Relationship between Airlines and Airports - Secretaría de...

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Strategic Airport Management Programme9-13 April 2007

Relationship between Relationship between Airlines and AirportsAirlines and Airports

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��

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�� A Business entity?A Business entity?�� A Client?A Client?�� A Customer?A Customer?�� A Consumer of A Consumer of

Airport Services?Airport Services?�� A Service A Service

Provider?Provider?�� An Operator?An Operator?

�� A Problem?A Problem?

What is an Airline to the Airport?What is an Airline to the Airport?

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�� PartnersPartners�� Team PlayersTeam Players�� AlliesAllies

Can Airlines beCan Airlines be…………


��Seek to understand the airline businessSeek to understand the airline business��Recognize the airlinesRecognize the airlines’’ needsneeds��Help airlines in good times and in badHelp airlines in good times and in bad��Work with airlines to make their business Work with airlines to make their business

viableviable��Mediate between airlines and other Mediate between airlines and other

government agencies or regulatorsgovernment agencies or regulators

Airport OperatorsAirport Operators’’ ApproachApproach

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�� Involve airlines in the Involve airlines in the development of the airport development of the airport and air transportationand air transportation

��Keep airlines informed of the Keep airlines informed of the airport business:airport business:--�� Help them understand the Help them understand the

airport business and strategyairport business and strategy�� Forge synergies with the Forge synergies with the

airlinesairlines�� Develop a symbiotic Develop a symbiotic

relationship and seek a winrelationship and seek a win--win formulawin formula

Airport OperatorsAirport Operators’’ ApproachApproach


��Regularly engage airlines in dialogue on Regularly engage airlines in dialogue on airport operations, plans and even problemsairport operations, plans and even problems��Airport Facilitation CommitteeAirport Facilitation Committee��Airport Operations CommitteeAirport Operations Committee��Ramp Operations CommitteeRamp Operations Committee��Air Cargo Facilitation CommitteeAir Cargo Facilitation Committee��AirportAirport--Airline MeetingsAirline Meetings��Airline OperatorsAirline Operators’’ CommitteeCommittee��Board of Airline RepresentativesBoard of Airline Representatives��Regular dialogue with airlines oneRegular dialogue with airlines one--onon--oneone

Engaging the AirlinesEngaging the Airlines

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��Efficient ServicesEfficient Services��Quality service delivery, onQuality service delivery, on--

time departuretime departure

��FacilitiesFacilities��proper information and proper information and

signage for airlines, airport signage for airlines, airport operators and operators and paxpax

��Sufficient Sufficient paxpax facilitiesfacilities

��CostsCosts��Competitive costs and value Competitive costs and value

for money servicesfor money services

Common InterestsCommon Interests


BeneficiariesBeneficiaries

��Transport Ministry and civil Transport Ministry and civil aviation authoritiesaviation authorities

��AirlinesAirlines��Other airport companiesOther airport companies��Promote trafficPromote traffic��Ultimately, passengersUltimately, passengers

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ChangiChangi’’ss SuccessesSuccesses�� 83 airlines, connected to 57 countries in 83 airlines, connected to 57 countries in

182 cities, over 4,100 weekly scheduled 182 cities, over 4,100 weekly scheduled international flightsinternational flights

�� ChangiChangi as a hub with full spectrum of as a hub with full spectrum of airlines operations airlines operations �� physical services, joint services, codephysical services, joint services, code--

shareshare�� alliance operations (STAR, alliance operations (STAR, oneworldoneworld, ,

SkyteamSkyteam))�� freighters freighters

�� Over 90 bilateral air services agreementsOver 90 bilateral air services agreements�� Record 26 awards from aviation industry Record 26 awards from aviation industry

(including airlines)(including airlines)


��Even handed relationship between national Even handed relationship between national and foreign airlinesand foreign airlines

��The place of national carrier and homeThe place of national carrier and home--based carrierbased carrier�� Managing perceptions with realityManaging perceptions with reality

��Changing state of passenger expectations Changing state of passenger expectations and passenger needsand passenger needs

��Rising competition from other airportsRising competition from other airports

Perennial ChallengesPerennial Challenges

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��A partnership that can pass the test of time and A partnership that can pass the test of time and difficult issuesdifficult issues�� Kept landing and parking charges unchanged for the past Kept landing and parking charges unchanged for the past

20 years20 years�� Incorporated Incorporated paxpax service charge in air ticketservice charge in air ticket�� Incorporate new airport security chargeIncorporate new airport security charge�� Relocation of airlines in different terminalsRelocation of airlines in different terminals�� Bearing through the airport infrastructure upgrading worksBearing through the airport infrastructure upgrading works�� Authority taking the role as mediator, arbitrator when Authority taking the role as mediator, arbitrator when

airlines have problems among themselves or with other airlines have problems among themselves or with other agenciesagencies

AirlineAirline--Airport PartnershipAirport Partnership


��1997 Asian Economic Crisis1997 Asian Economic Crisis�� 1 year 10% rebate on landing and parking charges1 year 10% rebate on landing and parking charges�� Rebate on rental chargesRebate on rental charges�� Airlines maintained their services and Airlines maintained their services and

connectivitiesconnectivities

��2001 Economic Recession and Post 9/112001 Economic Recession and Post 9/11�� 1 year 10% rebate on landing and parking charges1 year 10% rebate on landing and parking charges�� 15% rebate on rental charges15% rebate on rental charges�� 4.2% rebate on property taxes (passed on from 4.2% rebate on property taxes (passed on from

govtgovt))�� Most airlines maintained their services while Most airlines maintained their services while

stronger airlines increased servicesstronger airlines increased services

Weathering Crisis TogetherWeathering Crisis Together

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��2003 SARS Crisis (May2003 SARS Crisis (May--Dec 2003)Dec 2003)�� 30% rebate on landing fees30% rebate on landing fees�� 10% rental rebate for all airport tenants10% rental rebate for all airport tenants�� Waiver of Minimum Monthly Guarantee Waiver of Minimum Monthly Guarantee

(MMG) for landside shops and restaurants(MMG) for landside shops and restaurants�� Automatic reduction in MMG payment Automatic reduction in MMG payment

(pegged to (pegged to paxpax traffic) for airside tenantstraffic) for airside tenants�� Most airlines able to tide over difficult times of Most airlines able to tide over difficult times of

declined in trafficdeclined in traffic

Weathering Crisis TogetherWeathering Crisis Together


��Enhancing airportEnhancing airport--airline relationshipairline relationship��Deepen dialogues and partnershipsDeepen dialogues and partnerships��Enhancing mutual understanding of each Enhancing mutual understanding of each

otherother’’s challenges, problems and needss challenges, problems and needs�� Increasing competition amongst Increasing competition amongst

airports/airlinesairports/airlines��Dawn of airline alliancesDawn of airline alliances��Rise of low cost carriersRise of low cost carriers��Threats from global terrorismThreats from global terrorism

Facing the Future TogetherFacing the Future Together

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Route DevelopmentRoute Development��Airport take a proactive role Airport take a proactive role

in route developmentin route development��Provide appropriate data, Provide appropriate data,

information and analysis information and analysis specific and targeted at specific and targeted at airlinesairlines�� Establish the origin and Establish the origin and

destination trafficdestination traffic�� Determine connectivity wavesDetermine connectivity waves�� Information on fundamentals of Information on fundamentals of

economy and opportunities of economy and opportunities of growthgrowth


Market ForcesMarket Forces

Leisure travelers are going more places, more frequently, for shorter trips

Trav

el F

requ

ency

Income $

High

Low

FartherDomesticVacation

RegionalTrip

NoVacation/VFR International

Vacation

Weekend Trips

SecondMain

Vacation

MultipleVacations

“Trade Up”/Modal Substitution

TravelCreation

“Need”

HighLow

"Discretionary"

The Expansion Of Leisure Travel Market Drives LCC Growth, Not a Switch From Full

Service Carriers

Premium / Full

Service Travel

Low Cost

Leisure Travel

Organic Growth

Switch From Premium Rail

Untapped Aspirational Travellers

Pric

e

Low

High

Market Market Source

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Analyse route structures �Country demographic and

economic trends�Air Traffic Growth and Trends�Current and historic Airline

services�Country’s competitive position

Identify routes for further expansion� Routes with growth potential� Weighed against region’s average

Diversify routes� Explore potential new routes to

develop� Mitigate dependence on any one

market

Number of Routes/Destination Served

0 10 20 30 40 50 60 70 80

Com

petit

or A

irpo

rts

UnderSupply

NoService

GoodSupply

Seat

s/T

onna

ge P

er W

eek

.

Destinations

Competitive AnalysisCompetitive Analysis


Strengths Weaknesses

Opportunities Threats

MarketPhysical

OperationalCommercial

SWOT AnalysisSWOT Analysis

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Identifying and Prioritizing Areas for Improvement

CapacityTerminal constraints

Improve economics of route networkAir Hub development

Existing Weakness Future Strength

Financial PerformanceProfitability of Hato Airport

Critical Success Factors

CommercialisationOptimise non-aviation revenueLogistics and Distribution Centre

Network

OperationsImprove efficiency, reduce Opex

Gap AnalysisGap Analysis


� Number of routes served compared to competitors

0 10 20 30 40 50 60 70 80

Balearics

Cyprus

Sardinia

Crete

Average

Corsica

Sicily

Southern Italy

Airport X

Number of Routes Served

Route AnalysisRoute Analysis

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0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Maples

Heathr

owRom

e

Gatwick

Malpen

sa

Frank

furt

Amsterd

am

Dusse

ldorf

Hambu

rg

AthensOrly

Marse

ille

Charle

s de G

aulle

Munich

Barce

lona

UnderSupply

Bologn

a

Verona

Turin

Venice Nice

Hanov

er

Stuttga

rt

Madrid

Cologn

e

NoService

GoodSupply

Seat

s/W

eek

Airport X18 Regionals Avg.

Route AnalysisRoute Analysis


Airport X Region Delta Target Seats Seats/AC FlightsOrly 7 1008 1928 -920 70% 644 124 5Marseilles 2 288 1844 -1556 25% 389 133 3de Gaulle 2 288 945 -657 70% 460 70 6Munich 2 288 735 -447 25% 112 110 1Barcelona 1 144 534 -390 25% 98 110 1

Naples 0 0 2438 -2438 25% 610 70 8Bologna 0 0 2160 -2160 25% 540 100 5Verona 0 0 1782 -1782 25% 446 100 4Turin 0 0 1733 -1733 25% 433 100 4Venice 0 0 1688 -1688 25% 422 100 4Nice 0 0 1370 -1370 25% 343 100 3Stuttgart 0 0 588 -588 25% 147 70 2Hanover 0 0 587 -587 25% 147 70 2Madrid 0 0 538 -538 70% 377 70 5Cologne 0 0 516 -516 25% 129 70 2

Seats/Week Potential Future Flights

Exp

and

Ser

vice

New

Ser

vice

Flights/Week

Airport X

Route AnalysisRoute Analysis� Quantifying Opportunities for Additional Flights

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� Opportunities� Potential New Direct Service� Expanding Existing Routes� Other Key Service Expansion

Route OpportunitiesRoute Opportunities


Route DevelopmentRoute Development��Conduct costConduct cost--benefit analysis visbenefit analysis vis--àà--vis other vis other

routes to market the routesroutes to market the routes��Package incentives for airlines together with Package incentives for airlines together with

other government agenciesother government agencies

Relationship between Airlines and Airports - Secretaría de...

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