Managing Airports Managing Airports presents a comprehensive and cutting- edge insight into today’s inter national airport industry. Approaching management topics from a strategic and commercial perspective, rather than from an operational and technical viewpoint, the book provides an innovative insight into the processes behind running a successful airport. This fourth edition has been fully revised and updated to refl ect the many important developments in the management of airports and issues facing the aviation industry since the third edition. This edition features: • New content on: coping with an increasingly volatile and uncertain operating environment, social media and other trends in technology, the evolving airport–airline relationship, responding to sustainability pressures and new security policies. • New chapter focusing on service quality and the passenger experience, refl ecting the increasing need for airports to offer wide- ranging high- quality services to their diverse customer base to remain competitive and to achieve high satisfaction levels. • Updated and new international case studies to show recent issues and theory in practice. New case studies on emerging economies including China, India and Brazil. Accessible and up to date, Managing Airports is ideal for students, lecturers and researchers of transport and tourism, and practitioners within the air transport industry. Anne Graham is a Reader in Air Transport and Tourism at the University of Westminster, UK. This page intentionally left blank Managing Airports An international perspective Fourth edition Anne Graham First edition published 2001 by Elsevier Third edition published 2008 by Elsevier Fourth edition published 2014 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 270 Madison Ave, New York, NY 10016 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2014 Anne Graham The right of Anne Graham to be identifi ed as author of this work has been asserted by him/her in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice : Product or corporate names may be trademarks or registered trademarks, and are used only for identifi cation and explanation without intent to infringe. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalogue record for this book is available from the British Library Graham, Anne. Managing airports: an international perspective / Anne Graham.––4th edition. pages cm “Simultaneously published in the USA and Canada” ––Title page verso. Previous edition: 2008. Includes bibliographical references and index. 1. Airports––Management. I. Title. TL725.3.M2G73 2013 387.7'36068––dc23 2013005290 ISBN: 978-0-415-52941-9 (pbk) ISBN: 978-0-415-52940-2 (hbk) ISBN: 978-0-203-11789-2 (ebk) Typeset in Times New Roman by Refi neCatch Limited, Bungay, Suffolk Contents List of fi gures vi List of tables viii List of case studies xi Preface xii Acknowledgements xiii Abbreviations xiv 1 Introduction 1 2 The structure of the airport industry 8 3 Airport economics and performance benchmarking 72 4 The airport–airline relationship 101 5 Airport operations 137 6 Airport service quality 166 7 Provision of commercial facilities 188 8 Airport competition and the role of marketing 220 9 The economic and social impact of airports 263 10 The environmental impact of airports 286 11 Future prospects 309 Index 317 Figures 1.1 Airport passengers by world region, 2011 2 1.2 Airport cargo tonnes by world region, 2011 3 1.3 The world’s 20 largest airports by total passengers, 2011 3 1.4 The world’s 20 largest airports by cargo tonnes, 2011 4 1.5 The world’s 20 largest airports by aircraft movements, 2011 4 1.6 Airport passenger growth by main region, 2003–11 5 2.1 Ownership of Vienna airport up until 1992 17 2.2 Ownership of Vienna airport after IPO in 1992 17 2.3 Ownership of Vienna airport after secondary offering in 1995 18 2.4 Ownership of Vienna airport in 2012 18 2.5 Funding sources for committed projects at US large hubs, 2011–15 42 2.6 Funding sources for committed projects at US small hubs, 2011–15 42 2.7 Passengers at Infraero Airports in Brazil, 1997–2010 48 2.8 EBITDA share of Fraport’s business segments (%), 2004–11 59 3.1 Operating margin of world airlines (top 150) and airports (top 50/100 depending on year) 1998–2011 74 3.2 Revenue structures at ACI airports, 2010 (excluding non- operating items) 76 3.3 Cost structures at ACI airports, 2010 77 3.4 Total costs per passenger for selected world airports, 2010 92 3.5 Residual variable factor productivity at selected Asia-Pacifi c airports, 2010 95 4.1 Aeronautical charges by source at ACI airports, 2010 106 4.2 Aeronautical charges and taxes for a regional cross- border A319 turnaround in 2011/12 at world airports 107 5.1 Use of self- service and mobile technology at airports 160 5.2 Technology attractiveness index (0–10: low–high) 162 6.1 Airline feedback scores at AENA airports, 2009–11 170 6.2 Passengers’ views on the most stressful part of the airport journey 173 7.1 Non- aeronautical revenue per passenger at ACI airports by world region, 2010 195 7.2 Non- aeronautical revenue at ACI airports by revenue source, 2010 195 7.3 Airport concession revenue at Heathrow airport, 2011 203 7.4 Airport concession revenue at Stansted airport, 2011 203 FIGURES vii 7.5 Dwell time by journey stage, 2011 206 7.6 Penetration rate by commercial category, 2011 208 7.7 Airport use of mobile apps and social media for commercial facilities, 2012–15 214 8.1 Reasons for passenger airport choice at UK airports, 2011 237 8.2 Use of different types of airport name 241 8.3 Top 15 items of content on airport websites 257 9.1 Popular reasons for airport economic impact studies 264 9.2 The economic impact of airports 265 9.3 Employment at Heathrow airport, 2008/09 267 9.4 Employment impacts of Heathrow airport, 2010 270 9.5 Airport value connectivity index 277 9.6 Services funded by the UK Route Development Fund 281 9.7 Passenger use of alternative airports to Amsterdam after the introduction of the passenger tax 283 10.1 Public transport use at European and Asian airports 299 10.2 Public transport use at US and Australian airports 300 11.1 Airport passenger growth forecasts by region, 2012–13 313 11.2 Airport passenger forecasts by region, 2031 313 Tables 2.1 China’s listed airports 20 2.2 Examples of airport privatisation through share fl otations 23 2.3 Examples of airport privatisation through trade sales 24 2.4 Examples of airport privatisation through concession agreements 29 2.5 Examples of airport privatisation through project fi nance 31 2.6 Ownership patterns at main UK airports, 2012 35 2.7 Group ownership of UK airports, 2012 38 2.8 Privatisation details of Australian airports 40 2.9 Total airport traffi c at Indian airports, 2002–11 45 2.10 Major privatisation projects at Indian airports 47 2.11 Major privatisation projects at Brazil airports 50 2.12 Fraport’s international activities 58 2.13 TAV Airports: portfolio of airports 60 3.1 Profi tability for 50 major airport operators, 2010/11 73 3.2 Airport operating revenue sources 75 3.3 Average operating revenue and cost structures at European airports, 1983–2011 78 3.4 Operating revenue and cost structures at a selection of European airports, 2010/11 79 3.5 Operating revenue and cost structures at a selection of US and Canadian airports, 2010/11 80 3.6 Operating revenue and cost structures at a selection of other airports, 2010/11 81 3.7 Performance indicators commonly used to assess economic performance 88 3.8 Key performance indicators used by ACI Europe 89 3.9 Examples of airport performance and effi ciency studies 93 4.1 Main aeronautical charges at airports 105 4.2 Main features of the 2009 EU airport charges directive 112 4.3 Examples of economic regulation at selected European airports 116 4.4 The X value used for the UK airport price caps 117 4.5 Key features of the 1993 EU slot- allocation regulation 122 4.6 Key features of the 2004 amendments to the 1993 EU slot- allocation regulation 123 TABLES ix 4.7 Examples of slot trades at Heathrow airport 127 4.8 Key features of the 1996 EU ground-handling directive 128 4.9 Taxes at US airports (as of 1 January 2013) 132 5.1 LCC needs and requirements of airport terminals 141 5.2 Examples of LCC facilities and terminals 143 5.3 Examples of different airport business models 148 5.4 Main security activities at airports 150 5.5 Key events related to airport security since 9/11 154 5.6 Use of self- service technology at airports 161 5.7 IATA’s Fast Travel Initiative 161 6.1 Overall passenger satisfaction levels: best-performing airports from ACI’s 2011 Airport Service Quality survey by airport size and region 172 6.2 The passenger experience 175 6.3 Passenger experience segmentation used at Copenhagen airport 177 6.4 Schedule time: Amsterdam–London, 1985–2012 179 6.5 Major European airports with longest delay in summer, 2012 179 6.6 Service quality elements included in the regulation of Heathrow 1, 3, 4 and Terminal East, 2008–13 182 6.7 Service quality elements included in the regulation