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A Brief Overview of LAX’s Position in WORLD AIRPORT PASSENGER TRAFFIC RANKINGS

A Brief Overview of LAX’s Position in WORLD AIRPORT PASSENGER TRAFFIC RANKINGS. A Management Presentation for the:. Los Angeles Board of Airport Commissioners. Monday, August 3, 2009.

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A Brief Overview of LAX’s Position in WORLD AIRPORT PASSENGER TRAFFIC RANKINGS

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  1. A Brief Overview of LAX’s Position inWORLD AIRPORT PASSENGER TRAFFIC RANKINGS A Management Presentation for the: Los Angeles Board of Airport Commissioners Monday, August 3, 2009

  2. LAX Has Fallen in the ACI World Airport Passenger Traffic Rankings from #3 in 2000 to #6 in 2008, as Traffic Has Not Fully Rebounded From 2001 Total Airport Passengers 2000-2008 Note: Traffic Includes Connecting Passengers Source: Airports Council International (ACI)

  3. Several Factors Have Contributed to LAX’s Decline in Traffic Levels and Descent in the ACI World Rankings • After the Events of 9/11/2001, Airlines Operating Hub and Spoke Networks Re-Trenched at the Major Hub Airports • As a result of this strategy, total passenger traffic at nearly every major airline connecting hub has increased… despite significant reductions in seat capacity • LAX is no Longer a Major Connecting Hub for any Single Airline • United, the last airline to operate a hub at LAX, has cut 45.8% of its seat capacity (more than 225,000 seats per week) since 2000 • American (-26.6%), Delta (-32.8%) and Northwest (-25%) have, combined, cut an additional 159,000 weekly seats at LAX during the same period • Low-cost carriers such as JetBlue and Virgin America have entered the LAX market relatively recently… it will take time for these airlines to replace lost seat capacity • Regionalization Has Worked During the Current Decade • From 2000 until the 2007 cyclical peak, LAX lost nearly 5 million annual passenger trips, while the other 4 airports in the region grew by nearly 6 million annual passenger trips

  4. LAX has Faced Steeper Capacity Declines Than Other Top U.S. Gateways Since the 2007 Cyclical Peak… Especially by U.S. Legacy Airlines Weekly Seats Change August 2007 vs. August 2009 Note: Majors Include American, Continental, Delta, Northwest, United and US Airways Source: OAG Schedules

  5. U.S. Legacy Airlines Have Cut Seat Capacity at LAX Because High Levels of Competition Prevent Market Dominance (and Resultant Revenue Premium) Weekly Seats at LAX, by Global Alliance August 2009 Source: OAG Schedules

  6. Despite Airlines’ Seat Capacity Cuts During this Decade, LAX Continues to Rank #3 in the U.S., in Terms of Scheduled Seat Capacity Weekly Seats from U.S. Airports August 2002, August 2005, August 2009 Source: Official Airline Guide (OAG) Schedules, for the month(s) noted.

  7. While Annual Passenger Traffic Totals at LAX Matter, They’re not the Most Accurate Measure of the Relative Health of our Local Air Service Market • Total Passenger Numbers Include Connecting and Origin-Destination (O-D) Passenger Traffic • Both O-D and connecting passengers are vital to the financial health of any airport • However, connecting passenger traffic is largely the result of airlines’ network and route system decisions. Such decisions are typically influenced by factors outside of any airport’s control • Many of the airports listed in the Top 25 of the ACI World rankings are major connecting hubs, 33-50+% of the passenger traffic is connecting. At LAX, connecting passengers comprise just 27% of the total • O-D Passenger Traffic Represents Demand for Air Travel to/from a Particular Market, and is Therefore a Better Measure of Market Vitality • O-D passengers are those who “begin and/or end a trip” at a particular airport • During CY 2008, approximately 43.5 million O-D passengers passed through LAX (73% of the airport’s total traffic)

  8. LAX Finished CY 2008 Ranked 3rd in the World (and #1 in The Americas), in Terms of O-D Passenger Traffic Top 10 World Airports, by Estimated Number of O-D Passenger Bookings CY 2008 Note: MIDT Booking Data Adjusted for Underreporting Source: MIDT Bookings, Sabre Airline Solutions, for the year(s) noted.

  9. As of YE2Q 2009, Continues to Rank Among the World Top 5 in Terms of Both O-D Passenger Bookings (#3) and O-D Passenger Revenue (#5) Top 10 World Airports, O-D Passenger Bookings and Revenue YE 2Q 2009, Indexed Against LAX Totals (LAX = 100)

  10. LAX has Ranked Among the World’s Top 3 O-D Passenger Airports During the Most Recent 7 Years (and #1 in the Americas Each Year) LAX World Ranking, O-D Passenger Bookings YE 2Q 2003 – YE 2Q 2009 Note: MIDT Booking Data Adjusted for Underreporting Source: MIDT Bookings, Sabre Airline Solutions, for the year(s) noted.

  11. The Unmatched Concentration of Foreign Flag Airlines at LAX Indicates the Comparative Strength of the Southern California O-D Passenger Market… Top 10 U.S. Airports for International Capacity Distribution By Carrier Flag Country August 2009 Los Angeles 82% Source: OAG Schedules

  12. … as Does the Fact that LAX has Gained More New Foreign Flag Service Than Any Other U.S. Airport Since 2007 Edmonton-LAXNovember 2008 London-LAXMarch 2008 Osaka-LAXMarch 2008 Oaxaca-LAXDecember 2008 Dubai-LAXOctober 2008 Monterrey-LAXMarch 2007 Rome-LAXJune 2008 Rarotonga-LAXApril 2007 San Jose Del Cabo-LAXAugust 2008 Brisbane-LAXApril 2009 Puerto Vallarta-LAXDecember 2007 São Paulo-LAXJune 2008 Melbourne-LAXSeptember 2009 São Paulo-LAXMay 2009 Santiago-LAXJune 2007 Sydney-LAXFebruary 2009 Melbourne-LAXDecember 2008 Sydney-LAXJuly 2009 Notes: Includes New Nonstop Services That Began Since January 2007 United Melbourne Service is Seasonal During the WinterSource: OAG Schedules

  13. Conclusion: What Can LAWA do to Return LAX to it Previous Position in the World Passenger Traffic Rankings? • Recognize Industry Trends and be Realistic • Many of the fastest-rising airports, in terms of both total and O-D passenger rankings, are in countries (e.g., China, India, the Middle East, etc.) with positive demographic growth and decades of pent-up demand for air travel • Continue to Attract as Much New Nonstop Air Service as Possible • Strategic new domestic routes (to replace lost legacy airline service and to provide feed for international services) • International destinations without nonstop (or attractive one-stop) service • Competitive service on existing international routes (as demand indicates) • Monitor Industry Consolidation, and Seek Opportunities to Re-establish Legacy Airline Hub/Gateway Operations • Example: Increased focus at LAX by Delta/SkyTeam, post Delta-Northwest merger • Hub/gateway operations will increase connecting passenger traffic, as well as O-D

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