Transcript Massive Uncertainty
Multi-Airport Systems in Era of Low-Cost Carriers Dr. Richard de Neufville
Professor of Engineering Systems and of Civil and Environmental Engineering Massachusetts Institute of Technology Airport Systems Planning RdN
Theme
“Low cost” airlines are developing a “parallel network” of travel “network choice” (rather than “airport choice”) may determine traffic in multi-airport systems Competition between “low cost” and “legacy” airlines leading to struggle between “low cost” and “legacy” hubs
Boston/Logan vs. Boston/Providence, etc., etc. Airport Systems Planning RdN
What is a Multi-Airport System?
the significant airports serving transport in a metropolitan region, without regard to ownership or political control
Ex: Boston, Providence, Manchester
Ex: Copenhagen (Denmark), Malmo (Sweden)
Discussion
This is reality for travelers
Contrasts with focus on ownership (as used by ACI – Airports Council International, and others)
Airport Systems Planning RdN
Discussion of Tables 1 – 4 derived from de Neufville database
Table 1: Except for very crowded situations, secondary airports are a small fraction of total at airport with most passengers.
This reflects concentration factor …
Table 2: Catalog of Major Secondary Airports Table 3: MAS ranked by Estimated Number of Originating Passengers, eliminating transfers
This focuses on a Major Driver of MAS
Table 4: Potential MAS, mostly driven by Low-Cost airlines.
New ones constantly emerging… Airport Systems Planning RdN
Planning Issue
Many ‘mistakes’ in planning multi airport systems
Washington/Dulles – planned as major DC airport, but had only ~ 3 MAP for 20 years London/Stansted – similar story – only developed with Ryanair hub around 2002 Osaka/Kansai – Osaka/Itami did not close Montreal/Mirabel – huge airfield, now “closed” to passenger traffic Et cetera… Airport Systems Planning RdN
Why mistakes happened
Failure to appreciate traffic concentration at primary airports
… Because planners/forecasters using wrong mental model
Airport Systems Planning RdN
What drives traffic allocation in Multi-Airport System?
Airline competition has been primary
S-shaped market share/frequency share Market Share Frequency Share
Drives airlines to
Match flights => Allocate flights to major markets Concentrate Traffic at primary airports Airport Systems Planning RdN
Right model: “Concentration” not “Catchment Areas”
Concentration is standard urban phenomenon
e.g.: financial, jewelry, etc. districts
Driven by what suppliers offer
Customers choose which location (airport) depending on where they find what they need -- not just most convenient facility
Airport Systems Planning RdN
“Concentration” persists - until high level of local traffic
When local originating traffic high…
More flights add little at major airports
Airlines place flights at second airports
There appears to be a ‘threshold”…
Currently ~ 16 million originations/year
Note: higher as “average” aircraft carries more passengers, larger aircraft or higher load factor
Airport Systems Planning RdN
New Reality: No-frill airlines setting up “parallel network”
Low cost carriers “parallel” majors
Major fare distinctions
Ticket distribution separate
Internet direct to users, ‘no’ travel agents
Parallel service between cities
Providence/Baltimore not Boston/Washington
‘No’ interlining of bags, tickets
‘Not’ in Reservation systems
Airport Systems Planning RdN
Metropolitan areas with significant multi-airport systems Metropolitan Region London New York Tokyo Los Angeles Paris Chicago Hong Kong Miami San Francisco Washington/Baltimore Shanghai Seoul Moscow Osaka Traffic in Millions For Region Originating 137 106 99 85 84 100 67 59 57 61 43 42 37 38 52 43 42 37 32 30 27 25 24 21 19 19 18 17 de Neufville data base for 2007 Multi-Airport System Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes Yes
Airport Systems Planning RdN
Metropolitan areas with significant multi-airport systems Metropolitan Region Bangkok Beijing Boston Sao Paulo Milan Manchester (UK) Las Vegas Taipei Barcelona Amsterdam Frankfurt Mexico City Atlanta Jakarta Traffic in Millions For Region Originating 42 49 36 35 37 35 45 33 35 48 57 36 84 32 17 17 17 17 16 16 16 15 15 15 15 15 15 15 de Neufville data base for 2007 Multi-Airport System Yes Yes Yes Yes Yes, low-cost Yes Yes, low-cost Yes, low-cost Yes, low-cost Yes
Airport Systems Planning RdN
Major exceptions to rule: technical or political
Until recently, major exceptions to concentration rule were:
Technical -- runways too short
Belfast, Belo Horizonte, Buenos Aires, Rio de Janeiro, Taipei
Political -- or military...
Berlin, Dusseldorf/Bonn, Glasgow, Moscow Airport Systems Planning RdN
New Reality: No-frills choose different airports
Southwest, Westjet (Canada), Ryanair and Easyjet (UK) require:
Cheap properties, no Taj Mahals (compare San Francisco/International and Oakland; London/Gatwick and Luton) Low congestion and delays Flexible work force
They find this at aggressive, ‘hungry’ airports -- not in major facilities
Airport Systems Planning RdN
New Reality: US/Canada Network of Low-Cost Carrier Airports
Metropolitan Region Boston Dallas/Ft. Worth Houston Los Angeles Miami San Francisco Vancouver Secondary Airport Manchester Providence Love Field Hobby Long Beach Ft. Lauderdale Oakland Abbotsford Low-Cost Carrier Southwest Southwest Southwest Southwest Jet Blue Southwest Southwest Westjet
Airport Systems Planning RdN
New Reality: Europe Network of Low-Cost Carrier Airports
Metropolitan Region Brussels Copenhagen Düsseldorf Frankfurt Glasgow London Manchester Milan Oslo Paris Rome Stockholm Secondary Airport Charleroi Malmo Weeze Köln / Bonn Hahn Prestwick Luton Stansted Liverpool Orio al Serio Torp Beauvais Ciampino Skvasta Low-Cost Carrier Ryanair Ryanair Ryanair easyjet Ryanair Ryanair easyjet Ryanair easyjet Ryanair Ryanair Ryanair Ryanair + easyjet Ryanair
Airport Systems Planning RdN
Multi-Airport Systems in Brazil
Metropolitan Region Sao Paulo Rio de Janeiro Belo Horizonte International, Distant Name Traffic Millions Garulhos Galeao Confins 15.8 8.9 3.7 Airport Domestic, Close-in Name Traffic Millions Congonhas Santos Dumont Pampulha 18.5 3.6 0.8 Source: Infraero; de Neufville database 2007
Airport Systems Planning RdN
Importance of Parallel Network of close-in Brazilian airports
Airport Pair Passengers, 1000s Congonhas Congonhas Congonhas Congonhas Santos Dumont
Brasilia
Pampulha
Curitiba
Congonhas
Garulhos
Santos Dumont Santos Dumont
Porto Allegre Salvador Brasilia
Pampulha
Source: INFRAERO, 2002, Rabbani, 2002 1461 596 565 551 365 364 325 312
Rank
1 2 3 4 5 6 7 8 Airport Systems Planning RdN
Implications for modelling future of second airports
A new driver for second airports...
Low cost carriers often ‘not’ competing at big airports Frequency competition does not drive growth pattern of secondary airports
Competition between networks may be primary…
… followed by catchment area model of airport choice
Airport Systems Planning RdN
Implications for future of second airports
No frills airlines are becoming ‘major’
Southwest 2nd largest airline in world (pax) Market Cap ~ 10 billion $ > any other pax airline Ryanair Market Cap greater than British Airways
Majors are shrinking (UAL, USAir, etc.)
Implies that Primary airports will lose significant traffic to second airports
This is already happening!!!
Airport Systems Planning RdN
Southwest entry in Boston
Since 1996, the Regional Airports H ave Captured M ore than 75% of the Region’s Air Passenger Growth to Regional Airports along with growth of Southwest at Providence and Manchester (NH) Distribution of New England Passenger Growth
1990 –1996 1996 –2000
Logan 77% (+2.3M) Logan 24% (+2.3M) Regional Airports 76% (+7.2M) Regional Airports 23% (+0.7M)
Regional airports include Providence, Manchester, W orcester, Ban gor, Burlington, Hartford, New Haven, and Portland.
Source: Airport Records and US DOT, Form 41 schedules.
Source: Louis Berger, New England Regional Aviation System Plan materials
Page 3
Airport Systems Planning RdN
Market Share of Boston/Logan is in decline
The Region is Less Reliant on Logan Airport Figure 2: The Boston/Logan traffic share dropped by a quarter over the past 20 years; half of this occurred with the Southwest growth in the late 1990s at Providence and Manchester (NH)
80%
78%
70% 60%
59% The 2004 Share is about 57% (SH&E, ’05)
50%
'80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00
Note: Includes enplaned passengers at Logan, Hartford/Bradley, T .F. Green/Providence, Manchester, Portland, Burlington, Bangor, Tweed New Haven, and Worcester.
Source: US DOT, Form 41 and Part 298/C. Airport records for Loga n and various regional airports.
Source: Louis Berger New England Regional Aviation System Plan
Airport Systems Planning RdN
Page 4
Summary
A new, parallel air transport network is emerging to compete with majors
This low-cost carrier network may become a major feature of industry
It implies growth and importance of low-cost second airports throughout North America, Europe -- and perhaps elsewhere
Airport Systems Planning RdN
Supplemental Comment
Meanwhile, a similar development is taking place in air cargo
Fedex and UPS are developing their own networks of cargo airports
Fedex: Memphis, Toronto/Hamilton, San Francisco/ Oakland, etc.
UPS: Louisville, Los Angeles/Ontario. Chicago/Rockford, etc.
Airport Systems Planning RdN