Airport Planning, Coursework Example

Over the last century commercial aviation has evolved from the first efforts of the Wright brothers into a global industry connecting the most far-flung parts of the world. Advances in technology, changes in regulation and economic factors have combined to guide the development of commercial aviation from its roots as a state-run and tightly-controlled industry into one where air travel is a commodity available to millions, or even billions of people. As these and other forces have shaped the commercial aviation industry from one where air travel is a luxury into one where air travel is a commodity, carriers and airports have been forced to adapt to these changes in order to survive. In the contemporary era of globalisation airlines and airports face increasing competition and ever-tightening profit margins, making the environment more challenging than ever before. In light of these challenges, airport planners must consider a broad range of factors when developing and implementing strategies that will best serve the needs of travelers while also responding to the dynamic forces that both affect and are affected by the airline industry.

Background

Although air travel has become a commodity available to more people in more places than ever before, it is still a relatively young industry. The aviation age that reached its zenith in the 20^th century, when air travel was a luxury available to the few, has given way to an industry that is driven largely by the demands of travelers. The era of globalisation has seen the advent of multinational corporations that service clients and customers around the world, and business and tourist travelers that expect to be able to reach any point on the globe and demand the lowest possible prices for the privilege. A number of significant factors have underpinned this evolution from exclusivity to mass-market commoditisation; among the most notable of these have been economic forces related to energy and supply costs and the regulatory responses that were spurred by these economic factors. In order to understand the context in which contemporary airport planners must function, it is helpful to understand the rough outlines of the history of commercial air travel and the shifting forces that have given rise to the contemporary air travel industry.

As commercial air travel grew, the agreements made about control of air space and about industry regulation favored the model of state control. Airlines had to be based primarily in the cities and countries in which they originated and which they serviced. While airlines based in various countries could send passengers to other countries, they were restricted from operating routes that did not originate or connect to airports in their home countries (Burghowt, 2007, p255). This situation meant that international travel was both possible and common, but it also placed significant restrictions on the functions of the airlines. At the same time, the early decades of the air travel industry were controlled and regulated at the international level; agreements developed by the International Air Transport Association (IATA), for example, served to establish standards for international fares and for associated fees, tariffs and taxes. Up until the 1980s the international air travel industry was supported by the “three pillars” (Doganis, 2000, p91) that established Air Service Agreements (ASAs) between controlling countries, established relationships between airlines that allowed them share costs and revenues in city pairs, and maintained the oversight and control of fares and tariffs.

The US also began to establish so-called bilateral agreements independently of IATA wherein US airlines were able to land in cities irrespective of the city pairs established under IATA (Doganis, 2000, p96). Such bilateral agreements did not, however, supersede the overall regulation of international air travel, and issues related to fees and passenger capacity remained tightly regulated. In this model the various airlines typically offered the same fares between city pairs, as the fares, tariffs, and other associated costs were standardised across the industry. Inter-airline pooling allowed the costs and revenues to be shared and divided; this gave rise to the practice of interlining, a system that allows passengers to make a single purchase for air travel, while also allowing the passenger’s itinerary to include flights in different airlines (Macario and Voorde, 2011, p175). With these factors at work, the air travel industry of the mid- to late20th century was not marked by the sort of competitive forces that shape it today.

Perhaps the single most significant factor that served to mold the contemporary air travel industry actually arose decades ago; the manufactured crisis of the oil shortage in 1973 drove a steep spike in fuel costs, and spurred calls for industry deregulation. The voices speaking up for deregulation believed that market forces would serve to drive down oil prices and promote competition between and among airlines (Tugores-Garcia, 2012, p14). Several years later, under the auspices of US President Jimmy Carter, the process of deregulating the air travel industry began, and the industry as it exists today began to take shape. Deregulation spurred the birth and growth of myriad discount and low-cost airlines, and cleared the field for the development of new agreements, the establishment of new routes and opportunities for airlines to compete with one another. This represented a paradigm shift in the air travel industry, and the reverberations of this shift continue to have implications for the industry today.

Contemporary Overview

Although the deregulation of air travel underpinned massive shifts in the industry, it was not the only factor that has given rise to the contemporary form the industry has taken. The development of satellite communication, the Internet, and other modern advances in technology have served to connect the world in virtual space in a manner which matches, and even exceeds, the physical and geographical connections. While international air travel has made it possible for passengers to travel to nearly any point on the globe, the advent of modern communication technology has in many instances obviated the need for such travel. Individuals who wish to meet with other people in other parts of the world have a greater array of options than ever before; where physically traveling from one location to another may have been the best –or sometimes the only- choice for many people, it is now possible to speak to and even see other people around the world without ever leaving home.

These advances in communication and information technologies have further served to exert downward pressure on the prices of air travel, while also opening up new potential sources of revenue for airlines and for the airports that serve them. The advent of so-called “global cities” (Ashford et al, 2011, p657) that are positioned to take advantage of the possibilities wrought by globalisation make prime choices for airport planners. In the early decades of the air travel industry, the functions and roles of airports were largely confined to providing operational platforms for carriers. In this context, airports served as destinations where airlines could stop for refueling and to load and unload passengers. Consideration was, of course, given to locations that would best allow these functions to occur, but the emphasis for both carriers and airports were largely restricted to these basic necessities and operations.

As the forces of globalisation have shaped the economic and even the cultural characteristics of destination cities, the roles played by airports have become increasingly complex. Ashford et al describe the way that airports have evolved from basic transportation centers to “major urban intermodal nodes” (p658). These contemporary airports serve an array of functions and have grown into significant contributors to urban and economic development. While it is still necessary for airports to perform their historical functions, many have blossomed into so-called “airport cities” that offer an array of amenities and services to travelers and that have “symbiotic” relationships with the economic and commercial interests operating in their surrounding environments (Ashford et al, p660).

These are not the only demands on or expectations that are exerting pressure on airports and on airport planners. Passengers have become consumers, with air travel serving as simply another commodity to be consumed. The shrinking of strict regulations combined with the advent of globalisation has also prompted significant changes and opened the door to many new possibilities for airlines. Although deregulation and the subsequent completion of discount airlines and other changes in the industry have forced airlines to cut costs in an effort to keep fares low, these changes have also led to enormous growth in the number of people traveling by air. Carriers are competing for fares that are squeezed by industry forces, but are also faced with the opportunities wrought by the growth in the number of passengers traveling by air.

Strategic Planning for the Age of Globalisation

While many of the legacy limitations and structures of an earlier age remain extant in contemporary air travel, a number of strategies began to emerge in the 1980s that have allowed airlines to adapt to changing markets and the evolution of the industry. One of these strategies is code-sharing, which operates similarly to inline ticketing. Code-sharing agreements allow airlines to apply their own codes to the flights of other airlines, which in turn makes it possible for carriers to circumvent the limitations of country-of-origin requirements (Tugores-Garcia, 2012, p15). In effect, such agreements extend the reach and scope of the partnered airlines, and promote cooperation alongside competition. This tension between cooperation and competition serves the interests of both the carriers and the passengers they serve, though it does make it necessary for carriers to balance these contradictory forces in order to generate revenues and manage costs.

The advent of code-sharing built on the earlier cooperative agreements of the pre-deregulation era, while also setting the stage for even more extensive and broad agreements. Many carriers have entered into alliances with each other in an effort to streamline operations and to remove as much friction as possible from the use of code-sharing. Like other agreements and cooperative efforts in the air travel industry, these alliances have evolved and grown to meet the demands of consumers and to take full advantage of the opportunities presented by cooperation. In the years following deregulation there were a significant number of mergers and acquisitions among carriers as low-cost airlines joined with larger companies and struggling carriers joined forces in an effort to remain competitive in an increasingly challenging economic environment. On an international scale these agreements are known as global airline alliances (GALs), and by the early 20^th century three primary GALs have emerged (Tugores-Garcia, 2011, p2). These three GALs are Star Alliance, oneworld, and Sky Team; all three are comprised of “major carriers from Europe, Asia, and North America” (Macario and Voorde, 2011, p167). The growth of GALs has had significant implications for extant airports and for those involved in planning for future development and implementation of airport locations and services.

Airport planning, like the air travel industry overall, is a much different arena than it was in the decades before deregulation. In the decades where air travel was more tightly regulated and wherein carriers were not forced to compete for revenue in the same way they now must compete, airport planning was predicated on basic needs of airlines and passengers. As deregulation made the market for carriers more competitive, airports also had to adapt and adjust to these new market forces. Concurrent with these changes, however, airport planners must also adopt a strategic approach, and consider the long-term and long-range implications of decisions made in the present (ACRP, 2010, p4). Air travel has become a dynamic and often-changing industry, and airport planners must ensure that they are prepared to meet the demands of current circumstances while also remaining flexible and responsive to future events and changing circumstances.

The implications of deregulation for airlines made the air travel industry more competitive and challenging for carriers. In order to survive, carriers had to find ways to maximize existing revenue streams develop new sources of revenue, cut costs, and yet still remain competitive. Deregulation also forced airports to be more competitive, as the pressures of market forces that limited revenue for carriers also affected the revenue generated for and by airports. Regulations that once assured standardized fares, tariffs, and other figures were eliminated, and the once-guaranteed revenues and known quantities evaporated, leaving both carriers and airports struggling to adjust to the new market conditions (Duval, 2007, p242). In the face of these challenges, airports have been forced to seek other ways by which they can generate revenue apart from that which is directly generated by carriers.

Airports have adopted a variety of strategies to meet these challenges, most of which have focused on providing additional or different services, amenities, and products to passengers and on applying fees or otherwise generating revenue from both extant and newly-created services (Ashford et al, 2011, p658). In the globalisation era, cities around the world are competing with each other in new and different ways. International air travel and digital communication have made it possible for corporations to enter virtually unlimited markets and to build offices, manufacturing facilities, distribution centers and other facilities in any region of the world (Goetsche and Alders, 2007, p3). These market forces are what drive the completion between cities, as they seek investment and other opportunities presented by economic expansion and development. Other sources of revenue from air travel include money spent by tourists, revenue generated by special events such as the Olympics and other sports competitions, and other revenue generated by individual private travelers (Duval, 2007, p243).

In the pre-deregulation era airports were differentiated largely by their geographical location. As the industry has changed and evolved in the last few decades, airports are now competing with each other in much the same way that air carriers must compete. The competition between airports is rooted more deeply, as airport facilities are typically a considerable component of the infrastructure of the cities in which they operate (Goetsche and Alders, 2007, p5). As cities compete with one another on the global stage, vying for the revenue generated by economic development and business growth, their airports must function to facilitate such competition. This presents enormous challenges, as airport managers and operators have to plan on multiple scales. At the macro level, airports must mesh with other forms of travel-related infrastructure, such as the surrounding highways, roads, and railways; this requires long-range and long-term planning (Goetsche and Alders, 2007, p3).

Such long-range planning must be based on projections of revenue generated in the future, and the shifting dynamics of the airline industry make such planning enormously challenging. In order to maximize revenue, airports have developed amenities for travelers that include restaurants, shops, and other services located in and around the airport. In order to extend their reach beyond the confines of the airport, managers and operators may form partnerships and joint ventures with their surrounding municipalities to develop revenue streams and to create synergy between the airport and the geographical region it serves (Goetsche and Alders, 2007, p3). This may include the development of office and retail space near the airport, and even the development of residential properties that are close enough to utilize the surrounding roads and other transportation to make reaching the airport and its surrounding commercial spaces viable and manageable.

Knippenberger and Wall (2010) describe contemporary airports as the “great transfer points of the world” and note that they serve as “global and regional interfaces” between national and international travelers and the cities in which they are located (p95). At the same time as airport planning must consider the broad, long-term implications involved in the synergy between themselves and their geographical and economic surroundings, they must also consider individual passengers, especially in light of economic forces driving consumers to seek low-cost air fares without sacrificing service. Such considerations make it imperative that airports have the capacity to serve large numbers of travelers in order to maximize revenue. This in turn means that airports must serve the needs of the airlines that utilize the airports, leading to a complex, interdependent relationship between passengers, airports, and carriers.

At the core of these considerations is mobility; it is the fundamental goal of airports and carriers to move people and things from one point to another (Macario and Voorde, 2011, p158). Airport planners must seek ways to ensure that passengers can easily get to and from their facilities, and that travelers who are stopping en route to other locations have access to amenities and services that ensure the satisfaction of travelers while maximizing revenue for the airports. Airport planners are not only tasked with responding to changing market forces and issues related to the dynamic carrier industry; they are must also be proactive. Not only do airport planners have to anticipate the future needs and desires of passengers and carriers, they must also cultivate a vision for the future that has yet to be considered. Simply being reactionary is not enough; airport planners must learn from the past in order to create airports that will continue to connect the regional to the international, and will connect the past to the future.

Works Cited

Ashford, Norman, Saleh A. Mumayiz, and Paul H. Wright. Airport Engineering: Planning, Design, and Development of 21st Century Airports. Hoboken, N.J: Wiley, 2011. Print.

Burghouwt, Guillaume. Airline Network Development in Europe and Its Implications for Airport Planning. Aldershot, Hampshire: Ashgate, 2007. Print.

“Burns & McDonnell.” Timeline of Commercial Aviation. N.p., 2013. Web. 20 Dec. 2013. <http://www.burnsmcd.com/BenchMark/Article/Timeline-of-Commercial-Aviation>.

Doganis, Rigas. The Airline Business in the 21st Century. New York, NY: Routledge, 2000. Print.

Duval, David T. Tourism and Transport: Modes, Networks and Flows. Clevedon, UK: Channel View Publications, 2007. Print.

Goetsch, Bjoern, and Sascha Albers. “Towards a Model of Airport-Airline Interaction.”University of Cologne, Dept. of Business Policy and Logistics: Working Paper (2007): n. pag. Web. 20 Dec. 2013.

Knippenberger, Ute, and Alex Wall. Airports in Cities and Regions: Research and Practise ; 1st International Colloquium on Airports and Spatial Development, Karlsruhe, 9th – 10th July 2009. Karlsruhe, Germany: KIT Scientific Publ, 2010. Print.

Maca?rio, Rosa?rio, and E. Voorde. Critical Issues in Air Transport Economics and Business. London, UK: Routledge, 2011. Print.

Strategic Planning in the Airport Industry. Airport Cooperative Research Program (ACRP), 2009. Web. 20 Dec. 2013.

Tugores-Garcia, Antonio. “Analysis of Global Airline Alliances as a Strategy for International Network Development.” Massachusetts Institute of Technology: Analysis (2012): n. pag. Web. 20 Dec. 2013.

Wulf, Torsten, Phillip Meibner, Christian Brands, and Bjorn Maul. “Future Scenarios for the European Airline Industry.” HHL – Leipzig Graduate School of Management: Working Paper Chair of Strategic Management and Organization (2010): n. pag. Web. 20 Dec. 2013.