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Managing Airports
• New content on: evolving airline models and implications for airports, self-
connection, digital marketing, sensor and beacon technology, policy decisions and
economic benefits, and climate change adaptation.
• Updated and expanded content on: airport privatisation, economic regulation,
technology within the terminal, non-aeronautical innovations, service quality and
the passenger experience.
• New and updated international case studies to show recent issues and theory in
practice, including studies from emerging economies such as 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 Professor of Air Transport and Tourism Management at the University
of Westminster in London, UK. One of her key areas of expertise and knowledge is
airport management, economics and regulation, and she has over 30 years’ experience of
lecturing, research and consultancy on these topics. She has published widely with recent
books including The Routledge Companion to Air Transport Management, Airport Finance and
Investment in the Global Economy, Aviation Economics and Airport Marketing. Between 2013
and 2015 Anne was Editor-in-Chief of the Journal of Air Transport Management and is on
the Editorial Board of a number of other journals.
Managing Airports
An international perspective
Fifth edition
Anne Graham
Fifth edition published 2018
by Routledge
2 Park Square, Milton Park, Abingdon, Oxon, OX14 4RN
and by Routledge
711 Third Avenue, New York, NY 10017
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2018 Anne Graham
The right of Anne Graham to be identified as author of this work has been
asserted by 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 identification and explanation
without intent to infringe.
First edition published by Elsevier 2001
Fourth edition published by Routledge 2014
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
Names: Graham, Anne, 1958– author.
Title: Managing airports : an international perspective / Anne Graham.
Description: 5th edition. | Abingdon, Oxon ; New York : Routledge, 2018. |
Includes bibliographical references and index.
Identifiers: LCCN 2017051614 (print) | LCCN 2017051781 (ebook) | ISBN
9781315269047 (Master ebook) | ISBN 9781351977869 (Web PDF) | ISBN
9781351977845 ( Mobipocket) | ISBN 9781138285354 (hbk : alk. paper) | ISBN
9781138285347 (pbk : alk. paper) | ISBN 9781315269047 (ebk)
Subjects: LCSH: Airports—Management.
Classification: LCC TL725.3.M2 (ebook) | LCC TL725.3.M2 G73 2018 (print) |
DDC 387.7/36068—dc23
LC record available at https://lccn.loc.gov/2017051614
1 Introduction 1
2 The structure of the airport industry 9
3 Airport economics and performance benchmarking 83
4 The airport–airline relationship 125
5 Airport operations 177
6 Airport service quality and the passenger experience 219
7 Provision of commercial facilities 253
8 Airport competition and the role of marketing 289
9 The economic and social impact of airports 349
10 The environmental impact of airports 379
11 Future prospects 411
Index 421
v
Figures
vii
FIGURES
viii
Tables
ix
TA B L E S
x
TA B L E S
xi
CASE STUDIES
xiii
Preface
When the first edition of this book was published in 2001, the airport industry had
received relatively little attention in the published literature and had been very much
overshadowed by the airline sector. Hence this was the motivation for writing this
book. Shortly after publication, the airport sector had to cope with the unparalleled
consequences of the events of 9/11, the Iraq War, the outbreak of SARS and the con-
tinuing threat of terrorism. These issues were consequently considered in the book’s
second edition, which was published in 2003. Five years on, the third edition in
2008 concluded that 9/11 had been a significant turning point for the industry and
since then it had been operating in a much more unstable environment. This was
not just due to security concerns, but also because of changing airline structures and
increased environmental pressures. Another five years passed and the world experi-
enced a severe global economic crisis, political unrest and a number of natural disas-
ters. So again, this was the backdrop for the fourth edition of this book. As I now write
this fifth edition amidst heightened fears of terrorist attacks, unpredicted political
change and its consequences, the occurrence of extreme weather events and advances
in technology (enabling a realization of the unimaginable), the only certainty seems
to be that the world, and with it the airport industry, will continue to face a future of
many uncertainties.
Whilst in general considerably more has now been written about the airport industry,
there is still limited coverage in one place of all the important managerial and busi-
ness aspects of running an airport and how these link together. Therefore, the aim of
this book, as in previous editions, is to provide a comprehensive appreciation of the key
management issues facing modern-day airport operators. As well as providing an up-to
date review of all the latest developments and trends, the discussions concerning certain
developments, such as the passenger experience, security and technological innovations,
have been expanded. Previously uncovered topics such as self-connection, beacon tech-
nology, climate change adaptation – to name but a few – have now been included. At the
same time, other themes such as airport privatisation, competition and economic regu-
lation have been revisited, given the changing airport–airline relationship and external
environment.
Airports are now complex businesses requiring a range of competencies and skills. The
emphasis here is on the economic, commercial and planning areas at a strategic level. An
approach has been adopted reflecting the very international nature of most of the indus-
try. The book uses material from a wide range of airports and has a very practical focus.
New case studies have been provided, not only to cover new topics, but also to reflect the
xv
P R E FA C E
shift of economic power and corresponding traffic growth to emerging economies and
other challenges that face more mature markets. The book provides an overview of all the
key management challenges facing airports, and so by necessity the scope has to be very
far-reaching. The book will enable the reader to acquire a broad and up-to-date insight
into the workings of the industry which will meet the needs of anyone who wishes to
work, or is already working, in the airport sector.
xvi
Acknowledgements
I am extremely grateful to all my colleagues, students, family and friends who have
helped me in pursuing my passion to write about airports. I am also very appreciative of
the enormous support from the team at Routledge, particularly Emma Travis and Carlotta
Fanton.
xvii
Abbreviations
xix
A B B R E V I AT I O N S
xx
A B B R E V I AT I O N S
xxi
A B B R E V I AT I O N S
xxii
1 Introduction
Airports are an essential part of the air transport system. They provide all the infrastructure
needed to enable passengers and freight to transfer from surface to air modes of transport
and to allow airlines to take off and land. The basic airport infrastructure consists of run-
ways, taxiways, apron space, gates, passenger and freight terminals, and ground transport
interchanges. Airports bring together a wide range of facilities and services in order to
fulfil their role within the air transport industry. These services include air traffic control
(ATC), security, and fire and rescue in the airfield. Handling facilities are provided so that
passengers, their baggage and freight can be transferred successfully between aircraft and
terminals, and processed within the terminal. Airports also offer a wide variety of com-
mercial facilities ranging from shops and restaurants to hotels, conference services and
business parks.
As well as playing a crucial role within the air transport sector, airports have a strategic
importance to the regions they serve. In a number of countries they are increasingly becom-
ing integrated within the overall transport system by establishing links to high-speed rail
and key road networks. Airports can bring greater wealth, provide substantial employment
opportunities and encourage economic development – and can be a lifeline to isolated com-
munities. However, they do have a very significant effect, both on the environment in which
they are located and on the quality of life of residents living nearby. Growing awareness of
general environmental issues has heightened environmental concerns about airports.
The focus of this book is on management issues facing airport operators. These
operators vary considerably in their ownership, management structure and style, degree
of autonomy, and funding. Typically, airport operators themselves provide only a small
proportion of an airport’s facilities and services. The rest of these activities are undertaken
by airlines, handling agents, government agencies, concessionaires and other specialist
organisations. The way in which operators choose to provide the diverse range of airport
facilities can have a major impact on their economic and operational performance and
on their relationship with their customers.
Each airport operator will thus have a unique identity, but all have to assume overall con-
trol and responsibility at the airport. Each will be faced with the challenging task of coor-
dinating all the services to enable the airport system to work efficiently. The providers of
services are just some of the airport stakeholders that operators need to consider. Others
include shareholders, airport users, employees, local residents, environmental lobbyists
and government bodies. A complex situation exists, with many of these groups having
different interests and possibly holding conflicting views about the strategic role of the
1
CHAPTER 1 I ntro d uction
airport. All the stakeholder relationships are important, but the development of a good
relationship with the airlines is critical as ultimately this will largely determine the air
services on offer at the airport.
Globally the airport industry is dominated by the regions of Europe, Asia/Pacific and
North America in terms of passenger numbers and cargo tonnes (Figures 1.1 and 1.2).
Europe
27%
Figure 1.1
Airport passengers by world region, 2016
Source: ACI
North America
18% Asia-Pacific
39%
Europe
28%
Figure 1.2
Airport cargo tonnes by world region, 2016
Source: ACI
2
INTRODUCTION CHAPTER 1
In total, Airports Council International (ACI) airports handled 7,700 million passengers,
110 million cargo tonnes and 92 million aircraft movements in 2016.
The importance of these three global regions is reflected in the individual traffic figures
of the various airports (Figures 1.3–1.5). Out of the 20 largest global airports, six are US
airports, nine are Asia Pacific/Middle Eastern airports and five are European (Figure 1.3).
120000
100000
80000
Passengers (000s)
60000
40000
20000
Figure 1.3
The world’s 20 largest airports by total passengers, 2016
Source: ACI
5000
4500
4000
Cargo (tonnes) (000s)
3500
3000
2500
2000
1500
1000
500
0
Figure 1.4
The world’s 20 largest airports by cargo tonnes, 2016
Source: ACI
3
CHAPTER 1 I ntro d uction
1000
900
Figure 1.5
The world’s 20 largest airports by aircraft movements, 2016
Source: ACI
Not all the major cargo airports coincide with the major passenger airports. Memphis is
the world’s second largest cargo airport because FedEx is based there. Similarly, UPS has
its base at Louisville. In terms of aircraft movements, North American airports tend to
have comparatively high numbers because the average size of aircraft is smaller due to
competitive pressures and the dominance of domestic traffic. The larger than average
aircraft size in Asia means that none of the busiest airports in terms of movements are
situated in this region, except for Beijing and Shanghai.
The aviation industry had been growing virtually continuously since the Second World
War, with periodic fluctuations due to economic recessions or other external factors such
as the Gulf War in 1991. However, this growth was dramatically halted due to the events
of 9/11 in 2001 combined with a global economic downturn. Since then, the airport
industry has experienced a number of volatile years, with further incidents including the
outbreaks of SARS (2003) and swine flu (2009), the Eyjafjallajökull ash cloud (2010), the
Japanese earthquake (2011) and the Arab Spring uprisings (2010–12). These events have
had various impacts in different world regions, as illustrated by Figure 1.6. For example,
the influence of SARS in the Asia/Pacific region in 2003 can be seen clearly, as can the
effect of the social and political unrest due to the Arab Spring uprisings in the African
region in 2011. Of major significance almost everywhere was the global credit crunch and
economic recession, which had a devastating impact on traffic in 2008 and 2009. Traffic
growth returned for all regions in 2010 and 2011 (except Africa), and has continued to
rise, but with a considerable variation within different regions.
In 1999, North America had 47 per cent of the global market share of passenger numbers,
followed by Europe with 30 per cent. Traffic in Asia/Pacific accounted for just 15 per
cent of the total. Since then the share of traffic in this region has increased dramatically,
4
INTRODUCTION CHAPTER 1
14
12
10
% growth on previous year
8 Asia/Pac
Europe
6
N.America
4
L.Amer/Car
2 Middle East
0 Africa
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
-2
-4
-6
Figure 1.6
Airport passenger growth by main region 2006–16
Source: ACI
particularly in China, where Beijing was the second largest airport in the world in 2016
with nearly 94 million passengers – having been in only ninth position with around
50 million passengers 10 years earlier. In addition, the Middle East area has seen very
significant increases in traffic volumes, particular at Dubai airport, which handled over
84 million passengers in 2016 compared with fewer than 30 million in 2006.
The growth in demand for air transport has had very significant economic and envi-
ronmental consequences for both the airline and airport industries. Moreover, since the
1970s there have been major regulatory and structural developments, which have pro-
foundly affected the way in which the two industries operate. Initially most change was
experienced within the airline sector as a consequence of airline deregulation, privatisa-
tion and globalisation trends. The pace of change was slower in the airport industry, but
now this sector, too, has developed into a fundamentally different business. The trend
towards airline deregulation began in 1978 with the deregulation of the US domestic
market. Many more markets were subsequently liberalised or deregulated, initially as the
result of the adoption of more liberal bilateral air service agreements. In the European
Union (EU), deregulation was achieved with a multilateral policy that evolved over a
number of years with the introduction of the three deregulation packages in 1987, 1990
and 1993. The 1993 package, which did not become fully operational until 1997, was
the most significant and had the most far-reaching impact. This European deregulation
allowed a large low-cost carrier (LCC) industry to develop, which has had major conse-
quences for many airports. This deregulation trend has continued in other parts of the
world, a very significant milestone being the introduction of the EU–US open aviation
area in 2008.
5
CHAPTER 1 I ntro d uction
At the same time the airline industry was being deregulated, airline ownership patterns
changed. Most carriers, with the notable exception of those in the United States, tradi-
tionally were state owned and often were subsidised by their government owners. How-
ever, this situation has changed substantially as an increasing number of governments
have opted for partially or totally private sector airline ownership, primarily to reduce the
burden on public sector expenditure and to encourage greater operating efficiency. The
other most significant development within the airline industry, partly due to deregula-
tion and privatisation trends, has been the globalisation of the industry and the emer-
gence of transnational airlines. Three major alliance groupings – Star, oneworld and Sky
Team – have emerged with global networks. They dominate the airline business, account-
ing for over half of all traffic. Airline joint ventures and mergers have followed and are
becoming increasingly popular.
The airports found themselves caught up in this environment of change. Radical restruc-
turing occurred, which in many ways mirrored that which had fundamentally changed
the airline industry. Three key developments have been witnessed within the airport sec-
tor, as follows.
This book discusses the implications of the development of the airport sector, which has
moved from an industry characterised by public sector ownership and national require-
ments, into a new era of airport management where the private sector and international
airport companies play a major role. Airports are now complex enterprises that require
a wide range of business competencies and skills – just as any other industry. Airports
no longer see their purpose simply as providers of infrastructure, but rather as providing
facilities to meet the needs of their users.
Chapter 2 describes the changes in ownership and management models that have taken
place, and reviews the current structure of the airport industry. These developments have
had a major impact on airport economics and have significantly increased the need to
benchmark performance, which is considered in Chapter 3. These airport industry trends,
occurring at the same time as deregulation within the airline industry, have also meant
that the traditional airline–airport relationship has been changed irreversibly. Chapter 4
looks at this, focusing primarily on airport charging, regulation and slots issues.
6
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