Role of Your Airport in Passenger Experience and Air Service Development

Passengers can sometimes misunderstand the role your airport plays in their travel experience. For example, if a passenger is unhappy with a flight cancellation or treatment during security screening, the frustration may be misdirected at your airport as the passenger believes you have control over these issues. It can be a frustrating task for any airport manager/staff to explain to the flying public the limitations of the airport in addressing many of these issues. The table below illustrates where commercial air service-related responsibilities lie. The ACI-NA Factsheet (see link below) provides a tool for airports to use to help educate their communities.

Roles and Responsibilities in ASD

Most of the core air service development activities reside with your airport’s staff in conjunction with community stakeholders such as Chambers of Commerce, Economic Development Corporations, top businesses and your consultants. However, airlines have the final say in which markets are flown, the number of flights offered, the type of aircraft used and the various levels of airfares at any given time. Your airport acts as the liaison with the airlines but in the end it is the airlines that make key decisions related to air service. New service decisions usually move up the airline’s chain of command from route planner to planning director and then to department vice president for final consideration. Airline service decisions involve the evaluation of multiple criteria on the part of the airline planning team as they strive to balance hard data and qualitative factors. New markets are often debated and scrutinized internally then ranked among the new market consideration set for the final go/no-go decision.

Airport

Your airport’s role in air service development is an integral one beyond being the operator of the facility and landlord to the airline tenants. Your airport’s role in ASD lies primarily in:

• Maintaining the relationships between the airline, your airport and the community. It is often your airport’s staff that coordinates efforts between the airline and the community.
• Providing airport-related data such as the airport catchment area, existing/historical air service, and the airport costs to the airlines.
• Setting up frequent meetings and discussions between your airport/local community and the airlines. These meetings can help influence airline planners and convince them that a profitable opportunity exists.
• Offering competitive costs. While airport costs typically make up a small percent of an airline’s total cost, a subset of airlines, particularly ultra-low cost airlines, say that they consider this to be an essential area for discussion when considering new service. Unlike fuel, airport costs tend to be negotiable. It is your responsibility to know their costs and provide estimates to the airline including landing fees, terminal fees, fuel flowage fees, etc. Airport staff through negotiations with their airline tenants set the airport costs.
• Developing incentives. Your airport and the surrounding community share a role in developing the air service incentives needed for service improvements.

There are numerous communities competing for limited aircraft resources, and competition for new markets is fierce. Airline route planners have to assess which markets have the greatest profit potential with the least amount of risk and startup costs.

Community

The role of the community in air service initiatives is an important one. Often smaller markets get less airline attention as there are fewer passengers and less revenue. Apart from market size issues there are two important facts about smaller markets that diminish airline attention: lack of passenger data and lack of marketing resources.

Provide Community Data

First, airlines typically make service decisions based on historical data on passenger traffic. If there is no historical passenger data then the community is far less likely to be considered for service. This can be why smaller communities that have undergone significant growth in population and/or economic activity frequently go unserved or underserved by air carriers. Communities may make these new service opportunities known to airline managers to receive the attention they warrant.

It is important to distinguish between efforts to entice an airline to serve a particular community for the first time and efforts to entice an airline to increase existing service to a community. When an airline introduces its first service to a community, the airline must open up shop there: hire or transfer management and employees, lease new office, ticket counter, gate and baggage space and make a host of administrative and financial arrangements. For small communities offering limited revenue potential, it can be very difficult to convince an airline to incur the cost of establishing business in a new location, especially since new routes are the riskiest for an airline. The best revenue opportunities are already being served, generally by multiple airlines.

Convincing an airline to add routes or frequencies to cities they already serve is still a difficult task, but not nearly as daunting. That’s because the marginal cost of adding a flight or two is far, far lower than the marginal cost of adding a new city to the network.

Commit to Supporting Service

Second, airline managers consider smaller markets higher risk than larger markets. In short, the pie is smaller and the barriers-to-entry are significant. Because smaller markets make up such a small share of an airlines overall passenger volume, the marketing dollars devoted by airlines to these markets is miniscule. The past is full of examples of airlines that have gone into smaller markets without marketing support for new service, only to pull service after a few months because the passengers did not materialize. Today, communities seeking service improvements could convince airline decision makers not only that the market has the required passenger and revenue potential, but that the community is committed to marketing and supporting the service when the airline comes to town.

Local Businesses

Within smaller non-resort communities, the local business community can be the most engaged group in air service development for several reasons. In most small communities the success of air service initiatives depends on the support of the business community. Why? In general there are two groups of air travelers, leisure and business. In small communities most leisure travelers drive to larger competing airports for lower airfares while business flyers are more likely to use local service. Business flyers are willing to pay for convenience; hence, they are the backbone of the air service market in small communities. Since business flyers have a vested interest in local air service, often they are willing participants in air service development programs. Additionally, since business flyers are considered high-value customers by traditional airlines, their participation in air service improvement efforts has more sway with airline managers. Accordingly, air service-related meetings with airline managers often include representatives from the local business community.

By far, the single most valuable incentive to an airline is a revenue guarantee, but this incentive cannot by law be funded by your airport. Thus, here community participation is invaluable. Many revenue guarantees are funded by local businesses, universities and Economic Development Corporations. Others are funded by SCASDP grants that also require community participation.