Keeping the facts in mind, the core competencies of Schiphol Group are; Developing airport capacity and making money from it by adding value, and using the same formula to do the same internationallyAttracting travelers and non-travelers .. and seduce them to buy as much as possible Providing services as a “package” and varietyBuilding airports and airport cities; the reason why we highlighted this is, Schiphol earns only 50% of its revenue from airlines, airline and passenger handling duties. The other 50% of its earnings are coming from the real estate, shopping, amusement, etc.
So with all its offerings, Schiphol is also named as the “City Without Citizens”
The Schiphol Group’s strategic focus is mainly on 4 areas. Cost cutting by economies of scale, and achieving this by international expansions, partnerships. Growing on international market by acquisitions,Finding or securing place in privatization competition both in local or international market. And of course, they want to keep the home strong, and they always want to be the preferred airport for travellers and airlines.
Let’s discuss who the customers are; Schiphol Airport is the home base for 5 airlines; ArkeflyCorendonMartinAirTransaviaAnd of course the biggest and the most important, KLM
And additionally, Schiphol provides services for many airlines. In 2011, the total number of airlines Schiphol worked with was 106, which places Schiphol to the top five list of the most connected hubs.
Besides airlines, retailer companies, hotels, and office space renters are also an important part of Schiphol’s customer group. At Schiphol airport a passenger can find 30+ retailer shops and services before the border control and 20+ offerings after the border control, at the duty free zone.
But all those shops and airlines would be meaningless, if there were no people or potential customers around. So the ultimate customer of Schiphol is; the passengers people passing through the terminaland people who work nearbyIn 2011, daily average of 136.000 passengers flew from/to Schiphol Airport, and this number excludes the people just passing by, or working nearby. So, I want to emphasize the number once again. 136.000. a shopping mall would do everything it can, to bring 1/3 of this number of shoppers daily. This is really an incredible number.
If we look at what Schiphol provides its customers to attract them, we should first start with airlines. Schiphol provides a large maintenance facility and infrastructure for the airlines. It is one of the largest and most experienced maintenance service around Europe.
Even though low prices was not the real ambition of Schiphol, due to market trends, low prices for airlines, like passenger handling, etc. became attractive to Schiphol’s customers.
Schiphol also attracts the passengers by its low price and various duty free offerings. the See Buy Fly concept is one of the most advertised and also the profitable offerings of Schiphol.
Besides that, Schiphol is really good at focusing passenger needs. The passenger convenience leads all decisions and designs in and around Schiphol.All kinds of shops and services, easy transportation links and parking are all provided under one roof.
Makes money from Airlines with regular airport duties like passenger handling etc. But Schiphol makes almost the same amount of money from its value adding services like Office and Shop space rentals, retail estate, parking, etc. To feed this channel more, Schiphol tries attracting as many travelers as possible and to seduce them to buy as much as possible when in Schiphol premises. Like on a cruise ship.
Based on the case and our research, we saw, although Schiphol is a really strong player in the market, they have some weaknesses in their strategy. Let’s name them.
So to overcome with these weaknesses and threats, Schiphol already took some actions. Our advises are also aligned with their approach.
This concludes my presentation, and if you have any questions my teammates are happy to answer.
Schiphol marketting strategies
Amsterdam Business School Gulcin Askin Michelle DonovanMarketing Strategy Kivanc OzuolmezMarch 21st, 2013 Peter Tempelman
Facts main international airport, in AmsterdamNetherlands’Worlds 5th largest by international passenger traffic49.8 million passengers passed through in 2011136,000 passengers on 1,016 flights on a dayHighest peak hour capacity in EuropeOne terminal conceptGeographically one of the worlds lowest airports
Core CompetenciesDeveloping airport capacity and making money from it by adding valueAttracting travelers and non-travelers, and seduce them to buy asmuch as possibleProviding services as a “package” and varietyBuilding airports and “Airport Cities”analogy with cruise ship formulae.g. shopping, amusement, parking, offices, hotels and cafeterias all under the same roof.
Strategic AmbitionExpansion (internationally) to achieve economies of scale by combinedprocurement and improve customer service. Analogy with telecom: it is imperativeto build networks.To be the preferred airport for travelers and attract non-travelers too.Expansion by acquiring shares in other airports.Having strong position in the competition of privatization.
CustomerIn 2011, Schiphol provided continuous service for 106 airlines
CustomerCompanies renting office and shop spaces 30+ Before passport control 20+ After passport control Many office spaces and hotels
Customer136.000 daily passengers Airline passengers and shoppers People passing through the terminal People who work nearby
The Value for CustomerInfrastructure and Maintenance Facilities for Airlines
The Value for Customer Low prices for Airlines
The Value for Customer Low prices for Passengers
The Value for Customer Convenience All kinds of shops and services under one roof Easy transport links Convenient parking
Money for SchipholAirplane services, passenger and cargo handlingOffice and shop space rentalsRetail estateParkingCost cutting by sustainability projectsrecycle and be energy efficient as much as possible
Weaknesses and Threats of Schiphol’s strategy Low-cost airlines from other airports could attract more travelers e.g. Eindhoven, Brussels, Cologne/Düsseldorf etc Airlines could decide to use another (cheaper) hub – less transfer passengers KLM could go bankrupt or be bought by another airline who could focus on another hub e.g. AirFrance in Paris KLM would break up with Northwestern accordingly whole transatlantic traffic would collapse and other airlines would not be able to fill up the space.
Weaknesses and Threats of Schiphol’s strategy People could stop travelling by air. e.g. due to environmental concerns, fuel costs etc. They are outbid for other international locations so unable to expand Government regulations – currently favorable, but a new government could renationalize the airports? (Even more of a risk in international locations) Could become a victim of own success. e.g. no space left to expand, no parking spaces, etc. Another airport can be started in nearby location that can steal all Schiphol’s traffic
Weaknesses and Threats of Schiphol’s strategy Losing airlines that are based on Schiphol, and not having an airline that uses Schiphol as their home base. Majority of investments located in and around Schiphol Airport. These densely located assets might be risky and vulnerable to natural disasters, fire, and war-alike threads.
Strategies To Overcome The ThreatsInvest/become partner in other airportsairports nearby to have monopolistic powerairports overseas to diversify the risksPartner with local and national governmentStrategic alliances, cooperation Combined investments to decrease costs Combined procurement to decrease costs Build a network of airports to increase traffic between these airportsImprove customer service and experience through standardization
Strategies To Overcome The ThreatsIntroduce dynamic pricing to attract low cost airlineslow cost carriers pay less but also receive lower servicee.g. docking far away from main building, early/late hoursRollout the knowhow to ports, railway terminals, shopping centersMore effective usage of means of productionPosition well to expand to the other airports even if the tenders lost.If the tender winner lacks experience, there could be need for Schiphol’s knowhow.