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AIRPORT COOPERATIVE RESEARCH PROGRAM ACRP REPORT 54 Airports are vital national resources. They serve a key role in trans- Project 01-11 portation of people and goods and in regional, national, and inter- ISSN 1935-9802 national commerce. They are where the nation’s aviation system ISBN 978-0-309-21353-0 connects with other modes of transportation and where federal respon- Library of Congress Control Number 2011937761 sibility for managing and regulating air traffic operations intersects © 2011 National Academy of Sciences. All rights reserved. with the role of state and local governments that own and operate most airports. Research is necessary to solve common operating problems, to adapt appropriate new technologies from other industries, and to introduce innovations into the airport industry. The Airport Coopera- COPYRIGHT INFORMATION tive Research Program (ACRP) serves as one of the principal means by Authors herein are responsible for the authenticity of their materials and for obtaining which the airport industry can develop innovative near-term solutions written permissions from publishers or persons who own the copyright to any previously to meet demands placed on it. published or copyrighted material used herein. The need for ACRP was identified in TRB Special Report 272: Airport Cooperative Research Programs (CRP) grants permission to reproduce material in this Research Needs: Cooperative Solutions in 2003, based on a study spon- publication for classroom and not-for-profit purposes. Permission is given with the sored by the Federal Aviation Administration (FAA). The ACRP carries understanding that none of the material will be used to imply TRB or FAA endorsement out applied research on problems that are shared by airport operating of a particular product, method, or practice. It is expected that those reproducing the agencies and are not being adequately addressed by existing federal material in this document for educational and not-for-profit uses will give appropriate research programs. It is modeled after the successful National Coopera- acknowledgment of the source of any reprinted or reproduced material. For other uses of the material, request permission from CRP. tive Highway Research Program and Transit Cooperative Research Pro- gram. The ACRP undertakes research and other technical activities in a variety of airport subject areas, including design, construction, mainte- nance, operations, safety, security, policy, planning, human resources, NOTICE and administration. The ACRP provides a forum where airport opera- The project that is the subject of this report was a part of the Airport Cooperative Research tors can cooperatively address common operational problems. Program, conducted by the Transportation Research Board with the approval of the The ACRP was authorized in December 2003 as part of the Vision Governing Board of the National Research Council. 100-Century of Aviation Reauthorization Act. The primary partici- The members of the technical panel selected to monitor this project and to review this pants in the ACRP are (1) an independent governing board, the ACRP report were chosen for their special competencies and with regard for appropriate balance. Oversight Committee (AOC), appointed by the Secretary of the U.S. The report was reviewed by the technical panel and accepted for publication according to Department of Transportation with representation from airport oper- procedures established and overseen by the Transportation Research Board and approved ating agencies, other stakeholders, and relevant industry organizations by the Governing Board of the National Research Council. such as the Airports Council International-North America (ACI-NA), The opinions and conclusions expressed or implied in this report are those of the the American Association of Airport Executives (AAAE), the National researchers who performed the research and are not necessarily those of the Transportation Association of State Aviation Officials (NASAO), and the Air Transport Research Board, the National Research Council, or the program sponsors. Association (ATA) as vital links to the airport community; (2) the TRB The Transportation Research Board of the National Academies, the National Research as program manager and secretariat for the governing board; and Council, and the sponsors of the Airport Cooperative Research Program do not endorse (3) the FAA as program sponsor. In October 2005, the FAA executed a products or manufacturers. Trade or manufacturers’ names appear herein solely because contract with the National Academies formally initiating the program. they are considered essential to the object of the report. The ACRP benefits from the cooperation and participation of airport professionals, air carriers, shippers, state and local government officials, equipment and service suppliers, other airport users, and research orga- nizations. Each of these participants has different interests and respon- sibilities, and each is an integral part of this cooperative research effort. Research problem statements for the ACRP are solicited periodically but may be submitted to the TRB by anyone at any time. It is the responsibility of the AOC to formulate the research program by iden- tifying the highest priority projects and defining funding levels and expected products. Once selected, each ACRP project is assigned to an expert panel, appointed by the TRB. Panels include experienced practitioners and research specialists; heavy emphasis is placed on including airport pro- fessionals, the intended users of the research products. The panels pre- pare project statements (requests for proposals), select contractors, and provide technical guidance and counsel throughout the life of the Published reports of the project. The process for developing research problem statements and selecting research agencies has been used by TRB in managing cooper- AIRPORT COOPERATIVE RESEARCH PROGRAM ative research programs since 1962. As in other TRB activities, ACRP are available from: project panels serve voluntarily without compensation. Transportation Research Board Primary emphasis is placed on disseminating ACRP results to the Business Office intended end-users of the research: airport operating agencies, service 500 Fifth Street, NW providers, and suppliers. The ACRP produces a series of research Washington, DC 20001 reports for use by airport operators, local agencies, the FAA, and other and can be ordered through the Internet at interested parties, and industry associations may arrange for work- http://www.national-academies.org/trb/bookstore shops, training aids, field visits, and other activities to ensure that results are implemented by airport-industry practitioners. Printed in the United States of America

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The National Academy of Sciences is a private, nonprofit, self-perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. On the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Ralph J. Cicerone is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Charles M. Vest is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and, on its own initiative, to identify issues of medical care, research, and education. Dr. Harvey V. Fineberg is president of the Institute of Medicine. The National Research Council was organized by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy’s purposes of furthering knowledge and advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Ralph J. Cicerone and Dr. Charles M. Vest are chair and vice chair, respectively, of the National Research Council. The Transportation Research Board is one of six major divisions of the National Research Council. The mission of the Transporta- tion Research Board is to provide leadership in transportation innovation and progress through research and information exchange, conducted within a setting that is objective, interdisciplinary, and multimodal. The Board’s varied activities annually engage about 7,000 engineers, scientists, and other transportation researchers and practitioners from the public and private sectors and academia, all of whom contribute their expertise in the public interest. The program is supported by state transportation departments, federal agencies including the component administrations of the U.S. Department of Transportation, and other organizations and individu- als interested in the development of transportation. www.TRB.org www.national-academies.org

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COOPERATIVE RESEARCH PROGRAMS CRP STAFF FOR ACRP REPORT 54 Christopher W. Jenks, Director, Cooperative Research Programs Crawford F. Jencks, Deputy Director, Cooperative Research Programs Michael R. Salamone, ACRP Manager Theresia H. Schatz, Senior Program Officer Joseph J. Brown-Snell, Program Associate Eileen P. Delaney, Director of Publications Ellen M. Chafee, Editor ACRP PROJECT 01-11 PANEL Field of Administration Carl E. Remus, Tulsa Airport Authority, Tulsa, OK (Chair) John A. Buckner, Jr., Salt Lake City Department of Airports, Salt Lake City, UT Zenola Worrill Campbell, Dallas/Fort Worth International Airport, DFW Airport, TX Alan M. Gluck, Broward County (FL) Aviation Department, Ft. Lauderdale, FL Raymond Moore, Delta Airlines, Inc., Atlanta, GA Michael R. Mullaney, The Hudson Group, East Rutherford, NJ M. Ashraf Jan, FAA Liaison Danielle J. Rinsler, AICP, FAA Liaison Liying Gu, Airports Council International–North America Liaison Christine Gerencher, TRB Liaison AUTHOR ACKNOWLEDGMENTS The research reported herein was performed under ACRP Project 01-11, “Understanding Airport In- Terminal Concession Programs.” LeighFisher (formerly Jacobs Consultancy) was the contractor for this study, with Exstare Federal Services Group, LLC, as a subcontractor. Bruce J. Boudreau, Director of LeighFisher, was the Project Director and Principal Investigator. Gary J. Davies, Associate Director of LeighFisher, and Gordon Hamilton, Director of LeighFisher, served as Deputy Principal Investigators. Other authors of this report are Francois Martel, Director of LeighFisher; David J. Biggs, Director of LeighFisher; Nancy K. West, Principal, Exstare Federal Services Group, LLC; and Linda Moore, Principal, Animer Consulting, LLC. The Research Team would like to express its gratitude to the members of the project panel for their sup- port and insightful comments throughout this research project. The Research Team would also like to thank the many airport staff, concessionaire representatives, consultants, and overseas airport commer- cial managers who took the time to share their insights, experience, and opinions with the Research Team and to respond to follow-up queries.

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FOREWORD By Theresia H. Schatz Staff Officer Transportation Research Board ACRP Report 54: Resource Manual for Airport In-Terminal Concessions provides guidance on the development and implementation of airport concession programs. The report pro- vides information on the airport concession process; concession goals; potential customers; developing a concession space plan and concession mix; the Airport Concessions Disadvan- taged Business Enterprise (ACDBE) program; and concession procurement, contracting, and management practices. Case studies are provided to illustrate key areas. This report will help airport managers understand market potential and implementation requirements for an effective in-terminal concession program while recognizing evolving challenges. This report will serve as a valuable tool for use by airport staff involved in and responsible for the business decisions affecting the development of concession programs and plans. It also serves as an informational tool for other stakeholders, including but not limited to, airport board members, airlines involved in creating concession programs, and concessionaires. In-terminal concessions are defined as food and beverage, retail, amenities, and services (e.g., vending, banking, luggage carts, postal services, telephones and wireless communica- tions, advertising, and personal services). Airport in-terminal concessions provide an important and necessary passenger service amenity and have been shown to be a key contributor to overall passenger satisfaction. A well-implemented concession program can also provide measurable financial benefits to the airport’s operating budget. Requirements for design and delivery of these services have changed dramatically over the past 10 years as services have moved inside the secure envi- ronment. In addition, as passengers continue to spend more time inside the secure termi- nal area, meeting changing needs has become even more important. As a result, many air- ports have transformed their retail and service offerings from generic non-branded food and news and a predictable set of services into an integrated set of offerings featuring national and regional food concepts, a wide variety of specialty retail brands, and services tailored to both meet and stimulate passenger needs. With these changes, there is a greater need to understand the market potential and challenges as well as a variety of viewpoints (e.g., domestic and international airports, other retail, transportation centers, and other commercial venues). A report documenting the research method used to develop the resource manual has been posted on the ACRP Project 01-11 web page at http://apps.trb.org/cmsfeed/TRBNet ProjectDisplay.asp?ProjectID=2571. This research effort was conducted by LeighFisher as the prime contractor with Bruce Boudreau serving as the Principal Investigator in associa- tion with Exstare Federal Services Group, LLC.

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CONTENTS 1 Chapter 1 Introduction to Airport In-Terminal Concessions 1 1.1 Changes in Airport In-Terminal Concession Programs 2 1.2 Purpose of the Resource Manual 2 1.3 Methodology and Data Collection 4 1.4 Potential Benefits of the Resource Manual 5 1.5 Navigating the Resource Manual 6 Chapter 2 Overview of Airport Concession Programs 6 2.1 Revenues from In-Terminal Concessions 10 2.2 Types of In-Terminal Concessions 16 2.3 Attributes of Successful Concession Programs 18 2.4 Recent Trends in Concessions 22 Chapter 3 Establishing Goals for the Concession Program 22 3.1 Competing Stakeholder Demands 24 3.2 Concession Program Planning Process 25 3.3 Assessment of Customer Satisfaction 27 3.4 Establishment of Realistic Expectations 28 3.5 Differences between Domestic and International Passengers and Terminals 34 3.6 Optimization of Sales and Revenues 34 3.7 Preparation of a SWOT Analysis 35 3.8 Common Concession Program Goals 40 Chapter 4 The Passenger and Customer Profile 40 4.1 The Airport and Its Customers 41 4.2 Passenger Segments 42 4.3 Other Customer Segments 46 4.4 Demographics and Market Segmentation 47 4.5 Identifying Gaps—Why Certain Market Segments Do Not Patronize Concessions 47 4.6 Customer Surveys and Focus Groups 52 Chapter 5 Developing the Concession Space Plan 52 5.1 Space Planning 65 5.2 Supportable Concession Units Based on Traffic Levels 66 5.3 Sizing of Concession Units 66 5.4 Location Criteria 71 5.5 Adjacencies 72 5.6 International Terminals 73 5.7 Wayfinding and Concession Signage 73 5.8 Return on Airport Investments in Concession Space 79 Chapter 6 The Concession Mix 79 6.1 Achieving the Right Overall Balance 81 6.2 Program Differentiation and Creating a Sense of Place

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82 6.3 Concession Theming 83 6.4 Branded Concessions 85 6.5 Food and Beverage Concession Category 87 6.6 Convenience Retail 88 6.7 Specialty Retail 88 6.8 Duty Free 90 6.9 Services 92 6.10 Advertising 104 Chapter 7 The ACDBE Program 104 7.1 Federal Requirements 107 7.2 Determining Concessionaire Market Area(s) 107 7.3 Determining Availability of Ready, Willing, and Able Participants 108 7.4 Establishing Race-Neutral and Race-Conscious Participation Goals 109 7.5 Outreach Activities 111 7.6 Methods for Achieving ACDBE Participation through Contractual Arrangements 113 7.7 Evaluating Joint Venture and Subtenant Agreements 114 7.8 Compliance Monitoring and Enforcement 114 7.9 Attributes of Successful ACDBE Programs 115 7.10 Measuring Performance 116 7.11 Reporting Achievements 116 7.12 Barriers to ACDBE Participation 119 7.13 Program Audits 119 7.14 Mentoring 121 Chapter 8 Concession Contracting Approaches 121 8.1 Description of Concession Management Approaches 128 8.2 Financial Performance by Management Approach 137 Chapter 9 Business Terms and Concession Agreements 137 9.1 Term 139 9.2 Privileges 140 9.3 Concession Fees 145 9.4 Obligations 148 9.5 Performance Standards 149 9.6 Pricing 151 9.7 Capital Improvements 152 9.8 Midterm Investment Requirements 152 9.9 Other Concession Agreement Provisions 153 9.10 Business Practices in Need of Review 153 9.11 Additional Concession Agreement Resources 155 Chapter 10 Procurement 155 10.1 Concession Procurement Approaches 158 10.2 Requests for Proposals—the Standard Practice 160 10.3 Minimum Qualifications 160 10.4 Typical Elements Required in Proposals 162 10.5 Evaluation Criteria 163 10.6 Financial Evaluation 165 10.7 Advertising the RFP 165 10.8 Issuing the RFP 166 10.9 The Preproposal Conference 167 10.10 The Evaluation Process

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167 10.11 Converting the Proposal to a Concession Agreement 168 10.12 Streamlining the RFP 169 10.13 Concession Workforce Issues 170 10.14 Strategies for Increasing Local Participation 171 10.15 Using Technology to Streamline the Solicitation Process 172 10.16 International Concession Contracting Practices 173 Chapter 11 Services, Storage, and Logistics 173 11.1 Loading Docks 175 11.2 Security Screening of Goods 176 11.3 Concession Storage Facilities 177 11.4 Servicing Routes and Devices 178 11.5 Use of Centralized Third-Party Logistics Providers 180 11.6 Waste Collection, Recycling, and Removal 185 11.7 Sustainability 187 11.8 Food Preparation 188 Chapter 12 Capital Investment 188 12.1 Cost of Building on the Airport 188 12.2 Investment Relative to Sales 191 12.3 Midterm Investment 191 12.4 Design Guidelines and Standards 199 12.5 Permitting and Monitoring Buildout 200 Chapter 13 Managing the Concession Program 200 13.1 Staffing Requirements and Qualifications 201 13.2 Lease Management Systems 201 13.3 Understanding the Concession Agreement 202 13.4 Importance of Comprehensive Concession Agreement Files 203 13.5 Interaction with Concessionaires 204 13.6 Marketing the Concession Program 206 13.7 Organizing the Concession Staff 207 13.8 Performance Monitoring 213 13.9 Reconcepting Existing Units 213 13.10 Transition Planning 214 13.11 Airports with Well-Managed Concession Programs 216 Chapter 14 Case Studies 216 14.1 Dallas/Fort Worth International Airport 222 14.2 San Francisco International Airport 227 14.3 Tulsa International Airport 232 14.4 Portland International Airport 236 14.5 Amsterdam Schiphol International Airport 240 14.6 Seoul Incheon International Airport 244 14.7 Copenhagen International Airport 248 Glossary 252 References 253 Bibliography Note: Many of the photographs, figures, and tables in this report have been converted from color to grayscale for printing. The electronic version of the report (posted on the Web at www.trb.org) retains the color versions.