Low Cost Airports in India Part 1 - Applying implementation frameworks 7-S model and Balanced Scorecard

Fachhochschule Frankfurt am Main
University of Applied Sciences
University of Petroleum and Energy
Studies, Dehradun
Masters of Business Administration in Aviation Management
Strategic Airport Management
Low Cost Airports in India
Part 1:Applying implementation frameworks
7-S model and Balanced Scorecard
Professor Heike Wörner-Erk and Professor Knut Walther
Seema Vedak - 1042180
José Joaquim Fernandes - 1034431
4th
June 2014

Page i
Table of Contents
List of Appendices.......................................................................................iii
Table of Figures..........................................................................................iv
Abbreviations...............................................................................................v
Abstract......................................................................................................vii
1 Introduction.......................................................................................... 1
2 Problem Statement.............................................................................. 1
3 Selection of literature........................................................................... 2
4 Strategic Implementation..................................................................... 2
4.1 7-S Model ..................................................................................... 3
4.1.1 Strategy................................................................................ 5
4.1.2 Structure............................................................................... 8
4.1.3 Systems................................................................................ 9
4.1.4 Style ................................................................................... 11
4.1.5 Staff.................................................................................... 12
4.1.6 Skills................................................................................... 12
4.1.7 Shared Values.................................................................... 13
4.2 Balanced Scorecard.................................................................... 16
4.2.1 Clarify and translate vision and strategy............................. 17
4.2.1.1 Financial ......................................................................... 17
4.2.1.2 Customer perspective..................................................... 18
4.2.1.3 Internal Business perspective ......................................... 18
4.2.1.4 Innovation and Learning perspective .............................. 19
4.2.2 Communicate and link strategic objectives and measures. 21

Page ii
4.2.3 Plan, set targets, and align strategic initiatives................... 21
4.2.4 Enhance strategic feedback and learning........................... 21
5 Criticism............................................................................................. 22
6 Conclusions....................................................................................... 22
7 References........................................................................................ 24

Page iii
List of Appendices
Appendix A Strategic Analysis ........................................................... 28
Appendix A1 PESTEL Analysis.......................................................... 28
Appendix A2 Value Chain Analysis .................................................... 29
Appendix A3 Five Forces analysis ..................................................... 31
Appendix A4 SWOT Analysis............................................................. 31
Appendix B Culture ............................................................................ 33
Appendix B1 Artifacts ......................................................................... 33
Appendix B2 Espoused Values .......................................................... 34
Appendix B3 Basic Underlying Assumptions...................................... 34
Appendix C Selection of literature ...................................................... 36
Appendix D Typical Airport IT Systems .............................................. 38

Page iv
List of Figures
Figure 1: 7-S Model ................................................................................... 4
Figure 2: 7-S analysis for a Low Cost airport versus Full Service Airport 16
Figure 3: Balanced Scorecard analysis for a Low Cost Airport ................ 20
Figure 4: PESTEL analysis for a Low Cost Airport................................... 29
Figure 5: Value chain for a Low Cost Airport ........................................... 30
Figure 6: SWOT Analysis for a Low Cost Airport ..................................... 32
Figure 7: Levels of Culture....................................................................... 35

Page v
Abbreviations
AMAN: Airport Management System
AMS/GMS: Apron Management System / Gate Management System
AOCC: Airport Operations Control Centre
AODB: Airport Operational Database
ATC: Air Traffic Control systems
BHS: Baggage Handling System
BMS: Building Management System
BRS: Baggage Reconciliation System
BSC: Balanced Score Card
CCTV: Closed Circuit Television
CUSS Common Use Self Service
CUTE: Common Use Terminal Equipment
ERP: Enterprise Resource planning
FIDS: Flight Information Display Systems
GSR: Ground Service Radio
IB: Information Broker
LCA: Low Cost Airport
LCC: Low Cost Carrier
MATV: Master Television
MIS: Management Information System
NMS: Network Management System
PAVA: Public Address and Voice Alarm Systems
PBS Passenger Boarding System

Page vi
PMS: Performance Measuring System
PTB: Passenger Terminal Building
SAN: Storage area network
SCADA: Supervisory Control and Data Acquisition
WLAN: Wireless Local Area Network

Page vii
Abstract
This paper applies two strategic implementation frameworks, McKinsey
7-S model and Balanced Scorecard, on the concept of a low cost airport in
India.
It details the theoretical contents of each of the implementation
frameworks and suggests where differences can be found between a full
service airport and a low cost airport in India.
It concludes how the two implementation frameworks used in this paper,
the McKinsey 7-S model and the Balanced Scorecard, will contribute to
minimising the effects of poor implementation attempts, and help direct
focusing implementation efforts on the fundamental traits of organisational
effectiveness to successful strategy execution.
We finally propose that a successful low cost airport in India, implementing
their strategies using McKinsey 7-S framework and the balanced
scorecard will be the main airport in regional India, and not as is usually
the case for low cost airports, a secondary airport.

1 Introduction
India’s aviation market is expected to grow at a rate of 9-10% annually
until 2020 (Ministry of Civil Aviation 2010). Currently a significant part of
Indian domestic air travel is focused around the traditional hub airports in
the major metropolitan areas
Similarly to the traditional concentration of Alitalia on Milan and Rome has
facilitated the entry of new airlines to regional airports, such as Bologna,
Venice, Pisa, Turin and Genoa (Barrett 2004), we believe that the
concentration of domestic carriers on the major metropolitan airports in
India will facilitate the entry of airlines to new low cost regional airports in
India. The concept of Low cost airport was first introduced by De Neufville
(De Neufville 2008).
In general, the airport business has been transformed from a public utility
to one of modern business, and this shift has contributed to the success of
the low cost carrier growth (Barrett 2004)
Traditionally airports were part of a system, where the absence of price
competition reduced efficiency measures (Barrett 2004).
The combination of low-cost airline and low-cost airports has been
significant in terms of gaining market share and expanding the size of the
overall market (Barrett 2004).
2 Problem Statement
This paper applies two strategic implementation frameworks, the
McKinsey 7-S model and the Balanced Scorecard, on the concept of a low
cost airport in India.
In this paper we use the term full service airport, to denote the
characteristics of a traditional major metropolitan airport, serving legacy
carriers in a hub-and-spoke concept model.

3 Selection of literature
The research articles were selected by undertaking a search through the
search engine Google Scholar and through the electronic databases
ScienceDirect and ResearchGate as well as the website of Journal of
Airline and Airport Management in addition to a general search on Google.
For a detailed description of the selection of literature, please refer to
Appendix C.
4 Strategic Implementation
Strategic implementation describes the concrete measures that translate
strategic intent into action that produce results (Luecke 2005). The main
task of strategic implementation is to bring the strategy into life as part of
everyday decision making process of the organisation (Misankova and
Kocisova 2013). According to Misankova and Kocisova (Misankova and
Kocisova 2013), strategy will not be successful in the case of absence of
implementation of the strategy throughout the entire organisation.
In order to ensure implementation of the strategy throughout the entire
organisation, it is necessary to apply the strategic implementation
framework to ensure alignment between the formulated strategy and the
implemented strategy. Strategic fit is important, because when achieved, it
creates competitive advantage and superior profitability (Porter 1996).
Prior to engaging into strategic implementation and applying any strategic
implementation frameworks it is certainly advisable to apply strategic
analysis tools in order to analyse both the external environment as well as
the internal environment in which a company finds itself (Johnson and
Scholes 1997; David 2012; Mintzberg et. al 1998a). Our suggestion for
performing a thorough strategic analysis can be found in Appendix A.
Two frameworks for ensuring implementation of the strategy throughout
the entire organisation are McKinsey’s 7-S model and the Balanced
Scorecard. In the following, each of these two frameworks will be applied
to the concept of a low cost airport in India.

4.1 7-S Model
One approach used for implementation of the strategy is the 7-S model,
developed by Waterman and Peters at McKinsey & Company in 1980
(Waterman et al. 1980). The model contains 7 elements, and is based on
the theory that, for an organization to perform well, these seven elements
need to be aligned and mutually reinforcing. The model can be used to
help identify what needs to be realigned to improve performance, or to
maintain alignment and performance during organisational change.
Irrespective the type of change; restructuring, new processes,
organisational merger, new systems, change of leadership, etc.; the 7-S
model can be used to understand how the organizational elements are
interrelated, and so ensure that the wider impact of changes made in one
area are taken into consideration (Mindtools.com 2014).
The 7-S Model can be used in a wide variety of situations where an
alignment perspective is useful (mindtools.com):
• Improving the performance of a company.
• Examining the likely effects of future changes within a company.
• Aligning departments and processes during a merger or acquisition.
• Determining how best to implement a proposed strategy.

Figure 1: 7-S Model
(Source: Mindtools.com)
The 7-S model contains hard and soft factors (Mindtools.com 2014). Hard
factors, or elements, are easier to define and management can directly
influence them. The three hard elements of the model are (Waterman et
al. 1980):
Strategy – expresses how the company achieves its vision and how
it responds to opportunities and threats from the environment. It
also includes the awareness of the strategy and its explanation to
external subjects as well as internal subjects.
Structure – expresses how the company is structured; its inferiority
and superiority relations. The way organisational structure supports
the implementation of the strategy.
Systems – are formal and informal everyday activities and
procedures carried out by employees. Systems are also systems of
planning, control and information that support the implementation of
the strategy.
On the other hand soft elements of the model are more difficult to define,
they are less specific and influenced by a company´s culture. Soft
elements are just as important as hard elements, if the organisation is

going to be successful. Soft elements of the 7-S model are (Mindtools.com
2014):
Style – the style of leadership and choice of the appropriate style of
leadership of the organisation. The style belongs to important
cultural factors affecting the implementation of the strategy.
Staff – the employees and their basic skills are key factors of the
success of the implementation of the strategy. It also means having
the right people in the right place.
Skills – the actual skills and abilities of the organisation’s
employees. Organisations should focus on the development of the
skills in the future as well as extension of knowledge and acquisition
of experience.
Shared values – values enforced in the strategy are based on
shared interests and are included in the mission of the organisation.
Shared values are a key element that influences the effectiveness
of all other factors and is an important feature of an organisation’s
culture that supports the creation and implementation of the
strategy.
The 7-S model can be applied to any type of organisation. If something
does not work in the organisation it is likely that a conflict exist between
some elements in the 7-S model (Misankova and Kocisova 2013).
According to Misankova and Kocisova (Misankova and Kocisova 2013),
experiences from companies showed that the elements of the 7-S model
support the implementation of the strategy and contribute to the long term
success of a company.
Each of the seven elements of the 7-S framework will in turn be applied to
the concept of a low cost airport in India.
4.1.1 Strategy
The overall purpose of the strategy element of the 7-S model is to clarify
the plan devised to maintain and build competitive advantage over the

competition (Mindtools 2014). It is those actions that a company plans in
response to or anticipation of changes in external environment (Waterman
et al. 1980). Strategy is about combining activities into a reinforcing
system that creates dynamic fit with the environment (Markides 2000).
Full service airports have traditionally been able to count on decade-long
relationships with their legacy-airline customers (De Neufville 2008).
Airports serving low cost carriers can not necessarily rely on decade long
relationships with low cost carriers (De Neufville 2008). Standards for the
quantity and quality of the space in the airport buildings are high (De
Neufville 2008).
An example of such standards is the Airport Development Reference
manual from IATA (IATA 2004), which was actively used both in the
development of Muscat and Salalah International Airports in the Sultanate
of Oman in 2005 as well as in the development of New Delhi International
Airport Terminal 3 in 2007.
A full service airport typically has comprehensive support for hub and
spoke operations such as passenger services, baggage services and
ground handling. These amenities are essential and expected both by
passengers and by full service carriers.
On the other hand, low cost airports provide basic services and comfort. A
low cost airport will have limited support for hub and spoke operations
which consequently will reduce operational cost. A low cost airport should
also provide a high degree of flexibility in physical infrastructure (De
Neufville 2008).
In a low cost airport, the business model is distinct from that of traditional
full service airports, in that low cost airports emphasize profitability through
operational efficiency and minimal frills (De Neufville 2008).
For example the departure area at Bordeaux-Merignal airport allows 0.72
m2
per person, compared to 2-2.5 m2
at conventional terminals (Njoya and
Niemeier 2011).

Low cost airports will not have expensive buildings and will focus on
efficiency and sparse commercial areas (De Neufville 2008). They will not
create large amounts of expensive commercial space (De Neuville 2008).
In Bordeaux-Merignal airport, the space allotted to commercial offerings is
only 20% of the overall floor space (Njoya and Niemeier 2011).
Since low cost airlines operate on point-to-point basis, their passengers do
not need the facilities for transfer passengers, typically provided by full
service airports supporting hub operations (Barrett 2004).
As full service airports have large and costly commercial areas, one of the
main passenger strategies are to keep departing passengers inside the
departure shopping area as long as possible, in order to entice shopping.
In Copenhagen Airport, this is achieved, by only advertising a boarding
gate a close to the departure time as possible, typically 20-25 minutes
before scheduled departure, although the departure gate for planning
purposes is known long time in advance.
Low cost airports work on the passenger strategy to get passengers to
board the aircraft as soon as possible. A low cost airport will therefore
emphasise on minimum walking distance to gate. Low cost airports
models for minimising walking distances to boarding gates recommend a
single pier as a preferable configuration because it gives a short walking
distance and requires the smallest total construction area (Hanaoka and
Saraswati 2011).
The case for low airport charges is that the large decline in airfares since
the market entry of Low Cost Carriers has raised the share of airport
charges in the price of an airline ticket (Barrett 2004). Low airport charges
are therefore an incentive in attracting low cost carriers to an airport. This
is achieved by cutting non-core travel services to allow lower cost
structures, which in turn allow airports to charge low cost carriers lower
prices (Njoya and Niemeier 2011).
It is also important that low cost airports maintain an increased focus on
the importance of non-aeronautical revenues (Gillen and Lall 2004), as the

low-cost carriers typically are attracted to airports with low aeronautical
charges (Graham 2013) and consequently contribute less to aeronautical
revenues than the full-service carriers do at a full service airport.
In order to take advantage of any spending benefit that may exist with
LCC passengers, there must be adequate commercial facilities in place
(Graham 2013). Contrary to what is usually perceived, the buying
behaviour of LCC passengers at airports does not vary significantly from
those flying network carriers (Njoya and Niemeier 2011).
Many airport operators seek to compensate for the reduction in
aeronautical revenues by off-setting these with higher non-aeronautical
revenues from the increased number of LCC passengers and their
spending (Graham 2013). This means that Low Cost Airports often creates
innovative ways of income generation through non-aeronautical ancillary
services and sources.
In a low cost airport innovative ways of contributing to increased non-
aeronautical revenue generation relevant to the circumstances of the
particular airport should be addressed.
4.1.2 Structure
Organisational units should be optimally organised to support the strategy
(Luecek 2005). If organisational structures do not sufficiently support the
strategy, the organisation will not produce optimal results, and
organisational shadow systems, rather than organisational hierarchical
systems will determine the strategic direction (Stacey 1996).
Generally for smaller organisations, a lean organisational structure will be
relevant.
Traditional full service airports have complex organisational structures in
order to support the vast amount of specialised services offered by such
airports (De Neufville 2008)

Complex organisational structures are traditionally in the form of
divisionalised structures (Mintzberg 1983) where functional activities are
performed both centrally and in each separate division (David 2011).
In a Low cost airport, like every other enterprise that pursues agility and
speed, work will have to be shifted into a non-hierarchical unit in which
production decisions can be made swiftly and monitored more effectively
(Luecke 2005).
A low cost airport needs to implement a solid management structure to
reflect the varied needs of not only airlines, passengers, employees and
businesses but also governments and the community at large (Njoya and
Niemeier 2011).
Having an appropriate organisation, formal and informal management
controls, and reporting structures in place, will enable airports to realise
the full competitive advantage potential of their resources and capabilities
(Njoya and Niemeier 2011).
4.1.3 Systems
The systems element of the 7-S model is meant to cover all the
procedures, formal and informal, that make the organization go, day by
day and year by year: capital budgeting systems, training systems, cost
accounting procedures, budgeting systems. If there is a variable in the
model that threatens to dominate the others, it could well be systems
(Waterman et al. 1980). Invariably, since the 7-S model was developed,
the notion of systems will also have to cover the procedures and systems
which are today highly complex and integrated Airport IT Systems.
Ideally, procedures and processes should be clarified, performing
business process analysis, after which management should evaluate
which of these processes and procedures, could advantageously be
optimised or carried out using IT Systems. Unfortunately, far too often, it
happens the other way round.

In a full service airport, procedures and processes are highly complex and
specialised due to the nature of its complex products and services that a
full service airport offers its clients as well as due to the complex physical
infrastructure in which a full service airport finds itself in.
Traditional full service airports have highly complex integrated airport
systems. This also meant that full service airports rely heavily on IT
support for their airport systems.
Almost all aspects of a full service airport, being it the complex physical
infrastructure or complex services are typically supported by complex IT
systems. A list of possible IT systems found in a full service airport is given
in Appendix D.
In addition complex IT systems and services which are implemented in a
full service airport, they are also typically monitored and controlled by
overall command and control facilities, such as the Airport Operations
Control Centre (AOCC), Fire and Rescue Control Centre.
IT systems in itself, might also have an entire separate IT command and
control organisation, encompassing an entire IT organisation inside the
airport, such as LAN Support, WAN Support, Network support, Application
Support, Hardware Support and sometimes full service airport also house
entire sections of IT Development, IT Testing, IT production support etc.
In a low cost airport, it is of importance to carefully evaluate which work
processes can best supported and implemented by the use of airport IT
Systems. In a low cost airport, services are typically of a low complexity
and basic nature, where cost-consciousness is high, and some services,
such as baggage transfer, not even supported. Airport IT systems in a low
cost airport should therefore meet the criteria of efficiency and customer
convenience while being implemented with the expansion concepts of
scalability and modularity wherever possible.
A number of processes and systems would irrespective of the size of the
airport still have to be present, such as FIDS or public address however
the scale and complexity in terms of overall integration-capabilities could

be considerably different in a low cost airport as compared to the same
systems in a full service airport.
4.1.4 Style
A company’s style, as a reflection of its culture, has more to do with its
ability to change organization or performance than is generally recognized
(Waterman et al. 1980). Culture refers to a company’s values, tradition and
operating style (Luecke 2005). Culture and leadership must be supportive
of both strategy and the day-to-day activities that implement it (Luech
2005).
According to Luecke (Luecke 2005) it is one of those vague qualities that
is difficult to measure or describe, but nevertheless exist and sets the tone
for managerial and employee behaviour.
Schein (Schein 1992) identifies cultures at three different levels:
Artifacts
Espoused Values
Basic underlying assumptions
For a more detailed description of culture and each of the three levels of
culture defined by Schein, please refer to Appendix B.
Cultures may be strong or weak. Strong cultures are difficult to change
without great effort, time and sustained disruption. Companies with strong
cultures are wise to adopt strategies consistent with their culture (Luecke
2005).
In some cases where strategy and existing culture are not collaborative,
culture and strategy must be re-invented simultaneously. Changing a
corporate culture to better align it with a new strategy is the responsibility
of the CEO (Luecke 2005).
Organizations may listen to what managers say, but they believe what
managers do. Not words, but patterns of actions are decisive. The power
of style, then, is essentially manageable (Waterman et al. 1980).

In a full service airport, typically also caused by the organisational
structure of divisionalised form, the management style would be expected
to be rigorous and strict, with emphasis on structured career paths and
established appraisal systems.
In a low cost airport the management style would be more flexible
cooperative and cost conscious. Career paths would be more flexible and
cross career paths would be accepted.
4.1.5 Staff
The Staff element of the 7-S model relates to the specialisations or
positions represented within the organisation (Mindtools 2014).
Waterman (Waterman et al. 1980) observed that that the superbly
performing companies pay extraordinary attention to managing what might
be called the socialisation process in their companies. This applies
especially to the way they introduce young recruits into the mainstream of
their organisations and to the way they manage their careers as the
recruits develop into tomorrow's managers.
Considering people as a pool of resources to be nurtured, developed,
guarded, and allocated is one of the many ways to turn the "staff"
dimension of the 7-S framework into something not only amenable to, but
worthy of practical control by senior management (Waterman et al. 1980).
Employee jobs at full service airports are structured and would typically not
perform other duties, whereas in a Low cost airport, which is highly cost
conscious, employees would perform several different duties. A lot of
emphasis would be given to cross organizational capabilities of the staff.
4.1.6 Skills
The skills element of the 7-S model relates to the actual skills and
competencies of the employees working in the organisation (Mindtools
2014).

The notion of skills was added to the 7-S model for a highly practical
reason. It enables to capture a company's crucial attributes as no other
concept can do. The dominating attributes, or capabilities, that help
companies gain a competitive advantage is what is meant by skills
(Waterman et al 1980).
The skills element of the model is important, because Waterman and
Peters (Waterman et al. 1980) regularly observed that organizations facing
big discontinuities in business conditions have do more than shift strategic
focus. Frequently they need to add a new capability, in the form of a new
skill. Possibly the most difficult problem in trying to organise effectively is
that of weeding out old skills-and their supporting systems, structures, etc.-
to ensure that important new skills can take root and grow (Waterman et
al. 1980).
Highly specialised staff and high customer service standards which include
customized customer service, differentiation with regards to the
compartment of travel and segmentation, is a feature of full service
airports. In a low cost airport we would expect staffs that are highly
flexible, performing a multitude of different tasks, offering a unified service
level to passengers.
Full service airports have staff that possess a high degree of specialised
skills and complex management skills, due to the management hierarchy.
Staff in a low cost airport possesses a high degree of generalised skills
due to limited need for high specialization as a result of the lean
organisational structure.
In a low cost airport we would also expect staff to be trained to possess a
higher degree of cross functional capabilities than in a full service airport.
4.1.7 Shared Values
The shared values, originally termed “superordinate goals” when the
model was first developed (Mindtools 2014), is a set of values and
aspirations, often unwritten, that goes beyond the conventional formal

statement of corporate objectives (Waterman et al 1980). Shared values
are the fundamental ideas around which a business is built. They are its
main values. But they are more as well. They are the broad notions of
future direction that the top management team wants to infuse throughout
the organization. They are the way in which the team wants to express
itself, to leave its own mark (Waterman et al 1980).
To be readily communicated, superordinate goals need to be short and
clear. Typically, therefore, they are expressed at high Ievels of abstraction
and may mean very little to outsiders who don't know the organization
well. But for those inside, they are rich with significance. Within an
organization, superordinate goals, if well articulated, make meanings for
people. And making meanings is one of the main functions of leadership
(Waterman et al 1980).
In a full service airport, we expect staff to share the values of service
orientation and highly skilled specialisation.
In a low cost airport we would expect a more regional “connect” to the
local community where customer services attitude will be geared towards
the local community’s shared values.
Our 7-S analysis is summarised in the below figure.
7-S Analysis
Strategy
Full service airport Low Cost Airport
High quality passenger services
Servicing network carriers
Complex services – Baggage transfer
Retail services, maximise time spent
inside airport for shopping
Elaborate commercial infrastructure
Complex physical infrastructure
Comprehensive support for hub and
spoke operations including
passengers, baggage services, ground
Basic passenger services
Minimising walking distance to gate
Low degree of complex physical
infrastructure
High degree of flexibility in
infrastructure.
Limited support for hub and spoke
operations
Strategy to get passengers through
the airport and boarding as soon as

handling
High reliance on aeronautical revenue
Decade-long relationships with legacy
airlines
possible
Innovative sources of non-
aeronautical revenue generations
Profitability through operational
efficiency and minimal frills
Structure
Complex organisational structure
Slow decision making process due to
divisionalised form
Lean organisational structure
Faster decision making process due
to lean structure
Systems
Complex procedures and processes
Complex integrated airport IT systems
High degree of IT Support for Airport
systems.
Considerable support organisation for
IT Systems support.
Simplified procedures and processes
Simplified airport IT Systems
Basic IT Support for Airport IT
Systems
Minimal support organisation for IT
systems support
Style (Corporate Culture)
Rigorous and strict management style
Emphasis on career paths and
established appraisal systems
Flexible, co-operative and cost-
conscious management style
Flexible and cross-career paths
Staff
Highly specialised staff
High standard of customer services
Differentiated customer services
Highly flexible
Cost conscious
Unified customer services
Skills
High degree of specialisation of skills
Complex management skills across
High degree of generalisation of skills
Limited need for high specialisation

disciplines
High degree of management
specialisation in terms of alignment of
marketing, operations, finance and HR,
due to large management hierarchy
High degree of general management
skills, due to lean organisational
structure
Cross functional skills
Shared values
Service Oriented
Specialised and highly skilled
Cost consciousness
Regional “connect” to local community
Figure 2: 7-S analysis for a Low Cost airport versus Full Service Airport
4.2 Balanced Scorecard
Measuring performance is imperative to measure the success or failure of
any strategy, the most widely adopted performance technique is the
balanced scorecard (Agostino and Arnaboldi 2012). According to Agostino
and Arnaboldi (Agostino and Arnaboldi 2012) a performance measuring
system (PMS) is defined as a set of mechanisms and processes used by
an organization to identify key objectives and support the implementation
of actions, planning and measurement, control, rewarding and learning.
Kaplan and Norton coined the term balance scorecard and according to
them, “The collision between the irresistible force to build long-range
competitive capabilities and the immovable object of the historical-cost
financial account ting model has created a new synthesis called the
balanced scorecard” (Kaplan and Norton 1996).
The Balanced scorecard gives an overview of financial measures of past
performance and the future performance. It provides an organisations
performance with four perspectives, financial, customers, internal business
processes and learning and growth; thus measuring the financial and non-
financial aspects of the organisation (Kaplan and Norton 1996).
The balanced scorecard should aid in translating companies mission and
strategy into attainable objectives and measures. A balance between
external measures for stakeholders and internal measures of critical

business process within the organisation is necessary. Companies use the
balanced scorecard as a strategic management system, to manage their
strategies for a longer time (Kaplan and Norton 1996). The measurement
focus of the scorecard is used by companies to (Kaplan and Norton 1996):
Clarify and translate vision and strategy
Communicate and link strategic objectives and measures
Plan, set targets, and align strategic initiatives
Enhance strategic feedback and learning.
4.2.1 Clarify and translate vision and strategy
The first step of the scorecard used by the management is to translate the
company’s business strategies into specific targets.
“The BSC provides a framework to measure business strategies for
managing the implementation of strategy while also allowing the strategy
to evolve in response to changes in the company’s competitive, market
and technological environment”(Kaplan and Norton 2007).
There are four perspectives that aid in translating vision and strategy
(Kaplan and Norton 2007):
Financial perspective
Customer perspective
Internal business perspective
Innovation and Learning perspective
Each of these perspectives will in turn be applied on a low cost airport.
4.2.1.1 Financial
To translate the vision of the company it has to set certain financial goals,
which is the financial perspective of the BSC (Kaplan and Norton 1996).
The objectives that are targeted to be achieved are growth in revenue,
reduction in operating costs and increased profitability. In order to reach
the objective, the necessary measures that may be taken, are increase in

non-aeronautical revenue, cost reduction and percentage increase in
profit. The targets to attain the objectives are an increase in non-
aeronautical revenue by 2% year over year, controlling the cost and 5% of
turnover increase every year. In order to achieve these targets certain
initiatives are necessary such as a mall, car parking, warehouse, porta
cabins, advertising, land for mall, retail, operational efficiency, minimal frills
and increased revenue from non-aeronautical services.
4.2.1.2 Customer perspective
The customer perspective is important in order to translate the company’s
vision into objectives (Kaplan and Norton 1996). The objective is to attain
higher customer satisfaction and increased brand equity. This may be
measured by customer ranking and the target would be to attain a
percentage increase in customer satisfaction and a higher airport ranking.
The initiatives that are needed in order to achieve these objectives are
customer loyalty programme, minimal check in time, on-time flights,
improved airport environment, advertising, social networking, partnerships,
sponsoring events, trade fairs and aviation forums.
Once the financial and customer perspectives are achieved the
organisation then needs to measure its internal business process (Kaplan
and Norton 1996).
4.2.1.3 Internal Business perspective
The objective of the internal business perspective is to improve operational
efficiency and corporate social responsibility, safety, environmental impact
and quality management. The improvement in employee skills and
services as well as customer and supplier loyalty needs to be measured.
To achieve these objectives, initiatives such as employees ensuring on-
time arrivals and departures, minimum hold pattern, efficient ground
handling on airside and landside, are necessary. In addition best practices
and continuous improvement procedures are also equally essential.

4.2.1.4 Innovation and Learning perspective
In order to achieve the objective of an efficient passenger handling
process, it is necessary to have a minimal check in time. To achieve this,
employees have to be trained effectively. The management furthermore
has to ensure that highly skilled employees are retained in the
organisation.
The target for achieving efficient passenger handling in a low cost airport
is to reduce the closure of the check-in counter from its present 45 minutes
prior to departure; to 20 minutes prior to departure.
The management should target a 97% employee retention rate. To
achieve these targets the initiatives include training, e-Learning and
aligning employees with the company’s objectives.
In order to translate the company’s vision into objectives, it is essential to
link measures from the four perspectives back into the organisation’s
vision.
Our above Balanced Scorecard analysis is summarised in the below
figure.

A. Financial Perspective
Objective Performance Measure Targets Initiatives
Revenue Growth
Increase in non-
aeronautical revenue
Increase in non-aeronautical
revenue by 2% yoy
Mall, Car Parking, Warehouse,
Porta Cabins, Advertising,
Land for Mall, Retails
Reducing operating cost Cost reduction % decrease in cost
Operational efficiency,
minimal frills
Increase profitability % increase in profit
Year 1 - 5% of turnover
Increase revenue from non-
aeronautical services
B. Customer Perspective
Higher Customer
Satisfaction
Customer ranking Increase satisfaction by %
Customer Loyalty program,
minimal check-in time, on
time flights, improved airport
environment
Increase brand equity Customer ranking Increase airport ranking
Advertising, social
networking, partnerships,
sponsoring events, trade fairs,
aviation forums,
C. Internal Business Perspective
Improve operational
efficiency
Statistics
Minimum annual on time
aircraft turnaround - 98%
On time landings & take off's,
Minimum hold pattern,
efficient ground handling
(airside & terminal)
Corporate Social
Responsibility - Safety &
well, Environmental
impact, Quality
Management
Improved employee /
customer / supplier
loyalty
ISO Standards on Safety,
Environment & Quality
Best practices, continuous
improvement procedures
D. Innovation and Learning Perspective
Check-in system
Decrease in check-in
time
Decrease in check-in time
from min 45 min before
departure to 20 minutes
before departure
Innovative check-in process -
passenger picked up in car
and check-in process is
completed while being driven
to the aircraft. Body Scanners
at security check for quick,
efficient screening.
Talent Management
Employee retention
rate
97% employee retention
rate
Training, elearning, aligning
employees with company
objectives
Balanced Scorecard - Low Cost Airport
Figure 3: Balanced Scorecard analysis for a Low Cost Airport

4.2.2 Communicate and link strategic objectives and measures
The company’s strategic objectives and measures are communicated to
throughout the organisation via emails, bulletin boards etc. This creates
transparency amongst employees who are aware and can follow the
objectives and measures (Kaplan and Norton 1996).
4.2.3 Plan, set targets, and align strategic initiatives
The success of the BSC is when it is used to drive an organisational
change (Kaplan and Norton 1996). This stage enables an organisation to
(Kaplan and Norton 1996):
Quantify the long term outcomes it wishes to achieve
Identify mechanism and provide resources for achieving those
outcomes
Establish short term milestones for the financial and nonfinancial
measures on the BSC.
4.2.4 Enhance strategic feedback and learning
This is the most innovative and important aspect of the entire BSC. It
enhances organisational learning (Kaplan and Norton 1996). This step
enables the management to monitor and follow the implementation of the
strategy (Kaplan and Norton 1996).
Although, the Balanced Scorecard is a useful implementation tool, it has
also received some criticism. Hogue (Hogue 2014) quotes Butler, Letza
and Neale arguing that the concept is very general and that it may not fit in
an organisation's culture and could ignore corporate missions.

5 Criticism
Very few academic references are dealing directly with South Asia.
Parallels from academic works have to be drawn and assumed for India,
which might not be entirely possible.
The academic literature which we have found seems to discuss mostly
about the concept of Low Cost Airport from the perspective of a low cost
airport being a secondary airport (De Neufville 2008).
Low cost secondary airports in metropolitan areas compete with full
service airports (De Neufville 2008); however a low cost airport in a non-
metropolitan area would not necessarily have to compete with a full
service airport, but might have to compete to attract full service airlines, to
complement their mains market segment, low cost airlines, thereby
changing the tables.
With the expansion of low cost carriers expanding along with low cost
airports, these low cost airports contribute to reducing the market share of
legacy airports (De Neufville 2008).
6 Conclusions
This paper has applied two strategic implementation frameworks,
McKinsey 7-S model and Balanced Scorecard on the concept of a low cost
airport in India.
Both of the two implementation frameworks used in this paper, McKinsey
7-S model and the Balanced Scorecard will contribute to minimising the
effects of poor implementation attempts, such as the laissez-faire
management style, unclear strategy and conflicting priorities, ineffective
senior management teams, poor verbal communications, poor
coordination and inadequate down-the-line leadership (Beer and Eisenstat
2000) and help direct focusing implementation efforts on the fundamental
traits of organisational effectiveness to successful strategy execution
(Nielson et al. 2008).

We propose that a successful low cost airport in India, implementing their
strategies using McKinsey 7-S framework and the balanced scorecard will
be the main airport in regional India, and not as is usually the case for low
cost airports, a secondary airport. This to the extent, that a full service
airport might not even establish itself in a regional market simply because
of the strength of a well established low cost airport in the area.

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Appendix A Strategic Analysis
In performing a strategic analysis of an organisation we first need to
perform a structured analysis of the environment as it is otherwise difficult
to make sense of the diversity in which the organisational environment can
contribute to strategic decision making (Johnson and Scholes 1997).
We deliberately choose the modernistic view of strategy and apply the
perspective of the positioning school, where strategy formation takes place
as a result of an analytical process (Mintzberg 1998b).
The reason for the choice of the position school and the modernistic view
of strategy is that we are only with great difficulty able to apply traditional
analysis methods to other strategic perspectives, such as the
postmodernistic view; being well aware, that possibly a “muddling through”
approach, as proposed as an alternative by Stacey (Stacey 1996) could
result in other equally valid results of a strategic analysis.
Appendix A1 PESTEL Analysis
As a starting point of a strategic analysis we use PESTEL to analyse the
broad aspects of what environment influences have been particular
important in the past and to which extent there are changes occurring
which may make any of them more or less significant in the future for the
organisation and its competitors (Johnson and Scholes 1997).
Our PESTEL analysis of a low cost in airport in India is presented in the
below figure.
PESTEL Analysis
Political Analysis
High taxation by government
Land acquisition and rehabilitation policies of the
government affect growth of infrastructure at
airports
FDI policy of the government is a huge
determinant for growth of any airport

Policies of Ministry of defence to share
aerodromes and air space
Frequent policy changes
Economic Analysis
Cost of ATF is high causing a snowball effect on
Indian oil companies
Domestic taxation is very high causing airlines to
increase their price
Social Analysis
Growth of alternative means of transport such as
high speed trains, road travel will affect short haul
routes
Promoting tourism within India
No night ban on air traffic
Technological
analysis
Development of new technologies has a huge
impact in many areas of airport operations.
Airside areas such as installation automated
landing devices, taxiways etc.
Environmental
analysis
No Indian restrictions on noise pollution
No Indian rules on carbon emission
Advantage of lack of environmental bans
Unclear environmental policies
Legal Analysis
Internal arbitration is less
No clarification leading to huge delays causing
additional financial burden
Legal system is time consuming
Figure 4: PESTEL analysis for a Low Cost Airport
Appendix A2 Value Chain Analysis
Value chain analysis has been widely used as means of describing the
activities of an organisation and relating them to an assessment of the
competitive strength of an organisation or its ability to provide value-for-
money products or services. The purpose of using value chain is to
describe the separate strategies which are necessary to underpin the
organisation’s strategies and how they link together both inside and
outside the organisation (Johnson and Scholes 1997).

Porter (Porter 2004b) argues that an understanding of strategic
capabilities must start with an identification of the separate value activities.
An important outcome of the value chain analysis is to identify those
competencies which critically underpin the organisations competitive
advantage (Johnson and Scholes 1997). The bundle of skills and
technologies that enable a company to provide a particular benefit to
customers are also what Hamel and Prahalad (Hamel and Prahalad 1994)
call core competence.
We are also aware of Stacey’s criticism (Stacey 1996) of Porter’s Value
Chain analysis in that the only circumstances to which a Value Chain
Analysis can possibly apply are those close to certainty and agreement; a
situation that we as a low cost airport would probably not find ourselves in;
if for nothing else; due to the volatile nature of low cost carriers (Graham
2013) and due to the risk of lack of long term certainty (De Neufville 2008).
Applying, however, a post-modernistic perspective to the systems of value
chains of organisations implies also that the borders of the individual
organisations’ value chains are not fixed (Stacey 1996).
Our value chain analysis of a low cost airport is presented in the below
figure.
Connectivity to the Gates Baggage unloading Outdoor marketing Lost & Found
airport. Bonded warehouse Baggage belts Social media Car rentals
Pick & drop cab service Baggage makeup/breakup area Ground handling Online marketing Hotel representation
for early mornings and Fuel storage Bonded warehouse Television ads Lounge
late evening arrivals Check-in / boarding area Pick & drop cab service Print media Portacabins
Security checks for early morning and Media announcement Pax service
Baggage services late evening arrivals counters
Lounges Custom clearance
ATC
Emergency Services
Airline office infrastructure
S
U
P
P
O
R
T
A
C
T
I
V
I
T
Y
FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT : Hiring staff, training emergency service staff,
refreshers training for such services, Safety trainings, System training, hiring force to
manage the systems
TECHNOLOGY DEVELOPMENT : Baggage sorting systems, latest technology for
quick check-in, cab check-in
PROCUREMENT : Purchasing, Service contracting, Co-branding, leasing land and
services
PRIMARY ACTIVITIES
INBOUND OPERATIONS OUTBOUND MARKETING & SALES SERVICE
Figure 5: Value chain for a Low Cost Airport

Appendix A3 Five Forces analysis
The previous PESTEL analysis has given us an understanding of the
broad aspects of environmental influences. We now need to search for
opportunities to identify bases of advantage (Johnson and Scholes 1997).
In identifying these basis of advantages one of the tools, Porter’s Five
Forces approach (Porter 2004a), would provide us with an understanding
of what forces influence degrees of competition and opportunities for
building competitive advantage.
Although usually designed with the view of an individual Strategic
Business Unit in mind (Porter 2004a) we are aware that a more
generalised level of analysis, as we are performing here, could reduce the
value of our analysis (Johnson and Scholes 1997).
The Five forces analysis is not presented here, but merely suggested as a
tool.
Appendix A4 SWOT Analysis
The aim of the SWOT analysis is to identify the extent to which the current
strategy of an organisation and its more specific strengths and
weaknesses are relevant to and capable of dealing with the changes
taking place in the business environment.
Our SWOT analysis of a low cost airport is presented in the below figure.

STRENGTHS
Low Costs
Low charges
Quick turnovers
Increased check-in time
Higher revenue
generation from non-
aeronautical
WEAKNESS
Unable to cater to full
service carriers
Inadequate infrastructure
Government bueraucracy
Staff Storage
Lack of flexibility
OPPORTUNITY
Increase in tourism
Increase in international
operations
Location of the airport if
secondary metro or a primary
regional
Increase in educational
institutions and students
Future growth opportunities
THREATS
Roadways
Train service
Mass Rapid Transport
Service
Outdated Air traffic
equipments
Capital costs/ costs of
construction
Government approvals
Market structure of the
airport
Figure 6: SWOT Analysis for a Low Cost Airport

Appendix B Culture
This appendix gives a more detailed description of culture, as well a
culture based on Scheins three-level model.
According to Virkus (Virkus 2009), Kroeber and Kluckhohn complied in
1952 a list of 164 definitions of “Culture”.
Particularly slightly more traditional textbooks on organisational behaviour
have a very vague definition of culture, defining culture as institutionalised
traditions (Mishra 2001).
According to Brown (Brown 1998), it was Edgar Schein’s book,
Organisational Culture and Leadership (Schein 1992) that has become
one of the key foundations of corporate culture.
Certainly a lot of textbooks on strategy and Leadership (Johnson and
Scholes 1997), (Hatch 1997), (Brown 1998) all quote Schein’s model for
culture (Schein 1992).
Although Tropenars and Hampden-Turner (Tropenars and Hampden-
Turner 1999) do not actually quote Schein, they also have a three-layered
model of culture identical to Schein (Schein 1992).
Schein (Schein 1992) identifies cultures at three different levels:
Artifacts
Espoused Values
Basic underlying assumptions
Each of these will be briefly explained below.
Appendix B1 Artifacts
According to Schein (1992) artifacts are at the surface of culture.
Hatch (Hatch 2007) explain artifacts as visible, tangible and audible parts
of culture. Categories of artifacts include physical objects created by
members, verbal manifestations seen in written, spoken language, rituals,

ceremonies and other behavioural manifestations. Members of a culture
may or may not be aware of their culture’s artifacts, but the artifacts
themselves can directly be observed by anyone. According to Schein
(Schein 1992) this level of culture is the easiest to observe but also difficult
to decipher. An observer can describe what he sees and feels but will not
be able to reconstruct what the artifacts mean to a given group or if they
even reflect important underlying assumptions (Schein 1992).
Appendix B2 Espoused Values
Values are the social principles, goals and standards held within a culture.
(Hatch 1999)
They define what members of an organisation care about, such as
freedom, democracy, tradition, wealth or loyalty. Values constitute the
basis for making judgements about what is right or wrong (Hatch 1999).
According to Brown (Brown 1997) values are intimately connected with
moral and ethical code, and determine what people think ought to be
done.
Members of an organisation are able to recognise their values fairly easily
and become especially aware of them when someone tries to change their
culture in some fundamental way (Hatch 1999).
Appendix B3 Basic Underlying Assumptions
According to Schein (Schein 1992), when a solution to a problem works
repeatedly, it comes to be taken for granted. Basic assumptions are held
unconsciously and are very difficult to surface (Brown 1998).
Basic assumptions tend to be those we neither confront nor debate. Basic
assumptions represent what members believe to be reality and thereby
influence what they perceive and how they think and feel (Hatch 2007).
Basic assumptions are therefore extremely difficult to change (Schein
1992).

Basic assumptions are implicit, deeply rooted assumptions that people
share. The basic assumptions guide perceptions, feelings and emotions
about things (Brown 1998).
Artifacts
These take the form of stories,
myths, jokes, metaphors,
rites, rituals and ceremonies,
heroes and symbols
Espoused Values
Beliefs, Values and attributes
Basic Underlying
Assumptions
These concern the
environment, reality, human
nature, human activity and
human relationships
Deepest Level of
Culture
Taken for granted
invisible
The most superficial
manifestation of culture
Visible but often undecipherable
Greater level of
awareness
Figure 7: Levels of Culture
Source: Adapted from Schein (1992) P. 17, Hatch (1997) P. 211, Brown 1998) P. 12

Appendix C Selection of literature
The research articles were selected by undertaking a search through the
search engine Google Scholar and through the electronic databases
ScienceDirect and ResearchGate as well as the website of Journal of
Airline and Airport Management in addition to a general search on Google.
In addition to this, research also involved studying Strategic Management
textbooks recommended for use of the MBA in Aviation Management at
Frankfurt University (David 2012) as well as Cass MBA programme
(Johnson and Scholes 1997), Copenhagen Business School MBA
programmes (Markides 2000; Stacey 1996) in addition to work by
prominent authors such as Porter (Porter 2004a; Porter 2004b), Mintzberg
(Mintzberg et al. 1998a; Mintzberg 1998b), Kaplan and Norton (Kaplan
and Norton 1996) and Hamel and Prahalad (Hamel and Prahalad 1994;
Hamel et al. 1998) as well as professional aviation text books by De
Neufville (De Neufville and Odoni 2003), Deshpande (Deshpande 2001),
Horonjeff (Horonjeff et al. 2010) Graham (Graham 2008), Kazda (Kazda
and Caves 2007) and Wells (Wells and Young 2004)
For the search engines and databases a number of searching keywords
related to Low Cost Airport and Low Cost Carrier (such as “LCA”, “LCC”,
“Low Cost Airport”, “PTB”, “Passenger Terminal Building”) and to Strategic
Implementation (such as “7-S”, “McKinsey”, Balanced Scorecard”) as well
as words related to the geographical region (such as “Asia”, “South Asia”,
“India”, “Middle East”). This produced an extensive range of diverse
articles (80+) which had to be narrowed down by considering their
significance to this paper.
One of the major difficulties in determining their relevance was that the
majority of the articles included the concept of Low Cost Airport intertwined
with Low Cost Carriers as a topic for discussion, but not necessarily as the
only theme.

Consequently a subjective judgement had to be made as to whether there
was different coverage of focus for the relevance of this paper.
Whilst the database search ensured that international papers that
conventionally tend to be written in English were identified, a potential
limitation was that papers written in other languages, such as any of the
Indian languages, may have been omitted, which in turn may have
influenced the geographical perspective of the articles.
The majority of the references came from specialist aviation journals
(Journal of Air Transport Management, Journal of Airport Management)
but some also appeared in other transport, tourism or management
journals.

Appendix D Typical Airport IT Systems
Core Airport IT systems found in full service airports typically include
system such as:
Airport Operational Database (AODB)
Information Broker (IB)
Flight Information Display Systems (FIDS)
Common Use Terminal Equipment (CUTE)
Common Use Self Service (CUSS)
Apron Management Systems/Gate Management System
(AMS/GMS)
Passenger Boarding System (PBS)
Management Information System (MIS)
Baggage Reconciliation System (BRS)
Help Desk system
Call Centre system
Airport Management System (AMAN)
Enterprise Resource planning (ERP)
Storage area network (SAN)
Master Clock System
Aviation billing System
Non-aviation billing System.
In addition to these core IT systems, additional IT systems typically found
in full service airports include systems such as:
Public Address and Voice Alarm Systems (PAVA)
Closed Circuit Television (CCTV)

Building Management System (BMS)
IP Telephony
Baggage Handling System (BHS)
Ground Service Radio (GSR)
Master Television (MATV)
Supervisory Control and Data Acquisition (SCADA)
Air Traffic Control systems (ATC)
Cargo Warehouse systems
Wireless Local Area Network (WLAN)
Network Management System (NMS)

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