1. June 7, 2004 Prepared for: San Diego County Regional Airport Authority San Diego International Airport AVIATION ACTIVITY FORECASTS Board Presentation

2. 1 Background San Diego is the Only Major U.S. Airport that Operates With a Single Runway Current Flight Volume Can Be Accommodated With Existing Runway Capacity, but the Ability to Handle Future Growth is Limited SH&E Was Asked to Prepare Aviation Demand Forecasts to Estimate When San Diego International Airport (SDIA) Will Reach Its Runway Capacity Limits

3. 2 The SDIA Activity Forecasts Have Been Subject to an Extensive Process of Internal and External Review San Diego County Regional Airport Authority Federal Aviation Administration San Diego Air Traffic Control Tower Southern California TRACON Western Pacific Region (Richard Dykas) Office of Operations Planning Performance Analysis (Don Guffey) Office of Aviation Policy & Plans (Roger Schaufele) SANDAG Planning Airside Operations Airport Noise Facilities Development Site Selection Study Team Population & Economic Forecasts (Regional Demographers)

4. 3 Passenger Airlines Represent the Primary Source of Demand for Runway Capacity at SDIA 2003 Aircraft Operations Source: SDIA Airport Operations Department, Monthly Activity Report, December 2003 Scheduled Passenger Airlines 89% Scheduled Passenger Airlines 89% Future Growth in Passenger Traffic and Airline Operations Will Represent the Driving Factor in Determining SDIAs Ability to Accommodate Future Demand

5. 4 Agenda Aviation Activity Forecasts –Passenger Traffic –Airline Operations –Cargo Operations –General Aviation Operations –Military Operations Runway Capacity and Delay Analysis Forecast Conclusions

6. AVIATION ACTIVITY FORECASTS Passenger Traffic

7. 6 The Passenger Traffic Forecast Reflects 4 Key Elements Market Characteristics Past Growth Performance Growth Drivers Forecast Assumptions Passenger Traffic Forecast

8. 7 Understanding the Characteristics of San Diego Passengers Will Influence the Forecast of Future Demand Source: US DOT, O&D Passenger Survey, YE 3Q 2002; San Diego 1998 Customer Satisfaction Survey; San Diego 1998 Total Airport Experience Survey Resident (45%) Business (44%) Visitor (55%) Non-Business (56%) Connecting International Passenger Mix at SDIA Local (96%) Domestic (98%)

9. 8 Since 1980, San Diego Passenger Traffic Has Tripled Annual Passengers at SDIA Annual Passengers (In Millions) * US growth based on preliminary 2003 traffic statistics from Air Transport Association Source: San Diego Unified Port District Statistics, SAN Master Plan Update, and SH&E Analysis * US growth based on preliminary 2003 traffic statistics from Air Transport Association Source: San Diego Unified Port District Statistics, SAN Master Plan Update, and SH&E Analysis Avg. Annual Growth 1980–2003 SDIA4.9% U.S. *3.4% 5.1 M 2000 15.8 M 2003 15.3 M

10. 9 However, San Diego Passenger Growth Rates Have Been Tapering Downward Passenger Growth Rates Over Consecutive 10-Year Periods 1980-2003 Passenger Growth Rates Over Consecutive 10-Year Periods 1980-2003 Source: San Diego County Regional Airport Authority

11. 10 Slowing Growth in SDIA Passenger Traffic Can Be Traced to the Performance of the Economy Average Annual Growth in Personal Income 1980-2000 Average Annual Growth in Personal Income 1980-2000 Source: SANDAG; National Planning Associates

12. 11 Slower Growth in Air Visitors Has Also Contributed to Reduced Passenger Growth at SDIA Average Annual Growth in SDIA Domestic O&D Passengers Source: US DOT, O&D Survey

13. 12 Rapid Expansion of Low-Fare Carriers Has Stimulated Traffic Growth at SDIA – In 1990, Five Markets Had Low-Fare Carrier Service from San Diego August 1990 WN = Southwest HP = America West Source: OAG Schedule Tapes WN WN HP WN

14. 13 May 2004 Source: OAG Schedule Tapes Currently, SDIA Receives Low-Fare Carrier Service to 17 Markets, Including New East Coast Destinations WN SY WN HP WN F9 WN B6 WN = Southwest HP = America West SY = Sun Country F9 = Frontier B6 = jetBlue WN

15. 14 In 2003, Low-Fare Airlines Carried 45% of SDIA Domestic Passengers 2003 Domestic Passenger Share at SDIA Low-Fare Carriers Source: San Diego County Regional Airport Authority

16. 15 San Diego has a Higher Proportion of Low Fare Service than the U.S. as a Whole, but Low-Fare Carriers are Rapidly Gaining Share in the U.S. Market Share of Non-Stop Seats by Low Fare Carriers 1990 - 2004 Share of Non-Stop Seats by Low Fare Carriers 1990 - 2004 Source: OAG Schedule Tapes Pct of Non-Stop Seats

17. 16 SDIAs High and Low Forecasts Reflect Differing Views of the Future AssumptionHighLow Real Personal Income Growth + 2.4% per year (SANDAG 2003 Forecast plus 10%) + 2.2% per year (SANDAG 2003 Forecast) Change in Real Average Fare -0.3% per year (Half the U.S. Rate) Post-9/11 Recovery Partial Recovery from 2004 to 2006No Recovery from 2004 to 2006 Business Travel Substitution, e.g., Videoconferencing No Increase in Business Travel Substitution Substitutes Capture 15% of Business Passengers by 2014 International Route Development Aggressive – Service to 3 European Hubs and 1 Asian Gateway by 2015 Moderate – Service to 2 European Hubs by 2015 High and Low Forecast Assumptions

18. 17 SH&E Forecasts Unconstrained Passengers to Grow from 15.3M in 2003 to Between 27M and 33M by 2030 Average Annual Growth (Base 2002 – 2030) SH&E High2.8% SH&E Low2.2% Total San Diego Passengers Sources:SH&E Analysis San Diego International Airport Master Plan Final Report – June 2001, HNTB Airport Economic Analysis (AEA), HR&A with Landrum and Brown, January 2001 Annual Passengers 32.7 M 27.1 M 2003 Actual 15.3 M

19. 18 Translating the Passenger Forecast into Aircraft Operations Requires an Assessment of Two Key Factors Passenger Traffic Forecast Aircraft Operations Future Aircraft Fleet Mix – Average Seats Per Aircraft Load Factors – Percent of Seats Occupied

20. 19 Narrowbody Jets are the Predominate Aircraft Type in the Current Passenger Airline Fleet Mix at SDIA Passenger Airline Operations by Aircraft Class Base Year 2002 Source: US DOT, T100 Database Jet 100-150 Seats 65.2% Jet 100-150 Seats 65.2%

21. 20 Factors that Will Influence the Future Fleet at SDIA Aircraft Size for Southwest Airlines, the Leading Carrier at SDIA, Will Not Increase –All aircraft orders are for the 137-Seat Boeing 737-700 jetBlue Is Expected to Increase Its Presence at SDIA –Currently serves SDIA with 160-seat A-320s, the only large jet aircraft in its current fleet –Potential for future growth with 100-seat EMB-190 regional jets (deliveries starting 2005) Regional Jets (RJ) Are Expected to Replace Turboprops on the SAN-LAX Route Significant RJ Expansion in Other Markets Will Be Limited by the Presence of Low-Cost Carriers Orders of Other Major SDIA Carriers Are Focused on Narrowbody Jets

22. 21 Aircraft Size at SDIA is Projected to Increase Slowly Over the Forecast Period Average Seats per Aircraft Source: US DOT, T100 and SH&E

23. 22 San Diego Load Factors Are Among the Highest in the Nation Average Domestic Load Factors at U.S. Large Hub Airports 2003 Average Domestic Load Factors at U.S. Large Hub Airports 2003 Source: US DOT T100 Databank

24. 23 Load Factors Are Projected to Increase Nationally, But High Current Load Factors Will Limit Future Increases at SDIA Load Factor Assumptions Source: US DOT, T100 Database; SH&E * 2003 load factor is for domestic flights only.

25. 24 SH&E Forecasts Airline Operations to Grow by 1.6% to 2.3% Annually, Moderately Below the Growth in Passenger Traffic Forecast SDIA Passenger Airline Operations Actual and Forecast Average Annual Growth (Base 2002 – 2030) LowHigh Psgr Airline Operations1.6%2.3% Passenger Traffic2.2%2.8% 327,000 273,000 Actual 2003 172,520

26. AVIATION ACTIVITY FORECASTS Cargo, General Aviation and Military Operations

27. 26 Continued Strong Growth in Cargo Tonnage is Forecast in Both the High and Low Forecast Scenarios Average Annual Growth Historic:1980-19909.5% 1990-20036.5% HighLow Forecast:Base 2002 - 20304.8%3.9% San Diego Cargo Tons (Enplaned + Deplaned) Sources: SH&E Analysis 622,100 487,100 Actual 2003 154,600

28. 27 Cargo Operations are Projected to Grow Slower than Cargo Tonnage Due to Increasing Aircraft Capacity Forecast All-Cargo Operations at SDIA Average Annual Growth (2002 – 2030) LowHigh Cargo Operations2.4%3.3% Cargo Tonnage3.9%4.8% 4,600 4,900

29. 28 Only 2% of the Regions General Aviation Operations Occur at SDIA San Diego County GA Operations by Airport Facility 2002 Source: FAA, Terminal Area Forecast, 2003

30. 29 GA Traffic at SDIA is Forecast to Grow at Less than 2% Annually Historic and Forecast GA Operations 1990-2030 Source: San Diego County Regional Airport Authority Records; SH&E Year Annual Operations Forecast Historic 25,000 19,600 Actual 2003 14,500

31. 30 Military Operations Represent 1% of Current SDIA Flight Activity and Were Held Constant Over the Forecast Period Historic and Forecast Military Operations 1970-2030 Source: San Diego County Regional Airport Authority Records; SH&E Year Forecast Historic Annual Operations 1,100

32. 31 Unconstrained Aircraft Operations Are Forecast to Grow from Approximately 200,000 to Between 303,000 and 365,000 in 2030 Total Unconstrained Aircraft Operations Forecast for SDIA Source: SH&E Analysis Aircraft Operations HighLow 303,000 365,000 Average Annual Growth (Base 2002 – 2030) SH&E High2.3% SH&E Low1.6%

33. SH&E Performed a Capacity Analysis to Identify When SDIAs Single Runway Will No Longer Be Able to Accommodate Growth in Demand RUNWAY CAPACITY ANALYSIS

34. 33 Runway Capacity Analysis Indicates San Diego Can Handle 55 Operations per Hour Under VFR Weather Conditions Hourly Runway Capacity 2030 Hourly Runway Capacity 2030 VFR = Visual Flight Rules IFR = Instrument Flight Rules Note: Hourly Balanced Flow Capacity for Future SDIA Fleet Mix Rwy 09 or 09/27 IFR 3.5% Percentage of Time Configuration Used Runway 27 VFR1,200 feet3 miles Runway 27 IFR700 feet2 miles Runway 09 or 09/27 IFR400 feet1 mile ConfigurationCeilingVisibility Approach Minima

35. 34 San Diego Currently Experiences Minimal Delays as Demand is Well Below Capacity Hour Average Weekday Flights vs. Capacity 2003 Conditions Average Weekday Flights vs. Capacity 2003 Conditions Rwy 27 VFR Capacity – 55 Rwy 27 IFR Capacity – 49 Hourly Flights

36. 35 In 2010, San Diego Will Still Have Sufficient Runway Capacity to Accommodate Flight Demand Average Weekday Flights vs. Capacity 2010 High Growth Scenario Average Weekday Flights vs. Capacity 2010 High Growth Scenario Hourly Flights Rwy 27 VFR Capacity – 55 Rwy 27 IFR Capacity – 49 Hour 2010 2003

37. 36 By 2020, SDIA Will Experience Severe Capacity Pressures Under the High Growth Scenario Average Weekday Flights vs. Capacity 2020 High Growth Scenario (Unconstrained) Average Weekday Flights vs. Capacity 2020 High Growth Scenario (Unconstrained) Hourly Flights Rwy 27 VFR Capacity – 55 Rwy 27 IFR Capacity – 49 Hour 2020 2010 2003

38. 37 Forecast Flight Demand in 2030 is Well Above the Capacity of SDIAs Single Runway Average Weekday Flights vs. Capacity 2030 High Growth Scenario (Unconstrained) Average Weekday Flights vs. Capacity 2030 High Growth Scenario (Unconstrained) Hourly Flights Rwy 27 VFR Capacity – 55 Rwy 27 IFR Capacity – 49 Hour 2030 2020 2010 2003

39. FORECAST CONCLUSIONS

40. 39 At Approximately 260,000 Annual Operations, Runway Congestion and Delays Will Begin to Constrain Growth in Flight Activity at SDIA SH&E Forecasts that SDIA Will Reach 260,000 Aircraft Operations Between 2015 (High) and 2022 (Low) At 300,000 Annual Operations, Severe Runway Congestion Will Eliminate Further Growth (Between 2021 and 2030) Investments in the SDIA Gate and Taxiway Systems Will be Required to Reach These Levels

41. 40 There Are No Simple Remedies to Address a Significant Capacity Shortfall Hypothetical Solution Adjust Schedule Timing to Smooth Hourly Demand Pattern Increase Load Factors Substitute Larger Aircraft Forecast SDIA Load Factor (approx. 77%) is Higher Than Almost All Large Hubs Today and is Approaching Natural Limits No Evidence of Higher Load Factors at Heavily Delayed Airports Expected Impact Limited Benefit Given Relatively Flat Current Pattern. There Are No Low Delay Periods During Normal Operating Day (of High Activity Scenarios) Curfew and Passenger Preferences Preclude Extending Operating Day Larger Aircraft Size Observed at Highly Delayed Airports Some Benefit, but Limited by Composition of Carrier Fleets

42. 41 The SH&E Forecast Extends the Time Frame in Which Key Activity Thresholds Will be Reached by 7 to 14 Years Comparison of Operations Forecasts for SDIA Note:Operating Thresholds Based on SH&E Capacity/Delay Analysis and FAA Guidelines Sources: SH&E Analysis San Diego International Airport Master Plan Final Report – June 2001, HNTB, (Analysis base year: 1996) Airport Economic Analysis, HR&A with Landrum and Brown, January 2001, (Analysis base year: 1998) 260,000 Operations 2003 Severe Congestion ActualMaster Plan Aircraft Operations 300,000 Operations

43. 42 The SH&E Forecast Extends the Time Frame in Which Key Activity Thresholds Will be Reached by 7 to 14 Years Comparison of Operations Forecasts for SDIA 260,000 Operations 2003 2008 Severe Congestion ActualMaster Plan Airport Economic Analysis Aircraft Operations 300,000 Operations Note:Operating Thresholds Based on SH&E Capacity/Delay Analysis and FAA Guidelines Sources: SH&E Analysis San Diego International Airport Master Plan Final Report – June 2001, HNTB, (Analysis base year: 1996) Airport Economic Analysis, HR&A with Landrum and Brown, January 2001, (Analysis base year: 1998)

44. 43 The SH&E Forecast Extends the Time Frame in Which Key Activity Thresholds Will be Reached by 7 to 14 Years Comparison of Operations Forecasts for SDIA 260,000 Operations 2003 20082015 Severe Congestion ActualMaster Plan Airport Economic Analysis SH&E High Aircraft Operations 300,000 Operations Note:Operating Thresholds Based on SH&E Capacity/Delay Analysis and FAA Guidelines Sources: SH&E Analysis San Diego International Airport Master Plan Final Report – June 2001, HNTB, (Analysis base year: 1996) Airport Economic Analysis, HR&A with Landrum and Brown, January 2001, (Analysis base year: 1998)

45. 44 The SH&E Forecast Extends the Time Frame in Which Key Activity Thresholds Will be Reached by 7 to 14 Years Comparison of Operations Forecasts for SDIA 260,000 Operations 2003 200820152022 Severe Congestion ActualMaster Plan Airport Economic Analysis SH&E High SH&E Low Aircraft Operations 300,000 Operations Note:Operating Thresholds Based on SH&E Capacity/Delay Analysis and FAA Guidelines Sources: SH&E Analysis San Diego International Airport Master Plan Final Report – June 2001, HNTB, (Analysis base year: 1996) Airport Economic Analysis, HR&A with Landrum and Brown, January 2001, (Analysis base year: 1998)

46. 45 Limited Runway Capacity Will Cause an Estimated Loss of Between 1.0 Million and 4.4 Million Passengers in 2030 Year Passenger loss is approximately ~1.0M (or 3.8%) in 2030 Cumulative passenger loss of 5.0M (2022-2030) Low Growth Scenario 27.1 m 26.1 m Divergence in 2022 at 23M Psgrs Low Growth Scenario Forecast SDIA Passengers (millions) Low Growth Scenario Forecast SDIA Passengers (millions) Year High Growth Scenario 32.7 m 28.2 m Divergence in 2015 at 23M Psgrs Passenger loss is approximately ~4.4M (or 13.6%) in 2030 Cumulative passenger loss of 31.3M (2015-2030) High Growth Scenario Forecast SDIA Passengers (millions) High Growth Scenario Forecast SDIA Passengers (millions)

47. 46 Findings and Conclusions Passenger Airlines are the Principal Driver of Total Aircraft Operations at SDIA Passenger Traffic at SDIA is Forecast to Grow from 15.3 Million Passengers in 2003 to Between 27 and 33 Million in 2030 Historically, Increases in Aircraft Size and Load Factors at SDIA Permitted Strong Passenger Growth Without a Commensurate Increase in the Number of Aircraft Operations However, High Current Load Factors and Aircraft Fleet Trends Indicate that, Over the Forecast Period, SDIA Aircraft Operations Will Grow at Rates that Approach the Underlying Rate of Passenger Growth As a Result, SDIA Aircraft Operations are Forecast to Increase From Approximately 200,000 Flights in 2003 up to Between 303,000 and 365,000 Flights in 2030 (Unconstrained)

48. 47 Findings and Conclusions contd. While SDIA Can Accommodate Current Flight Activity, the Single Runway Has Insufficient Capacity to Handle the Forecast Growth in Aircraft Operations Runway Capacity will Begin to Constrain Growth at 260,000 Operations Approximately 30% Above Current LevelsOccurring Between 2015 and 2022 At 300,000 Annual OperationsOccurring Between 2021 and 2030 Runway Congestion will Eliminate Further Growth Investments in the SDIA Gate and Taxiway Systems (Additional Gates and Taxiway Improvements) Will be Required to Reach these Levels If Additional Runway Capacity is Not Provided, San Diego Will Experience a Cumulative Loss of At Least 5 Million Passengers (Low Growth Scenario) and As Many As 31 Million Passengers (High Growth Scenario) Over the Forecast Period