EXPLORING THE PROSPECT OF OPERATINGLOW COST AND LEGACY CARRIERS FROM THESAME MAIN AIRPORT TERMINALA service quality perspe...
iThis thesis was completed to obtain aMaster of Science DegreeInComplex Transport Infrastructure SystemsA part of the MIT ...
iiACKNOWLEDGMENTSI would like to express my deepest gratitude to my family – amma and achan, back home inIndia, who have g...
iiiABSTRACTThe world has been witness to a spurt in the global airline passenger throughputs mainlythrough the burgeoning ...
ivINDEXACKNOWLEDGMENTS.......................................................................................................
v4.1 INTRODUCTION .....................................................................................................364...
vi5.9 SYNERGY CONFLICT ANALYSIS...........................................................................745.9.1 SYNOPSIS...
viiLIST OF FIGURESFigure 1.1 – Structure and the Methodological approach of the dissertation.................................
viiiFigure 4.3 – Distribution of the mean scores of the Importance Analysis..................................46Figure 4.4 ...
ixTable 4-3 – Mean scores of the Performance Analysis ............................................................46Table ...
xACRONYMS AND DEFINITIONSANA Aeroportos de PortugalATC Air traffic ControlBA British Airwaysbmi British Midland Internatio...
11. INTRODUCTION1.1 INTRODUCTORY NOTEThe tremendous growth experienced by the airline/ aviation sector is the main source ...
21.3 STRUCTURE AND METHODOLOGICAL APPROACH OF THEDISSERTATIONMethodologically speaking, in terms of data collection, the m...
3This will be followed by an overall process analysis in an airport terminal. Ground HandlingProcesses, especially the tur...
42. LOW COST AND LEGACY CARRIERS2.1 IMPACT OF DEREGULATION IN THE AVIATION SECTORThe airline/airport industry, which is co...
5seats or used old aircraft with lesser safety measures; it just was an innovative outlook towardsmaking air travel access...
6travellers but also ended up taking a share of the passengers who used to earlier fly by thelegacy carriers. So much so t...
7Figure 2.1 – Comparison between LCC and Legacy carriers [Source: (Esplugas 2008)]As can be seen from the figure above, th...
8Figure 2.2 – Operational Characteristics of LCC and legacy carriers [Source: (Civil Aviation Section2002) & (Alderighi et...
9Major legacy carriers became trapped in a vicious cycle; as long as their competitors optimizedtheir destination portfoli...
10convenient than that of NCs who force their clients into congested off – site megaairports. They offer what most clients...
11Figure 2.4 – Distinction between the LCC and legacy carrier business models [Source:(Bieger et al.2002)]2.3 LCC IMPACT O...
12After deregulation, the airlines quickly moved to a hub-and-spoke system, whereby an airlineselected some airport, the h...
13operational and product features of their low – cost business models. This was later utilized tostudy departures from co...
143. AIRPORT TERMINALS3.1 INTRODUCTIONThe simplest definition of airport terminal is as follows:An airport terminal is a b...
15paradigm shift, from the once famous penchant for huge and gorgeous terminals into theterminals which are more economica...
16operating and maintenance costs. Thus, some designs have little to do with the function theterminal is intended to achie...
17Figure 3.2 – Traditional Airport Airline relationship [Source: (Francis et al. 2004)]Figure 3.3 – Modern airline – airpo...
18III. spare airport capacity [(Warnock-Smith & Potter 2005)];IV. convenient slot times [(Warnock-Smith & Potter 2005)];V....
19 Terminal Transitiono Entry ways and foyers; Lobby area Airline Facilitieso Office; Ticket counter, Baggage check/ cla...
20simultaneously in accordance with the practices adopted, which tow in line to the airportregulations. (Mumayiz 1985)Thre...
21activities that are relating to the air transport. Non – Aeronautical revenues are those which areobtained by the airpor...
22beneficiaries from airport space, such as hotels, banks, and caterers and so on. (Parappallil2007) It is usually determi...
233.3.2.3 LITERATURE ON AIRPORT REVENUES(Francis et al. 2003) sums up a list of activities that generate revenue to the ai...
24(Graham 2007), in her book on Managing Airports presents another perspective on the aspectof airport revenues. It is as ...
25Figure 3.6 – Growing Importance of Non – Aeronautical revenues [Source: (Airports Company SouthAfrica 2012)]II. Changing...
263.4 PROCESS ANALYSIS3.4.1 INTRODUCTIONIn this section, a detailed analysis on the various processes involved on the land...
27 Required security search processes include the use of metal detectors and X Raysystems Existing security processes ar...
28Figure 3.9 – Arrival process analysis [Source: (DLR EU 2008)]3.4.4 TRANSFERFor purposes of transfer, the most important ...
293.4.5 BAGGAGE HANDLINGThe whole baggage processes involves three main tasks: Move bags from the check-in area to the de...
30(un)loading and fuelling cannot take place at the same time because the area of concentrationis close to each other and ...
31Those are not allowed to wait at the cargo area too long. Baggage loading is handled atthe stand.IX. Passenger boarding:...
32Table 3-5 – Turnaround processes for low cost and legacy carriersTurnaround Process /Airline ClassLegacy Carriers Low Co...
33turnaround time.Catering Presence of in – flightcatering, so requires loadingand unloading with eachflight.No free in – ...
34pioneer in process analysis studies and they have researched on the turnaround timescommonly observed for both long/ med...
35 Minimal or no cargo loading/ unloading No refuelling done after every flight Boarding and de - boarding through both...
364. IMPORTANCE PERFORMANCE ANALYSIS4.1 INTRODUCTIONThe Importance Performance Analysis (IPA) is a well-documented busines...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service ...
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Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service quality perspective.

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- Looking into the aspect of variation in service quality, delivered to the passengers of low cost carriers and legacy carriers across the world.

- Understanding the main deliverables in the service quality paradigm of airport terminals across the world, by means of a passenger questionnaire survey and Importance Performance Analysis.

- Establishing service quality criteria, analysing the needs of the customers, setting up minimum performance threshold matrix for service quality in airport terminals and assessing customer satisfactions

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Exploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal - a service quality perspective.

  1. 1. EXPLORING THE PROSPECT OF OPERATINGLOW COST AND LEGACY CARRIERS FROM THESAME MAIN AIRPORT TERMINALA service quality perspectiveNikhil MenonDissertation submitted for obtaining the degree ofMaster in Complex Transport Infrastructure SystemsJuryPresident: Prof. Luis Guilherme Picado SantosSupervisor: Prof. Maria do Rosário Mauricio Ribeiro MacárioMember: Prof. Vasco Domingos Moreira Lopes Miranda dos ReisDecember 2012
  2. 2. iThis thesis was completed to obtain aMaster of Science DegreeInComplex Transport Infrastructure SystemsA part of the MIT Portugal Program
  3. 3. iiACKNOWLEDGMENTSI would like to express my deepest gratitude to my family – amma and achan, back home inIndia, who have given me the opportunity to undertake the master degree program in ComplexTransport Infrastructure Systems, as part of the MIT Portugal Program. Their constant supportand encouragement is the main reason I am here.To the MIT Portugal Program - for giving me the opportunity to be part of it through the provisionof the corporate fellowship, thereby enabling me to pursue my education. Many thanks tosupervisor Prof. Maria do Rosário Mauricio Ribeiro Macário, for her encouraging words ofadvice and wisdom during the course of the master dissertation. I am sure that the expertguidance obtained on the various aspects of the airlines/ airports theme, not just on matterspertaining to the dissertation shall go a long way in broadening my horizon on the field.This dissertation would be incomplete if not for the passenger questionnaire survey conductedas part of the research. My sincere thanks to all the respondents, from across the world whohave put in their time and effort in answering the questionnaire, thereby contributing their bit inbeing part of this work. I am ever – so – indebted to you for making this dissertation, a success.The role of the MIT Portugal Program would be incomplete without the mention of a few peoplewho have made my stay in Lisbon, a very amazing experience. First of all, my colleagues in theprogram – especially Joao, Minas, Shant, Andrej and Aivin – for the vast amounts of time spenttogether in discussions, sharing amazing insights (academic and otherwise) and for theconstant source of encouragement and assistance during the course of the dissertation. Next,to Teresa, Elaine, Liliana, Prof. Viegas, Prof. Vasco, Prof. Filipe Moura, Alex, Ryan, Dimitris andeveryone else, part and parcel of the program in Lisbon for being such wonderful hosts andmaking my stay, a very enjoyable and enchanting experience. I am glad to have met someamazing people here, some of whose friendships I shall definitely be able to nurture for thefuture.Mata, pita, guru and next in line is dev (the almighty) for making everything work without anyhindrances and giving me the strength and will to excel in strive for knowledge.
  4. 4. iiiABSTRACTThe world has been witness to a spurt in the global airline passenger throughputs mainlythrough the burgeoning of low cost aviation since the airline deregulation of the 70s. Low CostCarriers (LCCs) - with the initial push from Southwest Airlines in the USA, through smartbusiness models have realized that they can not only make the legacy carriers (LC) customersshift towards flying low cost, but also that they could create a new niche segment of passengerswho would not have flown otherwise.This dissertation strives to explore the prospect of operating low cost carriers and the legacycarriers out of the same main airport terminal, from a service quality point of view. Servicequality delivered in the airport terminals would be the main focus of the dissertation. Analysiswill be made to determine the service attributes which will impact the overall quality perceivedby the passengers inside an airport terminal. Focus would then shift towards establishing qualitycriteria. It is the endeavour of the dissertation to define service levels for establishing qualitycriteria in airport terminals and later set up a service quality level matrix, which shall give a stateof all possible scenarios in the service quality jargon, concerning the airport terminal.The impact of service attributes in defining the overall quality of service perceived by thepassenger in an airport is analyzed by means of an Important Performance Analysis, whichgives an insight into the customer’s understanding of the product or service that is being offeredto them. Subsequently, an effort is made into establishing quality criteria for airport terminals.The various approaches that look into establishing service quality are analyzed and one of themethods (The 4 Q’s method) is chosen to work on the current dissertation. The customer needsare analyzed by means of the Expected and Perceived quality scores. Minimum performancethresholds are analyzed as part of being in a level of service, ranging from the best (A) to theworst (D), finally leading into a matrix of all possible scenarios arising out of the serviceattributes.To conclude, this is then modelled into a synergy conflict analysis to analyze whether there is asynergy effect or a conflicting effect on the prospect of operating low cost carriers (LCCs) andlegacy carriers (LCs) from the same main airport terminal, on the basis of each service attribute.It is seen that 10 of the 12 service attributes have a synergy effect and 4 of the 12 seem to havea conflicting effect on the objective of the dissertation. There is an overlap in two instances,where it is strongly felt that the policies of the airport might play a great role in determining thepossibility or not of operating the low cost carriers and legacy carriers from the same mainairport terminal.Keywords: Airport Terminals, Low Cost Carriers, Service Quality, Importance PerformanceAnalysis, The 4 Q’s Method.
  5. 5. ivINDEXACKNOWLEDGMENTS............................................................................................................iiABSTRACT.............................................................................................................................. iiiINDEX ..................................................................................................................................... ivLIST OF FIGURES.................................................................................................................. viiLIST OF TABLES................................................................................................................... viiiACRONYMS AND DEFINITIONS..............................................................................................x1. INTRODUCTION................................................................................................................11.1 INTRODUCTORY NOTE ...........................................................................................11.2 OBJECTIVE...............................................................................................................11.3 STRUCTURE AND METHODOLOGICAL APPROACH OF THE DISSERTATION......22. LOW COST AND LEGACY CARRIERS .............................................................................42.1 IMPACT OF DEREGULATION IN THE AVIATION SECTOR......................................42.2 BUSINESS MODEL ANALYSIS.................................................................................62.3 LCC IMPACT ON AVIATION ...................................................................................113. AIRPORT TERMINALS....................................................................................................143.1 INTRODUCTION .....................................................................................................143.2 LOW COST AIRLINE REQUIREMENTS FROM THE AIRPORT TERMINALS..........153.3 TERMINAL ACTIVITIES, COSTS AND REVENUES ................................................183.3.1 TERMINAL ACTIVITIES AND COSTS .................................................................183.3.2 REVENUES.........................................................................................................203.4 PROCESS ANALYSIS.............................................................................................263.4.1 INTRODUCTION .................................................................................................263.4.2 DEPARTURE.......................................................................................................263.4.3 ARRIVAL.............................................................................................................273.4.4 TRANSFER .........................................................................................................283.4.5 BAGGAGE HANDLING........................................................................................293.4.6 TURNAROUND PROCESS .................................................................................294. IMPORTANCE PERFORMANCE ANALYSIS...................................................................36
  6. 6. v4.1 INTRODUCTION .....................................................................................................364.2 PASSENGER QUESTIONNAIRE SURVEY .............................................................384.3 ADEQUACY OF THE SAMPLE SIZE.......................................................................384.3.1 SAMPLE SIZE CRITERIA....................................................................................394.3.2 STRATEGIES FOR DETERMINING SAMPLE SIZE.............................................404.3.3 SAMPLE SIZE ESTIMATION...............................................................................414.3.4 OTHER SAMPLE SIZE DETERMINATION CONSIDERATIONS ..........................424.4 FINDINGS ...............................................................................................................424.4.1 IMPORTANCE VERSUS PERFORMANCE OF ATTRIBUTES .............................424.5 INTERPRETATION OF THE RESULTS...................................................................484.5.1 IPA (SCALE-CENTERED APPROACH)...............................................................484.5.2 IPA (DATA-CENTERED APPROACH) .................................................................484.5.3 IPA (MEDIAN – CENTRED APPROACH) ............................................................504.5.4 ATTRIBURE DISTRIBUTION BASED ON THE DIFFERENT APPROACHES.......504.6 SENSITIVITY ANALYSIS.........................................................................................515. ESTABLISHING QUALITY CRITERIA FOR AIRPORT TERMINALS ................................525.1 INTRODUCTION .....................................................................................................525.2 APPROACHES THAT LOOK INTO ESTABLISHING QUALITY CRITERIA...............525.2.1 IMPORTANCE PERFORMANCE ANALYSIS (IPA)..............................................525.2.2 SERVQUAL.........................................................................................................535.2.3 SERVICE QUALITY INDEX (SQI)........................................................................545.2.4 THE 4 Q’s METHOD............................................................................................545.3 CHOICE OF METHODLOGY...................................................................................555.4 THE 4 Q’s METHOD................................................................................................555.5 ANALYSIS OF CUSTOMER NEEDS AND FUTURE TRENDS.................................585.6 SETTING UP MINIMUM PERFORMANCE THRESHOLDS......................................595.7 HARMONIZATION OF SERVICE ATTRIBUTES ......................................................645.8 ASSESSMENT OF CUSTOMER SATISFACTION ...................................................65
  7. 7. vi5.9 SYNERGY CONFLICT ANALYSIS...........................................................................745.9.1 SYNOPSIS ..........................................................................................................816. CONCLUSION AND DIRECTIONS FOR FURTHER RESEARCH ....................................836.1 CONCLUSION.........................................................................................................836.2 DIRECTIONS FOR FURTHER RESEARCH ............................................................84BIBILIOGRAPHY ....................................................................................................................85ANNEXE.................................................................................................................................89QUESTIONNAIRE ..............................................................................................................89
  8. 8. viiLIST OF FIGURESFigure 1.1 – Structure and the Methodological approach of the dissertation...............................3Figure 2.1 – Comparison between LCC and Legacy carriers [Source: (Esplugas 2008)] ............7Figure 2.2 – Operational Characteristics of LCC and legacy carriers [Source: (Civil AviationSection 2002) & (Alderighi et al. 2004)] .....................................................................................8Figure 2.3 – Scope of the current hub and spoke model [Source:(Franke 2004)] .......................8Figure 2.4 – Distinction between the LCC and legacy carrier business models [Source:(Biegeret al. 2002)].............................................................................................................................11Figure 2.5 – Impact of LCCs on the aviation scenario in the UK [Source:(Airways British 2004)]...............................................................................................................................................11Figure 3.1 – Terminal Configurations [Source:(Wikipedia 2012b) ]...........................................15Figure 3.2 – Traditional Airport Airline relationship [Source: (Francis et al. 2004)] ....................17Figure 3.3 – Modern airline – airport relationship [Source: (Francis et al. 2004)] ......................17Figure 3.4 – Non – Aeronautical revenues [Source: (ANA Aeroportos de Portugal 2011b)] ......21Figure 3.5 – Share of non – aeronautical revenue in ANA airports [Source: (ANA Aeroportos dePortugal 2011b)] .....................................................................................................................22Figure 3.6 – Growing Importance of Non – Aeronautical revenues [Source: (Airports CompanySouth Africa 2012)] .................................................................................................................25Figure 3.7 – Typical Departure process [Source: (DLR EU 2008)] ...........................................26Figure 3.8 – Typical Arrival process [Source:(DLR EU 2008)] ..................................................27Figure 3.9 – Arrival process analysis [Source: (DLR EU 2008)]................................................28Figure 3.10 – Transfer Passenger handling process [Source: (DLR EU 2008)] ........................28Figure 3.11 – Baggage handling process [Source: (DLR EU 2008)].........................................29Figure 3.12 – Typical turnaround times observed in a B 777 [Source: (DLR EU 2008)] ............34Figure 3.13 – Typical turnaround times observed in a B 737 [Source:(DLR EU 2008)] .............34Figure 4.1 – Importance Analysis ............................................................................................43Figure 4.2 – Performance Analysis..........................................................................................44
  9. 9. viiiFigure 4.3 – Distribution of the mean scores of the Importance Analysis..................................46Figure 4.4 – Distribution of the mean scores of the Performance Analysis ...............................47Figure 4.5 – IPA Scale Centred Approach ...............................................................................49Figure 4.6 – IPA Data Centred Approach.................................................................................49Figure 4.7 – IPA Median Centred Approach ............................................................................49Figure 4.8 – Results of the Sensitivity Analysis........................................................................52Figure 5.1 – Importance Performance Analysis .......................................................................53Figure 5.2 – The 4 Q’s method................................................................................................55Figure 5.3 – Decoupled version of the quality definition (The 4 Q’s method) ............................56Figure 5.4 – Quality gaps in definition of service quality...........................................................57Figure 5.5 – Congestion Level of Service A.............................................................................60Figure 5.6 – Congestion Level of Service B.............................................................................61Figure 5.7 – Congestion Level of Service C.............................................................................61Figure 5.8 – Congestion Level of Service C, Queuing..............................................................61Figure 5.9 – Congestion Level of Service D.............................................................................62LIST OF TABLESTable 3-1 – Sources of Airport Revenue [Source:(Francis et al. 2003)] ....................................23Table 3-2 – Sources of Airport Revenue [Source: (Odoni 2007)]..............................................23Table 3-3 – Sources of Airport Revenue [Source: (Odoni 2007)].............................................23Table 3-4 – Sources of Airport Revenue [Source: (Graham 2007)] ..........................................24Table 3-5 – Turnaround processes for low cost and legacy carriers.........................................32Table 4-1 – Demographic information (IPA).............................................................................37Table 4-2 – Mean scores of the Importance Analysis...............................................................45
  10. 10. ixTable 4-3 – Mean scores of the Performance Analysis ............................................................46Table 4-4 – Mean scores of the Importance and Performance Analysis ...................................47Table 4-5 – Quadrant wise distribution of service attributes (Importance Performance Analysis)...............................................................................................................................................51Table 4-6 – Sensitivity Analysis on the level of precision..........................................................51Table 5-1 – Expected Quality scores.......................................................................................59Table 5-2 – Perceived Quality scores ......................................................................................66Table 5-3 – Satisfaction Gap scores........................................................................................72Table 5-4 – Service Quality Level Matrix .................................................................................73Table 5-5 – Availability of transport modes for commute from the terminal...............................75Table 5-6 – Time taken to do check – in..................................................................................75Table 5-7 – Level of Congestion (Crowding)............................................................................76Table 5-8 – Number of working check – in counters.................................................................76Table 5-9 – Walking distances inside the terminal ...................................................................77Table 5-10 – Accessibility to food and beverages ....................................................................78Table 5-11 – thermal comfort (Temperature Control) ...............................................................78Table 5-12 – Seat Availability inside the terminal.....................................................................79Table 5-13 – Visual impact of the terminal (cleanliness and design).........................................79Table 5-14 – Availability of choices in food or retail..................................................................80Table 5-15 – Availability of trolleys ..........................................................................................80Table 5-16 – Accessibility to retail and concessions.................................................................81Table 5-17 – Synergy Conflict Analysis ...................................................................................82
  11. 11. xACRONYMS AND DEFINITIONSANA Aeroportos de PortugalATC Air traffic ControlBA British Airwaysbmi British Midland InternationalEC European CommissionETDS Explosive Trace Detection SystemsEU European UnionFIS Federal Inspection ServicesHCM Highway Capacity ManualIPA Importance Performance AnalysisLC Legacy CarriersLCC Low Cost CarriersLOS Level of ServiceNC Network CarrierNLR National Aeronautics LaboratoryP2P Point to PointQD Delivered QualityQE Expected QualityQP Perceived QualityQT Targetted QualitySQI Service Quality IndexUK United KingdomUSA United States of America
  12. 12. 11. INTRODUCTION1.1 INTRODUCTORY NOTEThe tremendous growth experienced by the airline/ aviation sector is the main source of interestfor the current study. The spurt in the global airline passenger throughputs mainly through theburgeoning of low cost aviation has been the single largest contributor on this aspect. Low costcarriers (LCCs), with the initial push from Southwest Airlines in the USA, through smartbusiness models have realized that they can not only make the legacy carriers (LC) customersshift towards flying low cost, but also that they could create a new niche segment of passengerswho would not have flown otherwise. This realization was further strengthened when Ryanairstarted operations in Europe, quickly followed by easyJet during the 90s. And thus the wavespread over to Asia and subsequently all other parts the world.In the due process, the airlines had to constantly innovate in order to keep their cost advantageintact. Those who failed to do so eventually disappeared from the scene, while the lucky fewflourished and took up a huge market share. When the LCC business model started to gainprominence, they started to realize the need to operate from smaller airfields, secondaryairports in order to reduce the costs and also to achieve time advantages. This use of using thesecondary airports came with need to have a trade-off between costs and quality of service.The passengers flying LCCs sure had lesser costs on the airline tickets, but had the servicequality compromised. Sometimes the secondary airports was so far off that additional costsneeded to be required for commute into the main city (as is the case of Girona (Barcelona) andHahn (Frankfurt) amongst others). A recent study showed that over 57% of the Southwestcustomers would recommend the airline to their friends over the aspect of its cost advantage,despite the lower quality of service they receive when compared to a legacy airline passenger.It is the endeavour of this dissertation to study in detail, the service quality aspect delivered tothe LCC passengers in the airport terminals, to understand their requirements and set upservice quality levels that look into the aspect of quality delivered in airport terminals.1.2 OBJECTIVEThis dissertation strives to explore the prospect of operating low cost carriers and the legacycarriers out of the same main airport terminal, from a service quality point of view. In doing so, itaims to achieve the situation where the low cost carriers, which now operate from the low costairports or the secondary airports/ terminals would be taken off service from there and startedoperating from the main airport terminal purely looking at it from the point of view of servicequality.
  13. 13. 21.3 STRUCTURE AND METHODOLOGICAL APPROACH OF THEDISSERTATIONMethodologically speaking, in terms of data collection, the main tool used for the course of thisdissertation would be a passenger questionnaire survey. The survey is to be floated amongst atarget audience which shall consist of airline passengers, with special reference to low costpassengers. The main task entrusted with the target group during the survey would be toidentify and illustrate the set of service attributes, which in their opinion shall hold forte indefining service quality in an airport terminal. The target group would be advised to give scoreson each of the service attributes in two main aspects – importance and performance.The service attributes, a total of 12 in number have been chosen after extensive literaturereviews on the aspect of defining service quality in various industries including airports. Basedon the results of the survey, Importance Performance Analysis (IPA) would be resorted to, inorder to place the service attributes on the IPA grid. Once the IPA grid is established, the resultsinterpreted, the next stage of this dissertation would focus on the establishment of qualitycriteria for setting up service quality parameters in an airport terminal. And the final parts of thisdissertation would focus on the setting up of a service quality level matrix and eventually on theaspect of addressing the main objective, having all these results in hand.On the structural point of view of the report, this dissertation would begin with an attempt tounderstand low cost carriers and legacy carriers. Main aspects of interest would be to examinethe impact that the deregulation of the 70s had on global aviation. The main focus of the saidlow cost and legacy carriers would be to understand the business models of the respectiveclass of airlines. This will be followed by the impact of LCC on aviation.Section 3 starts with a thorough exploration of the airport passenger terminals that are in use,the world over. Airport passenger terminals henceforth referred to as Terminals in this work aregenerally divided into categories on the basis of major airport activities such as commercialservices, primary, cargo services, reliever and general aviation airports. For the course of thisstudy, only commercial service airports with more than 2500 enplaning or deplaning passengersper year for any calendar year has been found to be relevant. A thorough analysis of thedifferent kinds of airport terminals – based on their design featuring their main characteristics,would be detailed during the course of this dissertation. The LCC requirement from airportterminals is the next topic of discussion here.Next focus will be on the revenues generated by the airport – namely the aeronautical and thenon – aeronautical revenues. The terminal activities, costs and revenues are another area ofexploration as far as this dissertation is concerned. It is the endeavour of the currentdissertation to look into the growing importance of the non – aeronautical revenue in airportsand similar attempts shall be made on this regard.
  14. 14. 3This will be followed by an overall process analysis in an airport terminal. Ground HandlingProcesses, especially the turnaround process assumes a very big importance in achievingeconomy, especially in the case of low cost carriers. As for the dissertation, it is believed thatthe turnaround times (ground handling operations) will end up being one of the most premierconstraints in operating both classes of airlines from the same airport terminal into reality.Taking this view into regard, a complete analysis of the turnaround process will be explored inthe subsequent session and it will be modelled on the operations happening on the ground for alow cost as well as a legacy carrier. Analysis, when done this way will aid in understanding theturnaround process in greater detail, emphasizing the possible advantages that one airline classstands to receive against the other – something which has been seen to be inherent of theirrespective business models.The final part of the dissertation will involve the analysis of the importance and performance ofthe service attributes, subsequent establishment of quality criteria and setting up of a servicequality level matrix addressing the prospect of operating low cost and legacy carriers out of thesame main airport terminal.The structure of the dissertation can be explained by the flow chart described below:Figure 1.1 – Structure and the Methodological approach of the dissertationCONCLUSION AND DIRECTIONS FOR FURTHER RESEARCHCONCLUSION DIRECTIONS FOR FURTHER RESEARCHESTABLISHING QUALITY CRITERIAINTRODUCTIONAPPRAOCHESTHAT LOOKINTOESTABLISHINGQUALITYCRITERIACHOICE OFMETHODOLOGYTHE 4QsMETHODANALYSIS OFCISTOMERNEEDS ANDFUTURETRENDSSETTING UPMINIMUMPERFORMANCETHRESHOLDSHARMONIZATION OF SERVICEATTRIBUTESASSESSMENTOF CUSTOMERSATISFACTIONSYNERGYCONFLICTANALYSISIMPORTANCE PERFORMANCE ANALYSISINTRODUCTIONADEQUACY OF THE SAMPLESIZEFINDINGSINTERPRETATION OF THEANALYSISSENSITIVITY ANALYSISAIRPORT TERMINALSINTRODUCTIONLOW COST AIRLINE REQUIREMENTSFROM THE AIRPORT TERMINALSTERMINAL ACTIVITIES, COSTS ANDREVENUESPROCESS ANALYSISLOW COST AND LEGACY CARRIERSIMPACT OF DEREGULATION IN THE AVIATION SECTOR BUSINESS MODEL ANALYSIS LCC IMPACT ON AVIATION
  15. 15. 42. LOW COST AND LEGACY CARRIERS2.1 IMPACT OF DEREGULATION IN THE AVIATION SECTORThe airline/airport industry, which is collectively referred to as the aviation industry haswitnessed widespread changes in the way it has been operating, since the turn of themillennium. A large contribution to this change has been attributed to the diverse patterns oftravel that have resulted due to the numerous needs of the passengers. Gone are the dayswhen flying used to be a businessman’s thing or confined even to the upper strata of thesociety. The deregulation in 1978 played a great role in realizing this dream. With the advent ofthe low cost phenomenon, flying has turned from being a niche segment into a completelyglobal character, cutting across regional and monetary lines. Passenger movement hasincreased over the turn of the millennium, fuelled by the low cost phenomenon which made itaccessible to more and more people all across the world. But as every phenomenon, it camewith its own drawbacks.More passengers would mean that the main airports were getting more and more congested.The airport terminals which host the passengers before enplaning and after deplaning becamethe major sources of bottleneck, unable to encapsulate the growing demand. This is majorly dueto the fact that most airports which were built during the 1960s to the 1980s did not account forthis unprecedented growth in air travel. Forecasting techniques were seldom employed duringthose days and if at all they were, it turned out to be always wrong in estimating the future stateof affairs. Thus it became evident that the existing airports had two options in front of them: i)expansion to meet the needs of the present and account for the future. ii) pave way for theconstruction of new airports (and impending possibility of shutting down or not, depending on acase by case basis) because of capacity constraints in the existing airports.By the turn of the 90s, this was realized by almost all the major airports existing and efforts wereon to either expand facilities or to build new airports which would have larger capacities than theexisting ones. Huge facilities with gargantuan designs for terminals were built by the turn of themillennium and this meant that millions of dollars were spent by the respective countries ingetting the airports, up and ready for meeting newer challenges. This was about the time, whenthe low cost revolution had kicked up in most parts of the world, succeeding the South Westrevolution which had taken place in the United States of America, much earlier. The Southwestmodel was copied blatantly by most of the airlines of that time, which later modified a fewaspects from their business models in order to stand out in the crowd.The low cost revolution meant that airlines were now looking in a new direction altogether. Theyoperated differently from the existing legacy carriers. Simple measures included recruitingyounger, non-union staff, having uniform fleets among other innovative measures as a means tocut costs. A major portion of their success involved a very innovative business model which wasbuilt around the idea of cutting costs wherever permissible. This did not mean that they had bad
  16. 16. 5seats or used old aircraft with lesser safety measures; it just was an innovative outlook towardsmaking air travel accessible to everyone. In order to do this, they explored the various avenuesof costs incurred to the airlines and figured out, that a large portion of it was concentrated on theaspect of airport charges that the airports used to levy on the airlines.From the point of view of the airline, the airport charges composed of all activities related toaviation activities, called the aeronautical charges. The aeronautical charges encompassed allthe aviation – related activities that the airline will undergo at the airports like the landing fees,the air traffic control (ATC) fees, the passengers and cargo boarding fees, the handling chargesamong others. And logically speaking, the airports which experienced greater traffic (the mainairports) had higher airport charges than the small/ secondary/medium sized airports. This factwas realized by the low cost airlines at a very nascent stage and most of the pioneers in thatsegment like Southwest, Ryanair etc. had made it clear that they would not like to fly to the mainairports in view of their higher landing charges. And fortunately for them, most of the areasaround Europe and North America had multi airport systems already existing. The mostfrequent type is a multi-airport system with one primary airport and one secondary airport (like inthe case of Frankfurt, Dallas, Melbourne) and in some cases with more than one primary andmore than one secondary airport in the vicinity (like in Paris, London, New York etc.).The secondary airports were largely unused military bases which were suffering from little or notraffic due to the fact that they did not boast of the kind of facilities, which their counterparts (themain airports) had amongst them. This turned out to be the perfect solution for the low costairlines that were looking at the aspect of cutting costs. Secondary Airports were cheaper to usefor the low cost airlines because they just had the bare minimum infrastructure required for theairport to function and the air travel to become a reality. Most of these airports consisted ofsingle terminals where arrival and departure would take place at the same level. They weredevoid of ornamental facilities like the air bridge for which costs were incurred from the airline,upon their usage. There were good facilities for ground transport existing in these airports and amajority of the low cost airlines preferred to make their passengers walk to the aircraft from theterminal. Another major factor attracting the low cost carriers to the secondary airports was onthe aspect of the turnaround times. The turnaround time is defined as the total amount of timespent by the aircraft, right from landing at a particular airport to the time when it takes off fromthe airport for its next flight. Low cost airlines commanded a turnaround time of 25-30 minswhich was impossible to achieve in the main airports mainly due to the high traffic that theseairports experienced. This was very much possible to achieve in the secondary airports sincethe terminals were usually very closely located to the ends of the runway owing to the small sizeof these airports.Thus the low cost revolution kicked off and air travel turned very global in character with moreairports, and more choices for the passengers to travel to, with lesser fares. This was a big blowto the legacy carriers. The low cost carriers not only managed to create a new segment of air
  17. 17. 6travellers but also ended up taking a share of the passengers who used to earlier fly by thelegacy carriers. So much so that Southwest currently accounts for half of the total domesticpassengers travelling across the United States of America. Similar ripples were observed inEurope with the advent of Ryanair and easyJet which took a huge chunk of the market sharefrom the legacy carriers as well. The legacy carriers were no facing mounting losses. Some ofthem were forced into bankruptcies (like Delta, US Airways, Spanair, Malev, Swiss Air) while afew others were forced into mergers in order to avoid bankruptcies themselves (like KLMbrought by Air France, Austrian Air and Swiss Air brought by Lufthansa, and US being broughtby America West). The passenger share of the legacy carriers decreased, which also meantfurther cancellations of routes, non – utilization of facilities at main airports among others.The main airports which had built enormous facilities for the legacy carriers are now facingsurging losses, because of the events that transpired within the legacy carrier industry. Add tothat, cases of some secondary airports which had turned out to become hubs of the low costairlines (like Brussels Charleroi) which are giving the main airports, very stiff competition forhandling aircrafts and passengers.2.2 BUSINESS MODEL ANALYSISTo assess the achievement of any business model one needs criterion to set it against;essentially some form of matrix and a benchmark. Success in business can be assessed onseveral dimensions. In terms of the business community it may relate to profits, the standardneo-classical rent seeking criteria, but business success may also be seen in relation to marketshare or in terms of sales revenues (Baumol 1962). The LC model is essentially one based on adifferentiation strategy, in contrast to the LCC approach based on cost leadership or costminimisation (Alamdari & Fagan 2005) within each model companies will seek competitiveadvantage through some variation in their operational vision, business routines, architectureand practiceThe business models of low cost airlines and legacy carriers vary widely. Low cost airlines arebuilt up on two key words, “efficiency” and “effectiveness”. And in order to reach these goals,they start off by optimizing their processes in order to bring minimal loses. Cost reduction isanother mantra practiced very much by the low cost airlines, to good effect. The changes in thebusiness model have impacted not just the airlines and the passengers themselves, but also theairports and every other party involved in the flying business.What the low cost aviation did was to widen the horizons of flying from being an elitist aspect tomaking it affordable for the masses. Although this came at a price of not having any frills on-board, flying has definitely become more accessible to people from various economic strata.The emphasis is on cost reduction and the service is defined by cost cuts rather thanpassengers’ perception of level of service.
  18. 18. 7Figure 2.1 – Comparison between LCC and Legacy carriers [Source: (Esplugas 2008)]As can be seen from the figure above, the business models of the low cost and legacy carriersvary leaps and bounds. There are some intermediaries which have tried to inculcate the bestparts of both realms like jetBlue, Aerlingus etc. These airlines have tried to balance the spheresof cost reductions, not compromising a lot on the customer perception of the level of service.(CESUR & TPR 2007) classify the low cost business models into 5 types and they are asfollows: 1) Southwest copycats; 2) Subsidiaries; 3) Cost cutters; 4) Diversified – charter carriers;and 5) State subsidized companies competing on price.The legacy carrier business model is essentially one based on a differentiation strategy, incontrast to the low cost carrier approach based on cost leadership or cost minimisation(Alamdari & Fagan 2005) within each model companies will seek competitive advantagethrough some variation in their operational vision, business routines, architecture and practice.Thus, there is room for heterogeneity within sectors and between sectors as well. A ‘typical’profile of a legacy carrier and low cost carrier model organization is as follows:Another perspective onto the varying business model situation is described by (Franke 2004) inhis work. Starting with the legacy carriers, he observes the most common patterns andaccording to him, major airlines capitalized on the progress of computer technology andoptimization models, developing the concept of “legacy management” in the 90s. This wasencouraged by the deregulation and liberalisation, major carriers built up global legacies aroundlarge hubs. Maximum hub connectivity is typically reached by waved traffic patterns in the hubs,increasing the probability of reaching a variety of outbound flights from any inbound flight. Thenegative aspects of this strategy are a loss of convenience for the passengers, and aconsiderable cost penalty for the airline on the operational side. Waved traffic means massivepeaks in hub operation leading to congestion during peak hours, time – critical connections andstrongly fluctuating utilization of ground handling facilities.
  19. 19. 8Figure 2.2 – Operational Characteristics of LCC and legacy carriers [Source: (Civil Aviation Section2002) & (Alderighi et al. 2004)]With no alternative business model, airline clients had no choice but to comply with theoperational model the legacy carriers had created, paying for this inherent complexity. Theproduct differentiation they received in return was – and still is – rather poor on continentalroutes. The main focus of product differentiation is on booking restrictions (eg: rebookingflexibility) and on in – flight product; landside processes are seldom reassessed. In effect, thecarriers had built their complex operational model around the needs of their least valuableclients (low – yield connecting passengers) whom they forced to connect at hubs in order tomaximize their overall destination portfolio; a situation paid for by their own premium clients. Acrisis soon developed during the second half of the 2000s when faced with the economicdownturn, these high – value passengers, showed a growing reluctance to pay premium prices.Figure 2.3 – Scope of the current hub and spoke model [Source:(Franke 2004)]
  20. 20. 9Major legacy carriers became trapped in a vicious cycle; as long as their competitors optimizedtheir destination portfolio and hub connectivity at the expense of productivity ad clientconvenience, they were forced to act likewise. Any deviation from this could prove fatal. Theonly remaining business innovations open to legacy airlines were alliances and partnershipswhich boomed in the second half of the 90s. Major carriers organized themselves in a variety ofpartnerships, and three main global alliances developed. A certain value for the client (eg:seamless global travel) as well as some low hanging fruits for the carriers (eg: scale effects inprocurement, aligned IT systems) made these alliances quite successful. However thederegulation efforts of the last 20 years have failed to change restrictive ownership clauses andbilateral traffic right arrangements thus making them not ready to face competition from their low– cost counterparts. (Franke 2004)He further goes on to explore the low – cost business model.After the “invention” of the low – cost business model by Southwest in the early 70s, it tookmore than 15 years in the US and 20 years in Europe before major legacy carriers began totake the challenge of this new business model. The network carrier executives perceived thislow cost model as restricted to a niche market sector, luring low - low – yield passengers whowould have never flown otherwise (and whom the network carriers would not like to attractanyhow), by offering the lowest service standards possible. Even at the beginning of the crisis,this perspective remained largely unchanged.Studies of the low – cost phenomenon have challenged this very thought. It has becomeobvious that LCCs have not merely expanded from their original niche in times of crisis, buthave established an alternative business model that is better prepared to adapt to the changesin demand for continental travel than that of the legacy carriers’. Studies by (Doganis 2001)show that LCC business model can operate sustainably at a 40 – 50% of the unit cost of theaverage legacy carrier. This cost gap can be only explained by the assumption of lower wagesand a ‘no frills’ approach to business. For example, point – to – point (P2P) service is offeredonly in continental traffic with a homogeneous fleet of cost efficient aircraft (B737 or A320/319).This cost gap can be explained by lower number of flights between major destinations, resultingin a considerably higher productivity of aircraft and crew. Other success factors are: lowermaintenance costs due to homogeneous fleets and lower landing/ ground handling fees, beingnegotiated with secondary airport without congestion problems.He further goes on to sayAirline strategists from NCs have identified at least three major errors in their initial perceptionsof the LCC model: The LCC service level is focussed, not poor. In most cases, the LCC product is highlyreliable and convenient for passengers; the LCC product can, in fact even be more
  21. 21. 10convenient than that of NCs who force their clients into congested off – site megaairports. They offer what most clients value at least in continental travel; directconnections with minimum interaction at the airport. LCCs do attract low – low – yield passengers and heavy bargainers who would not haveflown otherwise, but they also alienate “regular” coach travellers and even price –sensitive business class clients from the NCs. While the LCC model started in a niche, it can thrive equally well in significant parts ofcontinental air traffic markets. With the exception of highly served hub connections, LCCcould – at least in theory – enter all local markets that provide enough demand for atleast one direct flight with a B 737 per day. This segment accounts for some 70% of theEuropean continental market and more than 70% market in the US.All said, there are for sure a set of experts who are obviously not thrilled to play party to the lowcost model. They maximize the use of their factors of production. Aircraft turnaround times arekept short because there is no-belly-hold cargo to unload/unload, there are no window shadesto open, there are no seat-back pockets to be emptied, less congested airports are favoured,planes are only cleaned once a day, there are no on-line passengers to worry about, etc.Another approach of comparing the low cost carriers and the legacy carrier business modelsarises from the work by (Bieger et al. 2002). The work summarises the business modeldifferentiations from eight dimensions. It can be summarised as given in the figure below.
  22. 22. 11Figure 2.4 – Distinction between the LCC and legacy carrier business models [Source:(Bieger et al.2002)]2.3 LCC IMPACT ON AVIATIONThis section will delve into the details regarding the impacts that the low cost revolution had onthe aviation sector. Focus will be given on the various steps that were taken by the legacycarriers as a counter – measure to the spiralling low cost phenomenon.Low-cost airlines have continued to grow and increase their share of the market, especially inrecent years. Europe’s LCCs are growing at annual rates of 20–40%. They have won a 10%market share (24 million passengers) of the total intra-European market. This figure is predictedto grow to 33% (or 148.5 million passengers) by 2010 (Aviation Strategy, 2002). The figurebelow shares the growth story of the low cost airlines in the United Kingdom. This illustrationgives a very good picture into the impact of the LCCs on the aviation scene in the UnitedKingdom. Values are the percentage share of passengers on board all UK short-haul inbound,outbound and domestic scheduled flights of Ryanair, Buzz, easyJet and Go. (Alamdari & Fagan2005)Figure 2.5 – Impact of LCCs on the aviation scenario in the UK [Source:(Airways British 2004)]
  23. 23. 12After deregulation, the airlines quickly moved to a hub-and-spoke system, whereby an airlineselected some airport, the hub, as the destination point for flights from a number of originationcities, the spokes. Because the size of the planes used varied according to the travel on thatspoke, and since hubs allowed passenger travel to be consolidated in “transfer stations”,capacity utilization increased allowing fare reduction. The hub-and-spoke model survivesamong the legacy carriers, but the low-cost carriers (LCCs), now 30 percent of the market,typically fly point to point. The legacy hubs model offers consumers more convenience forroutes, but point-to-point routes have proven less costly for airlines to implement. Over time, thelegacy carriers and the LCCs will likely use some combination of point to point and legacy hubsto capture both economies of scope and pricing advantages. (Wikipedia 2012a)The success and the constant competition from the low cost carriers had made it imperative onthe part of the legacy carriers to go for a re – think on their business model and the strategiesimplemented on the ground. The strategies implemented by major airlines in reaction to thecompetitive threat from the low – cost carriers include means of reducing labour costs orincreasing productivity within the mainline airline operation. There is also the possibility oftransferring services to regional partners, franchises or alliances and even setting up a low –cost carrier subsidiary. (Dennis 2007)Some of the largest changes have been achieved by selling off whole departments (eg. groundhandling at bmi). Low cost airlines have sought to achieve dramatic growths in productivity bytaking on the bare minimum number of extra flight and cabin crew to support their vastlyexpanded operations. And unlike the low cost carriers, the major airlines have not generallytried to shift any flight and cabin crew to lower cost economies. (Dennis 2007) Support servicessuch as catering, cleaning and ground handling have come under much more severe pressure(David & Michaels 2003). An example of the above situation is elucidated by the drop inrevenue of Gate Gourmet by 30% despite a growth in passenger numbers. (Ott 2005)British Airways (BA) is generally accredited with having the most realistic strategy for dealingwith the low – cost airlines, perhaps alongside Aer Lingus who are the only real example of atraditional legacy airline converting much of the way into a low – cost carrier. (Aviation Strategy2004) Others have done with minimum by changing strategy only where head – to – head witheither a low cost airline or BA. Some have adopted aggressive tactics through legal proceduresor control of slots, facilities or capacity to keep new entrants out. (Dennis 2007)The adoption of differentiation strategies by airlines is also a result of the impact of the low costairlines in the aviation sector. And this is not just reserved for the legacy carriers alone. Therehave been instances where LCCs have departed from the conventional low cosy businessmodels to enable differentiation strategies into their models. (Alamdari & Fagan 2005) studiedthis in detail with respect to ten low cost carriers and their conclusions are summarised asbelow. For the purpose of the study, they identified ten LCCs with special regard to 17 of their
  24. 24. 13operational and product features of their low – cost business models. This was later utilized tostudy departures from convention.Overall, the selected carriers, in pursuit of their differentiation strategy, deviated slightly morefrom the product features of the original model (40%) than from the operational features (36%).The evidence also suggests that European carriers tend to adhere to the original model morethan their counterparts in the USA. However, this could change in the future as more low-costairlines enter the European market and the legacy carriers react by offering low fares as well asservice frills.Nevertheless, the main change in airport management is that airlines are no longer their primarycustomers. Rather, passengers become a significant source of revenue. Airport managers hadto reduce aeronautical revenues (in charges) to increase attractiveness, and had to develop andbecome more dependent on non-aeronautical activities such as retail, parking and advertising.“(…) the airport has better use of its facility, can attract new entrants, and is better equipped tomanage growth and expansion. But there’s risk as well. Unlike a residual agreement thatrequires the airlines to help cover airport debt and operational expenses, in this scenario theairport is solely responsible for potential revenue shortfalls.” (Lennane, A. 2010)Although the LCCs in all continents have continued to experience traffic growth, such growthcan be adversely affected by factors including a lack of access to suitable slots at airports, anincrease in airport costs when start-up tariffs are removed, lower credit card and Internetpenetration in some targeted markets, reaction by legacy carriers offering low fares, as well asservice frills and increased rivalry amongst the growing number of LCCs. (Alamdari & Fagan2005)And finally, as efficiency and cost cutting were the two main features the low cost revolutionbrought onto the table, efforts were made to optimize the ground handling processes takingthese two above given factors into consideration. Positive steps in this direction included self-check – in kiosks, web/ mobile check – in, electronic display, common use check – in countersamongst others.
  25. 25. 143. AIRPORT TERMINALS3.1 INTRODUCTIONThe simplest definition of airport terminal is as follows:An airport terminal is a building at an airport where passengers transfer between groundtransportation and the facilities that allow them to board and disembark from the aircraft.The terminal is the area within which the passengers purchase tickets, transfer their luggageand go through the security processes. The term terminal is synonymously used with the wordconcourse, which are defined as the buildings that provide access to the airplanes (via gates) –depending on the configuration of the airport. Smaller airports have one terminal while largerairports have several terminals and/or concourses. The design philosophy of terminals hasevolved over the years into a matter of intricacy and extreme importance. While the number ofterminals in an airport is always defined by the passenger throughput and the demand that theairport is handling, the configurations of these terminals have been the centre of attraction,where they are altered on a case by case basis depending on the situation at hand.At smaller airports which have only one terminal, the single terminal building typically serves allof the functions of a terminal and a concourse. Some larger airports have one terminal that isconnected to multiple concourses via walkways, sky – bridges, or underground tunnels. Someother large airports have more than one terminal, each with one or more concourses. Still, someother airports have multiple terminals, each of which incorporates the functions of a concourse.So, as can be seen there is a lot of scope for variety in the design of an airport terminal. Thenext section will highlight in brief, the most common configurations of airport passengerbuildings. (Wikipedia 2012b)The evolution in the design of airport terminals is an interesting story to explore. Due to therapid rise in popularity of passenger flight, many early terminals were built in the 1930s – 1940sand reflected the popular art deco style architecture of the time. The earliest of the philosophiesinvolved every airport terminals directly opening onto the tarmac: passengers would walk ortake a bus to the aircraft. This design, however is still common among the smaller airports andas will be seen later, is starting to take prominence in the designs of the modern day as well.(Wikipedia 2012b)Airport Passenger Buildings -- midfield concourses, finger piers or terminals -- now representthe major capital expenses at airports worldwide. This is because they are expensive, easilycosting several hundred million dollars apiece at the largest airports (Suebsukcharoen 2000).Airport managers and designers are increasingly under pressure to be efficient from aneconomic perspective. In most cases, private companies have replaced the government ownedoperators and therefore expect a high rate of return on investment. (Neufville & Belin n.d.) This
  26. 26. 15paradigm shift, from the once famous penchant for huge and gorgeous terminals into theterminals which are more economically efficient, came about as a result of the low costrevolution.The most common airport terminal configurations are as described in the figure below:Figure 3.1 – Terminal Configurations [Source:(Wikipedia 2012b) ]Economic efficiency is a prime motive for the spread of shared – use, multi – functional facilitiesin airport terminals. The low cost airlines look for operational efficiency ahead of passenger’sperception of the level of service in choosing their terminals of operation. (Neufville & Belin n.d.)This chapter will mainly deal with the airport terminal and associated aspects. Focus will be onthe requirements of the low cost airlines as the main aim of this study is to explore the prospectof accommodating both low cost carriers and legacy carriers in the same terminal. An overallreview of the terminal activities, costs involved, revenues and airport systems will subsequentlyfollow, thus providing a complete insight into airport terminals.3.2 LOW COST AIRLINE REQUIREMENTS FROM THE AIRPORT TERMINALSThe airport passenger terminal constitutes one of the main elements of the infrastructure cost ofan airport and can be defined as a building which facilitates connectivity between airside andlandside access and where a complex interaction between airport operators, airline companiesand passengers takes place. The airport business has often been characterised by investmentsin expensive facilities which appear to be unsuitable for the needs and specific requirements ofLCCs. Most modern airport terminals have been designed for maximum convenience andcomfort, whereby high standards, expensive materials and sometimes architectural monumentsare applied with the aim of delivering a prestigious image to represent the culture of the regionor country. Such developments are associated with higher costs such as capital investment,
  27. 27. 16operating and maintenance costs. Thus, some designs have little to do with the function theterminal is intended to achieve. (Ashford, N., & Wright 1992)The incentives for over-investment may be attributed to the method used to regulate airports. Inthis sense, (Niemeier 2009) argues that cost-based regulation is a major cause of the poorperformance of airports, in that it results in incentives for gold-plating, high costs and highcharges for airlines and passengers.In todays airport business, two main terminal types can be distinguished, namely, traditionalterminals and low-cost terminals. Whereas the traditional terminal can be defined as a terminaldesigned to process the flights and passengers associated with the operation of NCs with fullservice facilities, the low cost terminal can be thought of as an airport terminal that has beendeveloped with low capital investment cost and with the aim of reducing costs and increasingefficiencyIn choosing which airports and airport terminals to operate from, the low cost carriers bring intoconsideration a lot of different factors before making a decision. Quite often, these decisionsdiffer from one airline to another, in line with their policies and preferences. For Ryanair, airportchoice factors include low airport charges, quick turnarounds, simple terminals, rapid check-infacilities, good passenger facilities and accessibility. (Barrett 2004) Deregulation was a firstfactor in determining the philosophy of low cost airlines to look at other options for startingoperations from secondary airports.For example, the most mature route deregulation, Dublin–London, could not have happened ata Heathrow monopoly in 1986.The new market entrant, Ryanair, did not have access to slotsthere. Luton airport was thus an indispensable part of deregulation as was Stanstedsubsequently. (Barrett 2004)Before the discussion moves into the LCC requirements from airports, specifically airportterminals, the relationship between the airlines and the airports deserves a special mention.Traditionally, the contract between airlines and airport stated the conditions of use of airportfacilities and services in exchange for the aeronautical fees paid by the airlines. (Graham 2003)A simple buyer-seller relationship existed. (Albers et al. 2005) As shown in Figure, airportsviewed airlines as their primary customers (Francis et al. 2004); (Graham 2003) The intention ofobtaining revenues from the passengers was almost non – existent as the idea was still verynascent and also due to the initial thought process of including the passengers as part of theairline business. (Francis et al. 2004) As a result, airports relied heavily on aeronauticalrevenues.
  28. 28. 17Figure 3.2 – Traditional Airport Airline relationship [Source: (Francis et al. 2004)]Figure 3.3 – Modern airline – airport relationship [Source: (Francis et al. 2004)](Francis et al. 2004) slowly realized and argued that the airline-airport relationship wasgradually becoming more complex as airlines are increasingly cost minded for the sake of theirown financial performance, as a result, aeronautical charges are under increasing scrutiny fromairlines. (Graham 2003) This situation is more prevalent in the case of LCC. Many LCCs areattempting to negotiate a better deal in aeronautical charges from airports. Some airports,particularly those that are not utilized to its full extent, are willing to offer discounts to LCCs(Barrett 2004) or even waive their landing fee for the first few years. (Graham 2003) Now inorder to compensate the loss of aeronautical charges, airports must find new source of income,while non-aeronautical incomes from concessions, tenants and visitors are the most readilyavailable source of revenues to airports. (Francis et al. 2004)As for the LCC requirements from the airports and airport terminals, there has been enoughresearch done on this aspect to give a good indication of where things stand at the moment.That includes requirements such as -I. low airport charges [(Barbot 2006);(Barrett 2004);(Graham 2003);(Francis et al.2004);(Warnock-Smith & Potter 2005)];II. quick turnaround time [(Barrett 2004);(Gillen & Lall 2004); (Warnock-Smith & Potter2005)];
  29. 29. 18III. spare airport capacity [(Warnock-Smith & Potter 2005)];IV. convenient slot times [(Warnock-Smith & Potter 2005)];V. single storey airport terminals [(Barrett 2004); (Francis et al. 2004)]VI. quick check-in [(Barrett 2004)]VII. good catering at airport [(Barrett 2004)]VIII. good shopping at airport [(Barrett 2004)]IX. good facilities for ground transport high potential demand for LCC services andno gold-plating facility [(Barrett 2004)]So, as can be seen the traditional way of negotiations with the airports for an LCC is verystraightforward and basic.LCCs usually avoid expenditures on services that are not strictly necessary for the provision ofthe core air transport product, such as the use of air bridges or escalators, the need for transferand complex systems of the NCs. (Njoya & Niemeier 2011)With regard to the implications for airports, (Barrett 2004) is of the opinion that low cost andsmaller secondary airports (i.e. those accommodating 0.5–5 million annual passengers) havebeen greatest beneficiaries of low-cost carriers growth over the last two decades. LCCstriggered new demand and even shifted traffic away from congested airports to regionalairports.3.3 TERMINAL ACTIVITIES, COSTS AND REVENUES3.3.1 TERMINAL ACTIVITIES AND COSTSThe Airport Terminal consists of both airside and landside segments, which deem it necessaryto perform a whole range of activities apart from the conventional airport operations. As isobvious, most of the activities taking place in an airport terminal are on the landside, less so onthe airside.The airport landside is controlled by a variety of agents such as airport users and governmentagencies. In addition to these two are the airlines, with whom the airport operators co-operatefor the smooth operations. An attempt is made here to enlist all the components of the AirportTerminal landside system based on (TRB 1987)Terminal Building General Configurationo Pier; Satellite; Linear; Transporter Terminal Kerbo Departures; Arrivals
  30. 30. 19 Terminal Transitiono Entry ways and foyers; Lobby area Airline Facilitieso Office; Ticket counter, Baggage check/ claim Circulationo Corridors; Stairs; Escalators; Security Screening Passenger amenitieso Food/ beverage; news/ tobacco; Drugs; Gifts; Clothing;o Florists; Barber and shoeshine;o Car rental and flight insurance;o Public lockers and telephones;o Post office’ Amusement arcades; Vending machines;o Restrooms and nurseries’ Showers and health club;o Chapels; VIP waiting areas Departure lounges (Passenger waiting areas) International facilities/ Federal Inspection Services (FIS)o Immigration and naturalisation; Customs;o Plant and animal health (Agriculture);o Public health Airline Operationso Flight operations/ crew ready rooms’o Valuable/ outsized baggage storage, Air freight and mail;o Administrative offices Airport Operations and Serviceso Offices; Police Medical and first aids;o Fire fighting; Building maintenance; Building Mechanical Systems Communication Facilities Electrical Equipment Government Officeso Air traffic control; Weather; FIS and public health Conference and press facilitiesThe airport passenger terminal constitutes one of the principal elements of the infrastructurecost at the airport. (Ashford, N., & Wright 1992) It forms the zone of transition around whichpassengers’ transit providing the link between the ground and air transport. The rate at whichaircrafts are handled, the overall ground access provided, the capacity of the airside – all aredependent on the design and operation of the terminal. (Wells A I 1992) A specific order andprocedure are maintained, under which airport terminals perform several functions
  31. 31. 20simultaneously in accordance with the practices adopted, which tow in line to the airportregulations. (Mumayiz 1985)Three main functions are performed by the airport terminals and have been described by(Ashford, N., & Wright 1992) as follows:Change of Mode: Few air trips are made direct from origin to destination. By their nature, "air"trips are mixed-mode trips, with surface access trips linked at either end to the line haul air trips.In changing from one mode to the other, the passenger physically moves through the airportterminal according to a prescribed pattern of movement. These movement patterns areaccommodated by passenger circulation areas.Processing: The terminal is a convenient point to carry out certain processes associated withthe air trip. These may include ticketing and checking in the passengers, separating them fromand reuniting them with their baggage, and canying out security checks and governmentalcontrols. This function of the terminal requires passengerChange of Movement Type: Although aircraft move passengers in discrete groups in what istermed "batch movements", the same passengers access the airport on an almost continuousbasis, arriving and departing in small groups mainly by bus, auto, taxi, and limousine. Theterminal, therefore, functions on the departure side as a reservoir that collects passengerscontinuously and processes them in batches. On the arrivals side, the pattern is reversed. Toperform this function, the terminal must provide passenger holding space.(Ashford et al. 1984) discussed in good detail the individual terminal facilities based on theairport operational standing. Terminal activities were classified into five principal componentgroups: (1) direct passenger services; (2) airline – related passenger services; (3) governmentalservices; (4) non – passenger related airport authority functions; (5) airline – related operationalfunctions.A rising challenge at present for airport managers is to ensure the optimization of the air sideand also the terminal facilities available to the users of the airlines. This has gained moreprominence in the era of the surging LCC ridership, the accompanying change from theconventional hub and spoke model to point – to – point services of the LCCs and change inpassenger ridership structures experienced across the various airports and airlines.3.3.2 REVENUESAn airport receives revenue both from aeronautical as well as non – aeronautical sources.Aeronautical revenues are those which are the revenues that are obtained from the airport by
  32. 32. 21activities that are relating to the air transport. Non – Aeronautical revenues are those which areobtained by the airport through activities that are not related to air transport.3.3.2.1 AERONAUTICAL REVENUESAeronautical revenues are essentially the charges that the airlines will have to pay for using theairport space including some additional servicesIn Europe, all airlines, with no exceptions, have to pay the same aeronautical charges despitefollowing different business models. These charges are listed next: Taking off and landing charges based on the planes’ maximum weight specified fortake-offs; Parking charges which can be divided in traffic and maintenance areas depending ontime spent on platforms, (which again can depend varying on the situation – as fortraffic operation and maintenance); Aircraft shelter charges; Passenger service charges (depending on destination – Schengen, non – Schengenand International); Passenger security charges.(ANA Aeroportos de Portugal 2011a)Based on the method of boarding, there are additional charges to be paid. For instance, the useof air bridges represents a higher cost structure than the bus and walking gates. Low costcompanies do not prefer to use the air bridges as they use the two door boarding policy as ameans to reduce the boarding time.3.3.2.2 NON – AERONAUTICAL REVENUESNon – Aeronautical revenues are said to be consisting of six main sources in the (ANAAeroportos de Portugal 2011a). It is as given below:Figure 3.4 – Non – Aeronautical revenues [Source: (ANA Aeroportos de Portugal 2011b)]Rents and concessions form the two major parts of the commercial revenues. (Doganis 1992)Rental income is obtained by leasing the airport space to the users of the airport – among whoare airliners, freight forwarders, travel agents, tour operators and warehouses and other major
  33. 33. 22beneficiaries from airport space, such as hotels, banks, and caterers and so on. (Parappallil2007) It is usually determined by the amount of space taken up by the user and also on theamount of facilities used by the tenants such as check in kiosks, lounges etc.Concessions on the other hand are charges levied by the airport authorities from variousservice providers for letting them use the apace in the airport to sell their products. This isusually a variable, dependent on the amount of turnover of the concessionaires and not on thespace provided, calculated as a percentage of the total turnover. (Parappallil 2007)Some airports have also marketed themselves in innovative ways paving way for more revenuefrom these activities. Unlike rents and concessions, these incomes go directly into the accountof the airport. However these direct sales activities carry a certain amount of risk due to the highcapital investment, labour costs and possible inexperience on the part of the airport in dealingwith such business deals. (Freathy, P. & O’Connell 1998) Other examples of innovative revenuegenerating schemes include operating taxi services, sightseeing tours amongst others.The graphic below gives the share of the non – aeronautical revenues at the ANA airports inPortugal –Figure 3.5 – Share of non – aeronautical revenue in ANA airports [Source: (ANA Aeroportos dePortugal 2011b)]As can be seen from the above graphic, it is clear that of the 26% of total non – aeronauticalrevenue obtained by the ANA airports, more than half is obtained through retail. Real Estate,car park and Rent – a – car follow suit, finally culminating with Advertising and other measures.
  34. 34. 233.3.2.3 LITERATURE ON AIRPORT REVENUES(Francis et al. 2003) sums up a list of activities that generate revenue to the airport, both froman aeronautical as well as a non – aeronautical perspective. It is as enlisted below:Table 3-1 – Sources of Airport Revenue [Source:(Francis et al. 2003)](Odoni 2007) defines the revenues generated by airports tabulating them as follows:Table 3-2 – Sources of Airport Revenue [Source: (Odoni 2007)]He further goes on to define another class of revenues which could be generated by the airport,naming them off airport revenues – revenues which are derived from activities that are notrelated to the movement of aircraft, passengers or cargo through the subject airport. Therevenue generated from these sources could be defined under non – aeronautical revenues inany other classification system but he chooses to segregate them into a separate class. Givenbelow is the list of off airport revenues enlisted –Table 3-3 – Sources of Airport Revenue [Source: (Odoni 2007)]Aeronautical Non - AeronauticalLanding, departure and parking fees Direct sales (duty free shop/ duty paid)Passenger fees RoyaltiesFreight charges Concessions (Rentals)Apron services and aircraft handling AdvertisingOther non - aeronauticalCar ParkRechargesAirport RevenueAeronautical Non - AeronauticalLanding (and/ or take off) Concession fees for aviation fuel and oilTerminal area - air navigation Concession fees from commercial activitiesPassenger service (terminals) Revenues from car parking and car rentalsCargo service Rentals for airport land, space in buildings and equipmentAircraft parking and hangars Fees charged for tours, admissions etcSecurity Fees derived from the provision of engineering services, utlities etc, by the airport operatorAirport NoiseNoxious emissions (air pollution)Ground (ramp and traffic) handlingEn route air navigationAirport RevenueOff Airport RevenueConsulting servicesEducation and training servicesManagement contracts at other airportsManagement contracts for other activitiesEquity investments in travel related or other venturesEquity investments in other airports
  35. 35. 24(Graham 2007), in her book on Managing Airports presents another perspective on the aspectof airport revenues. It is as given below –Table 3-4 – Sources of Airport Revenue [Source: (Graham 2007)](Wells & Young 2003) made a more elaborate classification into the various revenue generatedby the airport, to give a five group classification as follows:I. Airfield area (landing fees, aircraft parking charges, fuel flowage fees etc);II. Terminal area concessions (food and beverage concessions, travel services andfacilities, specialty stores and shops, personal services, amusement, displayadvertising, outside terminal concessions – auto parking, hotel, motels etc);III. Airline leased areas (ground equipment rentals, cargo terminals, office rentals, ticketcounters, hangars, operations and maintenance facilities);IV. Other leased areas ( freight forwarders, fixed – base operators, governmental units andbusinesses in the airport industrial area);V. Other operating revenue (distribution systems for public utilities – electricity and steamcontract performed for tenants)3.3.2.4 GROWING IMPORTANCE OF NON – AERONAUTICAL REVENUESIn the last two decades, the importance of non – aeronautical revenue has been widelyrecognised as being of concern for airports since it opened up as being an opportunity for theairports to generate some extra income from activities that were not related to aviation. Thetransition of the airports from being candidates of traditional models of business to businessmodels that are trending to the current times (commercialization, privatization, increased role forthe airport manager in enhancing the commercial viability of the airport) should be one of themain reasons for the recognition of the importance of the non – aeronautical revenues.Four broad reasons have been identified as possible precursors to this phenomenon:I. Increasing competition, along with falling yields and erratic world events have ledairlines to bargain for cheaper landing charges at airports. This has led to the airportlooking elsewhere in order to remain profitable and also as a means of increasingrevenues. The main airports have mainly reacted to this situation by trying to expandtheir commercial activities in an endeavour to be more profitable.Aeronautical Non- AeronauticalLandingfees ConcessionsPassengerfees RentsAircraftparkingfees DirectSales (shops, cateringand otherservices provided by the airportoperator)Handlingfees (if handlingis provided by the operator) CarPark (if provided by the airportoperator)Otheraeronautical fees (airtrafficcontrol, lighting, airbridges etc) Recharges (forgas, water, electricity etc)Othernon - aeronautical revenues (consultancy, visitorand business services etc)AirportRevenue
  36. 36. 25Figure 3.6 – Growing Importance of Non – Aeronautical revenues [Source: (Airports Company SouthAfrica 2012)]II. Changing travel patterns of the air passengers is another reason why there is a need forairports to focus on non – aeronautical revenues. Gone are the days when only whenthe elite class used to fly. Air travel has become much more accessible and due to theadvent of the LCCs, a niche segment called the leisure class of passengers hasemerged, who are focussing their attention on the commercial activities at theseairports.III. Increasing competition between hub airports is another major contributing factor. Whilepassengers who fly from point – to – point might fly from airports which offer betterconvenience of flights for them, the transfer passengers’ decisions can be altered byairports which can offer a variety of commercial services.IV. Stricter environmental regulations have meant that most airports have restrictions onnight flights (after 2300) until 0600, resulting in the airport having to be shut technicallyduring this period of time. This has led many an airport manager to rethink on theaspect of shifting focus from generating slot revenues towards non – aeronauticalrevenues to compensate for the loss of revenue due to the new restrictions.(Parappallil 2007)
  37. 37. 263.4 PROCESS ANALYSIS3.4.1 INTRODUCTIONIn this section, a detailed analysis on the various processes involved on the landside and theairside of the airport are explored:This starts from the very point of initiating the idea of travel to the actual check in process fordeparture, finally culminating in being seated inside the aircraft and getting ready for the flight.Similarly, certain number of processes are involved during the arrivals as well – starting fromdisembarking the aircraft to baggage retrieval, passing the customs inside the terminal,eventually leading to exiting the airport for the onward journey/ activity. All these can be handledin a variety of ways.3.4.2 DEPARTUREThe departure processes can be explained through the graphic below. Note that the colour blueis representative of all the processes which are mandatory inside the airport, right from checkingin to boarding the aircraft.Although, not all the processes mentioned above are mandatory. For example: Border Controlis an issue which does not come into the picture if the passenger is travelling inside the countryor even in the European Union, for that matter. Similarly, passengers may choose to travel withor without baggage to be dropped off.Figure 3.7 – Typical Departure process [Source: (DLR EU 2008)]A better understanding of the above processes has been initiated through the report of the(IATA 1989) which goes into the depths of the passenger process analysis during the departure.To go through the process steps the passenger and staff have to do the following: Registration, seat allocation and confirmation passenger details (e.g. passenger withreduced mobility, special meals, unaccompanied minor, etc.) Passenger ID verification Travel document verification (including payment verification) Baggage suitability (size, weight/pieces, security questions) Baggage labelling and drop-off Boarding Pass Control
  38. 38. 27 Required security search processes include the use of metal detectors and X Raysystems Existing security processes are sometimes augmented by explosive trace detectionsystems (ETDS) as well as random hand search Border Control Passenger boarding (registration passenger on board)The sequence of events is explained by the following graphic.3.4.3 ARRIVALThe arrival process is less complicated than the departure process and can be explained by thefollowing graphic:Figure 3.8 – Typical Arrival process [Source:(DLR EU 2008)]As explained in the departure process, not all steps are necessary here too. For example,passengers travelling inside a country or even the European country need not go through theborder and/ or customs control. Same is the case with passengers travelling only with cabinbaggage, as they do not have to go through the step of Baggage claim.For the correct implementation of these steps, the airport authority or the government has toprovide the airport with the following: Border Control by the government authority Checking passport Checking travel document (Visa, Immigration documents, etc.) Collect baggage from baggage claim, bulk luggage return Customs control by the government authority Further transportation
  39. 39. 28Figure 3.9 – Arrival process analysis [Source: (DLR EU 2008)]3.4.4 TRANSFERFor purposes of transfer, the most important factor to consider is the origin and the destinationof the passenger. For example inside Europe, countries who have signed the SchengenAgreement permits free and hassle free transfer of passengers within the member nationswithout the need to go through border and/or customs control. Whereas, passengers from acountry like Great Britain, for example are treated as Internationals as they have not signed theSchengen Agreement. The process analysis for a transfer passenger can be depicted asfollows:Figure 3.10 – Transfer Passenger handling process [Source: (DLR EU 2008)]
  40. 40. 293.4.5 BAGGAGE HANDLINGThe whole baggage processes involves three main tasks: Move bags from the check-in area to the departure gate Move bags from one gate to another during transfers Move bags from the arrival gate to the baggage-claim areaIt can be explained by the following process diagram:Figure 3.11 – Baggage handling process [Source: (DLR EU 2008)]3.4.6 TURNAROUND PROCESSIn order to assess the possibility of operating low cost and legacy carriers out of the same mainairport terminal, an analysis of the airport turnaround process needs to be done. The NationalAeronautics Laboratory NLR, which has done extensive work on modelling the turn-aroundprocess, defines it as an encompassment of all ground handling activities that has to beperformed at an aircraft when parked at a stand. These activities have to be performed betweenin – block, when the aircraft arrives at the stand, and off block, when the aircraft leaves thestand. Ground Handling services include baggage and cargo (un)loading, passenger and crew(de)boarding, cleaning, catering, fuelling and other associated activities.Basically, the turnaround process has been divided into three sub processes namely: Passenger Processes Baggage Processes Airline ProcessesA high level of planning has to be ensured in order to make sure that these processes do notclash with each other, thus leading to loss of time. Certain processes of ground handling aresuch that they cannot happen at the same time. So, one process has to be over to ensure thesmooth continuation of the subsequent one. For example: it is well known that baggage
  41. 41. 30(un)loading and fuelling cannot take place at the same time because the area of concentrationis close to each other and thus, there is a good chance that a loss of time can be experiencedduring this situation.The processes involved in a typical turnaround are as explained as below:I. Docking: Docking is the arrival at the exact location for arranging the handlingprocesses. As pilots are not able to see the location of their wheels, a flagger isnecessary to signal the crew how to move and where exactly to stop. At many airports,the flagger is replaced by an automated docking system where on the wall in front of theaircraft, electronic signals indicate the pilot what to do.II. De-boarding: De-boarding starts with bringing an aerobridge or stairs to the aircraft. Incase passengers and crew de-board via stairs, additional airport personnel arenecessary to guide them to the building. This can be a brief walk over the airport’ssurface or through a bus connection. The crew gets a special treatment as they willleave after the passengers and need more time for final checks.III. Baggage and cargo unloading: Baggage unloading can typically start immediatelyafter the aircraft has come to a stop. A dedicated company will take out the baggageand bring this to the terminal building. Cargo, if not too voluminous, is unloaded at theaircraft’s stand. More commonly, cargo from combined – aircraft is unloaded at theairport’s cargo area, in which case the aircraft will be towed to that position with a towvehicle.IV. Security: Aircraft with passengers from certain countries need a security check whenthey arrive at the airport.V. Cleaning: Cleaning concerns the interior of the aircraft, which is prepared for thefollowing flight.VI. Fuelling: Fuelling is performed with pump vehicles which take the kerosene fromhydrant wells, which are located at the gates. Alternatively, tank vehicles bring the fuelto the aircraft.VII. Catering: Catering delivers the necessary food to the aircraft. Depending on thedestination of the flight, certain types of food are not allowed. Some airlines allowpassengers to indicate special wishes (like vegetarian meals) beforehand. Severalairlines, do not serve food to every passenger; instead they provide food and drinks at acost. In this case, fewer catering items will be required.VIII. Baggage and cargo loading: Like cargo unloading, if necessary, cargo loading isperformed at the cargo area. Specific rules exist concerning livestock and cooling.
  42. 42. 31Those are not allowed to wait at the cargo area too long. Baggage loading is handled atthe stand.IX. Passenger boarding: Passengers can board the way they de – board, either throughan aerobridge, through a short walk on the surface or through a bus connection.X. Security: All passengers and their luggage have to pass a security check. If this isperformed at the gate, the process is included in the handling process. At some airports,the security check is performed at a central area. In this case, the security check is notincluded in the handling process.XI. Aircraft check: The crew is responsible for the flight and will check the aircraftthoroughly before each flight. Aircraft checks concern inspections on the outside of theaircraft and proper functioning of the aircraft machinery and equipment (cockpit checks).XII. Push – back: When all the boarding processes have been completed, the aircraft candepart. Aircraft at gates need to be pushed – back using dedicated push – backvehicles. Aircrafts at stands mostly require push – backs as well, depending on theconfiguration of the stand. At some stands, aircraft can directly start up their enginesand start taxiing.(Leeuwen 2007)The section above depicted the typical turn around process that an aircraft goes through once itreaches the stand to the moment it takes off for its next flight. For the purpose of this study, wetry to explore into more detail of the turnaround process. It is felt that the turnaround process isone of the most processes to be explored due to the fact that ground handling is recognised asone of the important sources of delay in the air transport system. And especially at a time when,the current study explores the possibility to operate low cost and legacy carriers out of the samemain airport terminal, it is believed that the turnaround times become a major factor to be takeninto consideration.The following table shows the specific turnaround processes usually involved in a low cost andlegacy carrier:
  43. 43. 32Table 3-5 – Turnaround processes for low cost and legacy carriersTurnaround Process /Airline ClassLegacy Carriers Low Cost CarriersDocking Mixed fleets – so differentpositions to stop the aircraft,conveyed to the pilot by theaid of a flagger or anelectronic signal on theadjoining wall.Single fleet – so sameposition to stop the aircraft,conveyed to the pilot by theaid of a flagger or anelectronic signal on theadjoining wall.De-boarding Mostly through aerobridges –so only through one door. Ifthrough stairs – one or twodoors depending on the case.Don’t use aerobridges even ifavailable, because theyincrease time and cost. Usestairs – usually one doorutilized, sometimes two.Baggage and cargounloadingMedium to long haul flights –considerable amount ofbaggage stored in theunderbelly. Time taken tounload is more.Short hauls – stricter baggagelimits. Considerable amountstored in the cabin. Therefore,time taken to unload is less.Security Same for low cost and legacycarriers since its dependenton the specific airport policiesand regulations.Same for low cost and legacycarriers since its dependenton the specific airport policiesand regulations.Cleaning Elaborate cleaning requiredafter each flight due to themedium/ long haul nature offlights and in – flight catering.Elaborate cleaning notrequired after each flight dueto the short haul nature offlights and no in – flightcatering.Fuelling Usually performed after eachflight because of the medium/long haul nature. Takes 15 –20 minutes.Tankering technique adopted- 1st flight in the morning isfilled upto full capacity andcan be used for multiplenumber of flights due to theshort haul nature. Reduces
  44. 44. 33turnaround time.Catering Presence of in – flightcatering, so requires loadingand unloading with eachflight.No free in – flight catering, sorequires lesser time to loadand unload food due to thelower demand.Baggage and cargo loading Medium to long haul flights –considerable amount ofbaggage stored in theunderbelly. Time taken to loadis more.Short hauls – stricter baggagelimits. Considerable amountstored in the cabin. Therefore,time taken to load is less.Passenger boarding Mostly through aerobridges –so only through one door. Ifthrough stairs – one or twodoors depending on the case.Don’t use aerobridges even ifavailable, because theyincrease time and cost. Usestairs – usually one doorutilized, sometimes twoSecurity Same for low cost and legacycarriers since its dependenton the specific airport policiesand regulations.Same for low cost and legacycarriers since its dependenton the specific airport policiesand regulations.Aircraft check Aircraft checks are conductedfor every carrier, irrespectiveof whether it is a low cost or alegacy carrierAircraft checks are conductedfor every carrier, irrespectiveof whether it is a low cost or alegacy carrierPush – back When all the boardingprocesses are completed, theaircraft is ready to depart. Thepush – back process isinitiated, irrespective ofwhether it is a low cost or alegacy carrier.When all the boardingprocesses are completed, theaircraft is ready to depart. Thepush – back process isinitiated, irrespective ofwhether it is a low cost or alegacy carrier.On closer examination of the turnaround process, as has been done above it is seen that thereare several factors which differentiate the turnaround times achieved by the low cost as well asthe legacy carriers. This plays a key role in ensuring the lesser turnaround times for low costairlines in comparison with the turnaround times observed for the legacy carriers. The EuropeanCommission project on the Aeronautic Study for seamless transport (DLR EU 2008) has been a
  45. 45. 34pioneer in process analysis studies and they have researched on the turnaround timescommonly observed for both long/ medium and short haul aircrafts. Their observations of theturnaround timelines and critical paths are depicted in the following graphic:Figure 3.12 – Typical turnaround times observed in a B 777 [Source: (DLR EU 2008)]The graphic above shows the turnaround times observed for a medium/long haul aircraft, theBoeing 777 – 300 ER. This is in line with the common turnaround times observed for legacycarriers, which is around 60-75 minutes. As can be seen, this is in contrast to that of a low costairline which manages to do turnarounds in 20-30 minutes, even in the busiest of times. Theturnaround timeline and the critical path usually adopted are as depicted below. The graphicbelow displays the turnaround time observed for a common short haul aircraft, the Boeing 737 –900. One important thing to notice however is the inclusion of fuelling in the turnaround timeline.It is usual for low cost airlines which are short haul to adopt the tinkering technique which willreduce the need to refuel after every flight. Thus, the typical turnaround times observed are inthe range of 25-30 minutes, as can be elucidated from the graphic below.Figure 3.13 – Typical turnaround times observed in a B 737 [Source:(DLR EU 2008)]Thus, some of the main reasons of the low cost airlines achieving the said shorter turnaroundtimes are identified and are as given below: Single fleet, so personnel on the job are very well trained. No in-flight catering, which reduces the time to load and unload food.
  46. 46. 35 Minimal or no cargo loading/ unloading No refuelling done after every flight Boarding and de - boarding through both doors or alternating processes through eachdoors. Close proximity of gates to the aircraft High employee morale to produce efficient results
  47. 47. 364. IMPORTANCE PERFORMANCE ANALYSIS4.1 INTRODUCTIONThe Importance Performance Analysis (IPA) is a well-documented business research techniquedeveloped by (Martilla & James 1977). It is a method to evaluate the attributes of a product orservice based on measures of importance and performance from the perceptual viewpoint ofthe customers. (Chiang 2008)According to (Bacon 2003)The importance and performance measures give the management a richerunderstanding of customer reactions to a product or service. From the IPA, themanagement will not only know which attributes require immediate attention, but alsowhy they require immediate attentionImportance and Performance differences not only have consequences for the management asthey predict purchase behaviour, but also have a direct impact on repurchase intentions as theyaim to provide an asymmetric impact of negative and positive attribute level performance onoverall satisfaction as well.(Mittal et al. 1998) In today’s highly competitive world, high qualityand customer satisfaction are achieved only when the firm’s performance exceeds what thecustomers expect from them.(Oliver 1997) The IPA is valuable in helping the service providersto assess the quality of their efforts in satisfying the needs of the customers. (Chiang 2008)Thus, there is always room for improvement in every sphere regardless of the conclusions thatthe IPA analysis gives.The IPA follows a systematic five-step approach as follows: (1) Identification of product/serviceattributes; (2) Development of the data collection instrument; (3) Data collection; (4) Tabulationof the Results; and (5) Interpretation of results. (Chiang 2008)The list of attributes was first generated by a thorough review of existing literature and pastresearches relevant to the particular industry being studied. A questionnaire survey with aselection of users of this service, (in this case, the passengers flying in airlines with specialreference to low cost airlines) were then conducted in order to arrive at a more accurate list ofservice factors, which played an important role in defining the quality inside an airport terminal.According to (Chiang 2008),The importance and performance of the attributes can be interpreted by examining whichquadrants each of these attributes fall into on the grid. The analyses regardless of thepositioning of the gridlines are similar. Quadrant A: Attributes that fall into this quadrant are deemed important to thecustomers. However, the service provider falls short of customers’ expectationswith regards to the provision of these product or service attributes. Negativeperformance on an attribute has a greater impact than a positive performance on

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