San Luis Obispo Denver Non-Stop Service. Opportunities for Business Savings and Support

Transcription

1 San Luis Obispo Denver Non-Stop Service Opportunities for Business Savings and Support

2 Agenda Inefficiencies of Current Air Travel Cost of Drive Diversion to Other Airports Lost Employee Time Potential Service: Denver/United Service Network/Connections Potential Schedule New Service Support Current Incentives Business Commitment to Service United Airlines PassPlus Program Potential Fare Savings

3 Inefficiencies of Current Air Travel

4 SLO Retains Just 43% of its Passengers SFO, 11.4% OAK, 4.6% Originating Airport For San Luis Obispo Area Passengers Rank True Market with LCC Adjustment Tw elve Months Ended June 2010 Airport Passengers PDEW Share 1 San Luis Obispo, CA 239, % 2 Los Angeles, CA 142, % 3 San Francisco, CA 63, % 4 Santa Maria, CA 30, % 5 San Jose, CA 28, % 6 Oakland, CA 25, % 7 Burbank, CA 19, % 8 Santa Barbara, CA 8, % 9 Monterey, CA 1, % SJC, 5.1% SBP, 42.8% SMX, 5.4% SBA, 1.4% Total San Luis Obispo Area Passengers 559, % LAX, 25.5% BUR, 3.6% Page 4 Source: Sixel Consulting Group San Luis Obispo True Market Study

5 The Average LAX Drive Cost is $211 Roundtrip San Francisco (SFO) 225 Miles 3:25 Drive Time San Jose (SJC) 193 Miles 2:57 Drive Time Direct Drive Costs: San Luis Obispo Alternate Airports As of September 2013 Airport Mileage (O/W) IRS Rate One Way Cost Roundtrip Cost Los Angeles (LAX) 187 $0.565 $ $ San Francisco (SFO) 225 $0.565 $ $ San Jose (SJC) 193 $0.565 $ $ Santa Barbara (SBA) 94 $0.565 $53.11 $ Sources: Sixel Consulting Group, Google Maps, Internal Revenue Service SBP Santa Barbara (SBA) 193 Miles 1:30 Drive Time Los Angeles (LAX) 187 Miles 3:10 Drive Time Page 5 Sources: Sixel Consulting Group and Google Maps Average Drive Time

6 A Company with 100 Trips Spends $21K Direct Drive Cost: San Luis Obispo - Los Angeles (LAX) As of September 2013 Annual Roundtrips Cost per Roundtrip Annual Cost 10 $ $2, $ $10, $ $15, $ $21, $ $31, $ $42, $ $52, $ $63, $ $73, $ $84, $ $95, $ $105, ,000 $ $211, ,500 $ $316, ,000 $ $422, ,500 $ $528, ,000 $ $1,056, Sources: Sixel Consulting Group, Google Maps, Internal Revenue Service SBP Los Angeles (LAX) 187 Miles 3:10 Drive Time Page 6 Sources: Sixel Consulting Group and Google Maps Average Drive Time

7 100 Trips Represents $31K in Personnel Costs Personnel Time Cost: San Luis Obispo - Los Angeles International Airport (LAX) As of September 2013 Annual Roundtrips Roundtrip Drive Time Hourly Wage Personnel Cost Annual Roundtrips Roundtrip Drive Time Hourly Wage Personnel Cost $20.00 $1, $20.00 $63, $35.00 $2, $35.00 $110, $50.00 $3, $50.00 $158, $20.00 $6, , $20.00 $126, $35.00 $11, $35.00 $221, $50.00 $15, $50.00 $316, $20.00 $12, , $20.00 $189, $35.00 $22, $35.00 $332, $50.00 $31, $50.00 $474, $20.00 $25, , $20.00 $253, $35.00 $44, $35.00 $443, $50.00 $63, $50.00 $633, $20.00 $37, , $20.00 $316, $35.00 $66, $35.00 $553, $50.00 $94, $50.00 $791, $20.00 $50, , $20.00 $633, $35.00 $88, $35.00 $1,107, $50.00 $126, $50.00 $1,582, Sources: Sixel Consulting Group, Google Maps Los Angeles (LAX) 187 Miles 3:10 Drive Time Page 7 Sources: Sixel Consulting Group and Google Maps Average Drive Time

8 A Company with 100 Trips Spends $25K Direct Drive Cost: San Luis Obispo - San Francisco (SFO) As of September 2013 Annual Roundtrips Cost per Roundtrip Annual Cost 10 $ $2, $ $12, $ $19, $ $25, $ $38, $ $50, $ $63, $ $76, $ $88, $ $101, $ $114, $ $127, ,000 $ $254, ,500 $ $381, ,000 $ $508, ,500 $ $635, ,000 $ $1,271, San Francisco (SFO) 225 Miles 3:25 Drive Time SBP Sources: Sixel Consulting Group, Google Maps, Internal Revenue Service Page 8 Sources: Sixel Consulting Group and Google Maps Average Drive Time

9 100 Trips Represents $32K in Personnel Costs Personnel Time Cost: San Luis Obispo - San Francisco International (SFO) As of September 2013 San Francisco (SFO) 225 Miles 3:25 Drive Time Annual Roundtrips Roundtrip Drive Time Hourly Wage Personnel Cost Annual Roundtrips Roundtrip Drive Time Hourly Wage Personnel Cost $20.00 $1, $20.00 $64, $35.00 $2, $35.00 $112, $50.00 $3, $50.00 $160, $20.00 $6, , $20.00 $128, $35.00 $11, $35.00 $225, $50.00 $16, $50.00 $321, $20.00 $12, , $20.00 $192, $35.00 $22, $35.00 $337, $50.00 $32, $50.00 $482, $20.00 $25, , $20.00 $257, $35.00 $45, $35.00 $450, $50.00 $64, $50.00 $643, $20.00 $38, , $20.00 $321, $35.00 $67, $35.00 $562, $50.00 $96, $50.00 $803, $20.00 $51, , $20.00 $643, $35.00 $90, $35.00 $1,125, $50.00 $128, $50.00 $1,607, Sources: Sixel Consulting Group, Google Maps Page 9 Sources: Sixel Consulting Group and Google Maps Average Drive Time

10 Potential Service: Denver/United

11 Proposed SBP Denver Service Proposed Schedule: San Luis Obispo - Denver Operated by SkyWest dba United Express Origin Destination Departs Arrives Elapsed Time Aircraft SBP DEN 6:05am 9:35am 2:30 CR7 DEN SBP 9:50pm 11:20pm 2:30 CR7 One Daily Flight in Each Direction, on Business Schedule Operated by SkyWest, Doing Business As (DBA) United Express Canadair CRJ700 (CRJ) Aircraft, Seating 70 Six First Class 16 Economy Plus 48 Economy Page 11 Sources: Sixel Consulting Group Analysis of United Airlines Denver Hub

12 San Luis Obispo Denver Connectivity 85 One-Stop Cities 25 Non-Duplicated Connections Page 12 Sources: Sixel Consulting Group Analysis of United Airlines Denver Hub

13 New Service Support

14 Mitigating Airline Risk Due to Drive Diversion, New Routes Forecast Poorly in Airline Models SBP-DEN Forecasts $722,000 Loss in Years One and Two Total Forecast Loss Near $1.5 Million in Start-Up Phase Must Overcome Poor Forecast Through Risk Mitigation Additional Funds Required to Reduce Risk and Secure Flights Business Commitment to Use New Service is Paramount Commitment Can Be Leveraged to Save Money Lock in Discounts with Corporate Contracts Opportunity to Reduce Drive Costs Employee Time Lost to Ground Transportation Page 14

15 Mitigating Losses in Start-Up Phase Targeted Risk Mitigation Amount: $1,500,000 Funding Already Secured: $500,000 Funding Still Needed: $1,000,000 Request for Business Pledges to Take to Carrier Pre-Purchased Tickets Funds in Escrow Account for Use on New Service Draw from Account for Discounted Fares Optimum Formula: Take Direct Cost Savings from Drive to Other Airports and Commit that Funding to the Project Page 15

16 Examples from Other Communities Kalispell $500,000 Guarantee Drew $500,000 Idaho Falls $500,000 Guarantee None Used Bismarck $250,000 Guarantee None Used Duluth $300,000 Guarantee Drew $50,000 Manhattan $2 Million Guarantee None Used Springfield $500,000 Guarantee Drew $500,000 Branson $3 Million Guarantee None Used Myrtle Beach $500,000 Guarantee Drew $500,000 Panama City $25 Million Guarantee None Used Page 16

17 Impact of New Service in Other Communities Kalispell Passengers Up 2% Idaho Falls Passengers Up 9% Bismarck Passengers Up 23% Duluth Passengers Up 18% Manhattan Passengers Up 165% Springfield Passengers Up 12% Average Passenger Growth: 53% Branson Passengers Up 52% Myrtle Beach Passengers Up 19% Panama City Passengers Up 179% Page 17

18 United Airlines PassPlus Program

19 United Airlines Corporate Accounts Pre-Paid United PassPlus Program Lock-In Discounts Based on Mileage Flown Designees Access Through Mileage Plus Account Can Be Used on Last Minute Fares Benefits Business Travelers the Most Discount Program Fare Type Domestic Discount Int l Discount First, Business, Full Fare Y 20% 20% 14-Day Advance Coach 5% 20% Deep Discount Coach 2% No Discount Other Benefits Premier Level Memberships and Upgrades Priority Check-In Economy Plus Seating at No Charge Page 19

20 Example PassPlus Fares from San Luis Obispo United PassPlus Fares on Select San Luis Obispo Routes September 2013; Sources: ExpertFlyer; United Airlines; Sixel Consulting Group Fare Type Current Fare Discount Fare San Luis Obispo Denver 21-Day Advance Coach $308 $302 7-Day Advance Coach $350 $333 Walk-Up Coach (Books Into First) $770 $616 San Luis Obispo Chicago 21-Day Advance Coach $380 $372 7-Day Advance Coach $450 $428 Walk-Up Coach (Books Into First) $1,156 $925 San Luis Obispo New York/Newark 21-Day Advance Coach $410 $402 7-Day Advance Coach $550 $523 Walk-Up Coach (Books Into First) $1,286 $1,029 San Luis Obispo Washington/Baltimore 21-Day Advance Coach $410 $402 7-Day Advance Coach $550 $523 Walk-Up Coach (Books Into First) $1,286 $1,029 Page 20

21 San Luis Obispo Denver Non-Stop Service Richard Howell Airports General Manager San Luis Obispo County iflyslo.com Jack Penning Director of Market Analysis Sixel Consulting Group sixelconsulting.com