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.
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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
 Discussion
 This
is reality for travellers
 Contrasts with ACI focus on ownership
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Planning Issue
 Many ‘mistakes’ in planning multiairport systems
– 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…
 Washington/Dulles
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Why mistakes happened
 Failure to appreciate traffic
concentration at primary airports
 … Because planners/forecasters
using wrong mental model
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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
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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
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“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 ~ 13 million originations/year
 Note: higher as “average” aircraft larger
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Metropolitan areas with
significant multi-airport systems
Metropolitan
Region
London
Tokyo
New York
Los Angeles
Chicago
Paris
San Francisco
Miami
Hong Kong
Washington/Baltim.
Seoul
Boston
Traffic in Millions
Originating
For Region
51
130
40
93
29
97
37
86
30
100
29
76
24
58
24
57
22
55
20
57
18
41
16
35
de Neufville data base for 2004
Multi-Airport
System
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
Shanghai
Osaka
Atlanta
Las Vegas
Bangkok
Frankfurt
Milan
Dallas/Fort Worth
Orlando
Sao Paulo
Phoenix
Moscow
Traffic in Millions
For Region
Originating
36
16
35
16
84
15
42
15
28
14
54
14
31
14
65
13
33
13
27
13
40
13
27
13
de Neufville data base for 2004
Multi-Airport
System
Yes
Yes
U.C.
Yes
Yes
Yes
Yes
Yes
Yes
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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
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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
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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
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New Reality: US/Canada Network
of Low-Cost Carrier Airports
Metropolitan
Secondary
Region
Airport
Boston
Manchester
Boston
Providence
Dallas/Ft Worth
Love
Houston
Hobby
Los Angeles
Long Beach
Miami
Ft Lauderdale
New York
Islip
San Francisco
Oakland
Toronto
Hamilton
Vancover
Abbotsford
Low-Cost
Carrier
Southwest
Southwest
Southwest
Southwest
Jet Blue
Southwest
Southwest
Southwest
Westjet
Westjet
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New Reality: Europe Network
of Low-Cost Carrier Airports
Metropolitan
Region
Brussels
Copenhagen
Dusseldorf
Frankfurt
Glasgow
Hamburg
London
London
Manchester
Milan
Milan
Oslo
Paris
Rome
Stockholm
Low-Cost
Secondary
Carrier
Airport
Ryanair
Charleroi
Ryanair
Malmo
Easyjet
Koln/Bonn
Ryanair
Hahn
Ryanair
Prestwick
Ryanair
Lubeck
Easyjet
Luton
Ryanair
Stansted
Easyjet
Liverpool
Easyjet
Linate
Ryanair
Orio al Serio
Ryanair
Torp
Ryanair
Beauvais
Easyjet + Ryan
Ciampino
Ryanair
Skvasta
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Multi-Airport Systems
in Brazil
Metropolitan Internat'l Distant Airport
Area
Name
Traffic
Domestic Close-in Airport
Name
Traffic
Millions
Millions
Sao Paulo
Garulhos
13.0
Congonhas
11.7
Rio de Janeiro
Galeao
6.0
Santos Dumont
4.9
Belo Horizonte
Confins
0.8
Pampulha
2.5
Source: INFRAERO, 2002; Rabbani, 2002
Airport Systems Planning RdN
Importance of Parallel Network
of close-in Brazilian airports
Airport Pair
Passengers,
Rank
1000s
Congonhas
Santos Dumont
1461
1
Congonhas
Brasilia
596
2
Congonhas
Pampulha
565
3
Congonhas
Curitiba
551
4
Congonhas
Porto Allegre
365
5
Garulhos
Salvador
364
6
Santos Dumont
Brasilia
325
7
Santos Dumont
Pampulha
312
8
Source: INFRAERO, 2002, Rabbani, 2002
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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
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Implications for future of
second airports
 No-frills airlines are becoming ‘major’
 Southwest
2nd largest airline in world (pax)
 Market Cap ~ 12 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!!!
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Southwest entry in Boston
Figure 4
market grew
second airports
ince 1996, the Regional Airports Have Captured M ore than
Figure 1: New England traffic growth shifted from Boston/Logan
5% 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
Logan
24%
(+2.3M)
77%
(+2.3M)
Regional
Airports
76%
(+7.2M)
Regional Airports
Source: Louis
Berger, New
England Regional
Aviation System
Plan materials
23%
+2.9
+2.9 Million
Million
Air
Air Passengers
Passengers
(+0.7M)
+9.5
+9.5 Million
Million
Air
Air Passengers
Passengers
Regional airports include Providence, Manchester, W orcester, Bangor, Burlington, Hartford, New Haven, and Portland.
Source: Airport Records and US DOT, Form 41 schedules.
Page 3
Airport Systems Planning RdN
Market Share of Boston/Logan
Figure
5
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
Share
of New England Air Passengers
Providence andLogan's
Manchester
(NH)
80%
78%
70%
59%
60%
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 Logan and various regional airports.
Source: Louis Berger New England
Regional Aviation System Plan
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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
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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, Manila/Subic Bay,
San Francisco/Oakland, etc.
 UPS: Louisville, Los Angeles/Ontario.
Chicago/Rockford, etc.
Airport Systems Planning RdN