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Passengers chasing seats Air service in New York State NYAMA Annual Conference September 20, 2012


InterVISTAS Consulting Group: The Transportation and Tourism Business Airline Business •

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

PPP, Commercial & Finance

Air Service Development •

Market Analysis

Leakage Analysis

Route Strategy

Transportation Infrastructure Privatization

Transportation Policy

Border Facilitation

Economics & Regulatory

Financial Modeling/Due Diligence

Expert Witness Logistics & Supply Chains

Aviation & Transportation Security

Aviation Safety

Commercial Development

Development Economics

Airport & Transportation Planning

Retail

Strategic Planning

Food & Beverage

Tourism Development

Parking •

Environment

Market Analysis

Benchmarking/ Consumer Research

Business Case Development

Incentive Evaluation

Negotiation

Planning, Borders, & Security

Economics & Strategic Planning

Airport Cities

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The September 2009 Question: Have we reached bottom yet?  There are signs of recovery from the recession  Uneven  Slow

recovery by region and by sector

recovery of jobs

• Air travel sector also senses an impending recovery, but… Changed by 2012

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

Changed by 2012

The deployment of airline capacity in 2010 will largely define when, where and how traffic rebounds 2


Economic conditions typically drive air 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

2009: Largest US airline capacity reduction since 1942

Source: ATA

6


Most recently, US airlines have carefully calibrated capacity with demand

3.8 2.6

2.3

Key factors: • Sluggish US recovery • Fuel price risk • Corporate consolidation • Seasonal flexibility

2.4

1.6 1.0

0.9

0.2

0.0

(1.1) (1.8)

1Q10

2Q10

3Q10

4Q10

Source: Official Airline Guide, 2010-2012

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

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Airline business models have adapted to market and competitive conditions  Legacy network  Legacy point-to-point  New model LCC  New model ULCC  Regional feeder  Regional at risk  Tour operator  ACMI lift providers

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Airline common denominators in the current U.S. market environment Concentration and/or partnership Specialized business models Fleet and route rationalization Revenue management Risk aversion Profit (not market share)

9


NYC’s “Big 3”: Domestic seat capacity is recovering, but unevenly

Source: Official Airline Guide 10


NYC’s “Big 3”: International seat capacity is rising at JFK

Source: Official Airline Guide 11


Upstate’s “Big 4”: Less capacity, even as regional economies grow

Source: Official Airline Guide 12


Regional airports are steady, but some are growing (i.e. Plattsburgh and Elmira)

Source: Official Airline Guide 13


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 situation  Educate airlines about how your airport relates to their market opportunities  Match market opportunities to carriers through compelling business cases for their business models  Maximize regional stakeholder involvement and support that is led and coordinated by the airport  Have a strategy that is balanced: realistic, aggressive and proactive 15


Thank You! www.InterVISTAS.com barney.parrella@intervistas.com

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Passengers Chasing Seats - Air Service in New York State  

Presentation by Barney Parrella at the NYAMA Annual Conference, September 20, 2012

Passengers Chasing Seats - Air Service in New York State  

Presentation by Barney Parrella at the NYAMA Annual Conference, September 20, 2012

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