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Building Columbus Air Service Community Strategy for Growth Agenda - - PowerPoint PPT Presentation
Building Columbus Air Service Community Strategy for Growth Agenda - - PowerPoint PPT Presentation
Building Columbus Air Service Community Strategy for Growth Agenda State of the Airline Industry Changes in Non-Hub Air Service Airline and Alliance Consolidation The Journey in Columbus Travel Trends and Data Passenger Leakage
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State of the Airline Industry
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Jet Fuel Prices Are at the “New Normal”
$0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $4.00 Spot Price of Jet Fuel – U.S. Gulf Coast
January 1, 1994 – November 1, 2014
Source: US Energy Information Administration
Current Price: $2.65
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Increasing Costs Have Spurred Consolidation
1978 2000 Today 1990
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Non-Hubs Have Lost More Seats Than Others
- 6.8%
- 28.5%
- 24.4%
- 43.0%
- 7.1%
- 25.4%
- 22.8%
- 31.1%
- 50.0%
- 45.0%
- 40.0%
- 35.0%
- 30.0%
- 25.0%
- 20.0%
- 15.0%
- 10.0%
- 5.0%
0.0%
Large Hub Medium Hub Small Hub Non-Hub
Change in Scheduled Flights and Available Seats by Airport Size
Calendar Year 2007 vs. Calendar Year 2013; US Airports
Source: Sixel Consulting Group Analysis of OAG Airline Schedules
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1.16 1.23 1.21 1.13 1.05 1.07 1.03 1.10 1.17 1.04 0.95 0.96 0.87 0.79 0.78 0.74 0.64 0.58 1.08 1.05 1.03 0.95 0.89 0.91 0.88 0.86 0.84 0.50 0.60 0.70 0.80 0.90 1.00 1.10 1.20 1.30 1.40 1.50 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Domestic Regional Jet Capacity Growth Index
AA DL/NW UA/CO US Industry
Small Regional Jet Capacity Index in North American Markets
Calendar Year 2004 – Calendar Year 2013 Page 7
Small Regional Jet Capacity is Down 16%
AA is Growing Small RJs DL is Reducing Small RJs
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The Journey in Columbus
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Source: Sixel Consulting Group; US Census Data
Columbus Offers a Large Metro Area
Columbus MSA: 491,852 The Columbus Airport catchment area: 610,924 Inside yellow line The greater Columbus area: 1.2 million Inside blue line
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Auburn Columbus
Source: Sixel Consulting Group Columbus True Market Study
Most Passengers Come From Immediate Columbus
Columbus MSA: 55% 910 Pax/Day Auburn CSA: 24% 397 Pax/Day
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Average One Way Fares at Regional Airports in the Southeast Region
Year Ended First Quarter 2014; No Adjustment for Ancillary Revenue
$344 $305 $256 $254 $248 $246 $246 $231 $229 $227 $215 $215 $214 $214 $207 $198 $197 $197 $196 $184
$150 $170 $190 $210 $230 $250 $270 $290 $310 $330
Columbus, GA Dothan, AL Valdosta, GA Albany, GA Montgomery, AL Mobile, AL Huntsville, AL Columbia, SC Brunswick, GA Tallahassee, FL Hilton Head, SC Gainesville, FL Valparaiso, FL Savannah, GA Augusta, GA Pensacola, FL Key West, FL Birmingham, AL Florence, SC Panama City, FL
Southeast Region Average: $164
Columbus Has the Highest Fare in the Region
Source: US DOT Table OD1A
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CSG: 9% ATL: 90% MGM: 0.3% BHM: 0.5%
Source: Sixel Consulting Group Columbus True Market Study
Columbus Retains Just 9% of the Region’s Pax
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1.7% 0.5% 0.8% 0.0% 1.6% 2.7% 0.8% 1.1% 0.0% 1.9% 2.1% 5.1% 15.4% 12.0% 0.8% 0.0% 0.0% 1.5%
0% 2% 4% 6% 8% 10% 12% 14% 16%
2013-01 2013-02 2013-03 2013-04 2013-05 2013-06 2013-07 2013-08 2013-09 2013-10 2013-11 2013-12 2014-01 2014-02 2014-03 2014-04 2014-05 2014-06
Flight Cancellation Percentage at Columbus
January 2013 – June 2014 Source: US DOT Table T100
Columbus Reliability Has Returned to “Good”
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Developing Additional Service
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Our Primary Service Targets
Columbus
Orlando/Florida Charlotte
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Our Secondary Service Targets
Columbus
Washington, DC Orlando/Florida Chicago Charlotte Dallas/Ft. Worth
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“[The] FAA allows promotional incentives to air carriers for new service to increase travel using the airport and/or promote competition…”
Source: Sixel Consulting Group Analysis of FAA Air Carrier Incentive Handbook
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Mitigating Airline Risk
Due to Drive Diversion, New Routes Forecast Poorly in Airline Models Models Have Trouble Adjusting for Passengers Who Use Atlanta New Routes Are a Major Investment A Columbus – Charlotte Service Costs $3,600 Each Way A Daily Flight is an $2.6 Million Annual Investment Large Markets with More Traffic Seem Less Risky Consumer Behavior is Difficult to Change Frequent Flier Loyalty Corporate Contracts Airport Preference Airports Are Limited in What They Can Offer FAA Competition Regulations Business Commitment to Use New Service is Paramount Commitment Can Be Leveraged to Save Money Opportunity to Reduce Drive Costs Employee Time Lost to Ground Transportation and Connections
Source: Sixel Consulting Group Analysis
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We Have a Head Start… But Need Partners
This Fall Columbus Airport Won a Small Community Air Service Grant Provides a Revenue Guarantee for New Service Targeted Charlotte on American (US Airways) The Airline Will Also Want Local “Skin in the Game” Grant Requires Local Matching Funding (Non-Airport) Can Be for Marketing or Revenue Guarantee Any Participant is Welcome
Incentive Guarantor Amount Year One Total Notes 2014 SCASD Grant DOT $750,000 $750,000 MRG Local Match Local Contributors $200,000 $200,000 Marketing $950,000 Columbus, Georgia Incentive Overview As of November 2014 Total Incentive Value, Year One American-Coded Service to Charlotte
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Building Columbus Air Service
Jack Penning
Executive Director, Strategy and Development jack@sixelconsulting.com sixelconsulting.com
Richard Howell, AAE
Airport Director rhowell@flycolumbusga.com flycolumbusga.com