Transcript Current Status of the Air Transport Industry

Current Status of the
Airport / Airline Industry
Dr. Richard de Neufville
Professor of Engineering Systems and
Civil and Environmental Engineering
Massachusetts Institute of Technology
Airport Systems Planning & Design / RdN 
Current Status of the
Air Transport Industry
 Objective: To define
 current
situation and major new factors
 Airline and Airport Rankings
 Major Trends
•
•
•
•
•
Shrinking, Bankruptcy of Legacy Airlines
Losses in Transfer Hubs: St Louis, Pittsburgh
Rise of Innovative Carriers: Southwest, Fedex
And Secondary A/Ps: Providence, Ft Lauderdale
Demand for Low Cost Buildings at Airports
Airport Systems Planning & Design / RdN 
Major Recent Events
 Disappearance of Major Airlines

TWA, Swissair, Sabena
 Mergers
JAL and JAS (2002) ; Air France + KLM (2004)
 America West + US Airways; Lufthansa + Swiss (2005)
 United +bmi (UK)?? + Aloha???; Gol + Varig (2007)

 Major Bankruptcies… and recoveries

United, US Airways, Delta, Air Canada, Northwest
 Surge by Low-Cost, Chinese, Cargo Carriers
Air Tran, Ryanair, easyjet, AirAsia
 Cathay Pacific, China Airlines,Airport
EVA
Systems Planning & Design / RdN 

Electronic Ticketing
 Big Savings – up to $3 billion for
air transport industry
 Less
staff, less space, less rent…
 $1 per E ticket vs. ~$10 per paper ticket
 Status
 >70
% of all tickets worldwide (Dec. 2006)
 Over 86% in Canada
 ~ 83% in UK, >1/2 in Asia Pacific
 Some airlines at 100%: Southwest, Ryanair
Source: IATA WATS
Airport Systems Planning & Design / RdN 
Bar Coded boarding passes
Common Use Kiosks
 Bar Coding
 Estimated
savings: $3.50 per ticket, or
about $2.5 Billion/year for 100% use
 IATA Goal: 100% by 2010
 Common Use Kiosks
 Estimated
Savings $ 2.50 per check in
 49 airports had CUSS by end of 2006
Source: IATA WATS
Airport Systems Planning & Design / RdN 
Principal drivers of air
transportation industry
 Long-term annual decrease in air fares:

Driving comparable annual worldwide traffic growth – aircraft
size, engines, composite materials
 Low-cost carriers


Southwest, AirTran, Jet Blue, Westjet, Ryanair, easyjet, AirAsia
New business practices
 Commercialization:

market economy management replaces…
government ownership and economic regulation
 Globalization:

transnational airline alliances and airport groups
 Technical innovation:

e-commerce, RJs, satellite-based navigation
Airport Systems Planning & Design / RdN 
Annual Decrease in Air Fares
Relative cents/Revenue
Pax-KM
Estimated Real Yields
110
100
90
80
70
60
1993
1997
2001
2005
Year
Source: IATA WATS
Airport Systems Planning & Design / RdN 
IATA Members’ Traffic,
Revenues, Yield, and CPI
Traffic
Revenues
Yield
Inflation
250
Percent of 1991
200
150
100
50
0
91 992 993 994 995 996 997 998 999 000 001 002 003 004
9
1
1
1
1
1
1
1
1
1
2
2
2
2
2
Source: IATA World Air Transport Statistics
Airport Systems Planning & Design / RdN 
Interpretation of Trends
 Over past 13 years…
 Yields
(revenues/unit distance) have
dropped about 20%
 While inflation has risen about 50%
 So: costs on a constant basis cut in half
 Thus: traffic doubled
 Implying price elasticity about -1.3 > -1.0
 So total revenues grow as price drops
Airport Systems Planning & Design / RdN 
World Traffic, (Pax-Km x 109)
World and IATA
Year
Pax-km, Billions
IATA
Annual Growth %
IATA
World share, % IATA
World
2006
3426
3914
87.5
4
5
2005
3275
3708
88.3
6
0
2004
3082
3722
82.8
13
13.6
2003
2704
3236
83.5
(0.4)
1
2002
2770
3196
86
(1)
(1)
2001
2652
2912
91
(4)
(4)
2000
2757
3018
91
4
(2)
1999
2657
3074
86
6
6
1998
2514
2888
87
7
4
1990
1600
2186
73
18
8
1987
1042
1763
59
9
8
1982
712
1263
56
4
4
1977
600
1036
58
Source: IATA World Air Transport Statistics
Note: Changed Series; now includes charter travel
Airport Systems Planning & Design / RdN 
Non-IATA Members
 As of 2006, many airlines in the top
50 worldwide were not in IATA…
 Southwest,
Jetblue, AirTran, Spirit,
 Westjet
 Ryanair,
easyjet
 Frontier, Hawaiian, Skywest
 Condor
Source: IATA WATS
Airport Systems Planning & Design / RdN 
Airports by millions of pax, 2006
(ACI data from IATA WATS; US- Bold, hubs- italics)
Rank
Airport
2004 2006
1
1
Atlanta
2
2
Chicago / OHare
3
3
London / Heathrow
4
4
Tokyo / Haneda
5
5
Los Angeles / Internatl
6
6
Dallas / Ft. Worth
8
7
Paris / de Gaulle
7
8
Frankfurt / Main
20
9
Beijing
10
10
Denver / International
11
11
Las Vegas
9
12
Amsterdam / Schiphol
13
13
Madrid
17
14
Hong Kong / C L K
14
15
Bangkok
18
16
Houston / Bush
15
17
New York / Kennedy
12
18
Phoenix
19
19
Detroit / Metro
16
20
Minneapolis / St. Paul
22
21
New York / Newark
26
22
Singapore
24
23
Orlando / International
23
24
London / Gatwick
21
25 San Francisco / Internatl
27
26
Miami / International
25
27
Tokyo / Narita
30
28
Philadelphia
29
29
Toronto / Pearson
35
30
Jakarta
2006
84.8
76.2
67.5
62.2
61.0
60.1
56.8
52.8
48.5
47.3
46.2
46.1
45.5
44.0
42.8
42.6
42.6
41.4
36.4
35.6
35.5
35.0
34.8
34.2
33.5
32.5
31.8
31.8
31.0
30.9
2004
83.6
75.4
67.3
62.3
60.7
59.4
50.9
51.1
34.9
42.4
41.4
42.5
38.5
36.7
38.0
36.5
37.4
39.5
35.2
36.8
31.8
30.4
31.1
31.5
33.5
30.2
31.1
28.5
28.7
25.7
Millions of Passengers
2003
2002
2001
2000
78.8
76.6
75.9
80.2
69.4
66.5
66.8
72.1
63.2
63.0
60.7
64.6
63.2
61.1
58.7
56.4
55.0
56.2
61.0
68.5
53.2
52.8
55.2
60.7
47.9
48.1
48.0
48.2
48.1
48.1
48.6
49.4
24.4
27.2
24.2
21.7
37.5
35.7
36.1
38.7
36.3
35.0
35.2
36.9
39.8
40.6
39.5
39.6
35.4
33.7
34.0
32.8
26.4
33.5
32.6
32.7
29.1
30.5
30.6
29.6
34.1
34.4
34.8
35.2
31.7
28.9
29.4
32.8
37.4
35.6
35.5
35.9
32.7
32.4
32.3
35.5
33.2
32.6
35.2
36.7
29.6
29.0
30.5
34.2
23.1
27.4
28.1
28.6
27.3
26.7
28.2
30.8
29.9
29.5
31.2
32.1
28.8
30.7
34.6
41.2
29.6
30.1
31.7
33.6
23.5
25.8
25.4
27.4
24.7
24.4
23.9
24.9
24.7
25.9
28.0
28.8
18.6
*
*
*
1993
47.8
65.1
47.6
41.5
47.8
49.7
25.7
31.9
*
32.6
22.5
20.1
17.3
24.4
17.1
20.3
26.8
23.5
24.2
23.4
25.8
18.8
21.5
20.1
32.0
28.7
20.0
16.5
20.5
*
Annual %
2000-2006
1.0
0.9
0.7
1.7
-1.8
-0.2
3.0
1.1
20.6
3.7
4.2
2.7
6.5
5.8
7.4
3.5
5.0
2.6
0.4
-0.5
0.6
3.7
2.2
1.1
-3.1
-0.5
2.7
4.6
1.3
Airport Systems Planning & Design / RdN 
Airports by millions of pax, 2006
 In
2006, airport traffic stagnated at many airports
• San Francisco has lost a lot
 Big
increases in
• New Hubs – such as Madrid, Philadelphia
• Secondary airports – London/Stansted
• Asia, especially China, Thailand and Dubai!
 Thus,
significant changes in ranking over last
several years
Airport Systems Planning & Design / RdN 
Airports by millions of pax, 2006
(ACI data from IATA WATS; US- Bold, hubs- italics)
33
31
32
37
28
36
44
39
34
46
38
40
41
47
49
42
45
48
43
50
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
Munich
Rome / Fuimicino
Sydney
Barcelona
Seattle / Tacoma
Charlotte
Dubai
Seoul/Incheon
Boston / Logan
Shanghai/Pudong
Guangzhou
New York / LaGuardia
Paris / Orly
Mexico City
Kuala Lumpur
London/Stansted
Istambul
Taipei
Washington / Dulles
Manchester (UK)
Miami/ Fort Lauderdale
Cincinnati
Washington/Baltimore
St. Louis / Lambert
Seoul/Gimpo
Honolulu
Palma de Mallorca
Osaka / Itami
Fukuoka
30.8
30.1
30.0
30.0
30.0
29.7
28.8
28.4
27.7
26.8
26.8
25.8
25.6
24.7
24.1
23.7
23.3
22.9
22.8
22.8
26.8
28.1
28.1
24.5
28.7
24.7
21.7
24.2
26.1
21.1
*
24.4
24.0
23.0
21.1
20.9
*
*
22.7
21.5
24.0
25.8
24.2
22.5
26.7
23.1
*
*
22.8
*
*
22.5
22.4
21.7
*
18.7
*
*
17.0
19.5
23.0
25.0
23.4
21.2
26.7
23.6
*
*
22.6
*
*
21.3
23.1
20.3
*
*
*
*
23.1
25.9
23.5
19.8
28.4
23.1
*
*
27.4
*
*
25.2
25.4
20.7
*
*
*
*
20.0
18.6
23.6
25.6
24.3
20.7
27.0
23.2
*
*
24.2
*
*
21.9
23.0
20.6
*
*
*
*
17.9
19.5
12.5
18.8
16.6
*
18.8
17.3
*
*
24.0
*
*
19.8
25.3
*
*
*
*
*
*
12.8
21.0
22.0
20.7
*
21.2
19.7
20.4
19.8
19.4
19.1
18.8
18.8
*
20.9
19.0
25.6
21.0
21.1
17.8
*
*
*
17.3
*
26.7
22.0
21.1
19.2
19.3
*
*
22.5
*
30.5
36.7
22.7
*
12.3
*
19.9
22.6
22.0
12.4
*
*
20.5
*
5.6
2.7
4.6
8.6
0.9
4.8
0.2
0.4
0.1
3.2
2.3
7.2
0.3
-1.2
-1.2
5.4
Airport Systems Planning & Design / RdN 
Changes in Transfer Hubs
 Big changes in recent years
 New Hubs
Big: Paris/de Gaulle, Amsterdam, Madrid
 Medium: Dubai; London/Stansted, Munich

 “Close” of old hubs
Pittsburgh (US Airways shrunk to Philadelphia)
 St Louis
(TWA merged out of existence)
 Zurich
(collapse of Swissair)

Airport Systems Planning & Design / RdN 
Current Major Airport Projects
 Atlanta,
Toronto
Airport Makeovers
 (Bangkok), Kobe
Major New Airport
 Osaka/Kansai; Tokyo/Haneda Runway landfills
 Singapore
Massive new Terminal
 Shanghai/Pudong
New Runway, Terminal
 Paris/de Gaulle; DFW Pax Buildings, APM
 London/HRW
Terminal 5 ($8 billion)
 Frankfurt
A380 base (and T3?)
 Madrid ; Miami/Intnatl
Runway, Buildings
 Doha (Qatar); Dubai
Major Projects
Airport Systems Planning & Design / RdN 
Airline Rankings 2006
(Pax-Km, billions)
Airline
American
United
Delta
Air France
Continental
Northwest
British
Lufthansa
Southwest
JAL
Singapore
Qantas
Emirates
Air Canada
KLM
Cathay Pacific
China Southern
USAirways
Air China Ltd
ANA
Thai
Source: IATA WATS
2006
224
189
159
123
123
117
115
115
108
89
88
79
74
72
72
71
69
60
60
58
55
2004
209
184
158
107
101
118
106
109
87
95
77
74
*
66
63
57
54
65
*
55
51
2003
193
167
144
99
91
110
100
97
77
76
64
69
*
59
57
43
*
61
*
52
45
2002
196
176
153
99
91
116
99
94
71
83
74
73
*
69
59
49
*
64
*
54
*
1995
165
180
137
50
57
101
94
62
70
48
52
*
*
44
*
*
61
*
43
*
1992
157
149
130
37
69
94
72
49
22
55
37
31
*
*
31
*
*
56
*
38
*
Annual % 02-06
3.6
1.8
1.0
6.1
8.8
0.2
4.0
5.6
13.0
1.8
4.7
2.1
1.1
5.5
11.2
(1.6)
1.9
NA
Airport Systems Planning & Design / RdN 
Airline Rankings 2006
(Passengers, millions)
Airline
American
Southwest
Delta
United
Northwest
Lufthansa
Air France
ANA
JAL
China Southern
Continental
Ryanair
US Airways
British
China Eastern
easyjet
Air China
Iberia
SAS
Alitalia
Qantas
Air Canada
2006
100
96
74
69
56
51
49
49
49
49
47
41
36
36
35
28
31
28
25
24
24
23
Source: IATA WATS
2004
92
81
87
71
56
48
45
46
52
39
41
28
42
35
21
22
24
26
20
22
24
21
2003
89
66
84
67
53
44
44
43
34
*
38
23
41
35
*
22
*
25
20
22
24
20
2002
94
64
90
69
54
44
43
44
34
21
40
21
47
34
*
21
*
24
23
22
24
23
1995
80
*
87
79
49
33
*
38
29
*
35
*
58
32
*
*
*
*
19
21
*
*
1992
86
28
83
67
44
27
14
35
24
*
38
*
55
25
*
*
*
*
14
20
*
*
Annual % 02-06
1.6
12.5
(4.4)
0.0
0.9
4.0
3.5
2.8
11.0
33.3
4.4
23.8
(5.9)
1.5
8.3
4.2
2.2
2.3
0.0
0.0
Airport Systems Planning & Design / RdN 
Airline Rankings 2006
(Freight Tonne-Km, Billions)
Airline
Fedex
UPS
Korean
Lufthansa
Singapore
Cathay Pacific
China Airlines
Air France
Cargolux
EVA
Emirates
British
KLM
Japan
Northwest
Air China
Asiana
2006
15.1
9.3
8.8
8.1
8.0
6.9
6.1
5.9
5.2
5.1
5.0
4.7
4.7
4.7
3.2
3.2
2.9
2004
14.6
7.4
8.3
8.0
7.1
5.9
5.6
5.4
4.7
5.5
3.5
4.8
4.5
4.9
3.3
2.6
2.7
2003
13.2
6.7
6.9
7.3
6.7
5.2
4.7
4.9
4.3
4.7
2.6
4.2
4.1
4.4
3.0
*
2.6
2002
13.0
6.6
6.0
7.2
6.8
4.8
4.5
4.9
4.2
4.1
*
4.1
4.0
4.4
3.0
*
2.6
1995
7.0
*
4.3
5.8
3.7
2.8
*
4.4
*
*
*
3.3
3.6
3.8
2.8
*
*
1992
5.8
*
2.7
4.3
2.9
1.7
*
3.3
*
*
*
2.5
2.4
3.2
2.7
*
*
% Change 02-06
4.0
10.2
11.7
3.1
4.4
10.9
8.9
5.1
6.0
6.1
30.8
3.7
4.4
1.7
1.7
2.9
Airport Systems Planning & Design / RdN 
Airline Rankings 2006
(Freight Tonne, millions)
Airline
Fedex
UPS
United
Korean
China Airlines
Singapore
Lufthansa
Cathay
Japan Airlines
Emirates
China Eastern
EVA
Air China
Air France
China Southern
Northwest
EAT
British
Asiana
ANA
Cargolux
KLM
Thai
Malaysian
American
2006
7.15
4.29
1.75
1.60
1.34
1.29
1.20
1.20
1.14
1.14
0.88
0.83
0.82
0.81
0.79
0.72
0.71
0.69
0.66
0.66
0.65
0.59
0.56
0.54
0.52
Source: IATA World Air Transport Statistics
2004
7.00
4.02
1.61
1.52
1.74
1.13
1.15
0.97
1.19
0.79
0.68
0.86
0.65
0.77
0.67
0.75
0.60
0.71
0.69
0.61
0.57
0.56
0.54
0.55
0.54
2003
6.50
3.28
1.18
1.75
1.08
1.04
1.02
0.88
0.97
0.62
*
0.74
0.55
0.69
0.58
0.67
0.52
0.63
0.68
0.59
0.52
0.52
0.51
*
0.51
2002
6.41
3.21
1.03
1.26
1.00
1.03
1.03
0.85
0.92
*
*
0.62
*
0.68
*
0.65
0.55
0.61
0.56
0.54
0.45
0.52
0.53
*
0.51
1995
3.40
*
0.53
0.85
*
0.59
0.98
0.52
0.84
*
*
*
*
0.66
*
0.72
*
0.52
*
0.46
0.43
0.55
0.38
*
0.64
1992
2.80
*
0.49
0.57
*
0.39
0.74
0.35
0.69
*
*
*
*
0.53
*
0.48
*
0.39
*
0.38
*
0.37
0.24
*
0.51
Annual % 02 - 06
2.9
8.4
17.5
6.7
8.5
6.3
4.1
10.3
6.0
28.0
8.5
4.8
2.7
7.3
3.3
4.5
5.6
11.1
3.4
1.4
0.5
Airport Systems Planning & Design / RdN 
Main Freight Airports
Airport
Memphis
Hong Kong
Tokyo/Narita
Anchorage
Seoul/Incheon
Los Angeles Internatl.
Frankfurt/Main
Singapore
Miami
Louisville
Taipei
New York/Kennedy
Chicago/O'Hare
Shanghai/Pudong
Paris/de Gaulle
Amsterdam
London/Heathrow
Dubai
Bangkok
Indianapolis
New York/Newark
Atlanta
Dallas/Fort Worth
San Francisco/Oakland
San Francisco/Internatl
Philadelphia
Los Angeles/Ontario
Cincinnati/Covington
Tons,Millions
3.6
3.1
2.4
2.6
2.1
1.9
1.8
1.8
1.8
1.8
1.7
1.7
1.5
1.6
1.6
1.5
1.4
1.2
1.1
0.99
0.95
0.77
0.74
0.59
0.59
0.55
0.52
0.25
Sources:
ACI “Top 30 Airports” 2004
FAA CY 2005 Cargo Landings
Hubs in Blue.
Airport Systems Planning & Design / RdN 
Airline Market “Caps” Jan 07
(=price/share x shares) $ billions
Airline
UPS
Fedex
Singapore
Ryanair
Lufthansa
Southwest
British
Air France
Cathay Pacific
Qantas
ANA
American
GOL
easyJet
Japan AL
Market Cap
80.5
33.4
14.0
12.6
12.3
12.1
11.8
11.3
9.7
7.7
7.0
6.5
5.6
5.1
4.9
Airline Type
Integrated Freight
Integrated Freight
Went Bankrupt?
Low Cost
Low-Cost
Low-Cost
Low Cost
Airport Systems Planning & Design / RdN 
Airline Market “Caps” Jan 07
(=price/share x shares) $ billions
United
4.9
US Airways
4.7
Continental
3.7
Iberia
3.3
Korean
2.7
jetBlue
2.5
Low Cost
SAS
2.4
Thai
2.2
Virgin Blue
2.0
Low Cost
Air Canada
1.9
Alitalia
1.8
Alaska
1.6
Westjet
1.4
Low Cost
Finnair
1.3
Air Tran
1.1
Low Cost
AirAsia
1.0
Low-cost
Allegiant
0.5
Low-Cost
Northwest
0.4
Delta
0.3
Hawaiian
0.2
Source: finance.yahoo.com, IATA WATS, and industry estimates
Yes
Yes
Yes
Yes
Yes
Yes
Airport Systems Planning & Design / RdN 
Airport Market “Caps”
(=price/share x shares)
Airport
Share Price, Local Money
2001
2002
2003
2004
2005
BAA (UK)
6.13
6.2
5.1
5.5
5.95
Fraport
*
25.6
19.6
23
31
Copenhagen
770
589
460
885
1312
AIAL (New Z.)
3.46
4.54
5.27
6.75
1.9
Beijing
2.03
1.82
1.65
2.33
2.9
Vienna
39.1
34.6
31.5
43.8
50.3
ASUR (Mexico)
18.1
13.4
13.9
18.4
32.9
Zurich
201
124
34
101
174
Malaysia
1.54
2.15
1.46
1.41
1.7
Florence
*
*
15.8
9.8
31.1
Source: Jane's Airport World, Summer issues and market quotes
2006
9.32
60
240
2.0
5.3
63.3
39.1
NA
NA
NA
US$, Billions
2006 (or 2005)
18.98
6.99
0.35
1.82
2.58
1.71
1.18
0.71
0.49
0.12
Many airports are economically more powerful than airlines!
Airport Systems Planning & Design / RdN 
Airline Alliances
Star Alliance -- United, Lufthansa + Swiss, Air Canada,
Thai, US Airways, ANA, Singapore, LOT,
SAS, Air New Zealand, Thai, TAP, bmi,
South African, Asiana, Austrian, Spanair,
plus regionals
oneworld
American, British, JAL,Aer Lingus, Finnair,
Iberia, Qantas, Cathay Pacific, Lan Chile,
Malev, Royal Jordanian
SkyTeam
Air France + KLM, Alitalia, Czech, Korean,
Continental, Delta, Northwest,
Aeromexico, Aeroflot
Airport Systems Planning & Design / RdN 
Alliances’ Market Shares 2006
Alliance
Star
Skyteam
oneworld
Alliances
Total
2006
Pax km
% of
billions
World
566
14
452
12
461
12
1479
38
3914
Source: IATA WATS
Airport Systems Planning & Design / RdN 
New Types of Airlines
 Cargo Integrators
 UPS,
Fedex, DHL
 Role of “Post Offices” ??
 Low-Cost Carriers
 Point-to-point:
Southwest, Jetblue, Ryanair,
Air Asia, Gol (Brazil)
 “Network”: Easyjet, AirTran
 Quasi-Network: Southwest??
 The innovators are the most
profitable and valuable airlines
Airport Systems Planning & Design / RdN 
Challenge to Traditional
Network Carriers
 Is their business model working?
 Will
people pay enough for convenience of
• easy connection at hubs
• big expensive passenger buildings
• travel agents
 If not, what will they do?
 Squeeze
out costs (wages, standards) and
survive on a more modest scale?
 Manage by having “cheap” partners
• Delta -- Song; United -- Ted… (hasn’t worked)
 Disappear?
TWA, Sabena, Swissair…
 Merge? KLM, America West, Japan AS…
Airport Systems Planning & Design / RdN 
Cemts per Sea-Mile
Airline Seat-Mile Costs, 06 Q1
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
e
n
rit est
er ran
st
ys tal est elta ted ska
i
i
a
lu
t
e
a
p
c
i
n
i
n
T
B
a
r
S
e
W ro
D Un
rw
ir
hw Jet
hw
Al me
t
a
A
Ai ntin ort
F
u
ric
A
S
o
N
So
e
U
C
Am
Source: US DOT, BTS,
www.bts.gov/press_releases/ 2006
Airport Systems Planning & Design / RdN 
Airline Seat-Mile Costs, 05
Cents
18.0
16.0
14.0
12.0
10.0
8.0
6.0
Legacy
Source: US DOT, BTS,
www.bts.gov/press_releases/ 2005
JetBlue
ATA
Southwest
America
West
Spirit
Air Tran
Frontier
Continental
Alaska
Northwest
United
American
Delta
US
Airways
4.0
2.0
0.0
LCC
Airline
Airport Systems Planning & Design / RdN 
Effect of Low-Cost Carriers
 Market Share becoming dominant
 US:
About 45%
 Europe: 12% + 20% charters = 1/3 of total
 Inter-Asia: only 6% as of summer 2004
 Real Yields have dropped by 1/3 in
past decade
Source: IATA WATS and McKinsey and Co.
Airport Systems Planning & Design / RdN 
Southwest compared to
Leading Domestic Competitors
Domestic Traffic
Average Aircraft
(millions, 2006)
Age (years)
2006
2007
%
Southwest
96.3
9.8
445
491
+ 10
American
76.3
14.1
699
672
- 3
Delta
63.4
13.3
434
428
- 3
Airline
Fleet Size
Change
Sources US FAA, Bureau of Transportation
Statistics and Airfleets. net
Airport Systems Planning & Design / RdN 
Consequences for Traffic
 Cheaper travel will increase traffic
 Where will it go?
 To
traditional hubs of legacy majors?
 To/from leisure locations and homes?
• Yucatan, Malaga, Bali, etc
 To
secondary airports?
• Miami/Ft. Lauderdale, Los Angeles/Ontario,
London/Stansted, Frankfurt/Hahn,
Rome/Ciampino, etc.
 Airport customers likely to demand
new locations, cheaper facilities
Airport Systems Planning & Design / RdN 
Consequences for Airports (1)
 “Low cost airlines” are causing the
development of “low cost airports”
 Secondary
airports: Boston/Providence,
Miami/Fort Lauderdale, London/Luton
 Inexpensive terminals, designed for new
ways of handling passengers – such as
Jetblue facility at New York/Kennedy
• Compare Boston Delta and Jetblue facilities:
• Pax per gate about 500,000 pax for Jetblue,
about half for Delta
Airport Systems Planning & Design / RdN 
Consequences for Airports (2)
 Struggle of “low cost” and “legacy”
airlines extending to competition
between “low cost” and traditional
main airports
 Boston/Providence
vs. Boston/Logan
 Miami/International vs Miami/Ft Lauderdale
 London/Heathrow vs. London/Stansted
 Bangkok/Suvarnabhumi vs. B/Don Muang
Airport Systems Planning & Design / RdN 
Bottom Line ...
 The nature of the Airport Business
is changing dramatically
 Not clear that airport professionals
fully recognize full implications
 Strong professional tensions …
 Some
examples (not for publication)
Airport Systems Planning & Design / RdN 