Thomas McKenna

Assistant Director of Aviation - Marketing

FAA Economic Forecast

• 2.0 percent increase in domestic enplanements for 2003

• 3.5 percent increase in domestic enplanements in long run (2004-2014)

• Traffic returns to Pre-911 totals by 2006

• Low fare carriers increase market share == falling fares

• 5.0 percent increase in air cargo for 2003 and beyond

Industry Overview - Airlines• Bankruptcy – Chapter 7 or 11

• Vanguard• US Airways• United

• “Who’s Next??”• American • Delta• Midwest• Northwest

• Capacity Cuts• Layoffs/Unions• Reduction of flights/destinations• Regional Jets/Low-cost carriers• Alliances/Partnerships/Merges

Regional Jets

• 91 Regional Jet Airlines

• 1/3 of U.S. commercial airline fleet

• Fastest growing segment in commercial aviation

• 1 out 8 domestic airline passengers flies on a regional airline

• 82.8 million passengers boarded in 2001; double 1991 totals

Source: Regional Airline Association; April 2002

Industry Overview - Airports

• AIR-3 Reauthorization• Establish a new federal – airport partnership

• Protect capacity investments

• Increase airport financial flexibility

• PFC streamlining

• Essential Air Service• Small Airports – affordable access to Air Service

• Security Mandates• Expand federal reimbursement

Economic Impact of KCI

• $3.2 billion to the Kansas City Economy

• 67,400 total employment

• $1.5 million in total payroll expenses

• Headquarter Relocation Program

• Geographic Location

• Life Style

• Air Service

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Source: Official Airline Guide, schedules for the week of March 10 – 16, 2003, February 2003, Max edition and announced new service.

Nonstop Destinations

55

Daily Nonstop Departures

212

Daily Nonstop Seats

23,811

NEBRASKA

IOWA

OKLAHOMA

MISSOURI

ARKANSAS

KANSAS

DMA = Designated Market Area.Source: Sales & Marketing Management, Survey of Buying Power, September 2002

NEBRASKA

IOWA

OKLAHOMA

MISSOURI

ARKANSAS

KANSAS

Sioux City

Omaha

Lincoln

Des Moines

Waterloo

Iowa City

Cedar Rapids

Davenport

Wichita

Columbia

St. Louis

Springfield

Joplin

Lawton

Enid

Oklahoma City

Tulsa Fayetteville

Ft. Smith

Little Rock

Pine Bluff

Memphis

Texarkana

DMA’s of Kansas City, St. Joseph and Topeka

Dubuque

KCI

DMA Populations = 2,780.0

Income (EBI in billions) = $49.9

Approximate Population of San Diego

Southwest35%

American15%

Delta11%

United9%

Northwest8%

US Airways7%

Midwest Express5%

Continental5%

Frontier2%

America West3%

Year Ended March 2002, Enplanements

Note: Includes only U.S. carriers reporting T-100 data.

Source: U.S. DOT, T-100 data, via Data Base Products.

KANSAS CITY IS NOT DOMINATED BY A HUB CARRIER

PROFILE OF THE KANSAS CITY DOMESTIC MARKET(Year Ended March 2002)

Domestic O&D passengers

Average yield

Average passenger haul

Sources: U.S. DOT Origination-Destination Passenger Survey, year ended March 2002, via Data Base Products,

8,885,500

13.0¢

930 miles

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

18,000,000

20,000,000

92Q1 92Q3 93Q1 93Q3 94Q1 94Q3 95Q1 95Q3 96Q1 96Q3 97Q1 97Q3 98Q1 98Q3 99Q1 99Q3 00Q1 00Q3 01Q1 01Q3 02Q1

Seats

Source: U.S. DOT, T-100 Data, via Data Base Products.

Passengers

Year Ended

Load factor has improved by 6 pointsto 64% over the last ten years

Seats/Passengers

KCI Over 150,000Nearly 50,000

Nea

rly

60,0

00

Nearly 80,000O

ver

60,0

00

Europe

Mexico

Asia

Canada/Greenland

Caribbean/Central America/South America

Over 430,000 international passengers in YE June 2001

Source: U.S. DOT Origination-Destination Passenger Survey via Data Base Products, YE June 2001.

KCI PROJECTS

• Terminal Improvement Project

• Consolidated Rental Car Facility

• Economy Lot

• KCI’s $258 million Terminal Improvement Project will:

– Better distribute passenger traffic among the three terminals

– Widen walkways in all terminals

– Improve information displays for flights and baggage

• The short curb-to-gate distance of 75 feet will not change

TERMINAL IMPROVEMENT PROJECT

• KCI’s $258 million Terminal Improvement Project will:

– Provide unique baggage claims areas for all airlines

– Add many PC outlets and establish a new business center

– 50% more concession space

• Expected completion: 2004

B A

C

New Employee Lot

KCI’s $62 million Economy Lot will provide:

– Dedicated terminal lots & shuttles

– Real time parking& airport information (Kiosks)

– 15,000 new low cost parking spaces

– Additional security cameras for patrons’ safety

– Faster travel time from new lots to terminal

Economy Lot

• Expected completion: 2003

Consolidated Rental Car Facility

Benefits to the airport user:

– Customer convenience

– Closer to the terminals

– Flight information display

– Additional on-airport rental choices

• Expected completion: 2005

• Expected cost: $86 million

Air Cargo

Air Cargo means business at KCI !

• All Cargo Carriers (20 flights per day)

– Airborne, BAX Global, DHL Worldwide, Emery Worldwide, FedEx, Kitty Hawk, UPS, and United States Post Office

• Largest cargo airport in six-states – (NE,IA,MO,KS,OK,AR)

• Air cargo buildings on airport - 6

89% of all air freight is processed by the eight all-cargo carriers

FTZ Attributes at KCI

• Zone No. 15 - Site 3

• One of Largest FTZ airports in the US

• Benefits including: Deferral payment of duties until goods are entered in the commerce of the United States

• Works with Greater Kansas City Foreign Trade Zone, Inc to attract companies that need airport location and FTZ benefits.

Types / Modes of Distribution

• Pipeline

• Water

• Rail

• Truck

• Air

Cost of Modes

• Pipeline

• Water

• Rail

• Truck

• Air

0.02 per ton mile

0.02 per ton mile

0.03 per ton mile

0.40 per ton mile

0.90 per ton mile

What percentage of World Commerce goes by Air?

• About 2% of World Trade by Volume

• About 40% of World Trade by Value– About 2.5 trillion dollars of goods are uplifted by aircraft each

year

What types of commodities move by Air?

Limits of Air Cargo

• History

• Belly Cargo

• Weight

• Size– 747 today = 100 tons (total Aircraft load)

(118 inches high, 96 inches wide, 240 inches long)

Intermodal Air Cargo

• Air - Truck

• Sea - Air

• Air - Rail

Air Cargo Information Flow

Freight Fowarder

Custom Hose Broker

Air Carrier

Banks

Customs Service

Dept. of Agriculture

Shipper

Consignee

ACS (Automated Customs System)

Not Just Jets

Remote location (Helicopter)

Airships (lighter than Air)

Rockets (Satelitte Delivery)

DISCUSSION