EXPLORING THE PROSPECT OF OPERATING

LOW COST AND LEGACY CARRIERS FROM THE

SAME MAIN AIRPORT TERMINAL

A service quality perspective

Nikhil Menon

Dissertation submitted for obtaining the degree of

Master in Complex Transport Infrastructure Systems

Jury

President: Prof. Luis Guilherme Picado Santos

Supervisor: Prof. Maria do Rosário Mauricio Ribeiro Macário

Member: Prof. Vasco Domingos Moreira Lopes Miranda dos Reis

December 2012

i

This thesis was completed to obtain a

Master of Science Degree

In

Complex Transport Infrastructure Systems

A part of the MIT Portugal Program

ii

ACKNOWLEDGMENTS

I would like to express my deepest gratitude to my family – amma and achan, back home in

India, who have given me the opportunity to undertake the master degree program in Complex

Transport Infrastructure Systems, as part of the MIT Portugal Program. Their constant support

and encouragement is the main reason I am here.

To the MIT Portugal Program - for giving me the opportunity to be part of it through the provision

of the corporate fellowship, thereby enabling me to pursue my education. Many thanks to

supervisor Prof. Maria do Rosário Mauricio Ribeiro Macário, for her encouraging words of

advice and wisdom during the course of the master dissertation. I am sure that the expert

guidance obtained on the various aspects of the airlines/ airports theme, not just on matters

pertaining to the dissertation shall go a long way in broadening my horizon on the field.

This dissertation would be incomplete if not for the passenger questionnaire survey conducted

as part of the research. My sincere thanks to all the respondents, from across the world who

have put in their time and effort in answering the questionnaire, thereby contributing their bit in

being part of this work. I am ever – so – indebted to you for making this dissertation, a success.

The role of the MIT Portugal Program would be incomplete without the mention of a few people

who have made my stay in Lisbon, a very amazing experience. First of all, my colleagues in the

program – especially Joao, Minas, Shant, Andrej and Aivin – for the vast amounts of time spent

together in discussions, sharing amazing insights (academic and otherwise) and for the

constant source of encouragement and assistance during the course of the dissertation. Next,

to Teresa, Elaine, Liliana, Prof. Viegas, Prof. Vasco, Prof. Filipe Moura, Alex, Ryan, Dimitris and

everyone else, part and parcel of the program in Lisbon for being such wonderful hosts and

making my stay, a very enjoyable and enchanting experience. I am glad to have met some

amazing people here, some of whose friendships I shall definitely be able to nurture for the

future.

Mata, pita, guru and next in line is dev (the almighty) for making everything work without any

hindrances and giving me the strength and will to excel in strive for knowledge.

iii

ABSTRACT

The world has been witness to a spurt in the global airline passenger throughputs mainly

through the burgeoning of low cost aviation since the airline deregulation of the 70s. Low Cost

Carriers (LCCs) - with the initial push from Southwest Airlines in the USA, through smart

business models have realized that they can not only make the legacy carriers (LC) customers

shift towards flying low cost, but also that they could create a new niche segment of passengers

who would not have flown otherwise.

This dissertation strives to explore the prospect of operating low cost carriers and the legacy

carriers out of the same main airport terminal, from a service quality point of view. Service

quality delivered in the airport terminals would be the main focus of the dissertation. Analysis

will be made to determine the service attributes which will impact the overall quality perceived

by the passengers inside an airport terminal. Focus would then shift towards establishing quality

criteria. It is the endeavour of the dissertation to define service levels for establishing quality

criteria in airport terminals and later set up a service quality level matrix, which shall give a state

of all possible scenarios in the service quality jargon, concerning the airport terminal.

The impact of service attributes in defining the overall quality of service perceived by the

passenger in an airport is analyzed by means of an Important Performance Analysis, which

gives an insight into the customer’s understanding of the product or service that is being offered

to them. Subsequently, an effort is made into establishing quality criteria for airport terminals.

The various approaches that look into establishing service quality are analyzed and one of the

methods (The 4 Q’s method) is chosen to work on the current dissertation. The customer needs

are analyzed by means of the Expected and Perceived quality scores. Minimum performance

thresholds are analyzed as part of being in a level of service, ranging from the best (A) to the

worst (D), finally leading into a matrix of all possible scenarios arising out of the service

attributes.

To conclude, this is then modelled into a synergy conflict analysis to analyze whether there is a

synergy effect or a conflicting effect on the prospect of operating low cost carriers (LCCs) and

legacy carriers (LCs) from the same main airport terminal, on the basis of each service attribute.

It is seen that 10 of the 12 service attributes have a synergy effect and 4 of the 12 seem to have

a conflicting effect on the objective of the dissertation. There is an overlap in two instances,

where it is strongly felt that the policies of the airport might play a great role in determining the

possibility or not of operating the low cost carriers and legacy carriers from the same main

airport terminal.

Keywords: Airport Terminals, Low Cost Carriers, Service Quality, Importance Performance

Analysis, The 4 Q’s Method.

iv

INDEX

ACKNOWLEDGMENTS ............................................................................................................ ii

ABSTRACT.............................................................................................................................. iii

INDEX ..................................................................................................................................... iv

LIST OF FIGURES.................................................................................................................. vii

LIST OF TABLES ................................................................................................................... viii

ACRONYMS AND DEFINITIONS .............................................................................................. x

1. INTRODUCTION................................................................................................................ 1

1.1 INTRODUCTORY NOTE ........................................................................................... 1

1.2 OBJECTIVE............................................................................................................... 1

1.3 STRUCTURE AND METHODOLOGICAL APPROACH OF THE DISSERTATION ...... 2

2. LOW COST AND LEGACY CARRIERS ............................................................................. 4

2.1 IMPACT OF DEREGULATION IN THE AVIATION SECTOR ...................................... 4

2.2 BUSINESS MODEL ANALYSIS ................................................................................. 6

2.3 LCC IMPACT ON AVIATION ................................................................................... 11

3. AIRPORT TERMINALS .................................................................................................... 14

3.1 INTRODUCTION ..................................................................................................... 14

3.2 LOW COST AIRLINE REQUIREMENTS FROM THE AIRPORT TERMINALS.......... 15

3.3 TERMINAL ACTIVITIES, COSTS AND REVENUES ................................................ 18

3.3.1 TERMINAL ACTIVITIES AND COSTS ................................................................. 18

3.3.2 REVENUES ......................................................................................................... 20

3.4 PROCESS ANALYSIS ............................................................................................. 26

3.4.1 INTRODUCTION ................................................................................................. 26

3.4.2 DEPARTURE....................................................................................................... 26

3.4.3 ARRIVAL ............................................................................................................. 27

3.4.4 TRANSFER ......................................................................................................... 28

3.4.5 BAGGAGE HANDLING ........................................................................................ 29

3.4.6 TURNAROUND PROCESS ................................................................................. 29

4. IMPORTANCE PERFORMANCE ANALYSIS ................................................................... 36

v

4.1 INTRODUCTION ..................................................................................................... 36

4.2 PASSENGER QUESTIONNAIRE SURVEY ............................................................. 38

4.3 ADEQUACY OF THE SAMPLE SIZE ....................................................................... 38

4.3.1 SAMPLE SIZE CRITERIA .................................................................................... 39

4.3.2 STRATEGIES FOR DETERMINING SAMPLE SIZE ............................................. 40

4.3.3 SAMPLE SIZE ESTIMATION ............................................................................... 41

4.3.4 OTHER SAMPLE SIZE DETERMINATION CONSIDERATIONS .......................... 42

4.4 FINDINGS ............................................................................................................... 42

4.4.1 IMPORTANCE VERSUS PERFORMANCE OF ATTRIBUTES ............................. 42

4.5 INTERPRETATION OF THE RESULTS ................................................................... 48

4.5.1 IPA (SCALE-CENTERED APPROACH) ............................................................... 48

4.5.2 IPA (DATA-CENTERED APPROACH) ................................................................. 48

4.5.3 IPA (MEDIAN – CENTRED APPROACH) ............................................................ 50

4.5.4 ATTRIBURE DISTRIBUTION BASED ON THE DIFFERENT APPROACHES....... 50

4.6 SENSITIVITY ANALYSIS ......................................................................................... 51

5. ESTABLISHING QUALITY CRITERIA FOR AIRPORT TERMINALS ................................ 52

5.1 INTRODUCTION ..................................................................................................... 52

5.2 APPROACHES THAT LOOK INTO ESTABLISHING QUALITY CRITERIA............... 52

5.2.1 IMPORTANCE PERFORMANCE ANALYSIS (IPA) .............................................. 52

5.2.2 SERVQUAL ......................................................................................................... 53

5.2.3 SERVICE QUALITY INDEX (SQI) ........................................................................ 54

5.2.4 THE 4 Q’s METHOD ............................................................................................ 54

5.3 CHOICE OF METHODLOGY ................................................................................... 55

5.4 THE 4 Q’s METHOD ................................................................................................ 55

5.5 ANALYSIS OF CUSTOMER NEEDS AND FUTURE TRENDS ................................. 58

5.6 SETTING UP MINIMUM PERFORMANCE THRESHOLDS ...................................... 59

5.7 HARMONIZATION OF SERVICE ATTRIBUTES ...................................................... 64

5.8 ASSESSMENT OF CUSTOMER SATISFACTION ................................................... 65

vi

5.9 SYNERGY CONFLICT ANALYSIS........................................................................... 74

5.9.1 SYNOPSIS .......................................................................................................... 81

6. CONCLUSION AND DIRECTIONS FOR FURTHER RESEARCH .................................... 83

6.1 CONCLUSION ......................................................................................................... 83

6.2 DIRECTIONS FOR FURTHER RESEARCH ............................................................ 84

BIBILIOGRAPHY .................................................................................................................... 85

ANNEXE ................................................................................................................................. 89

QUESTIONNAIRE .............................................................................................................. 89

vii

LIST OF FIGURES

Figure 1.1 – Structure and the Methodological approach of the dissertation ............................... 3

Figure 2.1 – Comparison between LCC and Legacy carriers [Source: (Esplugas 2008)] ............ 7

Figure 2.2 – Operational Characteristics of LCC and legacy carriers [Source: (Civil Aviation

Section 2002) & (Alderighi et al. 2004)] ..................................................................................... 8

Figure 2.3 – Scope of the current hub and spoke model [Source:(Franke 2004)] ....................... 8

Figure 2.4 – Distinction between the LCC and legacy carrier business models [Source:(Bieger

et al. 2002)] ............................................................................................................................. 11

Figure 2.5 – Impact of LCCs on the aviation scenario in the UK [Source:(Airways British 2004)]

............................................................................................................................................... 11

Figure 3.1 – Terminal Configurations [Source:(Wikipedia 2012b) ] ........................................... 15

Figure 3.2 – Traditional Airport Airline relationship [Source: (Francis et al. 2004)] .................... 17

Figure 3.3 – Modern airline – airport relationship [Source: (Francis et al. 2004)] ...................... 17

Figure 3.4 – Non – Aeronautical revenues [Source: (ANA Aeroportos de Portugal 2011b)] ...... 21

Figure 3.5 – Share of non – aeronautical revenue in ANA airports [Source: (ANA Aeroportos de

Portugal 2011b)] ..................................................................................................................... 22

Figure 3.6 – Growing Importance of Non – Aeronautical revenues [Source: (Airports Company

South Africa 2012)] ................................................................................................................. 25

Figure 3.7 – Typical Departure process [Source: (DLR EU 2008)] ........................................... 26

Figure 3.8 – Typical Arrival process [Source:(DLR EU 2008)] .................................................. 27

Figure 3.9 – Arrival process analysis [Source: (DLR EU 2008)]................................................ 28

Figure 3.10 – Transfer Passenger handling process [Source: (DLR EU 2008)] ........................ 28

Figure 3.11 – Baggage handling process [Source: (DLR EU 2008)] ......................................... 29

Figure 3.12 – Typical turnaround times observed in a B 777 [Source: (DLR EU 2008)] ............ 34

Figure 3.13 – Typical turnaround times observed in a B 737 [Source:(DLR EU 2008)] ............. 34

Figure 4.1 – Importance Analysis ............................................................................................ 43

Figure 4.2 – Performance Analysis .......................................................................................... 44

viii

Figure 4.3 – Distribution of the mean scores of the Importance Analysis .................................. 46

Figure 4.4 – Distribution of the mean scores of the Performance Analysis ............................... 47

Figure 4.5 – IPA Scale Centred Approach ............................................................................... 49

Figure 4.6 – IPA Data Centred Approach................................................................................. 49

Figure 4.7 – IPA Median Centred Approach ............................................................................ 49

Figure 4.8 – Results of the Sensitivity Analysis ........................................................................ 52

Figure 5.1 – Importance Performance Analysis ....................................................................... 53

Figure 5.2 – The 4 Q’s method ................................................................................................ 55

Figure 5.3 – Decoupled version of the quality definition (The 4 Q’s method) ............................ 56

Figure 5.4 – Quality gaps in definition of service quality ........................................................... 57

Figure 5.5 – Congestion Level of Service A ............................................................................. 60

Figure 5.6 – Congestion Level of Service B ............................................................................. 61

Figure 5.7 – Congestion Level of Service C ............................................................................. 61

Figure 5.8 – Congestion Level of Service C, Queuing .............................................................. 61

Figure 5.9 – Congestion Level of Service D ............................................................................. 62

LIST OF TABLES

Table 3-1 – Sources of Airport Revenue [Source:(Francis et al. 2003)] .................................... 23

Table 3-2 – Sources of Airport Revenue [Source: (Odoni 2007)] .............................................. 23

Table 3-3 – Sources of Airport Revenue [Source: (Odoni 2007)] ............................................. 23

Table 3-4 – Sources of Airport Revenue [Source: (Graham 2007)] .......................................... 24

Table 3-5 – Turnaround processes for low cost and legacy carriers ......................................... 32

Table 4-1 – Demographic information (IPA) ............................................................................. 37

Table 4-2 – Mean scores of the Importance Analysis ............................................................... 45

ix

Table 4-3 – Mean scores of the Performance Analysis ............................................................ 46

Table 4-4 – Mean scores of the Importance and Performance Analysis ................................... 47

Table 4-5 – Quadrant wise distribution of service attributes (Importance Performance Analysis)

............................................................................................................................................... 51

Table 4-6 – Sensitivity Analysis on the level of precision.......................................................... 51

Table 5-1 – Expected Quality scores ....................................................................................... 59

Table 5-2 – Perceived Quality scores ...................................................................................... 66

Table 5-3 – Satisfaction Gap scores ........................................................................................ 72

Table 5-4 – Service Quality Level Matrix ................................................................................. 73

Table 5-5 – Availability of transport modes for commute from the terminal ............................... 75

Table 5-6 – Time taken to do check – in .................................................................................. 75

Table 5-7 – Level of Congestion (Crowding) ............................................................................ 76

Table 5-8 – Number of working check – in counters................................................................. 76

Table 5-9 – Walking distances inside the terminal ................................................................... 77

Table 5-10 – Accessibility to food and beverages .................................................................... 78

Table 5-11 – thermal comfort (Temperature Control) ............................................................... 78

Table 5-12 – Seat Availability inside the terminal ..................................................................... 79

Table 5-13 – Visual impact of the terminal (cleanliness and design)......................................... 79

Table 5-14 – Availability of choices in food or retail .................................................................. 80

Table 5-15 – Availability of trolleys .......................................................................................... 80

Table 5-16 – Accessibility to retail and concessions................................................................. 81

Table 5-17 – Synergy Conflict Analysis ................................................................................... 82

x

ACRONYMS AND DEFINITIONS

ANA Aeroportos de Portugal

ATC Air traffic Control

BA British Airways

bmi British Midland International

EC European Commission

ETDS Explosive Trace Detection Systems

EU European Union

FIS Federal Inspection Services

HCM Highway Capacity Manual

IPA Importance Performance Analysis

LC Legacy Carriers

LCC Low Cost Carriers

LOS Level of Service

NC Network Carrier

NLR National Aeronautics Laboratory

P2P Point to Point

QD Delivered Quality

QE Expected Quality

QP Perceived Quality

QT Targetted Quality

SQI Service Quality Index

UK United Kingdom

USA United States of America

1

1. INTRODUCTION

1.1 INTRODUCTORY NOTE

The tremendous growth experienced by the airline/ aviation sector is the main source of interest

for the current study. The spurt in the global airline passenger throughputs mainly through the

burgeoning of low cost aviation has been the single largest contributor on this aspect. Low cost

carriers (LCCs), with the initial push from Southwest Airlines in the USA, through smart

business models have realized that they can not only make the legacy carriers (LC) customers

shift towards flying low cost, but also that they could create a new niche segment of passengers

who would not have flown otherwise. This realization was further strengthened when Ryanair

started operations in Europe, quickly followed by easyJet during the 90s. And thus the wave

spread over to Asia and subsequently all other parts the world.

In the due process, the airlines had to constantly innovate in order to keep their cost advantage

intact. Those who failed to do so eventually disappeared from the scene, while the lucky few

flourished and took up a huge market share. When the LCC business model started to gain

prominence, they started to realize the need to operate from smaller airfields, secondary

airports in order to reduce the costs and also to achieve time advantages. This use of using the

secondary airports came with need to have a trade-off between costs and quality of service.

The passengers flying LCCs sure had lesser costs on the airline tickets, but had the service

quality compromised. Sometimes the secondary airports was so far off that additional costs

needed to be required for commute into the main city (as is the case of Girona (Barcelona) and

Hahn (Frankfurt) amongst others). A recent study showed that over 57% of the Southwest

customers would recommend the airline to their friends over the aspect of its cost advantage,

despite the lower quality of service they receive when compared to a legacy airline passenger.

It is the endeavour of this dissertation to study in detail, the service quality aspect delivered to

the LCC passengers in the airport terminals, to understand their requirements and set up

service quality levels that look into the aspect of quality delivered in airport terminals.

1.2 OBJECTIVE

This dissertation strives to explore the prospect of operating low cost carriers and the legacy

carriers out of the same main airport terminal, from a service quality point of view. In doing so, it

aims to achieve the situation where the low cost carriers, which now operate from the low cost

airports or the secondary airports/ terminals would be taken off service from there and started

operating from the main airport terminal purely looking at it from the point of view of service

quality.

2

1.3 STRUCTURE AND METHODOLOGICAL APPROACH OF THE

DISSERTATION

Methodologically speaking, in terms of data collection, the main tool used for the course of this

dissertation would be a passenger questionnaire survey. The survey is to be floated amongst a

target audience which shall consist of airline passengers, with special reference to low cost

passengers. The main task entrusted with the target group during the survey would be to

identify and illustrate the set of service attributes, which in their opinion shall hold forte in

defining service quality in an airport terminal. The target group would be advised to give scores

on each of the service attributes in two main aspects – importance and performance.

The service attributes, a total of 12 in number have been chosen after extensive literature

reviews on the aspect of defining service quality in various industries including airports. Based

on the results of the survey, Importance Performance Analysis (IPA) would be resorted to, in

order to place the service attributes on the IPA grid. Once the IPA grid is established, the results

interpreted, the next stage of this dissertation would focus on the establishment of quality

criteria for setting up service quality parameters in an airport terminal. And the final parts of this

dissertation would focus on the setting up of a service quality level matrix and eventually on the

aspect of addressing the main objective, having all these results in hand.

On the structural point of view of the report, this dissertation would begin with an attempt to

understand low cost carriers and legacy carriers. Main aspects of interest would be to examine

the impact that the deregulation of the 70s had on global aviation. The main focus of the said

low cost and legacy carriers would be to understand the business models of the respective

class of airlines. This will be followed by the impact of LCC on aviation.

Section 3 starts with a thorough exploration of the airport passenger terminals that are in use,

the world over. Airport passenger terminals henceforth referred to as Terminals in this work are

generally divided into categories on the basis of major airport activities such as commercial

services, primary, cargo services, reliever and general aviation airports. For the course of this

study, only commercial service airports with more than 2500 enplaning or deplaning passengers

per year for any calendar year has been found to be relevant. A thorough analysis of the

different kinds of airport terminals – based on their design featuring their main characteristics,

would be detailed during the course of this dissertation. The LCC requirement from airport

terminals is the next topic of discussion here.

Next focus will be on the revenues generated by the airport – namely the aeronautical and the

non – aeronautical revenues. The terminal activities, costs and revenues are another area of

exploration as far as this dissertation is concerned. It is the endeavour of the current

dissertation to look into the growing importance of the non – aeronautical revenue in airports

and similar attempts shall be made on this regard.

3

This will be followed by an overall process analysis in an airport terminal. Ground Handling

Processes, especially the turnaround process assumes a very big importance in achieving

economy, especially in the case of low cost carriers. As for the dissertation, it is believed that

the turnaround times (ground handling operations) will end up being one of the most premier

constraints in operating both classes of airlines from the same airport terminal into reality.

Taking this view into regard, a complete analysis of the turnaround process will be explored in

the subsequent session and it will be modelled on the operations happening on the ground for a

low cost as well as a legacy carrier. Analysis, when done this way will aid in understanding the

turnaround process in greater detail, emphasizing the possible advantages that one airline class

stands to receive against the other – something which has been seen to be inherent of their

respective business models.

The final part of the dissertation will involve the analysis of the importance and performance of

the service attributes, subsequent establishment of quality criteria and setting up of a service

quality level matrix addressing the prospect of operating low cost and legacy carriers out of the

same main airport terminal.

The structure of the dissertation can be explained by the flow chart described below:

Figure 1.1 – Structure and the Methodological approach of the dissertation

CONCLUSION AND DIRECTIONS FOR FURTHER RESEARCH

CONCLUSION DIRECTIONS FOR FURTHER RESEARCH

ESTABLISHING QUALITY CRITERIA

INTRODUCTION

APPRAOCHES THAT LOOK

INTO ESTABLISHING

QUALITY CRITERIA

CHOICE OF METHODOLOGY

THE 4Q's METHOD

ANALYSIS OF CISTOMER

NEEDS AND FUTURE TRENDS

SETTING UP MINIMUM

PERFORMANCE THRESHOLDS

HARMONIZATION OF SERVICE ATTRIBUTES

ASSESSMENT OF CUSTOMER SATISFACTION

SYNERGY CONFLICT ANALYSIS

IMPORTANCE PERFORMANCE ANALYSIS

INTRODUCTION ADEQUACY OF THE SAMPLE

SIZE FINDINGS

INTERPRETATION OF THE ANALYSIS

SENSITIVITY ANALYSIS

AIRPORT TERMINALS

INTRODUCTION LOW COST AIRLINE REQUIREMENTS

FROM THE AIRPORT TERMINALS TERMINAL ACTIVITIES, COSTS AND

REVENUES PROCESS ANALYSIS

LOW COST AND LEGACY CARRIERS

IMPACT OF DEREGULATION IN THE AVIATION SECTOR BUSINESS MODEL ANALYSIS LCC IMPACT ON AVIATION

4

2. LOW COST AND LEGACY CARRIERS

2.1 IMPACT OF DEREGULATION IN THE AVIATION SECTOR

The airline/airport industry, which is collectively referred to as the aviation industry has

witnessed widespread changes in the way it has been operating, since the turn of the

millennium. A large contribution to this change has been attributed to the diverse patterns of

travel that have resulted due to the numerous needs of the passengers. Gone are the days

when flying used to be a businessman’s thing or confined even to the upper strata of the

society. The deregulation in 1978 played a great role in realizing this dream. With the advent of

the low cost phenomenon, flying has turned from being a niche segment into a completely

global character, cutting across regional and monetary lines. Passenger movement has

increased over the turn of the millennium, fuelled by the low cost phenomenon which made it

accessible to more and more people all across the world. But as every phenomenon, it came

with its own drawbacks.

More passengers would mean that the main airports were getting more and more congested.

The airport terminals which host the passengers before enplaning and after deplaning became

the major sources of bottleneck, unable to encapsulate the growing demand. This is majorly due

to the fact that most airports which were built during the 1960s to the 1980s did not account for

this unprecedented growth in air travel. Forecasting techniques were seldom employed during

those days and if at all they were, it turned out to be always wrong in estimating the future state

of affairs. Thus it became evident that the existing airports had two options in front of them: i)

expansion to meet the needs of the present and account for the future. ii) pave way for the

construction of new airports (and impending possibility of shutting down or not, depending on a

case by case basis) because of capacity constraints in the existing airports.

By the turn of the 90s, this was realized by almost all the major airports existing and efforts were

on to either expand facilities or to build new airports which would have larger capacities than the

existing ones. Huge facilities with gargantuan designs for terminals were built by the turn of the

millennium and this meant that millions of dollars were spent by the respective countries in

getting the airports, up and ready for meeting newer challenges. This was about the time, when

the low cost revolution had kicked up in most parts of the world, succeeding the South West

revolution which had taken place in the United States of America, much earlier. The Southwest

model was copied blatantly by most of the airlines of that time, which later modified a few

aspects from their business models in order to stand out in the crowd.

The low cost revolution meant that airlines were now looking in a new direction altogether. They

operated differently from the existing legacy carriers. Simple measures included recruiting

younger, non-union staff, having uniform fleets among other innovative measures as a means to

cut costs. A major portion of their success involved a very innovative business model which was

built around the idea of cutting costs wherever permissible. This did not mean that they had bad

5

seats or used old aircraft with lesser safety measures; it just was an innovative outlook towards

making air travel accessible to everyone. In order to do this, they explored the various avenues

of costs incurred to the airlines and figured out, that a large portion of it was concentrated on the

aspect of airport charges that the airports used to levy on the airlines.

From the point of view of the airline, the airport charges composed of all activities related to

aviation activities, called the aeronautical charges. The aeronautical charges encompassed all

the aviation – related activities that the airline will undergo at the airports like the landing fees,

the air traffic control (ATC) fees, the passengers and cargo boarding fees, the handling charges

among others. And logically speaking, the airports which experienced greater traffic (the main

airports) had higher airport charges than the small/ secondary/medium sized airports. This fact

was realized by the low cost airlines at a very nascent stage and most of the pioneers in that

segment like Southwest, Ryanair etc. had made it clear that they would not like to fly to the main

airports in view of their higher landing charges. And fortunately for them, most of the areas

around Europe and North America had multi airport systems already existing. The most

frequent type is a multi-airport system with one primary airport and one secondary airport (like in

the case of Frankfurt, Dallas, Melbourne) and in some cases with more than one primary and

more than one secondary airport in the vicinity (like in Paris, London, New York etc.).

The secondary airports were largely unused military bases which were suffering from little or no

traffic due to the fact that they did not boast of the kind of facilities, which their counterparts (the

main airports) had amongst them. This turned out to be the perfect solution for the low cost

airlines that were looking at the aspect of cutting costs. Secondary Airports were cheaper to use

for the low cost airlines because they just had the bare minimum infrastructure required for the

airport to function and the air travel to become a reality. Most of these airports consisted of

single terminals where arrival and departure would take place at the same level. They were

devoid of ornamental facilities like the air bridge for which costs were incurred from the airline,

upon their usage. There were good facilities for ground transport existing in these airports and a

majority of the low cost airlines preferred to make their passengers walk to the aircraft from the

terminal. Another major factor attracting the low cost carriers to the secondary airports was on

the aspect of the turnaround times. The turnaround time is defined as the total amount of time

spent by the aircraft, right from landing at a particular airport to the time when it takes off from

the airport for its next flight. Low cost airlines commanded a turnaround time of 25-30 mins

which was impossible to achieve in the main airports mainly due to the high traffic that these

airports experienced. This was very much possible to achieve in the secondary airports since

the terminals were usually very closely located to the ends of the runway owing to the small size

of these airports.

Thus the low cost revolution kicked off and air travel turned very global in character with more

airports, and more choices for the passengers to travel to, with lesser fares. This was a big blow

to the legacy carriers. The low cost carriers not only managed to create a new segment of air

6

travellers but also ended up taking a share of the passengers who used to earlier fly by the

legacy carriers. So much so that Southwest currently accounts for half of the total domestic

passengers travelling across the United States of America. Similar ripples were observed in

Europe with the advent of Ryanair and easyJet which took a huge chunk of the market share

from the legacy carriers as well. The legacy carriers were no facing mounting losses. Some of

them were forced into bankruptcies (like Delta, US Airways, Spanair, Malev, Swiss Air) while a

few others were forced into mergers in order to avoid bankruptcies themselves (like KLM

brought by Air France, Austrian Air and Swiss Air brought by Lufthansa, and US being brought

by America West). The passenger share of the legacy carriers decreased, which also meant

further cancellations of routes, non – utilization of facilities at main airports among others.

The main airports which had built enormous facilities for the legacy carriers are now facing

surging losses, because of the events that transpired within the legacy carrier industry. Add to

that, cases of some secondary airports which had turned out to become hubs of the low cost

airlines (like Brussels Charleroi) which are giving the main airports, very stiff competition for

handling aircrafts and passengers.

2.2 BUSINESS MODEL ANALYSIS

To assess the achievement of any business model one needs criterion to set it against;

essentially some form of matrix and a benchmark. Success in business can be assessed on

several dimensions. In terms of the business community it may relate to profits, the standard

neo-classical rent seeking criteria, but business success may also be seen in relation to market

share or in terms of sales revenues (Baumol 1962). The LC model is essentially one based on a

differentiation strategy, in contrast to the LCC approach based on cost leadership or cost

minimisation (Alamdari & Fagan 2005) within each model companies will seek competitive

advantage through some variation in their operational vision, business routines, architecture

and practice

The business models of low cost airlines and legacy carriers vary widely. Low cost airlines are

built up on two key words, “efficiency” and “effectiveness”. And in order to reach these goals,

they start off by optimizing their processes in order to bring minimal loses. Cost reduction is

another mantra practiced very much by the low cost airlines, to good effect. The changes in the

business model have impacted not just the airlines and the passengers themselves, but also the

airports and every other party involved in the flying business.

What the low cost aviation did was to widen the horizons of flying from being an elitist aspect to

making it affordable for the masses. Although this came at a price of not having any frills on-

board, flying has definitely become more accessible to people from various economic strata.

The emphasis is on cost reduction and the service is defined by cost cuts rather than

passengers’ perception of level of service.

7

Figure 2.1 – Comparison between LCC and Legacy carriers [Source: (Esplugas 2008)]

As can be seen from the figure above, the business models of the low cost and legacy carriers

vary leaps and bounds. There are some intermediaries which have tried to inculcate the best

parts of both realms like jetBlue, Aerlingus etc. These airlines have tried to balance the spheres

of cost reductions, not compromising a lot on the customer perception of the level of service.

(CESUR & TPR 2007) classify the low cost business models into 5 types and they are as

follows: 1) Southwest copycats; 2) Subsidiaries; 3) Cost cutters; 4) Diversified – charter carriers;

and 5) State subsidized companies competing on price.

The legacy carrier business model is essentially one based on a differentiation strategy, in

contrast to the low cost carrier approach based on cost leadership or cost minimisation

(Alamdari & Fagan 2005) within each model companies will seek competitive advantage

through some variation in their operational vision, business routines, architecture and practice.

Thus, there is room for heterogeneity within sectors and between sectors as well. A ‘typical’

profile of a legacy carrier and low cost carrier model organization is as follows:

Another perspective onto the varying business model situation is described by (Franke 2004) in

his work. Starting with the legacy carriers, he observes the most common patterns and

according to him, major airlines capitalized on the progress of computer technology and

optimization models, developing the concept of “legacy management” in the 90s. This was

encouraged by the deregulation and liberalisation, major carriers built up global legacies around

large hubs. Maximum hub connectivity is typically reached by waved traffic patterns in the hubs,

increasing the probability of reaching a variety of outbound flights from any inbound flight. The

negative aspects of this strategy are a loss of convenience for the passengers, and a

considerable cost penalty for the airline on the operational side. Waved traffic means massive

peaks in hub operation leading to congestion during peak hours, time – critical connections and

strongly fluctuating utilization of ground handling facilities.

8

Figure 2.2 – Operational Characteristics of LCC and legacy carriers [Source: (Civil Aviation Section

2002) & (Alderighi et al. 2004)]

With no alternative business model, airline clients had no choice but to comply with the

operational model the legacy carriers had created, paying for this inherent complexity. The

product differentiation they received in return was – and still is – rather poor on continental

routes. The main focus of product differentiation is on booking restrictions (eg: rebooking

flexibility) and on in – flight product; landside processes are seldom reassessed. In effect, the

carriers had built their complex operational model around the needs of their least valuable

clients (low – yield connecting passengers) whom they forced to connect at hubs in order to

maximize their overall destination portfolio; a situation paid for by their own premium clients. A

crisis soon developed during the second half of the 2000s when faced with the economic

downturn, these high – value passengers, showed a growing reluctance to pay premium prices.

Figure 2.3 – Scope of the current hub and spoke model [Source:(Franke 2004)]

9

Major legacy carriers became trapped in a vicious cycle; as long as their competitors optimized

their destination portfolio and hub connectivity at the expense of productivity ad client

convenience, they were forced to act likewise. Any deviation from this could prove fatal. The

only remaining business innovations open to legacy airlines were alliances and partnerships

which boomed in the second half of the 90s. Major carriers organized themselves in a variety of

partnerships, and three main global alliances developed. A certain value for the client (eg:

seamless global travel) as well as some low hanging fruits for the carriers (eg: scale effects in

procurement, aligned IT systems) made these alliances quite successful. However the

deregulation efforts of the last 20 years have failed to change restrictive ownership clauses and

bilateral traffic right arrangements thus making them not ready to face competition from their low

– cost counterparts. (Franke 2004)

He further goes on to explore the low – cost business model.

After the “invention” of the low – cost business model by Southwest in the early 70s, it took

more than 15 years in the US and 20 years in Europe before major legacy carriers began to

take the challenge of this new business model. The network carrier executives perceived this

low cost model as restricted to a niche market sector, luring low - low – yield passengers who

would have never flown otherwise (and whom the network carriers would not like to attract

anyhow), by offering the lowest service standards possible. Even at the beginning of the crisis,

this perspective remained largely unchanged.

Studies of the low – cost phenomenon have challenged this very thought. It has become

obvious that LCCs have not merely expanded from their original niche in times of crisis, but

have established an alternative business model that is better prepared to adapt to the changes

in demand for continental travel than that of the legacy carriers’. Studies by (Doganis 2001)

show that LCC business model can operate sustainably at a 40 – 50% of the unit cost of the

average legacy carrier. This cost gap can be only explained by the assumption of lower wages

and a ‘no frills’ approach to business. For example, point – to – point (P2P) service is offered

only in continental traffic with a homogeneous fleet of cost efficient aircraft (B737 or A320/319).

This cost gap can be explained by lower number of flights between major destinations, resulting

in a considerably higher productivity of aircraft and crew. Other success factors are: lower

maintenance costs due to homogeneous fleets and lower landing/ ground handling fees, being

negotiated with secondary airport without congestion problems.

He further goes on to say

Airline strategists from NCs have identified at least three major errors in their initial perceptions

of the LCC model:

The LCC service level is focussed, not poor. In most cases, the LCC product is highly

reliable and convenient for passengers; the LCC product can, in fact even be more

10

convenient than that of NCs who force their clients into congested off – site mega

airports. They offer what most clients value at least in continental travel; direct

connections with minimum interaction at the airport.

LCCs do attract low – low – yield passengers and heavy bargainers who would not have

flown otherwise, but they also alienate “regular” coach travellers and even price –

sensitive business class clients from the NCs.

While the LCC model started in a niche, it can thrive equally well in significant parts of

continental air traffic markets. With the exception of highly served hub connections, LCC

could – at least in theory – enter all local markets that provide enough demand for at

least one direct flight with a B 737 per day. This segment accounts for some 70% of the

European continental market and more than 70% market in the US.

All said, there are for sure a set of experts who are obviously not thrilled to play party to the low

cost model. They maximize the use of their factors of production. Aircraft turnaround times are

kept short because there is no-belly-hold cargo to unload/unload, there are no window shades

to open, there are no seat-back pockets to be emptied, less congested airports are favoured,

planes are only cleaned once a day, there are no on-line passengers to worry about, etc.

Another approach of comparing the low cost carriers and the legacy carrier business models

arises from the work by (Bieger et al. 2002). The work summarises the business model

differentiations from eight dimensions. It can be summarised as given in the figure below.

11

Figure 2.4 – Distinction between the LCC and legacy carrier business models [Source:(Bieger et al.

2002)]

2.3 LCC IMPACT ON AVIATION

This section will delve into the details regarding the impacts that the low cost revolution had on

the aviation sector. Focus will be given on the various steps that were taken by the legacy

carriers as a counter – measure to the spiralling low cost phenomenon.

Low-cost airlines have continued to grow and increase their share of the market, especially in

recent years. Europe’s LCCs are growing at annual rates of 20–40%. They have won a 10%

market share (24 million passengers) of the total intra-European market. This figure is predicted

to grow to 33% (or 148.5 million passengers) by 2010 (Aviation Strategy, 2002). The figure

below shares the growth story of the low cost airlines in the United Kingdom. This illustration

gives a very good picture into the impact of the LCCs on the aviation scene in the United

Kingdom. Values are the percentage share of passengers on board all UK short-haul inbound,

outbound and domestic scheduled flights of Ryanair, Buzz, easyJet and Go. (Alamdari & Fagan

2005)

Figure 2.5 – Impact of LCCs on the aviation scenario in the UK [Source:(Airways British 2004)]

12

After deregulation, the airlines quickly moved to a hub-and-spoke system, whereby an airline

selected some airport, the hub, as the destination point for flights from a number of origination

cities, the spokes. Because the size of the planes used varied according to the travel on that

spoke, and since hubs allowed passenger travel to be consolidated in “transfer stations”,

capacity utilization increased allowing fare reduction. The hub-and-spoke model survives

among the legacy carriers, but the low-cost carriers (LCCs), now 30 percent of the market,

typically fly point to point. The legacy hubs model offers consumers more convenience for

routes, but point-to-point routes have proven less costly for airlines to implement. Over time, the

legacy carriers and the LCCs will likely use some combination of point to point and legacy hubs

to capture both economies of scope and pricing advantages. (Wikipedia 2012a)

The success and the constant competition from the low cost carriers had made it imperative on

the part of the legacy carriers to go for a re – think on their business model and the strategies

implemented on the ground. The strategies implemented by major airlines in reaction to the

competitive threat from the low – cost carriers include means of reducing labour costs or

increasing productivity within the mainline airline operation. There is also the possibility of

transferring services to regional partners, franchises or alliances and even setting up a low –

cost carrier subsidiary. (Dennis 2007)

Some of the largest changes have been achieved by selling off whole departments (eg. ground

handling at bmi). Low cost airlines have sought to achieve dramatic growths in productivity by

taking on the bare minimum number of extra flight and cabin crew to support their vastly

expanded operations. And unlike the low cost carriers, the major airlines have not generally

tried to shift any flight and cabin crew to lower cost economies. (Dennis 2007) Support services

such as catering, cleaning and ground handling have come under much more severe pressure

(David & Michaels 2003). An example of the above situation is elucidated by the drop in

revenue of Gate Gourmet by 30% despite a growth in passenger numbers. (Ott 2005)

British Airways (BA) is generally accredited with having the most realistic strategy for dealing

with the low – cost airlines, perhaps alongside Aer Lingus who are the only real example of a

traditional legacy airline converting much of the way into a low – cost carrier. (Aviation Strategy

2004) Others have done with minimum by changing strategy only where head – to – head with

either a low cost airline or BA. Some have adopted aggressive tactics through legal procedures

or control of slots, facilities or capacity to keep new entrants out. (Dennis 2007)

The adoption of differentiation strategies by airlines is also a result of the impact of the low cost

airlines in the aviation sector. And this is not just reserved for the legacy carriers alone. There

have been instances where LCCs have departed from the conventional low cosy business

models to enable differentiation strategies into their models. (Alamdari & Fagan 2005) studied

this in detail with respect to ten low cost carriers and their conclusions are summarised as

below. For the purpose of the study, they identified ten LCCs with special regard to 17 of their

13

operational and product features of their low – cost business models. This was later utilized to

study departures from convention.

Overall, the selected carriers, in pursuit of their differentiation strategy, deviated slightly more

from the product features of the original model (40%) than from the operational features (36%).

The evidence also suggests that European carriers tend to adhere to the original model more

than their counterparts in the USA. However, this could change in the future as more low-cost

airlines enter the European market and the legacy carriers react by offering low fares as well as

service frills.

Nevertheless, the main change in airport management is that airlines are no longer their primary

customers. Rather, passengers become a significant source of revenue. Airport managers had

to reduce aeronautical revenues (in charges) to increase attractiveness, and had to develop and

become more dependent on non-aeronautical activities such as retail, parking and advertising.

“(…) the airport has better use of its facility, can attract new entrants, and is better equipped to

manage growth and expansion. But there’s risk as well. Unlike a residual agreement that

requires the airlines to help cover airport debt and operational expenses, in this scenario the

airport is solely responsible for potential revenue shortfalls.” (Lennane, A. 2010)

Although the LCCs in all continents have continued to experience traffic growth, such growth

can be adversely affected by factors including a lack of access to suitable slots at airports, an

increase in airport costs when start-up tariffs are removed, lower credit card and Internet

penetration in some targeted markets, reaction by legacy carriers offering low fares, as well as

service frills and increased rivalry amongst the growing number of LCCs. (Alamdari & Fagan

2005)

And finally, as efficiency and cost cutting were the two main features the low cost revolution

brought onto the table, efforts were made to optimize the ground handling processes taking

these two above given factors into consideration. Positive steps in this direction included self-

check – in kiosks, web/ mobile check – in, electronic display, common use check – in counters

amongst others.

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3. AIRPORT TERMINALS

3.1 INTRODUCTION

The simplest definition of airport terminal is as follows:

An airport terminal is a building at an airport where passengers transfer between ground

transportation and the facilities that allow them to board and disembark from the aircraft.

The terminal is the area within which the passengers purchase tickets, transfer their luggage

and go through the security processes. The term terminal is synonymously used with the word

concourse, which are defined as the buildings that provide access to the airplanes (via gates) –

depending on the configuration of the airport. Smaller airports have one terminal while larger

airports have several terminals and/or concourses. The design philosophy of terminals has

evolved over the years into a matter of intricacy and extreme importance. While the number of

terminals in an airport is always defined by the passenger throughput and the demand that the

airport is handling, the configurations of these terminals have been the centre of attraction,

where they are altered on a case by case basis depending on the situation at hand.

At smaller airports which have only one terminal, the single terminal building typically serves all

of the functions of a terminal and a concourse. Some larger airports have one terminal that is

connected to multiple concourses via walkways, sky – bridges, or underground tunnels. Some

other large airports have more than one terminal, each with one or more concourses. Still, some

other airports have multiple terminals, each of which incorporates the functions of a concourse.

So, as can be seen there is a lot of scope for variety in the design of an airport terminal. The

next section will highlight in brief, the most common configurations of airport passenger

buildings. (Wikipedia 2012b)

The evolution in the design of airport terminals is an interesting story to explore. Due to the

rapid rise in popularity of passenger flight, many early terminals were built in the 1930s – 1940s

and reflected the popular art deco style architecture of the time. The earliest of the philosophies

involved every airport terminals directly opening onto the tarmac: passengers would walk or

take a bus to the aircraft. This design, however is still common among the smaller airports and

as will be seen later, is starting to take prominence in the designs of the modern day as well.

(Wikipedia 2012b)

Airport Passenger Buildings -- midfield concourses, finger piers or terminals -- now represent

the major capital expenses at airports worldwide. This is because they are expensive, easily

costing several hundred million dollars apiece at the largest airports (Suebsukcharoen 2000).

Airport managers and designers are increasingly under pressure to be efficient from an

economic perspective. In most cases, private companies have replaced the government owned

operators and therefore expect a high rate of return on investment. (Neufville & Belin n.d.) This

15

paradigm shift, from the once famous penchant for huge and gorgeous terminals into the

terminals which are more economically efficient, came about as a result of the low cost

revolution.

The most common airport terminal configurations are as described in the figure below:

Figure 3.1 – Terminal Configurations [Source:(Wikipedia 2012b) ]

Economic efficiency is a prime motive for the spread of shared – use, multi – functional facilities

in airport terminals. The low cost airlines look for operational efficiency ahead of passenger’s

perception of the level of service in choosing their terminals of operation. (Neufville & Belin n.d.)

This chapter will mainly deal with the airport terminal and associated aspects. Focus will be on

the requirements of the low cost airlines as the main aim of this study is to explore the prospect

of accommodating both low cost carriers and legacy carriers in the same terminal. An overall

review of the terminal activities, costs involved, revenues and airport systems will subsequently

follow, thus providing a complete insight into airport terminals.

3.2 LOW COST AIRLINE REQUIREMENTS FROM THE AIRPORT TERMINALS

The airport passenger terminal constitutes one of the main elements of the infrastructure cost of

an airport and can be defined as a building which facilitates connectivity between airside and

landside access and where a complex interaction between airport operators, airline companies

and passengers takes place. The airport business has often been characterised by investments

in expensive facilities which appear to be unsuitable for the needs and specific requirements of

LCCs. Most modern airport terminals have been designed for maximum convenience and

comfort, whereby high standards, expensive materials and sometimes architectural monuments

are applied with the aim of delivering a prestigious image to represent the culture of the region

or country. Such developments are associated with higher costs such as capital investment,

16

operating and maintenance costs. Thus, some designs have little to do with the function the

terminal is intended to achieve. (Ashford, N., & Wright 1992)

The incentives for over-investment may be attributed to the method used to regulate airports. In

this sense, (Niemeier 2009) argues that cost-based regulation is a major cause of the poor

performance of airports, in that it results in incentives for gold-plating, high costs and high

charges for airlines and passengers.

In today's airport business, two main terminal types can be distinguished, namely, traditional

terminals and low-cost terminals. Whereas the traditional terminal can be defined as a terminal

designed to process the flights and passengers associated with the operation of NCs with full

service facilities, the low cost terminal can be thought of as an airport terminal that has been

developed with low capital investment cost and with the aim of reducing costs and increasing

efficiency

In choosing which airports and airport terminals to operate from, the low cost carriers bring into

consideration a lot of different factors before making a decision. Quite often, these decisions

differ from one airline to another, in line with their policies and preferences. For Ryanair, airport

choice factors include low airport charges, quick turnarounds, simple terminals, rapid check-in

facilities, good passenger facilities and accessibility. (Barrett 2004) Deregulation was a first

factor in determining the philosophy of low cost airlines to look at other options for starting

operations from secondary airports.

For example, the most mature route deregulation, Dublin–London, could not have happened at

a Heathrow monopoly in 1986.The new market entrant, Ryanair, did not have access to slots

there. Luton airport was thus an indispensable part of deregulation as was Stansted

subsequently. (Barrett 2004)

Before the discussion moves into the LCC requirements from airports, specifically airport

terminals, the relationship between the airlines and the airports deserves a special mention.

Traditionally, the contract between airlines and airport stated the conditions of use of airport

facilities and services in exchange for the aeronautical fees paid by the airlines. (Graham 2003)

A simple buyer-seller relationship existed. (Albers et al. 2005) As shown in Figure, airports

viewed airlines as their primary customers (Francis et al. 2004); (Graham 2003) The intention of

obtaining revenues from the passengers was almost non – existent as the idea was still very

nascent and also due to the initial thought process of including the passengers as part of the

airline business. (Francis et al. 2004) As a result, airports relied heavily on aeronautical

revenues.

17

Figure 3.2 – Traditional Airport Airline relationship [Source: (Francis et al. 2004)]

Figure 3.3 – Modern airline – airport relationship [Source: (Francis et al. 2004)]

(Francis et al. 2004) slowly realized and argued that the airline-airport relationship was

gradually becoming more complex as airlines are increasingly cost minded for the sake of their

own financial performance, as a result, aeronautical charges are under increasing scrutiny from

airlines. (Graham 2003) This situation is more prevalent in the case of LCC. Many LCCs are

attempting to negotiate a better deal in aeronautical charges from airports. Some airports,

particularly those that are not utilized to its full extent, are willing to offer discounts to LCCs

(Barrett 2004) or even waive their landing fee for the first few years. (Graham 2003) Now in

order to compensate the loss of aeronautical charges, airports must find new source of income,

while non-aeronautical incomes from concessions, tenants and visitors are the most readily

available source of revenues to airports. (Francis et al. 2004)

As for the LCC requirements from the airports and airport terminals, there has been enough

research done on this aspect to give a good indication of where things stand at the moment.

That includes requirements such as -

I. low airport charges [(Barbot 2006);(Barrett 2004);(Graham 2003);(Francis et al. 2004);(Warnock-Smith & Potter 2005)];

II. quick turnaround time [(Barrett 2004);(Gillen & Lall 2004); (Warnock-Smith & Potter 2005)];

18

III. spare airport capacity [(Warnock-Smith & Potter 2005)];

IV. convenient slot times [(Warnock-Smith & Potter 2005)];

V. single storey airport terminals [(Barrett 2004); (Francis et al. 2004)]

VI. quick check-in [(Barrett 2004)]

VII. good catering at airport [(Barrett 2004)]

VIII. good shopping at airport [(Barrett 2004)]

IX. good facilities for ground transport high potential demand for LCC services and no gold-plating facility [(Barrett 2004)]

So, as can be seen the traditional way of negotiations with the airports for an LCC is very

straightforward and basic.

LCCs usually avoid expenditures on services that are not strictly necessary for the provision of

the core air transport product, such as the use of air bridges or escalators, the need for transfer

and complex systems of the NCs. (Njoya & Niemeier 2011)

With regard to the implications for airports, (Barrett 2004) is of the opinion that low cost and

smaller secondary airports (i.e. those accommodating 0.5–5 million annual passengers) have

been greatest beneficiaries of low-cost carriers' growth over the last two decades. LCCs

triggered new demand and even shifted traffic away from congested airports to regional

airports.

3.3 TERMINAL ACTIVITIES, COSTS AND REVENUES

3.3.1 TERMINAL ACTIVITIES AND COSTS

The Airport Terminal consists of both airside and landside segments, which deem it necessary

to perform a whole range of activities apart from the conventional airport operations. As is

obvious, most of the activities taking place in an airport terminal are on the landside, less so on

the airside.

The airport landside is controlled by a variety of agents such as airport users and government

agencies. In addition to these two are the airlines, with whom the airport operators co-operate

for the smooth operations. An attempt is made here to enlist all the components of the Airport

Terminal landside system based on (TRB 1987)

Terminal Building

General Configuration

o Pier; Satellite; Linear; Transporter

Terminal Kerb

o Departures; Arrivals

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Terminal Transition

o Entry ways and foyers; Lobby area

Airline Facilities

o Office; Ticket counter, Baggage check/ claim

Circulation

o Corridors; Stairs; Escalators; Security Screening

Passenger amenities

o Food/ beverage; news/ tobacco; Drugs; Gifts; Clothing;

o Florists; Barber and shoeshine;

o Car rental and flight insurance;

o Public lockers and telephones;

o Post office’ Amusement arcades; Vending machines;

o Restrooms and nurseries’ Showers and health club;

o Chapels; VIP waiting areas

Departure lounges (Passenger waiting areas)

International facilities/ Federal Inspection Services (FIS)

o Immigration and naturalisation; Customs;

o Plant and animal health (Agriculture);

o Public health

Airline Operations

o Flight operations/ crew ready rooms’

o Valuable/ outsized baggage storage, Air freight and mail;

o Administrative offices

Airport Operations and Services

o Offices; Police Medical and first aids;

o Fire fighting; Building maintenance;

Building Mechanical Systems

Communication Facilities

Electrical Equipment

Government Offices

o Air traffic control; Weather; FIS and public health

Conference and press facilities

The airport passenger terminal constitutes one of the principal elements of the infrastructure

cost at the airport. (Ashford, N., & Wright 1992) It forms the zone of transition around which

passengers’ transit providing the link between the ground and air transport. The rate at which

aircrafts are handled, the overall ground access provided, the capacity of the airside – all are

dependent on the design and operation of the terminal. (Wells A I 1992) A specific order and

procedure are maintained, under which airport terminals perform several functions

20

simultaneously in accordance with the practices adopted, which tow in line to the airport

regulations. (Mumayiz 1985)

Three main functions are performed by the airport terminals and have been described by

(Ashford, N., & Wright 1992) as follows:

Change of Mode: Few air trips are made direct from origin to destination. By their nature, "air"

trips are mixed-mode trips, with surface access trips linked at either end to the line haul air trips.

In changing from one mode to the other, the passenger physically moves through the airport

terminal according to a prescribed pattern of movement. These movement patterns are

accommodated by passenger circulation areas.

Processing: The terminal is a convenient point to carry out certain processes associated with

the air trip. These may include ticketing and checking in the passengers, separating them from

and reuniting them with their baggage, and canying out security checks and governmental

controls. This function of the terminal requires passenger

Change of Movement Type: Although aircraft move passengers in discrete groups in what is

termed "batch movements", the same passengers access the airport on an almost continuous

basis, arriving and departing in small groups mainly by bus, auto, taxi, and limousine. The

terminal, therefore, functions on the departure side as a reservoir that collects passengers

continuously and processes them in batches. On the arrivals side, the pattern is reversed. To

perform this function, the terminal must provide passenger holding space.

(Ashford et al. 1984) discussed in good detail the individual terminal facilities based on the

airport operational standing. Terminal activities were classified into five principal component

groups: (1) direct passenger services; (2) airline – related passenger services; (3) governmental

services; (4) non – passenger related airport authority functions; (5) airline – related operational

functions.

A rising challenge at present for airport managers is to ensure the optimization of the air side

and also the terminal facilities available to the users of the airlines. This has gained more

prominence in the era of the surging LCC ridership, the accompanying change from the

conventional hub and spoke model to point – to – point services of the LCCs and change in

passenger ridership structures experienced across the various airports and airlines.

3.3.2 REVENUES

An airport receives revenue both from aeronautical as well as non – aeronautical sources.

Aeronautical revenues are those which are the revenues that are obtained from the airport by

21

activities that are relating to the air transport. Non – Aeronautical revenues are those which are

obtained by the airport through activities that are not related to air transport.

3.3.2.1 AERONAUTICAL REVENUES

Aeronautical revenues are essentially the charges that the airlines will have to pay for using the

airport space including some additional services

In Europe, all airlines, with no exceptions, have to pay the same aeronautical charges despite

following different business models. These charges are listed next:

Taking off and landing charges based on the planes’ maximum weight specified for

take-offs;

Parking charges which can be divided in traffic and maintenance areas depending on

time spent on platforms, (which again can depend varying on the situation – as for

traffic operation and maintenance);

Aircraft shelter charges;

Passenger service charges (depending on destination – Schengen, non – Schengen

and International);

Passenger security charges.

(ANA Aeroportos de Portugal 2011a)

Based on the method of boarding, there are additional charges to be paid. For instance, the use

of air bridges represents a higher cost structure than the bus and walking gates. Low cost

companies do not prefer to use the air bridges as they use the two door boarding policy as a

means to reduce the boarding time.

3.3.2.2 NON – AERONAUTICAL REVENUES

Non – Aeronautical revenues are said to be consisting of six main sources in the (ANA

Aeroportos de Portugal 2011a). It is as given below:

Figure 3.4 – Non – Aeronautical revenues [Source: (ANA Aeroportos de Portugal 2011b)]

Rents and concessions form the two major parts of the commercial revenues. (Doganis 1992)

Rental income is obtained by leasing the airport space to the users of the airport – among who

are airliners, freight forwarders, travel agents, tour operators and warehouses and other major

22

beneficiaries from airport space, such as hotels, banks, and caterers and so on. (Parappallil

2007) It is usually determined by the amount of space taken up by the user and also on the

amount of facilities used by the tenants such as check in kiosks, lounges etc.

Concessions on the other hand are charges levied by the airport authorities from various

service providers for letting them use the apace in the airport to sell their products. This is

usually a variable, dependent on the amount of turnover of the concessionaires and not on the

space provided, calculated as a percentage of the total turnover. (Parappallil 2007)

Some airports have also marketed themselves in innovative ways paving way for more revenue

from these activities. Unlike rents and concessions, these incomes go directly into the account

of the airport. However these direct sales activities carry a certain amount of risk due to the high

capital investment, labour costs and possible inexperience on the part of the airport in dealing

with such business deals. (Freathy, P. & O’Connell 1998) Other examples of innovative revenue

generating schemes include operating taxi services, sightseeing tours amongst others.

The graphic below gives the share of the non – aeronautical revenues at the ANA airports in

Portugal –

Figure 3.5 – Share of non – aeronautical revenue in ANA airports [Source: (ANA Aeroportos de

Portugal 2011b)]

As can be seen from the above graphic, it is clear that of the 26% of total non – aeronautical

revenue obtained by the ANA airports, more than half is obtained through retail. Real Estate,

car park and Rent – a – car follow suit, finally culminating with Advertising and other measures.

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3.3.2.3 LITERATURE ON AIRPORT REVENUES

(Francis et al. 2003) sums up a list of activities that generate revenue to the airport, both from

an aeronautical as well as a non – aeronautical perspective. It is as enlisted below:

Table 3-1 – Sources of Airport Revenue [Source:(Francis et al. 2003)]

(Odoni 2007) defines the revenues generated by airports tabulating them as follows:

Table 3-2 – Sources of Airport Revenue [Source: (Odoni 2007)]

He further goes on to define another class of revenues which could be generated by the airport,

naming them off airport revenues – revenues which are derived from activities that are not

related to the movement of aircraft, passengers or cargo through the subject airport. The

revenue generated from these sources could be defined under non – aeronautical revenues in

any other classification system but he chooses to segregate them into a separate class. Given

below is the list of off airport revenues enlisted –

Table 3-3 – Sources of Airport Revenue [Source: (Odoni 2007)]

Aeronautical Non - Aeronautical

Landing, departure and parking fees Direct sales (duty free shop/ duty paid)

Passenger fees Royalties

Freight charges Concessions (Rentals)

Apron services and aircraft handling Advertising

Other non - aeronautical

Car Park

Recharges

Airport Revenue

Aeronautical Non - Aeronautical

Landing (and/ or take off) Concession fees for aviation fuel and oil

Terminal area - air navigation Concession fees from commercial activities

Passenger service (terminals) Revenues from car parking and car rentals

Cargo service Rentals for airport land, space in buildings and equipment

Aircraft parking and hangars Fees charged for tours, admissions etc

Security Fees derived from the provision of engineering services, utlities etc, by the airport operator

Airport Noise

Noxious emissions (air pollution)

Ground (ramp and traffic) handling

En route air navigation

Airport Revenue

Off Airport Revenue

Consulting services

Education and training services

Management contracts at other airports

Management contracts for other activities

Equity investments in travel related or other ventures

Equity investments in other airports

24

(Graham 2007), in her book on Managing Airports presents another perspective on the aspect

of airport revenues. It is as given below –

Table 3-4 – Sources of Airport Revenue [Source: (Graham 2007)]

(Wells & Young 2003) made a more elaborate classification into the various revenue generated

by the airport, to give a five group classification as follows:

I. Airfield area (landing fees, aircraft parking charges, fuel flowage fees etc);

II. Terminal area concessions (food and beverage concessions, travel services and

facilities, specialty stores and shops, personal services, amusement, display

advertising, outside terminal concessions – auto parking, hotel, motels etc);

III. Airline leased areas (ground equipment rentals, cargo terminals, office rentals, ticket

counters, hangars, operations and maintenance facilities);

IV. Other leased areas ( freight forwarders, fixed – base operators, governmental units and

businesses in the airport industrial area);

V. Other operating revenue (distribution systems for public utilities – electricity and steam

contract performed for tenants)

3.3.2.4 GROWING IMPORTANCE OF NON – AERONAUTICAL REVENUES

In the last two decades, the importance of non – aeronautical revenue has been widely

recognised as being of concern for airports since it opened up as being an opportunity for the

airports to generate some extra income from activities that were not related to aviation. The

transition of the airports from being candidates of traditional models of business to business

models that are trending to the current times (commercialization, privatization, increased role for

the airport manager in enhancing the commercial viability of the airport) should be one of the

main reasons for the recognition of the importance of the non – aeronautical revenues.

Four broad reasons have been identified as possible precursors to this phenomenon:

I. Increasing competition, along with falling yields and erratic world events have led

airlines to bargain for cheaper landing charges at airports. This has led to the airport

looking elsewhere in order to remain profitable and also as a means of increasing

revenues. The main airports have mainly reacted to this situation by trying to expand

their commercial activities in an endeavour to be more profitable.

Aeronautical Non - Aeronautical

Landing fees Concessions

Passenger fees Rents

Aircraft parking fees Direct Sales (shops, catering and other services provided by the airport operator)

Handling fees (if handling is provided by the operator) Car Park (if provided by the airport operator)

Other aeronautical fees (air traffic control, lighting, airbridges etc) Recharges (for gas, water, electricity etc)

Other non - aeronautical revenues (consultancy, visitor and business services etc)

Airport Revenue

25

Figure 3.6 – Growing Importance of Non – Aeronautical revenues [Source: (Airports Company South

Africa 2012)]

II. Changing travel patterns of the air passengers is another reason why there is a need for

airports to focus on non – aeronautical revenues. Gone are the days when only when

the elite class used to fly. Air travel has become much more accessible and due to the

advent of the LCCs, a niche segment called the leisure class of passengers has

emerged, who are focussing their attention on the commercial activities at these

airports.

III. Increasing competition between hub airports is another major contributing factor. While

passengers who fly from point – to – point might fly from airports which offer better

convenience of flights for them, the transfer passengers’ decisions can be altered by

airports which can offer a variety of commercial services.

IV. Stricter environmental regulations have meant that most airports have restrictions on

night flights (after 2300) until 0600, resulting in the airport having to be shut technically

during this period of time. This has led many an airport manager to rethink on the

aspect of shifting focus from generating slot revenues towards non – aeronautical

revenues to compensate for the loss of revenue due to the new restrictions.

(Parappallil 2007)

26

3.4 PROCESS ANALYSIS

3.4.1 INTRODUCTION

In this section, a detailed analysis on the various processes involved on the landside and the

airside of the airport are explored:

This starts from the very point of initiating the idea of travel to the actual check in process for

departure, finally culminating in being seated inside the aircraft and getting ready for the flight.

Similarly, certain number of processes are involved during the arrivals as well – starting from

disembarking the aircraft to baggage retrieval, passing the customs inside the terminal,

eventually leading to exiting the airport for the onward journey/ activity. All these can be handled

in a variety of ways.

3.4.2 DEPARTURE

The departure processes can be explained through the graphic below. Note that the colour blue

is representative of all the processes which are mandatory inside the airport, right from checking

in to boarding the aircraft.

Although, not all the processes mentioned above are mandatory. For example: Border Control

is an issue which does not come into the picture if the passenger is travelling inside the country

or even in the European Union, for that matter. Similarly, passengers may choose to travel with

or without baggage to be dropped off.

Figure 3.7 – Typical Departure process [Source: (DLR EU 2008)]

A better understanding of the above processes has been initiated through the report of the

(IATA 1989) which goes into the depths of the passenger process analysis during the departure.

To go through the process steps the passenger and staff have to do the following:

Registration, seat allocation and confirmation passenger details (e.g. passenger with

reduced mobility, special meals, unaccompanied minor, etc.)

Passenger ID verification

Travel document verification (including payment verification)

Baggage suitability (size, weight/pieces, security questions)

Baggage labelling and drop-off

Boarding Pass Control

27

Required security search processes include the use of metal detectors and X Ray

systems

Existing security processes are sometimes augmented by explosive trace detection

systems (ETDS) as well as random hand search

Border Control

Passenger boarding (registration passenger on board)

The sequence of events is explained by the following graphic.

3.4.3 ARRIVAL

The arrival process is less complicated than the departure process and can be explained by the

following graphic:

Figure 3.8 – Typical Arrival process [Source:(DLR EU 2008)]

As explained in the departure process, not all steps are necessary here too. For example,

passengers travelling inside a country or even the European country need not go through the

border and/ or customs control. Same is the case with passengers travelling only with cabin

baggage, as they do not have to go through the step of Baggage claim.

For the correct implementation of these steps, the airport authority or the government has to

provide the airport with the following:

Border Control by the government authority

Checking passport

Checking travel document (Visa, Immigration documents, etc.)

Collect baggage from baggage claim, bulk luggage return

Customs control by the government authority

Further transportation

28

Figure 3.9 – Arrival process analysis [Source: (DLR EU 2008)]

3.4.4 TRANSFER

For purposes of transfer, the most important factor to consider is the origin and the destination

of the passenger. For example inside Europe, countries who have signed the Schengen

Agreement permits free and hassle free transfer of passengers within the member nations

without the need to go through border and/or customs control. Whereas, passengers from a

country like Great Britain, for example are treated as Internationals as they have not signed the

Schengen Agreement. The process analysis for a transfer passenger can be depicted as

follows:

Figure 3.10 – Transfer Passenger handling process [Source: (DLR EU 2008)]

29

3.4.5 BAGGAGE HANDLING

The whole baggage processes involves three main tasks:

Move bags from the check-in area to the departure gate

Move bags from one gate to another during transfers

Move bags from the arrival gate to the baggage-claim area

It can be explained by the following process diagram:

Figure 3.11 – Baggage handling process [Source: (DLR EU 2008)]

3.4.6 TURNAROUND PROCESS

In order to assess the possibility of operating low cost and legacy carriers out of the same main

airport terminal, an analysis of the airport turnaround process needs to be done. The National

Aeronautics Laboratory NLR, which has done extensive work on modelling the turn-around

process, defines it as an encompassment of all ground handling activities that has to be

performed at an aircraft when parked at a stand. These activities have to be performed between

in – block, when the aircraft arrives at the stand, and off block, when the aircraft leaves the

stand. Ground Handling services include baggage and cargo (un)loading, passenger and crew

(de)boarding, cleaning, catering, fuelling and other associated activities.

Basically, the turnaround process has been divided into three sub processes namely:

Passenger Processes

Baggage Processes

Airline Processes

A high level of planning has to be ensured in order to make sure that these processes do not

clash with each other, thus leading to loss of time. Certain processes of ground handling are

such that they cannot happen at the same time. So, one process has to be over to ensure the

smooth continuation of the subsequent one. For example: it is well known that baggage

30

(un)loading and fuelling cannot take place at the same time because the area of concentration

is close to each other and thus, there is a good chance that a loss of time can be experienced

during this situation.

The processes involved in a typical turnaround are as explained as below:

I. Docking: Docking is the arrival at the exact location for arranging the handling

processes. As pilots are not able to see the location of their wheels, a flagger is

necessary to signal the crew how to move and where exactly to stop. At many airports,

the flagger is replaced by an automated docking system where on the wall in front of the

aircraft, electronic signals indicate the pilot what to do.

II. De-boarding: De-boarding starts with bringing an aerobridge or stairs to the aircraft. In

case passengers and crew de-board via stairs, additional airport personnel are

necessary to guide them to the building. This can be a brief walk over the airport’s

surface or through a bus connection. The crew gets a special treatment as they will

leave after the passengers and need more time for final checks.

III. Baggage and cargo unloading: Baggage unloading can typically start immediately

after the aircraft has come to a stop. A dedicated company will take out the baggage

and bring this to the terminal building. Cargo, if not too voluminous, is unloaded at the

aircraft’s stand. More commonly, cargo from combined – aircraft is unloaded at the

airport’s cargo area, in which case the aircraft will be towed to that position with a tow

vehicle.

IV. Security: Aircraft with passengers from certain countries need a security check when

they arrive at the airport.

V. Cleaning: Cleaning concerns the interior of the aircraft, which is prepared for the

following flight.

VI. Fuelling: Fuelling is performed with pump vehicles which take the kerosene from

hydrant wells, which are located at the gates. Alternatively, tank vehicles bring the fuel

to the aircraft.

VII. Catering: Catering delivers the necessary food to the aircraft. Depending on the

destination of the flight, certain types of food are not allowed. Some airlines allow

passengers to indicate special wishes (like vegetarian meals) beforehand. Several

airlines, do not serve food to every passenger; instead they provide food and drinks at a

cost. In this case, fewer catering items will be required.

VIII. Baggage and cargo loading: Like cargo unloading, if necessary, cargo loading is

performed at the cargo area. Specific rules exist concerning livestock and cooling.

31

Those are not allowed to wait at the cargo area too long. Baggage loading is handled at

the stand.

IX. Passenger boarding: Passengers can board the way they de – board, either through

an aerobridge, through a short walk on the surface or through a bus connection.

X. Security: All passengers and their luggage have to pass a security check. If this is

performed at the gate, the process is included in the handling process. At some airports,

the security check is performed at a central area. In this case, the security check is not

included in the handling process.

XI. Aircraft check: The crew is responsible for the flight and will check the aircraft

thoroughly before each flight. Aircraft checks concern inspections on the outside of the

aircraft and proper functioning of the aircraft machinery and equipment (cockpit checks).

XII. Push – back: When all the boarding processes have been completed, the aircraft can

depart. Aircraft at gates need to be pushed – back using dedicated push – back

vehicles. Aircrafts at stands mostly require push – backs as well, depending on the

configuration of the stand. At some stands, aircraft can directly start up their engines

and start taxiing.

(Leeuwen 2007)

The section above depicted the typical turn around process that an aircraft goes through once it

reaches the stand to the moment it takes off for its next flight. For the purpose of this study, we

try to explore into more detail of the turnaround process. It is felt that the turnaround process is

one of the most processes to be explored due to the fact that ground handling is recognised as

one of the important sources of delay in the air transport system. And especially at a time when,

the current study explores the possibility to operate low cost and legacy carriers out of the same

main airport terminal, it is believed that the turnaround times become a major factor to be taken

into consideration.

The following table shows the specific turnaround processes usually involved in a low cost and

legacy carrier:

32

Table 3-5 – Turnaround processes for low cost and legacy carriers

Turnaround Process /

Airline Class

Legacy Carriers Low Cost Carriers

Docking Mixed fleets – so different

positions to stop the aircraft,

conveyed to the pilot by the

aid of a flagger or an

electronic signal on the

adjoining wall.

Single fleet – so same

position to stop the aircraft,

conveyed to the pilot by the

aid of a flagger or an

electronic signal on the

adjoining wall.

De-boarding Mostly through aerobridges –

so only through one door. If

through stairs – one or two

doors depending on the case.

Don’t use aerobridges even if

available, because they

increase time and cost. Use

stairs – usually one door

utilized, sometimes two.

Baggage and cargo

unloading

Medium to long haul flights –

considerable amount of

baggage stored in the

underbelly. Time taken to

unload is more.

Short hauls – stricter baggage

limits. Considerable amount

stored in the cabin. Therefore,

time taken to unload is less.

Security Same for low cost and legacy

carriers since its dependent

on the specific airport policies

and regulations.

Same for low cost and legacy

carriers since its dependent

on the specific airport policies

and regulations.

Cleaning Elaborate cleaning required

after each flight due to the

medium/ long haul nature of

flights and in – flight catering.

Elaborate cleaning not

required after each flight due

to the short haul nature of

flights and no in – flight

catering.

Fuelling Usually performed after each

flight because of the medium/

long haul nature. Takes 15 –

20 minutes.

Tankering technique adopted

- 1st flight in the morning is

filled upto full capacity and

can be used for multiple

number of flights due to the

short haul nature. Reduces

33

turnaround time.

Catering Presence of in – flight

catering, so requires loading

and unloading with each

flight.

No free in – flight catering, so

requires lesser time to load

and unload food due to the

lower demand.

Baggage and cargo loading Medium to long haul flights –

considerable amount of

baggage stored in the

underbelly. Time taken to load

is more.

Short hauls – stricter baggage

limits. Considerable amount

stored in the cabin. Therefore,

time taken to load is less.

Passenger boarding Mostly through aerobridges –

so only through one door. If

through stairs – one or two

doors depending on the case.

Don’t use aerobridges even if

available, because they

increase time and cost. Use

stairs – usually one door

utilized, sometimes two

Security Same for low cost and legacy

carriers since its dependent

on the specific airport policies

and regulations.

Same for low cost and legacy

carriers since its dependent

on the specific airport policies

and regulations.

Aircraft check Aircraft checks are conducted

for every carrier, irrespective

of whether it is a low cost or a

legacy carrier

Aircraft checks are conducted

for every carrier, irrespective

of whether it is a low cost or a

legacy carrier

Push – back When all the boarding

processes are completed, the

aircraft is ready to depart. The

push – back process is

initiated, irrespective of

whether it is a low cost or a

legacy carrier.

When all the boarding

processes are completed, the

aircraft is ready to depart. The

push – back process is

initiated, irrespective of

whether it is a low cost or a

legacy carrier.

On closer examination of the turnaround process, as has been done above it is seen that there

are several factors which differentiate the turnaround times achieved by the low cost as well as

the legacy carriers. This plays a key role in ensuring the lesser turnaround times for low cost

airlines in comparison with the turnaround times observed for the legacy carriers. The European

Commission project on the Aeronautic Study for seamless transport (DLR EU 2008) has been a

34

pioneer in process analysis studies and they have researched on the turnaround times

commonly observed for both long/ medium and short haul aircrafts. Their observations of the

turnaround timelines and critical paths are depicted in the following graphic:

Figure 3.12 – Typical turnaround times observed in a B 777 [Source: (DLR EU 2008)]

The graphic above shows the turnaround times observed for a medium/long haul aircraft, the

Boeing 777 – 300 ER. This is in line with the common turnaround times observed for legacy

carriers, which is around 60-75 minutes. As can be seen, this is in contrast to that of a low cost

airline which manages to do turnarounds in 20-30 minutes, even in the busiest of times. The

turnaround timeline and the critical path usually adopted are as depicted below. The graphic

below displays the turnaround time observed for a common short haul aircraft, the Boeing 737 –

900. One important thing to notice however is the inclusion of fuelling in the turnaround timeline.

It is usual for low cost airlines which are short haul to adopt the tinkering technique which will

reduce the need to refuel after every flight. Thus, the typical turnaround times observed are in

the range of 25-30 minutes, as can be elucidated from the graphic below.

Figure 3.13 – Typical turnaround times observed in a B 737 [Source:(DLR EU 2008)]

Thus, some of the main reasons of the low cost airlines achieving the said shorter turnaround

times are identified and are as given below:

Single fleet, so personnel on the job are very well trained.

No in-flight catering, which reduces the time to load and unload food.

35

Minimal or no cargo loading/ unloading

No refuelling done after every flight

Boarding and de - boarding through both doors or alternating processes through each

doors.

Close proximity of gates to the aircraft

High employee morale to produce efficient results

36

4. IMPORTANCE PERFORMANCE ANALYSIS

4.1 INTRODUCTION

The Importance Performance Analysis (IPA) is a well-documented business research technique

developed by (Martilla & James 1977). It is a method to evaluate the attributes of a product or

service based on measures of importance and performance from the perceptual viewpoint of

the customers. (Chiang 2008)

According to (Bacon 2003)

The importance and performance measures give the management a richer

understanding of customer reactions to a product or service. From the IPA, the

management will not only know which attributes require immediate attention, but also

why they require immediate attention

Importance and Performance differences not only have consequences for the management as

they predict purchase behaviour, but also have a direct impact on repurchase intentions as they

aim to provide an asymmetric impact of negative and positive attribute level performance on

overall satisfaction as well.(Mittal et al. 1998) In today’s highly competitive world, high quality

and customer satisfaction are achieved only when the firm’s performance exceeds what the

customers expect from them.(Oliver 1997) The IPA is valuable in helping the service providers

to assess the quality of their efforts in satisfying the needs of the customers. (Chiang 2008)

Thus, there is always room for improvement in every sphere regardless of the conclusions that

the IPA analysis gives.

The IPA follows a systematic five-step approach as follows: (1) Identification of product/service

attributes; (2) Development of the data collection instrument; (3) Data collection; (4) Tabulation

of the Results; and (5) Interpretation of results. (Chiang 2008)

The list of attributes was first generated by a thorough review of existing literature and past

researches relevant to the particular industry being studied. A questionnaire survey with a

selection of users of this service, (in this case, the passengers flying in airlines with special

reference to low cost airlines) were then conducted in order to arrive at a more accurate list of

service factors, which played an important role in defining the quality inside an airport terminal.

According to (Chiang 2008),

The importance and performance of the attributes can be interpreted by examining which

quadrants each of these attributes fall into on the grid. The analyses regardless of the

positioning of the gridlines are similar.

Quadrant A: Attributes that fall into this quadrant are deemed important to the

customers. However, the service provider falls short of customers’ expectations

with regards to the provision of these product or service attributes. Negative

performance on an attribute has a greater impact than a positive performance on

37

that same attribute. (Mittal et al. 1998) Hence, extra attention has to be focused on

these attributes to rise.

Quadrant B: Attributes falling within this quadrant are of importance to the

customers, and in this case, the service provider has at least achieved an

acceptable level of satisfaction. Possible courses of action include exploring the

possibilities to further delight the customers or at least to maintain status quo.

Quadrant C: Customers are generally unsatisfied with the performance of the

product or service attributes that fall within this quadrant. Fortunately for the service

provider, customers also place little emphasis on these attributes. In this instance, it

is less of a concern but the service provider would do well to improve on the

performance of the attributes nonetheless.

Quadrant D: Services providers can be said to be over-providing for customers in

terms of the attributes that falls into this quadrant. Customers are satisfied with the

performance of these attributes but do not place great emphasis on them. The

service provider may see benefits in continuing to maintain their level of

performance although in some cases they may see a need to de-emphasize some

of their efforts.

Table 4-1 – Demographic information (IPA)

Response % Response Count

ResidenceEurope 48.4 75

Asia 26.7 41

America (North and South) 17.6 27

Africa 1.4 2

Oceania 5.9 9

GenderMale 67.4 104

Female 32.6 50

AgeLess than 20 4.1 6

20 - 29 44.8 69

30 - 39 26.2 40

40 - 49 10.0 15

More than 50 14.9 23

Flying FrequencyOnce every 2 weeks 8.6 13

Once a month 11.3 17

Once every 2 - 3 months 29.9 46

Once every 6 months 27.6 43

Once a year 22.6 35

Trip PurposeLeisure 35.3 54

Work 33.5 52

Study 9.5 15

Friends & Family 21.7 33

Experience f lying low cost airlineYes 80.8 124

No 19.2 30

Sa mp le s ize = 154

VARIABLE

38

4.2 PASSENGER QUESTIONNAIRE SURVEY

The crux of the methodology adopted for this dissertation involves the passenger questionnaire

survey. The survey was aimed at concluding on the passenger’s opinions on the various service

attributes listed – specifically on their importance and performance, which shall aid in defining

the service quality delivered in an airport terminal. The target group for the survey involved all

passengers who used air as a mode of transportation with special reference to low cost

passengers.

It was felt that since the dissertation would be addressing on the need or not to shift the low cost

carriers from their present terminal (secondary airport/ terminals and low cost terminals) into the

main airport terminals, the target group was made specific to obtain results which align with the

research objective. 12 service factors were adopted for the course of this dissertation after

referring into various literatures which addressed similar issues of service quality in an airport.

Some of the references used for the dissertation were (Park 1994), (Yeung et al. 2012), (Magri

& Alves 2005) and (Australian Competition & Consumer Commission 2004) .

The survey was taken in the month of October over the online survey platform, Survey Monkey.

Respondents were supplied with the links to the survey and were made to answer it and submit

it online. Since this was an online survey and not a personal level survey, there were large

amounts of non – response. Non – response is common because the surveys were not

conducted at a personal level, which would have taken more time than the current procedure.

Thus, paucity of time was a major constraint in the decisions regarding the conducting of the

passenger questionnaire survey. The survey was hosted online for a period of 1 month from the

2nd

week of October to the 1st week of November.

Apart from survey monkey, mails were sent to prospective respondents and the survey was also

hosted on social media (LinkedIn, Twitter, Facebook etc) The survey yielded 217 responses out

of which 63 were ineligible because of incomplete responses and patterning in the way the

respondents answered the survey. In the end, 154 responses were taken to be valid and thus,

the sample size used for the present dissertation is 154. Table above gives a detailed

description on the demographical aspects of the passenger questionnaire survey.

4.3 ADEQUACY OF THE SAMPLE SIZE

A common goal of a survey research is to collect data which represents the population. The

information gathered from the survey serves as the main source for the researcher to infer his

views over a population.(Bartlett et al. 2001) Here is where the sampling size question comes

into effect.

According to (Israel 1992)

39

The answer to this question is influenced by a number of factors, including the purpose

of the study, population size, the risk of selecting a “bad” sample, and the allowable

sampling error.

(Wunsch D 1986) stated that disregard for sampling error when determining sample size, and

disregard for response and nonresponse bias two of the most consistent flaws included.

4.3.1 SAMPLE SIZE CRITERIA

There have been many interpretations on this regard by several authors.

According to (George Miaoulis & Michener 1976)

In addition to the purpose of the study and population size, three criteria usually will

need to be specified to determine the appropriate sample size: the level of precision, the

level of confidence or risk, and the degree of variability in the attributes being measured.

(Israel 1992) treats the three main criteria for determining sample size as follows:

THE LEVEL OF PRECISION

The level of precision, sometimes called sampling error, is the range in which the true

value of the population is estimated to be. This range is often expressed in percentage

points (e.g., ±5 percent)

THE CONFIDENCE LEVEL

The confidence or risk level is based on ideas encompassed under the Central Limit

Theorem. The key idea encompassed in the Central Limit Theorem is that when a

population is repeatedly sampled, the average value of the attribute obtained by those

samples is equal to the true population value. Furthermore, the values obtained by

these samples are distributed normally about the true value, with some samples having

a higher value and some obtaining a lower score than the true population value. In a

normal distribution, approximately 95% of the sample values are within two standard

deviations of the true population value (e.g., mean).

DEGREE OF VARIABILITY

The third criterion, the degree of variability in the attributes being measured, refers to

the distribution of attributes in the population. The more heterogeneous a population,

the larger the sample size required to obtain a given level of precision. The lesser

variable (more homogeneous) a population, the smaller is the sample size.

40

4.3.2 STRATEGIES FOR DETERMINING SAMPLE SIZE

There are four possible strategies for determining sample sizes (Israel 1992):

I. Using a census for small populations: If the population is small, it is advised to use

the entire population as the sample. Costs are bound to be high, but the results are

bound to be more accurate.

II. Using a sample size of a similar study: Consulting similar studies that were

conducted and using the sample sizes prescribed in those studies or in the literature,

prescribed for the same subject. More chances of being error prone if not checked in

detail.

III. Using published tables: Relying on published tables which are set for particular

criteria. The information given on the tables are prescribed for the selected criteria and

if the survey research involves some other peculiar considerations, this method cannot

be resorted to.

IV. Using formulas to calculate a sample size: Although tables provide a good indication

in calculating the sample size, for a different level of precision desired, formulas may

have to be resorted to.

This study involves the determination of sample size for a research survey whose population

size is large. The population which was being looked at during the course of this study included

all the passengers who are flying in the various airlines around the world, with special reference

to those flying with low cost companies. This is indeed a huge number and thus the literature

involves only those mathematical formulations which taken into account, large populations.

(Cochran 1963) developed an equation to yield a representative sample for proportions. It can

be illustrated as below:

where no is the sample size, Z2 is the abscissa of the normal curve that cuts an area α at the

tails, e is the desired level of precision, p is the estimated proportion of an attribute that is

present in the population and q is 1-p.

If the population is small then the sample size can be reduced slightly. This is because a given

sample size provides proportionately more information for a small population than for a large

population.

( )

where n is the sample size and N is the population size. As can be seen, the above correction

formula significantly reduces the necessary sample size for small sizes.

41

(Yamane 1967) provides a simplified formula to calculate sample sizes. A 95% confidence level

and P = .5 are assumed. The use of the level of maximum variability (P=.5) in the calculation of

the sample size for the proportion generally will produce a more conservative sample size (i.e.,

a larger one) than will be calculated by the sample size of the mean.

( )

where n is the sample size, N is the population size, and e is the level of precision.

For the course of this research work and the dissertation, the formula employed for determining

the sample size is that one proposed by (Yamane 1967)

( )

4.3.3 SAMPLE SIZE ESTIMATION

For the study under consideration, the adequacy of the sample size is determined as follows:

Confidence Interval = 95%

Degree of variability = 0.5

The most important factor to be taken into consideration here is the population size, N. The

population size for the current study should involve all the passengers who are using airlines to

fly with special emphasis on low cost airlines. This number is estimated to be a very huge

number going into 10s of millions of passengers.

According to (ANA Aeroportos de Portugal 2011b), the five main low cost carriers operating

from Faro Airport are Ryanair (1.52 million passengers in 2011), easyJet (1.1 million), Monarch

(537,000), Transavia (380,000) and Jet2.com (303,000).

Thus, the total representative number of passengers flying in low cost airlines is taken to be

around 40 million per month, on a global scale. As for the purpose of this study, the population

size is assumed to be 100,000 as any number above 100,000 would give more or less the same

extent of the sample size required to be used for a research study. Therefore,

Population Size, N = 100,000

A next criterion to be established is the required level of precision, e. The usual values of the

level of precision range from 0.05 to 0.1 depend on the study concerned. For a research study

at the academic level, lower values of precision are generally tolerable, if it is difficult to obtain

higher levels of precision. (Bartlett et al. 2001) This study takes the value of the level of

precision to be 0.09, which is found to be within the specified ranges. Thus,

Level of precision, e = 0.09

According to the formula designed by (Yamane 1967), the optimal number of samples required

for the study will be

( )

42

( )

The current survey conducted as part of the study for the dissertation obtained 154 responses,

which is more than 123, as was suggested by the formulation for obtaining the optimum sample

size.

4.3.4 OTHER SAMPLE SIZE DETERMINATION CONSIDERATIONS

Often, there are a few other considerations that are to be taken in mind when sample size

determination techniques are employed. A few of them are listed below:

1. The sample size formulas provide the number of responses that need to be obtained.

Many researchers commonly add 40% for nonresponse bias. Thus, the number of

mailed surveys or planned interviews can be substantially larger than the number

required for a desired level of confidence and precision.(Israel 1992)

Employing that into the current study, it would mean that there will be an increase of

40% to the number of responses obtained, which will increase the sample size to 216 (

= 154 + 0.4*154), which is seen to be well above the number of responses determined

through the sample size determination techniques.

2. Budget, time and other constraints. Often, the researcher is faced with various

constraints that may force them to use inadequate sample sizes because of practical

versus statistical reasons. These constraints may include budget, time, personnel, and

other resource limitations. In these cases, researchers should report both the

appropriate sample sizes along with the sample sizes actually used in the study, the

reasons for using inadequate sample sizes, and a discussion of the effect the

inadequate sample sizes may have on the results of the study. (Bartlett et al. 2001)

4.4 FINDINGS

4.4.1 IMPORTANCE VERSUS PERFORMANCE OF ATTRIBUTES

A total of 12 attributes were chosen to be included in the study. The study involved sending out

questionnaires to passengers who have been flying both low cost and legacy carriers. The

objective of the questionnaire was to determine the aspects perceived by the passengers as

relevant for determining the quality of an airport terminal. The Importance Performance Analysis

was performed on the 12 service factors and the following observations were obtained.

The first figment of analysis was to see how the passengers or the customers of the airlines and

airports rated their experiences with respect to the factors listed for determining the quality of an

airport terminal. Figure below will aid in making this clearer. The Importance analysis of the

factors taken into consideration for the course of this study shows the following results

The Importance Analysis threw open user perspectives on the service factors that are deemed

to be more important than some others. In the most important criteria, Availability of transport

43

modes for commute from the airport terminal was deemed to be topmost in the pecking order.

87% of the total responses in Availability of transport modes for commute from the airport

terminal fell into the categories most important and important, suggesting how much further

commute played a role in the minds of an airline passenger. Most people travelling in airlines,

both low cost carriers and legacy carriers had shown a trend of continuing their journeys

onward, from the airport terminal and this required the availability of transport modes from the

terminal. This has been well realized and is reflected on the findings conducted. Another factor

which had a lot of importance given to by the passengers was the Time taken to do check – in.

In retrospect, it turned out to be the single most important factor receiving 88% responses in the

categories of Most Important and Important.

Figure 4.1 – Importance Analysis

Similar analysis on the other factors reveals that the factor Accessibility to retail and

concessions was thought to have least importance in the minds of a passenger inside an airport

terminal with only 9.4% of the survey respondents treating them to be Most Important and 64%

of people deeming it to be in the categories of Slightly Important and Least Important.

Availability of trolleys was another factor which the passengers surveyed during the course of

this work felt was not such an important factor. This is reinforced with the almost 48% featuring

in the categories Slightly Important and Least Important. Other factors can be analyzed by

similar way.

The graphic below explains the analysis done on the performance of these service factors. And

the following observations are observed.

The Performance Analysis threw open interesting perspectives on how in the opinion of the

passengers travelling in airlines (with special reference to low cost airlines) did the service

factors perform in the airport terminals. Frequent flyers were told to quote their most common

experiences. As can be seen from the graphic above, not many of the respondents were happy

44

with the services meted out to them. The top three High Performing factors determined on the

survey conducted on a global survey put Visual Impact of the terminal (cleanliness and design),

Availability of food and beverages and Seat Availability inside the terminal to at the top two

spots polling 24.5%, 22.3% and 22.3% respectively. Thermal Comfort (Temperature Control)

and Visual Impact of the terminal (cleanliness and design) are the factors which most

passengers surveyed were satisfied as is evidenced by the high percentages of votes falling

into the categories of High Performance and Medium Performance (81% and 80% respectively).

Figure 4.2 – Performance Analysis

This could also indicate that these two factors did not play a great role in defining quality inside

the airport terminal from a passenger point of view. All the airport terminals (low cost terminals

as well as the main airport terminals) served the purpose of transit, in concordance with the

money spent on the same. The service factor receiving the worst performance ratings was

determined to be the Level of Congestion, which polled almost 51% votes in the Bad

Performance and Low Performance categories. In retrospect, this was quite expected since the

respondents surveyed were low cost passengers. The low cost airports or terminals have

always been minimal facilities aimed at cutting costs. Thus, the levels of service experienced at

these terminals are always bound to be low in comparison with their counterparts in the main

airports. Other factors can be analyzed by similar way.

The graphical representations which follow will give more insight into the results obtained

through the Importance Performance Analysis by introducing the mean scores received for each

factor during the course of this survey.

The study gave interesting results as can be seen from the observations on the table above. On

the one hand, it gave an insight into the fact that the levels of importance were considered high

only in the case of 3 factors (Availability of transport modes for commute from the terminal),

45

(Time taken to do check – in) and (Level of congestion). This study emphasised most

importance of transport modes from the airport terminal, for further travels of the passengers.

Passengers gave greater importance at having choices of commute from the airport terminal to

the destinations of their choice rather than being forced to rely on a single mode of transport as

can be the case when the airport for the low cost airline is located away from the city. The time

taken to check – in was second in priority which gave insights into the times spent by

passengers in completing the check – in process.

Table 4-2 – Mean scores of the Importance Analysis

Not many of the passengers were happy in spending time in the long queues at the check in

counter. This could mean that they were looking to save time at the check – in process to

ensure they had enough time to go through the retail and concessions most airports terminals

had. For those terminals, that lacked this facility, this result throws an insight on what the

passenger would ideally prefer, which when worked out well by the airport operators, could

increase in substantial increase in revenue for the airport. The third aspect that got a lot of

importance from the eyes of the passenger was on the level of congestion experienced. A

higher degree of importance simply means that the passenger is not happy with the idea of

increasingly congested terminals.

Imp o rta nce

3,33

3,27

3,06

2,84

2,81

2,79

2,78

2,78

2,59

2,53

2,42

2,23

Number of working check - in counters

Thermal Comfort (Temperature control)

Visual impact of the terminal (cleanliness and design)

Availability of trolleys

Availability of choices in food or retail

Walking distances inside the terminal

Seat Availability inside the terminal

Time taken to do check - in

Level of congestion (crowding)

Accessibility to retail and concessions

Availability of transport modes for commute from the terminal

Accessibility to food and beverages

Se rv ice Attrib ute

46

Figure 4.3 – Distribution of the mean scores of the Importance Analysis

Table 4-3 – Mean scores of the Performance Analysis

This could mean two things: One being that the passengers were expecting more roomy

terminals instead of the small and often congested designs of the low cot secondary airports.

The second being that they did not favour the main terminals which are often having traffic at all

times, apart from the peak hours. The least important was the availability of retails and

concession, an obvious indicator that the long check in queues could be hampering their

chances at spending on an airport. This is further enhanced by the non – presence of enough

retail and concession options while flying from a low cost terminal.

Pe rfo rma nce

2,99

2,99

2,90

2,86

2,84

2,83

2,80

2,79

2,79

2,60

2,57

2,47Level of congestion (crowding)

Visual impact of the terminal (cleanliness and design)

Thermal Comfort (Temperature control)

Accessibility to food and beverages

Availability of trolleys

Accessibility to retail and concessions

Seat Availability inside the terminal

Availability of transport modes for commute from the terminal

Number of working check - in counters

Time taken to do check - in

Walking distances inside the terminal

Availability of choices in food or retail

Se rv ice Attrib ute

47

Figure 4.4 – Distribution of the mean scores of the Performance Analysis

As for the main inferences from the performance analysis, the worst performing service factor is

the congestion scene at the airport terminal. Passengers found the existing airport terminal

designs to be failing at countering the congestion that was experienced in air travel. And this

has been reflected on a global scale as the respondents included people from all parts of the

world. The next indicator of worse performance came from the Availability of choices in food

and retail. This was bound to arise considering the fact that the research study focussed on

passengers travelling on low cost carriers using low cost terminals and/ or secondary airports.

These kinds of small compact terminals, which are usually managed by low cost airlines, usually

do not possess adequate choices that passengers might be looking into, from the aspect of food

and beverages as well as on the retail and concession. As for the most performing service

factors, passengers felt that attributes such as Thermal Comfort and Visual Impact of the

terminals did not hinder their impressions on the quality of an airport terminal so long as they

served the purpose.

Progressing from the general observations, the attribute importance means were matched with

the performance means for the corresponding attributes to form coordinates for each of the

attributes as shown in Table 3. These coordinates were plotted into the 2-dimensional IPA grid

with ‘Performance’ on the X-axis and ‘Importance’ on the Y-axis.

Recommendations for IPA would be carried out in order of relative importance. In addition,

special attention was given to extreme outlying points since they represented the greatest

disparity between importance and performance and thus might be indications of customer

dissatisfactions.

Table 4-4 – Mean scores of the Importance and Performance Analysis

48

4.5 INTERPRETATION OF THE RESULTS

As mentioned earlier, the results of the Importance – Performance Analysis can be analysed in

three ways. They are as follows:

I. IPA (Scale – Centred Approach)

II. IPA (Data Centred Approach)

III. IPA (Median – Centred Approach)

There has always been a discussion on which of the three IPA approaches yielded better

results. And it is felt that a combined use is found to give a better understanding of the service

factors. For the purpose of clarity, this study shall be approaching the results based on all the

three methodologies instead of having just a single approach for the analysis.

4.5.1 IPA (SCALE-CENTERED APPROACH)

Plotting each of the attributes into the IPA grid using the coordinates, the initial IPA grid was

formed and depicted below in Figure 4.5. For this grid, scale mean was used as the importance

(Y) and performance (X) axes intersection point in accordance with the original IPA framework

developed by Martilla and James (1977).

4.5.2 IPA (DATA-CENTERED APPROACH)

The second IPA grid was formed using data means as the intersection point of the X

(performance) and Y (importance) axes. Data means used were the average of the mean

scores of attribute importance and attribute performance. From the findings presented in Figure

Imp o rta nce Pe rfo rma nce

13,33 2,83

23,27 2,79

33,06 2,47

42,84 2,79

52,81 2,60

62,79 2,90

72,78 2,99

82,78 2,80

92,59 2,99

102,53 2,57

112,42 2,86

122,23 2,84

Thermal Comfort (Temperature control)

Seat Availability inside the terminal

Visual impact of the terminal (cleanliness and design)

Availability of choices in food or retail

Availability of trolleys

Accessibility to retail and concessions

Availability of transport modes for commute from the terminal

Time taken to do check - in

Level of congestion (crowding)

Number of working check - in counters

Walking distances inside the terminal

Accessibility to food and beverages

Se rv ice Fa cto r

49

4.6, it is evident that the use of the data-centered approach will yield more distinctive results as

compared to the scale-centered approach.

Figure 4.5 – IPA Scale Centred Approach

Figure 4.6 – IPA Data Centred Approach

Figure 4.7 – IPA Median Centred Approach

50

4.5.3 IPA (MEDIAN – CENTRED APPROACH)

The third IPA grid was formed using the median value of the mean score of attribute importance

and performance respectively as the intersection- point of the X (performance) and Y

(importance) axes. The results are presented in Figure 4.7.

4.5.4 ATTRIBURE DISTRIBUTION BASED ON THE DIFFERENT APPROACHES

Looking at the IPA grid and the interpretations thrown up by it, there are some important

conclusions to be made. The first discussion on this aspect would be the impact of having

service factors distributed across various quadrants in view of the differing approaches

employed. The transition of the service factors from one quadrant to the other may or may not

have an impact on the strategy to be employed and this will be explored in this section.

Take for instance, the transition of a service factor from Quadrant B (Keep up the Good Work)

to Quadrant A (Concentrate Here). The focus towards the service factor has changed

considerably from the point where the efforts are said to be good enough to ensure better

performance to that where there is a need to be concentrating on this aspect to achieve better

results. Service Factor 2 (Time taken to do check – in) and Service factor 1 (Availability of

transport modes for commute from the terminal) swing in between Quadrants A and B during

the course of the interpretation of the results using the three approaches.

Similar swing from Quadrant B (Keep up the Good Work) to Quadrant C (Low Priority) would

create a shift in focus towards a particular service factor as it would mean a move towards non

prioritization of the service factor from a state of being good enough to ensure sustainable

performance. Service Factor 4 (Number of working check – in counters) swings from Quadrant

B to Quadrant C, but the impact of the said swing is proved to be minimal comparing the swing

from Quadrant A to Quadrant B or that from Quadrant C (Low Priority) to Quadrant D (Possible

Overkill).

Another of the quadrant swings we need to pay attention to is the possibility of a swing from

Quadrant D (Possible Overkill) to Quadrant C (Keep up the Good Work) where the emphasis

towards the service factor changes from being that of a warning for over use to a state where it

is felt that enough is being done to ensure the good quality. Service Factor 11 (Availability of

trolleys), Service Factor 12 (Accessibility to retail and concessions) and Service Factor 8

(Thermal Comfort) swing from Quadrant D to Quadrant C, but the impact of the said swing is

proved to be minimal comparing the swing from Quadrant A to Quadrant B or that from

Quadrant A (Concentrate Here) to Quadrant D (Possible Overkill).

Perhaps, the most vital of the swing in quadrants would have been the possibility of a swing

from Quadrant A (Concentrate Here) to Quadrant D (Possible Overkill) – a change from a state

of requiring emphasis to a state of over emphasizing the service factor. As is common, such

changes are not bound to occur in an IPA Analysis done with a good sample population. And

51

the same has been repeated here with no swing reported from Quadrant A to Quadrant D, an

obvious good indicator to the sample and the survey taken up during the course of this study.

The table below shows this trend of distribution of the service factors in a clearer manner.

Table 4-5 – Quadrant wise distribution of service attributes (Importance Performance Analysis)

Quadrant Attributes Importance Performance Aseesement Model

A (Concentrate Here)

3, 4 Scale - Centered Approach

2,3,4 Data - Centered Approach

2,3,4,7 Median - Centered Approach

B (Keep Up the Good Work)

1,2,5,6,7,8 Scale - Centered Approach

1,6,5 Data - Centered Approach

1, 5 Median - Centered Approach

C (Low Priority)

10 Scale - Centered Approach

10 Data - Centered Approach

7, 10 Median - Centered Approach

D (Possible Overkill)

9,11,12 Scale - Centered Approach

7,8,9,11,12 Data - Centered Approach

8,9,11,12 Median - Centered Approach

4.6 SENSITIVITY ANALYSIS

Sensitivity Analysis was performed for checking the impact of the level of precision on the

sample size. Ranges for level of precision were tabulated from 3% to 15% and the

corresponding sample sizes were determined using the formula proposed by (Yamane 1967)

which is again illustrated as follows:

( )

Table 4-6 – Sensitivity Analysis on the level of precision

Sensitivity Analysis on the Level of Precision

3% 5% 7% 9% 11% 13% 15%

Sample Size n 1099 398 204 123 83 59 44

52

Figure 4.8 – Results of the Sensitivity Analysis

The results of the sensitivity analysis carried out are as given above. As can be seen, the more

accurate the level of precision, the greater the sample size. When the level of precision

decreases, it is supplemented by a corresponding decrease in sample size. The level of

precision taken for the course of this study, as indicated earlier is e = 0.09.

40120200280360440520600680760840920

10001080

3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15%

Sensitivity Analysis on the Level of Precision

Sensitivity Analysis on the Level of Precision

52

5. ESTABLISHING QUALITY CRITERIA FOR AIRPORT TERMINALS

5.1 INTRODUCTION

In order to ascertain the need for operating both low cost and legacy carriers from the same

main airport terminal, this study looks into the aspect of the establishment of criteria for defining

quality in the airport terminals. It is widely understood that the passengers travelling low cost

airlines and the passengers travelling in the legacy carriers have different views on quality and

level of service being provided for them at the airports. It is believed that there is a need to

define quality, both from a customer’s perspective as well as from the producer’s perspective.

In order to establish quality criteria, there first needs to be a consensus on the definition of

quality. Many works have been published which have tried to define Quality, but the current

study would pertain to take definitions, as being of critical importance to managing quality.

(Juran 2000) gives two definitions of Quality as follows:

Quality means those features of products which meet customer needs and thereby provide

customer satisfaction.

and

Quality means freedom from deficiencies – freedom from errors that require doing the work

again or that results in field failures, customer dissatisfaction.

Predictably, this definition of quality has evolved over the course of time and has distanced itself

from the definitions which earlier related to the adherence to specification, which implicitly

assumed full knowledge of the needs of the customers and its exact translation into product and

service specifications. (Macario 2011)

The broadening of the quality horizon was perpetuated by a more realistic belief that the

customers were not as predictable as has been thought during the conformance to specification

period. In its application to public transport and urban transport, it was further determined that

the little elements of customer dissatisfaction could be attributed to the strategic and tactical

levels of decision making which brought about the existence of a quality gap at the initiation

stage. (Macario 2011)

5.2 APPROACHES THAT LOOK INTO ESTABLISHING QUALITY CRITERIA

A brief attempt is made here to look into the several approaches that look into the aspect of

establishing quality criteria.

5.2.1 IMPORTANCE PERFORMANCE ANALYSIS (IPA)

Designed by (Martilla & James 1977)

53

Used to measure customer satisfaction levels in a variety of segments like education,

travel and tourism, healthcare marketing, campus foods etc.

Transport perspective: Used extensively by airline companies to assess customer

satisfaction, by airport terminals to understand the levels of quality desired by

passengers (current dissertation).

Basic premise: Disparities between the Importance and Performance of a particular

attribute is the sign of customer dissatisfaction.

Methodology: Consists of taking mean scores from a questionnaire asking for ratings

of a particular attribute, both for Importance and Performance and subsequently placing

them in the IPA grid to understand its impact on the choices of the customer and in

providing overall customer satisfaction.

Figure 5.1 – Importance Performance Analysis

Results Interpretation: Represented on three approaches to get the maximum

coverage into the results obtained – Scale Centred, Data Centred and Median Centred.

Gives a clear picture on the attributes that need to be concentrated upon, on the

attributes that are performing fine, the attributes that don’t need to be so prioritized and

those which are possibly being overused.

5.2.2 SERVQUAL

Designed by (Parasuraman et al. 1985)

Provides a technology for measuring and managing service quality (SQ).

54

Used extensively as a topic for research because of its apparent relationship to costs in

a variety of segments like hospitality, higher education, accounting, recreational

services, tyre retailing, banking etc.

Transport Perspective: Research done by Gilbert and Wong in documenting links

between customer expectations and service quality.

Basic premise: Customer’s assessment of SQ is paramount and this assessment is

conceptualized as a gap between what the customer expects by way of SQ and their

evaluations of the performance of a particular service provider based on ten

components of SQ defined in 1988, later modified.

Methodology: Consists of taking mean scores from a questionnaire asking for ratings

of a particular attribute, both for Expectations and Performance and subsequently

testing them for significant differences across the various segments using ANOVA or

something similar.

5.2.3 SERVICE QUALITY INDEX (SQI)

Promoted by David Hensher in his work on developing an SQI in the promotion of bus

contracts (Hensher et al. 2003)

Transport Perspective: Used in evaluating service quality proposed during the delivery

of public transport contracts.

Basic Premise: To develop an SQI - this can be incorporated into a performance

assessment regime that measures the service effectiveness meaningfully from a

passenger perspective.

Methodology: Developing an SQI based on the response obtained in the surveys. This

is followed by setting up importance weights, which will be identified by the setting up of

the Multinomial Logit (MNL) models. This is then followed up by the benchmarking

service quality and finally ranking them in the order of the results obtained.

Results Interpretation: From an operator’s perspective, it gives an idea into what the

customers’ expectations are, with reference to any service.

5.2.4 THE 4 Q’s METHOD

Designed by the QUATTRO team (EC, OGM, 1998a, p99) during the development of a

European standard configuring of quality factors in an urban mobility system.

Basic Premise: The relation between the 4 Qs is of utmost importance in

understanding the needs and adjusting the service to both the stated and revealed

preferences of the customer.

55

Figure 5.2 – The 4 Q’s method

Transport Perspective: To develop a service quality based model for application in

urban mobility systems.

Methodology: Assessing the 4 Q’s and later measuring the quality gaps that exist

between them, as a means to understand the deficiencies, re-assessing the customer

needs and finally resetting service quality targets.

Results Interpretation: From both the customer as well as the service provider’s

perspective, it gives an overall idea of the quality gaps (deficiencies) – giving an overall

perspective into defining service quality levels.

5.3 CHOICE OF METHODLOGY

The previous section gave an overview of the approaches that look into the aspect of

establishing quality criteria for defining service quality levels in transportation. More detailed

insights into the approaches concluded that the current study will adopt the 4 Q’s method for

establishing quality criteria. The reasons for the choice of this methodology are as follows:

I. The 4 Q’s method gives an overall outlook into the aspect of defining service quality by

looking at both the customer and service provider perspective, thus is considered to be

more stable than the other approaches.

II. The other approaches described here have already been utilized in abundance in the

field of airlines/ airports. Adopting the 4 Q’s to airlines/ airports from the initial urban

mobility systems intervention is considered to be a more novel approach in expanding

the horizon of knowledge base in the field.

5.4 THE 4 Q’s METHOD

Within the work developed in the research project QUATTRO (EC, OGM, 1998a, p. 99), also

reflected in the norm issued by the European Standardization Committee (TC320/WG5/13816-

56

2002EN), the definition of quality has been decoupled into four main concepts that are now

being adapted to the system level. They are as given under:

Expected Quality (QE): This is the level of quality which implicitly or explicitly is

required by the customer. The level of quality is understood as a composition of a

number of criteria. Qualitative analysis on consumer profiles and preferences can

assess to the contributions of these criteria.

Targeted Quality (QT): This is the level of quality which the service provider or

manager of the system is aiming to provide to the customers as a consequence of his

understanding of the customer expectations and of the capabilities of the productive

side of the system. Targeted Quality must be set in an objective way and decoupled

through the different services available within the system.

Delivered Quality (QD): This is the level of quality effectively achieved in the provision

of services by the different components of the system, although not necessarily a

coincident image of what is visible by the customers. Delivered quality must be

measured also from the customer viewpoint and not only from the supply side

perspective meaning that it should be assessed also against the client’s criteria.

Perceived Quality (QP): This is the level of quality perceived by the user – customer.

This is influenced by several factors, such as their personal experience of the service,

or from associated or similar services, the information received about the service, from

the provider or other sources, the non-service elements.

The figure below described the decoupled version of the quality definition. As can be seen

below, the four main concepts which have been defined above have been segregated into the

customer and the producer perspectives.

Figure 5.3 – Decoupled version of the quality definition (The 4 Q’s method)

57

The operationalization of these concepts can vary from scenario to scenario, or even between

cases inside a scenario. (Macario 2011) The difference between Expected Quality (QE) and

Perceived Quality (QP) bring about an indication into the Measure of Satisfaction for the

customer from the service offered to him. As from the producer/ service provider’s perspective,

the difference between the Targeted quality (QT) and the Delivered Quality (QD) give an

indication of the Measure of Performance.

The relation between these four concepts is of utmost importance to understand and adjust the

service according to the stated and revealed preferences of the customers. This makes the

whole spectrum much more complex with the induction of several agents and their interactions

which lead to the introduction of the concept of quality gaps, which can be explained with the

help of the figure below.

Figure 5.4 – Quality gaps in definition of service quality

As said above, the induction of the agents and the various inter – agent processes lead to the

introduction of quality gaps into the system. The difference between the expected quality (QE)

and targeted quality (QT) reveals the gaps in quality between what the customer wants and what

the customer thinks, he has received. This gap is called the “Satisfaction Gap”. The reasons for

these gaps are manifold – ranging from ineffectiveness of the mechanisms for observation to

the errors at the strategic or tactical level of decision making.

Gaps between targeted quality (QT) and delivered quality (QD) can be manifold, related to the

deficiencies in the service provider/ producer’s perspective. An underperformance related to the

delivery of services is one of the prime reasons for the occurrence of a “Performance Gap”. This

58

gap could also be seen as a measure of the effectiveness of the service provider/ producer in

achieving the targets set up.

Perceived Quality is often found to vastly differ from the delivered quality (QD). Gaps between

the delivered quality (QD) and perceived quality (QP) can be as a reason of the customers

accumulated knowledge of the service, through constant use and the subsequent failure of the

service to live up to his expectation in the mind.

(Macario 2011) during the configuration of quality factors in urban mobility systems says the

following:

The first main step is the explicit and implicit analyze of customers’ expectations, that is observe

and understand current state of needs and future trends, with adequate instruments such as

data collection in mobility patterns, attitudinal surveys, key informant interviews, focus groups,

participant observer techniques etc. (Cliffton &Handy, 2001, pp 4 – 10). Next there is the need

to assure adequate frameworks for the provision of services and, considering those

expectations, set minimum performance thresholds for all the components of the mobility

system. After this performance, assessment of the several services should be done, considering

adequate deployment of the quality criteria to all components and minimization of the

performance gaps. Finally, the last step consists in the assessment of customer satisfaction,

analyze of results and consequent readjust of the quality targets.

5.5 ANALYSIS OF CUSTOMER NEEDS AND FUTURE TRENDS

In order to understand the needs of the customers, measure their expectations and also keep

an eye on the possible future trends, surveys need to be done. Surveys on the stakeholders of

the proposed service, in this dissertation, the users of the airlines with special reference to low

cost airlines, aid in giving an unbiased understanding into the needs of the customer. Not just

that, an effective methodology of survey, when adopted can give adequate feedback into the

trends that the customers look forward to obtain from the use of the service.

For the purpose of this study, this shall be satisfied by the Importance – Performance Analysis,

applied earlier in order to gauge the importance and the subsequent performance of the service

attributes that define quality in an airport terminal. The mean scores obtained for each service

attribute on the Importance section give the expectations of the customer from that particular

service attribute. In this quality criteria establishment exercise, it fills up the Expected Quality

(QE) component.

The Importance Performance Analysis yielded 154 responses from a global respondent base of

travelers who use airlines with special reference to low cost airlines. This sample, statistically

significant was determined to be ample enough in understanding the needs of the airline

passengers who form the customer component of the quality jargon. On a 4 point scale, the

mean scores for all the service attributes were obtained and are as given below. As can be

59

seen, the study takes into account the assumption that the Expected Quality (QE) proposed in

the configuration of quality factors is synonymous to the Importance criterion in the Importance

Performance Analysis. This is backed up by the fact that most methods that address on service

quality have the same philosophy of assessing the quality based on the phenomenon of

expectations and perceptions, when taking a customers’ perspective.

Table 5-1 – Expected Quality scores

5.6 SETTING UP MINIMUM PERFORMANCE THRESHOLDS

The next step in establishing quality criteria is to establish minimum thresholds of performance

for each of the components of the mobility system. This study shall entail the formation of 4

scaled bases for assessing the quality, called service levels henceforth. Service Level A shall

be of the highest order and Service Level D shall be of the lowest order in the quality

assessment procedure.

The task in the current study involves setting up 4 quality levels for each service attribute, thus

providing a framework for defining the service rendered in an objective manner. The

representation of these quality levels shall begin from defining the most preferred scenario to

the least preferred scenario in that order (A to D).

1. Availability of transport modes for commute from the terminal

Service Level A: Availability of choices in transport modes (public transport, trains

and taxis for instance) for commute from the terminal at all times.

Imp o rta nce

Exp e cte d

Qua lity (QE)

3,33100,0

3,2794,5

3,0675,5

2,8455,5

2,8152,7

2,7950,9

2,7850,0

2,7850,0

2,5932,7

2,5327,3

2,4217,3

2,230,0

Number of working check - in counters

Thermal Comfort (Temperature control)

Visual impact of the terminal (cleanliness and design)

Availability of trolleys

Availability of choices in food or retail

Walking distances inside the terminal

Seat Availability inside the terminal

Time taken to do check - in

Level of congestion (crowding)

Accessibility to retail and concessions

Availability of transport modes for commute from the terminal

Accessibility to food and beverages

Se rv ice Attrib ute

0,00 0,50 1,00 1,50 2,00 2,50 3,00 3,50

60

Service Level B: Availability of choices in transport modes (public transport, trains

and taxis for instance) for commute from the terminal during peak hours, but

availability of atleast one mode at all times other than taxi.

Service Level C: Availability of atleast one transport mode apart from taxi during

peak hours and availability of the taxi during non – peak hours.

Service Level D: Availability of one transport mode (taxi) at all times.

2. Time taken to do check - in

Service Level A: Time taken to do check – in not exceeding 15 minutes.

Service Level B: Time taken to do check – in not exceeding 25 minutes.

Service Level C: Time taken to do check – in exceeding 30 minutes, but less than

40 minutes.

Service Level D: Time taken to do check – in exceeding 40 minutes.

3. Level of Congestion

Service Level A: The best service quality level being the one where the terminal is

capable of handling passenger and airline traffic without much hindrance to the

maintenance of flows and fulfilling spatial requirements at all times including the

peak hours. A Service Level A terminal would resemble the following:

Figure 5.5 – Congestion Level of Service A

Service Level B: The second best service quality level being the one where the

terminal is capable of handling passenger and airline traffic without much hindrance

to the maintenance of flows at all times except the peak hours. At the peak hours,

the terminal experiences little congestion and would resemble the following:

61

Figure 5.6 – Congestion Level of Service B

Service Level C: The next best service quality level being the one where the

terminal is found to be not capable of handling passenger and airline traffic because

of the hindrance to the maintenance of flows at most times including the peak hours.

During the peak hours, the terminal experiences long queues and the situation can

be described by the following:

Figure 5.7 – Congestion Level of Service C

Figure 5.8 – Congestion Level of Service C, Queuing

Service Level D: The least favourable service quality level being the one where the

terminal is found to be not capable of handling passenger and airline traffic because

62

of the hindrance to the maintenance of flows at all times including the peak hours.

During the peak hours, the terminal experiences extremely long queues, delays in

check – in and related activities severely congesting the terminal. This situation can

be as described as shown below:

Figure 5.9 – Congestion Level of Service D

4. Number of working check – in counters

Service Level A: Number of working check – in counters being good enough to

ensure that the total time spent in the check – in process does not exceed 15

minutes.

Service Level B: Number of working check – in counters being good enough to

ensure that the total time spent in the check – in process does not exceed 25

minutes.

Service Level C: Number of working check – in counters being good enough to

ensure that the total time spent in the check – in process lies between 30 and 40

minutes.

Service Level D: Number of working check – in counters at the present moment

resulting in the total time spent in the check – in process exceeding 40 minutes.

5. Walking distances inside the terminal

Service Level A: Walking distances inside the terminal not exceeding 300 metres (5

minutes of walking)

Service Level B: Walking distances inside the terminal not exceeding 500 metres

(10 minutes of walking)

Service Level C: Walking distances inside the terminal not exceeding 800 metres

(15 minutes of walking)

Service Level D: Walking distances inside the terminal exceeding 800 m. ( 15 - 20

minutes of walking)

63

6. Accessibility to food and beverages

Service Level A: Accessibility to food and beverages at a walking distance of 100

metres from any point inside the airport terminal.

Service Level B: Accessibility to food and beverages at a walking distance of 200

metres from any point inside the airport terminal.

Service Level C: Accessibility to food and beverages at a walking distance of 300

metres from any point inside the airport terminal.

Service Level D: Accessibility to food and beverages at a distance, exceeding 300

metres from any point inside the airport terminal.

7. Thermal Comfort (Temperature control)

Service Level A: Ambient temperature inside the airport terminal not exceeding the

basic human comfort temperature of 23 °C. Winter temperatures adjusted

accordingly.

Service Level B: Ambient temperature inside the airport terminal at 24 °C. Winter

temperatures adjusted accordingly.

Service Level C: Ambient temperature inside the airport terminal at 25 - 26 °C.

Winter temperatures adjusted accordingly.

Service Level D: Ambient temperature inside the airport terminal exceeding 26 °C.

Winter temperatures adjusted accordingly.

8. Seat availability inside the terminal

Service Level A: Seat availability inside the terminal corresponding to a 1:1

relationship, on comparison with the demand inside the terminal.

Service Level B: Seat availability inside the terminal corresponding to a 1:2

relationship, on comparison with the demand inside the terminal.

Service Level C: Seat availability inside the terminal corresponding to a 1:3 – 1:5

relationship, on comparison with the demand inside the terminal.

Service Level D: Seat availability inside the terminal corresponding to more than a

1:5 relationship, on comparison with the demand inside the terminal.

9. Visual Impact of the terminal (cleanliness and design)

Service Level A: Visual Impact of the terminal corresponding to a star rating of 4

and above, as approved by Skytrax.

Service Level A: Visual Impact of the terminal corresponding to a star rating of 3, as

approved by Skytrax.

Service Level A: Visual Impact of the terminal corresponding to a star rating of 2, as

approved by Skytrax.

Service Level D: Visual Impact of the terminal corresponding to a star rating of 1, as

approved by Skytrax.

64

10. Availability of choices in food and retail

Service Level A: Availability of choices in food and retail – with more three or more

alternatives.

Service Level B: Availability of choices in food and retail – with more two

alternatives.

Service Level C: Availability of choices in food and retail – with more one

alternative.

Service Level D: Availability of choices in food and retail – with no alternatives.

11. Availability of trolleys

Service Level A: Availability of trolleys on a 1:1 basis, on comparison with demand.

Service Level A: Availability of trolleys on a 1:2 basis, on comparison with demand.

Service Level A: Availability of trolleys on a 1:3 basis, on comparison with demand.

Service Level A: Availability of trolleys on a basis which is greater than or equal to

1:5, on comparison with demand.

12. Accessibility to retail and concessions

Service Level A: Accessibility to retail and concessions at a walking distance of 200

metres or less.

Service Level B: Accessibility to retail and concessions at a walking distance not

exceeding 400 metres.

Service Level A: Accessibility to retail and concessions at a walking distance not

exceeding 500 metres.

Service Level A: Accessibility to retail and concessions at a walking distance not

exceeding 600 metres.

5.7 HARMONIZATION OF SERVICE ATTRIBUTES

The previous section involved defining minimum performance thresholds for each service

attribute. Service Level A was adopted as the best in terms of delivering service quality and

Service Level D was the least preferred scenario.

An effort has been done through this study to understand the satisfaction gap in terms of

quality, which is prevalent in an airport terminal. This required a clear definition of the various

terms involved in this process. The definitions adopted for the course of this study are as given

below:

In the study of service quality, the Expected Quality and Perceived Quality have been defined

as the following:

Expected Quality: This is the level of quality required by the customer, implicitly or explicitly.

Perceived Quality: This is the level of quality perceived by the user – customer.

65

Note that there is a difference between Expected Quality & Importance (in the Importance –

Performance Analysis) and between Perceived Quality & Performance. The study had earlier

mapped the mean scores obtained against Importance straight ahead to the term Expected

Quality (QE) and repeated the procedure for the Performance and Perceived Quality (QP). It was

later realized that there is a variation and thus, the need to harmonize the mean scores

obtained for each service attribute was realized.

This is a situation of multi – criteria decision making where it is required to evaluate each

attribute based on the criterions established. This is done by constructing a value function for

each descriptor, where in, a value score is associated to each one of the levels of impact /

performance of the descriptor. Typically, a value function converts impacts into scores. And the

value score assigned, takes into consideration the attractiveness of the impact with the two

adopted reference levels.

By the two adopted reference levels, it is meant that level of reference, the highest of which is

assigned a value score of 100, and the lowest of which is assigned a value score of 0. The

value scores of the other parameters are established relatively, based on the two adopted

reference levels. This process, when done correctly, harmonizes the mean scores into a single

homogenous scale between 0 and 100, which is quantifiable. This method to harmonize the

scales is done in view of the fact that the mean score ranges obtained during the course of this

study have been in different scale ranges for Importance and Performance. It is felt that, there is

thus a need to homogenize this scale before assessing the satisfaction gap for each service

attribute.

Thus, the Expected Quality (QE) is defined here as the value score obtained for the Importance

criterion and the Perceived Quality (QP) is defined as the value score obtained for the

Performance criterion. This is done because it is not appropriate to map the mean scores of

Importance and Performance straight away as Expected Quality (QE) and Perceived Quality

(QP). Thus, the study assumes that the customer expectations and perceptions are in line with

the value scores.

5.8 ASSESSMENT OF CUSTOMER SATISFACTION

The next step in the process of establishment of quality criteria is the assessment of the

customer satisfaction. From the quality criteria perspective, this aims to address the Perceived

Quality (QP). Once the accurate estimation of the perceived quality is done about, it will aid in

giving the estimate of the quality gap, namely the Satisfaction gap in this case, that prevails.

The basis for this information is again the Importance Performance Analysis (IPA), more

specifically, the performance criterion in that.

Given below are the value scores obtained as part of the study conducted for the study that

translate into being the Perceived quality (QP). The higher the perceived quality, the better it is

66

for that particular service attribute. One another aspect worth noting here will be the apparent

difference between Expected Quality and Perceived Quality. This, called the satisfaction gap,

can be positive or negative depending on the scores obtained for both the expected and

perceived qualities. The main objective in configuring quality criteria is to reduce the quality

gaps to as much minimum as it can possibly be. Thus, a negative satisfaction gap is said to be

much more beneficial than a positive satisfaction gap.

In order to study the satisfaction gap, each of the service attributes shall be taken separately to

analyze the possible reasons for the deficiencies or surpluses, as is applicable in each case.

Table 5-2 – Perceived Quality scores

The satisfaction gaps that exist in each service attribute and the observations are explored to

and are as given under -

1. Availability of transport modes for commute from the terminal

Expected Quality Value Score: 100.0

Perceived Quality Value Score: 69.2

Satisfaction Gap: 30.8

Pe rfo rma nce

Pe rce ive d

Qua lity (QP)

2,99100,0

2,99100,0

2,9082,7

2,8675,0

2,8471,2

2,8369,2

2,8063,5

2,7961,5

2,7961,5

2,6025,0

2,5719,2

2,470,0Level of congestion (crowding)

Visual impact of the terminal (cleanliness and design)

Thermal Comfort (Temperature control)

Accessibility to food and beverages

Availability of trolleys

Accessibility to retail and concessions

Seat Availability inside the terminal

Availability of transport modes for commute from the terminal

Number of working check - in counters

Time taken to do check - in

Walking distances inside the terminal

Availability of choices in food or retail

Se rv ice Attrib ute

67

Analysis: It is observed that the satisfaction gap for this service attribute is 30.8. This

means that the customers expect the service attribute to be 30.8 % better than what it

is now. Possible reasons for the existence of the quality gap include the following:

I. Dissatisfaction of the customer over the choices of transport modes available.

II. Dissatisfaction of the customer over the costs of the commute.

III. Dissatisfaction of the customer over the frequencies of the transport modes.

2. Time to do check – in

Expected Quality Score: 94.5

Perceived Quality Score: 61.5

Satisfaction Gap: 33.0

Analysis: It is observed that the satisfaction gap for this service attribute is 33. This

means that the customers expect the service attribute to be 33 % better than what it is

now. Possible reasons for the existence of the quality gap include the following:

I. Dissatisfaction of the customer over the efficiency of the terminal staff doing

the check – in processes.

II. Dissatisfaction of the customer over the number of working check – in counters

at a particular moment.

III. Dissatisfaction of the customer over the queue management system.

3. Level of Congestion (crowding)

Expected Quality Score: 75.5

Perceived Quality Score: 0.0

Satisfaction Gap: 75.5

Analysis: It is observed that the satisfaction gap for this service attribute is 75.5. This

means that the customers expect the service attribute to be 75.5 % better than what it is

now. This is the highest positive gap in quality that is observed during the course of this

study. Possible reasons for the existence of the quality gap include the following:

I. Dissatisfaction of the customer over the amount of space available in the

terminal.

68

II. Dissatisfaction of the customer over the design and visual aspects of the

terminal.

4. Number of working check – in counters

Expected Quality Score: 55.5

Perceived Quality Score: 61.5

Satisfaction Gap: -6.1

Analysis: It is observed that the satisfaction gap for this service attribute is -6.1. This

means that despite seeing the satisfaction gap to be positive, in comparison with the

other service attributes, the customers felt that the service attribute was 6.1 % better

than what they had expected it to be. Possible reasons for the existence of the quality

gap include the following:

I. Dissatisfaction of the customer over the efficiency of the terminal staff doing the

check – in process.

5. Walking distances inside the terminal

Expected Quality Score: 52.7

Perceived Quality Score: 25.0

Satisfaction Gap: 27.7

Analysis: It is observed that the satisfaction gap for this service attribute is 27.7. This

means that the customers expect the service attribute to be 27.7 % better than what it

is now. Possible reasons for the existence of the quality gap include the following:

I. Dissatisfaction of the customer over the design and visual aspects of the

terminal.

II. Dissatisfaction of the customer over the space allocation for various activities

inside the airport terminal.

6. Accessibility to food and beverages

Expected Quality Score: 50.9

Perceived Quality Score: 82.7

Satisfaction Gap: - 31.8

69

Analysis: It is observed that the satisfaction gap for this service attribute is -31.8. This

means that the customers felt that the service attribute was 31.8 % better than what

they had expected it to be. Possible reasons for the existence of the quality gap include

the following:

I. Satisfaction of the customer over the availability of food and beverage options

inside the terminal, which is of special significance for passengers flying low –

cost since most low – cost airlines are no frills in character.

7. Thermal Comfort

Expected Quality Score: 50.0

Perceived Quality Score: 100.0

Satisfaction Gap: - 50.0

Analysis: It is observed that the satisfaction gap for this service attribute is -50.0. This

means that the customers felt that the service attribute was 50.0 % better than what

they had expected it to be. Possible reasons for the existence of the quality gap include

the following:

I. Satisfaction of the customer over the thermal comfort experienced in the airport

terminal which seems to have played a very limited role in defining the quality

of an airport terminal.

8. Seat Availability inside the terminal

Expected Quality Score: 50.0

Perceived Quality Score: 63.5

Satisfaction Gap: - 13.5

Analysis: It is observed that the satisfaction gap for this service attribute is -13.5. This

means that the customers felt that the service attribute was 13.55 % better than what

they had expected it to be. Possible reasons for the existence of the quality gap include

the following:

I. Satisfaction of the customer over the seat availability due to the large sections

of travelling class being in the mid age categories.

II. Satisfaction of the customer over seat availability because of the existence of

adequate access to retails and concessions, food and beverages which negate

the need to be seated for large amount of times before boarding the aircraft.

70

9. Visual Impact of the terminal (cleanliness and design)

Expected Quality Score: 32.7

Perceived Quality Score: 100

Satisfaction Gap: - 67.3

Analysis It is observed that the satisfaction gap for this service attribute is - 67.3. This

means that the customers felt that the service attribute was 67.3 % better than what

they had expected it to be. Possible reasons for the existence of the quality gap

include the following:

I. Satisfaction of the customer over the visual impact of the terminal which seems

to have played a very limited role in defining the quality of the airport terminal.

10. Availability of choices in food and retail

Expected Quality Score: 27.3

Perceived Quality Score: 19.2

Satisfaction Gap: 8.0

Analysis: It is observed that the satisfaction gap for this service attribute is 8.0. This

means that despite seeing the satisfaction gap to be negative, in comparison with the

other service attributes, the customers felt that the service attribute could have been 8

% better than what it was right now. Possible reasons for the existence of the quality

gap include the following:

I. Satisfaction of the customer over the availability of choices in food and retail

because the distances flown are less, so the need for choices comes down

considerably as well.

11. Availability of Trolleys

Expected Quality Score: 17.3

Perceived Quality Score: 75.0

Satisfaction Gap: - 57.7

Analysis: It is observed that the satisfaction gap for this service attribute is - 57.7. This

means that the customers felt that the service attribute was 57.7 % better than what

they had expected it to be. Possible reasons for the existence of the quality gap

include the following:

71

I. Satisfaction of the customer over the availability of trolleys primarily because

most of the customers travelling in low cost airlines are either travelling on

business or short visits. Vacation travelers are seasonal and most of them

would still prefer to travel by the legacy carriers keeping in mind the baggage

restrictions on the low cost airline. Thus, the need for the trolleys is realized by

only a very few segment of passengers and thus, there are trolleys in surplus

for them.

12. Accessibility to retail and concessions

Expected Quality Score: 0

Perceived Quality Score: 71.2

Satisfaction Gap: -71.2

Analysis: It is observed that the satisfaction gap for this service attribute is – 71.2. This

means that the customers felt that the service attribute was 71.2 % better than what

they had expected it to be. This is the highest negative gap in quality that is observed

during the course of this study. Possible reasons for the existence of the quality gap

include the following:

I. Satisfaction of the customer over the accessibility to retail and concessions coz

most passengers flying low cost airlines do not expect a lot of retail and

concession options because of the nuances of the low cost business model.

Thus, when there are even minimal services available in airports, it is seen to

be enough to satisfy the customers and thus, there is a huge satisfaction gap

that is being observed.

72

The satisfaction gap scores for all the service attributes are as listed below:

Table 5-3 – Satisfaction Gap scores

As can be seen from the above graphic, the highest satisfaction scores are obtained for

Accessibility to retail and concessions, followed by visual impact of the terminal (cleanliness and

design). The least satisfaction gap score is obtained for Level of Congestion (crowding). A small

inference to be gathered from the above graphic is the fact that most of the service attributes

which were higher in the priority list; both by means of Importance scores and the subsequent

expected quality (QE) fair only marginally well in the evaluation of the satisfaction gap scores.

Service attributes which were below in the pecking order, in terms of their Importance received

greater satisfaction gap scores.

Exp e cte d Qua lity (QE) Pe rce ive d Qua lity (QP) Sa tis fa c tio n Ga p Sco re

100,0 69,2 30,8

94,5 61,5 33,0

75,5 0,0 75,5

55,5 61,5 -6,1

52,7 25,0 27,7

50,9 82,7 -31,8

50,0 100,0 -50,0

50,0 63,5 -13,5

32,7 100,0 -67,3

27,3 19,2 8,0

17,3 75,0 -57,7

0,0 71,2 -71,2

Se rv ice Attrb ute

Thermal Comfort (Temperature control)

Seat Availability inside the terminal

Visual impact of the terminal (cleanliness and design)

Availability of choices in food or retail

Availability of trolleys

Accessibility to retail and concessions

Availability of transport modes for commute from the terminal

Time taken to do check - in

Level of congestion (crowding)

Number of working check - in counters

Walking distances inside the terminal

Accessibility to food and beverages

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The matrix of all possibilities arising from the various service quality levels for the service attributes has been constructed and

is as given below:

Table 5-4 – Service Quality Level Matrix

Se rv ice

Attrib ute /

Se rv ice

Le ve l

Ava ila b ility o f tra nsp o rt

mo d e s fo r co mmute

fro m the te rmina l

T ime ta ke n

to d o che ck -

in

Le ve l o f

co ng e stio n

(cro wd ing )

Numb e r o f

wo rk ing che ck

- in co unte rs

Wa lk ing

d is ta nce s ins id e

the te rmina l

Acce ss ib il ity

to fo o d a nd

b e ve ra g e s

T he rma l Co mfo rt

(T e mp e ra ture

co ntro l)

Se a t Ava ila b ility

ins id e the

te rmina l

Visua l imp a ct o f the

te rmina l (c le a nline ss

a nd d e s ig n)

Ava ila b ility

o f cho ice s in

fo o d o r re ta il

Ava ila b ility

o f tro lle ys

Acce ss ib il ity

to re ta il a nd

co nce ss io ns

A All modes at all times. ≤ 15 mins

Terminal

capable of

taking traffic

at all times

Check - in

counters good

enough to

ensure the

process takes ≤

15 mins.

Walking distances

≤ 300 m

At a walking

distance of 100

m from any

point inside the

terminal

Terminal ambient

temperature at 23

°c.

Seats: Demand : :

1:1 ≥ 4 star rating (Skytrax) ≥ 3 alternatives

Trolleys:

Demand : :

1:1

At a walking

distance of ≤

200 m from any

point inside the

terminal

B

All modes during peak,

atleast one (taxi) during the

other times. ≤ 25 mins

Terminal

capable of

taking traffic

at all times

except the

peak hours.

Check - in

counters good

enough to

ensure the

process takes ≤

25 mins.

Walking distances

≤ 500 m

At a walking

distance of 200

m from any

point inside the

terminal

Terminal ambient

temperature at 24

°c.

Seats: Demand : :

1:2 3 star rating (Skytrax) 2 alternatives

Trolleys:

Demand : :

1:2

At a walking

distance of ≥

400 m from any

point inside the

terminal

C

One mode apart from taxi at

peak hours, taxi during the

other times 30-40 mins

Terminal not

capable of

taking traffic

at most times

including the

peak hours.

Long queues

Check - in

counters good

enough to snure

the process

takes only

between 30 - 40

mins

Walking distances

≤ 800 m

At a walking

distance of 300

m from any

point inside the

terminal

Terminal ambient

temperature at 25 -

26 °c.

Seats: Demand : :

1:3 2 star rating (Skytrax) 1 alternative

Trolleys:

Demand : :

1:3

At a walking

distance of ≥

500 m from any

point inside the

terminal

D One mode (taxi) at all times > 40 mins

Terminal not

capable of

taking traffic

at all times

including the

peak hours.

Extremely

Long queues

Check - in

counters not

good enough to

ensure the

process takes <

40 mins

Walking distances

≥ 800 m

At a walking

distance

exceeding 300

m from any

point inside the

terminal

Terminal ambient

temperature

exceeding 26 °c.

Seats: Demand : : ≥

1:5 1 star rating (Skytrax) NO alternatives

Trolleys:

Demand : : ≥

1:5

At a walking

distance of ≥

600 m from any

point inside the

terminal

74

The service attributes in any airport terminal can be represented by a variety of combinations arising

from the above given service quality matrix. Thus, towing in line with the recommendations of the

Highway Capacity Manual (HCM) in defining level of service (LOS) for the roadways traffic, an attempt

is made here to qualitatively define service levels, ranging from A to D.

Service Level A: Service Level A allows for free flowing operations inside an airport terminal.

All the service attributes are within permissible levels and the passengers (customers) are fully

satisfied with the quality of the service attribute on display. There are no delays even during

peak hours and even if there are any, they are easily absorbed.

Service Level B: Service Level B allows for reasonably free flowing operations inside an

airport terminal. All the service attributes are just within the permissible levels and the

passengers (customers) are satisfied with the quality of the service attribute on display. There

are not many delays and even if there are any, they are absorbed with minimal loss of time.

Service Level C: Service Level C is a state of decreasing free flowing operations inside an

airport terminal. Most of the service attributes are outside of the permissible levels and the

passengers (customers) are not fully satisfied with the quality of the service attribute on

display. There are delays and they are absorbed with loss of time, some of which can be long

leading to physical and psychological discomfort for the users.

Service Level D: Service Level D is a state of breakdown in free flowing operations inside an

airport terminal. All the service attributes are outside of the permissible levels and the

passengers (customers) are not satisfied with the quality of the service attribute on display.

There are delays and they are absorbed with loss of time, most of which can be long leading

to physical and psychological discomfort for the users.

5.9 SYNERGY CONFLICT ANALYSIS

The next step, now that the quality criteria have been defined is to look back on whether the set quality

criteria perfectly meet the needs of the current study. To reiterate, the purpose of the current study

was to explore on the prospect of operating low cost and legacy carriers out of the same main airport

terminal. The quality criteria that play a role in the minds of the passenger have been established. The

next step in the right direction on this regard is to check if the said propositions meet the requirements

of the research question mooted during the initial stages – a sort of a check back to assess the

correctness of the work done so far.

The Synergy Conflict Analysis involves grading each service attribute against the possible impact that

it creates on the research question. In other words, in order to understand whether the prospect of

operating low cost and legacy carriers can be realized (Synergy) or not (Conflict) with the influence of

the said service factor is analyzed.

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1. Availability of transport modes for commute from the terminal

Table 5-5 – Availability of transport modes for commute from the terminal

It is usual in the case of a main airport to be connected to the city with more than one mode of

transport, sometimes even three modes as is the case with most major airports across Europe

(Paris CDG, London Heathrow, and Frankfurt et al). A common pattern observed at low cost

terminals (secondary airports) which are far apart from the main airport in the city is the lack of

options for commute.

Some of the secondary airports are far enough to just have one mode of transport, namely the

taxi operating for onward commute from the terminal. Even when there is a bus connection, as

is the case in Europe, the timings are such that they are available only with a very strict time

table which does not suit most passengers who have tight schedules. So, the low cost

passenger gets a 20 – 30 € discount on the flight tickets for flying into the secondary airport,

only to spend that amount (and in most cases more) on the taxi service to their final

destinations. Whereas, in a main airport, this can be fulfilled by the buses or trains that

connect to the city. So, the cost advantage is lost here.

Thus it can be seen that the availability of transport modes for commute from the terminal is

bound to have a synergy effect when low cost and legacy carriers operate from the same main

terminal.

2. Time taken to do check - in

Table 5-6 – Time taken to do check – in

This can be explained in two ways. Most often in a main airport, there are many more number

of check – in counters in operation owing to the size of the terminal. And therefore, the time

taken to do check – in in the main airport terminal is usually less than the time taken in a low

cost terminal (European and American LCCs, the majority of share in low cost aviation patrons

are exceptions). Another way of seeing it is the school of thought which preaches that legacy

carrier passengers take more time despite having more counters in operators as they have to

get their luggage checked – in, which is more or less negligible in the case of low cost carriers.

Service Attribute / Serv ice Leve l A B C D

Ava ilab ility o f transport modes fo r

commute from the te rmina l All modes at all times.

All modes during

peak, atleast one

(taxi) during the other

times.

One mode apart

from taxi at peak

hours, taxi during the

other times One mode (taxi) at all times

Service Attribute / Service Leve l A B C D

T ime taken to do check - in ≤ 15 mins ≤ 25 mins 30-40 mins > 40 mins

76

It can always be argued that the time taken to do check – in should be commensurate with the

investment on the ticket by the passenger. In saying so, it is meant that there is always a

tendency to believe that low cost passengers could afford with a bit more of time on the

queues considering the fact that they are paying less for the tickets, in comparison with the

passenger on the legacy carrier. This still does not take away the fact that operating low cost

and legacy carriers from the same terminal might make it a better experience. Operations from

the same terminal might be better off or worse depending on whether there is common use of

the facilities or whether even inside the same terminal, there are separate enclosures for the

low cost terminal.

Thus it can be seen that the time taken to check – in is bound to have a conflicting or synergy

effect in the event where low cost and legacy carriers operate from the same main airport

terminal.

3. Level of Congestion (crowding)

Table 5-7 – Level of Congestion (Crowding)

The level of congestion always has a negative effect on the service quality delivered in an

airport terminal. Congestion is commonplace in main terminals which have a service level of B

or less, regardless of whether it is a main airport terminal or a secondary airport with lesser

infrastructure. Main airports are able to combat such congestion situations by having the

advantage of space, which may not be available in case of secondary airports or low cost

terminals, in particular.

Thus, the level of congestion (crowding) is bound to have a conflicting effect in an event where

low cost and legacy carriers operate from the same main airport terminal.

4. Number of working check – in counters

Table 5-8 – Number of working check – in counters

Secondary airports or low cost terminals in particular, are always embattled with an issue of

space. Therefore, many of these airports might only have upto two check – in counters

functioning even during peak hours, which might sometimes lead to delays in the time taken to

Serv ice Attribute / Se rv ice Leve l A B C D

Leve l o f congestion (crowd ing )

Terminal capable of

taking traffic at all times

Terminal capable of

taking traffic at all

times except the

peak hours.

Terminal not

capable of taking

traffic at most times

including the peak

hours. Long queues

Terminal not capable of taking

traffic at all times including the

peak hours. Extremely Long

queues

Serv ice Attribute / Se rv ice Leve l A B C D

Number o f work ing check - in

counte rs

Check - in counters good

enough to ensure the

process takes ≤ 15 mins.

Check - in counters

good enough to

ensure the process

takes ≤ 25 mins.

Check - in counters

good enough to

snure the process

takes only between

30 - 40 mins

Check - in counters not good

enough to ensure the process

takes < 40 mins

77

check – in. It should also be said that since most of the passengers flying in low cost carriers

do not carry a lot of luggage (except the vacation travelers category); there are not many

chances of the airport experiencing congestion on this regard as well.

Compare this to a condition in most main airport terminals and there are always bound to be

time delays especially if the terminal is delivering a service level of B or less. Thus, it is

imperative to have more number of check – in counters operating to ensure there are less of

delays. When the aspect of operating aircrafts from the same main airport terminal is explored,

it is seen that whether there is any advantage or not will be governed by the fact of whether

the airport terminal will promote using common - use terminal equipment or whether there will

be separate enclosures for the low cost and legacy carriers respectively.

Thus, the number of working check – in counters is said to have either a conflicting or a

synergy effect based on the policy of the main airport terminal.

5. Walking distances inside the terminal

Table 5-9 – Walking distances inside the terminal

The walking distances inside the terminal is a service attribute where quality levels cannot be

generalized in the easiest of manners. This is due to the reason that the satisfaction that a

customer achieves by walking inside the terminal could vary depending on the situation at

hand. An easy way to understand this is to take the case of a typical main airport terminal in

Europe like London Heathrow or Frankfurt – the walking distances in these terminals are quite

high. But that is compensated by the presence of enough retailing, food & beverages

concessions that are spaced along the terminal which generally induces a lesser effect of

distaste in the minds of the passenger.

This certainly does not discount the fact that longer walking distances can be especially hard

for people who are older or specially abled or even in case of passengers who do not have a

lot of time in transiting through a main airport. This situation is certainly negated in case of a

secondary airport, more specifically a low cost terminal. Whereas, for the question of

operations from the same terminal, this study concludes that the passengers despite the

longer walking distances are still set to gain from this move.

Thus, the walking distances inside the terminal is said to have a synergy effect in an event

where low cost and legacy carriers operate from the same main airport terminal.

Service Attribute / Service Leve l A B C D

Walking d istances inside the

te rmina l Walking distances ≤ 300 m

Walking distances ≤

500 m

Walking distances ≤

800 m Walking distances ≥ 800 m

78

6. Accessibility to food and beverages

Table 5-10 – Accessibility to food and beverages

Secondary Airports are often far-fetched for space. This has adverse effects on the services

that are available on the airport. Although it is part of the business model for LCCs to go with

no frills on their airlines, most often what happens is that this same no frills phenomenon

spreads into their airport terminals as well. This is seen as a deliberate move to cut costs.

Majority of the low cost terminals suffer from a lack of accessibility to food and beverages.

Most often you have one license granted for the terminal and the possibility of variety in choice

for the passenger is denied. This leaves most passengers with no choice, but to limit their

options to the ones that prevail inside the terminal. On the aspect of operating low cost and

legacy carriers from the same terminal, it is seen that this move will benefit the passengers

since the main terminals always have more accessibility to food and beverages, leaving the

passenger with variety.

Thus, the accessibility to food and beverages is said to have a synergy effect in an event

where low cost and legacy carriers operate from the same main airport terminal.

7. Thermal Comfort (Temperature Control)

Table 5-11 – thermal comfort (Temperature Control)

Thermal Comfort is a service attribute which is largely a function of the ambient temperature

that is maintained inside the airport terminal. Normally, the most ideal condition is the ambient

temperature of 23 °c. It should be adjusted to suit the needs depending on the weather

condition outside and also the passenger throughput experienced by the terminal. When there

is an event of operating low cost and legacy carriers from the same main airport terminal,

there is more passenger throughput through the terminal which in no way should affect any of

the existing entities.

Thus, the thermal comfort (temperature control) is said to have a synergy effect in an event

where low cost and legacy carriers operate from the same main airport terminal.

Service Attribute / Serv ice Leve l A B C D

Accessib ility to food and

beverages

At a walking distance of

100 m from any point

inside the terminal

At a walking

distance of 200 m

from any point inside

the terminal

At a walking

distance of 300 m

from any point

inside the terminal

At a walking distance exceeding

300 m from any point inside the

terminal

Service Attribute / Serv ice Leve l A B C D

T herma l Comfort (T empera ture

contro l)

Terminal ambient

temperature at 23 °c.

Terminal ambient

temperature at 24 °c.

Terminal ambient

temperature at 25 -

26 °c.

Terminal ambient temperature

exceeding 26 °c.

79

8. Seat Availability inside the terminal

Table 5-12 – Seat Availability inside the terminal

Most low cost terminals and secondary airports have minimal seating arrangements in them.

From experience, it is seen that the seats: demand ratio often exceeds 1: 25 during the peak

hours. This affects the category of people who are old aged or who require seating assistance

by default.

It can always be argued that the time spent by a low cost passenger waiting for the aircraft is

less than that spent by a legacy carrier passenger after the security, but having a seats:

demand ratio of 1: 1 is always much more desirable than having to wait for your aircraft,

standing. Most main airport terminals are able to provide this seating standard for their

passengers. Therefore, when the proposal to operate low cost and legacy carriers comes into

consideration, whether this is seen as a positive or a negative move based on seat availability

will depend on if there will be common seating enclosures or separate enclosures for the

added traffic.

Thus, the seating availability inside the terminal is said to have a conflicting effect in an event

where low cost and legacy carriers operate from the same main airport terminal.

9. Visual impact of the terminal (cleanliness and design)

Table 5-13 – Visual impact of the terminal (cleanliness and design)

Most low cost terminals and secondary airports are minimal in their designs and are thus

catering to service levels B and less from an objective point of view whereas, most of the main

airport terminals are grandiose in character - with visually pleasing terminal designs and other

architectural aspects. From a service quality point of view, the prospect of operating low cost

and legacy carriers from the same main airport terminal should augur well for the parties

involved, especially the customers of the low cost carriers who are set to welcome the move.

Thus, the visual impact of the terminal (cleanliness and design) is said to have a synergy

effect in an event where low cost and legacy carriers operate from the same main airport

terminal.

Service Attribute / Service Leve l A B C D

Seat Ava ilab ility inside the

te rmina l Seats: Demand : : 1:1

Seats: Demand : :

1:2

Seats: Demand : :

1:3 Seats: Demand : : ≥ 1:5

Service Attribute / Service Leve l A B C D

Visua l impact o f the te rmina l

(c leanliness and design) ≥ 4 star rating (Skytrax) 3 star rating (Skytrax) 2 star rating (Skytrax) 1 star rating (Skytrax)

80

10. Availability of choices in food or retail

Table 5-14 – Availability of choices in food or retail

Secondary Airports are often far-fetched for space. This has adverse effects on the services

that are available on the airport. Although it is part of the business model for LCCs to go with

no frills on their airlines, most often what happens is that this same no frills phenomenon

spreads into their airport terminals as well. This is seen as a deliberate move to cut costs.

Majority of the low cost terminals suffer from a lack of accessibility to food and beverages.

Most often you have one license granted for the terminal and the possibility of variety in choice

for the passenger is denied. This leaves most passengers with no choice, but to limit their

options to the ones that prevail inside the terminal. On the aspect of operating low cost and

legacy carriers from the same terminal, it is seen that this move will benefit the passengers

since the main terminals always have more availability of choices in food and retail, leaving

the passenger with increased accessibility.

Thus, the availability of choices in food and retail is said to have a synergy effect in an event

where low cost and legacy carriers operate from the same main airport terminal.

11. Availability of trolleys

Table 5-15 – Availability of trolleys

Most passengers flying low cost airlines have minimal baggage with them, except for the

category of vacation travellers who might have more baggage than what is the norm.

Therefore, the requirement of trolleys is not as much as it is, in the case of legacy carriers.

From the prospect of moving into the same main airport for terminal, it is felt that this service

attribute shall not have a negative impact.

Thus, the availability of trolleys is said to have a synergy effect in an event where the low cost

and legacy carriers operate from the same main airport terminal.

Service Attribute / Service Leve l A B C D

Ava ilab ility o f cho ices in food or

re ta il ≥ 3 alternatives 2 alternatives 1 alternative NO alternatives

Service Attribute / Service Leve l A B C D

Ava ilab ility o f tro lleys Trolleys: Demand : : 1:1

Trolleys: Demand : :

1:2

Trolleys: Demand : :

1:3 Trolleys: Demand : : ≥ 1:5

81

12. Accessibility to retail and concessions

Table 5-16 – Accessibility to retail and concessions

Secondary Airports are often far-fetched for space. This has adverse effects on the services

that are available on the airport. Although it is part of the business model for LCCs to go with

no frills on their airlines, most often what happens is that this same no frills phenomenon

spreads into their airport terminals as well. This is seen as a deliberate move to cut costs.

Majority of the low cost terminals suffer from a lack of accessibility to retail and concessions.

This leaves most passengers with no choice, but to limit their options of accessing retail and

concessions that prevail inside the terminal. On the aspect of operating low cost and legacy

carriers from the same terminal, it is seen that this move will benefit the passengers since the

main terminals always have more accessibility to retails and concessions, leaving the

passenger with variety to choose.

Thus, the accessibility to retail and concessions is said to have a synergy effect in an event

where low cost and legacy carriers operate from the same main airport terminal.

5.9.1 SYNOPSIS

The graphic below describes the synergy conflict analysis in a more illustrative manner. One

striking aspect to be noted from the graphic below is the pattern in which the service attributes

have had a conflicting or synergy effect on the proposed move for operating low cost and

legacy carriers from the same main airport terminal.

From our study, it can be concluded that 10 of the service attributes can create a synergy

effect at some point in lieu with the policies of the airport and 4 of the service attributes can

create a conflicting effect when the proposal to operate low cost and legacy carriers from the

same terminal is mooted. 2 of the service attributes produce an overlap between showcasing

a conflicting effect and a synergy effect. This is because they are heavily dependent on the

prospect of the airport granting separate enclosures for the operation of the low cost carrier

and the legacy carrier or not.

Service Attribute / Serv ice Leve l A B C D

Accessib ility to re ta il and

concessions

At a walking distance of ≤

200 m from any point

inside the terminal

At a walking

distance of ≥ 400 m

from any point inside

the terminal

At a walking

distance of ≥ 500 m

from any point

inside the terminal

At a walking distance of ≥ 600 m

from any point inside the terminal

82

Table 5-17 – Synergy Conflict Analysis

If the airport grants separate enclosures for the operation of the low cost and legacy carriers,

then the service attributes Time taken to do check – in and Number of working check – in

counters shall have a synergy effect, otherwise they will bring a conflicting effect into the

service quality jargon.

Se rv ice Attrib ute Co nflic t Syne rg y

Ava ila b ility o f tra nsp o rt

mo d e s fo r co mmute fro m

the te rmina l

T ime ta ke n to d o che ck - in

Le ve l o f co ng e stio n

(c ro wd ing )

Numb e r o f wo rk ing che ck -

in co unte rs

Wa lk ing d is ta nce s ins id e

the te rmina l

Acce ss ib il ity to fo o d a nd

b e ve ra g e s

T he rma l Co mfo rt

(T e mp e ra ture co ntro l)

Se a t Ava ila b ility ins id e the

te rmina l

Visua l imp a ct o f the

te rmina l (c le a nline ss a nd

d e s ig n)

Ava ila b ility o f cho ice s in

fo o d o r re ta il

Ava ila b ility o f tro lle ys

Acce ss ib il ity to re ta il a nd

co nce ss io ns

83

6. CONCLUSION AND DIRECTIONS FOR FURTHER RESEARCH

6.1 CONCLUSION

The main objective of this dissertation was to explore the prospect of operating low cost carriers

(LCCs) and legacy carriers (LCs) out of the same main airport terminal, looking from a service quality

perspective.

On this regard, a first attempt was made in Section 2 in order to demystify the low cost phenomenon

and to understand the differences in the business models between LCCs and LCs. Later, the impact of

LCCs on the aviation industry has also been explored.

Section 3 was devoted to airport terminals. Study on the various configurations, terminal activities,

costs and revenues led us to understand the growing importance of non – aeronautical revenues in an

airport terminal. Process Analysis concluded on the importance of turnaround times in the decision as

to whether the main airport can or should accommodate LCCs along with LCs.

Section 4 was the introduction of the service quality paradigm into the dissertation. 12 service

attributes were selected based on peer reviews and extensive literature and their impacts in defining

the quality of an airport terminal were surveyed through a global passenger survey, in order to the

Importance and Performance of the service attributes. This served as the precursor to Section 5,

where the service quality criteria were established.

Section 5 dealt with the establishment of quality criteria for airport terminals. The aim of this section

was to define a framework for setting up a service quality level matrix. Approaches that look into the

establishment of quality criteria were studied and a methodology was chosen which involved

indigenous work on introduction into the airport/ airlines theme, from the conventional applications in

urban mobility systems. The minimum performance thresholds were set up and the customer

satisfaction gap scores were determined, which helped in setting up the service quality level matrix.

To conclude, this is then modelled into a synergy conflict analysis to analyze whether there is a

synergy effect or a conflicting effect on the prospect of operating low cost carriers (LCCs) and legacy

carriers (LCs) from the same main airport terminal, on the basis of each service attribute. It is seen

that 10 of the 12 service attributes have a synergy effect and 4 of the 12 seem to have a conflicting

effect on the objective of the dissertation. There is an overlap in two instances, where it is strongly felt

that the policies of the airport might play a great role in determining the possibility or not of operating

the low cost carriers and legacy carriers from the same main airport terminal.

From all the work done from Sections 2 to 5, especially from the sections 4 and 5, it is understood that

the research objective of exploring the prospect of operating low cost and legacy carriers from the

same main airport terminal could be achieved as a majority of the service attributes are creating a

synergy effect and only 4 of them (2 in the most ideal case) would create a conflict. Thus, keeping in

84

mind, only the service quality aspect, it is of the opinion that if the air passengers, especially the low

cost customers require or expect better service quality than that is present in the current airports which

service low cost airlines, it is needed to switch the operations of the low cost airline from the

secondary airports. Terminals into the main airport terminal and then operate both categories of

airlines from the same main airport terminal. How easy or how difficult this transition could be is solely

based on the directives and policies of the specific airport terminal in question.

6.2 DIRECTIONS FOR FURTHER RESEARCH

As for further research, it is felt that with more time and resources the study could be extended to

cover the customer perspective in the establishment of quality criteria (The 4 Q’s method). All round

emphasis of quality levels (QE, QT, QD, QP) will give a more clear understanding of the deficiencies

existing and thus, also leading to a more well-rounded approach in the study field. Another aspect of

improvement could be on the Importance Performance Analysis, involving more service attributes and

much more detailed surveying methods like conducting stakeholder (passenger surveys) at a personal

level which might increase the accuracy of the results obtained and also eliminate non – response to a

good extent. Another common critique could be that this dissertation takes a very broad approach and

does not focus on any specific case studies for deeper reference. This dissertation is talking on low

cost airlines and low cost airports from the aspect of the most generally observed patterns and thus

has a possibility of needing modifications on a case by case basis when the work is to be done on

specific airports.

85

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ANNEXE

QUESTIONNAIRE

Dear Passenger,

We are conducting a survey to determine the aspects that are perceived by the passengers as relevant for determining the

quality of an airport terminal. By doing this survey, we hope to understand the set of factors that are going to be important in

setting and defining the levels of service in an airport terminal.

The questionnaire is divided into two sections. Section 1 consists of a few questions for which you may have to give some

information about yourself. Section 2 will be the Importance Performance Analysis. It is a way to understand customers’ needs

and expectations so that companies can make good management decisions about how to satisfy them. From the IPA, the senior

management does not only identify which attributes require immediate attention, but also why they require immediate attention.

To assist you in the successful answering of the questionnaire, we have set up a scale from 1-4 on which you will be responding

to each question given in Section 2 of the survey. Further details on answering are provided in Section 2. The maximum time

required to complete the survey should be less than 10 minutes.

Your answers will be valuable for the course of the study and will reflect in the research study being done in the MIT Portugal

Program.

Please press "Prox" to go to the next page.

Thank You very much for your cooperation.

________________________________________________________

Caro passageiro,

De forma a determinar a qualidade do Terminal de um Aeroporto, estamos a realizar uma pesquisa de modo a identificar quais

os fatores relevantes para o passageiro. Esta pesquisa ajudará a compreender quais os elementos importantes em definir o

nível de serviço do Terminal de um Aeroporto.

O questionário envolve duas secções. A primeira secção contém perguntas sobre a informação pessoal do passageiro. Ao

passo que a segunda secção é cerca Análise de Importância de Desempenho, é um método científico para compreender as

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necessidades e expectativas dos clientes e como as empresas possam realizar decisões de gestão com o fim de satisfaze-los.

Através da Análise de Importância de Desempenho, não só o gestor consegue identificar quais os elementos que requerem

imediata atenção mas também o porquê dela.

De modo a facilitar o preenchimento do questionário, foi definido uma escala de um (1) a quarto (4) para responder a cada

pergunta da segunda secção. Informação adicional será fornecida à medida que responde às perguntas.

A sua resposta ao questionário é de grande importância para o estudo e servirá de investigação realizada no âmbito do

programa MIT Portugal.

Agradeço desde já toda a sua atenção e cooperação nesta pesquisa.

PART 1: GENERAL INFORMATION / PARTE 1: INFORMAÇÃO GERAL

The first section of the questionnaire consists of a few questions for which you may have to give some information about

yourself. We assure you that personal information shall not be revealed to anyone.

After answering all the questions, please press "Prox" to go to the next page.

________________________________________________________

A primeira seção do questionário vai envolver algumas perguntas onde você tem que dar alguma informação sobre si mesmo.

Nós garantimos que informações pessoais não serão revelados a ninguém durante o curso do estudo.

1. Where do you reside? / Residência

Europe Asia America (North and South)

Africa Oceania

2. Gender / Sexo

Male / Masculino Female / Feminino

3. Age / Idade

Less than 20 / Menos que 20

20 - 29 30 - 39 40 - 49 More than 50 / Mais de 50

4. How often do you fly? / Qual a frequência que viaja?

Once every two weeks / Uma vez cada duas semanas

Once a month / Uma vez cada mês

Once every two or three months / Uma vez cada dois a três meses

Once every six months / Uma vez cada seis meses

Once a year / Uma vez por ano

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5. What is the most common purpose of your trip? / Qual é o motivo principal das suas viajens?

Leisure / Lazer Work / Trabalho Study / Académico Friends & Family / Familia e Amigos

Others (Please specify) / Outro (especifique)

6. Have you flown with a low cost airline? (easyJet, Ryanair, Wizz Air, Air Berlin, Vueling, Spicejet, IndiGO etc) / Já voo numa compania aerea de "Low-Cost" (easyJet, Ryanair, Wizz Air, Air Berlin, Vueling, etc)

Yes / Sim No / Não

PART 2: IMPORTANCE PERFORMANCE ANALYSIS / PARTE 2: ANÁLISE DE DESEMPENHO DE IMPORTÂNCIA

Please read this carefully before proceeding with the questionnaire.

If your answer to Q6 was Yes, please answer the questionnaire citing the experience of flying in the low cost airline. If the

answer to Q6 was No, please answer the questionnaire based on your general experience.

In the following section, please mark the Importance (Q7) and Performance (Q8) of each service factor inside the airport

terminal based on your judgement on a scale of 1 (least important / least performing) to 4( most important / most performing).

Q7 In simple words: How would you rate the importance of each of the service factors based on your experience inside an

airport terminal?

Q8 In simple words: How would you rate the performance of each of the service factors based on your experience inside an

airport terminal?

After answering the questions, please press "confirmar" to conclude the survey.

________________________________________________________

Por favor, leia com atenção antes de prosseguir para responder ao questionário.

Se respondeu 'Sim' à pergunta Q6, então responda ao questionário segundo a sua experiência em viajar em companias "Low-

Cost.

Se respondeu 'Não' à pergunta Q6, então responda ao questionário segundo a sua experiência no geral.

Na seção seguinte, avalie numa escala de 1 (menos importante / menor desempenho) a 4 (mais importante / maior

desempenho)os vários factores para a qualidade de serviço do terminal de um aeroporto.

De uma maneira simples, como avalia o grau de importância de cada factor baseado na sua experiência dentro do Terminal do

Aeroporto?

92

De uma maneira simples, como avalia o grau de desempenho de cada factor baseado na sua experiência dentro do Terminal

do Aeroporto?

7. IMPORTANCE ANALYSIS / ANÁLISE DE IMPORTÂNCIA

Least Important / Menos importante

Slightly Important / Pouco importante

Important / Importante

Most Important / Muito Importante

Number of working check - in counters / Número de balções de check-in em funcionamento

Time taken to do check - in / Tempo necessário para fazer check - in

Seat Availability inside the terminal / Disponibilidade de assentos dentro do terminal

Visual impact of the terminal (cleanliness and design) / Impacto visual do terminal (limpeza e design)

Thermal Comfort (Temperature control) / Temperatura ambiente

Accessibility to retail and concessions / Acessibilidade das lojas (Duty-Free)

Accessibility to food and beverages / Acessibilidade a Acessibilidade à restauração

Availability of choices in food or retail / Disponibilidade de opções de lojas e na restauração

Level of congestion (crowding) / Nível de congestionamento (multidões)

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Least Important / Menos importante

Slightly Important / Pouco importante

Important / Importante

Most Important / Muito Importante

Walking distances inside the terminal / distâncias a pé

Availability of trolleys / Disponibilidade de carrinhos para bagagem

Availability of transport modes for commute from the terminal / Disponibilidade de modos de transporte para deslocar a partir do terminal

8. PERFORMANCE ANALYSIS / ANÁLISE DE DESEMPENHO

Bad Performance / Mau Desempenho

Low Performance / Baixo Desempenho

Medium Performance / Medio Desempenho

High Performance / Alto Desempenho

Number of working check - in counters / Número de balções de check-in em funcionamento

Time taken to do check - in / Tempo necessário para fazer check - in

Seat Availability inside the terminal / Disponibilidade de assentos dentro do terminal

Visual impact of the terminal (cleanliness and design) / Impacto visual do terminal (limpeza e design)

Thermal Comfort (Temperature control) / Temperatura ambiente

Accessibility to retail and concessions / Acessibilidade das lojas (Duty-Free)

Accessibility to food and beverages / Acessibilidade a alimentos e bebidas

Availability of choices in food or retail / Disponibilidade de opções de lojas e

94

Bad Performance / Mau Desempenho

Low Performance / Baixo Desempenho

Medium Performance / Medio Desempenho

High Performance / Alto Desempenho

na restauração

Level of congestion (crowding) / Nível de congestionamento (multidões)

Walking distances inside the terminal / distâncias a pé

Availability of trolleys / Disponibilidade de carrinhos para bagagem

Availability of transport modes for commute from the terminal / Disponibilidade de modos de transporte para deslocar a partir do terminal

95

1

Re sp o n

se

Pe rce nt

Re sp o nse Co unt

48,4% 75

26,7% 41

17,6% 27

1,4% 2

5,9% 9

2

Re sp o n

se

Pe rce nt

Re sp o nse Co unt

67,4% 104

32,6% 50

3

Re sp o n

se

Pe rce nt

Re sp o nse Co unt

4,1% 6

44,8% 69

26,2% 40

10,0% 15

14,9% 23

4

Re sp o n

se

Pe rce nt

Re sp o nse Co unt

8,6% 13

11,3% 17

29,9% 46

27,6% 43

22,6% 35

5

Re sp o n

se

Pe rce nt

Re sp o nse Co unt

35,3% 54

33,5% 52

9,5% 15

21,7% 33

6

Re sp o n

se

Pe rce nt

Re sp o nse Co unt

80,8% 124

19,2% 30

Ha ve yo u flo wn with a lo w co st a irl ine ? (e a syJe t. Rya na ir. W izz Air. Air Be rlin.

Answe r Op tio ns

Yes / Sim

No / Não

W ha t is the mo st co mmo n p urp o se o f yo ur trip ? / Qua l é o mo tivo p rinc ip a l

Answe r Op tio ns

Leisure / Lazer

Work / Trabalho

Study / Académico

Friends & Family / Familia e

Answe r Op tio ns

Once every two weeks / Uma

Once a month / Uma vez cada

Once every two or three months

Once every six months / Uma

Once a year / Uma vez por ano

Less than 20 / Menos que 20

20 - 29

30 - 39

40 - 49

More than 50 / Mais de 50

Ho w o fte n d o yo u fly? / Qua l a fre q uê nc ia q ue v ia ja ?

W he re d o yo u re s id e ? / Re s id ê nc ia

Answe r Op tio ns

Europe

Asia

Ag e / Id a d e

Answe r Op tio ns

America (North and South)

Africa

Oceania

DEMOGRAPHICS (n = 154)

Ge nd e r / Se xo

Answe r Op tio ns

Male / Masculino

Female / Feminino

96

Le a st

Imp o rta nt /

Me no s

imp o rta nte

Slig htly

Imp o rta nt /

Po uco

imp o rta nte

Imp o rta nt / Imp o rta nte

Mo st

Imp o rta nt /

Muito

Imp o rta nte

Ra ting

Ave ra g e

Re sp o nse

Co unt

13 30 79 32 2,84 154

8 11 67 68 3,27 154

13 40 69 32 2,78 154

17 50 66 21 2,59 154

13 38 73 30 2,78 154

34 65 41 14 2,23 154

9 37 85 23 2,79 154

16 56 66 16 2,53 154

5 26 78 45 3,06 154

11 47 57 39 2,81 154

42 41 35 36 2,42 154

7 17 48 82 3,33 154

154

Time taken to do check - in / Tempo necessário para

Accessibility to food and beverages / Acessibilidade

IMPORT ANCE ANALYSIS / ANÁLISE DE IMPORT ÂNCIA

Availability of transport modes for commute from the

Visual impact of the terminal (cleanliness and design)

Level of congestion (crowding) / Nível de

Number of working check - in counters / Número de

Accessibility to retail and concessions /

Availability of trolleys / Disponibilidade de carrinhos

Seat Availability inside the terminal / Disponibilidade

Availability of choices in food or retail /

Answe r Op tio ns

a nswe re d q ue stio n

Thermal Comfort (Temperature control) / Temperatura

Walking distances inside the terminal / distâncias a

Ba d

Pe rfo rma nce

/ Ma u

De se mp e nh

o

Lo w

Pe rfo rma nce

/ Ba ixo

De se mp e nh

o

Me d ium

Pe rfo rma nce /

Me d io

De se mp e nho

Hig h Pe rfo rma nce / Alto De se mp e nhoRa ting

Ave ra g e

Re sp o nse

Co unt

6 43 82 23 2,79 154

13 35 78 28 2,79 154

12 38 73 31 2,80 154

6 27 84 37 2,99 154

6 22 94 32 2,99 154

10 35 78 31 2,84 154

9 30 82 33 2,90 154

23 40 71 20 2,57 154

19 60 59 16 2,47 154

17 47 71 19 2,60 154

13 29 79 33 2,86 154

14 29 80 31 2,83 154

154

Accessibility to retail and concessions /

Availability of trolleys / Disponibilidade de carrinhos

Seat Availability inside the terminal / Disponibilidade

Availability of choices in food or retail /

Answe r Op tio ns

a nswe re d q ue stio n

Thermal Comfort (Temperature control) / Temperatura

Walking distances inside the terminal / distâncias a

Time taken to do check - in / Tempo necessário para

Accessibility to food and beverages / Acessibilidade

PERFORMANCE ANALYSIS / ANÁLISE DE DESEMPENHO

Availability of transport modes for commute from the

Visual impact of the terminal (cleanliness and design)

Level of congestion (crowding) / Nível de

Number of working check - in counters / Número de