Airline Business Development Update · VISION 100 FAA Reauth. (20 new DCA slots-8 within/12 outside perimeter) AIR-21 FAA Reauth. (24 new DCA slots-12 within/12 outside perimeter)

Airline Business

Development Update

June 22, 2017

Office of Airline Business Development’s Primary Mission

Expanding Air Service at Dulles International

and

Discouraging New Flights at Reagan National

Article 11.B “The Airports Authority shall operate, maintain, protect, promote and develop the Metropolitan

Washington Airports as a unit and as primary airports serving the Metropolitan Washington Area.”

Stemming from Obligations within the Airports Authority Lease

3

Managing the Federal Government’s Assets

■ Reagan and Dulles Airports – federal airports turned over in 1987

“Transfer Act” to MWAA to manage as “a unit”. Rationale:

– Capital investments in the two airports needed

– Access to the bond markets critical

■ Congress directed:

– Reagan - short-haul, origin/destination airport

– Dulles - long-haul, growth airport

■ Passenger activity at Reagan National was steady from1987 until 2000 –

when Congress began adding slots and beyond perimeter flights.

■ In the past 25 years, the character of the two airports has changed due

to commercial transactions and regulatory changes.

4

Changing Character of

Reagan and Dulles Over 25 Years

5

0.0

5.0

10.0

15.0

20.0

25.0

30.0

Reagan Dulles

Total Passenger Activity

(Millions)

-

2

4

6

8

10

12

2010 2011 2012 2013 2014 2015 2016

Domestic International

2016 Marked 2nd Year of Growth in Both Domestic and

International Activity at Dulles International• Total enplanements increased 1.4% over

2015: domestic and international

enplanements increased 0.1% and 4.0%,

respectively, in 2016

• United’s domestic enplanements increased

4.2% over 2015, the first increase since 2010

• Dulles International served a record 3.7

million international enplaned passengers in

2016 - the 13th consecutive year of

international traffic growth

AND THE GROWTH CONTINUES:

• In April 2017, overall passenger activity at Dulles rose

for the 11th consecutive month with an increase of

10.7% (182k passengers) from a year ago to 1.9

million.

• Domestic traffic increased 8.9% (103k passengers)

primarily due to robust growth by United, which had a

12.3% (106k passengers) increase in domestic activity.

• International activity also rose 14.9% (81k passengers)

Dulles International – Enplanements(1) (in millions)

Top

Carriers2015 2016

United 62.4% 63.6%

American 4.8% 4.6%

Delta 4.4% 4.4%

Southwest 2.5% 2.4%

Virgin

America1.8% 1.8%

Foreign

Flag19.1% 20.1%

Other 5.0% 3.1%

1 - Excludes general aviation and military enplanements.

11.74 11.5211.17 10.86 10.68 10.71 10.86

73% 72% 70% 68% 67% 67% 66%

27% 28% 30% 32% 33% 33% 34%

United /

Continental

merger

United

emerges from

bankruptcy

Delta files for

bankruptcy

Delta / US Airways

DCA slot swap

JetBlue slot

purchase doubles

DCA service

Southwest /

AirTran

merger

American

files for

bankruptcy

US Airways

/ American

merger

Do

me

sti

c P

ass

en

ge

rs (

mil

lio

ns

)

Delta /

Northwest

merger

Recession

9/11

terrorist

attacks

Recession

United files

for

bankruptcy

US Airways

files for

bankruptcy

Slot Changes at Reagan National and Uncontrollable Outside Factors

Have Challenged Dulles Domestic Service

7

FAA Reauth.

8 new outside

perimeter slots/8

converted outside

perimeter slots

VISION 100

FAA

Reauth.

(20 new

DCA slots-

8 within/12

outside

perimeter)

AIR-21

FAA Reauth.

(24 new

DCA slots-

12 within/12

outside

perimeter)

Independence

Air begins

IAD service

Independence

Air

dissolution

15.9

14.0

13.1

12.9

18.2

22.1

17.8

18.8

17.6

17.017.2

16.7

15.9

15.014.4 14.5 14.5

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Expanding Air Service at Dulles International

Airport Operators work hard to influence BUT Airlines decide where to fly

Market

Costs

Incentives

Market

Costs

Incentives

Recruiting Air Service - The Paradigm Has Shifted

Market Revenue, Operating Costs and Incentives are All Key Factors

Airlines Consider When Deciding on New Routes

• Market Revenue - The Washington-Baltimore Combined Statistical Area

(CSA) is the one of the top 5 largest CSA’s in the country, and home to

one of the wealthiest regions of the country.

• Costs - Airports Authority aggressive efforts have reduced Cost per

Enplanement.

• Incentives - Airports Authority Airline Incentive Programs are available only

at Dulles.

Marketing Dulles International

Dulles International’s catchment area spans both the

Washington and Baltimore MSAs - a population of 8.5 million

MSA Population

Source: ARC Data, InterVISTAS Analysis, CY 2015

Washington-Arlington-Alexandria

DC-VA-MD-WV MSA

Baltimore-Columbia-Towson MD MSA

MSA PopulationPercentof Total

Washington 5,776,833 68%

Baltimore 2,713,747 32%

Total 8,490,580 100%

Dulles International is Conveniently Located

in the Most Affluent Area of the Region

7 of the top 15 wealthiest counties in the U.S. surround Dulles

$10

$14

$18

$22

$26

$30

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

DCA IAD Airport System

12

Cost per Enplanement is Carefully Managed

Cost per Enplanement

Historical Forecast

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

His

toric

al

DCA $12.79 $13.39 $11.26 $13.32 $13.44

IAD 25.01 26.47 26.55 23.67 21.00

Domestic 21.62 22.98 22.21 19.27 17.66

International 37.44 38.12 38.62 31.98 27.51

Fo

recast

DCA $12.73(1)$12.27(2) $13.70(3) $13.18(4) $13.85(5) $13.79(6) $12.81(6)$12.94(6)$11.76(6)$13.46(6)$14.63(6)

IAD 27.46(1) 28.39(2) 28.52(3) 24.60(4) 21.15(5) 17.57(6) 19.68(6) 21.18(6) 22.23(6) 23.17 (6) 22.64(6)

Domestic 13.90* 15.52* 17.09* 17.97* 18.69* 18.13

International 24.71* 27.77* 29.13* 30.51* 31.86* 31.41

Airports System

(Historical/Forecast5)$19.29 $20.11 $18.96 $18.30 $17.06 $15.60 $16.13 $16.94 $16.88 $18.24 $18.60

(1) From 2011 ROAC Forecast






* Internal estimates

Source: Report of the Airport Consultant (2011, 2013, 2014, 2015, 2016, 2017)

CPE lower than forecast $50 million grant impact

Non-Airline Revenue Growth

Reduces Airline Costs and

Improving Access

• Silver Line Express bus connects the

Metrorail Silver Line to Dulles.

– Non-stop service between Dulles

and Wiehle-Reston East for just $5

– Ridership has exceeded

expectations

14

New Airlines at Dulles

May 2016

Air Canada began three daily flights between Dulles

International and Toronto Pearson International Airport.

LATAM began three weekly flights from Dulles

International to Lima, Peru.

September 2016 Royal Air Maroc began three weekly flights between Dulles

International and Casablanca, Morocco

July 2017 Air India will begin three weekly flights between Dulles

International and Delhi, India

New Air Service by Existing Airlines

April 21: 4 weekly flights to Austin and a daily flight to

Denver.

July 10: Daily summer seasonal service to Colorado

Springs; and these flights will also provide

one-stop, same plane service to San Diego in

both directions.

July 16: Daily service to Las Vegas.

June 4: Daily service to Fort Lauderdale.

April 24: Daily flight to Salt Lake City.

June 19: Daily service to Montreal.

April 4: Rome daily seasonal service resumes.

May 5: Lisbon and Madrid daily service resumes.

May 24: Barcelona daily service resumes.

June 8: Fort Lauderdale extended through summer.

United has also announced it will increase frequency to

Jacksonville, Providence, Portland (Maine) and Roanoke.

The Airports Authority works closely with local

governments, chambers and other groups to support

Dulles International

• Members of Congress regularly attempt to stretch the perimeter further.

The latest attempt came just last week, when members from Texas

proposed expanding the perimeter to include San Antonio.

• An attempt to add San Antonio failed last year, when it was blocked in a

House Committee through the bi-partisan teamwork of Barbara Comstock

and Eleanor Holmes Norton.

• It was killed again in Committee several days ago. Then it appeared in an

amendment to a Defense bill, where it also was defeated. Currently, the

Texas members are trying to push a perimeter-expanding amendment

onto a bill in the Senate Commerce Committee.

• It’s an issue that never seems to go away and MWAA is working to defeat

it again.

Discouraging New Flights at Reagan National

Advocate to your appointing elected officials that they need to support

“NO MORE CHANGE” to Reagan National allowing growth.

&

Fly Dulles!

What Can You Do to Help?

Thank You

Mike Stewart

Vice President, Airline Business Development

Metropolitan Washington Airports Authority

[email protected]

Documents

Airline Business Development Update · VISION 100 FAA Reauth. (20 new DCA slots-8 within/12 outside perimeter) AIR-21 FAA Reauth. (24 new DCA slots-12 within/12 outside perimeter)