2014 Quarter Four Traffic Analyses

Transcription

1 Market Intelligence Report 2014 Quarter Four Traffic Analyses Developed from Aviation Consulting, Research & Forecasting 78 Beaver Brook Canyon Road Evergreen, Colorado USA (303)

2 Traffic Analyses 2 Report Approach It is important to understand that raw BTS data is not reliable in regard to simply comparing fares and other cost metrics between airports. This is for a number of reasons. The first is that BTS fare data is based on ticket-spend, not cost of travel. The total spend is divided by total passengers (within the sample) and an average is generated. This includes round trip and one-way itineraries, and the mix of these two varies from airport to airport. Another factor that skews comparisons between airport fares - renders them useless, as a matter of fact - is the geographic location of the airport, and also the mix of travel demand. Markets such as Midland and Amarillo are heavily dominated by travel to relatively-close petroleum-related centers, so the average length of passenger travel at these airports is short, resulting in higher per-mile costs of air travel. Fairbanks, on the other hand, has very high average length of travel, which lowers the per-mile fares paid. Conversely, the total one-way fares are just the opposite, again due to the length of travel. Another factor is that the raw fares as reported are not always completely representative of any qualitative comparisons. As one example, the media may report that Atlantic City has the lowest, or among the lowest, fares in the nation, implying that consumers in that city enjoy low costs of air travel. Unfortunately, that is simply sloppy reporting - any media source has the ethical responsibility to understand the data on which they report, and also to assure that such data are consistent with the conclusions they report. In the case of Atlantic City (and also with markets such as Punta Gorda, Youngstown and others) the majority of the service is with a specific-market low fare airline - the airport s air service is only to a couple of markets, and is aimed at a very thin travel category. In the case of Atlantic City, the majority of the service is only to points in Florida. As for accessing the rest of the world, consumers must use other airports. Point: the real metric of cost is what the consumer is paying - all up, including federal fees and taxes - on a per-mile basis, computed on a nonstop (instead of connecting itinerary) basis. In this report, Boyd Group International compares the top 150 US airports (by local domestic O&D passenger traffic). These 150 airports comprise over 96% of the total US traffic and are fully representative of the national air service situation. In this document, three main metrics are developed: Domestic Passenger O&D - Some airports, such as JFK, have significant international O&D that can skew the comparisons with other airports. Average OW Fare: This includes federal fees and taxes. Unlike BTS data, this does not mix one way and round trip itineraries. Cost Per Mile - this is the average OW fare divided by the nonstop O&D miles. This eliminates the distortions caused by varying itinerary length over connecting hubs.

3 Traffic Analyses 3 Executive Summary Comparisons Year-Over-Year The fourth quarter of 2014 showed marginal changes with that of 2013 Key Data: Year Total Psgr AVG OW Fare Nonstop Yield ,057,500 $ ,957,533 $ Pct Change 3.2% 2.3% 1.6% It is important to understand that differences in when holidays fall, weather, and other factors can skew traffic data comparisons. However, the cost of air travel - computed in fares per mile - is indicated to have increased just 1.6%. Top 20 US Airports By Domestic O&D - Fourth Quarter 2014 PaxRank 4Q 2014 Avg OW Fare Rank Cost Per Mile Rank Airport Total Psgr Avg Fare Nonstop Yield Avg Pax Trip - Miles LAX 9,360,280 $ , LAS 7,400,411 $ , DEN 7,310,065 $ , ORD 7,298,935 $ , SFO 6,963,016 $ , MCO 6,924,902 $ , ATL 6,875,902 $ BOS 5,956,029 $ , LGA 5,899,674 $ PHX 5,873,384 $ , DFW 5,574,126 $ , SEA 5,544,221 $ , JFK 4,858,058 $ , EWR 4,657,603 $ , FLL 4,637,485 $ , DCA 4,334,028 $ SAN 4,184,932 $ , MSP 4,065,900 $ , PHL 3,895,648 $ , TPA 3,807,174 $ ,105 Of note is that while Atlanta and Chicago/O Hare are larger in regard to total operations, their domestic O&D traffic generation is less than LAX, LAS and DEN.

4 Traffic Analyses 4 Top 20 US Airports - Cost of Air Travel Per Mile PaxRank 4Q 2014 Avg OW Fare Rank Cost Per Mile Rank The airports in red have average passenger trip length close to the national average of 1171 miles, but cost per mile of air travel significantly higher than the national average of 18.2 cents. Aside from being only a general number comparison, the actuality is that these airports will tend to have the most secure air service. Airport Total Psgr Avg Fare Nonstop Yield Avg Pax Trip - Miles MAF 281,984 $ AMA 180,335 $ TLH 158,474 $ , LBB 235,801 $ HSV 236,837 $ , XNA 277,750 $ , JAN 247,525 $ , BTR 179,644 $ , GSO 405,131 $ EYW 143,431 $ , LEX 275,958 $ CVG 1,054,558 $ BHM 634,012 $ TUL 647,412 $ CAE 236,685 $ , CRP 171,640 $ MEM 834,827 $ TYS 394,044 $ ECP 165,032 $ SDF 747,040 $ Snapshot: D/FW Metroplex - Results Are In Regarding Wright Repeal The 4Q of 2014 is the first to provide data reflecting the effects of elimination of the consumer-averse Wright Amendment, which now allows nonstop DAL flights to any domestic point. As indicated in earlier BGI studies, the net effect is positive for all parties. To be sure, the traffic benefit at DAL inures mostly to Southwest, which, despite media lore, is essentially the only airline that has any real interest in operating at DAL, as opposed to DFW. (Virgin America s move was for specific strategic reasons.) Total Metroplex O&D Total Pax ,134,711 16,404, ,712,238 17,636,036 Change 8.1% 7.5%

5 Traffic Analyses 5 The domestic local O&D in the Metroplex (combined DFW and DAL) increased over 8% due to the elimination of the Wright Amendment. The total traffic (including connecting passengers at both airports, all destinations) jumped 7.5%. This means that seats made available at DFW due to any shift of local O&D to DAL were immediately back-filled with connect passengers. In the chart below, we compare local O&D at both airports for 3Q in 2014 v 3Q Note that while DAL has seen a 38% increase in local O&D. DFW International was essentially flat - almost no noticeable decline in local O&D. Dallas/Love Year Local O&D AVG Fare Nonstop Yield LOH Total Pax ,547,119 $ ,167, ,138,112 $ ,899,898 PCT Change 38.2% -1.2% -21.8% 24.0% 33.8% DFW International Year Local O&D AVG Fare Nonstop Yield LOH Total Pax ,587,592 $ ,055 14,237, ,574,126 $ ,046 14,736,138 PCT Change -0.2% -0.1% 1.0% -0.9% 3.5% Note the Total Pax column - this includes connecting traffic. DFW International s total passengers continued to climb - up 3.5%. The high load factors at DFW carriers, as noted by BGI in earlier studies, represented traffic spill that would quickly replace any traffic shifted to Dallas/Love. In the April 27 Monday Update at we reviewed the future projections of traffic in the DFW Metroplex. Because DAL has a brick-wall expansion limit due to just 20 gates, that airport can be expected to grow 7.5 to 8.0 million passengers, and level off. DFW International will continue to expand at approximately 2.2% annually for the next ten years. By , the ratio of local O&D capture in the Metroplex will be back to approximately 20% DAL and 80% DFW International. The basic data within the D/FW Metroplex would dictate that these data are no surprise. Boyd Group International s studies since 2005 clearly predicted this outcome, much contrary to the me-too media prognostications that a Wright removal would end up harming DFW.

6 Traffic Analyses 6 Top 20 Airports - Ranked By Average OW Fare This chart is for anecdotal purposes only. Average fares - whether computed one-way or, as the BTS does, a combination of ticket itinerary spend - is a useless metric to compare airports. The length of haul, the traffic composition, and the geographic location of the city all skew the data. PaxRank 4Q 2014 Avg OW Fare Rank Cost Per Mile Rank Airport Total Psgr Avg Fare Nonstop Yield Avg Pax Trip - Miles FAI 175,742 $ , EYW 143,431 $ , ANC 703,757 $ , STT 285,919 $ , SBA 157,673 $ , KOA 583,266 $ , TLH 158,474 $ , HSV 236,837 $ , XNA 277,750 $ , OGG 1,139,150 $ , HNL 2,604,406 $ , MSN 383,682 $ , CAE 236,685 $ , BIL 204,546 $ , VPS 157,552 $ , LIH 599,239 $ , EWR 4,657,603 $ , MAF 281,984 $ BZN 197,386 $ , BTR 179,644 $ ,018 The #1 source for futurist business intelligence and aviation forecasts that give airports, airlines, suppliers and financial institutions the competitive edge. Don t follow the leaders be one and join us. For the exciting agenda and to register log on to