Los Angeles
Thorpe describes a relatively new phenomenon of Internet-savvy passengers ‘double ticketing’ – buying a cheap ticket with an LCC for the domestic leg of a journey and a second ticket for international services. This works well at LAX thanks to its mix of carriers and network.
“Roughly 30% of Southwest passengers are double ticketing, buying a domestic ticket with Southwest and then one on an Asian carrier, we get a lot of that double ticketing and it’s increasing with JetBlue.”
While LAX has had Southwest as a tenant for many years, there was some concern the gateway could see the loss of domestic traffi c to neighbours such as Bob Hope and Long Beach airports which have benefi tted from new JetBlue services.
Thorpe explains those new services represent the tapping of previously unexploited demand in southern California, while the recent heating up of competition within the US domestic market between JetBlue and Virgin America has only been good for the gateway.
Increased airline competition “Virgin America has injected real competition into the market. When they arrived at San Francisco, JetBlue was forced to introduce a rival service. When Virgin America arrived it meant JetBlue had to come into LAX, driving domestic traffi c, and while they do present a challenge for the legacy carriers, domestic traffi c is important for
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them when it comes to feeding international fl ights.”
So, the modernisation of LAX’s facilities certainly promise some connectivity bonuses to the big carriers like American Airlines, as well as JetBlue and Southwest, but the critical question is will this be enough to generate new services? “It’s about three things – providing good infrastructure, cost levels and having the right market to attract the right carriers. Of course it should not be infrastructure for infrastructure’s sake, any new facilities need to operate effi ciently and cost effectively, but even if you take an example of an airport like London Heathrow that is constrained and congested, it hasn’t stopped airlines fl ying there, because the market is there,” says John Strickland, director of the route development consultancy, JLS Consulting.
According to Strickland, airports face a tough decision when it comes to upgrading or building new facilities – airlines will apply pressure for better services or threaten to leave but equally they will baulk at paying higher charges to pay for them. With the growth of low-cost carriers (LCC) in recent years, this opposition has only increased. Secondly, Strickland believes airlines may initially fi nd that they have to deploy the B787 on routes which are sub-optimal for its capabilities, due to operational limitations, particularly availability of slots at key airports (the focus for the B787 will be higher frequency operations requiring more slots) once the aircraft
begins to come into operation in the third quarter of 2011. Thirdly, airports have to estimate what
an airline’s future plans will be as planning times for the infrastructure development are typically substantially longer than airlines network planning time frames.
“A recent example is Qantas, which recently announced they would stop fl ying to San Francisco and are instead shifting the service to Dallas, which is a completely different market. This is in part to do with their membership of the oneworld alliance and their relationship with American Airlines, because Dallas is a hub for AA and offers many connections from which Qanatas can benefi t,” says Strickland.
“But of course Los Angeles is still a key point of access into the tourism and business markets of California, in my opinion the airport is not likely to fi nd itself usurped by other competitors,” he adds.
Indeed, Los Angeles claims to be the biggest O&D market in the world, some 25.7 million people visited the city in 2010, while its position as the biggest state economy in the US means business traffi c is also booming. Last year, LAX handled 56 million passengers and it expects this to rise 63 million by the year 2014.
While the B787 has been plagued by technical issues and production delays, its arrival is imminent and how that will affect LAX and how much impact its TBIT modernisation programme will have, only time will tell.
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