selection of lcc destination, bergamo, 3.11.2005 © 1 selection of lcc destinations seaplane follow...
Post on 21-Dec-2015
214 views
TRANSCRIPT
1Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Selection of LCC DestinationsSEAPLANE Follow up Event
Wolfgang Kurth3. November 2005 Bergamo, Italy
2Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Agenda
LCCs in Europe
Value for Cities and Regions
Selection of LCC Destinations
Conclusions
LCCs in Europe
3Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Business EnvironmentV
OLU
ME/G
DP
TIME
Africa
Asia
Middle East
Latin America
PIONEERSTAGE
TRANSITION RAPID GROWTHSTAGE
TRANSITION
U.S. andEurope
MATURESTAGE
GDP
Volume
4Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
For what reason would you fly more often?
11%11%
8%
41%
8%6%
17%
0%
10%
20%
30%
40%
50%
upgrades schedule safetyground
low fares more FFP´s
safetyboard
others
Source: IATA Online Survey 2003
Low Fares Stimulate Demand
5Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Forecasts for the European Low-Cost Market
2002–2009F
PAX(Mio)
Pessimistisch
Optimistisch
Anzahl der Passagiere von Ryanair und easyJet auf Basis der Kapazitätsankün-digungen
19%
15%
30%
5
16
83
21
42
0
25
50
75
100
Gesamtbevölkerung Optimistisch
International
National
Marktetpotential GermanLow-Cost Segment
PAX(Mio)
Schätzung unter Anwen-dung US und UK Marktanteile & Reisehäufigkeit auf die deutsche Population
Forecasts Are Optimistic
1 Pessimistisch: Anzahl der No-Frills-Reisen in Europa erreicht derzeitiges UK / Irland Niveau (0.25 Trips / Capita) in 8 Jahren (Anzahl der Passagiere = 72MM) 2 Optimistic: Anzahl der No-Frills-Reisen in Europa erreicht das derzeitige Nivaeu in den U.S.A. (0.5 Trips / Capita) in 8 Jahren (Anzahl der Passagiere = 195MM)
Quelle: Analystenreports, HLX-Schätzung, Monitor Group Analyse
CAGR
Pessimistisch
0
50
100
150
200
250
2002 2004F 2006F 2008F
6Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Caption:
Ryanair
easyjet
Volareweb
bmi Baby
Hapag-Lloyd Express
Germanwings
Sterling
Skyeurope
jet2
LCC Routes 2001
7Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Caption:
Ryanair
easyjet
Volareweb
bmi Baby
Hapag-Lloyd Express
Germanwings
Sterling
Skyeurope
jet2
LCC Routes 2002
8Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Caption:
Ryanair
easyjet
Volareweb
bmi Baby
Hapag-Lloyd Express
Germanwings
Sterling
Skyeurope
jet2
LCC Routes 2003
9Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Caption:
Ryanair
easyjet
Volareweb
bmi Baby
Hapag-Lloyd Express
Germanwings
Sterling
Skyeurope
jet2
LCC Routes 2004
10Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Caption:
Ryanair
easyjet
bmi Baby
Hapag-Lloyd Express
Germanwings
Sterling
Skyeurope
Jet2etc, etc
LCC Routes 2005
11Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Split of LCC Customers Split of “new” Passengers
Quelle: NFO Infratest, 2002; Monitor Group Analyse
71%
15%
6%
8% 100%
0%
25%
50%
75%
100%
Otherwiseno Travel
Otherwiseper Train
Otherwiseper Car
Other Total
59%
37%4% 100%
0%
25%
50%
75%
100%
New Pax Transfer NoStatement
Total
Sharel (%)Share(%)
Growth Is Triggered By „New“ Passengers
12Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
0,2%
-0,8%
6,2%
3,5%
2,4%
1,3% 1,2%
2,2%
-8,5%
Asia/Oceania
EuropeanUnion
North America
Source: ITA Daten 2002/3, Analysis ADL Aviation Competence Center
secondary airports
continental hubs
intercontinental hubs
4,5%
9,7%
6,2%
European Union,secondary airports
with
LCC
home
base
with-
out
LCC
home
base
Growth Of Secondary Airports (Basis: Pax 2002/2003)
13Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Agenda
LCCs in Europe
Value for Cities and Regions
Selection of LCC Destinations
Conclusions
Value for Cities and Regions
14Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
LCCs – Generators Of Regional Economic ProsperityImpacts on regional economies be generally split into:
Direct effectsMainly jobs at airlines, handling & related aviation acitivities (as being roughly half oftotal job effects). Total on-site employment of regional airports between 850 – 1200. 1,000 jobs created for every 1 million passengers through an airport.
Indirect effectsRegional airports support roughly 1200-1800 jobs within the regional or local economies. Studies have found regional airports to have comparable economic effects to several mid-size manufacturing plants.
Catalytic effectsMainly effects stemming from attraction and detention of inward investment and the stimulation of inbound tourism. Especially the enhancement of competitiveness to local economies as well as the attraction of business and leisure passengers leads to higher generation of incomes and employment.
15Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Direct Impacts Of LCCs
EasyJet’s direct operations con-tribute approximately £66 millionto local gross income levels, supporting a total of 1,770 jobsin the aviation sector and supply-chain companies.
These levels of direct expen-diture and employment provide income and employment for others.
Taking all these wider effects into account, EasyJet’s operations add £120 million to local incomes and support a total of 3,185 local jobs.
Source: National Economic Research Associates, London 2000
LTN Passenger development
16Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Catalytic Impacts Of LCCs
Routes from London-Stansted launched in April 1998 and from Brussels-Charleroi in April 2001. Annual passengers of both routes account for roughly 250.000 visitors, 90% of which are non-French
Stimulus by London route only is estimated to account for € 215m, only € 6,5m of which related to direct effects at the airport. A total of 2.800 new jobs is estimated to be related to this new route and it´s consequences.
Prices of real estate are estimated to have risen by 25% between 1998.
LCCs contribute to regional development and economic development, directly and indirectly.
Source: Financial Times, Dec12, 2002
Carcassonne
17Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
LCCs Generate Incoming-Traffic
• Approx. 25-30 per cent of the passengers on the LCC routes to
Germany are Incoming Passengers
Incoming Anteil Köln im Dezember 2003
37%
17%
32%
32%
31%
43%
29%
28%
38%
29%
23%
22%
20%
20%
28%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%
BIO
CIA
GVA
KLU
MAD
MAN
MRS
NAP
OLB
PMO
PSA
REU
SVQ
VCE
VLC
Incoming Anteil Hannover im Dezember 2003
30%
41%
18%
23%
26%
28%
14%
27%
21%
29%
21%
25%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
BGY
BIO
CIA
CTA
KLU
NAP
NCE
OLB
PSA
REU
VCE
VLC
18Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Region Verkehrsanteil
Brussels area 25%
N Belgium 19%
S Belgium 18%
Netherlands 17%
Luxembourg 8%
France 7%
Germany 6%
Catchment Charleroi
19Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Per 1 mio passengers per annum on 12 routes….
Ryanair pays to Charleroi Airport:€ 2.0 mio airport fees and handling charges
Charleroi Airport pays to Ryanair:€ 1.9 mio Marketing Incentive for new routes € 2.0 mio Marketing Support€ 1.5 mio Support for infrastructure and recruitment
Total costs for the airport:
€ 3.4 mio or € 3.4 per passenger
Quelle: Aviation Strategy, July/August 2001, S.3
Incentivprogram for Ryanair
20Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Agenda
LCCs in Europe
Value for Cities and Regions
Selection of LCC Destinations
Conclusions
Selection of LCC Destinations
21Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Unit Costs vs. Stage Length
Low CostCarriers
Britannia
Regional
Airlines
Scheduled
Airlines BA
EasyJet
LHAF
KL
IB
Ryanair
SK
SWA ATA
AS
AWA
NW
DL
CO
US
UA
TWAirT
AZ
AA
Average Route Length (Miles)
Cen
ts /
AS
M
ASM: Available Seats MilesSource: CASM Form 41, Air Transp. World June 2001 issue, Stage length data from the Airline Monitor Nov. 2001 issue; AirTran data Air Tran 10-Ks BAH Analysis
CharterAirlines
25
20
15
10
5
00 200 400 600 800 1.000 1.200 1.400
1.600
22Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
40
60
80
100
120
140
160
180
200
220
240
30% 40% 50% 60% 70% 80% 90% 100%
MADROMVCETXL
Note: Yield Curves include costs of Airports, Ground-Handling, TNC, En Route, Fuel and ACMI (1,980 and 1650 EUR/BH respectively) Source: TUI Data, Press, Company Reports, Company Website, Broker Reports, EU, AEA, Monitor Analysis
Load Factor (%)
1,396 km1,075 km
698 km467 km
Break Even Yield Curves
Revenue/Segment
(€)
Unit Costs Decrease with Stage Length
Trip costs increase with stage length.
Unit costs decrease with stage length or aircraft size.
Break even yield increases with stagelength.
Break even yield decreases with LF.
23Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
NetworkDesign
EasyJet
2003E
Liverpool
Barcelona
Malaga
EdinburghGlasgow
AberdeenIverness
Belfast
Newcastle
Geneva
Nice
Amsterdam
Madrid
Luton
Gatwick
Paris
LCCs Follow Different Growth Patterns
Ryanair
Dublin
Stansted
Brüssels
Shannon
Milan Frankfurt-Hahn
Stockholm
Glasgow 2003E
GrowthStrategy
Growth mainly triggered by new market generation (I.e. stimulating new leisure and business demand); some growth by taking share from incumbents
Competition only from Ryanair (only 25% of routes have low-cost competition) and flagships (67% of routes); however, flagships started to react and protect their routes (BA kicked back ‘01)
Accelerated growth over last two years; however, increased density but did not add new destinations
High network gains by utilizing higher airport costs with high frequencies and many connections
Expanded continuously since 1995; Since ’99 increased network density by adding new hubs and connecting these with existing network successively; Started integrating Go network end of ‘02
Hubs are based on successful destinations
Growth mainly triggered by new market generation (I.e. stimulating new leisure and business demand); some growth by taking share from incumbents
Competition only from easyJet (only 12% of routes have low-cost competition) and flagships (59% of routes); however, flagships started to react and protect their routes
Accelerated growth over last two years, mainly by adding new destinations
Not many network gains; due to lower airport cost not necessary
Concentrated on domestic market until 1996, increased frequencies; Expanded between ’97 and ’00 by adding destinations; Started turning successful destinations into hubs since ‘01
“DensityApproach”
“ModularApproach”
24Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Stage LenghtsHAJ vs STR
•Boeing typical airline rules•Taxi times not included•85% annual winds•3% airways allowance
LondonLondon
MadridMadrid
ParisParis
BarcelonaBarcelona
ShannonShannon
LisbonLisbon
AlgiersAlgiers
RomeRome
PalermoPalermo
MaltaMalta
AthensAthens
DubrovnikDubrovnik
HelsinkiHelsinki
STUTTGARTSTUTTGART
St. PetersburgSt. Petersburg
MinskMinsk
MoscowMoscow
TallinnTallinnOsloOslo
BudapestBudapest
WarsawWarsaw
StockholmStockholm
BelgradeBelgradeBucharestBucharest
HANNOVERHANNOVER
25Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Incremental Costs Caused By Geo – Strategic Disadvantage
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
0 0,25 0,5 0,75 1 1,25 1,5 1,75 2 2,25 2,5 2,75 3
BH
Eu
ro
Durch. Kosten/BH STR CGN HAJ
DOCDOC
A/P 1A/P 1
A/P 2/3A/P 2/3
ca. 560 Euroca. 560 Euro
A/P 1 A/P 2 A/P 3Avg. Costs/Bhr
26Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
HAJ-NAP vs. STR-NAP
0,00
20,00
40,00
60,00
80,00
100,00
120,00
140,00
160,00
40% 50% 60% 70% 80% 90% 100%
STR (1H)
STR(1,25)
STR(1,5)
STR(1,75)
STR(2h)
STR(2,25)
STR(2,5)
0,00
20,00
40,00
60,00
80,00
100,00
120,00
140,00
160,00
40% 50% 60% 70% 80% 90% 100%
HAJ (1H)
HAJ(1,25)
HAJ(1,5)
HAJ(1,75)
HAJ (2h)
HAJ(2,25)
HAJ(2,5)
40
50
60
70
80
90
100
110
120
130
40% 50% 60% 70% 80% 90% 100% Auslastung
Eur
o/P
ax
HAJ-NAP(2,25)
STR-NAP(1,75)
At 70% LF: geo-strategic disadvantage HAJ vs. STR app.ca. 5 Euro/Pax
27Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Agenda
LCCs in Europe
Value for Cities and Regions
Selection of LCC Destinations
Conclusions
Conclusions
28Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Hamburg
Berlin
Hanover
Cologne
Stuttgart
26%
35%
33%
30%
27%
Not All Destinations Are Equally Atttractive
29Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Catchments Are Affected By Competition
Liverpool
East Midlands
Luton
Liverpool
East Midlands
Luton
Leeds/Bradford
Birmingham
Catchment for:East Midlands - Barcelona Frühjahr 2002 (bmibaby)
Catchment for:East Midlands - Barcelona Frühjahr 2003 (bmibaby and easyJet)
30Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Legacy Carriers Are Cutting Back
Cardiff/Wales (weekday deps)
April 2002British Airways* 12KLMuk 5Manx 1Ryanair 1Air Wales 1
----20
April 2003bmibaby 11KLMuk 5Air Wales 3Ryanair 1
----20
Belfast International (weekday deps)
April 1998British Airways* 19British Midland 12Jersey European 4KLMuk 3Sabena 1Aer Lingus 1
----40
April 2003easyJet 35bmibaby 4British Airways* 4Eastern 1British Northwest 2
----46
* including franchises
31Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
LCC
Airport
Tourism Organisation
Incentives
Passengers
Tourism Industries
Guests
Touristic Value Creation
?
The Challenge
32Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Tax Financed Marketing
Kärnten Werbung (legal entity, major shareholder State Government) provides certain incentives and support to LCCs and gets re-financed through
„Fremdenverkehrsabgabe“ Tourist Fee to be paid by tourism industries to Local and State Government
„Nächtigungstaxe“ Overnight Tax to be paid by hotels, B&Bs to Local and State Government
Total Income: app. € 20 mio (est)
35Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
LCCs stimulate the demand. Frequency and days of service are of paramount importance.
Attractivity of destinations de-termines the balance of the traffic flow
LCCs have very different business models
…. More Challenges
36Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Incentives have to be based upon careful evaluation
o follow the rules o stimulate Incoming Traffic o take into account the existing route portfolio o take into account the existing carrier-portfolio o „stretch“ the average stage length
The Home Page of LCC is perfect to market touristic services (hotel, entertainment, Guided Tours etc)
Catchments of LCC - airports may be influenced by other services
…. More Challenges
37Selection of LCC Destination, Bergamo, 3.11.2005 www.advolar.com ©
Airports, cities and regions don‘t have necessariy the same interests!!
A strong and co-operative partnership between Low Cost Airline and tourism organisation/-industrie is pre-requisit for a significante stimulation of the touristic value creation.
Know how and experience are key for a realistic evaluation of LCC-services.
Key Success Factors