Daniel G. Fry Massachusetts Institute of Technology December, 2013

Transcription

1 Daniel G. Fry Massachusetts Institute of Technology December, 2013

2 } Announced in April of 2008 } Delta Air Lines acquired Northwest Airlines in October of 2008 } Integration of airlines complete in January of 2010

3 } 1926: Northwest Airlines purchases only hangar at site of future MSP. } 1929: Northwest Airlines operates first closed cabin passenger service. } 1948: Northwest Airlines begin international service. } 1967: 4.1 million passengers flew through MSP, mostly on Northwest Airlines. } 2007: 33 million passengers flew through MSP, 80% on Northwest Airlines.

4 } MSP is estimated to contribute $10.1 billion to the local economy $5.7 billion in direct operations $2.16 billion in indirect impacts $2.26 billion in induced impacts } MSP supports 76,340 jobs 19,800 directly 13,400 indirectly 17,100 induced 1,540 from capital improvements (Delta Air Lines and affiliates employ about 13,000) Data from Minneapolis-St. Paul International Airport Economic Impact Study, InterVISTAS Consulting LLC.

5 Delta Air Service at MSP } MSP in the Delta Network } Delta s Long Term Plans at MSP } Changes in Competition at MSP } Future Growth at MSP } MAC Response }

6 From 2004, before the merger, to 2013, virtually no change has been made to the route structure on Delta Air Lines from MSP Data from T100 via Diio Mi

7 Departing Seats S340's Small Regionals Large Regionals DC-9's Small Narrowbodies Large Narrowbodies Small Widebodies Large Widebodies Data from T100 via Diio Mi

8 Onboard Departing Passengers Number of Passengers Prior to the merger, Northwest Airlines went into Chapter 11 Bankruptcy protection in 2005 and began restructuring and withdrawing service and 2008 saw global recession and high fuel prices. However, post-merger, the number of passengers flying through MSP on Delta Air Lines has stabilized. DL NW Data from T100 via Diio Mi

9 80.00% 60.00% 40.00% 20.00% 0.00% % % % % Changes in Number of Nonstop Connections ( ) 60.00% 40.00% 20.00% 0.00% % % % % Changes in Departing Seats ( ) When MSP is compared to other hubs and focus cities in the Delta network, it appears to be about center for gains and losses. For number of non-stop connections, MSP lost less between 2009 and 2012 then ATL. Data from T100 via Diio Mi

10 Changes in Number of Non-Stop Connections ( ) ATL MSP DTW JFK SLC MEM LGA CVG LAX NRT BOS SEA AMS CDG PDX MSP is the second largest hub in the system, and occupies an entirely different class of hub than MEM and CVG, two airports that have lost much of their service. Data from T100 via Diio Mi

11 } MSP has airfares significantly higher than other Delta hubs, making it a lucrative market. $550 Average Airfares (Inflation-Adjusted), $500 $450 $400 $350 U.S. Average Atlanta, GA Minneapolis/St. Paul, MN Detroit, MI Salt Lake City, UT $ Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q2 Data from DB1B

12 } More efficient hub, with right-sized fleet. } Second(ary) hub for Delta Air Lines } MSP has good cost structure. } MSP is lucrative per passenger with high Delta market share. } Delta Air Lines is expected to maintain a large, stable hub.

13 SY 3% Departing Seats, 2004 DL 3% UA 3% HP 1% US 1% CO 1% AA 3% FL 1% F9 1% Other 3% 0% US 2% SY 4% UA 3% AA 4% Departing Seats, 2008 DL 2% CO 2% FL 2% F9 1% Other 1% Departing Seats, 2012 WN + FL 6% UA 4% SY 4% F9 NK 1% 1% Other 1% AA + US 7% NW 80% NW 79% DL 76% From 2004 to 2013, the Delta / Northwest market share of MSP as been very large, although it has declined slightly over the past 8 years. Data from T100 via Diio Mi

14 } Number of onboard departures is up postmerger DL NW Other Data from T100 via Diio Mi

15 AA+US WN+FL UA+CO SY AS F9 NK FI ZK AC Other + + Double digit growth has been typical in recent years for T2 airlines. Data from T100 via Diio Mi

16 } Delta Air Lines Expanded service to Europe, Asia, and Latin America } Southwest Airlines Resume expanding its presence? } Alaska Airlines Expand in response to Delta in Seattle? } Icelandair Better marketing for European service? } Spirit Airlines Continue to expand? } JetBlue Enter the market, after significant discussion? } Virgin America (?)

17 } The MAC has a very flexible master plan extending to 2030 with many alternatives. Long Term Comprehensive Plan

18 } Delta Air Lines. Minneapolis-St. Paul International Airport. Retrieved from Delta Air Lines website: index.php?s=18&item=102. Retrieved December, } InterVISTAS Consulting LLC. Minneapolis-St. Paul International Airport Economic Impact Study. Retrieved from Minneapolis St. Paul International Airport website: Study-Estimates-Minneapolis-St-Paul-Internatio.aspx. Retrieved December, } Metropolitan Airports Commission. Minneapolis-St. Paul International Airport Final Long Term Comprehensive Plan. Retrieved from Minneapolis St. Paul International Airport website: ltcp_final_document.aspx. Retrieved December, } Metropolitan Airports Commission. Minneapolis-St. Paul International Airport Statistics. Retrieved from Minneapolis St. Paul International Airport website: Retrieved December, } Metropolitan Airports Commission. MSP 2010: Building a Better Airport. Retrieved from Minneapolis St. Paul International Airport website: Retrieved December, } Metropolitan Airports Commission. MSP Airport Improvements. Retrieved from Minneapolis St. Paul International Airport website: Retrieved December, } Metropolitan Airports Commission. MSP History. Retrieved from Minneapolis St. Paul International Airport website: Retrieved December, } Metropolitan Airports Commission. The Metropolitan Airports Commission. Retrieved from Metropolitan Airports Commission website: Retrieved December, } Mouawad, J. (2013, December 6). Delta-Northwest Merger s Long and Complex Path New York Times. Retrieved from New York Times website: Retrieved in December, } Mutzabaugh, B. (2013, December 6). The 'frenemy' strikes back: Alaska Air takes on Delta. USA Today. Retrieved from USA Today website: Retrieved in December, } U.S. Department of Transportation, Research and Innovative Technology Administration, Bureau of Transportation Statistics, Air Transportation: Air Carrier Statistics Database (T-100). Accessed via Diio Mi in November, } U.S. Department of Transportation, Research and Innovative Technology Administration, Bureau of Transportation Statistics, Air Transportation: Airline Origin and Destination Survey (DB1B). Retrieved from in December, 2013.