Substitution and complementarity in aviation: airports vs airlines

In this paper a model concerning substitution and complementarity on the linkage between airport facilities and airlines from the viewpoint of pricing policy is formulated. This model is used to analyze whether airport pricing policies, e.g. to ensure cost recovery, are compatible with competition for transfer passengers. It is found that airports with a high volume of demand can pursue cost recovery and still be the most preferred hub. Airports with a low level of demand will not be the preferred hub, even if the larger airport charges higher taxes to recover costs.     

Analysis of ground access modes choice King Khaled International Airport, Riyadh, Saudi Arabia

Airports are vital to the transportation system because air travel is the fastest means of transporting people and goods around the world. Airports also connect aviation systems with other modes of transportation.As a result, access modes to airports are critical to the aviation system, and studying air passenger decisions regarding mode choice is an essential part of airport management and system planning.Though there has been systematic analysis of car use to access airports, there has been less systematic attention to the use of the public transport system, especially the taxi service. The aim of this study is to identify King Khaled International Airport (KKIA) access mode characteristics and users, which has not been investigated previously concentrating on the mix between car and taxi using data collected specifically for this research.More than half (55.5%) of the travelers surveyed arrived at KKIA by private car; taxi and limousine passengers accounted for 42.2% of the sample. The Saudi Public Transit Company (SAPTCO), transported only 2.3% of the air passengers surveyed. These results are similar to findings for an airport in the United States and very different from findings for an airports in the East (e.g., Hong Kong).A binary logit model was developed to evaluate the access mode choice. It was found that income, luggage, travel access time, and nationality significantly affect mode choice.Results provide insight for improved planning of access to KKIA.     

Segmentation of passenger preferences for using digital technologies at airports in Norway

Airports are increasingly focused on implementing digital technologies at key stages of the airport journey to enhance the passenger experience. However, passengers have different preferences. TwoStep Cluster Analysis is used to reveal the presence of distinct segments according to their preferences. The findings are based on a survey of 6082 passengers at airports in Norway. Three distinct segments are identified: those that prefer traditional manual processes, those that prefer automated technology-based processes, and those that prefer more personalised technology-based processes. Significant differences are revealed for each segment according to passenger and trip characteristics and opinions regarding how the use of digital technologies at airports impact on personal privacy and human dignity. The findings contribute to knowledge on passenger preferences at airports and can help to inform airport decision making.     

Airports’ managerial human capital,ownership, and efficiency

Airport performance differences require a better understanding of the sources of efficiency and competitive advantages. Globalization drives the air transport industry into a more market-orientated business questioning the relationship between managerial decisions and airport performance. Aviation management studies do not consider managerial capabilities and skills since they are intangible exogenous factors that are difficult to assess. In this study, a stochastic frontier analysis is performed accounting for top managers' theoretical knowledge and experience enclosed as exogenous drivers of airports' efficiency. The model analyses 12 Polish airports from 2009 to 2017. The results show a diversity of airports with a different number of passengers as efficient. The top managers' experience, when gained in the same airport, has a positive impact on airports' technical efficiency. Airports having unstable management are more technically inefficient. Independently of the efficiency level, some airports change their management after the national elections, suggesting that managers are chosen by political interest rather than by their specialised knowledge or their prior experience in aviation management. The results suggest that more practical knowledge improve airports’ performance. Airports with a majority of government ownership that are the largest ones increase their efficiency significantly, suggesting that political decisions may be discriminatory in detriment of airports managed by regional and city authorities.     

Brazilian airport economics from a geographical perspective

This paper discusses the revenue and expenditure functions of a sample of Brazil’s airports administered by Infraero, the Brazilian State enterprise responsible for administering the country’s major airports. It aims to identify what volume of movement at the airports associates with positive net earnings, i.e., the break-even point between revenue and expenditure, in view of aspects of airport movement and geographical factors. It examines airports serving regular airlines and with movement of up to 8 million passengers in 2010. Revenues and expenditures are explained by total passengers embarked and disembarked at each airport and by the potential of the airport’s ‘anchor city’. Multiple regression analysis achieved a high level of explanation for the dependent variables studied, i.e., revenues and expenditures. The model explains 81% and 91% of the variations in revenues and expenditures, respectively. The analysis shows that, considering the ranking of cities, Brazilian airports with less than 2 million passengers tend to operate at a financial loss, those with between 2 and 3 million passengers are at the transition stage between positive and negative earnings, while airports with more than 3 million passengers tend to make gains. However, the simulation modelling shows that the break-even point between expenditure and revenue functions can vary considerably when different ‘city potentials’ are considered. In this respect, the modelling offers investors a tool for analyzing passenger demand risk in the light of expectations for Brazilian cities’ potential.     

Solving airside airport congestion: Why peak runway pricing is not working

The paper examines why peak runway pricing has never been effectively implemented. Some of the literature discussing the theory is examined to show the basis for the theory and the potential for flaws in practice. Three cases where airports attempted to implement peak runway pricing are analyzed. The findings indicate that there may be some institutional barriers to peak pricing theory that prevent effective implementation. Airports and others seeking to reduce congestion might consider focusing their efforts on working towards providing alternatives for passengers, rather than attempting to use peak pricing as a congestion-reduction mechanism in isolation.     

Operational efficiency of Asia–Pacific airports

Airports are important drivers of economic development and thus under tremendous pressure from emerging competitors. However, few studies have analysed the operational efficiency of Asia–Pacific airports. This study therefore evaluated the operational efficiency of 21 Asia–Pacific airports between 2002 and 2011. A two-stage method was used: Data Envelopment Analysis (DEA) to assess airport efficiency, followed by the second-stage regression analysis to identify the key determinants of airport efficiency. The first-stage DEA results indicated that Adelaide, Beijing, Brisbane, Hong Kong, Melbourne, and Shenzhen are the efficient airports. The second-stage regression analysis suggested that percentage of international passengers handled by an airport, airport hinterland population size, dominant airline(s) of an airport when entering global airline strategic alliance, and an increase in GDP per capita are significant in explaining variations in airport efficiency.     

A note on how to measure hubbing practices in airline networks

Benefits and costs associated to hubbing practices of airlines are still subject to much debate. In the previous literature, some standard spatial concentration indices have been proposed to measure it. However, we show that these indices are “ill-defined” because they do not take into account the salient characteristic of hubbing: connecting passengers. The purpose of this research is to present a new methodology which avoids the pitfalls of other methods. Our new methodology also analyzes the level of concentration of the connecting passengers studying two different dimensions: hub airports and routes. Finally, we apply our methodology to some US carriers.     

Airline strategies for aircraft size and airline frequency with changing demand and competition: A simultaneous-equations approach for traffic on the north Atlantic

Airport planners need to know the forecast demand on the facilities provided airside at airports. For this they need to know how airlines will deal with traffic in terms of the size of aircraft and frequency of service. In response to increasing demand, airlines may increase capacity by increasing the frequency of flights or they may choose to increase aircraft size. This may yield operating cost economies. If the airports they operate from are capacity constrained they will be limited in the extent that they can change frequency that will limit their ability to compete with the number of frequencies offered. Consequently, these airports are excluded as are major hubs as frequencies will be influenced by connecting passengers. Routes are identified on the north Atlantic that can be analysed and conclusions are suggested on the basis of three stage least-squares estimates for pooled time series-cross section data. An increase in passengers on the whole will result in a larger increase in frequency than in aircraft size but the impact of competition does not yield significant results due to the strategy of excluding certain categories of airport.     

An econometric analysis of domestic air traffic demand in regional airports: Evidence from India

The Indian aviation industry has a vast potential to grow to cater to its population and commerce through developing air transport services to the regional airports. This paper examines the possible determinants of domestic air traffic demand in Indian regional airports serving below three million passengers per annum. Using multiple regression analysis, we find that distance to the nearest airport and accessibility of the airport significantly affect traffic volumes in regional airports. This study also highlights the specificities of Indian regional airports.     

Airports Council International, Greenport ’99 conference and exhibition – thinking green – strategies for balanced airport development in the next century, Amsterdam, The Netherlands 21–23 April, 1999

Airports Council International (ACI), ‘The Voice of the World’s Airports', is the only professional airport association in the world. ACI was formed in 1991 when the Airport Operator’s Council International (AOCI), the International Civil Airports Association (ICAA), and the Airport Associations Co-ordinating Council (AACC) merged to represent the world’s airports. ACI is based in Geneva, Switzerland with geographical regions in Africa, Asia, Europe, Latin America/Caribbean, North America, and the Pacific. Currently, ACIs membership consists of 528 members operating 1300 airports in more than 160 countries. ‘Greenport ’99’, the first conference of its kind, brought together organisations from around the world to discuss the future of airport development and its impact on the environment in the 21st century.     

Airport choice and flight connectivity among domestic and international passengers – Empirical analysis using passenger movement survey data in Japan

This paper presents an empirical analysis of airport choice and passenger movement on international flights from local cities in Japan to Narita and Haneda Airports in the Tokyo metropolitan area. This is the first study to evaluate airport choice behavior in Japan empirically by using the micro data collected by Japan’s Ministry of Land, Infrastructure, Transport and Tourism in 2010 (i.e., when time slots for international long-haul flights were first assigned at Haneda). The analysis confirms that flight connectivity is a crucial element in airport choice.Further, Japanese airlines and their associated alliances are able to attract passengers arriving from local cities by using Haneda airport. Above all, we find that the introduction of long-haul international flights from Haneda has met the needs of a number of passengers arriving from local cities in Japan owing to the convenience of the domestic flight network, especially for business purpose passengers.     

Whether low-cost-carrier passengers spend more on duty-free goods at the airport? Evidence from Incheon International Airport

With a dramatic growth in the low-cost carrier (LCC) traffic around the world, many airports have built budget terminals to accommodate the LCC flights with cheaper airport charge to the airlines but inferior shopping environment and service quality to the passengers. This study aims to answer the following research questions: i). Whether the LCC passengers have higher purchasing power than FSC (full-service carrier) passengers for the airport concessions, particularly the duty-free goods? ii). Would the budget terminal design contribute to or jeopardize the LCC passengers' airport concession expenditure? iii). How could the airport operator maximize its concession revenue by re-designing terminal or re-allocating flight slots? We collect the actual airport duty-free transaction data from Incheon International Airport (ICN) for an empirical investigation. Our empirical evidence first suggests that LCC passengers could have comparable or even higher purchasing power than FSC passengers in consuming duty-free goods at the airport. Among all the LCC passengers, Chinese have the highest purchasing power. Second, the inferior shopping environment and service quality of budget terminal seriously jeopardize the duty-free sales from the LCC passengers. Third, counterfactual analyses show that, if ICN could convert its budget terminal into a conventional terminal, 44 million USD more duty-free sales can be generated per year. Even keeping the current terminal design, re-allocating the LCC flights between the budget terminal and conventional terminal could bring approximately 4.9 million USD more duty-free sales per year. The findings provide managerial implications to ICN and other airports for effective airport revenue management. First, the budget terminal design may not be ideal to accommodate LCC traffic as it damages the concession revenue from particular LCC passengers with high purchasing power. Second, exploring the concession revenue from the growing LCC traffic could help maintain an airport's advantage in aeronautical charge under single-till regulation.     

Meetings facilities at airports

This paper investigates the extent to which airports act as venues, the importance that airports place on this type of activity, and whether it is certain categories of airport that are involved in this type of activity. Airports have always been a vital element of business travel in providing access to a destination where business can be conducted or where meetings, conferences and events can be held. In this situation it is largely the availability of air services at the airport that will attract passengers rather than the airport itself. However in recent years airports have become more than just facilitators of access and have developed infrastructure and services (’meetings facilities’) that allow them to become meeting venues in their own right.     

User-Driven Prioritisation Process (UDPP) from advanced experimental to pre-operational validation environment

When the European Air Traffic Management Network (EATMN) approaches its capacity limits at certain airports, generating increasingly costly delays to flights and for passengers, reducing the impacts on airlines and passengers will be essential. There are two ways to address such increases in delay and costs. One is to strive to augment the capacity to reduce both delays and costs. The other one, adopted in this paper, is to reduce the impact of the delay on airlines and passengers.The User Driven Prioritisation Process (UDPP) provides airlines with additional flexibility in planning within constrained situations where delays are allocated, beyond the current slot swapping process already implemented by the EUROCONTROL Network Manager (NM).The paper presents recent validation results. It summarizes earlier results in a simplified EATMN with one constraint and several AUs showing that UDPP could reduce the impact of that delays on AUs' direct operational costs by 58% on average, and improves passengers’ connections. The paper then describes a parallel validation activity including several trials with SWISS. It focuses on the most recent validation results in a pre-operational environment close to SWISS Operations Control Centre (OCC). The results revealed overall operational benefit up to 65% improvement for the airline; and an initial impact assessment on the EATMN -although limited to one UDPP in the EATMN and one airline using it- shows promising results for the on-going integration closer to operations.While limited due to the simplified network context, these results are encouraging to undertake more complete network impact studies as well as to move forward to environments that are more realistic, bridging towards deployment.     

Supply-and-demand models for exploring relationships between smaller airports and neighboring hub airports in the U.S.

Airport passenger leakage is the phenomenon of air passengers choosing to travel longer distances to access more extensive air services offered by airlines at an out-of-region hub (or, substitute) airport, instead of using their local airports. Airport leakage can cause further reduction in services offered by airlines at a local airport, thereby causing even further leakage, and so on, which can significantly impact an airport's role in the growth of the local economy. This paper explores the geographic and operational attributes of local-and-substitute airport pairs in the United States, explicitly accounting for the interactive feedback relationship between passenger volumes and air service characteristics that contribute to the onset, persistence, and exacerbation of airport passenger leakage. A two-stage least squares regression model of air passenger demand at small- and medium-sized airports is first presented, where local passengers may travel by vehicle to larger, out-of-region hub airports. The results confirm that airfare and passenger volume relationships exist between the local and substitute airport pairs included in the dataset, and that lower airfares at the substitute airport have a greater impact on airport choices made by larger travel groups. They also suggest the existence of positive feedback in that if an airport attracts increasingly smaller passenger numbers with fewer air services and fewer air services with fewer passengers, without external intervention airport leakage impacts may be irreversible and exacerbate over time. A conceptual market share equilibrium analysis is used to illustrate the mechanisms of a direct two-way feedback relationship between passenger volumes at a local airport and air service characteristics at both the local and substitute airports. With data, this quantitative framework can help guide airport planners in further assessing and verifying suspected passenger leakage issues at their airport. The results suggest that without intervention, airport leakage impacts may be difficult to reverse; further exacerbating the trend are technological advancements that make driving cheaper and easier (connected and autonomous vehicles). However, the results can also guide planners in choosing the types and degrees of infrastructure investments and airline incentives that may be used to expand or retain air services to attract passengers.     

Spillover effects of the development constraints in London Heathrow Airport

In this article we assess the growth impact of London Heathrow’s development constraints on other airports in the UK. To test the relationship we use a two-stage methodology yielding an estimate of a congestion spillover effect. Our data are passenger traffic from 1990 to 2012 containing both intercontinental and European air traffic. For intercontinental air traffic, our results show high congestion spillover effect between Heathrow and Gatwick airports, and significant but lesser effect to Stansted airport. We also find significant congestion spillover effects from Heathrow to the spatially more distant Manchester and Birmingham airports, showing the extensive spatial impact of Heathrow’s development constraints. For European air traffic, controlling for low-cost air carrier growth, only two airports show significant congestion spillover effects: Gatwick and London City Airports. Illustrating that low-cost carriers do not operate from Heathrow, so its limitations cannot affect the predominant low-cost air traffic in other airports. The novel methodology we present in this paper can be applied to congestion research in general to assess regional and modal spills within networks.     

A ticket to ride: Evolving landscapes of air travel accessibility in the United States

During the past decade, air passenger service in the United States has been exposed to numerous carrier bankruptcies, antitrust investigations, mergers, labor problems and a massive increase in competition. These internal elements, combined with the rising costs of fuel and the threat of terrorism combine to make a relatively uncertain air travel landscape for both passengers and operators. Moreover, these dynamics have generated significant geographical shifts in airline route structures and airports serviced by commercial carriers. These factors, combined with increasing levels of consumer access to fare and routing information, have altered the landscape of air travel accessibility in the United States. The purpose of this paper is to examine issues of consumer air travel accessibility through an analysis of three critical measures: flight segments, flight time and ticket costs. In addition, a typology of air passenger accessibility is generated for the 156 busiest commercial airports in the United States using these three measures. Results suggest significant local and regional biases in time and cost, relative to distance, for many US markets.     

Privatization of airports in Asia

It has been claimed that Asia lags behind the rest of the world in the privatization of airports. At the same time, the air transport sector has been growing quickly and this has placed enormous pressure on airport infrastructure. This paper reviews the situation and finds that the private sector is involved extensively with new airports and the upgrading of existing airports in Asia. Although the models used to accommodate the private sector appear similar to those used elsewhere, governments in Asia have retained majority control in every case. Despite the fact that some governments say that efficiency is important to them, the most common and important motive in “privatization” in Asia is to mobilize a new source of finance. Airports remain high on the agenda of public policy. Governments are concerned about abuse of monopoly powers and they want to cross-subsidize regional airports, but they lack the institutional strengths to regulate effectively. By retaining majority control, however, governments risk losing the efficiency benefits of privatization. The paper explores the reasons why airports are such difficult cases to deal with and concludes that there is a greater need than ever to be able to compare the performances of airports.