Airport Marketing

Lecture teaching:Suiling,Li Associate professor

E-Mail:suiling@npu.edu.tw
Phone:06-9264115-5519
2010/3/4

The Issues of Managing Airports

The changing nature of airport

Airport economics and performance benchmarking
Service quality and its measurement
Airport-airline relationship
The provision of commercial facilities
Airport competition and the role of airport marketing
The economic and social impact of airports
The environmental impact of airports
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The Airport Enterprise: Role and

Scope of activity
The Role and Scope of activity of the Airport
Enterprise
Fund-Raising Activity and Main Governance
Patterns in the Airport Business
Industry-Specific Reasons for low Competition
in the Airport Industry
The International path of Evolution in the
Airport Business

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The Role and Scope of activity of the

Airport Enterprise
The economic impact on countries and regions
The Logistical and Infrastructural Dimension
The Hub Dimension in the marketing of places
Perspective
The marketing Dimension of airport enterprises
in the air transport value chain
The Political value of airport enterprises

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Fund-Raising Activity and Main Governance

Patterns in the Airport Business

Financing and Fund-Raising Phase

Governance Phase
Direct government control
Decentralized public control through airport
authorities
Mixed public/private control
Private ownership programs

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Airport privatization through share flotation

Airport

Date Type of sale

UK:BAA

1987 100%IPO

Austria: Vienna

1992 27%IPO

Denmark :Copenhagen

1994 25%IPO
1996 24% Secondary offering

Italy :Rome

1997 45.5%IPO
2001 45.5% secondary offering

N. Zealand : Auckland

1998 51.6%IPO

Malaysia: Malaysian airport

1999 18%IPO

China: BCIA

2000 35%IPO and trade sales

Switzerland : Zurich

2000 22%IPO and 28% secondary

offering

Source: Graham, 2001

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Airport Privatization through trade sales

Airport

Date

Share of apt. sold (%)

Buyer

UK: Liverpool

1990

76

British Aerospace

UK: Prestwick

1992

100

British Aerospace

UK: British Midlands

1993

100

National Express

UK: Southend

1994

100

Regional Apts.Ltd.

UK: Cardiff

1995

100

TBI

UK: Bournemouth

1995

100

National Express

UK: Belfast Int.al

1996

100

TBI

UK: Birmingham

1997

51

Aerrianta/Natwest 40%,other private investors 11%

UK: Bristol

1997

51

Firstbus

UK: Liverpool

1997

76

Peel Holdings

Italy :Naples

1997

70

BAA

Australia:
Brisbane, Melbourne, Perth

1997

100

Sweden:
Skavsta Stockholm

1998

90

TBI

South Africa: ACSA

1998

20

ADRI South Africa Consortium (ADR has 69% share)

Germany : Hannover

1998

30

Frankfurt airports

N. Zealand:Wellington

1998

66

Infratil

Australia:15 remaining major

airports (excluding Sydney)

1998

100

Source: Graham, 2001

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Various

Various

airport marketing

Industry-Specific Reasons for low

Competition in the Airport Industry
Two additional industry-specific elements that
may help to explain airport fragmentation
International regulatory framework Industrial and
financial centers both airlines productive
decisions and customers purchase choice are
narrowed
Open Skies Policies
Hub-and-spoke vs. non-stop threat

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The International path of Evolution in the Airport

Business
Top 20 Airport groups by revenue
Apt. Group

Country

Main apt.

Apt. Group

Country

Main apt.

BAA plc

UK

LHR/LGW/STN

F.Munchen

Germany

MUC

Fraport

Germany

FRA

City Chicago

USA

ORD/MDW

Aena

Spain

MAD/BCN

CAA
Singapore

Singapore

SIN

Port Authority
NY/NJ

USA

JFK/EWR/LGA

Avinor

Norway

OSL

ADP

France

CDG/ORY

ADR

Italy

FCO/CIA

NAA

Japan

NRT

SEA

Italy

MXP/LIN

KIA

Japan

KIX

LAW.Apt

USA

LAX

Schiphol G.

Holland

AMS

INFRAERO

Brazil

CPQ/GRU

H.Kong Apt.

China

HKG

SAA

USA

SFO

Luftfart.t

Sweden

ARN

Manchester
Apt.

UK

MAN

Source:Airline Business,December 2003

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The Air Transport Value Chain

The Air Transport Value Chain
The Bundle of Actors Involved in the Air
Transport Value-Chain
Channel leader vs. Gate Guardian: The Two
Primary Actors in the air Transport Value Chain
New Patterns of Conduct for Airport Enterprises:
Skipping Peripheral Positions in the Value Chain

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The Bundle of Actors Involved in the

Air Transport Value-Chain

Airline Operators
Airport Enterprises
Hard Providers
Soft providers for the aviation business

General Sale Agents

Airline catering operator
Car rentals
Aircraft lessors
Airport handlers
Air charter brokers
Tour operators
Travel agents
End Customer

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Asia-Pacific low-carriers
Carrier

Base

Start date

Fleet

Air Asia

Kuala, Lumpur

Jan 2002

737-300

Air Deccan

Bangalore

Aug 2003

ATR42,A320s

Air Do

Sapporo

Dec 1998

767-300ER

Cebu Pacific

Manila

Mar 1996

757-200,DC9

Freedom Air

Auckland

Dec 1995

737-300

Jetstar

Melbourne

May 2004

717,A320

Lion Airlines

Jakarta

June 2000

MD 82-83

Nok Air

Bangkok

June 2004

737-400

One-Two-Go

Bangkok

Dec 2003

757-200

Pacific Blue

Christchurch

Jan 2004

737-800

Singapore AirAsia

Singapore

Tba

737-300

Skynet Asia

Miyazaki

Aug 2002

737-400

Skymark Airlines

Tokyo

Sept 1998

767-300ER

Thai AirAsia

Bangkok

Feb 2004

737-300

Tiger Airways

Singapore

Late 2004

Tba

Valuair

Singapore

Tba

A320

Virgin Blue

Brisbane

Aug 2000

737-700/800

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Airport enterprises
Two main SBUs of the airport enterprise
Aviation-related activities

Non aviation-related activities

Landing fees

Rents from additional spaces to: airlines,

General Sales Agents, Catering firms,
forwarders, cargo operators, tour
operators, travel agents

Air traffic control (ATC) fee

Rents and commissions from various

commercial ventures (boutiques, duty
free shops, bank, parking sites, etc.)

Passenger and cargo boarding

fees

Direct sales arising from shops owned

or managed directly by the airport
authority

Handling fees

Other complementary activities

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The Aviation-related SBU: the airport

enterprises technical core business
The Traditional Value Proposition of Airport
Enterprises
A Change in the Rules of the Game
The Rise of Airport Marketing for the AviationRelated Business
Airports Market Positioning
Primary Hub, Secondary Hub, Regional
,All-Cargo Airport

More Positioning Criteria

A Clear View of its Role on the Market
Identification of Partners for Airport Development
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Main elements involved in airport

choice

Width, density and potential market growth of the catchment area

Slot availability
Presence or absence of direct competitors
Network and operational Consistency
Airport charges (landing and handling fee plus fuel price)
Minimum guaranteed turnaround times
Presence of economic and commercial incentives at start-up of operation
Width and availability of airport infrastructural facilities
Availability of a range of intermodal solutions for accessing and leaving the
airport
Absence of environmental restrictions
Availability of maintenance centers at the airport
24 hrs. non stop opening time
Presence of upgrade projects for terminal expansion

Low historical rate of accidents on apron caused by handling operations

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Nineteen different airport positioning criteria

Market positioning

Example

Airports integrated into a citys market plan

Manchester

Airports integrated into a regions market plan

Munich

Airports with growth potential, although limited by

physical constraints

Brussels, San Francisco,Amsterdam

Airports integrated within a system and where the

same hub carrier is dominant

Paris Orly and CDG

London Heathrow and Gatwick

Airports integrated within a system by the will of a

regulator

Milan Linate and Malpensa

Tokyo Haneda and Narita
Washington Dulles and Reagan

Airports operating within the same catchment area,

although with different value proposition

Chicago OHare and Midway

Stockholm Arlanda and Bromma
Milan Malpensa and Orio

Airports attracting overflow traffic

London Biggin Hill

Paris Le Bourget
Rome Ciampino
http://www.tsis.com.tw/menu/airmap_all.htm

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Nineteen different airport positioning criteria

Market positioning

Example

Airports with an alternative(low-cost) proposition

London Luton and Stansted

Paris Beauvois,Brussels Charleroi
Milan Orio,Frankfurt Hahn

Airports implementing cooperative policies with

neighbouring residents and counties

Frankfurt,Amsterdam,
Tokyo Narita

Airports with technical limitations (city airport)

London City Airport

Florence, Toronto City
Courchevel Chambery
Dusseldorf Express,Aosta

Airports under reengineering, due to abandonment St. Louis, Raleigh-Durham

by the hub carrier
London Gatwick, Geneva
Airports designated as national or pan regional
gateways(primary and second hubs)

Wien, Miami,Toronto,
Dubai,Johannesburg,
Los Angeles, Bangkok,
New York JFK

Airports with a cargo focus(all cargo airports)

Vatry, Rotterdam,Memphis,
Louisville,Luik

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Nineteen different airport positioning criteria

Market positioning

Example

Greenfield airports

Munich, Oslo, Seoul, Athens

Upgraded airports, on the basis of

previously existing infrastructures

London Heathrow,
Milan Malpensa, Doha,Dubai,
Bahrain, Madrid, Paris CDG

Airports with limitations in the range of air

service offered, due to infrastructural
constraints

New York La Guardia

Tokyo Narita,
Washington Reagan

Airports acting as a countrys sole gateway

Singapore,Hong Kong,Malta,
Larnaca/Nicosia

Airports undergoing conversion from

military to civil operation

Torrejon (Spain)
El Toro (California)
Grazzanise (Italy)

Helsinki,Copenhagen,Tel Aviv,Wein
Dominant airports (not the sole countrys
gateway, but controlling most of the market) San Juan,Dublin

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Identification of Partners for

Airport Development
Key drivers impacting on the size of an airports catchment area

Richness of aviation-related proposition

Efficient intermodal solutions
Competition from other airports
Competition from other means of transportation
Existence of geographical or legal barriers
Magnitude of economic and tourist activity of the area
Distinctive features of the areas residents, in terms of
income per capita and propensity to fly

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Ideal placement of outlets and services

within a terminal: airside vs. landside area
Departure hall landside

Departure hall
airside

Arrival Hall

Gourmet shop

Duty-free
shops

Pharmacy

Bar/restaurants/food court

Bars/restaurant Bars/restaurants
s

Hairdresser

Last minute
duty-free shop

Info point

Thematic shops

Jeweller

Hotel Point

Fashion stores

Money changer Bank

News-stand

Miscellaneous
Florist
Car rental

Source:Jarach,2002

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The Development of the Non AviationRelated Value Proposition

Towards an Evolution of the Traditional Airport
Business model
New Evolutionary Patterns for Airport Enterprises
The commercial airport philosophy: A new
perspective
A Best-in Class Airport Enterprise: BAA and the
Non-Aviation Business
Best Airport in the world: the case of Singapore
Airport
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The diversification of the airport

value proposition
many

Number of
serviced
cluster

Service focused
(for instance, airports
serving all categories of
carriers)

Aggressively diversified
(targeting primary and
secondary catchment
areas in a wider and
creative way)

Focused on a single
positioning
(for instance, low-cost
airport)

Diversified,
(but targeting the
primary catchment area
only)

few
narrow
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wide
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Modern airport enterprise~ the

commercial airport philosophy: A new
perspective
Wide product: logistic service, commercial
service, congressional services, tourist service,
consulting service
Expected product: multi-modal service
Generic product: frequency of route, service
personalization, cargo, comfort, baggage
handling, check-in, information, operational
efficiency, ticketing
Core benefit: Passengers and goods transfer
from A to point B
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New Marketing-Driven Paradigms for the

airport enterprises Aviation-related
Business
The First Quantum Leap of the airport enterprise
Low-Cost Airports: A possible Evolutionary Path for
Airport Enterprises?
The Possible Role of Helicopters as a Complemetary
Feeder and Defeeder of Hub Airport
Airport Revenue Management
Airport Alliance
Point to point alliances,
Multi-point alliances
Management Contract

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How to Construct an Airport Marketing

Plan
A Creative Marketing Approach for the Airport
enterprise
Assessment
Definition of Goals
Implementation of Objectives
Auditing of Financial Results
Some Concluding Remarks about airport
marketing planning
London City Airport: A Best-in-Class Provider in
the Airport Business
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The contents of an airport

marketing plan into four phases
An assessment of the firms macro and
micro competitive position
A definition of the main goals and
objectives for the airport enterprise
Implementation of the chosen objectives
Auditing of actual performance achieved

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Assessment
How did the airports market position
change since the last period of
observation?
What is the airports current market
position?

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The main types of macro environmental

changes concerning the airport industry
Macro environment changes
1.induced and controlled changes by political
or governmental bodies(ex. Euro introduction,
deregulation acts, OPEC fuel decisions)
2.changes induced by some private based or
private-acting organizations, according to
some trust agreement( ex: airline insurance
fees )
3.Mutations related to totally exogenous and
unpredictable events (ex: Twin Towers effect)
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Definition of Goals
The flight option, that promises to increase an
airports market share
The retrench option that works to protect the
current market share in a highly turbulent
environment
The streamlining option, that looks at divesting
unprofitable SBUs
The abandon option, that sees a company
exiting a current business

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Option of Goals

Flighting for Acquiring New Market Power

Reinforcing and defending current market
share
Divesting
Abandon an Entire SBU

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Flighting for Acquiring

New Market Power
new

Value
offer

Developing by stretching
the current value
proposition
(upgrade of the airport
retailing offer)

Creative diversification
(entertainment, logistic,
conference business)

Better penetration of
served market (by
improving satisfaction on
KPIs)

New market development

(by attracting new carriers)

current
current

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Implementation of Objectives
Timing of Activities
Assignment of Responsibilities
Budgeting

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Auditing of financial result

gap analysis
definition of corrective hypotheses

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London City Airport: A Best-in-Class

Provider in the Airport Business
the creation of a permanent joint committee between the airport
authority and citizens representatives, with the goal of discussing
both occasions of growth for the airport and pace of negative
externalities generated by aircraft operations
LCA has strictly cooperated with regional aircraft manufactures to
research full operational ability and certification to land their various
types of aircraft at LCA.
LCA management has strongly believed in an airport-related
marketing strategy aimed at extending the number of connections
and attracting new operations its airport
the terminal building has been designed to provide excellence in the
most significant processes for its business target audience.

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Reference
David Jarach ,Airport Marketing-Startegies to
Cope with the New Millennium Enviroment,
2005
Anne, Graham, Managing airports an
international perspective, 2008

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