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CHAPTER 3 Market Determination This chapter presents the steps required to conduct a market analysis for an offsite terminal. In this application, the market analysis focuses on the location and number of potential customers and provides an objective measure for estimating offsite terminal use. Identifying a location con- venient to the largest number of potential customers establishes a standard against which other offsite terminal locations can be measured. As presented in Chapter 2, there are various reasons to develop offsite terminals; analyzing the customer market provides valuable data for a proposed development regardless of the underlying rationale. The following topics are discussed in this chapter: Information sources, data requirements, and data processing for the market analysis; How to conduct an offsite terminal market analysis and considerations when using the analysis results; and A checklist for the offsite terminal market analysis. The procedure described in this chapter is flexible and can be used to analyze various offsite terminal scenarios. For example, it can be used to evaluate the customer market for multiple off- site terminals or the market associated with a specific location. It is based on an understanding of airport ground access customers--those who travel to and from an airport by some form of ground transportation. The information presented in this chapter is based on an analysis of offsite terminals serving Los Angeles International Airport (LAX) and Boston Logan International Airport (BOS) and on the application of market factors from four additional airports: Seattle-Tacoma International Airport (SEA), Denver International Airport (DIA), Phoenix Sky Harbor International Airport (PHX), and Houston George Bush Intercontinental Airport (IAH). LAX and BOS are the only commercial airports in the United States with offsite terminals operated by the airport operator. A complete discussion of the research supporting this chapter is found in the Final Report for ACRP Project 10-02, which is available on the TRB website (trb.org). Data Requirements and Processing The most important information needed to analyze the market for an offsite terminal is the location where potential customers start their trip to the airport. Determining how many cus- tomers originate from individual locations requires an understanding of an airport's local ground access market. Importing this information into a database that can be used for analysis is accomplished using geographical information system (GIS) software. Although it is possible to conduct an offsite terminal market analysis without the aid of GIS software, it is not recom- 7

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8 Planning for Offsite Airport Terminals mended since an important part of the analysis is spatial--the geographic relationship between the airport and the origin points for airport customers' access trips. Airport Customer Segments Market segmentation is used in all facets of research and planning today and helps target a product or service to the group or groups most likely to find it useful. Market segments are important to this analysis because they divide airport users into distinct groups having one or more characteristics in common. Empirical data from existing offsite terminals provides infor- mation about market segments that can then be applied to the analysis of new market areas. In other words, analyzing who uses existing offsite terminals aids in identifying the market for new offsite terminals. Air Passengers The principal user of an offsite terminal is the air passenger, the customer an offsite terminal is designed to serve. Airports serve both origin/destination (O/D) and transferring air passengers while offsite terminals serve only origin/destination air passengers. Origin/destination air passen- gers travel to the airport by some form of ground transportation and can be further divided into two groups: residents who live in the region served by the airport and non-residents who live out- side the local region. Segmenting air passengers into residents and non-residents is important because it reveals two factors that influence air passengers' decisions to use an offsite terminal: private vehicle availability and origin location type. Collectively, the access mode choices of air passengers and the origin points for their trips to the airport result in patterns of activity that can provide useful information when planning new facilities. Resident air passengers have the following characteristics: They live within the region. The airport is their home airport. Residents typically have a personal vehicle available for their use. The majority of residents start their trip to the airport from home. They are familiar with available ground access choices to reach their home airport. They are the primary customer of the long-term parking supply at the airport since their private automobiles are based in the region. They are responsible for a significant number of pick-ups/drop-offs by private automobile. Non-resident air passengers have the following characteristics: They live outside the region. Their home airport is elsewhere. All non-residents start their trip to the airport from somewhere other than their own home--for example, someone else's home, a hotel, a school, or a place of work. They are less likely to be familiar with specific ground access choices for the airport they are visiting and are probably only familiar with generic choices such as taxi, door-to-door van, and subway. Pick-up/drop-off by private automobile is only available if they know someone who lives in the area. They are responsible for 100% of rental car use. They typically use a rental car for day-to-day travel and for the trip to and from the airport. Airport Employees The second group or segment of potential offsite terminal customers is airport employees. Many major U.S. airports have significant numbers of employees. Distinguishing characteristics are their work schedules, how many days per week they work, and the on airport location of their employment.

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Market Determination 9 Although offsite terminals are planned primarily for use by air passengers, an increasing num- ber of airport employees are also using them. Airport employees should be considered a supple- mental market to be served by the offsite terminal and transportation link when they live in the same area as those in the air passenger market. Employees can be segmented into the following categories: Airline (flight crew and non-flight crew); Airport operator; Full-time and part-time; and Shift and non-shift workers. Workers with multiple part-time jobs. As with air passengers, airport employee travel patterns will vary by segment. Information Sources for Airport Customer Segments Air Passengers The principal source of information about air passengers is usually an air passenger survey. An offsite terminal market analysis cannot be completed without reliable and detailed data indicating where air passengers begin their ground access trip to an airport. This statement can- not be overemphasized. Furthermore, the number of records included in the survey sample must be of sufficient quantity to distinguish geographic patterns of air passenger activity. Often, an airport conducts a survey for another purpose such as determining passengers' satisfaction with various airport services and amenities or to understand the activity associated with peak travel periods. The type of survey used is not relevant as long as the crucial origin data is collected. However, there is a problem if the results from peak-period surveys are used. By definition, these surveys are measures of an extreme period of airport activity and will not be representative of activity patterns for the majority of the year. Therefore, if peak-period surveys are used, the results must be adjusted to represent average patterns of activity at the airport. An important consideration when using air passenger survey data for offsite terminal market analysis is the size of the survey sample. For market analysis, the sample size should provide data for the majority of analysis zones (zip codes or other geographic units) within 30 miles of the air- port for the two major segments of air passengers, residents and non-residents. Based on average annual day enplaning passengers and assuming 50% resident and 50% non-resident air passen- gers, the recommendation is to have a minimum sample size of 25%--that is, if there are 30,000 originating air passengers on an average day, the minimum sample size is 7,500 completed surveys, 3,750 resident and 3,750 non-resident. The basic information that should be collected in an air passenger survey includes Whether the respondent is a resident or non-resident of the region (the definition of resident is determined locally); Where the respondent started their local trip to the airport (i.e., zip code, address, or landmark); The primary purpose of the air travel (i.e., business or non-business); and The mode of access used to the airport. Only the first two pieces of information are needed to conduct the market analysis; however, trip purpose and access mode data provide additional information that is useful when planning an offsite terminal. Airport Employees An employee travel survey is an excellent source of information about airport employees, but very few airports have conducted this type of survey. In the absence of employee surveys, there

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10 Planning for Offsite Airport Terminals are ways to estimate the distribution of employee origins in the region. Today, all airports have security badge systems that include most or all airport employees. Aggregating the number of badges by zip code or other geographic unit provides a way to estimate the number and origin locations for airport employees. Then, assuming some proportion of total employees comes to the airport on an average day and applying that percentage to total badges provides an estimate of average day employees. Airport employee home zip codes should be scaled to represent aver- age annual day inbound airport trips. When making the estimation about average daily employee trips to the airport, the analyst should keep in mind that employees are required to staff the air- port during all operating hours, which at many airports is 24 hours per day, 7 days per week, and 365 days per year. Processing Airport Customer Origin Trip Data The discussion of airport customer data will focus on air passengers. The suggested zonal sys- tem for the market analysis is zip codes, although any type of zonal system can be used. Zip code zones provide sufficient detail for conducting a market analysis, and there is a wealth of second- ary data available in the same format. Processing air passenger survey data involves the preparation of a file listing the number of res- ident air passengers by zip code and the number of non-resident air passengers by zip code. In many cases, there will a limited number of non-resident records with zip code information because many non-residents do not know the zip code for their local origin. As discussed in a later section, zip code origins for resident air passengers is the most important information needed for the mar- ket analysis because resident air passengers are the principal customers for offsite terminals. Survey records for resident and non-resident air passengers are scaled to represent average day enplaning air passengers in 2006. Any measure of air passengers can be used to describe the pri- mary market; however, the analysis completed for this project uses average annual day enplaning (AADE) air passengers as the standard metric. To compare analysis results from an individual airport to the benchmarks provided, one must use the same measure of air passengers. If non- resident air passenger and airport employee information is available by zip code, the same pro- cedures apply. Total annual passengers can be easily calculated by doubling average day enplaning air passengers to equal total daily passengers and then multiplying by 365. The scaled air passenger data--resident air passengers by zip code and non-resident air pas- sengers by zip code--should then be linked to a geographic data base so that the information can be displayed spatially on a base map of the region. The base map should include major regional roadways, the location of transit and rail stations, and the zip code zones (or other geographic zones used in the analysis). The product is a zip codebased map file with survey data represent- ing AADE air passengers. Employee trip data, if available, should be factored to represent aver- age annual day inbound airport trips. Table 1 illustrates the steps taken to estimate 2006 AADE resident air passengers. Table 1. Estimation of average annual day enplaning (AADE) resident air passengers. Formula Product (2006 O/D air passengers x percent Step 1 2006 AADE resident air passengers residents) / 365 / 2 Link air passenger survey file to 2006 AADE resident air passengers by Step 3 map, summarize by zip code, and zip code zone weight by resident scaling factor Source: MarketSense Consulting