Fundamental shifts in airline services have pressured airports to adopt new strategies in order to survive and thrive. Already we are seeing the first signs of a new kind of airport that will replace the dated facilities operating in most cities.
For decades, airline operations were a model of stability. What caused the industry to turn topsy-turvy? One major force was the appearance of a new breed of low-cost carriers, such as Southwest Airlines. Their innovative way of doing business, coupled with the advent of smaller-capacity regional jets, made airports hustle to accommodate the increased volume of passengers and rapid turnaround of planes.
More recently—following 9/11—even bigger changes took place when airports were forced to adopt dramatic new security protocols. Then, after airlines rode out the bankruptcies and restructurings of 2005-2007, fuel prices skyrocketed in 2008 and demand for air travel plummeted. All this uncertainty has led airports to re-examine how they work with airlines.
These industry trends put new pressures on airport infrastructure. Low-cost carriers, for example, demand changes to aprons and taxi lanes to accommodate their fleets. The shift to Internet check-in means airports should provide more places for bag drops and electronic check-in.
At the same time, the legacy carriers are cutting back on regional jet service and shifting aircraft to more profitable domestic and international routes, which is forcing airports to look for ways to turn unused domestic gates into “international swing gates.” Further, airports have been forced to develop or expand customs and border facilities.
Funding these capital improvements is a critical problem for airports. To tap potential revenue sources, they are moving away from long-term, exclusive leases with airlines to a compensatory funding model—a pay-as-you-go approach in which airlines pay for what they use when they use it. While this arrangement is financially riskier for airports, it gives them greater control of their facilities.
In this risk-laden business environment, airports are hungry to reduce uncertainty. For many, the best solution is to adopt a so-called common-use business model. In this scenario, the airport owns its gates, loading bridges, ticketing hall and baggage-claim facility and assigns usage to carriers as needed. A fully common-use terminal allows for a much smaller ticketing hall and fewer gates and baggage-claim facilities, producing smaller terminals with lower construction costs. By paying less money for a terminal with greater flexibility, airport executives can use their fixed assets more efficiently.
Technology is speeding the transition to common-use airports as well as driving the look and feel of the next generation of terminals. With broader acceptance of e-ticketing, the ticketing hall as we know it today may disappear altogether.
Under the common-use business model, cost-effective, highly flexible airports will replace the less nimble, airline-centric model of the past. Airports will look and operate differently as they are reconfigured from airline fortresses to passenger-focused service centers. The aim is easier access, speedier passenger flow through ticketing and security, seamless baggage handling, more and better choices of food and beverages, and amenity-filled waiting areas suited to tech-savvy travelers.
Further, airlines will benefit from paying only for what they need when they need it. Airports will take back control of their facilities, gain the ability to manage their assets more efficiently, and provide a higher level of passenger service.