Upload
jared-collins
View
215
Download
0
Embed Size (px)
DESCRIPTION
2 Forecast Scope Depends on the Application
Citation preview
30th Annual FAA Aviation Forecast Conference
AIRPORT FORECASTING IN UNCERTAIN TIMES
Presented By:
Christina CassotisVice President, SH&E, Inc.
Washington D.C., March 18, 2005
2
Aviation Forecasts Are Necessary for Planning but Challenges Are Part of the Work
Purpose:Purpose:
Problem:Problem:
Solution:Solution:
To Assess Future Infrastructure Requirements andTo Assess Future Infrastructure Requirements andthe Relative Timing of Capital Investmentsthe Relative Timing of Capital Investments
Forecasts are Never PreciseForecasts are Never Precise
Too Many Assumptions, Too Many UnknownsToo Many Assumptions, Too Many Unknowns
Incorporate Uncertainty into Forecasting andIncorporate Uncertainty into Forecasting andthe Planning Processesthe Planning Processes
3
Forecast Scope Depends on the Application
ScopeAircraft / Engine
M anufacturers
Airlines
Government Agencies
Airport M anagement
Worldwide X X
Regional X X X
Country X X X
M etro Area X X X
Indiv idual Airports X X X
Route X X X
4
Airport Forecasters Face A Number of Issues
Understanding the Factors that Drive Demand for Your Airport
Recognizing Emerging Trends and How They May Impact Your Airport– Industry-wide developments
– Local factors
Predicting the Future in an Unstable and Ever Changing Industry
5
Understanding the Demand Profile for Your Airport is Key
Growth is Fueled by Different Factors
Market Segments Likely to Grow at Different Rates
Infrastructure Requirements Vary
Local vs. Connecting
Resident vs. Visitor
Domestic vs. International
Short-haul vs. Long-haul
Business vs. Leisure
Market SegmentsMarket Segments
6
Identifying the Drivers of Demand in a Stable Environment Can Be Straightforward
Personal Income
Economy
Population Growth
Air Fares
Service Levels
Alternate Airports
Substitute Modes
PassengerDemandForecast
7
19701970 19751975 19801980 19851985 19901990 19951995 20012001100M100M
200M200M
300M300M
400M400M
500M500M
600M600M
700M700M
But, Unpredictable External Events Can Disrupt a Stable Growth Pattern
U.S. Airline Revenue Enplanements
Economic RecessionsEconomic Recessions
Pan AmFlt 103
Gulf War
Deregulation
Controller’sStrike
9/11
8
9/11 and the 2001 Economic Recession Had A Pronounced Impact on US Demand
450,000
500,000
550,000
600,000
650,000
700,000
750,000
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
U.S. Airline Revenue Enplanements
Source: Air Transport AssociationSource: Air Transport Association
Trendline 14% Below
Expected
9/11 & Economic Recession
9
Industry Developments Will Influence Future Airport Traffic Levels
Growing Market Presence of Low Cost Carriers
Regional Jet Deployment
Increased Use of Secondary Airports
Airline Industry Consolidation
The LCC Phenomenonis a Global Trend
11
Low-Fare Airlines Now Represent Nearly 30% of the U.S. Market
8%10% 10%
12%14%
16%18% 18% 19%
21% 22% 23% 24%26% 28% 29%
Aug90
Aug91
Aug92
Aug93
Aug94
Aug95
Aug96
Aug97
Aug98
Aug99
Aug00
Aug01
Aug02
Aug03
May04
Mar05
Source: OAG Schedule Tapes and InnovataSource: OAG Schedule Tapes and Innovata
U.S. Low-Fare Carrier Share of Total U.S. Nonstop SeatsU.S. Low-Fare Carrier Share of Total U.S. Nonstop Seats
12
Canada Has Experienced Rapid LCC Growth
6%9%
12%
22%
32%36%
33%
Aug 1999 Aug 2000 Aug 2001 Aug 2002 Aug 2003 Aug 2004 Mar 2005
Source: OAG Schedule Tapes only, does not include charter activity
Low Cost Carrier Share of Nonstop Intra-Canada Seats Low Cost Carrier Share of Nonstop Intra-Canada Seats
13
LCCs are Also Gaining a Foothold in Europe
Source: OAG Schedule TapesSource: OAG Schedule Tapes
Low Cost Carrier Share of Nonstop Intra-Europe Seats Low Cost Carrier Share of Nonstop Intra-Europe Seats
Note: Excludes charter seats which carry half of intra-Europe demand
14
Europe’s LCC Market is Far From Mature
Upstart LCCs and Reinvented Carriers Are Poised for Significant Growth in Europe
15
The LCC Phenomenon is Rapidly Spreading Across Asia with Several New Entrants in SE Asia Market
Malaysian-based
Also serving Thailand and Indonesia
– Orient Thai provides low-cost Int’l service
– Formed One-Two-Go to serve domestic routes
2nd Largest Philippines-based carrier
Singapore-based LCC
Launched service in May 2004
Thai AirAsia - Joint venture with AirAsia and Thai interests
ValueAir
16
Established Carriers Also Have Plans for LCC Operations in Asia
Looking to expand from Australian market into SE Asia
Launched Singapore-based JetStar Asia, in December 2004
Inaugural flight from Changi to Bangkok, September 15, 2004
Launched Nok Air July 20, 2004, a Budget Carrier Serving Domestic Thai Markets
TigerAirways
17
In Addition, China and Japan Are Exploring LCC Competition
Considering the entry of LCCs to serve domestic marketNumerous underutilized regional airports
Launching Air Next in 2005Will serve southern Japan Island markets
Airports Served by LCCs Experience Dramatic Traffic Growth
But Surrounding Airports May See Slower Growth or Traffic Declines
19
LCCs Can Alter Airport Usage Patterns in aMulti-Airport Region – The Boston Example
Avoided Boston LoganAirport due to Congestion
Entered Providence,October 1996
Entered Manchester,June 1998
Southwest Serves the Boston Market Through Secondary Airports
Greater BostonAirport System
Primary CommercialService Airport
Secondary Airport
BostonLogan
Manchester
Providence
20
-0.3%
6.7%3.3%
20.2%
28.6%
4.0%
-5%
0%
5%
10%
15%
20%
25%
30%
35%
Providence Manchester U.S.
1990-1995 1995-2000
Average Annual Passenger Growth
The Secondary Airports Experienced Phenomenal Growth after Southwest Airlines’ Entry
Source: Airport Records and US DOT, Form 41 schedules.Source: Airport Records and US DOT, Form 41 schedules.
21
Providence & Manchester Providence & Manchester 14%14%
(+0.2M) (+0.2M)
LoganLogan86%86%
(+1.3M)(+1.3M)
Providence & Providence & ManchesterManchester
63%63%(+5.5M)(+5.5M)
LoganLogan37%37%
(+3.2M)(+3.2M)
+1.5 MillionPassengers
+7.5 MillionPassengers
Source: Airport Records and US DOT, Form 41 schedules.Source: Airport Records and US DOT, Form 41 schedules.
With LCC Service, The Secondary Airports Attracted Most of the Region’s Passenger Growth
1990-19951990-1995 1995-20001995-2000
22
LCC Growth is Expected to Continue as They Account for an Increasing Share of Aircraft Orders
0%
20%
40%
60%
80%
100%
2004 2005 2006 2007 2008 2009
Regionals LCCsLegacy Airlines
Distribution of US Airline Aircraft OrdersDistribution of US Airline Aircraft Orders
Source: ACAS DatabaseSource: ACAS Database
23
Regional Jet Aircraft Are Also Transforming the Industry
Opening Up New, Thin Markets– Hub Bypass and Point-to-Point Services
Replacing Unpopular Turboprops
Augmenting Mainline Service in Off-Peak Hours
24
There Has Been Explosive Growth in the Use of Regional Jets in Recent Years, Particularly in the US
Note: August 1990 – August 2004 and March 2005Note: August 1990 – August 2004 and March 2005
Source: OAG Schedule Tapes and InnovataSource: OAG Schedule Tapes and Innovata
Daily U.S. Domestic Departures with RJsDaily U.S. Domestic Departures with RJs 1990 – 20051990 – 2005
405 151 172 160 229 320 477 6601,212
2,047
2,987
4,303
5,541
7,113
8,8659,380
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
25
Boeing Predicts that RJ’s Will Account for 17% of the Worldwide Fleet in 2023
Single-aisle62%
Twin-aisle18%
747 & Larger
6%RJs14%
Single-aisle58%
Twin-aisle21%
747 & Larger
4%RJs17%
2003 2023
Source: Boeing, Current Market Outlook, 2004.Source: Boeing, Current Market Outlook, 2004.
16,200 Aircraft16,200 Aircraft 34,800 Aircraft34,800 Aircraft
26
Over 75% of New RJs Will be Deployed in North America and Europe
North America
Europe
Asia
Latin America
Africa
Middle East
500 1,000 1,500 2,000 2,500
RJ Deliveries by World Region, 2004-2023RJ Deliveries by World Region, 2004-2023
Source: Boeing, Current Market Outlook, 2004.Source: Boeing, Current Market Outlook, 2004.
27
At the Airport Level, An Influx of RJs can Affect Capacity and Facility Needs
Average Aircraft Size Will Increase to AccommodateGrowing Passenger Demand
Old Assumption:Old Assumption:
New Reality:New Reality:Average Aircraft Size Has Been Declining
Requiring More Aircraft Operations to Accommodatethe Same Number of Expected Passengers
28
In Recent Years, There Has Been a Steep Decline in Average Aircraft Size
128130132134136138140142144146148
Actual Forecast
Due Largely to the Influx of RJs andDue Largely to the Influx of RJs andEmphasis on Service FrequencyEmphasis on Service Frequency
Note: System Operations for Large and Regional CarriersNote: System Operations for Large and Regional CarriersSource: FAA Aerospace Forecasts, March 2004Source: FAA Aerospace Forecasts, March 2004
Average Seats per Departure
The Realities of Forecasting
30
The Factors that Explain Historic Growth Can Be Easily Quantified
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
7,000,000
8,000,000
9,000,000
Actual
Predicted
Passenger Enplanements Passenger Enplanements – Major US Airport– Major US Airport
R2 = 99%
31
A Good Historic Fit Does Not Guarantee an Accurate Forecast
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
Actual
Predicted
Historic Fit Forecast
Passenger Enplanements Passenger Enplanements – Major US Airport– Major US Airport
32
There are Inherent Risks with Using Historical Relationships to Predict the Future
Structural Changes May Alter the Relationship Between Independent Variables and Traffic Growth
New Factors that Influence Passenger Demand May Arise
33
The US Short Haul Market Was Disproportionately Affected by 9/11 and Has Not Fully Recovered
The “Hassle” Factor– don’t go or drive instead of fly
The Velocity Effect– fewer trips made by those who remain in the market
The Corporate Policy Effect– reinforces both of the above
So, How do You Reflect Inherent Uncertainties and Plan Effectively?
35
Develop High and Low Projections That Bracket the Most Likely Forecast
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
18,000,000
20,000,000
Historic
Mid
High
Low
Historic and Forecast Passenger EnplanementsHistoric and Forecast Passenger EnplanementsMajor US AirportMajor US Airport
Sources: SH&E AnalysisSources: SH&E Analysis
36
23.6M 26.5M 27.4M
Focus on Threshold Levels and Not Forecast Years
Threshold Levels Drive Infrastructure NeedsThreshold Levels Drive Infrastructure Needs
450,000450,000
500,000500,000
550,000550,000
600,000600,000
650,000650,000
700,000700,000
1993 1998 2000
Low
29M
High Low RJ High High
37.5M 45M
HistoricHistoric ForecastForecast
Annual Annual OperationsOperations
493K507K
479K510K
552K 543K
585K608K
656K
529K
RJ
YearsYears Passenger Traffic ThresholdsPassenger Traffic Thresholds
Boston Logan Airport Planning ForecastsBoston Logan Airport Planning Forecasts
37
The Best Planning Forecasts Recognize Inherent Uncertainties
Rely on Several Different Forecast Approaches
Reflect a Reasonable Range of Future Outcomes
Incorporate Forecast Refinement as More InformationBecomes Available