Low cost airports

216 Pages·2015·3.82 MB·English

by  Edgar Jimenez

DOCTORAL PROGRAM IN TRANSPORTATION SYSTEMS
Faculdade de Engenharia da Universidade do Porto
MIT Portugal Program
Airport strategic planning in the context of low-
cost carriers ascendency: insights from the
European experience
Edgar Ramiro Jimenez Perez
October 2014
Submitted in partial fulfilment of the requirements for the degree of
Ph. D. in Transportation Systems
Supervised by:
Jorge Pinho de Sousa
Faculdade de Engenharia da Universidade do Porto (FEUP)
João Claro
Faculdade de Engenharia da Universidade do Porto (FEUP)
Richard de Neufville
Massachusetts Institute of Technology (MIT)
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Abstract
Airport strategic planning in the context of low-cost carriers ascendency: insights from the
European experience
During the last decades the airport industry has undergone significant structural changes.
Before, airport planning used to follow broad political goals and extensive governmental regulation.
Airports were mere providers of infrastructure that favoured the construction of monumental
facilities, often reflecting a kind of national or regional pride. This form of airport planning and
design became a paradigm that still applies for many major airports.
Liberalisation of the air transport market has played a key role in reshaping the entire aviation
industry. Low-Cost Carriers (LCC) have proliferated in liberalised markets and have disrupted the
industry by offering a different value proposition and operative model with impacts in traditional
airlines and airports alike. The emergence of LCCs allowed underused airports and former military
bases, particularly in Europe and the United States, to grow significantly. Yet, as the low-cost
segment matures, LCCs move to bigger airports to keep growing. The impact of this trend for
airport strategic planning is not clear in the existing literature.
This dissertation combines qualitative and quantitative methods to analyse in detail the
airports in which LCCs operate in Europe, by using empirical data, unstructured interviews with key
informants, direct observations at airport visits and a comprehensive document review. A
transversal study analyses the characteristics of a sample of 171 airports and their relation with the
importance of LCCs at each of them. A longitudinal study, covering a second sample of 42 airports
over the past decade (2004 to 2013), identifies relevant dynamics in airport evolution concerning
the developments of the low-cost segment.
A comprehensive understanding of the airport business in the current context supports the
definition of an integrated framework that complements other methods for airport strategic
planning: the [New] Airport Business Network. This framework may assist planners and managers in
incorporating, in the same process, the planning and design of infrastructure, and the definition of
a corresponding business strategy. Moreover, given the inherent uncertainty of the aviation
industry, the framework allows airports to set the attributes of their product and shape their own
future.
Keywords: airport planning, airport strategies, airport development, airport management,
low-cost carriers, low-cost airports
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Resumo
Planeamento estratégico de aeroportos no contexto da ascendência das companhias low-
cost: lições do caso europeu
A indústria dos aeroportos tem testemunhado mudanças estruturais significativas nas últimas
décadas. Anteriormente o planeamento dos aeroportos estava mais determinado por objetivos
políticos e uma vasta regulação governamental. Nesse contexto, os aeroportos eram considerados
simplesmente como fornecedores de infraestrutura e era favorecida a construção de edifícios
monumentais, com frequência refletindo algum tipo de orgulho nacional ou regional.
Um dos aspetos chave nas mudanças que têm redefinido a indústria da aviação é a
liberalização do mercado de transporte aéreo. Num mercado liberalizado as companhias low-cost
(LCC) têm proliferado. As LCC revolucionaram a indústria ao oferecer uma proposta de valor e um
modelo operativo diferentes com impacto tanto nas companhias tradicionais quanto nos
aeroportos. O surgimento das LCC permitiu a alguns aeroportos secundários subutilizados e a
antigas bases militares, particularmente na Europa, atrair um significativo incremento no seu
tráfego. No entanto, à medida que o segmento low-cost se consolida, as LCC têm vindo a utilizar
aeroportos principais com maior relevo. O impacto desta tendência no planeamento estratégico
dos aeroportos ainda não é completamente entendido na literatura.
Esta dissertação combina métodos quantitativos e qualitativos para analisar em detalhe os
aeroportos que as LCC utilizam na Europa, servindo-se de dados empíricos, entrevistas não-
estruturadas, observação direta em visitas a aeroportos e revisão documental. Num estudo
transversal são analisadas as características de uma amostra de 171 aeroportos e a sua relação com
a importância que as LCC têm em cada um deles. Um estudo longitudinal, que abrange uma
segunda amostra de 42 aeroportos na última década (2004 – 2013), serve para identificar as
dinâmicas mais relevantes na evolução dos aeroportos em relação ao tráfego low-cost.
Neste sentido, um claro entendimento do negócio aeroportuário no contexto atual serve de
apoio para a definição de um modelo geral que complementa outros métodos de planeamento
estratégico de aeroportos: a [Nova] Rede de Negócios do Aeroporto. Este modelo serve como
ferramenta para apoiar os gestores e projetistas na incorporação, no mesmo processo, do
planeamento e dimensionamento da infraestrutura, bem como da definição de uma estratégia de
negócio concordante. De igual forma, considerando a incerteza inerente à indústria da aviação, o
modelo permite aos aeroportos definir as características do seus produtos de forma a construir com
sucesso o seu próprio futuro.
Palavras chave: planeamento de aeroportos, estratégia de aeroportos, desenvolvimento de
aeroportos, gestão de aeroportos, companhias low-cost, aeroportos low-cost
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Resumen
Planeación estratégica de aeropuertos en el contexto del crecimiento y predominancia de
las compañías de bajo coste: enseñanzas de la experiencia en Europa
La industria aeroportuaria ha sufrido cambios estructurales durante las últimas décadas.
Anteriormente la planeación de aeropuertos estaba más determinada por objetivos políticos y una
vasta regulación gubernamental. En ese contexto, los aeropuertos eran considerados meros
proveedores de infraestructura y se favorecía la construcción de edificios monumentales, a menudo
asociados de cierta forma al orgullo de una nación o región. Esta forma de planeación y diseño de
aeropuertos se convirtió en un paradigma que aún aplica para muchos aeropuertos principales.
La liberalización del mercado aéreo ha jugado un papel clave en la revolución de la industria
de la aviación. En un mercado liberalizado las compañías de bajo coste (LCC) han proliferado y han
revolucionado la industria ofreciendo una propuesta de valor y un modelo de operaciones
diferentes que han impactado tanto a las aerolíneas convencionales como a los aeropuertos. El
surgimiento de las LCC permitió que aeropuertos subutilizados y antiguas bases militares,
especialmente en Europa, crecieran significativamente. Sin embargo, a medida que el segmento se
consolida, las LCC han comenzado a utilizar aeropuertos principales a gran escala. El impacto de
esta tendencia aún no ha sido totalmente comprendido en la literatura.
Esta disertación combina métodos cuantitativos y cualitativos para analizar en detalle los
aeropuertos que las LCC usan en Europa, por medio de datos empíricos, entrevistas no-
estructuradas, observación directa en visitas técnicas a aeropuertos y revisión documental. En un
estudio transversal son analizadas las características de una muestra de 171 aeropuertos y su
relación con la importancia de las LCC en cada uno de ellos. Por otro lado, un estudio longitudinal,
que comprende una segunda muestra de 42 aeropuertos durante la última década (2004 – 2013),
sirve para identificar las dinámicas más relevantes en la evolución de los aeropuertos, sobre todo
en relación al segmento de tráfico de bajo coste.
Un claro entendimiento del negocio aeroportuario en la actualidad sirve como punto de
partida para proponer un modelo general que complementa los métodos existentes para
planeación estratégica de aeropuertos: la [Nueva] Red de Negocios del Aeropuerto. Este modelo
sirve como herramienta para ayudar a los administradores y planeadores de aeropuertos en la
incorporación, en un mismo proceso, tanto la planeación y diseño de la infraestructura como la
definición de una estrategia de negocio coincidente. Además, teniendo en cuenta la incertidumbre
inherente a la industria de la aviación, el modelo permite a los aeropuertos definir las
características de sus productos de manera que puedan forjar su propio futuro.
Palabras clave: planeación de aeropuertos, estrategia de aeropuertos, desarrollo de
aeropuertos, administración de aeropuertos, compañías de bajo coste, aeropuertos low-cost
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Acknowledgements
A Ph. D. is a learning process in which the process itself is as important as the end
result. It requires patience and proper guidance. Jorge, João and Richard were always kind
to provide me with both endless patience and marvellous guidance. I have only words of
appreciation for the time they devoted to this work and to myself in very fruitful and
enjoyable conversations. Their wisdom, which combined perfectly for this work, improved
this dissertation in every aspect and allowed me to learn something valuable in so many
different areas. Their kindness and permanent support made us, me and my wife, feel
always at home in Porto and Boston.
I am also very grateful to Xavier Fageda at the University of Barcelona, Mike Wittman
and Peter Belobaba at MIT's International Center for Air Transportation, and Jodie
Armstrong and the team at Pinkfroot (makers of planefinder.net) for their collaboration
with data collection and valuable comments that certainly improved the quality of this
work.
My most heartfelt thanks to my wife Cata for her permanent support and
encouragement to go ahead and finish my thesis. For being always there even when I was
away. For being inspiring, lovely, sincere and, overall, immensely fofinha.
I also appreciate the unconditional support of my entire family along all these years.
Special thanks to may parents for always believing in me. I know this accomplishment is as
rewarding for them as it is for me.
To all my friends and colleagues in Portugal and the USA, in particular at INESC TEC,
FEUP and MIT. The list is endless to put all names here, but I am very grateful for especially
valuable comments, discussion and support for this whole project.
To all my old friends in Colombia and the new ones in Europe that made this whole
experience unforgettable and so much valuable.
Special thanks to the people and friends at Universidad de Ibagué in Colombia that
were always ready to support and assist me in this adventure.
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The author gratefully acknowledges the funding support provided by Fundação para a
Ciência e a Tecnologia – FCT (Portuguese Foundation for Science and Technology) through
the MIT Portugal Program under Grant SFRH/BD/51128/2010. Parts of this work were
also financed by the ERDF European Regional Development Fund through the COMPETE
Programme (operational programme for competitiveness) and by National Funds through
FCT within the project Airdev/MIT-Pt/TS-AAS/0046/2008.
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Table of Contents
1 Introduction................................................................................................................................1
1.1 Research design...............................................................................................................................3
1.1.1 Research questions................................................................................................................................3
1.1.2 Methodological approach...................................................................................................................4
i) Geographical scope......................................................................................................................................5
ii) Qualitative research methods.................................................................................................................5
iii) Quantitative research methods............................................................................................................9
1.2 Dissertation structure................................................................................................................12
1.3 Publications....................................................................................................................................13
2 State of the art.........................................................................................................................15
2.1 Airport planning...........................................................................................................................16
2.2 Airport flexibility..........................................................................................................................19
2.3 Airport strategies.........................................................................................................................22
2.4 'Low cost airports'.......................................................................................................................23
2.5 Summary.........................................................................................................................................27
3 The airport business in the current context................................................................29
3.1 Stakeholders in the airport industry....................................................................................29
3.1.1 Airport......................................................................................................................................................31
i) Airport management................................................................................................................................31
ii) Airport owners..........................................................................................................................................32
iii) Employees..................................................................................................................................................32
3.1.2 Partners....................................................................................................................................................32
i) Airlines...........................................................................................................................................................32
ii) Aeronautical business units..................................................................................................................33
iii) Non-aeronautical business units.......................................................................................................33
iv) Air Navigation Service Provider.........................................................................................................33
v) Suppliers (aviation value chain).........................................................................................................34
3.1.3 Society.......................................................................................................................................................34
i) Regulators.....................................................................................................................................................34
ii) Government (local, regional, national).............................................................................................34
iii) Economic agents (as users and as promoters)............................................................................35
iv) Non-Governmental Organisations.....................................................................................................35
v) Residents......................................................................................................................................................36
3.2 Airport customers........................................................................................................................36
3.2.1 Aviation trade........................................................................................................................................37
3.2.2 Individuals..............................................................................................................................................37
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3.2.3 Commercial trade................................................................................................................................38
3.3 Airport product.............................................................................................................................38
3.3.1 Infrastructure and aeronautical services.................................................................................39
3.3.2 Transport network (air and surface).........................................................................................39
3.3.3 Retail and non-aeronautical services.........................................................................................40
3.3.4 Activities and events..........................................................................................................................40
3.3.5 Real estate development..................................................................................................................40
3.3.6 Consultancy and managerial services.......................................................................................40
3.4 Approaches to the airport business......................................................................................41
3.5 Airport competition....................................................................................................................42
3.5.1 Provision of services to airlines....................................................................................................43
3.5.2 Passenger demand in the catchment area...............................................................................45
3.5.3 Transfer traffic......................................................................................................................................46
3.5.4 Inbound demand.................................................................................................................................47
3.5.5 Global competition..............................................................................................................................47
3.5.6 Competition for funding...................................................................................................................48
3.5.7 Competition with other modes.....................................................................................................48
3.6 Summary.........................................................................................................................................49
4 Low-Cost Carriers..................................................................................................................51
4.1 Elements of the LCC business model....................................................................................52
4.2 LCCs around the world..............................................................................................................54
4.2.1 LCCs in the Americas.........................................................................................................................54
4.2.2 LCCs in Asia-Pacific.............................................................................................................................55
4.2.3 LCCs in Africa.........................................................................................................................................56
4.2.4 LCCs in the Middle East....................................................................................................................56
4.3 Evolution of LCCs in Europe....................................................................................................57
4.3.1 The origins of European LCCs.......................................................................................................60
4.4 European destinations of LCCs...............................................................................................62
4.5 Summary.........................................................................................................................................65
5 Characterisation of 'low cost airports' in Europe......................................................67
5.1 Sample selection...........................................................................................................................68
5.2 Measuring the importance of LCCs in European airports............................................74
5.2.1 Quartiles to define how 'low cost' airports are.....................................................................75
5.3 Characteristics of European 'low cost airports'...............................................................77
5.3.1 Organisational structure..................................................................................................................77
i) Ownership.....................................................................................................................................................77
ii) Airport group.............................................................................................................................................79
5.3.2 Geographical location........................................................................................................................80
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