Airports need to change the way they view and invest in ground transportation.
The recession has been arduous for airlines and airports. Air carriers have responded by reducing capacity, cutting costs and increasing ticket prices, which has enabled many to weather the storm, as BA and Ryanair’s recent financial results demonstrate. Airports, in contrast, have generally fared less well, being saddled with high fixed costs and falling passenger numbers (and a market which in certain regions is nearing saturation). As a result, many airport operators need to rethink their propositions if they are to reverse this decline in the overall market and increase market share.
Part of the solution for airports involves improving on-site services and facilities: reduced queue lengths, improved on-time performance and enhanced retail offerings can all play their part. However, to overcome the current challenges, airports need to see the bigger picture and focus on improving the ‘end-to-end’ journey experience, from the passenger’s front door at home through to the boarding gate.
The idea that road and rail connections are important will not be news to airport operators. Most major airports have detailed surface access strategies, designed to make terminals easy to reach while promoting public transport. Airports have supported these plans by investing in the capital cost of ground transport (even in the current climate, as evidenced by BAA’s financial commitment to Crossrail), and, in some instances, have contributed towards the operating costs of ’start-up’ surface schemes as part of their encouragement of public transport.
However, on a day-to-day basis, airports still see surface access as a revenue stream: for example, BAA levies a departure charge on each coach and black cab leaving its London airports. Meanwhile, the cost to passengers of getting to the airport continues to rise: for a family of four, ‘airport express’ rail travel from London to Gatwick now costs over £85 (US$137), while a week’s parking at Heathrow can easily exceed £50 (US$80), even at the remotest long-stay car park. In either case, the cost of reaching the airport could amount to 20% or more of a short haul air fare, making getting to the airport substantially more expensive than the much publicised increases to air passenger duty.
These cost increases are not exclusive to the UK and contradict an overall downward trend in the price of air travel. For example, in the US, average domestic air fares fell by 9% between Q3 2000 and Q3 2009, thanks to competition and more sophisticated revenue management by airlines. However, during this period, access costs increased considerably – for example, cab fares in Chicago rose by 16% in 2000 and 11.7% in 2005.
Given this situation, airports need to adopt a fresh approach to surface access, not only to improve the customer’s travel experience, but also to help reduce the total cost of air travel. Rather than regard these services exclusively as sources of revenue, airports should consider subsidising passengers’ trips to the airport.
To that end, airports should make a priority of investing in all forms of ground transportation – not only supporting rail services (such as Southend Airport’s new railway station), but also bus, coach and even taxi services, and introducing special offers to subsidise fares.
At the same time, airports would benefit from reviewing car park charges, as, at certain airports, high fees are causing revenues to be lost to local hotels, which offer drivers better value parking coupled to a night’s accommodation before or after flying.
Other stories in this Newsletter:
Maddox Goes “Up and Away” with Helicopters in China
A Smarter Approach to Surface Access?
New Director Augusto Viansson Ponte to Head Up Maddox’s Aviation Practice
Maddox at Home, Competing on the Slopes and Dance Floor