Competitive drivers towards improved airport/airline relationships

This paper draws on a recent report from Copenhagen Economics, with which both authors were involved, to argue that the European airport market has changed such that airports are now subject to competitive constraints from a number of sources. While these will bite differentially according to the circumstances of individual airports, airport possession of significant market power can no longer be casually assumed; nor, therefore, can the need for economic regulation. Indeed, the costs and benefits of economic regulation need to be carefully assessed against the extent and nature of the market power it is intended to countervail. In particular, increasing attention needs to be paid to the risks of economic regulation hampering both the further growth of airport competition and the development of more productive commercial relationships between airports and their airline customers which have the potential to create added value for both parties.     

Does the nature of airport terminal service activities matter? Processing and non-processing service quality,passenger affective image and satisfaction

The surge in air transport demand and the increasingly competitive and volatile market dynamics due to airline deregulation are rapidly transforming airports’ character into multi-service firms and destinations. As a result, service performance measurement of significant systems and their consequent impact on airport users are crucial in creating better airport service design, operation and management for sustainable competitive advantage. The present study 1) assesses the applicability of the Airport Indicators of Passenger Experience (AIPEX) model on Shanghai Pudong International Airport (PVG), and 2) tests a theoretical model that explores the direct and indirect relationships among airport service quality, passenger affective image and satisfaction, as well as the moderating mechanism of passenger type (travel purpose) in these associations. The results indicate that, the AIPEX model fits the PVG context for airport service performance assessment. Also, the theoretical model suggests robust direct associations among processing/non-processing domains and passenger satisfaction, as well as the processing domain and passenger affective image, except non-processing domain and passenger affective image relation. Moreover, significant mediating and moderating effects of passenger affective image and travel purpose on the significant positive direct associations are found. Further, implications for theory and practice are discussed.     

Ethical and moral considerations of airline management

Air transport is a relatively new industry. It has expanded rapidly and now is an exceptionally safe way to travel. But all may not be well. Despite all this achievement, the human face of commercial aviation has been somewhat tarnished by the very prolific growth of carriage by air, and the monotonous regularity with which it is executed. Aviation business management needs to go back to basics, where the formula “everyone needs to know and feel that he is needed; and everyone wants to be treated as an individual” has to be revisited in the face of modern exigencies experienced by the passenger. The issue is likely to gain in importance in the future as economic, political and social trends affect the types of people who wish to use air transport. Airline managers have to be aware of the need to identify passengers in need and offer tangible support and assistance. This article addresses issues relating to the human face of aviation management and looks at some of the proposals to improve current practices.     

Minimum delay or maximum efficiency? Rising productivity of available capacity at airports: Review of current practice and future needs

Around the world airports are facing capacity constraints more and more everyday, generally the runway capacities are restricted by governments and airports are unable to accept additional aircrafts. Technological improvements can decrease the necessity of policy limitations in terms of noise and air pollution. Rapidly increasing numbers of traffic developed severe scarce capacity, congestion and delay problems and the capacity that is available, needs to be allocated as efficiently as possible. Airport capacity can be allocated in different ways; administrative capacity management with slot allocation and traffic distribution rules; market-based capacity management with slot auctioning, secondary trading and peak pricing; a combination of both mechanisms; and no regulation mechanism as applied in the USA with the exceptions of busiest airports. The review contains the analysis of current state of practice and the review of relevant research on capacity and slot allocation modelling with policy and demand management perspectives. It targets identification of existing problems, inefficiencies, gaps and requirements in current practice of slot allocation mechanisms, defining options for change in policies to allocate slots more efficiently, transparent and fair by investigating market-based mechanisms. The objective of this paper is to contribute to the ongoing research for improvements to the slot allocation process that can be rationally implemented in practice in order to improve efficiency, fairness and transparency. For that purpose, based on these slot allocation approaches, we provide a critical review of status-quo, literature and current research with demand and congestion management perspectives by considering overall social welfare, airline and airport surplus, passenger welfare and explore hypothetical, computational and practical challenges that have arisen from cross-disciplinary methodologies.     

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.     

The spatial and temporal variation in passenger service rate and its impact on train dwell time: A time-series clustering approach using dynamic time warping

This study aims to improve the understanding of the underlying mechanism of passenger boarding and alighting processes, as well as its potential influence on train dwell time and train operation. Empirical data collected from one of busiest metro stations in Seoul, Korea, demonstrates the spatial and temporal variation in the passenger service rate, as a result of interference between boarding, alighting, and standing passengers. This study postulates that the level of interference can be associated with the train car occupancy and the proximity of train door to entry points, as waiting passengers tend to cluster near the platform entries. A unique temporal service rate curve is derived from each door location. We introduce Dynamic Time Warping for similarity assessment and clustering. It revealed four groups of train doors showing distinct shapes of curve from each platform. The first cluster includes the train doors located closest to the platform entry points where the initial service rate is drastically impeded by severe inference among passengers. The level of interference gradually diminishes as the door is located farther away from the entry points, but the overall service rate decreases as well. A passenger service time model is derived to include the cluster variable. To test its significance, the prediction capability of the model is presented with and without the cluster variable. The results of this study may be used to guide waiting passengers along the platform to minimize interference and to avoid serious disruption during passenger service time.