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, Varig
Mergers
Japan Airlines and Japan Air Systems (2002)
Air France and KLM (2004 )
America West and US Airways (2005)
Major Bankruptcies
United, US Airways, Air Canada, Delta, Northwest
Surge by Low-Cost, Chinese, Cargo Carriers
Air Tran, Ryanair, easyjet, AirAsia
Cathay Pacific, China Airlines, EVA
Airport 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
~ 40 % of all tickets worldwide (Nov. 2005) Over 80% in Canada ~ 73% in UK, ~1/3 in Asia Pacific Some airlines at 100%: Southwest, Ryanair 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
110 100 90 80 70 60 1993
Estimated Real Yields
1997
Year
2001
Source: IATA WATS
2005 Airport Systems Planning & Design / RdN
IATA Members’ Traffic, Revenues, Yield, and CPI
Traffic Revenues Yield Inflation 250 200 150 100 50 0 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04
Source: IATA World Air Transport Statistics Airport Systems Planning & Design / RdN
World Traffic, (Pax-Km x 10
9
) World and IATA
Year Pax-km, Billions IATA World IATA share, % Annual Growth % IATA World 2005 2004 2003 2002 2001 2000 1999 1998 1990 1987 1982 1977 3400 3082 2704 2770 2652 2757 2657 2514 1600 1042 712 600 4001 3722 3236 3196 2912 3018 3074 2888 2186 1763 1263 1036 85 82.8
83.5
86 91 91 86 87 73 59 56 58 10 13 (0.4) (1) (4) 4 6 7 18 9 4 7 13.6
1 (1) (4) (2) 6 4 8 8 4 Source: IATA World Air Transport Statistics Note: Changed Series; now includes charter travel
Airport Systems Planning & Design / RdN
Non-IATA Members
As of 2005, many airlines in the top 50 worldwide were not in IATA…
Southwest, Jetblue, AirTran, Spirit, Continental Express Westjet Ryanair, easyjet Frontier, Hawaiian, Skywest Condor 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
Airports by millions of pax, 2005
(ACI + FAA data; US- Bold, hubs- italics) Airport
Atlanta Chicago / OHare
London / Heathrow Tokyo / Haneda
Los Angeles / Internatl
Dallas / Ft. Worth
Paris / de Gaulle Frankfurt / Main Amsterdam / Schiphol
Las Vegas
Madrid
Denver / International Phoenix
Bangkok
New York / Kennedy
Houston / Bush Minneapolis / St. Paul
Hong Kong / C L K
Beijing / Pudong
Detroit / Metro
Orlando / International
New York / Newark
London / Gatwick
San Francisco / Internatl
Tokyo / Narita
2005
84.8
72.4
67.9
61.1
58.7
56.1
53.8
52.2
44.2
42.8
41.9
41.6
40.6
40.4
38.1
35.9
35.2
33.2
32.8
32.8
32.1
2004
83.6
75.4
67.3
62.3
60.7
59.4
50.9
51.1
42.5
41.4
38.5
42.4
39.5
38.0
37.4
36.5
36.8
36.7
34.9
35.2
31.1
31.8
31.5
33.5
31.1
Millions of Passengers 2003 2002 2001
78.8
69.4
63.2
63.2
55.0
53.2
47.9
48.1
39.8
36.3
35.4
37.5
37.4
29.1
31.7
34.1
33.2
26.4
24.4
32.7
27.3
29.6
29.9
28.8
23.5
76.6
66.5
63.0
61.1
56.2
52.8
48.1
48.1
40.6
35.0
33.7
35.7
35.6
30.5
28.9
34.4
32.6
33.5
27.2
32.4
26.7
29.0
29.5
30.7
25.8
2000 1993 Annual % 2000 - 05
75.9
66.8
60.7
58.7
61.0
55.2
48.0
48.6
39.5
35.2
34.0
36.1
35.5
30.6
29.4
34.8
35.2
32.6
24.2
32.3
28.2
30.5
31.2
34.6
80.2
72.1
64.6
56.4
68.5
60.7
48.2
49.4
39.6
36.9
32.8
38.7
35.9
29.6
32.8
35.2
36.7
32.7
21.7
35.5
30.8
34.2
32.1
41.2
47.8
65.1
47.6
41.5
47.8
49.7
25.7
31.9
20.1
22.5
17.3
32.6
23.5
17.1
26.8
20.3
23.4
24.4
* 24.2
21.5
25.8
20.1
32.0
25.4
27.4
20.0
NA Airport Systems Planning & Design / RdN 1.1
0.1
1.0
1.7
-2.9
-1.5
2.3
1.1
2.3
3.2
5.5
1.5
2.6
NA
4.6
1.6
-0.4
NA NA -0.2
1.6
-0.8
0.4
-4.4
Airports by millions of pax, 2004
In 2005, airport traffic stagnated at most major airports Big increases in • • •
New Hubs – such as Madrid, Philadelphia Secondary airports – London/Stansted Asia, especially China, Thailand
Thus, significant changes in ranking over last several years Airport Systems Planning & Design / RdN
Airports by millions of pax, 2005
(ACI + FAA data; US- Bold, hubs- italics)
Philadelphia
Singapore
Miami / International
Seattle / Tacoma
Toronto / Pearson Rome / Fuimicino Sydney
Munich
Charlotte
Barcelona
Boston / Logan
Jakarta
Washington / Dulles
New York / LaGuardia
Seoul/Incheon Paris / Orly Mexico City Manchester (UK)
Cincinnati
Dubai
Shanghai/Pudong Kuala Lumpur London/Stansted
Miami/ Fort Lauderdale Washington/Baltimore St. Louis / Lambert
Pittsburgh
22.0
21.5
19.7
13.7
10.4
30.8
30.7
30.2
28.7
28.6
28.6
28.0
27.1
26.4
26.1
26.0
24.9
22.7
22.5
28.5
30.4
30.2
28.7
28.7
28.1
28.1
26.8
24.7
24.5
26.1
25.7
22.7
24.4
24.2
24.0
23.0
21.5
22.0
21.7
21.1
21.1
20.9
21.0
20.7
* * 24.7
23.1
29.6
26.7
24.7
25.8
24.2
24.0
23.1
22.5
22.8
18.6
17.0
22.5
* 22.4
21.7
19.5
21.2
* * * 18.7
* 19.7
20.4
14.2
21.3
* 23.1
20.3
18.6
20.9
* * * * * 19.0
25.6
18.0
24.4
27.4
30.1
26.7
25.9
25.0
23.4
23.0
23.6
21.2
22.6
* 23.9
28.1
31.7
27.0
28.0
25.6
24.3
23.6
23.2
20.7
24.2
* 17.9
21.9
* 23.0
20.6
19.5
17.3
* * * * * * 26.7
19.9
24.9
28.6
33.6
28.4
28.8
25.9
23.5
23.1
23.1
19.8
27.4
* 20.0
25.2
* 25.4
20.7
22.5
* * * * * * 30.5
19.8
16.5
18.8
28.7
18.8
20.5
18.8
16.6
12.5
17.3
* 24.0
* * 19.8
* 25.3
* 12.8
12.3
* * * * * * 19.9
18.5
Airport Systems Planning & Design / RdN
4.7
1.5
-2.0
0.2
NA 2.1
NA
4.8
4.2
7.4
-0.7
NA NA 0.6
NA -0.4
NA NA 0.0
NA NA NA NA NA NA
-11.0
-8.8
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 Bangkok, Kobe Major New Airport Osaka/Kansai; Tokyo/Haneda Runway landfills Singapore Shanghai/Pudong Airport Makeovers Massive new Terminal New Runway, Teminal 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 (Pax-Km, billions)
Airline
American United Delta Northwest Air France Lufthansa British Continental Southwest JAL Singapore Qantas Air Canada KLM Cathay Pacific USAirways China Southern Emirates ANA Air China Thai
2005
65 60 59 56 52 50 222 183 167 122 116 113 111 109 97 94 81 74 71 68 65
2004
65 54 * 55 * 51 209 184 158 118 107 109 106 101 87 95 77 74 66 63 57
2003
61 * * 52 * 45 193 167 144 110 99 97 100 91 77 76 64 69 59 57 43
2002
64 * * 54 * * 196 176 153 116 99 94 99 91 71 83 74 73 69 59 49
1995
61 * * 43 * * 165 180 137 101 50 62 94 57 * 70 48 52 * 44 *
1992
55 37 31 * 31 * 157 149 130 94 37 49 72 69 22 56 * * 38 * *
Annual % 02-05
4.4
1.3
3.1
1.7
5.7
6.7
4.0
6.6
12.2
4.4
3.2
0.5
1.0
5.1
10.9
0.5
NA NA 1.2
NA NA Airport Systems Planning & Design / RdN
Source: IATA WATS
Airline
American Southwest Delta United Northwest JAL Lufthansa ANA Air France China Southern Continental US Airways British Ryanair China Eastern Air China Iberia eastjet SAS Alitalia Air Canada Qantas America West KLM Korean Westjet
Source: IATA WATS
Airline Rankings (Passengers, millions)
2005
98 88 86 67 58 51 49 48 48 43 25 24 24 23 22 43 42 36 33 30 28 27 26 22 21 9
2004
92 81 87 71 56 52 48 46 45 39 20 22 21 24 21 41 42 35 28 * 24 26 22 20 21 8
2003
89 66 84 67 53 34 44 43 44 * 20 22 20 24 20 38 41 35 23 * * 25 22 * 21 7
2002
94 64 90 69 54 34 44 44 43 21 23 22 23 24 19 40 47 34 21 * * 24 21 * 22 6
1995
80 * 87 79 49 29 33 38 * * 19 21 * * 17 35 58 32 * * * * * * 22 *
1992
86 28 83 67 44 24 27 35 14 * 14 20 * * 15 38 55 25 * * * * * * 20 *
Annual % 02-05
1.4
12.5
(1.5) (1.0) 2.5
16.7
3.8
3.0
3.9
34.9
2.5
(3.5) 2.0
19.0
NA NA 4.2
7.9
2.9
3.0
1.4
(1.4) 5.3
NA (1.5)
16.7
Airport Systems Planning & Design / RdN
Airline Rankings (Freight Tonne-Km, Billions)
Airline
Fedex UPS Korean Lufthansa Singapore Cathay Pacific China Airlines Air France EVA Cargolux Japan British KLM Emirates Northwest American Air China United Malaysian Asiana Nippon
2005
14.4
9.1
8.1
7.7
7.6
6.5
6.0
5.5
5.3
5.1
4.8
4.8
4.6
4.2
3.2
2.9
2.7
2.6
2.6
2.4
2.4
2004
14.6
7.4
8.3
8.0
7.1
5.9
5.6
5.4
5.5
4.7
4.9
4.8
4.5
3.5
3.3
2.9
2.6
2.6
* 2.7
2.4
2003
13.2
6.7
6.9
7.3
6.7
5.2
4.7
4.9
4.7
4.3
4.4
4.2
4.1
2.6
3.0
2.6
* 2.4
* 2.6
2.3
2002
13.0
6.6
6.0
7.2
6.8
4.8
4.5
4.9
4.1
4.2
4.4
4.1
4.0
* 3.0
2.6
* 2.8
* 2.6
2.2
Source: IATA World Air Transport Statistics Asian Cargo airlines have surged over past three years
1995
7.0
* 4.3
5.8
3.7
2.8
* 4.4
* * 3.8
3.3
3.6
* 2.8
2.4
* 2.5
* * 1.5
1992
5.8
* 2.7
4.3
2.9
1.7
* 3.3
* * 3.2
2.5
2.4
* 2.7
1.6
* 1.9
* * 1.1
% Change 02-05
3.6
12.6
11.7
2.3
3.9
11.8
11.1
4.1
9.8
7.1
3.0
5.7
5.0
NA 2.2
3.8
NA (2.4) NA (2.6) 3.0
Airport Systems Planning & Design / RdN
Airline Rankings (Freight Tonne, millions)
Airline Fedex UPS United Korean China Airlines Singapore Japan Airlines Lufthansa Cathay Emirates EVA China Eastern Air France China Southern Air China Northwest British EAT Asiana Cargolux ANA KLM Thai American Malaysian
Source: IATA World Air Transport Statistics
2005 6.97
4.20
1.65
1.49
1.34
1.21
1.16
1.14
1.12
0.93
0.84
0.82
0.78
0.74
0.72
0.71
0.70
0.66
0.64
0.63
0.62
0.57
0.56
0.54
0.53
2004 7.00
4.02
1.61
1.52
1.74
1.13
1.19
1.15
0.97
0.79
0.86
0.68
0.77
0.67
0.65
0.75
0.71
0.60
0.69
0.57
0.61
0.56
0.54
0.54
0.55
2003 6.50
3.28
1.18
1.75
1.08
1.04
0.97
1.02
0.88
0.62
0.74
* 0.69
0.58
0.55
0.67
0.63
0.52
0.68
0.52
0.59
0.52
0.51
0.51
* 2002 6.41
3.21
1.03
1.26
1.00
1.03
0.92
1.03
0.85
* 0.62
* 0.68
* * 0.65
0.61
0.55
0.56
0.45
0.54
0.52
0.53
0.51
* 1995 3.40
* 0.53
0.85
* 0.59
0.84
0.98
0.52
* * * 0.66
* * 0.72
0.52
* * 0.43
0.46
0.55
0.38
0.64
* 1992 2.80
* 0.49
0.57
* 0.39
0.69
0.74
0.35
* * * 0.53
* * 0.48
0.39
* * * 0.38
0.37
0.24
0.51
* Annual % 02 - 05 2.9
10.3
20.1
6.1
11.3
5.8
8.7
3.6
10.6
NA 11.8
NA 4.9
NA NA 3.1
4.9
6.7
4.8
13.3
4.9
3.2
1.9
2.0
NA
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
1.1
0.99
0.95
0.77
0.74
0.59
0.59
0.55
0.52
0.25
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
Sources: ACI “Top 30 Airports” 2004 FAA CY 2005 Cargo Landings Hubs in Blue.
Airport Systems Planning & Design / RdN
Airline Market “Caps” (=price/share x shares)
Airline
UPS Fedex Southwest Singapore Ryan Air * British Lufthansa GOL Air France easyjet Continental Jet Blue * American Alaska Virgin Blue AirTran JAL Westjet * Airasia Hawaiian Alitalia Delta USAirways
Symbol 2005
UPS FDX LUV SPAAF.PK
RYAAY BAB DLAKY.PK
GOL AF1.PA
EJETF.PK
CAL JBLU AMR ALK VBA.AX
AAI JALSY.PK
WJA.TO
AIABF.pk
HA AZA.MI
DALRQ.pk
UAIRQ.OB
2001
55 42 18 25 48 * * * 3 44 32 33 6 18 3 38 13
US $/Share Feb-03 Aug-04 Sep-05
59 52 13 4 6 6 3 19 39 19 9 * * 11 11 2 9 0.2
72 82 15 6.6
30 41 11.5
* 16 3 10 13 9 22 12 14 13 7.8
4 2 12 31 1.6
11 14 11 70 81 14 6.9
46 51 13 32 17 5.4
12 10 3
0.7
0.3
Market Capitalization Sep-06 US $, billions, Sep 06
70 100 16 8.8
57 77 19.5
34 19.7
8.9
25 10 10 37 1.6
9 10 10 4 0.9
0.7
0.16
Northwest Air Canada United NWACq.pk
Ace-rv.TO
21 6 33 6 3 1 10 0.07
0
0.8
0.06
0.5
0 Sources: Yahoo Finance and Google *Adjusted for Stock Split 75.3
30.7
12.9
11.5 est 8.8
8.7
7.5 est 6.6
5.0 est 3.5 est 2.2
1.7
1.7
1.5
1.4 est 0.9
0.7 est 0.4 est 0.3 est 0.2
~ 0
0.15
0.1
0.05
0 0
Airport Systems Planning & Design / RdN
Airport Market “Caps” (=price/share x shares)
Airport
BAA (UK) Fraport Copenhagen AIAL (New Z.) Beijing Vienna ASUR (Mexico) Zurich Malaysia Florence
2001
6.13
* 770 3.46
2.03
39.1
18.1
201 1.54
*
Share Price, Local Money 2002
6.2
25.6
589 4.54
1.82
34.6
13.4
124 2.15
*
2003
5.1
19.6
460 5.27
1.65
31.5
13.9
34 1.46
15.8
2004
5.5
23 885 6.75
2.33
43.8
18.4
101 1.41
9.8
2005
5.95
31 1312 1.9
2.9
50.3
32.9
174 1.7
31.1
Source: Jane's Airport World, Summer issues and market quotes
2006
9.32
60 240 2.0
5.3
63.3
39.1
NA NA NA
Many airports are economically more powerful than airlines!
US$, Billions 2006 (or 2005)
18.98
6.99
0.35
1.82
2.58
1.71
1.18
0.71
0.49
0.12
Airport Systems Planning & Design / RdN
Airline Alliances
Star Alliance
-- United, Lufthansa, Air Canada, Thai, US Airways, ANA, Singapore, LOT, SAS, Air New Zealand, Swiss, TAP, Bmi, Varig, South African, Asiana, Austrian, Spanair
oneworld
American, British, Aer Lingus, Finnair, Iberia, Qantas, Cathay Pacific, Lan Chile
SkyTeam
Air France + KLM, Alitalia, Czech, Korean, Continental, Delta, Northwest, Aeromexico, Aeroflot Airport Systems Planning & Design / RdN
Alliances’ Market Shares
2004 Market Share of Systems Alliance
Star Skyteam oneworld Alliances Total
Pax-km millions
752 642 530 1924 2989
% of world
25 21 18 64 Source: !ATA World Air Stats.
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 “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)
Or disappear? TWA, Sabena, Swissair… Airport Systems Planning & Design / RdN
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
U S Ai rw C ays on tin en ta N l ort hw est D el ta U ni te d Al ask a Ame rica n rica W est Fro nt ie r Ai rT ra n Ame Sp iri So t ut hw est Je tBl ue
Source: US DOT, BTS, www.bts.gov/press_releases/ 2006
Airport Systems Planning & Design / RdN
Airline Seat-Mile Costs, 05
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
Legacy
Source: US DOT, BTS, www.bts.gov/press_releases/ 2005 Airline
LCC 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
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 • •
(see discussion by Regine Weston) Compare Boston Delta and Jetblue facilities
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 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