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Taking Stock of the Situation 67 CASE STUDY Physical limits constrain operations Tweed New Haven Regional Airport (HVN) serves airlines to operate jets at the airport profitably. a market area of roughly one million people in Runway limits and other obstructions meant that cer- southern Connecticut. However, only US Airways-- tain jets could not carry a full passenger load. Many using turboprop aircraft flying to Philadelphia-- airlines targeted by the airport authority indicated provided commercial service at the airport. The that the airport's infrastructure must be enhanced airport authority estimated that with that one carrier, prior to serious discussions. it captured only 3 percent of its potential market. The airport has initiated work on its updated master Most of the population in the area drove to Bradley plan that calls for significant upgrades to the runway, International (Hartford County, CT), 56 miles away. safety areas, terminal, and roadways, all of which The airport authority recognized that Tweed New would allow jet operations to hubs such as Atlanta Haven's relatively short 5,600-foot runway and other and Chicago. physical obstructions would constrain the ability of When embarking on airport expansion projects, it is important to optimize usage of available infrastructure. Gates Gate usage influences the efficiency of the facility. LCCs such as Southwest Airlines try to use Small airports can gates 8 to 10 times each day where possible. At smaller airports, where there are fewer flights, gates might be used by only 2 or 4 flights per day. Gate usage is another area in which airline be prone to inflat- operators can be steered toward greater cost savings. When feasible, airlines can sometimes share ing their true gate space and avoid incurring the full cost of using a dedicated gate. Some airports do not assign market potential. specific gates to specific airlines and instead employ a common usage plan among their airline operators. Consider: What are Ticket Counter and Office Space competitive Ticket counter and back office space is another area in which the airport can assist its airline strengths/ operators in achieving cost savings. Airlines require a certain number of check-in positions for processing their passengers. If counter space is limited, airlines will sometimes share the space weaknesses of to increase efficiencies and decrease costs. It is important to learn whether airlines require exclu- the airport relative sive use of their counter and office space or are willing to share to reduce costs. to competing Security (Passenger, Baggage, and Cargo) airports in the Passenger security procedures have received increased visibility, especially following the events region? of September 11, 2001. The Transportation Security Administration (TSA) mandates certain How good is space requirements to accommodate their passenger- and baggage-screening process. Airports highway access with older terminal facilities are often constrained. Newer facilities can better plan for the increased to/from the security space. airport? How good is How does the airport compare to its peers? highway access to/from compet- To obtain a realistic perspective on the service at the airport being evaluated, its demograph- ics, traffic, and operations are best compared with similar airports. Points of comparison may be ing airports in nearby airports with which the facility competes for passenger traffic, or other airports or com- the area?

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68 Passenger Air Service Development Techniques CASE STUDY Hayden, Colorado's operational advantage Yampa Valley Regional Airport (HDN), located in has no natural obstructions at either end of the single Hayden, Colorado, serves the aviation needs of the runway, thereby allowing take-offs and landings in mountain communities of north central Colorado. both directions, depending on wind conditions. Yampa Valley Regional is close to the world-famous Airports in other Colorado mountain communities Steamboat Springs ski resort, just 25 miles to the east. may be hampered by mountain terrain that allows The airport is situated in the wide open Yampa River only one-way in and out operations. Flights destined valley and, as such, enjoys a competitive advantage to other mountain airports may divert to Yampa relative to other airports in the Colorado mountain Valley Regional when conditions deteriorate at those region. The airport lies at an elevation of 6,602 feet, facilities, providing a strategic advantage for this with a runway 10,000 feet long and 150 feet wide. It airport. munities of similar size. Such a comparison will allow the ASD team to assess whether its area is adequately served and whether it might have a reasonably realistic expectation for additional service. This comparison is sometimes referred to as a "SWOT analysis"--a review of the strengths, weaknesses, opportunities, and threats of the facility. One pitfall of operating a smaller airport is that it becomes easy to aggrandize the market's potential and perhaps view it as something greater than it actually is. Therefore, sober inventory and analysis of the airport is important. The ASD team should emphasize its competitive An airport's catch- strengths relative to other airports in the region, but also acknowledge its weaknesses relative to ment area is the competition and take steps to mitigate those shortcomings. defined by its Defining the Catchment Area proximity to other The airport's catchment area is defined as the geographic reach of the airport's service area. airports, the quality Practically put, the airport's catchment area encompasses the land area within which people of highway access, choose the airport as their preferred airport to begin and/or end their air travels. The primary flight frequencies, component of this equation is accessibility, i.e., how fast and easy is it for the traveling public to get to and from the airport relative to their other available options. Additional factors such as fares, and nonstop traffic, service levels (nonstop vs. connect), preferred airlines, parking, etc., also figure into the service. equation when a passenger chooses an airport for their travel needs. Consider: An airport's catchment area overlaps with those of nearby airports, particularly in urban areas How geographi- that are served with multiple airports. Some airports are more focused on domestic services, while others may include international operations. Issues that affect the boundaries of a catch- cally isolated is the ment area include the proximity to other airports, road network quality, drive times, traffic con- subject airport's gestion, airfare levels, flight frequency, and breadth of nonstop service. Each of those factors can catchment area? influence the travel choices of residents within the catchment area, as well as the choices of those Does a nearby business and leisure travelers who visit the catchment area from other cities. Figure 5.5 illustrates airport enjoy LCC 60- and 90-minute drive times and the airport catchment areas at Cleveland Hopkins International and Akron-Canton airports. Those airports also compete to some degree with Pittsburgh Inter- service that could national and Port Columbus International. siphon off some An airport's catchment area can change over time as the services offered at both that airport of the subject and its competitors change, or as the ease of driving between locations changes (e.g., with the airport's natural completion of a new highway or bridge). For example, Akron-Canton's catchment area grew catchment traffic? substantially following the introduction of service by AirTran, whose low-fare pricing lured people

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Taking Stock of the Situation 69 Figure 5.5. Overlapping catchment areas for Cleveland Hopkins International and Akron-Canton airports. from outside of Akron-Canton's traditional catchment area who might have previously used An airport's catch- Cleveland Hopkins International instead. Understanding the nature of the airport market being evaluated (i.e., the mix of inbound versus outbound traffic) also helps clarify the airport's catch- ment area changes ment area relative to alternative airports in the general region. over time as ser- vices there and at Assessing the Strength of a Catchment Area nearby competing The strength of an airport's catchment area is reflected in the extent to which it "captures" all airports change. of its local traffic. Conversely, the airport's catchment area can also be assessed by estimating its Changes in high- "passenger leakage," the extent to which it loses passenger traffic to nearby airports. ways can also Passenger Leakage affect the catch- Leakage is defined as the volume of passengers from the "natural" catchment area that are lost to other airports. It is the volume of passenger traffic that has opted to fly to or from a competing ment area. airport. Identifying sources of and reasons for leakage are crucial if an airport hopes to win back that traffic to use its facility. Passengers may decide to use another airport for a number of reasons: Passenger leakage: Nonstop versus connecting service: The other airport may have service from an airline that the volume of pas- offers nonstop service to the passenger's destination. The service from the airport being eval- uated would require a connection. sengers from an Flight frequency: Flights at another airport are at far more convenient times or, more simply, airport's "natural" flights are available, which allows business travelers greater flexibility. catchment area Airfare differences: Fares at another airport may simply be more affordable, for any number of competitive reasons (e.g., the presence of an LCC or greater competition among network lost to competing carriers). airports. Preferred airline: The other airport may be served by an airline for which the traveler has some preference. This preference may be associated with the traveler's frequent flyer program, or it may be that a traveler is simply boycotting an airline for personal reasons.

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70 Passenger Air Service Development Techniques Other reasons: All else being equal, passengers may prefer Detailed example of one airport's method to to use a different airport for any number of other reasons gather data on its catchment area unrelated to the air service available at the airport being evaluated. These reasons may include parking rates, ter- In Daytona Beach, Florida, the airport authority minal amenities, or outside factors completely beyond wanted to develop better information about the the airport's control (e.g., highway construction, a nearby origination of its traffic base. Similar to many other outlet mall, or Aunt Millie's nearby residence). airports, Daytona Beach International Airport (DAB) has surveyed the license plates of its parking There are a number of ways to estimate the total amount lots. However, the airport decided to try a of leakage that occurs at individual airports. A "license plate different approach for obtaining the same type survey" is a commonly recognized way to check an airport's of information. catchment area; it involves visiting the airport's parking lots and noting the number of license plates from different areas. The airport partnered with Embry-Riddle Aero- Passenger leakage can be estimated by performing a license nautical University to develop a zip code kiosk. plate survey in the parking lots of nearby airports. If the state The kiosk, placed in the hall before the TSA secu- includes some county indicator on the license plates, this rity checkpoint, asks passengers to enter their survey can be relatively straightforward. If not, however, five-digit zip code. Data are then summarized by license plate numbers would have to be recorded, and coop- Embry-Riddle students for airport staff to use. eration from the state department of motor vehicles would The kiosk is clearly marked as being run by the be needed to cross-reference the county of residence from Daytona Beach International Airport as part of its its own files. This can be very costly. efforts to expand air service. The airport estimates that it captures zip code information for 25 per- ASD teams also can get data on flight reservations or cent of its passengers at the TSA checkpoint. bookings by analyzing data from the Marketing Information Data Transfer (MIDT) database. These data are generated Combined with mapping software, this tool has by a computer reservation system (sometimes referred to as helped the airport understand from where in a CRS or Global Distribution System) and include such Florida it is drawing passengers. The data also information as origin, destination, airline, connecting air- help the airport authority better manage expec- ports (if any), passengers, and fare. Using those data will tations with regard to a realistic catchment area thus show which airports passengers from particular areas to target. (e.g., zip codes) booked flights on. It also can provide a Data from the kiosk report also help the airport much more detailed overview of passenger fares by fare cat- better understand its top inbound markets egory than can the U.S.DOT databases, which in turn can to the Daytona help measure the business and leisure travel components of Beach area. With the target market. that information, the airport is However, the MIDT data cover only flight reservations; better positioned passengers may not actually have made the trips. A further to leverage the limitation on the MIDT data is that it does not include participation of bookings made directly with airline web sites, which now hotels and local generate a significant percentage (variously described as 30 tourism agencies to 50 percent, depending on the source and the time period) in developing of bookings for domestic U.S. travel. financial and Reverse Leakage marketing-based incentive programs. Reverse leakage is defined as the volume of passenger traf- fic that uses an airport even though they reside or work in the natural catchment area of another airport. The same reasons that may cause a passenger to leak from the subject airport to a competing airport can also induce a passenger to use the subject airport. While reverse leakage benefits the subject airport, the ASD team should be mindful that the airports leaking passengers to its airport will likely work to decrease that loss of passengers.