AVIA2851 Airport Management Notes PDF

AVIA2851 Airport Management WEEK 2 Airports and Aviation Regulation - Ian Douglas Regulation Impacts ○ In late 2023 there was extensive discussion in the media around the Australian government refusal to grant expanded traffic rights for Qatar Airways, subsequently e...

AVIA2851 Airport Management WEEK 2 Airports and Aviation Regulation - Ian Douglas Regulation Impacts ○ In late 2023 there was extensive discussion in the media around the Australian government refusal to grant expanded traffic rights for Qatar Airways, subsequently extensive rights were given to Turkish ○ How do governments control international aviation markets? Allocation of traffic rights A quick history - Chicago Convention ○ In 1944 - in the dying days of WW2 a conference in Chicago mapped out the regulation of international aviation ○ Access to national rights required ownership and control within the State ○ Regulation - including airfares was handed to IATA Freedoms of the Air Phases of Regulatory FOCUS in Aviation ○ Regulation Era 1910 - 1918 Military importance 1920s - national integration (mail services) 1930s - internationalism (Empires BA/KL) 1940s - military development Late 1940s - 1970s - economic regulation ○ Deregulating and New Regulating Era 1970s - domestic from late 1970s in US International (open skies, EU packages, etc) 1980s - privatisation of infrastructure (airports) 2000s - airlines partnering and mergers 2020s - environmental regulations Australia’s Market ○ The regulated domestic market only ended in 1995 Qantas and Australian Airlines merged and privatised - 25% sold to BA Ansett given international designation - IASC established to allocate traffic rights Privatisation ○ Before 1995 the Australian government Federal Airports Corporation owned 39 airports  ○ And the Federal Government owned two airlines ○ Merged and sold Qantas and Australian airlines ○ Sold off airport leases ○ Corporatised Airservices (ATC) Two-Airline Policy ○ One airline owned by the government - one private head offices beside each other in Melbourne Mirror Image ○ Identical fleet, identical fares, identical schedules ○ Six monthly review for fare increases that required government approval Regulating Airport Congestion ○ Limited airport capacity at major cities has imposed requirements to manage access through slots. ‘Grandfathered’ to the next year provided used at least 80% of the time WASG ○ For the purposes of airport coordination, airports are categorised by the responsible authorities to the following levels of congestion: Level 1: airports where the capacity of the airport infrastructure is generally adequate to meet the demands of airports users at all times Level 2: airports where there is potential for congestion during some periods of the day, week, or season which can be resolved by schedule adjustments mutually agreed between the airlines and facilitator. A facilitator is appointed to facilitate the planned operations of airlines using or planning to use the airport Level 3: airports where capacity providers have not developed sufficient infrastructure, or where governments have imposed conditions that make it impossible to meet demand. A coordinator is appointed to allocate slots to airlines and other aircraft operators using or planning to use the airport as a means of managing the declared capacity High Levels of Congestion - Level 3  Slot Hoarding ○ Booking slots to only cancel them afterwards to ensure competitor airlines can’t land there ○ Requires 80% of their allocated slots to be used or airlines risk losing them Congestions drives larger aircraft at Heathrow The airport’s future is linked to the destiny of the home airlines and vice versa ○ Heavily constrained hub at London LHR forces BA to rationalise the use of limited slots Shed nodes… particularly domestic But allows BA to capture higher fares A recent study of London – Geneva and Amsterdam fares showed LHR fares 30% higher than LTN/STN/LGW Slots must allow enough time for Aircraft Turnaround  Delays Factors ○ ATC infrastructure is an external disrupter that can push airlines off schedule Bonza and Rex failed. What is the problem for new Jet route entrants in Australia? ○ The Australian market is more open than most. Australia allows majority and even full foreign ownership of domestic airlines. Both Virgin Australia and Rex are majority foreign owned. ○ Several of the FIFO airlines are also now owned by foreign FIFO specialists. ○ A small number of large LCCs do well in VERY LARGE marketsRyanair/Wizz/easyJet/Vueling in Europe. Market of 500 million ○ Standalone LCCs fail in Australia because of small MARKET SIZE, difficult GEOGRAPHY, and limited AIRPORT ACCESS B737/A320 BUT network carriers have the same fleet and seat density Competitors also fly Point to Point Few secondary airports in large cities. Using the same slot constrained airports Competitors also sell Online Ancillary sales BUT competitors sell points, lounge access, and financial products Airlines Economics Problem ○ Most of the trip cost is incurred before the first passenger boards. ○ Airlines keep selling below average cost to maximise revenue  Regulating Access to Capacity for International Air Services ○ Australian International Traffic Rights only apply to 4 airports. ○ The International Air Services Commission allocates traffic rights to Australian carriers ○ The Commission recently refused an application by Qantas and to codeshare with Garuda. Why was it refused? 6.11 In its submission of 8 February 2024, the ACCC notes that a key competition concern is that Qantas and Garuda Indonesia are each other’s closest competitor in the Australia – Indonesia air passenger services market and the proposed code share arrangement may soften competition between them. It may make it mutually profitable for Garuda Indonesia and/or Qantas to delay or limit the addition of capacity on city pairs where the underlying market conditions support profitable metal competition. Airports are often monopolies in their local markets. What regulation applies to airports? ○ Airport competition regulation Australia – Light touch since privatised – ACCC responsible. USA –most airports owned by government agencies/port authorities Malaysia/Thailand – government airport clusters eg AOT Europe – largest airports that have ‘market power’ are regulated Economic Regulation can be based on Recovering the costs of providing aeronautical services plus a return on capital (DUAL TILL) OR The total revenue generation of the airport (SINGLE TILL) Single Till Dual Till  ○ Airlines prefer the single till approach – arguably users do not cover the full cost under a single till structure – but airlines argue there is no non-aeronautical revenue without passengers Airport environmental regulation examples ○ Amsterdam – environmental annual flight cap (noise) ○ Sydney - flow limits 80 per hour (noise) ○ Curfews – widespread in Europe (noise) ○ Zurich - ground power/emissions limits. (CO2 emissions), Service standards (Commercial)  Imposing Performance Measures on Ground Handlers - ZRH ○ Zurich Airport Check in lines maximum 10 passengers (achieved 95%) Max average queue size First bag on the belt by 20 mins – last bag 30 mins Ramp area cleared within 10 minutes of aircraft off blocks Ensure 40 minute MCT can be delivered ○ Delay measures passenger hours (passengers x waiting time); aircraft seat hours (unproductive aircraft time spent on the ground), and delay minutes (over-usage of airport capacity) WEEK 3 Airport and Airline Relationship - Scott Zeglin Overview ○ Aeronautical Revenues Breakdown of charges Airport - Airline consultation Relationship of aero and non-aero revenues (single v dual till) Regulatory frameworks Cost-based, Price caps, Reserve regulation American anomaly - Use and lease agreements ○ Slots and airport access Rules and Regulation Slot movements Trading and waivers Heathrow anomaly - market based access Aeronautical Revenues - Breakdown of Charges ○ Recoverable revenues by airports usually fall under the following classifications: Landing charges Terminal and parking charges Passenger charges Navigation/Security charges ○ Other charges such as fuel, government taxes and increasingly ground handling are collected and passed through  ○ Depending on the airport, market, regulation and level of constraint, the weighting of aero charges can vary Cost-plus regulation focuses on cost to operate, but do little to incentivise airline growth and are difficult to administer in periods of demand shock More flexible regimes focus on cost per enplanement (CPE) as it aligns airline and airport revenue streams Airport - Airline Consultation ○ Airports are not allowed to discriminate between airlines and the usage of airport assets ○ However, airline pricing schemes and incentives can attempt to influence behaviour ○ For example: Peak-pricing schemes particularly for runway movements in constrained airports have a greater impact on smaller gauge domestic aircraft vs large gauge, long-haul aircraft ○ Consultation on new infrastructure depends on the regulatory jurisdiction as well as the regulatory framework in place Relationship of aero and non-aero revenues  Regulatory Frameworks ○ Government regulated Nearly 2/3rds of all airports globally have charges subject to government approval ○ Cost-based / Profit control Traditional, pure cost-plus methodology Potential for over-investment and inefficient cost base ○ Incentive or price caps Focuses on operator efficiency by regulating aero prices increases Typically uses CPI - X formula plus WACC model for capital investment Results in fit-for-purpose infrastructure: however, arduous to regulate ○ Reserve: regulation “Light-touch” with the regulator only becoming involved in a dispute Monitoring and surveillance approach American Anomaly - Use and Lease Agreements  Residual - cost based/ single-till Compensatory - dual till Hybrid - both Slots - Rules and Regulation ○ Slots are a take-off/landing slot ○ Governments provide regulation and local legislation ○ Coordination of two seasons per year, with process governed by IATA WSG and administered by an independent regulator Regulator usually the local government body; however, governments can bring in specialised, independent regulators to administer the policies and adhere to constraints (ACA, ACL, etc) ○ Three levels of airport access and constraints: Level 1: no infrastructure constraints Level 2: schedules facilitated airports Level 3: full coordination ○ Process: Historic slot usage from prior season Slot fillings for upcoming season IATA slot conference Slot handbacks and historic baseline date to determine 80/20 use-it-or-lose-it Slot Trading, Waivers and the Heathrow Anomaly ○ Slot trading and waivers Trading and improved access for airlines at Level 3 airports occurs every season Concept is to use historic slot approvals for particular times and trade with other airlines to provide mutual benefit Some historics can be lent or ‘babysat’ by other carriers Waivers have a historical precedence for use during unprecedented circumstances 9/11, COVID Current COVID waivers in place globally for NS21 and in most jurisdictions for NW21  ○ Heathrow anomaly WEEK 4 Airport Operations - Andre Younes, Chris Caines Australian Airspace ○ Tower controllers are generally located at airports and are responsible for all aircraft & vehicle movements on taxiways, runways, and in the immediate vicinity of the airport ○ Terminal controllers use radar to position aircraft in and out of the aerodrome circuit ○ En-route controllers located in Brisbane and Melbourne are responsible for all aircraft at upper levels (above 25,000ft) and responsible for the majority of Australian airspace Regulatory Compliance ○ International and local regulations: ICAO standards IATA Government and aviation authority compliance CASA is Australia’s safety regulator for civil air operations and the operation of Australian aircraft overseas Cyber and Infrastructure Security Centre (CISC), Department of Home Affairs Regular Audits and Inspections Australian Transport Safety Bureau (ATSB) is Australia’s national transport safety investigator The Role of an Airport ○ Functions of an airport: Facilitate passenger and cargo transport Provide space for aircraft takeoff, landing and maintenance Manage air traffic control and security Bringing Systems Together  ○ Managing Aircraft Traffic ○ Airport Collaborative Decision Making Benefits of ACDM: Increased operational efficiencies Improved sustainability (reduction in fuel burn) Improved response to weather disruptions through slop swap Quicker and effective decision making The Purpose of Airport Operations ○ Optimise the use of airport assets to drive business value ○ Manage operational demand ○ Deliver high levels of service to stakeholders and airport users ○ Deliver on expectations in relation to incident management and responses ○ Support corporate reputation ○ Deliver safely and security as the highest priorities Key Groups ○ Regulators CASA, CISC, ATSB ○ Key Operators Airservices Australia, Airport Operators, Airlines and Ground Handlers, Cargo and Fuel Farm Operators  ○ Government Agencies Department of Prime Minister & Cabinet, Department of Defence, Australian Federal Police, Border Force, Department of Agriculture, Department of Immigration, State Agencies ○ Stakeholders Retailers, Tenants, Service Providers, Work Contractors, Suppliers, Catering, Ground Transport Operational Documentation ○ Aerodrome operating manual ○ Transport security programme We adapt, flex and scale to meet operational demand ○ Achieve operational excellence through quality customer service, delivered through tactical operations ○ Strive for operational accountability, regarding aviation standards for Compliance, Safety, Security and Operational performance, and we can do this with focus on: Operations - Above Wing Operational Logic ○ Compliance and legislative requirements met ○ Maintain integrity and service levels of the asset ○ Enable core business ○ Protect revenue generation ○ Sustainability  ○ Support community engagement ○ Manage risks Operational Considerations ○ Airport work plans ○ High voltage (HV) power shutdowns ○ Stakeholder management for power shutdowns and disruptions ○ Method of working plan (MOWP) required for airfield only ○ NOTAMS required for airfield only ○ Safety/Information bulletins ○ Airside access during reduced operating conditions ○ Cost recovery Key Areas of Airport Operations ○ Airside Operations Runways, taxiways, ramps/apron What is airside? Covers everything from the runway, taxiways, aprons, aircraft parking and ground handling services Discuss the importance of ensuring the safe movement of aircraft and ground vehicles ○ Landside Operations Public transport stations, access roads, parking lots What is landside? Areas accessible to passengers and visitors such as parking lots, roadways and public transport Focus on managing traffic flow, parking facilities, and customer services outside the terminal ○ Terminal Operations Terminal management: Passenger flow (check-in, security, boarding) Baggage handling systems Concessions (shops, restaurants, lounges) AOCC Function ○ Airport Operational Control Centre is the airport nerve centre and has 3 main functions: Activate (emergency activation, response and coordination) Operate (day of operations control)  Support (operations support) Terminal Services Baggage Handling Operations ○ Overview of how baggage is processed from check-in to the aircraft ○ Common issues (delays, lost luggage) and how they’re mitigated ○ Excess baggage More than 4 billion bags annually are carried by airlines with 99.57% of these arriving on time to their owner, however, improvements continue to be made. Facilitation Project Changing the Footprint ○ Improving the Minimum Connect Time from 90 to 60 minutes Treatment facilities relocated away from flows More effective in resource management Improved practices through streaming operations Improved utilisation of terminal infrastructure More in-line with operators Express Paths ○ Importance of passenger experience: Minimising wait times at check-in and security Enhancing comfort through amenities (lounges and services) Use of technology for smoother processing (eg. automated boarding gates) Security Operations ○ Passenger and baggage screening (CT, x-ray, scanners)  ○ Access control to secure areas ○ Coordination with law enforcement and security agencies Impacts of 9/11 ○ Enhanced security measures ○ LAGS then PLAGS ○ TSA Requirements ○ Rapid security changes ○ Enhanced screening technology ○ Increased cost to industry Typical Apron Layout Plan ○ Aerobridges can be fixed or mobile and require qualified personnel to operate them who are normally contracted by the airline ○ Ramp activities include: Aircraft towing, high lift operations, catering, cleaning units, baggage equipment, maintenance, ground power units, aircraft waste removal Aviation Safety and Risk Management ○ Aviation Safety (Introduction of new aircraft, runway end safety areas, stop bars, exemptions, lighting and apron layouts) ○ Work Health and Safety ○ Compliance (CASA and AMS Audit oversight) Industry Decision Influences Cost of Growth Industry Decision Outcomes  Airbus A380 ○ Wing area 845 sqm, 50% more floor space in comparison to B747, can carry 853 passengers in an all economy config, has 530 kms of wiring, first A380 flight was from SIN to SYD in 2007 (SQ) ○ A380 readiness Aircraft Changes, Line Marking and Risks ○ No two airports are the same ○ Serviceability of assets AEP Emergencies Exercises and Incidents ○ Two types of calls from pilots: May-Day: Aircraft and occupants in grave and imminent danger Pan-Pan: Urgent transmission concerning the safety of aircraft and or persons on board ○ Two types of aerodrome responses: Local Standby Involves airport-based agencies such as on-airport rescue and fire fighting service and aerodrome operations teams Full Emergency Airport and non-airport agencies required ○ Aircraft recovery WEEK 5 Future Airports - Service, Customers and Innovation (Corey Stewart) Airport Customers - who are they? ○ Passengers, airlines, retail tenants, government agencies ○ Freight operators, airport staff, ground handlers, taxi drivers Airport Customers: Airlines ○ LCC, FSA, Charter, Regional, Domestic, International Airport Customers: Passengers ○ Business, leisure, family, solo, first timers, elderly, minors, PRM (wheelchairs etc), domestic, international Airport Products ○ Aero vs Non-Aero Aircraft turnaround, passenger processing, baggage processing, freight processing vs Carparks, Dining and retail, ground transport, advertising, lounge access ○ Revenue Sources eg.  Level of Service (Quality of offering) ○ Two key variables: Space per passenger: Underprovided, sub-optimum, optimum, over-designed Maximum waiting time ○ The goal is to design and operate terminal facilities with an OPTIMUM service level, avoiding over or under providing IATA Level of Service Level of Service: Benchmarking ○ Benchmarking is a useful tool to understanding an airports baseline goals with respect to the service offerings and customer expectation ○ Comparable airports  Ie. for a new airport in Western Sydney, it may be appropriate to benchmark against or take inspiration from the following during the first phase of operations Similar sized -> Adelaide Similar location -> Sydney Similar Operation (single runway) -> London Gatwick ○ Benchmarking is also a useful tool to understanding an airports ideal goals with respect to the service offerings and customer expectations by looking at airports which are best in class World's Best Airports (SkyTrax) Changi (worlds best for leisure), Tokyo Haneda (worlds best for PRM/Accessible facilities), Hong Kong (best for immigration), Kansai (best for baggage delivery) Passenger Experience - Physical and Digital Journeys Passenger Experience: Off Airport ○ The journey starts before the passenger even arrives at the airport ○ Website experience Booking/Pre Check-in Reserving parking Access to information ○ Transport Traffic Public Transport Signage and Directions ○ Car Parking Availability Cost Proximity to terminal Passenger Experience: Factors  Passenger Experience: Metrics ○ How do you measure passenger metrics: Passenger Experience: Influence ○ How do you influence the passenger experience? ○ Managing Expectation vs Reality Ie. informed passengers via access to information ○ Technology Solutions Ie. flow and queue management, sentiment tracking ○ Resource management Ie. ensuring enough security lanes are operating, enough staff are rostered on ○ Predictive modelling Ie. using historical data to predict when issues may arise based on similar variables Passenger Satisfaction Leveraging Technology Innovation and Development - Future Airports ○ Emerging technologies examples: WEEK 7 Managing Airport Baggage Operations - Prof. Gabriel Lodewijks Introduction ○ The definition of baggage is as follows: baggage is the trunks, bags, parcels and suitcases in which one carries one’s belongings while travelling; another word used for baggage is luggage. One passenger brings on average 1.2 pieces of baggage ○ A baggage handling system (BHS) is a type of transport system installed in airports that transports checked baggage from ticket counters or a drop-off point to areas where the bags can be loaded onto airplanes. A BHS also transports checked baggage coming from airports to baggage claim ○ Depends of aircraft B737 uses loose baggage. Airbus planes use containers Why is proper baggage handling important? ○ Baggage handling and punctuality is at the top of a passenger’s priority list. Baggage delays/lost leads to high costs and a decrease in customer satisfaction ○ Facilitated by the airline or ground handler. Airports only provide the equipment ○ Ensuring capacity meets demand is important It is always a combination between airline and airport management Insufficient capacity at security and baggage handling leads to queues (simple check with queuing theory) and large volumes of “lost” baggage How to manage baggage handling? ○ KPIs: eg. baggage mishandled per 1000 pax ○ Important to understand what the systems look like, where do you have potential bottlenecks? What is the process of the system?  The Baggage Handling Process ○ The airline becomes responsible for dealing your luggage once checked-in At departure the following activities take place: ○ Carriage of baggage to check-in Alternative carriage of baggage through websites etc  ○ Check-in procedures including tagging and occasions weighing Airlines make you pay for overweight luggage Can be self-service for eg. AMS, AKL, ORY airports ○ If applicable the baggage is tubbed ○ Screening of baggage Automatic infeed with 3D scanner and screening ○ Conveyance of baggage to airside Infeed with helix sorter Infeed with tub-system (Bagtrax) Tubtrax Discharge of baggage from system Bagtrax and Tubtrax ○ Buffering of baggage (early baggage storage) Having an early baggage storage has a huge impact on the operation and the service to the passengers Beneficial for non-aero revenues as well Lateral vs Lifting Conveyor ○ Sortation and make-up into aircraft loads (at lateral) Trailers and containers Utilising robots ○ Transport of baggage to planeside Handling ULD’s (unit load devices) Depends on aircraft size, ULD size is different ○ Loading into aircraft At arrival the following activities take place: ○ Unloading of baggage from aircraft Unloading of baggage from aircraft, transport to terminal airside, conveying to the reclaim area and the carriage from reclaim area all use similar technologies as on departure Infeed from aircraft Automatic unloading into BHS ○ Presentation of baggage to passengers to reclaim Length of reclaim system determines capacity Angled systems move baggage towards the lower end of the system which helps passengers to pick up their luggage  Tracking and Tracing ○ Since 2018 the IATA regulation 753 is in effect which means airlines must be able to track and trace baggage ○ Tracking is the act of following something or someone. ○ Tracing is the creation of a line/path/pattern of/corresponding to something that is being followed. ○ In our context: tracking is knowing where a specific piece of baggage is, and tracing is knowing how it got there. ○ Two main technologies are used: barcodes and Radio Frequency Identification (RFID) ○ In the 1990s baggage tags were developed that used bar codes. The use of bar codes enabled the automation of the baggage handling (why?). The tags are therefore called ABT’s (automated baggage tag). A barcode is an optical, machine-readable, representation of data, in general a number. The number is normally linked to a database that describes something about the bag that carries the barcode. Originally barcodes systematically represented data by varying the widths and spacings of parallel lines, and may be referred to as linear or one-dimensional (1D) bar codes. Later two-dimensional (2D) codes were developed, using rectangles, dots, hexagons and other geometric patterns in two dimensions. These (like QR codes) however, are not (yet) used on baggage tags. They are used on e-boarding passes. ○ There are two ways that bar code baggage tags are read: hand held scanners, and in-line arrays. In-line arrays are built into the baggage conveyor system and use a 360-degree array of lasers to read the bar code tags from multiple angles because baggage and the orientation of the bar code tag can shift as the bag travels through the conveyor belt system. ○ Ultra High Frequency RFID systems consists of five components: Tag, receiver, interrogator, data capture and collection, conversion data -> information  ○ Two examples of RFID tags on a baggage tag. Note that these tags are hybrid, they also contain a bar code ○ A few questions to consider: Are these four key points or gates sufficient? Do we need RFID to make the tracking and tracing work, or can we use a bar code based system? What would be the benefit of using a suitcase that is equipped with GPS and wireless communication facilities that allows 24/7 tracking worldwide? ○ First gate: 1. Passenger handover to airline What are the chances for errors in this step of the process? Low ○ Second gate: 2. Loading into aircraft Delta has 1500 special belt loaders with RFID readers built-in. (there is no RFID reader in the trailers, would that add anything?) ○ Third gate: 3. Deliver to the transfer area Hand held scanners are used by Delta to look for specific bags (can RFID help you to accurately find a bag’s location?). RFID readers are also used in gates to track bags on the way ○ Final gate: 4. Return to passenger Delta is using their app FlyDelta to keep passengers informed. Information can be looked-up or is pushed to the passengers. (What happens when you have no internet connection?) Managing Passenger Expectations ○ About delivering the package to the right hall, giving passengers information on where to pick up baggage etc. ○ Screens to provide information which carousel/belt to pick up from ○ Information on expected arrival time of bags ○ Information needs to be accurate ○ Slope vs flat beds/plates WEEK 8 Commercial Facilities - Dr Yimeng Chen Changing Airport Rules ○ Many airports are focussing on being more creative with non-aeronautical revenue ○ Singapore Changi: Project Jewel, April 2019, $1.47 billion ○ More than just an airport Museums, Rooftop swimming pools, Aquariums, Golf courses  Retail Income Across Regions ○ US $63.5 Billion in retail revenue (2019) Airport Sales ○ Also known as ‘Formula One of Retail’ - The Economist 2013 Because of the shared volumes and speed of transactions  ○ 10.6% annual growth in the last 3 years (PRE COVID) ○ 5-10% annual growth in the next 5 years (PRE COVID) ○ Table shows that retail revenue does not correlate with passenger numbers Retail revenue has to do more with airport branding, offering and target customers Macro Factors ○ Economic Situation ○ Passenger Number ○ Government Policy ○ Airport Location Today’s Focus Segmentation ○ Shopping Lovers Mainly female Prefer large shops and shops near departure gate More impulsive purchases Loves shopping and spending ○ Mood Shoppers Mainly male Impulsive shoppers Prefer centralised shops Can be influenced to spend more ○ Apathetic Shoppers Not interested Biggest population among the three groups Negative impact on retail revenue Passenger Socio-demographic factors  Major Difference Vs Shopping Centre Retail ○ Captured Audience Major difference is the captured audience. You go to shopping centres to ‘shop’ and ‘buy’ Whilst you go to airports mainly to ‘fly’ As a result of this flying activity, you become a captured audience Because you can’t leave an airport (after check-in, security, etc) Thus, the airports know that you have to spend at least some time in the airport terminals On the contrary, you can just leave shopping centres when you feel like it Passenger Travel Related Factors ○ Dwell Time The more time you have, the higher chance you would explore and spend Airport Retail Management  Terminal Shape ○ 5 Basic Shapes Finger Pier ✅ ✅ Centralised retail area ❌ Good passenger flow ❌ Longer walking distance Less dwell time Linear  ✅ ✅ Shorter walking distance ❌ Clear orientation ❌ No central shopping area Duplicate of facilities Midfield Concourse ✅ ❌ Centralised retail area Split passenger flow  Transporter Bus transports you to a further boarding gate ✅ Common in LCC terminals ❌ Shorter walking distance Reduced dwell time (waiting for bus) Satellite  ✅ ❌ Centralised retail area Reduced dwell time for transfer passengers Different Stages of Airport Retail Development  Dr Yimeng Chen’s Research ○ Simulation System Dynamic and Discrete Event are more likely used in process driven activities (eg. check-in processes) Agent Based gives you more freedom Decentralised, individual-centric Interact with the environment Very advanced agent characteristics More realistic than entity-based modelling Assist in planning and cost-effective ○ Past Airport Simulation Model  ○ Data Collection: behaviour exploration Eye tracking + short interviews 40 pax randomly selected - 34 effective samples To explore the actual behaviour of passengers ○ Offline calibration and mobile eye tracking ○ Four types of exploration strategy/decision making Driven by distance to available facilities Planned their visit Partially plan their visit Not interested in airport facilities ○ Major Data Collection 300 surveys collected Passenger’s demographics, products purchased, amount spent per purchase Passenger’s movement recorded through airport app Passenger Model  Selected Result ○ Found that a centralised layout is better for retail sales. Better for time sensitive passengers COVID-19 Impact COVID-19 Impact on Airport Commercial Performance  Future Airport Retail Post Covid? ○ Earlier passenger arrival at the airport? ○ Contactless transaction? ○ E-commerce integration with airport retail? ○ ‘Domestic’ duty free? WEEK 9 Airport Competition and the Role of Marketing - Scott Zeglin Introduction to Air Service Development ○ What is air service development and airline marketing? Selling the airport to various destinations to airlines, to increase passenger throughput, traffic and improve economic impacts ○ What can airports do to directly attract air service ○ Who are the customers and who are the stakeholders? Passengers, airlines Broader community, city, local councils, tourism offices ○ What is the role of non-airport stakeholders such as destinations marketing, business councils, region/city/council/state/territory/federal support? ○ Case study on air service development: building the case for Air New Zealand to enter Chicago - Auckland nonstop Attracting Air Service ○ Subsidy Direct cash payments to airlines from an airport’s revenue Not permissible in many jurisdictions, but common amongst privatised airports ○ Incentive Fee abatements and discounts on airport charges Typically multi-year with discounts reducing over time ○ Marketing Support In-kind marketing funded by the airport promoting an airline and/or its new service Using airport’s assets Can be combined jointly with other travel trade partners 3 year time period to offset capacity and costs  Introduction to the Case ○ The Chicago Department of Aviation (CDA) owns and operates the two primary airport gateways: O'Hare and Midway ○ ORD is one of the largest airports in the world and primary intercontinental gateway, attracting nearly 85 million annual pax UA (Star Alliance) and AA (oneworld) have major hubs at ORD, each with over 400 daily departures ○ Midway (MDW) is located 10 km from the CBD and is Southwest Airlines’ largest port in its system Short runways ( seasonal opportunities), connections to the airport, ○ Provides opportunities for ANZ to cooperate with other airlines to increase its destinations  They don’t want to discuss about costs etc. but should know about the costs and risks Next steps Including incentives etc. ORD did not have incentives at the time Notice no mention of the airport itself at the moment as it shows risk Economy, key industries of Chicago Lastly, the airport itself, runways, terminals etc. If it’s in the initial stages, it puts off the airline to work together due to costs and the rates the airline would incur due to capital projects Final Exam: - Best prep is to be comfortable from lecture content. - Red herrings from readings - 130 questions 2 hours - Advice: skip questions rather than spend a lot of time on a question. - Question options should be obvious (need to be on top of lecture materials and readings) - Reading list (only the necessary) can be tested