John P. Heimlich Sharon L. Pinkerton VP & Chief Economist SVP-Legislative & Regulatory Policy

A4A Media Briefing November 14, 2018

Contents

airlines.org 2

» Year-to-Date Operations and Financial Results

» Thanksgiving-Period Air Travel Forecast

» Trends in U.S. Airline and Airport Investment / Capital Improvement

» Update on Taxes and Airport Financial Resources

YTD 2018 OPERATIONS AND FINANCIAL RESULTS

airlines.org 3

Sources: BTS and DOT Air Travel Consumer Report (http://www.dot.gov/airconsumer/air-travel-consumer-reports)

airlines.org 4

On-Time Performance Inched Up in First 8 Months Despite Slightly Lower Completion 2018 Featuring the Lowest-Ever Recorded Rate of Involuntary Denied Boardings

98.2 98.7

98.5 98.1

2015

2016

2017

2018

Flight Completion Factor (%) – YTD Aug

3.24 2.70

2.46 2.89

2015

2016

2017

2018

Mishandled Bag Reports per 1,000 Psgrs. On-Time Arrival Rate (%) – YTD Aug

78.1 80.5

78.2 78.5

2015

2016

2017

2018

0.76 0.62

0.34 0.12

2015

2016

2017

2018

Involuntary Denied Boardings per 10K Psgrs.

1H

Jan-Aug

The First Nine Months of 2018 Posed Some Significant Operating Challenges

airlines.org 5

Source: A4A research, FAA Air Traffic Organization and masFlight (subsidiary of Global Eagle)

Airport Construction: ATL/CHI/DCA/DFW/HNL/HOU/LAX/MCO/MIA/NYC/PHL/PHX/SAN/TPA

Air Traffic Control: Understaffing at many major facilities; critically low staffing at New York TRACON*

Power Outages/Airport Equipment: Jan 1 CBP nationwide outage; Jan 7 (JFK T4 water main break) Aug 16 – DCA loses power for more than 1 hour, affecting about two dozen flights Sep 16 – Portions of PHX T4 had a multi-hour closure, prompted by a suspicious abandoned rental car, which snarled air traffic and led to the cancellation of ~30 flights (mostly WN) and delayed hundreds more.

Major Weather • Jan 3-5 (“bomb cyclone”), 7-8, 12, 16-18, 21-22 • Feb 4-5, 7, 9, 11, 15, 20 • Mar 2 (Winter Storm Riley) 7 (Quinn) 13 (Skylar) 20-22 (Toby) • Apr 4 (Mid-Atlantic/Northeast), 14-16 (MSP/ORD/CLT/NE), 25 (NE) • May 3 (CHI/DAL t-storms), 14-16 (CHI/mid-Atlantic/NE t-storms), 31 (SE/mid-Atlantic t-storms) • Jun 18-20 (rainstorms and low visibility in Chicago/mid-Atlantic), 26 (CHI t-storms) • Jul 1 (CHI storms), 15 (NYC/PHL storms), 17 (NE/mid-Atlantic), 22 (MCO), 23 (DEN), 27 (NE/mid-Atlantic) • Aug 2-3, 7-8 (t-storms in mid-Atlantic/NE/CHI), 11 (NYC/PHL), 13-14 (mid-Atlantic/NE/DAL), 17 (NE) • Sep 3 – “Flooding Causes Massive Delays at O’Hare, Closes Surrounding Roads”; ~500 flights canceled

and ~1,100 delayed; crews worked to clean up leaks inside the terminal • Sep 11-17 – Hurricane Florence (Carolinas) ~3,000 cancellations

* Staffing is routinely cited as the basis for many traffic management initiatives (ground delay programs, ground stops, airspace flow programs, miles-in-trail) across the NAS

1.90

1.52 1.35

1.02

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2.00

2015 2016 2017 2018

Sources: DOT Air Travel Consumer Report (http://www.dot.gov/airconsumer/air-travel-consumer-reports)

airlines.org 6

The Rate of Customer Complaints to DOT Continues to Fall in 2018 Customer Complaints re: U.S. Airlines per 100,000 Passengers

Jan-

Aug

YTD 3Q18 Expenses Rose Faster Than Revenues, Reducing Profitability Yet Again Carriers Under Cost Pressure in Every Major Category, Driving Margins Lower in 2018

airlines.org 7

Change (%) in Operating Revenues and Expenses First Nine Months 2018 vs. First Nine Months 2017

6.5

15.8 12.4

7.0 5.9

33.9

2.7 6.5

3.2 8.6

12.0 15.6 15.5

12.1 8.2

Pax

Rev

(1)

Car

go R

ev

Oth

er R

ev (2

)

Tota

l OpR

ev

Labo

r

Fuel

Mai

nten

ance

Airp

orts

Airc

raft

Oth

er (3

)

Tota

l OpE

xp

2015

2016

2017

2018

Source: A4A analysis of reports by Alaska, Allegiant, American, Delta, Hawaiian, JetBlue, Southwest, Spirit and United

1. Traffic (revenue passenger miles) up 4.8 percent; yield (revenue per passenger-mile flown) up 1.6 percent; U.S. CPI up 2.5 percent 2. Sale of frequent flyer award miles to airline business partners, transportation of pets, in-sourced aircraft and engine repair, flight simulator rentals, inflight sales, etc. 3. Professional fees, food/beverage, insurance, commissions, GDS fees, communications, advertising, utilities, office supplies, crew hotels, nonfuel payments to regionals

Pre-Tax Profit Margin (%) YTD 3Q Four-Year Trend

$10.

8B

$14.

9B

$2.2

0 vs

. $1.

70

$18.

3B

$18.

7B

In YTD 3Q18, U.S. Passenger Airline* Profitability Less Than a Third of Starbucks Pre-Tax Profit Margin (% of Operating Revenues)

airlines.org

38.2 33.0

28.3 26.3 25.5

18.3 18.0 16.0 12.1 10.4

8.2 6.2 3.7

McD

onal

d´s

Rai

lroad

s (2

)

Appl

e

Star

buck

s

Dis

ney

Com

cast

Hon

eyw

ell

Cat

erpi

llar

Mar

riott

Boei

ng

Airli

nes

(1)

Chi

potle

Ford

8

1 Alaska, Allegiant, American, Delta, Hawaiian, JetBlue, Southwest, Spirit and United 2 CSX, Norfolk Southern and Union Pacific Source: Company SEC filings

Airlines Recovered $0.68 in Revenue for Every $1.00 Increase in Operating Costs Fuel Alone Accounted for 57 Percent of the Year-Over-Year Increase in Costs

airlines.org 9

~ $70M/D

ay

Passenger Cargo

Other

Fuel

Labor Maintenance Airports Aircraft Other

$8,668

$12,767

($4,099)

Op Revenues Op Expenses Op Profits

Source: A4A analysis of reports by Alaska, Allegiant, American, Delta, Hawaiian, JetBlue, Southwest, Spirit and United

Change ($ Millions) in Revenues and Expenses – First Nine Months 2018 vs. First Nine Months 2017

1 ~75% traffic-driven 2 ~90% price-driven

1 2

Crude-Oil Prices Rising Swiftly, to Highest Level Since Late 2014 October 2018 Benchmark Price Averaged 41 Percent More Than October 2017

Spot Price* of Brent Crude Oil ($ per Barrel)

airlines.org 10

$0

$20

$40

$60

$80

$100

$120

Jan-

14M

ar-1

4M

ay-1

4Ju

l-14

Sep

-14

Nov

-14

Jan-

15M

ar-1

5M

ay-1

5Ju

l-15

Sep

-15

Nov

-15

Jan-

16M

ar-1

6M

ay-1

6Ju

l-16

Sep

-16

Nov

-16

Jan-

17M

ar-1

7M

ay-1

7Ju

l-17

Sep

-17

Nov

-17

Jan-

18M

ar-1

8M

ay-1

8Ju

l-18

Sep

-18

Nov

-18

Jan-

19M

ar-1

9M

ay-1

9Ju

l-19

Sep

-19

Nov

-19

Jan-

20

Source: A4A and Energy Information Administration (http://www.eia.gov/dnav/pet/pet_pri_spt_s1_d.htm)

Inflation-Adjusted Fares Continue to Fall in 2018, Averaging Less Than in 2010 Real Price* of Domestic Air Travel Down 5.3% YOY (-5.2% Fares, -7.2% Fees)

airlines.org 11

Source: A4A analysis of DOT Data Bank 1B (all cabins and fare basis codes) and DOT Form 41 via Airline Data Inc. (airlinedata.com)

362 382 387 391 398

384

359 347 356

338

25

24 24 24

24

24

24

23 24

22

387

406 412 415

423

408

382

370 380

360

$320

$340

$360

$380

$400

$420

$440

2010 2011 2012 2013 2014 2015 2016 2017 1H17 1H18

Fare Ancillary Fees (Bags + Reservation Changes)

Rou

nd-T

rip T

icke

t Pric

e ($

1H 2

018)

*

* Excl. taxes; CPI up 2.5% YOY

In Fact, 2Q 2018 Inflation-Adjusted Fares Were Lowest 2Q Ever Recorded by DOT In Real Terms, Domestic Fares Fell ~11% From 2Q 2010 and ~30% From 2Q 2000

airlines.org 12

Source: Bureau of Transportation Statistics

$325

$350

$375

$400

$425

$450

$475

$500

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

Average Second-Quarter Domestic Round-Trip Airfare Including Taxes (in 2018 Dollars)*

* Fare and taxes only, adjusted for inflation

Down 11.1%

In 2015-2018, Domestic Airline Capacity Grew at Twice the Rate of the U.S. Economy

airlines.org

Source: Bureau of Economic Analysis and published airline schedules via Diio Mi

1.6 1.1

0.2

1.6

2.3

5.1 4.9

4.0

5.3

2.6

1.6

2.2 1.8

2.5 2.9

1.6

2.2 2.5

0

1

2

3

4

5

6

2010 2011 2012 2013 2014 2015 2016 2017 2018

Domestic Airline Capacity (ASMs) Real US GDP

13

airlines.org 14

Among 11 U.S. Airline Brands, Smaller Carriers Have Been Growing the Fastest Different Types of Carriers Market Their Prices and Services Differently

(50)

0

50

100

150

200

250

300

350

400

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

% C

hang

e in

Cap

acity

* S

ince

200

7

Spirit

Sun Ctry

Hawaiian Alaska

JetBlue

Southwest AA/DL/UA

Source: Innovata (via Diio Mi) schedules as of Oct. 5, 2018, for selected marketing airlines including predecessors

Allegiant

Frontier

* Systemwide scheduled available seat miles

Airlines Utilize a Wide Array of Tools to Improve Profitability Amid Rising Fuel Prices

airlines.org 15

Increase fuel efficiency (reduce consumption per unit of flying) o Continue to replace older (often smaller) aircraft with typically larger, next-generation or re-engined aircraft o Deploy state-of-the-art flight planning/navigation software to optimize airborne movement of aircraft

o Utilize taxi-management technologies – and single-engine taxi – to minimize ground-based fuel burn o Consistently employ ground power while parked at gate instead of aircraft auxiliary power unit (APU) o Reduce onboard weight (e.g., lighter materials/structures, inflight entertainment systems, excess fuel)

Airlines Utilize a Wide Array of Tools to Improve Profitability (Cont’d)

airlines.org 16

Reduce or contain non-fuel costs o Deploy customer-preferred technologies

(e.g., airport kiosks for self-tagging of luggage, airline apps for passenger modification of itinerary in lieu of agents)

o Drive more bookings to lower-cost direct distribution channels (e.g., website, app)

o Trim management/nonunion headcount via attrition, buy-outs; freeze open positions

o Use virtual medicine (e.g., Doctor on Demand) for health care – cost-efficient and highly popular with workforce

o Achieve single pilot/FA contracts – reduce delays/cancels, enable efficient use of aircraft/crews, avoids over-hiring

o Employ new software/methods to improve hotel procurement and manage employee travel bookings

o Insource engine/ground-handling/other work to be performed better/more efficiently (where practicable)

o Negotiate preferred-pricing maintenance contracts enabled by improved scale/credit, recover warranties on aircraft parts, leverage data streams from new aircraft/engines to increase reliability and lower repair/inspection costs

Airlines Utilize a Wide Array of Tools to Improve Profitability (Cont’d)

airlines.org 17

Generate more revenue

o Carry more passenger traffic or better mix of traffic (corporate/premium), optimize fare/fee structure

o Boost availability/desirability of ancillary products (fleet-wide/faster WiFi, live TV int’l, refurbished clubs)

o Increase credit card sales – attracting new accounts due to larger networks and customer-preferred timings

o Intensify cargo sales efforts and leverage increased belly capacity (and temp controls) offered by new aircraft

Airlines Utilize a Wide Array of Tools to Improve Profitability (Cont’d)

airlines.org 18

o Re-optimize route networks – trim unprofitable capacity, defer deliveries, add routes enabled by new aircraft

o Increase utilization of aircraft, ground equipment and gates at hubs and take advantage of new gates coming online at key locations in 2018-2020

o Reduce fleet/subfleet types to lower hiring, training and maintenance costs while increasing both aircraft substitutability and product consistency (for travelers)

Hybrid revenue/cost improvements

THANKSGIVING PERIOD AIR TRAVEL FORECAST: PROJECTING ALL-TIME HIGH

airlines.org 19

U.S. Airline Traffic Flown and Capacity Operated Have Continued to Grow in 2018 Passenger Traffic Up 5.6% Year Over Year, Seating Capacity Up 4.4%

airlines.org 20

598.5 620.0 636.8 672.4

681.3 707.0 728.4 769.2

812.2 847.0 872.0 910.3

0

100

200

300

400

500

600

700

800

900

1000

2015 2016 2017 2018

Janu

ary-

Sept

embe

r (pr

elim

)

Passengers (Mils) RPMs (Bils) ASMs (Bils)

Source: U.S. Bureau of Transportation Statistics T1, systemwide scheduled service on U.S. airlines – revenue passenger miles (RPMs) and available seat miles (ASMs)

U.S. Economy, Jobs Growing; Household Net Worth Continues to Set New Records

airlines.org

2.9

1.6 2.2

2.9 2.8

2015 2016 2017 2018F 2019F

U.S. Real GDP Growth (% CAGR)

21

U.S. Employment Growth (000)

250

226

195

182

213

2014 2015 2016 2017 2018

Sources: U.S. GDP (Bureau of Economic Analysis actuals and IHS Markit forecast); U.S. nonfarm payroll employment growth (month-over-month, seasonally adjusted) from BLS; consumer sentiment (University of Michigan, Index 1Q 1966=100); U.S. household net worth in current dollars, not seasonally adjusted (Federal Reserve)

Consumer Sentiment (UMich Index 1Q66=100) U.S. Household Net Worth ($ Trillion, NSA)

86.3

89.6

95.2

103.

4

104.

7

106.

9

2014 2015 2016 2017 1Q18 2Q18

91.6

92.4

90.3

93.1

97.2

96.4

95.1

98.4

98.9

98.3

98.1

1Q16 3Q16 1Q17 3Q17 1Q18 3Q18

A4A Projects U.S. Airlines to Carry 30.6M Thanksgiving* Passengers in 2018, Up 5.7% *12-Day Forecast Period = Fri., Nov. 16 Through Tues., Nov. 27

airlines.org 22

23.2

23

.2

24.3

24

.4

24.8

24

.6

25.2

26

.6

27.8

29

.0

30.6

2008

E

2009

E

2010

E

2011

E

2012

E

2013

E

2014

E

2015

E

2016

E

2017

E

2018

F

Source: A4A analysis of TSA and BTS T100 segment data; volumes from past years are estimates from comparable 12-day period

U.S. Airline Onboard Passengers (Millions) 12-Day Thanksgiving Period, 2008E-2018F

2018 Volume Projections 2.55M passengers per day, up ~137,000 2.94M seats per day, up ~158,000 Daily volumes to range from 1.73M to 3.06M 2017 Thanksgiving Highlights T-giving Day was 4th lightest day of year Sunday return was 2nd busiest day of year Wednesday before was 18th busiest day of year

Note: E=estimate; F=forecast

Daily Thanksgiving Passenger Volumes to Vary by as Much as 1.33M (77%) T-giving Day to Fall 32% Below 12-Day Average, Sunday Return 20% Above Average

2.85

2.36 2.55 2.53

2.76 2.93

1.73 2.01

2.69 3.06

2.80

2.35

Fri.,

11/

16

Sat

., 11

/17

Sun

., 11

/18

Mon

., 11

/19

Tue.

, 11/

20

Wed

., 11

/21

Thu.

, 11/

22

Fri.,

11/

23

Sat

., 11

/24

Sun

., 11

/25

Mon

., 11

/26

Tue.

, 11/

27

airlines.org 23

#6 #5 #4 #8 #9 #7 #3 #12 #2 #11 #10 #1

U.S. Airline Projected Onboard Passengers (Millions) – Systemwide Service

Source: A4A analysis of TSA and BTS T100 segment data

12-Day Avg. = 2.55

2,274 2,289 2,366 2,454 2,542 2,651 2,618 2,655 310 330 351 368 390 405 401 413 2,584 2,620 2,717 2,823 2,932 3,056 3,019 3,068

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2013 2014 2015 2016 2017 2018 1H18 1H19

Domestic International

Customers Will See All-Time High of 3.07M Daily Seats Departing U.S. Airports Daily Seats (000) Departing U.S. Airports: Up 4.2% YOY in 2018 and 1.6% in 1H 2019

airlines.org 24

Source: Innovata (via Diio Mi) published schedules as of Nov. 3, 2018, for all airlines providing scheduled passenger service from U.S. airports to all destinations

Almost Every Major* U.S. Airport Has Seen Supply of Seats Rise Over Past 5 Years % Change in Scheduled-Service Seats Available: 2018 vs. 2013

airlines.org

70

57

56

51

45

44

43

35

35

35

33

32

32

32

31

30

30

29

26

25

24

24

24

24

22

22

22

21

20

20

19

18

18

17

16

16

15

15

14

14

12

11

10

9

9

9

9

9

8

7

7

5

5

5

3

2

1

1

(2)

(3)

(4)

(10)

0

10

20

30

40

50

60

70

80

DA

LA

US

SJC FL

LS

EAC

VG

BN

AM

CO

RD

UM

SY

PD

XB

OS

SM

FS

ANO

AKS

FO IND

LAX

EW

RR

SW

OM

AS

LCC

MH

BU

RB

DL

TPA

OG

GJF

KO

RD

PBI

DE

NJA

XO

NT

PIT

HO

ULA

SB

WI

SAT MC

IS

TLA

NC

ATL

SN

AIA

HD

FWD

TW MS

PD

CA

MIA

PH

XC

LT IAD

LGA

HN

LP

HL

MD

WM

KE

CLE

BU

FA

BQ SJU

25

Source: Innovata (via Diio Mi) published schedules as of Oct. 26, 2018, for all airlines providing scheduled service * FAA large and medium hub airports

U.S. AIRLINES & AIRPORTS – INVESTING HEAVILY FOR THE FUTURE

airlines.org 26

Substantial U.S. Airline Capital Investment* Has Continued in 2018 Despite Waning Profits – Bringing Total for This Business Cycle to $115 Billion

airlines.org 27

5.2 6.6

9.8

12.5 13.9

17.0 17.5 19.9

13.0

2010

2011

2012

2013

2014

2015

2016

2017

2018

Source: SEC filings of Alaska, Allegiant, American, Delta, Hawaiian, JetBlue, Southwest, Spirit, United and merged/acquired predecessors

U.S. Passenger Airline Capital Expenditures* ($ Billions per Year)

* Includes payments made for aircraft and other flight equipment, ground and other property and equipment, airport and other facility construction and information technology

Jan-

Sep

Airline-Airport Collaboration Has Paved Way for Widespread Infrastructure Investment Capital Projects Have Grown 86% Since 2015 at the 30 Largest U.S. Airports

airlines.org 28

» $130B of capital projects completed, underway or approved at the 30 largest U.S. airports since 2008, including, for example:

o Multiple new runways at Chicago O’Hare and new runways at Fort Lauderdale, Washington Dulles, Seattle and Charlotte

o New/expanded/modernized facilities at NYC, Miami, Las Vegas, Orlando, Honolulu, Houston, Denver, Seattle, Salt Lake City and San Francisco plus international facilities at Atlanta, Boston and L.A.

» Development is also robust at smaller airports, including:

o Runway projects at Columbus, Des Moines, Erie, Nashville, Providence, Sioux Falls; terminal projects at New Orleans, Eugene, Grand Rapids, Greenville-Spartanburg, Oakland, Dallas Love Field, San Luis Obispo, Portland (ME), Pasco, Reno-Tahoe, Wichita

» Investment is also occurring in cargo facilities and related infrastructure at Louisville, Newark, Lafayette (Louisiana), Indianapolis, Rockford, Memphis and elsewhere

$70

$100

$130

2015 2017 2018Approved Completed/Underway

Investment at Largest Airports ($ Billions)

J.D. Power: North America Airport Satisfaction* Climbs to Record High

airlines.org

689

675

690

725

731

749

761

600

650

700

750

800

2007 2008 2010 2015 2016 2017 2018

Source: J.D. Power 2018 North America Airport Satisfaction StudySM

“North America airports have managed to shrug off the potentially disruptive effects of record passenger volumes and massive construction projects to achieve a record high in overall passenger satisfaction.” (Sept. 19, 2018)

Note: Scale = 0-1000; study not conducted in 2009/2011-2014

29

Six factors: Terminal Facilities* (24%) Airport Accessibility (19%)

Security Check (16%) Baggage Claim (15%)

Check-In / Baggage Check (14%) Food / Beverage / Retail (13%)

* The study is based on responses from 40,183 North America travelers who traveled through at least one domestic airport and covers both departure and arrival experiences (including connecting airports) during the past three months. Travelers evaluated either a departing or arriving airport from their round-trip experience. The study was fielded from September 2017 through September 2018.

* Concourses, lounges, signage, restrooms, gate areas

RECORD TAX COLLECTIONS & ABUNDANT AIRPORT FINANCIAL RESOURCES

airlines.org 30

U.S. Commercial Aviation Taxes/Fees* Topped $25 Billion (~$70M per Day) in 2018 Fiscal Year 2018 Collections* ($Millions) from Airlines and their Customers

Sources: Animal and Plant Health Inspection Service (APHIS), Customs and Border Protection (CBP), Federal Aviation Administration (FAA), Treasury Dept. and A4A * U.S. federally levied/approved, including collections from non-U.S. carriers; APHIS figure is A4A estimate pending FOIA; PFC figure is FAA estimate for calendar year 2018

4,099 897 686 695

3,427

10,485

4,093 540 420 98 25,439

airlines.org 31

~ $70M/D

ay

DHS U.S. Airports FAA (Airport & Airway Trust Fund) EPA (Leaking Underground Storage Tank Trust Fund)

U.S. Airports Have Ample/Multiple Resources from Which to Fund Improvements

airlines.org 32

9.2

9.1

8.7 9.2 10

.4

10.5

11

.5

12.0

10

.7

10.6

11

.6

12.6

12

.9

13.5

14

.3

14.4

15

.1

15.8

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

General AviationCommercial Aviation

Airport & Airway Trust Fund Revenues ($ Bils) Airport & Airway Trust Fund Unobligated Balance ($ Bils)

7.3

4.8

3.9

2.4

1.9

1.8

1.5

1.4

0.3 0.7 1.

4 2.8

4.9 5.

8 5.

6 5.9

5.8

5.9 7.

5 8.7

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20

Source: A4A, FAA, CBO, U.S. Treasury; PFC collections exclude any compensation received for collecting/handling/remitting

U.S. Airport Revenues ($ Bils)

15.9 15.6 14.9 14.5 16.5 17.3 19.1 20.4 16.7 17.2 17.8 18.1 19.4 20.4 20.4 22.3 23.3

3.48 3.38 3.65 3.68 3.07 3.67

3.52 3.52 3.52 3.52 3.52 3.35 3.35 3.35 3.35

3.35 3.35

1.59 1.86 2.06 2.05 2.16 2.53 2.84 2.64

2.52 2.73 2.71 2.80 2.81 2.88 3.04 3.16 3.29

21.0

20

.9

20.6

20

.2

21.8

23

.5

25.5

26

.5

22.7

23

.4

24.1

24

.3

25.6

26

.7

26.8

28

.9

29.9

01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18Airlines/Concessions/Rents/Other AIP* PFC

U.S. Airport Unrestricted Cash & Investments ($ Bils)

9.8

9.7

10.5

11.3

12.5

12.7

14.0

14.4

2010 2011 2012 2013 2014 2015 2016 2017

* Airport Improvement Program

not a

vaila

ble

all-t

ime

high

Sources: https://www.fitchratings.com/site/pr/10049679 and Peer Review of U.S. Airports (Attribute Assessments, Metrics and Ratings), Oct. 29, 2018

33 airlines.org

“…strong overall performance for U.S. airports should continue undeterred for the foreseeable future according to Fitch Ratings in its latest annual peer review for the sector… Fitch-rated airports are still largely entrenched in ‘A’ territory. ‘Airports in general are showing a lot of resilience as the industry continues to evolve and event-driven challenges from the broader economy take shape,’ said Senior Director Seth Lehman. ‘Over 90% of the airports Fitch rates currently have a Stable Rating Outlook, which signifies continued stability deep into next year.’ GDP growth and general airline health remain the most important revenue gauges for airports, though rising rates could make borrowing debt more expensive for airports with a substantial pipeline of investments on the horizon.”

-- Fitch Ratings: “Skies Remain Friendly for U.S. Airports” (Oct. 29, 2018)

Fitch Ratings: Skies Remain Friendly for U.S. Airports

U.S. Airport Revenues Have Grown Faster Than Flights, Passengers and Inflation From 2000 to 2017, Airport Revenues Rose 87%, Double the Pace of U.S. Inflation

airlines.org 34

Source: FAA Form 5100-127 and DOT T100 + 298c reflecting all scheduled and nonscheduled passenger and cargo airline flights departing U.S. airports

80

100

120

140

160

180

200

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

2022

2024

2026

2028

Index: 2000 = 100

U.S. CPI (Inflation)

Aircraft Departures

Passengers

U.S. Airport Revenues

In Contrast to Highway Trust Fund Fuel Tax Revenues, Airport PFCs and Aviation Trust Fund Revenues Have Sharply Outpaced U.S. Inflation 2017 PFC Collections Reached $3.3 Billion – the Highest Level in Program History

airlines.org 35

Source: FAA Passenger Facility Charge (PFC) reports, Federal Highway Administration, Bureau of Labor Statistics (for the Consumer Price Index [CPI])

111.0%

54.0%

42.3%

17.7%

0% 20% 40% 60% 80% 100% 120%

U.S. Airport PFC Revenues

Airport & Airway Trust Fund Revenues

U.S. Inflation (CPI)

Highway Trust Fund Tax Receipts

Percent Change, 2000-2017

1.6 2.7

3.3

200020102017

PFC Collections ($ Billions)

Flyer Satisfaction Rises Markedly With Enrollment in “Trusted Traveler” Programs Airline/Government Collaboration Boosting Enrollment in Global Entry and TSA Pre✓

airlines.org

Very, 49%

Very, 30%

Somewhat, 36%

Somewhat, 49%

Trusted Traveler

Unenrolled

% of 2017 Flyers “Somewhat Satisfied” or “Very Satisfied” With Overall Air Travel Experience

Sources: Ipsos survey of American adults (January 2018), TSA and CBP

36

Millions of Persons Enrolled in DHS Trusted Traveler Programs (Dec. 31)

0.8 2.0

4.2 5.8

6.5

1.9 2.6

3.7 4.9

5.3

2.7

4.6

7.9

10.7 11.8

2014

2015

2016

2017

2018*

TSA Pre✓ Global Entry

86%

79%

(Global Entry or TSA Pre✓)

* As of May 16

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