Innovative Revenue Strategies – An Airport Guide (2015) / Chapter Skim
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Pages 11-22
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From page 11... ...
1 1 Chapter 1 Introduction 1.1 Decade of Amazing Change and Disrup ons 1.2 Shi s in the Airport Opera ng Environment 1.3 Funding and Financing Airport Projects and Services 1.4 Evolving Airport Business Model 1.5 Purpose of the Airport Guide 1.6 Airport Guide Organiza on 1.7 Addi onal References Chapter 1 of this Airport Guide examines the contribu ng factors that have mo vated airport operators to seek addi onal sources of revenue to supplement opera ng revenues from aeronau cal ac vi es. Airline consolida on plus effec ve capacity control and price discipline has led to a more compact domes c airline system.
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From page 12... ...
INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 1 2 Mass adop on of cell phones, digital cameras, and open mobile plaorms has changed how passengers check in, print boarding passes, process luggage, reserve or pay for parking, and order food in an airport terminal. Mobile plaorms con nue to replace paper and credit cards, and serve as point of sale (POS)
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From page 13... ...
CHAPTER 1 – INTRODUCTION 1 3 and to improve operaonal efficiencies. The need to re engineer passenger terminals was most visible at JFK Internaonal Airport, where iconic terminals, such as the original Pan Am Worldport and the TWA Flight Center, designed before widespread use of jet bridges and large capacity aircra, had become funconally obsolete.
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Figure 1 1: Decade of Disrup ons Source: KRAMER aerotek inc., 2014
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CHAPTER 1 – INTRODUCTION 1 5 Table 1 1 compares changes in the number of enplaned passengers at airports serving as connecng hubs for U.S. airlines from 2000 to 2013 and clearly demonstrates how changes in airline connecng networks can severely affect levels of acvity at a parcular airport.
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INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 1 6 1.2 SHIFTS IN THE AIRPORT OPERATING ENVIRONMENT As the Great Recession changed the ways that both airlines and airports conduct business, airport sponsors have taken on new responsibili es and assumed addi onal risks to address: Shortened dura ons on airline/airport opera ng agreements Reduced seat capacity in the domes c system and more concentra on in the largest markets, usually at the largest airports Increased compe on among airports for air service, passengers, and investment Fewer customer service representa ves of airport tenants on airport premises Reduced federal funding for Airport Improvement Program (AIP) grants in aid with passage of the FAA Moderniza on and Reform Act of 2012 A ceiling of $4.50 on passenger facility charges (PFCs)
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From page 17... ...
CHAPTER 1 – INTRODUCTION 1-7 aeronaucal revenue contributed in 2013, 47% of funding sources. Non-aeronaucal and aeronaucal revenues are also important sources to all airports.
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From page 18... ...
INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 1-8 Figure 1-3: Airport Indebtedness by Airport Hub Size, 2013 Source: FAA, AAS-400: CATS Report 127, 2013 1.4 EVOLVING AIRPORT BUSINESS MODEL The economic and polical upheavals of the past decade helped to solidify a view held by many airport operators that (1) tradional methods to fund and finance capital projects, airport operaons, and maintenance may, on their own, be insufficient in the future, and (2)
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CHAPTER 1 – INTRODUCTION 1 9 Figure 1 4: Evolving Airport Enterprise Sources: Adapted by KRAMER aerotek inc. from Oliver Wyman Inc.
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INNOVATIVE REVENUE STRATEGIES – AN AIRPORT GUIDE 1-10 3. Case studies that exemplify successful applicaon of parcular strategies 4.
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From page 21... ...
CHAPTER 1 – INTRODUCTION 1 11 ACRP Report 76: Addressing Uncertainty About Future Acvity Levels in Airport Decision Making (Kincaid, I
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