COLUMBUS – CHARLOTTE AIR SERVICE RECRUITMENT PLAN THIS IS A CENTERED DATELINE 1
AGENDA WHY AN INCENTIVE IS NECESSARY AIRLINE MERGERS PILOT SHORTAGE AIRPORTS USED BY COLUMBUS PASSENGERS FAA RESTRICTIONS ON AIRPORT INCENTIVES THE COLUMBUS – CHARLOTTE MARKET HOW SERVICE BENEFITS COLUMBUS OUR HEAD START GOAL AND TIMELINE REVENUE GUARANTEE DETAIL SUCCESS STORIES NEXT STEPS 2
FIRST SECTION WHY AN INCENTIVE IS NECESSARY 3
18 MAJORS HAVE BECOME FOUR 1978 1990 2000 Today Page 4 4
51 LCCs HAVE BECOME SEVEN 1978 1984 1990 1994 1998 2002 2006 2010 Today 5
AIRLINES FACE A PILOT SHORTAGE CUMULATIVE NUMBER OF US MAINLINE AIRLINE PILOTS REACHING RETIREMENT AGE PROJECTED FOR CALENDAR YEAR 2016 – CALENDAR YEAR 2022 14,000 REGIONALS CURRENTLY EMPLOY 17,000 PILOTS FEWER THAN 1,000 PILOTS ARE CERTIFIED PER YEAR 12,000 10,000 8,000 14,171 11,575 6,000 9,014 4,000 6,808 4,797 2,000 3,064 1,449 0 2016 2017 2018 2019 2020 2021 2022 SOURCE: REGIONAL AIRLINE ASSOCIATION (RAA) 6
AIRLINES RETIRED 11% OF FLEET US AIRLINE TOTAL FLEET SIZE CALENDAR YEAR 2000 – CALENDAR YEAR 2015 6,900 6,800 6,762 6,763 6,700 6,600 6,500 6,400 6,300 6,200 6,100 6,050 6,000 5,900 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 SOURCE: AIRLINES 4 AMERICA 7
AIRPORTS HAVE LOST CAPACITY CHANGE IN SCHEDULED DEPARTING AIRLINE SEATS CALENDAR YEAR 2005 – CALENDAR YEAR 2015 0.0% -2.3% -2.8% -6.9% -5.0% -14.3% -10.0% -24.7% -15.0% CSG IS A NON-HUB -20.0% -25.0% -30.0% Large Hub Medium Hub Small Hub Non-Hub EAS SOURCE: OAG DATA 8
ONLY 9% OF LOCALS USE CSG ATL: 90% BHM: 0.5% COLUMBUS GENERATES 3,300 PASSENGERS PER DAY JUST 300 USE CSG ALMOST 3,000 PER DAY DRIVE TO ATLANTA MGM: 0.3% CSG: 9% SOURCE: COLUMBUS AIRPORT TRUE MARKET STUDY 9
CSG FORECASTS POORLY DUE TO ATL “LEAKAGE,” CSG -CLT FORECASTS POORLY MUST OVERCOME POOR FORECAST BY MITIGATING RISK NEW ROUTES ARE A MAJOR INVESTMENT CHARLOTTE SERVICE COSTS $7,000 ROUNDTRIP TWICE-DAILY SERVICE IS A $5 MILLION ANNUAL INVESTMENT LARGE MARKETS WITH MORE TRAFFIC SEEM LESS RISKY CONSUMER BEHAVIOR IS DIFFICULT TO CHANGE FREQUENT FLIER LOYALTY CORPORATE CONTRACTS AIRPORT PREFERENCE LOCAL FINANCIAL SUPPORT IS PARAMOUNT IN RECRUITMENT 10
AIRPORT INCENTIVES ARE LIMITED “[THE] FAA ALLOWS PROMOTIONAL INCENTIVES TO AIR CARRIERS FOR NEW SERVICE TO INCREASE TRAVEL USING THE AIRPORT AND/OR PROMOTE COMPETITION…” SOURCE: FAA AIR CARRIER INCENTIVE HANDBOOK 11
SECOND SECTION THE COLUMBUS – CHARLOTTE MARKET 12
AA/CLT CONNECTS TO 107 CITIES 13
AA/CLT CONNECTS TO 107 CITIES ONE HOUR FLIGHT ACCESSES 2,220 DAILY CSG-AREA PASSENGERS WOULD PROVIDE COMPETITION IN ALL MARKETS WOULD HELP TO LOWER CSG FARES 14
WE HAVE A HEAD START COLUMBUS AIRPORT WON A FEDERAL AIR SERVICE GRANT $750,000 FOR NEW CHARLOTTE SERVICE ROUGHLY HALF OF THE TARGETED TOTAL 15
THIRD SECTION GOAL AND TIMELINE 16
TARGET: $1.7 MILLION IN FUNDING NEW SERVICE, BY THE NUMBERS UP TO $3,500 IN AIRLINE COST, EACH WAY UP TO $7,000 AIRLINE COST, ROUNDTRIP UP TO $5 MILLION ANNUAL AIRLINE INVESTMENT 17
TARGET: $1.7 MILLION IN FUNDING NEW SERVICE, BY THE NUMBERS UP TO $3,500 IN AIRLINE COST, EACH WAY UP TO $7,000 AIRLINE COST, ROUNDTRIP UP TO $5 MILLION ANNUAL AIRLINE INVESTMENT COLUMBUS AIRPORT INVESTMENT $200,000 IN WAIVERS AND MARKETING CASH $750,000 IN GRANT FUNDING $950,000 CURRENT AIRLINE INCENTIVES 18
TARGET: $1.7 MILLION IN FUNDING NEW SERVICE, BY THE NUMBERS UP TO $3,500 IN AIRLINE COST, EACH WAY UP TO $7,000 AIRLINE COST, ROUNDTRIP UP TO $5 MILLION ANNUAL AIRLINE INVESTMENT COLUMBUS AIRPORT INVESTMENT $200,000 IN WAIVERS AND MARKETING CASH $750,000 IN GRANT FUNDING $950,000 CURRENT AIRLINE INCENTIVES WHAT IT WILL LIKELY TAKE CURRENT INCENTIVE MITIGATES JUST 19% OF RISK AIRLINES WANT RISK MITIGATION OF 35%+ TOTAL PACKAGE $1.7 MILLION+ 19
MINIMUM REVENUE GUARANTEE ACCOUNTING FOR PARTICIPANTS’ FUNDING INDIVIDUAL LETTERS OF CREDIT, OR; PARTITIONED LOCAL BANK ACCOUNT QUARTERLY INVOICING AIRLINE WILL REPORT REVENUE AGAINST TARGET IF REVENUE IS BELOW TARGET FUNDING DRAWN BY PERCENTAGE FROM EACH ACCOUNT IF REVENUE IS ABOVE TARGET NO PAYMENT IS OWED GRANT FUNDING USED FIRST NO LOCAL FUNDING TOUCHED UNTIL GRANT EXHAUSTED END OF PROGRAM: TWO YEAR PERIOD 20
STRUCTURE OF EFFORT $1.5 MILLION OUR GOAL IN REVENUE GUARANTEES Today Airport Negotiates Determine Your Make Pledges With Interested Airlines Company’s Interest Pledge Aggregated Pledges Converted to Cash Service Agreement Revenue Guarantee On Account or Letters of Credit Reached Contract Signed Service Airline Completes Revenue No Begins Quarterly Revenue Reports Above Target Payment Revenue Grant Funding Invoiced Below Target To a Total of $750,000 Ultimate Goal Flights Remaining Funds Project Guarantors Invoiced Only if Grant Funding is Exhausted Self-Sustaining Returned to Guarantors Complete 21
EXAMPLE: ROCHESTER, MN Rochester Atlanta ROCHESTER, MINNESOTA – ATLANTA COMMUNITY COALITION $950,000 IN VARIOUS FUNDING DAILY SERVICE ON DELTA USED LESS THAN $200,000 22
EXAMPLE: NORTH BEND, OR North Bend Denver NORTH BEND, OREGON – DENVER RESORT AND BUSINESS COALITION $1.2 MILLION MRG TWICE-WEEKLY SERVICE ON UNITED GOING INTO THIRD SEASON 23
EXAMPLE: TUCSON, AZ New York Kennedy Tucson TUCSON – NEW YORK KENNEDY CHAMBER MEMBERSHIP $2.9 MILLION ON ACCOUNT DAILY SERVICE ON AMERICAN BEGAN OCTOBER 7 TH 24
POTENTIAL TIMELINE DEVELOP PLEDGES FEBRUARY 2017 FINAL DEADLINE TAKE PLEDGES TO CARRIERS FEBRUARY – APRIL 2017 CONVERT PLEDGES TO CASH ON AIRLINE’S REQUEST SEPTEMBER 2017 SIGN CONTRACT WITH CARRIER/ANNOUNCE SERVICE SEPTEMBER – DECEMBER 2017 SERVICE LAUNCH LATE 2017 INTO 2018 25
CONTACT INFORMATION RICHARD HOWELL AIRPORT DIRECTOR COLUMBUS AIRPORT 3250 WEST BRITT DAVID ROAD COLUMBUS, GEORGIA 31909 RHOWELL@FLYCOLUMBUSGA.COM 706.324.2449, EXT. 1410 THIS IS A CENTERED DATELINE 26
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