FINANCIAL PERFORMANCE* FOR SELECTED U.S. AIRLINES AS REPORTED BY EACH CARRIER
* Adjustments made to figures above for purely accounting related/non-operating items
DECEMBER 2023
QUARTERLY SUMMARY
ST. LOUIS DISCUSSION AND REVIEW
Despite the lingering nationwide shortfall in corporate traffic recovery, our STL air service profile remains strong. This profile continues to be led by a growing Southwest Airlines franchise.
1. DOMESTIC PASSENGER TRAFFIC
STL’s domestic traffic recovery has slightly trailed broader national trends as leisure/holiday focused traffic drove much of the pandemic recovery. While moderations in STL’s seat capacity drove this modest shortfall (Figure 9), we project that this is normalizing through this fall/ winter season.
FIGURE 9
CHANGE FROM SAME QUARTER 2019: O&D DOMESTIC TRAFFIC (STL vs. ALL US DOMESTIC)
Pandemic related travel dynamics also impacted STL’s mix of locally sourced traffic. STL has historically been a stronger origination market as uniquely strong outbound leisure traffic offsets our more balanced two-way business traffic.
For the year 2019, US DOT data indicates that 56% of STL domestic traffic was driven from local residents as opposed to inbound visitors. During the pandemic this figure rose to as high as 60% annually – and 65% in the 1Q 2021 – as outbound leisure traffic surged while two-way business travel was slower to rebound. These figures have nearly normalized (currently at 57%) with the slight remaining gap highlighting the portion of St. Louis-based business traffic yet to recover.
DECEMBER 2023
QUARTERLY SUMMARY
STL’s domestic load factor for the January-August 2023 period was 80%, slightly below the industry domestic total of 84%. The four largest STL carriers - Southwest, American, Delta, and United - each generated STL load factors between 80-82%.
2. PASSENGER TRAFFIC – INTERNATIONAL
The recovery of STL-based international traffic accelerated significantly in late 2022 and now exceeds pre-pandemic levels. While an initial surge in short-haul international leisure markets has moderated (Figure 10), transatlantic traffic was a key part of Summer 2023 gains.
10
QUARTERLY SUMMARY
3. STL DOMESTIC FARE TRENDS
2Q23 STL airfares tracked with increases in the overall domestic market, albeit at more moderate levels (Figure 11). A slower postpandemic return of STL’s robust business traffic segment drove the smaller increase compared to national figures.
STL 2Q23 AVERAGE DOMESTIC FARES FOR KEY AIRLINES: ALL FARES ADJUSTED TO 1,000 MILE TRIP*
* Fares adjusted using standard industry methodology and do not include ancillary revenue/fees
5. STL SCHEDULE RECOVERY AND OVERVIEW
STL will offer an average of 194 scheduled daily departures during the first half of 2024, a 1% increase from the first half of 2023. Airlines’ utilization of larger aircraft has improved our offering of outbound seats, which are up 6% for this same period. Outbound seats for the period are up 1% from the pre-pandemic first half of 2019, including a 7% increase from Southwest.
Market leader Southwest Airlines will offer 10% more daily seats vs. the first half of 2023 (Figure 12).
FIGURE 11
DECEMBER 2023
QUARTERLY SUMMARY
FIGURE 12
1Q/2Q 2024 vs. 1Q/2Q 2023 AVERAGE DAILY SEATS; STL BY AIRLINE
In addition to increases in seat capacity, STL market service gaps are being remedied. As of March 2024, Southwest will resume daily nonstop service to San Francisco/SFO and West Palm Beach/PBI.
One area of challenge remains the sustainability of STL’s Spirit Airlines franchise, with first half of 2024 seat capacity down nearly 73% from the first half of 2022.
MARKETING & BUSINESS DEVELOPMENT
DECEMBER 2023
MARKETING
& BUSINESS DEVELOPMENT
STRATEGIC AIR SERVICE MARKETING PLAN
TACTICAL AIR SERVICE MARKETING PLAN
DECEMBER 2023
AIR SERVICE MARKETING PLANS STRATEGIC AIR SERVICE MARKETING PLAN
STL’s marketing strategy should:
• Create an awareness of “STL Opportunities” with domestic network planners who may have overlooked STL’s market potential—for both incumbent and potential new entrant airlines
STL should have a comprehensive marketing strategy focused on selling “STL Opportunities.”
STL should fund the marketing strategy.
• Create an awareness of “STL Opportunities” with international network planners who may not be familiar with non-traditional U.S. Gateways (STL)—for both incumbent and potential new entrant airlines
• Create an overall awareness of the “STL Opportunities” for various industry groups (tour operators, vacation packagers, etc.)
• Differentiate “STL Opportunities” from other routes, markets, destinations, etc.
• Establish and use an air service brand for STL that is simple, yet has a memorable message(s)
• Establish and use an independent B2B website dedicated to STL’s Air Service Development
• Develop and maintain air service collateral materials dedicated to STL’s Air Service Development
STL should promote “STL Opportunities” at various events and with various media.
Continued funding enables STL to:
• Continue marketing strategy development and implementation
• Revise air service collateral materials and the B2B website with up-to-date information and marketing messages to maximize effectiveness
• Participate in various local and regional events, functions, and activities
STL should fund relationship building.
Promoting “STL Opportunities” involves:
• Attending Global Routes and Air Cargo conferences
• Attending Regional Routes and Networking conferences
• Attending other industry events
• Exhibiting at various events
• Sponsoring various events or activities
• Advertising in industry trade publications or at industry events
• Travel/Entertainment (meeting/conference) related expenses
Summary
It is crucial that we get the FLYSTL message out as often and to as many airline decision makers as possible. We need to develop both customized and generic “STL Opportunities” promotional materials that focus on increasing capacity in a given market or inaugurating service in new markets. To date, we have developed relationships with many of the airlines. It is important that we continue to cultivate these relationships and take our message to the next level.
DECEMBER 2023
AIR SERVICE MARKETING PLANS TACTICAL AIR SERVICE MARKETING PLAN
• Continue to meet with the airlines at every opportunity. It is crucial that we get the FLYSTL message out as often and to as many airline decision makers as possible. Other airports are gaining exposure and so should STL. STL’s presence at trade meetings that involve airlines (JumpStart, Network, International/Regional Routes conferences, etc.) or one-on-one meetings at corporate headquarters is of paramount importance. We need to be prepared to engage the airlines at locations and times of their choosing.
• Prepare customized marketing materials for each airline that is currently serving or likely to serve STL. These materials must demonstrate the benefit of increasing or starting service at STL. These materials should be periodically updated and distributed to those airlines. Note: It is important that we focus on information that is useful to the airlines.
• Prepare generic marketing materials for airlines that are less likely to start service at STL. These materials need to encourage the airlines to investigate service opportunities at STL. These materials should be periodically updated and distributed to those airlines. Again, it is important that we focus on information that is useful to the airlines.
• Shift as many resources ($) as possible from other marketing activities to Air Service Development. Without the funds generated by increased air service, there will never be funds for any other marketing activities.
• Develop a marketing newsletter informing the decision makers at the airlines of service related news at STL.
• Expand Air Service Development opportunities by developing and maintaining a dedicated airport Business to Business (B2B) website. Information contained on the website should be directed toward, and of interest to, those entities that STL wants to do business with (especially airlines).
• Consider shared-promotion activities such as the celebration of new entrants or new routes.
• Solicit the support and assistance of all regional business organizations (Explore St. Louis, Greater St. Louis, Inc., RBC, etc.).
• Coordinate a regional campaign to develop air service. There should be a uniform message from the Airport, the City of St. Louis, and the St. Louis region as a whole.
• Meet with and brief members of any group or committee organized for the purpose of developing air service at STL.
Summary
It is crucial that we communicate with airline decision makers as often as possible. Such communication can be in the form of informal outreach (schedule/equipment updates, etc.), formal/regular outreach (periodic reports, newsletters, etc.), St. Louis Centered Meetings (Air Service Partnership Events, St. Louis Direct Connect Events, etc.), and One-on-One Meetings (corporate office meetings, networking events, etc.). STL should expand its air service development effort to involve key regional stakeholders. There ultimately should be a uniform air service development message from the Airport, the City of St. Louis, and the St. Louis region as a whole.
MARKETING & BUSINESS DEVELOPMENT
DECEMBER 2023
MARKETING
& BUSINESS DEVELOPMENT
ABBREVIATED MEETING
NOTES
MARKETING & BUSINESS DEVELOPMENT
DECEMBER 2023 & BUSINESS DEVELOPMENT MARKETING
1. INTRODUCTION
MARKETING ASSISTANCE PROGRAMS
2. AIR CARRIER/CHARTER OPERATOR MARKETING SUPPORT PROGRAM
3. AIR SERVICE PARTNERSHIP PROGRAMS
A ESSENTIAL AIR SERVICE COMMUNITIES- PUBLIC AWARENESS CAMPAIGN
B. ESSENTIAL AIR SERVICE COMMUNITIES- PUSH TO 10K CAMPAIGN
C. AWARENESS CAMPAIGN FOR COMMUNITIES INSIDE STL’S CATCHMENT AREA
D. AWARENESS CAMPAIGN FOR COMMUNITIES OUTSIDE STL’S CATCHMENT AREA
4. CONTINUED EFFORTS TO INTRODUCE NEW REGIONAL ANALYTICS
5. CONTINUED EFFORTS TO ATTRACT NON-NETWORK, NON-CONVENTIONAL AIR CARRIER SERVICES
6. CONTINUED EFFORTS TO INCREASE CONNECTING ON-LINE AND OFF-LINE TRAFFIC
7. CONTINUED EFFORTS TO IMPROVE COMMUNICATIONS WITH AIR CARRIER DECISION MAKERS
8. CONTINUED EFFORTS TO INCREASE AIR FREIGHT
9. AIR SERVICE EVENTS AND FORUMS
DECEMBER 2023
MARKETING ASSISTANCE PROGRAMS
1. INTRODUCTION
STL’s air service development effort is supported by nine marketing programs/initiatives aimed at growing passenger/air freight demand and increasing air carrier interest in serving the STL Market.
By applying these marketing programs/initiatives over the past several years, STL has been successful in getting the FLYSTL message out to targeted audiences.
DECEMBER 2023
MARKETING ASSISTANCE PROGRAMS
2. AIR CARRIER/CHARTER OPERATOR MARKETING SUPPORT PROGRAM
Airlines rarely advertise outside of their hub markets. As a result, residents of many communities are often unaware of the level of air service that exists at their local airport. To help solve this problem in St. Louis, STL has implemented an Air Carrier/Charter Operator Marketing Support Program, which awards marketing funds to airlines/charter operators (e.g. Apple Vacations or Funjet Vacations offering regularly scheduled service on at least a seasonal basis) that initiate or add service at STL.
These funds, which must be spent solely on the promotion of each air carrier/charter operator’s STL service, can be spent on a wide variety of media or promotion, including but not limited to, the following:
STATUS UPDATE:
The Air Carrier/ Charter Operator Marketing Support Program was suspended for FY2021. Beginning July 2021 (FY2022), the Air Carrier/ Charter Operator Marketing Support Program is again available to eligible air carriers and charter operators.
• Television, radio or print advertising
• Billboard signage
• Sports team or event sponsorships
• Internet advertising (banner ads, social media campaigns, etc.)
• Other promotional activities
Allocations are generally awarded based on the following service additions:
• New entrants: $30,000.00 - $50,000.00
• Domestic service added: $10,000.00 - $30,000.00 per market
• International service added: $50,000.00 - $200,000.00 per market
• Other service awards: $10,000.00 - $30,000.00
FY* RECIPIENTS TO DATE
*July 2023 - June 2024
DECEMBER 2023
MARKETING ASSISTANCE PROGRAMS
3A. AIR SERVICE PARTNERSHIP PROGRAMS
ESSENTIAL AIR SERVICE COMMUNITIES
PUBLIC AWARENESS CAMPAIGN
Cape Air and Southern Airways Express currently provide government subsidized Essential Air Service (EAS) to STL from a number of outlying communities in Missouri and neighboring states. Many residents of these communities, however, are unaware of the exceptional commercial air service to St. Louis and points beyond. This Air Service Partnership Program strives to increase public awareness of these flights in the communities in which EAS to STL is offered. Each airport with EAS service to STL is annually awarded
IN ADDITION:
STL hosts an annual Air Service Partnership Program event for EAS airports and airlines. The overarching goal of this event is to communicate STL’s interest in and support of those communities that choose STL for their EAS Service.
STATUS UPDATE:
Beginning July 2023, the Air Service Partnership Program will again be available to EAS airports and airlines.
$5,000.00 - $10,000.00 in marketing funds for the promotion of its commercial air service to STL and beyond.
These funds, which must be spent solely on the promotion of each airport’s STL service, can be spent on a wide variety of media or promotion, including but not limited to, the following:
• Television, radio or print advertising
• Billboard signage
• Sports team or event sponsorships
• Internet advertising (banner ads, social media campaigns, etc.)
• Other promotional activities
FY* RECIPIENTS TO DATE
Burlington, IA
Jonesboro, AR
Jackson, TN
Quincy, IL
Total FY* Allocations to Date:
*July 2023 June 2024
$5,000
$5,000
$5,000
$5,000
$20,000
DECEMBER 2023
MARKETING ASSISTANCE PROGRAMS
3B. AIR SERVICE PARTNERSHIP PROGRAMS
ESSENTIAL AIR SERVICE COMMUNITIES
PUSH TO 10K CAMPAIGN
STATUS UPDATE:
This campaign is on hold for FY2023 due to budget constraints.
In an effort to further increase public awareness and boost passenger boardings in each Essential Air Service (EAS) market, STL provides an additional grant of up to $5,000.00 per EAS Airport. This Air Service Partnership Program is about challenging each market to realize a goal of 10,000 passenger enplanements over the course of a calendar year. The 10,000 passenger enplanement figure is an important threshold for small airports to reach Federal Aviation Administration Grant Allocations. STL would like to see each Air Service Partnership Program airport reach that mark.
These funds, which must be spent solely on the promotion of each airport’s STL service, can be spent on a wide variety of media or promotion, including but not limited to, the following:
• Television, radio or print advertising
• Billboard signage
• Sports team or event sponsorships
• Internet advertising (banner ads, social media campaigns, etc.)
• Other promotional activities
FY* RECIPIENTS TO DATE
Burlington, IA $0.00 Jonesboro, AR $0.00
Jackson, TN
Quincy, IL
Total FY* Allocations to Date:
*July 2023-June 2024
$0.00
$0.00
$0.00
DECEMBER 2023
MARKETING ASSISTANCE PROGRAMS
STATUS UPDATE:
Ongoing partnership efforts with targeted communities.
3C. AIR SERVICE PARTNERSHIP PROGRAMS
AWARENESS CAMPAIGN FOR COMMUNITIES INSIDE STL’S CATCHMENT AREA
This initiative is meant to increase awareness of STL’s air service in communities inside STL’s Catchment Area (see page 37), especially those communities near the periphery of STL’s catchment area (approximately 150-mile radius from STL) where passengers are being leaked to other airports. This leakage reduces demand for air service at STL and thereby reduces capacity (service) by the air carriers. Stimulating demand within STL’s catchment area should result in greater capacity (service) by the air carriers at STL.
STL’s efforts include direct marketing, such as business after hours events, receptions, community outreach, targeted meetings, “Pack Your Bags”* promotion, “Take Off and Travel”** promotion, sponsorships and advertising.
Another such effort is STL’s Originating Community Ground Transportation Partnership Program, which is a program that engages ground transportation providers in a way that is meant to influence the traveling public to use STL over competing airports or modes of transportation.
STATUS UPDATE:
Ongoing partnership efforts with communities outside STL’s catchment area that are new, unserved, underserved, at risk of losing service or strategically important to STL.
3D. AIR SERVICE PARTNERSHIP PROGRAMS
AWARENESS CAMPAIGN FOR COMMUNITIES OUTSIDE STL’S CATCHMENT AREA
This initiative is meant to develop joint marketing programs to promote proposed or existing air service in markets that are generally outside of STL’s catchment area and are new, unserved, underserved or that are at risk of losing service. STL’s efforts include community outreach, “Pack Your Bags”* promotion and targeted advertising.
DECEMBER 2023
MARKETING ASSISTANCE PROGRAMS
STL CATCHMENT AREA
*PACK YOUR BAGS PROMOTION
The PACK YOUR BAGS PROMOTION strives to promote travel to and from STL via nonstop service. The overarching goal of the promotion is to increase public awareness of air service options that exist via nonstop service between STL and those participating markets.
**TAKE OFF AND TRAVEL PROMOTION
The TAKE OFF AND TRAVEL PROMOTION strives to promote travel from STL to Mexican, Central American and Caribbean destinations. The promotion’s overall goal is to highlight the ease and affordability of travel, via the all-inclusive Vacation Packagers (Apple Vacations and Funjet Vacations), to leisure
DECEMBER 2023
MARKETING ASSISTANCE PROGRAMS
STATUS UPDATE:
STL is routinely updating its communication to air carriers.
4. CONTINUED EFFORTS TO INTRODUCE NEW REGIONAL ANALYTICS
STL has revised its presentation to air carriers to better portray the regional business environment and overall economy (non-aeronautical analytics). To date, Greater St. Louis, Inc. and the Missouri Partnership have provided key regional analytics which have been incorporated into air carrier presentations. STL is further revising its presentations to air carriers as new/additional regional analytics are available.
STATUS UPDATE:
This effort is ongoing.
5. CONTINUED EFFORTS TO ATTRACT NON-NETWORK, NON-CONVENTIONAL AIR CARRIER SERVICES
STL continues to investigate possible changes to allow easier entry by more specialty air carriers. To date, STL has revised certain agreements. Those revisions are meant to ease low-cost, ultra-low-cost and specialty air carriers’ entry into STL market.
The next Airline Use and Lease Agreement is currently being negotiated and STL is considering additional changes that will ease entry into the market.
DECEMBER 2023
STATUS UPDATE: STL continues to find on-line/off-line connecting traffic partners.
MARKETING ASSISTANCE PROGRAMS
6: CONTINUED EFFORTS TO INCREASE CONNECTING ON-LINE AND OFF-LINE TRAFFIC
This initiative involves efforts to increase connecting traffic for both on-line (i.e. same airline) and off-line (i.e. different airline, transportation provider) connections.
7: CONTINUED EFFORTS TO IMPROVE COMMUNICATIONS WITH AIR CARRIER DECISION MAKERS
This initiative is meant to establish more regular and improved communications with the air carrier decision makers (regular outreach, dedicated web presence, newsletter, social media, etc.) and expand current air carrier/travel industry meetings. The goal of the initiative is to distribute the FLYSTL messaging through more channels.
STATUS UPDATE: The STL website is currently undergoing an update.
DECEMBER 2023
MARKETING ASSISTANCE PROGRAMS
8. CONTINUED EFFORTS TO INCREASE AIR FREIGHT
STATUS UPDATE: This effort is ongoing.
STATUS UPDATE: STL is in the process of planning future (2023/2024) Air Service Events and Forums.
This initiative is meant to increase air freight at STL by engaging industry decision makers and supporting their air freight needs. STL’s goal is to expand both traditional and non-traditional air freight sectors.
9. AIR SERVICE EVENTS AND FORUMS
Each year STL produces a number of events and forums for the purpose of promoting various aspects of Air Service.
• Leisure Travel Event: Event promoting leisure travel opportunities out of STL. Each year STL will bring together local St. Louis Travel Agents with suppliers of leisure travel.
• Airline Sales Annual Event (Direct Connect): Annual networking event bringing together the local corporate travel community and the airlines serving STL.
• Air Service Partnership Program Annual Event: The goal of this event is to communicate STL’s interest in and support of those communities that choose STL as their EAS service destination. The most recent Air Service Partnership Program Annual Event was held November 7th-8th, 2023.
• TAKE OFF AND TRAVEL and PACK YOUR BAGS PROGRAMS Annual Wrap-Up Event: The goal of this event is to review and revise, as needed, the TAKE OFF AND TRAVEL and PACK YOUR BAGS PROGRAMS. This event is attended by the current year participants of the programs.
• Air Carrier Forums: The Air Carrier Forum is meant to remind, or in some cases introduce, air carrier network planners (route decision makers) to the many great qualities of the St. Louis region, as well as emphasize specific air carrier route expansion opportunities from STL. The Forum also provides the St. Louis business community the opportunity to discuss specific air service needs with the network planners of different air carriers.
MARKETING & BUSINESS DEVELOPMENT
DECEMBER 2023
MARKETING
INCENTIVE PROGRAM
INCENTIVES APPLIED TO DATE
INCENTIVE PROGRAM MEASURES & BUSINESS DEVELOPMENT
DECEMBER 2023
INCENTIVE PROGRAM
INCENTIVE PROGRAM MEASURES
MARKETS THAT HAVE RECEIVED INCENTIVE AND CONTINUE TO BE SERVED vs. ALL MARKETS HAVING RECEIVED INCENTIVE
GOAL: Increase passenger airline activity at the airport.
MEASURE: The percentage of markets that continue to be served by those airlines or some follow-on airline(s) that received incentive.
MARKETS CONTINUING TO BE SERVED ALL MARKETS
AIRLINES THAT HAVE RECEIVED INCENTIVE AND CONTINUE TO OPERATE vs. ALL AIRLINES HAVING RECEIVED INCENTIVE
GOAL: Attract new/additional passenger air service to the St. Louis market.
MEASURE: The percentage of airlines that received incentive for entering the STL market and continue to serve the STL market as that airline or some follow-on airline(s).
AIRLINES THAT HAVE RECIEVED INCENTIVE AND CONTINUE TO OPERATE VS. ALL AIRLINES HAVING RECIEVED INCENTIVE
AIRLINES CONTINUING TO OPERATE ALL AIRLINES
MARKETING & BUSINESS DEVELOPMENT
DECEMBER 2023
MARKETING
& BUSINESS DEVELOPMENT
STL MARKETING STRATEGIES
SHORT TERM STRATEGIES
JULY 1 – DECEMBER 31, 2023
LONG TERM STRATEGIES
JANUARY 1 – JUNE 30, 2024
ESTIMATED CONTRACT EXPENDITURES FY 2024
AIRLINE ENGAGEMENTS FY 2024
DECEMBER 2023
Meetings
STL MARKETING STRATEGIES
SHORT
TERM STRATEGIES
JULY 1 – DECEMBER 31, 2023
Continue to meet with air carrier and travel industry interests at every opportunity.
Air Service World Congress 2023
All air carrier meetings will include an airline-specific presentation to fit that airline’s network, alliance or business model.
Tasks
1. Review/Update all air service collateral materials.
2. Review/Update STL’s Doing Business section of the FLYSTL website (On-hold, new website being developed).
3. Convene one Air Carrier Forum. See Marketing Assistance, Section 9, Air Service Events and Forums (On hold).
4. Continue the Air Service Partnership Programs - Awareness Campaigns for Communities Inside STL’s Catchment Area. See Marketing Assistance Programs, Section 3C.
5. Continue the Air Service Partnership Programs - Awareness Campaigns for Communities Outside STL’s Catchment Area. See Marketing Assistance Programs, Section 3D.
6. Work with vacation packagers (Apple Vacations and Funjet Vacations) to expand their presence and activity for 2024.
7. Look at new ways to gain exposure for the FLYSTL message in STL’s catchment area and EAS markets (Catchment Area Graphic to the right).
DECEMBER 2023
Meetings
STL MARKETING STRATEGIES LONG TERM STRATEGIES JANUARY 1
Continue to meet with air carrier and travel industry interests at every opportunity.
All air carrier meetings will include an airline-specific presentation to fit that airline’s network, alliance or business model.
Tasks
1. Convene one Air Carrier Forum. See Marketing Assistance Programs Section 9, Air Service Events and Forums (On hold).
2. Continue efforts toward Attracting Non-Network, Non-Conventional (i.e. low-cost, ultra-low-cost and specialty) Air Carrier Services to STL. See Marketing Assistance Programs, Section 5.
3. Develop a strategy for Increasing Connecting On-Line and Off-Line Traffic and implement that strategy. See Marketing Assistance, Section 6.
4. Continue to work toward improving Communications with Air Carrier Decision Makers through regular outreach, dedicated web messaging, newsletter, social media, expanded air carrier/travel industry meetings, etc. and implement that strategy. See Marketing Assistance Programs, Section 7.
5. Continue to work with vacation packagers (Apple Vacations and Funjet Vacations) to expand their presence and activity.
6. Continue to look at new ways to gain exposure for the FLYSTL message in more markets in STL’s catchment area.
7. Participate in more public and/or industry events, especially those related to passenger air service.
March 19-21, 2024 Routes Americas 2024 Bogota, Columbia
May 20-22, 2024
Jumpstart Air Service Development Conference D.C
June 5-7, 2024 Connect New World Curacao
with North, South, and Central American passenger airlines route planners
with North, South, and Central American passenger airlines
with North, South, and Central American passenger airlines route planner
June 5-7, 2024 WPE 2024 Des Moines, IA Annual Livestock Trade Show
MARKETING & BUSINESS DEVELOPMENT
DECEMBER 2023
MARKETING
& BUSINESS DEVELOPMENT
STL MARKET UPDATE
STL STATISTICAL INFORMATION
• ROUTE MAP
• NONSTOP SERVICE SUMMARY
• TOP 50 AIRPORTS
• LIST OF UNDERSERVED MARKETS
• MARKET PRIORITIES
• MARKETS AT RISK
DECEMBER 2023
STL MARKET UPDATE NONSTOP SERVICE SUMMARY
1Q / 2Q 2024 (JANUARY-JUNE)
Note: Airline/Airport codes are on pages 75/76.
OF UNDERSERVED MARKETS** (BY SEAT DEFICIENCY): FIRST HALF OF 2024
STL MARKET UPDATE
DECEMBER 2023
DECEMBER 2023
STL MARKET UPDATE MARKETS AT RISK
1ST QUARTER 2023 / 2ND QUARTER 2023
IDENTIFYING STL MARKETS AT RISK
The Covid-19 pandemic temporarily made evaluation of individual airline route performance of lesser importance, although that dynamic has now normalized. There remains some underperformance in a subset of business-focused markets. Airline operational and staffing constraints have also moderated.
As a result, we can once again evaluate unit revenue performance for recent reporting periods based on traditional quantitative measures keeping in mind the caveats above. Metrics used in the following section include:
• ASMS = available seat miles
• RPMS = revenue passenger miles
• Load factor = ASMS/RPMS, also reflecting a measurement of the % of seats filled in a given market
• Revenue per seat = the amount of revenue earned by an airline for each flown seat; for passengers traveling on more than one segment, fare is prorated across segments
• Revenue per seat at 1,000 miles = revenue per seat adjusted for a segment’s trip length based on a standard industry methodology. This metric replaces the graphs utilized in previous reports and consolidates segment revenue performance into an individual metric. We adjust each route to reflect performance at a stage length of 1,000 miles to provide relevant comparisons.
As with previous reports, we are evaluating routes based only on revenue quality as internal airline cost projections are proprietary. In addition, differences in operating costs across aircraft types, airports, labor contracts, and other items make full profitability projections exceedingly difficult.
Additional items to consider:
• Load factor represents only a portion of the revenue performance (and profitability) equation and does not in isolation reflect a route’s success.
• Aircraft type also plays a role in unit revenue performance, as smaller aircraft often drive greater unit revenue performance but also higher unit costs (which is not reflected in this report).
• Ancillary revenue (bags, ticket fees, related) is not included in these DOT reported revenue figures.
• Some segments with limited operations for the period are excluded (but noted).
The reporting period for the data below (January-June) reflects a mix of peak and off-periods. We would expect revenue dynamics for the most part to replicate annual/full-year performance.
DECEMBER 2023
STL MARKET UPDATE MARKETS AT RISK
1ST QUARTER 2023/2ND QUARTER 2023
NETWORK CARRIERS
Network airlines traditionally generate higher unit revenues but also higher unit costs.
Some markets with limited operations not included.
SOUTHWEST AND ALASKA
Alaska Airlines generally has slightly higher unit costs than Southwest although they are both lower than the three network carriers.
Some markets with limited operations not included.
DECEMBER 2023
ULTRA LOW-COST AIRLINES
Ancillary revenue – which generates a large percentage of ultra-low cost airline revenue – is not included in these totals.
Some markets with limited operations not included.
STL DOMESTIC PASSENGER LOAD FACTORS BY DESTINATION (1Q23/2Q23)
DECEMBER 2023
STL MARKET UPDATE MARKETS AT RISK
1ST QUARTER 2023 / 2ND QUARTER 2023
SOUTHWEST AIRLINES PASSENGERS PER DAY ON SELECTED STL SEGMENTS (1Q23/2Q23)
SUMMARY
Airline route performance evaluation has normalized post-pandemic, although certain business-focused routes serving slower recovering industries or geographies continue to underperform. Travel among large U.S. corporate customers in general remains stagnant at approximately 75-85% of pre-pandemic levels.
Airline operational and staffing constraints have largely normalized, at least in the short term. However, airlines now face higher expenses and a potential downturn in passenger demand as we head through the offpeak/winter season.
Sources for quantitative information in this document include the following: U.S. Department of Transportation data and airline schedule data via Airline Data, Inc., Sabre Market Intelligence tool, various airline earnings reports, St. Louis Lambert International Airport, internal analysis, Airlines4America and other miscellaneous sources.
MARKETING & BUSINESS DEVELOPMENT
DECEMBER 2023
MARKETING
& BUSINESS DEVELOPMENT
STL MARKET UPDATE
STL STATISTICAL BAR GRAPHS
STL AVERAGE DAILY DEPARTURES BY YEAR (SCHEDULED)
STL AVERAGE DAILY DEPARTURES BY MONTH (SCHEDULED): 2023 VS. 2022
STL AGGREGATE DEPARTURES BY MONTH: 2023 VS. 2022
STL AVERAGE OUTBOUND DAILY SEATS BY YEAR
STL AVERAGE OUTBOUND DAILY SEATS BY MONTH: 2023 VS. 2022
STL AGGREGATE OUTBOUND SEATS BY MONTH: 2023 VS. 2022
STL ONBOARD PASSENGERS PER YEAR (LOCAL AND CONNECTING - OUTBOUND)
STL ONBOARD PASSENGERS BY MONTH 2023 VS. 2022 (LOCAL AND CONNECTING - OUTBOUND)
STL AGGREGATE ONBOARD PASSENGERS 2023 VS. 2022 (LOCAL AND CONNECTING - OUTBOUND)
STL LOCAL/O&D (ROUND-TRIP) PASSENGERS BY YEAR
STL LOCAL/O&D (ROUND-TRIP) PASSENGERS BY MONTH 2023 VS. 2022
STL LOCAL/O&D (ROUND-TRIP) AGGREGATE PASSENGERS 2023 VS. 2022
STL AVERAGE DAILY LOCAL/O&D DOMESTIC (ROUND-TRIP) PASSENGERS BY YEAR
STL AVERAGE DAILY LOCAL/O&D DOMESTIC (ROUND-TRIP) PASSENGERS BY MONTH 2023 VS. 2022
STL DOMESTIC LOCAL/O&D (ROUND-TRIP) AGGREGATE PASSENGERS 2023 VS. 2022
STL AVERAGE DAILY LOCAL/O&D INTERNATIONAL (ROUND-TRIP) PASSENGERS BY YEAR
STL AVERAGE DAILY LOCAL/O&D INTERNATIONAL (ROUND-TRIP) PASSENGERS BY MONTH
STL LOCAL/O&D INTERNATIONAL (ROUND-TRIP) AGGREGATE PASSENGERS: 2023 VS. 2022
STL TOTAL CARGO (LBS) BY YEAR
STL TOTAL CARGO (LBS) BY MONTH
STL AGGREGATE TOTAL CARGO (LBS) BY MONTH 2023 VS. 2022
DECEMBER 2023
STL STATISTICAL BAR GRAPHS: DEPARTURES
DECEMBER 2023
STL STATISTICAL BAR GRAPHS: CAPACITY
STL AVERAGE OUTBOUND DAILY SEATS BY YEAR (SCHEDULED)
STL AVERAGE OUTBOUND DAILY SEATS BY MONTH (SCHEDULED): 2023 vs. 2022
STL AGGREGATE OUTBOUND SEATS BY MONTH (SCHEDULED): 2023 vs. 2022
DECEMBER 2023
STL STATISTICAL BAR GRAPHS: ONBOARD PASSENGERS
PASSENGERS
DECEMBER 2023
STL STATISTICAL BAR GRAPHS: LOCAL PASSENGERS
STL LOCAL/O&D (round-trip) PASSENGERS BY YEAR
STL LOCAL/O&D (round-trip) PASSENGERS BY MONTH 2023 vs. 2022
STL LOCAL/O&D (round-trip) AGGREGATE PASSENGERS 2023 vs. 2022
DECEMBER 2023
STL STATISTICAL BAR GRAPHS: DOMESTIC PASSENGERS
DECEMBER 2023
STATISTICAL BAR GRAPHS:
PASSENGERS
DECEMBER 2023
STL STATISTICAL BAR GRAPHS: CARGO
STL AGGREGATE TOTAL CARGO (lbs) BY MONTH (2023 vs. 2022)
