Managing airports an international perspective, 5th edition

Managing Airports Managing Airports presents a comprehensive and cutting-edge insight into today’s international airport industry Approaching management topics from a strategic and commercial perspective, rather than from an operational and technical one, the book provides an innovative insight into the processes behind running a successful airport This fifth edition has been fully revised and updated to reflect the many important developments in the management of airports It features: • New content on: evolving airline models and implications for airports, selfconnection, digital marketing, sensor and beacon technology, policy decisions and economic benefits, and climate change adaptation • Updated and expanded content on: airport privatisation, economic regulation, technology within the terminal, non-aeronautical innovations, service quality and the passenger experience • New and updated international case studies to show recent issues and theory in practice, including studies from emerging economies such as China, India and Brazil Accessible and up-to-date, Managing Airports is ideal for students, lecturers and researchers of transport and tourism, and practitioners within the air transport industry Anne Graham is Professor of Air Transport and Tourism Management at the University of Westminster in London, UK One of her key areas of expertise and knowledge is airport management, economics and regulation, and she has over 30 years’ experience of lecturing, research and consultancy on these topics She has published widely with recent books including The Routledge Companion to Air Transport Management, Airport Finance and Investment in the Global Economy, Aviation Economics and Airport Marketing Between 2013 and 2015 Anne was Editor-in-Chief of the Journal of Air Transport Management and is on the Editorial Board of a number of other journals Managing Airports An international perspective Fifth edition Anne Graham Fifth edition published 2018 by Routledge Park Square, Milton Park, Abingdon, Oxon, OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2018 Anne Graham The right of Anne Graham to be identified as author of this work has been asserted by her in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988 All rights reserved No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe First edition published by Elsevier 2001 Fourth edition published by Routledge 2014 British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging-in-Publication Data Names: Graham, Anne, 1958– author Title: Managing airports : an international perspective / Anne Graham Description: 5th edition | Abingdon, Oxon ; New York : Routledge, 2018 |   Includes bibliographical references and index Identifiers: LCCN 2017051614 (print) | LCCN 2017051781 (ebook) | ISBN   9781315269047 (Master ebook) | ISBN 9781351977869 (Web PDF) | ISBN   9781351977845 ( Mobipocket) | ISBN 9781138285354 (hbk : alk paper) | ISBN   9781138285347 (pbk : alk paper) | ISBN 9781315269047 (ebk) Subjects: LCSH: Airports—Management Classification: LCC TL725.3.M2 (ebook) | LCC TL725.3.M2 G73 2018 (print) |   DDC 387.7/36068—dc23 LC record available at https://lccn.loc.gov/2017051614 ISBN: 978-1-138-28535-4 (hbk) ISBN: 978-1-138-28534-7 (pbk) ISBN: 978-1-315-26904-7 (ebk) Typeset in ITC Stone Serif by Apex CoVantage, LLC Visit the eResource: https://www.routledge.com/9781138285347 Contents List of figures vii List of tables ix List of case studies Preface xiii xv Acknowledgements xvii Abbreviations xix  1 Introduction   The structure of the airport industry   Airport economics and performance benchmarking 83   The airport–airline relationship 125   Airport operations 177   Airport service quality and the passenger experience 219   Provision of commercial facilities 253   Airport competition and the role of marketing 289   The economic and social impact of airports 349 10 The environmental impact of airports 379 11 Future prospects 411 Index 421 v Figures   1.1   1.2   1.3   1.4   1.5   1.6   2.1   2.2   2.3   2.4   2.5   2.6   3.1   3.2   3.3   3.4   3.5   4.1   4.2   4.3   4.4   4.5   5.1   6.1   7.1   7.2   7.3   7.4   7.5 Airport passengers by world region, 2016 Airport cargo tonnes by world region, 2016 The world’s 20 largest airports by total passengers, 2016 The world’s 20 largest airports by cargo tonnes, 2016 The world’s 20 largest airports by aircraft movements, 2016 Airport passenger growth by main region, 2006–16 Passengers at major French airports, 2015 EBITDA share of Fraport’s business segments (%) Percentage of airports with some private sector involvement by region, 2016 Percentage of passengers at airports with some private sector involvement by region, 2016 Percentage of airports by privatisation model, 2016 Percentage of passengers at airports by privatisation model, 2016 Operating margin of world airlines (top 150) and airports (top 50/100 depending on year) 1998–2015 Revenue structures at ACI airports, 2015 (excluding non-operating items) Operating cost structures at ACI airports, 2015 Total costs per passenger for selected world airports, 2015 Residual variable factor productivity at selected Asia-Pacific airports, 2015 Aeronautical charges by source at ACI airports, 2015 Airport charges index, 2016 Importance of different charges with the airport charges index, 2016 (%) Ground handling stations by major companies, 2015/16 US airport capital funding for committed projects, 2013–17 Passenger use of technology at airports, 2016 (%) Passengers feeling positive or negative emotions during the airport journey (%) Non-aeronautical revenue per passenger at ACI airports by world region, 2015 Non-aeronautical revenue at ACI airports by revenue source, 2015 Concession and car parking revenue at London Heathrow, Gatwick and Stansted airports (%), 2016 Dwell time (minutes) by journey stage, 2015 Penetration rate (%) by commercial category, 2015 2 3 39 62 66 67 67 68 87 89 90 109 113 131 132 132 162 169 210 239 260 261 269 271 275 vii FIGURES   7.6 Non-aeronautical revenue per passenger at Copenhagen, Geneva, Vienna and Zurich, 2005–16   8.1 Reasons for passenger airport choice at UK airports, 2011   8.2 Use of different types of airport names   8.3 Airport use or planned (in the next three years) passenger mobile services, 2017 (%)   9.1 The economic impact of airports   9.2 Direct jobs at airports, 2013   9.3 SEO air connectivity index of top 10 European airports, 2017   9.4 Services funded by the UK route development funds   9.5 Passenger use of alternative airports to Amsterdam after the introduction of the passenger tax 10.1 Surface access mode used at German airports, 2014 10.2 Public transport use and targets at selected Norwegian airports 10.3 Public transport use at selected UK airports, 2016 11.1 Airport passenger growth forecasts by region, 2015–40 11.2 Airport passenger forecasts by region, 2040 viii 279 311 317 337 351 353 363 370 373 396 397 400 416 416 Tables 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8 2.9 2.10 2.11 2.12 2.13 2.14 2.15 2.16 3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9 3.10 3.11 Examples of airport privatisation through share flotations Examples of airport privatisation through trade sales Examples of airport privatisation through concession agreements Examples of airport privatisation through project finance/BOT Ownership patterns at main UK airports, 2017 Group/fund ownership at main UK airports, 2017 Airport participation in the US Airport Privatization Pilot Program Lease rent payments at major Canadian airports, 2016 Total airport traffic at Indian airports, 2002–16 Major privatisation projects at Indian airports Major privatisation projects at Brazil airports China’s listed airports Fraport’s international activities TAV Airports: portfolio of airports Vinci Airports: portfolio of airports NAA’s Sister Airport Agreements Profitability for 50 major airport operators, 2015 Airport operating revenue sources Average airport operating revenue and cost structures Operating revenue and cost structures at a selection of European airports, 2016 Operating revenue and cost structures at a selection of US and Canadian airports, 2016 Operating revenue and cost structures at a selection of other airports, 2016 Performance indicators commonly used to assess economic performance Performance indicators suggested by ICAO and ACI Examples of airport performance and efficiency studies: parametric (stochastic) cost/production function methods Examples of airport performance and efficiency studies: non-parametric index number methods Examples of airport performance and efficiency studies: non-parametric frontier methods 19 21 26 29 35 37 43 45 46 47 50 56 61 63 65 77 83 88 91 93 94 95 106 107 111 112 114 ix CHAPTER  11 FUTURE PROSPECTS The more uncertain airport environment makes it increasingly difficult to produce accurate forecasts, but overall most stakeholders are of the view that demand, if accommodated, will grow significantly In the longer term, ACI is predicting that passenger numbers will increase by around per cent per annum to reach 14 billion by 2029 and over 20 billion by 2040 (ACI, 2016), with an overall average growth rate of 4.9 per cent (Table 11.1) ICAO, IATA and the main aircraft manufacturers have similar forecasts Growth in aircraft movements is likely to be less than growth in passengers, as more larger aircraft, such as the A380, are used and as airlines continue to fly with higher load factors As in the past, economic growth, which affects business activity and personal wealth and the cost of travel, will continue to play a major role in shaping the growth in passenger demand For certain markets, particularly within the United States and Europe, the responsiveness of demand to changes in income may be weakening as demand maturity sets in - in spite of ultra-mobile millennials Elsewhere, especially in more emerging markets of the world, the relatively immature market and higher-than-average predicted economic growth will ensure high growth rates In 2015, 56 per cent of passengers were from advanced economies compared to 44 per cent from emerging markets By 2024, ACI estimates that there will be an equal split between these two markets and by 2040, 62 per cent will be associated with emerging economies and only 38 per cent with advanced economies Further liberalisation, if this occurs, and higher economic growth in these emerging economies, will encourage greater competition, reduce airfares and stimulate demand among large groups of middle-income classes that are developing in a number of these countries Airbus (2017) estimated that trips per capita in India and China will be 0.4 and 1.3, respectively, in 2036, compared to 0.1 and 0.4 in 2016 Overall, just 2.8 per cent growth rates are being predicted for North America and 3.7 per cent for Europe Meanwhile, Middle Eastern traffic is forecast to continue to grow significantly (7.7 per cent) as a result of the aggressive airport and airline expansion plans, the region’s convenient location, a huge guest worker population in need of air travel, predicted economic and tourism growth, and a young population with the potential to travel in the future Asian traffic will also experience above-average growth rates (6.2 per cent), led by China but also for other countries, including India, Indonesia and Vietnam Latin America/Caribbean and Africa will see growth rates of around per cent There is much potential in South America but economic and political issues, as recently experienced in Brazil, always tend to play a major role Some African countries are now experiencing strong economic growth and this, combined with tourism development and poor ground transport links, is likely to cause moderate growth in the future (Figure 11.1) Overall, these trends will result in the Asia/Pacific market having a market share of just under half of all traffic (47 per cent) in 2031, followed by Europe (20 per cent) and North America (15 per cent), which is considerably different from the global split shown in Figure 1.1 where the Asia/Pacific region accounted for around a third of all traffic (Figure 11.2) Cargo traffic is generally expected to increase, albeit at a slower rate than passenger traffic, again with Middle Eastern and Asia/Pacific markets (consisting of major air cargo markets in China – including Hong Kong, Japan, Korea, Taiwan and Singapore) having 414 FUTURE PROSPECTS CHAPTER  11 Table 11.1  Long-term forecasts of global traffic growth Organisation Time period Traffic measure Average annual growth rate (per cent) ACI 2015–40 Passengers 4.9 Airbus 2017–36 Passenger-km 4.4 Boeing 2017–36 Passenger-km 4.7 IATA 2016–35 Passengers 3.7 ICAO 2012–32 Passenger-km 4.6 ICAO 2012–40 Passenger-km 4.5 2015–40 Aircraft movements 2.5 ACI 2015–40 Cargo tonnes 2.3 Airbus 2017–38 Cargo tonne-km 3.8 Boeing 2017–36 Cargo tonne-km 4.2 ICAO 2012–32 Cargo tonne-km 4.3 ICAO 2012–40 Cargo tonne-km 4.2 Passengers Aircraft movements ACI Cargo Sources: ICAO (2016); IATA (2016); ACI (2016); Airbus (2017); Boeing (2017) the highest average growth rates Air cargo demand is also driven primarily by economic growth and travel cost, as well as international trade Growth in the past has occurred because of increased reliance on global components and products that need to be transported around the world The rapidly expanding knowledge-based industrial sectors, including computing, electronics, communications and pharmaceuticals, are the most international and are heavily reliant on air travel for the transportation of their highvalue/low-weight products Increasing reliance on just-in-time inventory systems favours air cargo E-commerce has also brought substantial reductions in the distribution costs of air cargo and increased demand for the integrators and the express mail sector However, uncertainty within the global economy and a volatile trade environment can dampen the demand, as it did during the last economic recession Moreover, high fuel prices caused a 415 CHAPTER  11 FUTURE PROSPECTS Average annual growth (%) Middle East Asia Pacific Latin America Africa Europe North America Figure 11.1 Airport passenger growth forecasts by region, 2015–40 Source: Adapted from ACI (2016) Middle East 9% Africa 2% Latin AmericaCaribbean 7% North America 15% Asia-Pacific 47% Europe 20% Figure 11.2 Airport passenger forecasts by region, 2040 Source: Adapted from ACI (2016) shift towards other transport modes In the future, there is also considerable uncertainty concerning the impact on demand of digital purchases (e.g e-books and other non-physical products) and other advancements such as 3D printing If the growth in both passenger and cargo traffic in Table 11.1 is to be accommodated, there is a need for much more airport capacity As of July 2017, worldwide there was over 416 FUTURE PROSPECTS CHAPTER  11 US$255 billion of investment in new greenfield airport projects and US$845 billion in existing airports, bringing the total airport investment to US$1,100 billion (CAPA, 2017) By far the greatest investment in new airports is in the Asia Pacific region – over US$130 billion – compared with just US$70 billion in Europe (which is dominated by the New Istanbul project) and just US$3.6 billion for 11 projects in all of the United States and Canada, which has the least investment Also, around US$400 billion is being spent on existing airports in Asia Pacific, compared to between US$100 billion and US$150 billion in North America, Europe and the Middle East, and considerably less in Latin America and Africa In many emerging economies, especially in the Asia Pacific region, where greater than average traffic levels are being forecast, many current airports are unable to cope with the traffic volumes and this, combined with both a general desire to use air transport to support economic development and generally less resistance to expansion from an environmental angle, has encouraged the building of new airports By contrast, in more developed or advanced economies the difficulties in finding suitable new sites, as well as greater opposition because of environmental concerns, often means that expanding current airports is the more favoured option However, many argue that this will not be sufficient to meet the forecast demand For example, within Europe, Eurocontrol (2013) undertook a survey of 108 European airports responsible for 83 per cent of total European flights and found that only 17 per cent were planning a capacity increase by 2035, which was viewed inadequate to cope with the forecast demand There will be over 20 airports operating at or near capacity for six hours or more a day Likewise, in the United States it was estimated that nearly US$100 billion in capital needs will be needed just in 2017–21 (ACI North America, 2017) In general, expanding airport capacity can be very challenging for a number of reasons First, the finance for such development needs to be found Many funds traditionally came from public sources, but increasingly this sector is unable or unwilling to provide such support, especially in today’s more volatile economic climate Privatisation may yield a solution in some, but not all, cases As highlighted above, in certain countries where there is strong political will to develop air transport, as in China for instance, airport expansion can be agreed swiftly and with little trouble The same is true of a number of other Asian countries The development of the aerotropolis Dubai World Central with Al Maktoum International airport is a similar example Meanwhile, in other regions it can take years for airports to gain approval through the planning process, which can be excessively long and costly It can often take over 10 years for the process for expanded airport facilities, and even longer if a new greenfield site airport is being considered The London Heathrow terminal inquiry in the late 1990s in the UK lasted more than four years and was one of the longest planning enquiries in UK history Overall, the whole planning process took 14 years Extra runway capacity for the London area is now also being considered, which again has been a very long exercise, involving an independent commission looking at all the options The government has announced that it favours Heathrow for a third runway, but it is by no means certain when and if this will happen Likewise, the planning process for Munich airport took 22 years Other examples include the new parallel runway at Seattle airport which opened 417 CHAPTER  11 FUTURE PROSPECTS in 2008 This was 20 years after it had received initial approval by the local authorities, with the delays being due to environmental objections and a number of lawsuits filed by local residents Very few new airports or fully expanded airports have been built in the United States or Europe in recent years, Denver, Munich, Oslo, Athens and Milan being the only examples (Berlin is another, but the opening has been repeatedly postponed.) Elsewhere, in Narita in Tokyo the second runway was opposed for over 10 years by local politicians and farmers, and was eventually approved but with a shorter length, whereas in Auckland it took seven years to get the second runway approved Without doubt, the greatest challenge that the airport sector, and indeed the whole air transport industry, faces is coping with the expected traffic growth while at the same time living with the huge pressures to reduce global warming and achieve greater sustainability The CORSIA agreement is undoubtedly a major breakthrough here but much more needs to be done At a local level, issues related to quality of life have to be balanced against desires for greater mobility The more extreme environmentalists will continue to argue that there is no way the potential demand for air transport in the future should be met, and that the solution is to constrain growth Others hold less radical views, but most agree that the industry has to focus much of its effort and resources on developing sustainable solutions if it is to be allowed to grow at all to meet increasing traffic levels In conclusion, airport operators face a challenging time ahead The volatile operating conditions of the past decade or so show no signs of disappearing, with economic downturns, political instability, terrorism threats and natural adverse events likely to continue to play a major role Increasingly, airport operators are being confronted with conflicting demands from their different stakeholders Different airline groupings and types of airline are favouring more differentiated facilities and services, and putting increasing pressures on airports to reduce their costs Airline customers are also changing more frequently, with the modern-day operating environment encouraging more airline failures Passenger expectations in terms of service quality and the overall experience are rising Regional authorities want to ensure airports generate maximum economic benefits while not harming the well-being of the population in the region National governments want to ensure the environment and society are adequately protected, and may also want to guarantee, perhaps through regulation, that airports are not abusing any excessive market power and are not acting in an anti-competitive manner Then there are the financial demands from the airport owners or shareholders, which are increasingly driven by private sector motives Finally, everyone wants the airport to provide a secure, safe and healthy environment, which has arguably become more difficult to achieve in recent years because of the new security and health risks that now exist This book considers all these important interrelated issues and aims to provide some insight into how airport operators might address the challenges of the future References ACI (2016) 2016 World Airport Traffic Forecasts Infographics Online Available at http:// www.aci.aero/Publications/ACI-Airport-Economics-and-Statistics/ACI-World-AirportTraffic-Forecasts-20162040 (accessed 10 December 2016) 418 FUTURE PROSPECTS CHAPTER  11 ACI North America (2017) Airport Infrastructure Needs 2017–2021, Washington DC: ACI North America Airbus (2017) Global Market Forecast 2017–2036, Toulouse: Airbus Boeing (2017) Current Market Outlook 2017–2036, Seattle: Boeing CAPA (2017) USD1 Trillion for Airport Construction globally – but it’s not enough Online Available at https://centreforaviation.com/insights/analysis/usd1-trillion-forairport-construction-globally—-but-its-not-enough-capa-database-356495 (accessed August 2017) Eurocontrol (2013) Challenges of Growth 2013, Brussels: Eurocontrol IATA (2016) IATA Forecast Passenger Demand to Double Over 20 Years Online Available at http://www.iata.org/pressroom/pr/Pages/2016-10-18-02.aspx (accessed April 2017) ICAO (2016) ICAO Long-Term Traffic Forecasts: Passenger and Cargo, Montreal: ICAO 419 Index Note: ‘N’ after a page number indicates a note; italics indicate a figure; bold text indicates a table AAI see Airport Authority of India (AAI) accounting practices 12–3, 100 ACROS see Airport Climate Risk Operational Screening (ACROS) Adler, N 32, 149 AdP see Aéroports de Paris (AdP) advanced passenger information (API) 204 Aéroports de Paris (AdP) 56, 64, 75–6, 233 Aer Rianta International 56, 283–4, 284–5, 340–1 AHS see Aviation Handling Service (AHS) AIP see Airport Improvement Program (AIP) airlines: and airport privatisation 59; alliance groupings 6, 178–9; globalisation of 6; impact of airport charges on 133–6; long-term contracts with airports 148–9, 322; marketing to 318–20, 320–1, 323, 324; profitability of 87; service quality 228–31, 228, 229–30; state vs private sector 5–6 Air Passenger Duty tax 129–30, 371–2 Airport Authority of India (AAI) 45 airport charges 130; airport charges index 132; and airport competition 294; airport development or facility fees 128; cargo fees 128; and Chicago Convention (1944) 138–9; cross-subsidisation 135; discounts on 320, 320–1, 322–4, 323; effects of, on airline operations 133–6; for emissions 389; European Union (EU) directive 139–40, 139–40; factors impacting 133; government taxes 129–30; ground handling and fuel 129; landing or aircraftbased 125–6; and LCCs 129, 134; level of 130–3, 131, 132; for noise 383, 384; parking 128; peak pricing system 134–5; per passenger 126–7, 130–1; and pre-financing of infrastructure 135–6; PRM fees 128; residual vs compensatory 164–5; security 127; single vs dual till approach 137–8, 143; Thessaloniki Forum (2014) 140; see also revenues airport cities 360–1 Airport Climate Risk Operational Screening (ACROS) 406 Airport-Collaborative Decision Making (A-CDM) 231 Airport Development Act (1956) 51, 52 airport facilities: competition among 301–2; and customer self-connections 191–2; infrastructure 177–8; Kuala Lumpur airport 185–6, 186; for lowcost carriers (LCCs) 181–9, 182, 183–4, 186; low- cost terminals (LCTs) 182–9; and technology 247–9; wayfinding information sources 240, 247; see also commercial facilities; terminal design airport groups: competition within 300–1; crosssubsidisation of charges within 135; emergence of 74–7; sister agreements 322 Airport Improvement Program (AIP) 41 airport operators: and privatisation 56–60; profitability of 83–6, 86–8; role of airport ownership: commercialisation of 10–3; diversification of 6; traditional 9–10; see also privatisation airports: commercialisation of 6; competition between 289–95, 296–7, 298–300; effects of deregulation on 5–6; flight delay times by 229–30; growth of 4; internationalisation of 70–2; long-term contracts with airlines 148–9, 322; naming 315–6; privatisation of 6; by privatisation type 67; profitability of 87; ranked, by aircraft movements 3–4, 4; ranked, by cargo tonnes 3, 3; ranked, by passenger volume 3, 3; regulation of 138–53; size of 98; top-rated, in customer satisfaction 224; traditional management modes 9–10; as two-sided platforms 136–7; see also commercial facilities Airports Act (1986) 33–4 Airport Service Quality (ASQ) survey 224, 225–7, 225–6, 241–2 airport services: for families 180; for frequent flyers 180–1; premium-level 179–80; segmentation of 178–9 airport throughput unit (ATU), defined 104 airport use agreements 41, 164–6, 166 air quality 388–9 air traffic control (ATC) 126 Allroggen, F 364 alternative fuels 386 API see advanced passenger information (API) apps 336, 337; see also technology Argentina 49 Aruba Airport Happy Flow initiative 212–3 Asia-Pacific region: cargo moved, in 2016 2; commercial facilities 261; global market share 4, 5; passenger movements, in 2016 2; privatisation in 66; productivity of airports in 113 ASQ see Airport Service Quality (ASQ) survey 421 INDEX Assaf, A 33, 97–8, 99 Assies, H 282 ATC see air traffic control (ATC) Athens airport 28 ATSA see Aviation and Transportation Security Act (ATSA) (2001) ATU see airport throughput unit (ATU) Australia: airport privatisation in 38–40; economic regulation 146–7; Federal Airports Corporation (FAC) 38–9; service quality 236, 237 Averch-Johnson effect 141 Aviation and Transportation Security Act (ATSA) (2001) 197 Aviation Handling Service (AHS) 74 Aviation Investment and Reform Act (2000) 170 Aviation Security Plan of Action 197 BAA 14, 18, 30, 32, 33–4, 37–8, 44, 57, 58, 60, 134–5, 298–9 baggage-handling systems 191–2, 209, 248 Baglin, C 407 Baker, D 364 Bannò, M 362 Barros, C 32, 99 Basar, G 313 Basel-Mulhouse airport Bel, G 149 Bezerra, G.C.L 227 Bhat, C 313 Bilotkach,V 144, 149, 295 biofuels 386 biometric identification 204–7 Birmingham airport 28, 401 BLT see build, lease, transfer (BLT) boarding processes see check-in and boarding processes body scanners 199–200 Bogicevic,V 227 Bonnefoy, P 290 BOOT see build, own, operate, transfer (BOOT) bootstrapping procedures 116 BOT see build, operate, transfer (BOT) Bottasso, A 32 Boudreau, B 237, 245 branding 262–3, 314–5, 315; see also marketing Brazil 48–9, 50 Brisbane airport 246 British Airports Authority 10 Brussels South Charleroi airport (BSCA) 326–7 BSCA see Brussels South Charleroi airport (BSCA) Budd, T 395 Budde, S 71 build, lease, transfer (BLT) 27 build, operate, transfer (BOT) 25, 27–8, 29–30, 44, 46, 48, 49 build, own, operate, transfer (BOOT) 27 Burbidge, R 407 buses 394 422 business models 192–5 Button, K 364 Canada: airport management in 11; airport privatisation in 44–5, 45; revenue and costs for airports in 92, 94 cap-and-trade system 387 carbon accreditation scheme 404, 405 carbon dioxide (CO2) 385–6 Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) 388 cargo 2, 3, cargo scanners 199–200 car parking 264–5, 269, 269 Castillo-Manzano, J 255, 256 Cattaneo, M 191 CBA see Cost Benefit Analysis (CBA) CGE see Computable General Equilibrium (CGE) check-in and boarding processes 207–13, 209, 210, 211; Aruba Airport Happy Flow initiative 212–3; and baggage-handling systems 209; Fast Travel programme 211–2; remote technology 210–1; selfservice kiosks 208–10 Chicago Convention (1944) 138–9 Chicago Midway airport 42 China 11, 54–5, 56, 66 climate change adaptation 404, 405, 406–7, 406; see also environmental impacts commercial facilities: Aer Rianta International 283–4, 284–5; and airport size 270; approaches to providing 262–5; and branding 262–3; car parking 264–5; competition among 301–2; competition between 271–2; contract and tender process 265–8; disadvantages of 263; Dubai airports 285–6; dutyand tax-free shops 273–4, 277–80, 283–6; factors for success of 268–75; food and beverage (F&B) facilities 258, 274, 282–3; geographical characteristics 259–61, 260, 260–1; and local communities 258, 259; performance of 275–7, 276–7, 278, 279; and regulation 274–5; revenues from 253, 259–61, 269, 278, 279–80, 279; and security 273; security 280–1; and technology 281–2; and terminal design 272–3; trends 277–86; and types of shoppers 254–9; types of shoppers 257; see also airport facilities commercialisation: and accounting practices 12–3; aeronautical vs non-aeronautical revenues 12; and marketing of airports 12; overview of 6; rise of 10–3; see also privatisation community relations 392–3 competition: and airport charges 294; within airport groups 300–1; between airports 289–95, 296–7, 298–300; among facilities/terminals 301–2; between commercial facilities 271–2; and deregulation 303; and hub airports 292–3; and low-cost carriers 294; and marketing 340–2; and multi-airport systems (MAS) 290; with non-airline transport modes 294; and price regulation 295; and privatised airports 30–2; and secondary airports 290–2, 291; INDEX substitution possibilities 293–5, 296–7; in UK 298–300 Computable General Equilibrium (CGE) 366 concessions 23–5, 26–7, 265–8 connectivity indexes 363–4, 363 Conti, M 32 contracts 148–9, 265–8, 322 Copenhagen airport 15, 246 Cork and Shannon airport 341–2, 342–3 corporate responsibility strategies (CSRs) 392–3 corporatisation 11 Correia, A 227 CORSIA see Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) cost-based regulation 141–2 Cost Benefit Analysis (CBA) 366 costs: and airport location 101; averages 91; Canadian airports 92, 94; European airports 92, 93; factors impacting 97–102; personnel 90; of security 201–3; types of 89–90, 90; United States airports 92, 94 crowdsourcing 340 Cserep, K 190, 191 CSRs see corporate responsibility strategies (CSRs) customers: and airport selection 307–10, 308, 311–3, 311, 313; LCCs as 308–9, 309; types of 304–7, 306; see also marketing; passengers customer satisfaction surveys 223–7; see also service quality Czerny, A 134 data envelopment analysis (DEA) 113, 114 DEA see data envelopment analysis (DEA) decision-making units (DMUs) 114 ‘de-hubbing’ 293 Dennis, N 256, 333 Denver airport 246 deregulation 5–6, 148, 303; see also regulation Dieke, P 32, 99 discounts see incentives DMUs see decision-making units (DMUs) Domney, M 32 dual till regulation 149 Dubai airports 285–6 Dublin airport 233, 234, 357 Durmaz,V 393 Dusseldorf airport duty- and tax-free shops 273–4, 277–80, 283–6 dwell time 271 dynamic capacity 220 Dziedzic, M 308 earnings before interest, tax, depreciation and amortisation (EBITDA) 105 easyJet 59 EBITDA see earnings before interest, tax, depreciation and amortisation (EBITDA) Echevarne, R 257 Eco Management and Audit Scheme (EMAS) 402 economic development: airports’ role in 358–61; incentives for 367–70, 370, 371; measuring catalytic impacts 361–4 economic impact analysis (EIA) 349 economic impacts 351; direct 352–4, 353, 354; indirect/induced 354–6, 357; overview of 349–52; and policy decisions 364–6; taxes 351–2; types of 349–50 ecosystems 391–2 efficiency: as driver of privatisation 67; factors impacting 97–102; measuring 102–17; of privatised airports 32–3 EIA see economic impact analysis (EIA) electronic devices ban 199 EMAS see Eco Management and Audit Scheme (EMAS) emissions 384–9 emissions trading scheme (ETS) 387–8 employees see personnel employment 350, 352–4, 353, 354 endogenous heterogeneities 101 environmental impacts: air quality 388–9; alternative fuels 386; cap-and-trade system 387; carbon accreditation scheme 404, 405; Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA) 388; climate change adaptation 404, 405, 406–7, 406; emissions 384–9; global 384–8; global vs local 379; and ground transport 393–400; and ISO standards 402; local communities 388–9, 392–3; managing 400–4, 403; noise 380–4, 384; and recycling 390–1; waste and energy management 390–1; water pollution 389–90; wildlife, heritage and landscape 391–2 ETS see emissions trading scheme (ETS) EuroAirport Europe: airport security in 198; cargo moved, in 2016 2; commercial facilities 259–60; economic regulation 139–40, 139–40, 145–6, 145–6; effects of deregulation on 5; passenger movements, in 2016 2; privatisation in 66; revenue and costs for airports in 92, 93; security costs in 202 exogenous heterogeneities 101 FAC see Federal Airports Corporation (FAC) Fageda, X 149 Fast Travel programme 211–2 Federal Airports Corporation (FAC) 38–9 Feldman, D 194, 195 Ferrovial 58, 60 flight delays 228–31, 228, 229–30 flight processing time 242–3 Fodness, D 227 food and beverage (F&B) facilities 258, 274, 282–3 Forsyth, P 373 France 38, 39 Frank, L 195 423 INDEX Frankfurt airport 9, 60 Fraport 56, 60–2, 61, 62, 70 Freathy, P 269, 304 Fu, X 149 Fuerst, F 255 Fukui, H 160 Fung, M 32, 99 Galaxy International Cargo Alliance 74 Gardiner, J 309 Gatwick airport 192, 193, 209 Geneva airport 13 Gillen, D 33, 198, 256 GIP see Global Infrastructure Partners (GIP) Gitto, S 32 Global Airport Benchmarking Report 112–3 Global Infrastructure Partners (GIP) 60 globalisation 6; see also internationalisation global market share 4–5, GMR 58–9 golden shares 18 gold-plating problem 141 Gomes, C.F 227 Gorjidooz, J 32, 97 Graham, A 32, 67, 88, 148, 256, 304, 325, 332 Green, R.K 364 Gresham, Smith and Partners 247 Groot, M 282 ground handling issues 161–4, 162, 163 ground transport 393–400, 396, 397, 400, 401 Guiomard, C 144 Gupta, A 227 GVK 58–9 Halpern, N 304, 325, 329, 332, 335, 336 Harrison, A 238, 240 Hastings Funds Management 60 Hazel, R 105, 305 Heathrow airport 248, 329 Hermann, N 305 Hernandez, T.M 339 Hess, S 313 heterogeneities 101 high-density airport rule 170 Hirsh, M 361 historic buildings 391–2 Hochtief AirPort (HTA) 58 Holvad, T 32 Hong, C 32, 99 HTA see Hochtief AirPort (HTA) hub airports 99, 292–3 Hublink alliance 75–6 incentive regulation 141, 142 incentives 322–4, 367–70, 370, 371 Incheon airport 76 424 India 11, 45, 45–8, 46–7 Indonesia 11 Infraero 48 infrastructure see airport facilities Infratil 57–8 initial public offering (IPO) 18, 23 input-output models 355 internationalisation 70–2, 73, 74; see also globalisation investors 56–60 IPO see initial public offering (IPO) ISO standards 221–2, 402 Istanbul New Airport 28 Japan 51–4, 52 Jarach, D 194, 304 Jazeera 59 Jimenez, E 195 John Wayne Airport 41 Kalakou, S 195 Kamp,V 98 Karamanos, G 314 Kato, K 52 kerosene tax 387 key performance indicators (KPIs) 105, 106, 107 Kirschenbaum, A.A 203 Koỗ, S 393 Koch, B 71 KPIs see key performance indicators (KPIs) Kramer, L 242, 304 Kuala Lumpur airport 185–6, 186 Kuo,Y.-L 227 Kyoto Protocol 385 LAGs see liquids, aerosols and gels (LAGs) Lall, A 256 Latin America 66 LCC see low-cost carriers (LCCs) LCTs see low-cost terminals (LCTs) Lees, E 240 Lei, Z 256 level of service (LOS) standards 220, 221; see also service quality Liebert,V 32, 117, 149 Lieshout, R 332 lifestyle trends 282–3 Lin, L 32, 98, 99, 117 liquids, aerosols and gels (LAGs) 198–9, 280 Lisbon airport 241 Littorin, H 364 Lockerbie disaster 196 LOS see level of service (LOS) standards Los Angeles airport 240 Louis Armstrong New Orleans airport 42 low-cost carriers (LCCs): and airport charge discounts 322; and airport charges 129, 134; and airport INDEX competition 294; and airport selection 308–9, 309; and contracts between airports and airlines 148; and customer self-connections 190–2; facilities for 181–9, 182, 183–4; growth of 5, 189–92; in India 45; Kuala Lumpur airport 185–6, 186; and passengers as shoppers 256; route development 333–4 low-cost terminals (LCTs) 182–9; see also airport facilities; terminal design Lubbe, B 227, 228 Lufthansa 59 Luis Muñoz Marin San Juan airport 42 Luton airport 25–6, 357 Macário, R 195 MacDonald, Mott 160 Macquarie Airports (MAp) 60 Maertens, S 144, 190, 295 majority-in-interest (MII) clauses 165 Malighetti, P 190 Malina, R 319, 364 Malmquist index 114, 116 management see airport management management contracts 28, 30 Manchester airport 9, 34, 36, 329, 361 Manchester Airport Group 34, 36 Mancuso, P 32, 99 MAp see Macquarie Airports (MAp) marketing: to airlines 318–20, 320–1, 323, 324; and airport charge discounts 320, 320–1, 322–4, 323; airport names 315–6, 315; and airport product 313–7; for airport services 304–13; Brussels South Charleroi airport (BSCA) 326–7; and competition 340–2; by customer type 304–7; defined 304; to low-cost carriers (LCCs) 322; Nice airport 324; origins of 302–4; to passengers 328–30; and public relations 330; rise of 12; and route development 318–21, 330–4, 331; route development 325; slogans 316–7; and technology 335–6, 337–8, 337, 338–40; and travel trade 328; see also branding; customers Martín, J.C 395 Martin, S.C 336 Martin-Domingo, L 336, 395 MAS see multi-airport systems (MAS) McCarren airport 357 McCarthy, P 98 MCT see minimum connect time (MCT) Meersman, H 164 Merkert, R 99 Middle East 4–5, 5, 259 MII see majority-in-interest (MII) clauses minimum connect time (MCT) 179 Moodie, M 267 Morrison, W 117, 198 Mueller, J 144, 295 Mukkala, K 364 multi-airport operations 72–4 multi-airport systems (MAS) 290 Mumbai airport 233, 234–6 Murray, B 227 Nagl, P 364 naming, of airports 315–6 Narita airport 76–7, 77 New Zealand 40–1, 147 Nice airport 324 Niemeier, H.-M 117, 182 9/11 196–8 Ninoy Aquino International Airport 28 Njoya, E 182 noise 380–4, 384 non-parametric frontier methods 113, 114–6 North America 2, 4, O’Connell, F 269, 304 oneworld Ontario Teachers’ Pension Plan 60 Oum, T 32, 97, 99, 149 outsourcing 99–100, 162 ownership see airport ownership Pantouvakis, A 227, 228 Papatheodorou, A 256 Parker, D 32 parking charges 128 passenger-based fees 126–7, 130–1, 131 passenger experience 243, 245; as concept 237–40, 239; enhancing 244–9; flight processing time 242–3; outcome-based approach 240; and service quality 237–49; and stakeholder involvement 242–4; and technology 195, 247–9; see also service quality passenger facility charges (PFCs) 41, 136, 167 passenger name records (PNRs) 204 passengers: airports, ranked by number of 3, 3; and airport selection 307–10, 308, 311–3, 311, 313; feedback by, on service quality 222–7; international 98–9; marketing to 328–30; by privatisation type 68; profiling of, for security purposes 203–4; selfconnections 190–2; as shoppers 254–9, 257; types of 246; by world region peak pricing system 134–5, 154 Peel Group 57 Pels, E 313 people with reduced mobility (PRM) fees 128 Percoco, M 364 Perelman, S 97, 99 performance: of commercial facilities 275–7, 276–7, 278, 279; concepts 103–5, 107; data envelopment analysis (DEA) 113, 114; Global Airport Benchmarking Report 112–3; of hub airports 99; inter-airport 107–9, 109; key performance indicators (KPIs) 105, 106, 107; measuring 102–17, 425 INDEX 103; non-parametric frontier methods 113, 114–6; overall multi-dimensional measure 110, 111–2; stochastic frontier method 110; Tornqvist total factor productivity (TFP) method 110; variable factor productivity (VFP) 113 personnel: costs of 90; and public transportation 396–7 PFCs see passenger facility charges (PFCs) PNRs see passenger name records (PNRs) Polak, J.W 313 policy decisions 364–6 pollution see environmental impacts Popovic,V 238 PPP see public-private partnerships (PPP) price cap regulation 141, 142, 150–2 privacy rights 200 privatisation: and airlines 59; and airport operators/ investors 56–60; airports, grouped by type of 67; Australia 38–40; Canada 44–5, 45; China 54–5, 56, 66; and competition 30–2; concessions 23–5, 26–7; defined 13; and efficiency 32–3, 67; Europe 66; failures of 70; France 38, 39; growth of 68–9; impacts of 65–70; India 45–8, 46–7; and internationalisation 74; Japan 51–4; management contracts 28, 30; New Zealand 40–1; overview of 6; partial 17; project finance/BOT 25, 27–8, 29–30; public-private partnerships (PPP) 17; reasons for 13–4, 67–8; and regulation 30, 141; share flotation 18–20, 19; timetable of 14–6; trade sales 20, 21–2, 23; trend toward 9; types of 16–20, 19, 21–2, 23–5, 27–8, 30; United Kingdom 33–4, 35–6, 36–8, 37, 66; United States 41–4, 43; by world region 66; see also airport ownership; commercialisation PRM see people with reduced mobility (PRM) fees product differentiation 313–7 profiling 203–4 profitability: of airlines 87; of airport operators 83–6, 86–8; of airports 87; and international passengers 99 profitability gap 86, 133 profit control regulation 141 project finance/BOT 25, 27–8, 29–30, 44 public-private partnerships (PPP) 17, 44, 66, 67; see also concessions; project finance/BOT public relations 330 QSI see quality service index (QSI) quality see service quality quality service index (QSI) 334 Queen Alia International airport 28 RAB see regulated asset base (RAB) rail services 294, 393–5 rate of return (ROR) regulation 141–2 recycling 390–1 Redondi, R 293, 362 Regmi 335 regulated asset base (RAB) 142–3 regulation 138–53; Chicago Convention (1944) 138–9; and commercial facilities 274–5; and 426 competition 295; contracts between airports and airlines 148–9; cost-based 141–2; economic 138–53; examples of 145–7, 145–6; ground handling issues 161–4, 162, 163; impacts of 149–50; incentive 141, 142; price cap 141, 142, 150–2; of privatised airports 30, 141; rate of return (ROR) 141–2; reserve 141, 143; and service quality 144, 231–3, 234–6, 236, 237; slot allocation 153–61, 154, 157, 158; types of 141–4; in UK 150–3, 151, 152; see also deregulation regulatory benchmarking 143–4 rehabilitate, lease or rent and transfer (RLT) 23 rehabilitate, operate and transfer (ROT) 23 Reinhold, A 101, 144 Renzi, M.F 227, 228 reserve regulation 141, 143 return on invested capital (ROIC) 87 revenues: aeronautical 12, 88–9, 253; aeronautical vs non-aeronautical 12, 136–8; averages 91; Canadian airports 92, 94; European airports 92, 93; factors impacting 97–102; handling 89; at low-cost terminals (LCTs) 188; non-aeronautical 12, 88–9, 253, 259–61, 269, 278, 279–80, 279; and security 280–1; single vs dual till approach 137–8, 143; sources of 88, 89; and technology 264; United States airports 92, 94; see also airport charges; commercial facilities revenue yield approach 143 Rhoades, D 227 Richardson, C 166 Rikhy, H 13 RLT see rehabilitate, lease or rent and transfer (RLT) ROIC see return on invested capital (ROIC) ROR see rate of return (ROR) regulation ROT see rehabilitate, operate and transfer (ROT) route development 318–21, 325, 330–4, 331, 368–70, 370, 371 Ryanair 59, 292, 326–7, 340–1 Ryley, T 398 Sarkis, J 99 Schiphol Group 56, 57, 75–6 Scholvinck, J 282 Schuckert, M 338 security 196, 201; advanced passenger information (API) 204; Aviation and Transportation Security Act (ATSA) (2001) 197; Aviation Security Plan of Action 197; biometric identification 204–7; body scanners 199–200; cargo scanners 199–200; charges for 127; and commercial facilities 273; commercial facilities 280–1; electronic devices ban 199; in Europe 198; financing of 201–3; impacts of 9/11 on 196–8; liquids, aerosols and gels (LAGs) 198–9, 280; passenger name records (PNRs) 204; passenger profiling 203–4; vs safety 195–6; Smart Security initiative 206–7; technology 199–200, 204–7; in United States 197 self-connections 190–2 Sellner, R 364 INDEX Serebrisky, T 97, 99 service quality: airline flight delays 228–31, 228, 229–30; Airport Service Quality (ASQ) 224, 225–7, 225–6; Airport Service Quality (ASQ) survey 241–2; challenges of 219–21; customer satisfaction surveys 223–7; ISO standards 221–2; level of service (LOS) standards 220, 221; methods for measuring 221–5; and passenger experience 237–49, 239, 240; and regulation 144, 231–3, 234–6, 236, 237; research on 227–8; and static vs dynamic capacity 220; and technology 222, 240; top-rated airports 224; see also passenger experience Sevcik, T 282, 283 share flotation 18–20, 19 Shiphol-Fraport alliance 74–5 shops see commercial facilities single till regulation 149, 150–1 sister airport groups see airport groups Sky Team SkyTrax 224 slogans 316–7 slot allocation 153–61, 154, 157, 158, 169–71 Smart Security initiative 206–7 social impacts 366–7 social media 336, 338–9; see also technology ‘solidarity tax’ 372 Sonne, M.I.C 295 Southern Cross Airports Consortium 58 Star Starkie, D 138, 148 static capacity 220 Steer Davies Gleave 273, 383 Stewart International Airport 42 stochastic frontier method 110 subsidies 322–4 substitution possibilities 293–5, 296–7 surveys see service quality tariff basket approach 143 TAV Airports Holding 62–4, 63–4 taxes 374–5; Air Passenger Duty tax 129–30, 371–5; as airport charges 129–30; and economic impacts 351–2; for emissions 387; impacts of 372–5, 373; ‘solidarity tax’ 372; US airports 166–9, 168 taxis 394 TBI 57 technology: and airport facilities 247–9; airport websites 335–6, 338–9; apps 336, 337; check-in and boarding processes 207–13; and commercial facilities 281–2; and marketing 335–6, 337–8, 337, 338–40; and passenger experience 195; and public transportation 395, 398; as revenue generator 264; security 199–200, 204–7; and service quality 222, 240 terminal design: and commercial facilities 272–3; and low-cost carrier needs 182, 182, 183–4; and minimum connect time (MCT) 179; and premium services 179–80; and segmentation of services 178 terrorism 196–8 Tervo, H 364 Thelle, M.H 295 Thessaloniki Forum (2014) 140 3Ps see public-private partnerships (PPP) Tobit model 116 Tornqvist total factor productivity (TFP) method 110 tourism development 359 trade sales 20, 21–2, 23 transnational airlines Transportation Security Administration (TSA) 197 travel agents 328 travel trade 328 TSA see Transportation Security Administration (TSA) Tsekeris, T 97, 99 TUI 59 Turkey 62 two-sided platforms 136–7, 304 United Kingdom: and airport competition 298–300; Airport Improvement Program (AIP) 41; airport privatisation in 33–4, 35–6, 36–8, 37, 66; Airports Act (1986) 33–4; air transport forums 398–400, 400; BAA 14, 18, 30, 32, 33–4, 44; British Airports Authority 10; economic regulation in 150–3, 151, 152; flight processing time 243; passenger experience 245–6; and pre-financing of infrastructure 136; route development 369–70, 370, 371 United States: airport fees and taxes 166–9, 168; airport privatisation in 41–4, 43; airport security in 197, 205; airport use agreements 41, 164–6, 166; Aviation Investment and Reform Act (2000) 170; commercial facilities 267; flight processing time 242–3; funding sources 168–9, 169; high-density airport rule 170; indirect economic impacts in 355; passenger facility charges (PFCs) 41, 136, 167; revenue and costs for airports in 92; slot allocation in 169–71 Urfer, B 313 VanAuken, K 338 variable factor productivity (VFP) 113 Vasigh, B 32, 97 VFP see variable factor productivity (VFP) Vienna airport 12, 14–5 Vinci 58, 64, 65 Vogel, H.A 32, 33, 88 WACC see weighted average cost of capital (WACC) Wanke, P 97 Warnock-Smith, D 308 waste and energy management 390–1 water pollution 389–90 Wattanacharoensil, W 240, 338 wayfinding information sources 240, 247 websites 335–6, 338–9; see also technology weighted average cost of capital (WACC) 87–8, 142–3 Weinert, R 313 427 INDEX Wiggins Group 73–4 wildlife, heritage and landscape 391–2 Wiltshire, J 298 WLU see work load unit (WLU) work load unit (WLU) 97, 104 Yang, H 149 Yeh, C.-H 227 428 Yoshida,Y 97 Yuan, J 364 Yuen, A 32 Zhang, A 32, 134 zoning 382 Zuidberg, J 375 Zurich airport 10, 278 .. .Managing Airports Managing Airports presents a comprehensive and cutting-edge insight into today’s international airport industry Approaching management topics from a strategic and commercial... Brazil Accessible and up-to-date, Managing Airports is ideal for students, lecturers and researchers of transport and tourism, and practitioners within the air transport industry Anne Graham is... Economics and Airport Marketing Between 2013 and 2015 Anne was Editor-in-Chief of the Journal of Air Transport Management and is on the Editorial Board of a number of other journals Managing Airports