The State of the Aviation
Industry Post 9/11: The
Boston Logan Experience
Mr. Thomas J. Kinton, Jr.
Director of Aviation
MIT Symposium on Air Transportation
March 2004

I. Boston Logan Context
1

Boston Logan International Airport (2003)
“ Passengers
“ Operations
“ 60% Jet
“ 30% RJ
“ 10% Prop
“ O&D 90%
22.8M
373K
“ Almost 60 Airlines
“ Served by all the Majors
(except Southwest)
“ $6B/Yr. in Economic
Benefits, Supporting
100,000 Local Jobs

In 2002, Logan Was the 20 th Busiest Airport in the U.S.
Total Local and Connecting Passengers
CY 2002
Rank
13
14
15
16
9
10
11
12
17
18
19
20
21
7
8
5
6
3
4
1
2
Atlanta
Chicago O'Hare
Los Angeles
Dallas/Fort Worth
Denver
Phoenix
Las Vegas
Houston
Minneapolis
Detroit
San Francisco
Miami
New York J F Kennedy
New York Newark
Seattle/Tacoma
Orlando
St. Louis
Philadelphia
Charlotte
Boston
New York La Guardia
0
Local Connecting
10,000,000 20,000,000 30,000,000 40,000,000 50,000,000 60,000,000 70,000,000 80,000,000
3
Source: ACI; Airport Records; Salomon Smith Barney 2002 Hub Fact Book; US DOT O&D Survey

BOS is the 12 th Largest O&D Market in the United States,
With Over 16 Million Domestic O&D Passengers
Domestic O&D Passengers at Top 20 U.S. Airports
YE 2Q 2003
30,000,000
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
0
LAX LAS ORD ATL MCO PHX LGA DFW SEA DEN EWR BOS BWI FLL SFO SAN TPA DTW MSP PHL
Source: US DOT, O&D Survey
4

A Key Strength of Boston is that it is Dependent on No Single Carrier
100%
Carrier Share of Domestic Daily Departures at Selected Hub Airports
January 2004
90%
80%
70%
60%
50%
40%
30%
20%
10%
27%
36% 37%
49% 50%
55%
58% 59%
60%
62%
64% 66%
71% 72%
75%
79% 79%
83% 84%
86%
90%
CO
US
DL
NW
US
NW
DL
UA
US
CO
AA
UA
AA
AA
AS
UA
UA
HP
UA
US
AA
0%
BOS LGA LAX PHX ORD DEN SEA MIA STL SFO DFW EWR PHL IAD ATL DTW MSP PIT IAH CLT CVG
5
Source: OAG Schedule Tapes

Boston is also a Strong International Market (12 th
Largest International Gateway in the U.S.)
Weekly International Nonstop Service
March 2004
Seat
Rank Gateway
Weekly Percent of Total
Dept's Seats Dept's Seats
1 Miami
2 New York Kennedy
3 Los Angeles
4 Chicago O'Hare
5 New York Newark
6 San Francisco
7 Houston Inter.
8 Atlanta
9
10
11
12
13
14
15
16
Dallas/Fort Worth
Washington Dulles
Philadelphia
Boston
Detroit
Fort Lauderdale
Seattle/Tacoma
Minneapolis
17 Charlotte
18 Orlando
19 Phoenix 177 21,097
20 New York La Guardia 231 20,189
21 Denver
22 Las Vegas
23 Cincinnati
24 Baltimore
25 Pittsburgh
1,333
838
341 30,501
230 29,573
181
132
132
71
90
208,578
202,725
827 184,915
716 120,539
649 104,192
352 82,916
671 81,323
535 80,863
396 57,562
305 55,341
368 49,475
333 44,699
262 39,283
503 31,115
23,289
21,708
144 17,935
77 12,600
12,011
8,159
6,155
10.9% 11.9%
6.9% 11.5%
6.8% 10.5%
5.9% 6.9%
5.3% 5.9%
2.9% 4.7%
5.5% 4.6%
4.4% 4.6%
3.2% 3.3%
2.5% 3.1%
3.0% 2.8%
2.7% 2.5%
2.1% 2.2%
4.1% 1.8%
2.8% 1.7%
1.9% 1.7%
1.5% 1.3%
1.1% 1.2%
1.4% 1.2%
1.9% 1.1%
1.2% 1.0%
0.6% 0.7%
1.1% 0.7%
0.6% 0.5%
0.7% 0.4%
Total US 12,216 1,758,450 100.0% 100.0%
Source: OAG Schedules
6

The Boston Metro Region has a Highly
Diversified Economy that is Travel Intensive
“ High Technology
“ Biotechnology
“ Health Care Services
“ Financial Service
“ Higher Education
“ Tourism
“ About 55% Logan Trips are Business
Related
7

II. Impacts of 9/11 and Economic Downturn
8

As a Result of 9/11 & the Economic Downturn, the Greater
Boston Region has Lost Almost 5 Million Air Pax Trips
Logan
Total Pax
Operations
Cargo
2000
27,726,833
487,996
852,347,154
2003
22,791,169
373,304
744,838,287
40,000,000
35,000,000
30,000,000
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
0
2000 2003
% Change
-18%
-24%
-13%
M anche ste r
Prov ide nce
Boston Logan
Change
(4,935,664)
(114,692)
(62,737,146)
9

Since 9/11, Boston Has Exhibited the 2 nd Largest Decline in
O&D Passengers of the Top 20 U.S. Airports
5%
2.0%
0%
Change in Domestic O&D Passengers - Top 20 U.S. Airports
YE 2Q 2001 vs. YE 2Q 2003
-5%
-10%
-15%
-20%
-2.4%
-3.7%
-4.9% -5.4%
-5.9% -6.1% -6.4%
-8.8%
-9.4% -9.9%-10.2%
-11.8%-11.9%
-13.2%-13.6%
-16.0%-16.4%
-18.2%
-25%
Average of Top 20 Airports:
-10.5%
-30%
-29.7%
-35%
FLL LAS DEN PHX SAN ORD TPA SEA BWI MCO PHL DFW MSP LGA DTW ATL EWR LAX BOS SFO
10
Source: US DOT, O&D Survey

Boston Traffic Declines Have Been Most Severe in Short Haul
Markets Due to Air Carrier Cuts, Increase use of RJs, Diversion to Alternate Modes and Teleconferencing Technology
0%
-5%
-10%
-15%
-20%
-25%
-30%
-35%
-40%
-45%
-50%
Change in Boston Domestic O&D Passengers by Stage Length
2Q 2000 vs. 2Q 2003
Under 250 Miles 250-500 Miles 500-1,000 Miles Over 1,000 Miles
-43.5%
-24.3%
-20.6%
-13.2%
11
Source: US DOT, O&D Survey

Reflecting Industry Actions to Cut Capacity, Aircraft Size and Load Factors Have Both Risen at Boston Logan
Airline Operating Statistics at Boston
CY 1998 – YE 3Q 2003
Year
Seats
Per Departure
1998
1999
2000
2001
2002
2003
93
100
103
100
101
101
Load Passengers
Factor Per Departure
63.0%
61.0%
61.2%
57.7%
62.6%
66.3%
59
61
63
58
63
67
12
Source: OAG Schedule Tapes, USDOT T100 Databank.

Reasons for the Disproportionate Drop in
Boston Logan Traffic
“
“
“
“
“
“
Economy/Industry Already Weak Before 9/11
Airline Cuts in Capacity
Economic Downturn
“ Two sectors hardest hit are critical to the local economy (High Tech and Financial Services)
Business Travel Disproportionate Share
Minimum Low Cost Carrier Presence
Ongoing Construction
“ Big Dig
“ Logan Modernization
13

Recent Passenger Traffic Data Suggests Logan is Beginning to Rebound
“
“
“
“
Last Six Months
(Sept-Feb)
Last Quarter 2003
January 2004
February 2004
(Estimate net extra day & patriots)
Change from Previous Year
+ 6.7%
+ 4.5%
+ 8.5%
+ 14.4%
“
“
“
“
The Economy is Improving
Increase Presence of Low Cost Carriers
Dramatically Improved Access to Logan
New Airport Facilities Improving Customer
Experience
14

III. Boston Logan Priorities for the Future
“ Continue to Enhance Security
“ Complete Logan Capital Program
“ Respond to Evolving Air Carrier Business Models
(Legacy and Low Cost Carriers)
“ Reduce Operating Costs and Increase Alternative
Sources of Revenues
“ Focus on Customer Service
15

Re-Inventing Security
“ $146 Million in-line baggage screening
“ TSA Staffing
“ New Technology
“ Security Perimeter
“ Screening Cargo
“ BPR Training
16

Over $4 billion in Private/Public Investments Underway
“
“
“
Upgrade and Expand
International Terminal
Delta New Terminal A
“
US Airways Terminal B
Expansion of Central
Garage
“
“
New Walkways
New Hotel
New Roadways/Tunnel “
“
“
New Fuel Distribution
System/Other Utilities
Airfield Improvements
17

Low Cost Carriers jetBlue and America West Have
Substantially Increased the Low-Fare Presence at Boston
Daily Low-Fare Carrier Capacity
March 2003 vs. March 2004
9,000
8,132
8,000
Mar-03 Mar-04
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
4,438
3,800
3,699
2,740
3,032
BOS PVD MHT
Boston Now Has More Low-Fare Seats Than
Providence and Manchester Combined
18
Source: OAG Schedules

Boston Continues to be Well Positioned for
Significant Low-Fare Carrier Growth
“ Large Local Market
“ Below Average Low-Fare Presence
“ No One Carrier Dominates the Boston Market
“ Available Facilities in the Near Future
“ The Absence of Southwest Airlines Makes Boston
More Attractive to Other Major Low-Fare Carriers
19

Regional Jet Traffic has Increased from 13,000 Flights
Annually in 1999 to Almost 100,000 Flights Today
Boston Logan Regional Jet Flights
1999 - 2003
100,000
80,000
60,000
40,000
20,000
0
1999 2000 2001 2002
Source: ACAS Fleet Database.

Challenge of Managing Regional Jet Usage…
New domestic point to -
Off Peak Scheduling

IV. Industry Trends and Boston Logan Airport
22

Near Term Uncertainties versus Long Term
Fundamentals
Short Term Long Term
“ Uncertainty of
Economic Recovery
“ Security Costs
“ War/Terrorist Threats
“ Domestic & International
“ Airline Consolidation and Bankruptcies
“ Economic Recovery
“ Lower Fares
“ Rebound of Legacy
Carriers
“ Continued Growth of
Low Cost Carriers
“ Enhanced Customer
Service
23

The Future at Logan
“
“
“
“
The network carriers continue to struggle
“ One (or more) major carrier may fail
A major carrier failure would produce some shrinkage in seat capacity, both nationally and at
Boston
Strong growth by low-fare carriers will continue at Boston
“ Potential to increase from 14% of domestic pax traffic to over
30% (consistent with national trend)
Boston’s network carriers will respond aggressively, and both capacity increases and reduced fares are expected
24

The Future at Logan , Cont’d.
“
“
“
Expect further growth in Transatlantic services and new participation in the Asian and Latin
American markets
Completion of capital investment program will make Logan a dependable, customer friendly airport
“
“
“
Improved Access
New Facilities (Terminals, Garage, Roadways)
Airfield Improvements
Improvements in security procedures and new technologies will reduce security processing
“ Risk of under-funding TSA
25

The Future at Logan , Cont’d.
“
“
Increase use of regional jets and more point to point service will stress airfield facilities and airspace
Cost of environmental impacts will re-surface
“
“ Air Quality (NOx)
“ Noise (Stage 4)
Implement flexible management tools to direct highest and best use of airport facilities
“ Demand Management
“ Security responsibility and checkpoint staffing
“ Gate use requirements
“ Airfield Apron utilization
26

The Future at Logan , Cont’d.
“
“
“
Keep airport competitive
“ Continue to focus on customer service
“ Expand alternative sources of revenues
“ Control operating and capital costs
“ Maintain first class facilities
With ever thinner margins, air carriers are demanding that airports reduce costs
Air travelers are demanding better/low cost service from air carriers and airports
“ Choices of airports and alternative modes
27

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