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      Wg Cdr P PRASAD

1.     It is often said that managing airport is like being a mayor of a city. Similar to a
city, an airport is comprised of a huge variety of facilities, systems, users, workers
rules and regulations. Also, as cities thrive on trade and commerce with other cities,
airports are successful in part by their ability to successfully be the location where the
passengers and cargo travel to and from other airports.

2.      Apart from the social benefits of safely transporting more two billion people a
year throughout the world, air transport is a global business which has been one of the
driving forces of economic growth since the first scheduled air service was started by
Glenn C in Florida on Jan. 1, 1914. It has an integral role in the world economy as a
tool for conducting much of the world’s business, a foundation for the tourism industry
and a cost effective means of distributing goods and services.

3.     The recent developments in the airline manufacturing technology such as huge
body aircrafts and curiosity of space travel has prepared the airports to upgrade their
existing facilities or move over to green field airports. It’s nearly always easier to
modify an existing airport than to create new one, however, with the time, as the city
grows towards the airport and the space becomes inadequate for airport extension
and handling of increasing passenger traffic becomes difficult. This has forced
Governments to build Greenfield airports of international standards, which demands
huge investment. This has created opportunity for many private industries to partner
with government. The new business model public private consortium is a success in
revenue generation not only from air side but from terminal and land side as well.

4.     Development in information technology has come as a support for the aviation
industry in many ways viz. Airline Resource Management System (ARMS),
Centralised Reservation System (CRS), Radio Frequency Identification (RFID),
Baggage Tracking System, Ground Handling and Automatic Check in Scanners etc.
Technology has reduced the interaction time between passenger and airline staff, and
airport management has become that much more efficient. Now, more than one
passenger can be handled simultaneously, baggage shipping and discharge time has
reduced to great extent, resulting in faster turnaround time for airlines. Reduced
parking and turnaround time keeps the airplanes in air for extra time, resulted in
increased revenues.       Similarly airports are enhancing their revenues by
accommodating more number of aircrafts.

5.     Development in information technology has come as a support for the aviation
industry in many ways viz. Airline Resource Management System (ARMS),
Centralised Reservation System (CRS), Radio Frequency Identification (RFID),
Baggage Tracking System, Ground Handling and Automatic Check in Scanners etc.
Technology has reduced the interaction time between passenger and airline staff, and
airport management has become that much more efficient. Now, more than one
passenger can be handled simultaneously, baggage shipping and discharge time has
reduced to great extent, resulting in faster turnaround time for airlines. Reduced
parking and turnaround time keeps the airplanes in air for extra time, resulted in
increased revenues.      Similarly airports are enhancing their revenues by
accommodating more number of aircrafts.

6.   With reduced parking, turnaround time and increasing passenger traffic more
number of airlines are emerging and existing airlines extending their fleet size, so
many airplanes in air has created a big challenge in every country.

7.     Since the first scheduled air service was started in Jan 1914, the airline
industry has come a long way and today aviation is a critical industry for global and
international economic development and cooperation. Today airport management has
emerged as a complex and demanding profession and one that is forever changing,
the research paper on “Emerging challenges in Airport Management - A Global
Perspective,” is focused on: -

       (a)    Unprecedented Rapid Growth

       (b)    Aviation Security Threats

       (c)    Escalating Fuel Prices

       (d)    Low Cost Carriers

       (e)    Environment

       (f)    Airport capacity and privatization

                         UNPRECEDENTED RAPID GROWTH

8.     The fast and steady growth of the trade and tourism between the nations has
resulted in the air transport being the chosen mode for its quick, reliable, efficient and
safe services.      Further the recent trends in the development of free trade,
globalization, liberalization and deregulation has forced left the mankind to race with
time and thus has propelled the aviation industry to paramount. It has been assessed
that every job in the aviation industry will create seven other jobs directly or indirectly
through its catalytic impact on tourism and business; hence 2% growth in aviation
industry leads to 1% growth in GDP. Alluring situation with enhanced air traffic
population, created a wider space for mushrooming of new airlines.
9.   Factors driving the world air traffic growth are: -

     (a)    Falling real cost of air travel.

     (b)    Increasing economic activity. The air transport industry is a vital part of
     the increasingly globalised world economy, facilitating the growth of trade,
     tourism and international investment, and connecting people across continents.

            (i)     Direct impacts. The air transport industry itself is a major direct
            generator of employment and economic activity, in airline and airport
            operations, aircraft maintenance, air traffic control and management and
            activities directly serving air passengers, such as check-in, baggage-
            handling, on-site retail and catering facilities. Not all of these activities
            necessarily happen at an airport, with some taking place at head office.
            Direct impacts also include the activities of aerospace manufacturers
            selling aircraft and components to airlines and related businesses. The
            air transport industry carries over 2.2 billion passengers and 44 million
            tonnes of freight.2 Providing these services generated almost 5.5 million
            direct jobs globally in 2006 within the air transport industry and
            contributed USD 408 billion to global GDP.3 This is as large a world
            industry as the pharmaceuticals sector. Of the 5.5 million jobs directly
            generated by the air transport industry:
                         780,000 people work in the civil aerospace sector, involved
                   in the manufacture of aircraft systems, frames and engines, etc.

                         2.0 million people work for airlines or handling agents,
                   including flight crew, check-in staff, maintenance crew, etc.

                          380,000 people are employed by airport operators, in
                   airport management, maintenance, security, etc.

                       2.3 million have other jobs on-site at airports – for
                   example, in retail outlets, restaurants, hotels, etc.

            (ii)    Indirect impacts. These include employment and activities of
            suppliers to the air transport industry – for example, aviation fuel
            suppliers; construction companies that build airport facilities; suppliers of
            sub-components used in aircraft; manufacturers of goods sold in airport
            retail outlets; and a wide variety of activities in the business services
            sector (call centres, IT, accountancy, etc.).
                          The air transport industry also has important ‘multiplier’
                    impacts, which mean that its overall contribution to global
                    employment and GDP is much larger than its direct impact.
                      Induced impacts. The spending of those directly or indirectly
              employed in the air transport sector supports jobs in industries such as
              retail outlets, companies producing consumer goods and a range of
              service industries (e.g. banks, restaurants, etc.).

       (c)    Intensifying international trade. Air transport is an important facilitator of
       international trade, thereby promoting economic growth and development.
       Forecasts suggest that the global economy will become even more dependent
       on trade over the next decade. World trade is expected to nearly double, rising
       at more than twice the rate of global GDP growth, with China, India and
       emerging markets leading the way.

     (d)Tourism Promotion. Relaxation of travel restrictions, the ever expanding
     travel restrictions and increasing disposable incomes has made tourism a major
     contributor to the global economy. By 2018, the World Travel & Tourism Council
     (WTTC) expects the tourism industry to employ directly more than 98 million
     people globally.

     (e) Air transport liberalization.      To maintain a competitive civil aviation
     environment which ensures safety and security in accordance with international
     standards, promotes efficient, cost-effective and orderly growth of air transport
     and contributes to social and economic development of the country most of the
     countries have opened up their economies. The liberalization has had a positive
     impact on the air transport industry, IATA’s comprehensive survey of the airline
     industry, shows that passenger and freight demand growth will continue to
     provide a positive boost to airline revenues over the five years to 2015. However,
     the profile of growth will differ. International passenger growth is expected to
     slow slightly, domestic passenger growth to improve slightly and international
     freight growth to remain at a similar level.

Indian Scenario

10.    The rapidly changing face of the aviation sector in India, with booming
economy, heavy dependence on market- oriented approach, and globalization and
deregulations are important economic developments in the air transport growth in
India. Equally significant is the fact that the Asia and Pacific Region is going to have
the highest growth rate in the aviation sector and in turn the tourism potential, both of
which put together emerge as the largest single industry in the world, with an output of
US 4.2 trillion dollars, and 160 million jobs under its wings. The industry carries with it
10% of world’s domestic gross product (GDP), 10.3% of the global wages, 11.7% of
the indirect taxes, and 9.8% of the global profits thus making the travel and tourism
industry a creator of maximum wealth and employment in the world.
11.    In India, the aviation sector has undergone a sea change during the last five
years. Like most parts of the World, India too had its own share of woes after the 9/11
terror attacks. Fortunately, after some hiccups, the civil aviation industry the world
over recouped. In India particularly, it is showing a great promise but needs to be
managed efficiently, and cost effectively.

12.    The air traffic growth is closely related to the GDP of a country. The GDP in
India has touched a high of 7.7% and currently due to inflation is hovering close to
7.2%. For years though, it was stagnant at 4.5 to 5% in India. Thanks to the
deregulation of the economy, India is finding its due place globally. The World Bank
has estimated that for every one percent of the GDP growth, there is 1.5 to two times
the growth of air traffic.

13.     The international trade and Foreign Direct Investments (FDI) has changed the
geo-economic face of India. Added to this is a liberalization of trade sector. The World
today is moving towards mega projects to cater to the commercial and trade interests,
thus triggering the growth of many economies all over. These trends have led to the
sustained growth of international air traffic.

14.   Developments in many parts of the world, including in India, and the
emergence of low frill and low cost airlines is a factor to reckon with. These airlines
have captured about 25% of the domestic traffic, with occupancy of around 80% on an
average. Naturally, these airlines also require parking and handling facilities at very
low costs, to include at the Metro airports.

                                 LOW COST CARRIERS

15.   One changing aspect of airport management and development is the whole
dimension presented by the arrival of low fare airlines. Although they do take away
some traffic previously served by the big carriers, their net effect is to make air travel
more affordable and raise substantially the volume of passengers served.

16.    Typically an airport’s response is to remodel its operations by providing a lower
cost base and tailoring the facilities of the airport to the low fare product. In Singapore,
this response included the development of a dedicated budget terminal where the
basic operational processes can be transacted on a more cost competitive basis.
Other airports have chosen to address the specific requirements of these carriers by
adapting the facilities normally extended to the regular carriers.

17.    The core pre-requisites for LCC operations are:
       (a)     The airport must be capable of serving aircraft of a size which is
       sufficient to deliver economies of scale for the carrier. Thus, London City
       Airport – with its short runway and hence the steep approach required of planes
       using that airport – is confined to serving aircraft with a maximum seating
       capacity of 110 seats, thereby ruling out the airport from competing in the LCC
       sector. It compensates for this difficulty admirably by targeting niche airlines
       which cater to the business sector.

       (b)    The second pre-requisite is the need for terminal and apron
       configuration to allow for quick aircraft turnarounds and the benchmark set is
       30 minutes.

       (c)    The airport operators have to increasingly offer these carriers the facility
       of choosing from a menu of ground facilities and services instead of delivering
       these as a standard package. These options provide LCCs with the latitude to
       cost differentiate and capitalize on its understanding of the particular
       requirements of each sector of service.

18.    These developments challenge many of the notions on which the industry has
been traditionally constructed that is an airport is a sacrosanct infrastructure which, on
considerations of national security and sovereignty, suggests that its ownership
should be left largely in the hands of the government or at least be government
controlled. There is of course no turning back of the clock. It will mean an era where,
in terms of human resources, we will have to build up different and more diverse skill
sets and where, in terms of corporate leadership, we will need to embrace this new

                           AVIATION SECURITY THREATS

19.    Bill Clinton once said," We know we can't make the world risk-free, but we can
reduce the risks we face and we have to take the fight to the terrorists. If we have the
will, we can find the means." The threat of a terrorist attack at a major airport is a
primary concern for security officials worldwide.

20.    The ever-expanding global system has seen increase in the number of
airplanes in the sky carrying passengers and cargo: the size of these airplanes (like
the new Dreamliner), and the number of locations to which one can now fly. Terrorists
- much like criminals, insurgents and other violent non-state actors, exploit
vulnerabilities in the systems they target, and these systems are only as strong as
their weakest link. Thus, as the commercial aviation system becomes more globally
interconnected, the overall impact of these measures at U.S. airports has an
important, but relatively minor impact on the aviation sector worldwide. While airports
in Europe and North America responded to the rash of hijackings and bombings
during this period, many other countries—particularly in Africa and Asia—found it
difficult to impose most of these costly security measures, thus providing
vulnerabilities that could be exploited. The globalized aviation system, which includes
numerous developing countries, is vulnerable and plagued with substandard security
capabilities, corruption, bribery, and weak governance. Additionally, the Internet
provides worldwide access to all types of information that could be useful to terrorists,
including flight schedules, specific details and diagrams of both aircraft and airports,
and reports of successful terrorist tactics and countermeasures developed by

21.      Beginning in the late 1960s, increasingly robust layers of security measures
were put in place in response to hijackings. Yet, after four decades, the aviation sector
was still vulnerable, as demonstrated by the events of September 11, 2001. Since
then, we have seen additional security layers such as reinforced cockpit doors, armed
pilots, increased presence of air marshals, and an overall increased awareness of the
threat worldwide. Therefore, the post-9/11 security environment may be one in which
the threat to aviation is lower than it has been in the past, but in-flight bombings are
still a possibility.

22.    Responding to events is insufficient; modern aviation security requires
preventive measures. While these new measures may inconvenience passengers and
create some inefficiency, they will increase the breadth and depth of intelligence
gathering and sharing worldwide. Additionally, government officials should no longer
underestimate the adaptive nature of terrorists. Terrorism is a form of asymmetric
warfare, where the statistically weaker enemy will try to attack its stronger opponent in
ways they do not expect. The threat posed by innovative enemies requires a robust
government response that does more than harden targets. In addition to examining
the potential capabilities of terrorists to do harm to others by targeting airplanes and
airports, we must commit ourselves to the study of terrorist ideologies, strategies, and
motivations. We must educate both law enforcement and intelligence agencies in all
countries about how our enemies might try to “game the system” and exploit new,
perhaps even hidden, vulnerabilities in aviation security. Only then will we be able to
respond to the threat with greater sophistication and success.

23.    However, a terrorist working alone, or in concert with others poses a credible
threat to public safety beyond the security checkpoints inside the terminal. These new
threats include the entire airport complex and perimeter, requiring a new multilayered
approach to airport security.

24.    In a related area of concern, the nature of our response to the global threat to
aviation relies on the strength of the partnership between governments and the private
sector and how involved each want to be in diminishing the threat. In general, the
aviation sector is driven by free market competition. Thus, airlines must maintain an
emphasis on convenience and cost-savings; making investment in costly security
measures relatively difficult. Among governments, we have seen bloated
bureaucracies, a lack of intelligence sharing, and an overarching tendency to
implement security policies in response to an attack that has already occurred, rather
than embracing measures that might prevent an attack from occurring.
25.    With such a wide area to protect, the threat of a surface to air missile, mortar or
other weapon of mass destruction, taking down an aircraft and destroying a sub-
staging area or air traffic control tower, is credible. Such a devastating act would have
a catastrophic impact on the travel industry, and the economy as a whole. The flight
line, airport complex, and maintenance and sub-staging areas present a security
concern that cannot be countered with traditional security measures alone.

26.    The terrorist threat is changing and growing. Therefore, it is important to
improve security not just against familiar threats, such as explosives in checked
baggage, but also to explore means of assessing and countering emerging threats,
such as the use of biological or chemical agents, or the use of missiles. While these
do not present significant threats at present, it would be short-sighted not to plan for
their possible use and take prudent steps to counter them.

27.   Therefore, aviation security should be a system of systems, layered, integrated,
and working together to produce the highest possible levels of protection. The
Government with greater resources must lead the fight and the airport management
and the travelers must cooperate even at the cost of inconvenience and extra

                             ESCALATING FUEL PRICES

28.    Rising fuel prices affect every business either directly or indirectly but few as
much as the aviation world. Rising costs of ATF (Aviation Turbine Fuel) is thinning the
wallets of passengers in air traffic as also air carriers, which is prompting the
managements to reduce the number of flights. ATF accounts for nearly 40% of the
input cost of the airlines. The scene is worse in India, where the average flight
movements has come down to less than 8000 per week now against a peak of around
10,500 during april – june period. The sector is expected to pose a cumulative loss of
over $ 2 billion .

29.    Why does the airline industry which is always sensitive to price change take no
action this time? The South-west Airline Company disclosed that now it was the peak
period for tourism, and the number of airline passengers had just revived a little. If we
raised the ticket price at this time the passengers would scare away. Several
transportation companies also mention that the domestic transportation is stagnant
recently, and it would be further overwhelmed if the airline raised price now. Therefore
under the present condition of fuel price surge, the airline should minify the loss
through management strengthening, cost lowering and efficiency improving, but not
simply raise the price.

30.    Increases in fuel prices affect the airlines in two ways;

       (a)    The cost of fuel has an obvious and direct impact on the cost of
      (b)    Fuel cost increases have repeatedly triggered economic recessions,
      which in turn result in a substantial decline in demand for air travel and air

31.    Fuel price increases have a particularly adverse impact on airlines because
even in good time fuel costs constitute roughly 10-12% of our operating expense.
Every penny increase in the price of jet fuel costs the airline industry $180 million a
year. In the absence of pricing power – the ability to pass these costs along in the
form of higher airfares – these increases come right off the bottom line.

32.   An even more pernicious aspect of the fuel price increase is the relationship
between the economy and air travel. The link between fuel prices and the health of the
economy is clear. Three of the major recessions of the past thirty years can, in large
measure, be attributed to the steep increases in fuel prices that accompanied the
1973 Middle East oil embargo, the 1980 Iran Crisis, and the1990-91 Gulf War.

33.    The airline industry is inextricably tied to the overall economy – even minor
recessions result in reduced demand and increased sensitivity to prices for leisure as
well as business travelers.

                             ENVIRONMENTAL IMPACT

34.   For nearly five decades, air transport has provided significant social and
economic benefits to society1. The industry's competitive situation, however, has been
undergoing fundamental change. Its development in major markets has started to be
constrained by problems caused by overloaded airport and air traffic control systems
and by concern about air transport's environmental impact.

35.      Environmental Impact of Air Transport. The influence of the aviation industry
on the environment is much smaller than some people claim: aircraft use less space
to move more people and often produce less pollution per passenger than cars, trucks
and other forms of surface transport. Aviation uses less than 8% of the land required
for rail transport and less than 1% of that required for road and, in terms of the number
of people moved, aviation uses this land five times more efficiently than rail and six
times more efficiently than road.

36.    Environmental Record of Air Transport. The air transport industry has an
excellent record of improving its environmental performance over time and is
determined to better this record in the future. Technological improvements to
airframes and engines have resulted in quieter aircraft which will completely replace
the older, noisier models by the year 2002. During the past 20 years, the typical
“footprint” of intrusive aircraft noise per movement around an airport has been
reduced by 90%. In the U.S. and Europe together, the number of people affected by
such noise has fallen from about 20 million to less than 1 million - or about 0.15% of
the total population. Over the past 15 years, carbon monoxide emissions from aircraft
have declined by 70% and unburnt hydrocarbons by 85%; associated aircraft smoke
and soot have largely disappeared from the skies. These emissions should be
eliminated in the next few years.

37.    Adverse Contribution of Congestion. Congestion caused by inadequate
airport and air traffic management infrastructure only increases the impact of air
transport on the environment through more emissions, noise and wasteful fuel burn.
Civil aviation is responsible for about 2.5% of the carbon dioxide produced every year
from the burning of fossil fuels. Congestion only causes this figure to rise and greatly
reduces fuel efficiency. Improvements to air traffic management, the application of
CNS/ATM systems and the concept of “Free Flight” would do much to help reduce
congestion and hence emissions.

38.    The effects of the aviation industry on the environment are much smaller than
some people claim: aircraft use less space to move more people and often produce
less pollution per passenger than cars, trucks and other forms of surface transport.
Aviation is by necessity an efficient industry. Efficiency is an essential first step on the
road to sustainability and this is the key to minimising aviation's environmental impact.
Some facts are listed below: -

       (a)   Aviation uses less than 1% of the land required for transport in the
       European Union. In terms of the number of people moved over a distance
       (passenger/kilometre), aviation uses land five times more efficiently than road
       and seven times more efficiently than rail.

       (b)  Aircraft entering today's fleets are 20 decibels (dB) quieter than
       comparable aircraft 40 years ago.

       (c)   A further 50% reduction in noise during take-off and landing (minus
       10dB) is expected by 2020.

       (d)   Aircraft entering today's fleets are 70% more fuel-efficient than they were
       40 years ago. Carbon monoxide emissions have been simulatenously reduced
       by 50%, while unburned hydrocarbon and smoke have been cut by 90%.
       Research programmes aim to achieve a further 50% fuel and CO2 saving and
       an 80% reduction in oxides of nitrogen by 2020.

       (e)    Enhancements in air traffic management have the potential to reduce
       fuel burn by 6-12%, while operational improvements can bring an additional 2-
       6% fuel saving.

       (f)     80% of aviation greenhouse gas emissions are related to passenger
       flights of over 1,500km, for which there is no alternative mode of transport.
39.    The Need to Find a Balance. All the stake holders in the air transport industry
i.e the government, Aircraft manufacturers, Airline operators, Airport operators etc
need to recognise the seriousness of environmental concerns and actively work to
balance the need for airport capacity and air traffic management improvements with
environmental protection.


40.     It has been approximately 85 years since the aviation community was shaken
by the events of September 11. The industry has moved on. New hubs have emerged,
transforming the configuration of routes and connectivity across Europe and Asia.
Service quality, thought at one time to be the special preserve of Asian airlines and
airports, and has been transplanted successfully across cultures and geographical
divides. Meanwhile, worldwide passenger traffic continues to grow at 4% per annum.
At this rate passenger traffic will hit 7 billion by 2020. Air freight is projected to grow at
5% per annum to reach 170 million tons by the same year.

41.      The delivery of new and larger aircraft in the mode of the A380s and the
Boeing Dream Liner together with prevalence of LCCs across the world will change
the dynamics of our business and the magnitude of their impact. These would raise
the efficiency and affordability of air travel and in the process accentuates the demand
for airport capacity.

42.    Changing faces of airport world includes the following:

       (a)     Privatization of Airlines. Privatization of State owned airline has been
       one of the prominent transformations in international air transport, where
       airlines in all but a handful of States had been government owned until recent
       times. The motives for privatization have been highly discussed, ranging from
       few purely economic considerations to improving operating efficiency and
       competitiveness, to more pragmatic desire to reduce the heavy financial burden
       for governments for financing capital investment in new equipment. Since 1985,
       about 140 governments announced privatization plans or expressed their
       intentions of privatization for approximately 180 State owned airlines. In India
       we have seen the mushrooming may private airline operators like Jet airways,
       Kingfisher, etc.

       (b)     Low- Cost Airlines. Another recent development in the airline sector of
       the introduction of ‘Low – cost business model’ has been discussed earlier.

       (c)    Capacity Constraints.      Capacity constraint is one of the bottlenecks
       in air transport growth. At their meeting on 28 January 2000, Ministers of
       Transport from 38 European States estimated that cumulatively flights
       experienced over 27 million minutes delay in Europe alone due to airport and
air space congestion. Traffic patterns based on the underlying demand for air
services and air carrier practices influence the use of available capacity. Airport
slot is different from the air traffic control (ATC) slot, which is the take-off or
landing time of an aircraft which is assigned by the relevant air traffic control
unit to make optimum use of available capacity at points en-route or at the
destination airport. With the assignment of airport slot, airlines build their
schedule taking into account time to taxi out and the customary en-route
duration, on the assumption that an ATC slot will be available. This factor
therefore underlines the importance of close coordination between the airport
slots and ATC slots. Generally, the airport capacity is never fully utilized
throughout the day. It undergoes peak and lull periods. There are seasonal
peaks as well. When we talk of airport capacity, it is a combination of runway
and terminal capacity. The runway capacity is determined by the regulatory
authorities, usually in terms of the number of movements (landing or take-off
which can safely be performed per hour) taking into account such factors as the
physical characteristics of the runway and the surrounding area, types of
aircraft involved and air traffic control capabilities. Whereas, terminal capacity is
the amount of passengers and cargo which the airport can accommodate in a
given period of time sometimes referred to as passenger or cargo throughput.
Type of passengers or passenger mix can influence the rate of passenger
throughput. Aircraft size is another factor that can affect terminal capacity.
Airport capacity can also be adversely affected by external factors such as
environmental restrictions and air traffic control capabilities. When the air
carrier demand at an airport exceeds the availability of slots, the airport can
then be considered capacity constrained. To a great extent capacity constraints
are eased out through International Air Transport Association (IATA), schedule
coordination conferences, in which well over 260 airlines participate and
schedules are adjusted through bilateral discussions. Capacity is essentially
controlled through regulatory framework within which slot allocation
mechanisms are employed at global, regional and at national levels. The ability
of an airline to exercise the market access/ traffic rights granted under relevant
air services agreement is closely linked to the availability of slots (designated
times for an aircraft to take off or land) at the specified airports for which the
traffic right was granted. Shortage of airport slots by and large is an important
physical constraint on market access. Some of the airports resort to auctioning
of slots or price the slots to control the demands.

(d)     Consumer Interests.        Growing dissatisfaction with the conduct of
airlines staff and similar concern on quality of service such as facilitation at the
airports are matters of increasing passenger concern. In USA and Europe,
certain measures are in place aimed at reinforcing the rights of air passengers,
proposing new voluntary commitments and enforcement legislation. As for
voluntary commitments, airlines and airports in the member States of the
European Civil Aviation Conference (ECAC) developed two codes. The Airline
Passenger Services Commitment and the Airport Voluntary Commitment on Air
Passenger Services. These two codes became effective in February 2002.
Governments in other regions have also been considering some legal
measures. IATA also adopted a global customer services framework in June
2000 intended as a guide for member airlines in developing their own voluntary
commitments. The point to remember is that consumer interest issues are
gaining momentum and they need to be carefully examined to make sure that
the service quality has adequately been dealt with by the current commercial
practices by airlines and airports. The challenge for the airport mananement is
to strike the right balance between voluntary commitments and airport

(e)      Change of Airport Ownership. Majority of airports world over were
constructed pre-post World War II and in any case prior to mid 1960s. Airport
ownership then was reviewed as strategically important and as such most of
them came under government ownership. A further shift in ownership began in
early 1970s when a number of countries created airport corporations under
public ownership and it provided access to private/external capital market. A
second shift occurred in the mid 1980s and a number of countries began to turn
the private sector for direct financing of airport investment and to further
improve the managerial efficiency. A large number of publicly owned and
operated airports are generally not rated well equipped due to limited
government funding. Hong Kong and Singapore airports are exception to the
rule. In the 1990s many of the public airports became privatised. The
privatisation model included outright sale of asset through stock market, long-
term leases, joint ventures/equity flotation etc. Private sector participation in
Asia has reveled primarily around green field projects. In the current economic
climate, there is an increasing pressure to reduce or re-direct government
spending and that makes it more and more difficult for public involvement in
airport infrastructure. Therefore, there is an increasing trend in the airport
ownership by way of leasing and private participation, Airports have been
moving away from the government ownership to commercial and private
ownership. British Airports Authority (BAA) was among the first to privatize in
1987 and it remains a paradigm for airport management. Aer Rainta and
Schiphol are examples of airport companies which although State owned,
operate as commercial enterprises. New airports in Asia including India is
based on a concept of Public-Private Partnership (PPP), instituted through a
Special Purpose Vehicle (SPV). All the Greenfield airports in India are based
on this model. Traditionally, governments were cautious to take part in airport
privatisation barring few like British Airports Authority (BAA). Long-term lease
holds of Australian Government in Brisbane, Melbourne, Perth, Sydney etc
have provided the lead for other governments to come out of their traditional
outlook. Involvement of local authorities, concession for the management, Inter-
airport shareholdings are encouraging trend in airport ownership. Aeroport DI
Roma has 20% (US4 130 million) shareholding in Airports Company of South
Africa(ACSA). Copenhagen airport has a 25.5 percent stake in a consortium to
develop and operate nine airports in South Eastern Mexico. The management
of Djibouti airport was awarded to Dubai Ports International Authority, Bamako
airport in Mali transferred to a private concessionaire, Tehran airport to an
independent airport authority and similarly, Beirut airport to a commercial entity
to operate. China has embarked, on a trial basis, a substantial airport
management reform – under the scheme, hub airports will focus on strategic
initiatives to fulfill their development potential, while major regional airports
would specialise and strengthen links with their regions. Similar airports are
expected to peruse innovative approaches to become more financially
sustainable. What is interesting to observe is that aimed at reducing the
       financial outlay and improving the efficiency of government owned airports,
       more and more airports around the world are transforming into autonomous
       authorities and subsequently moving towards private sector participation.
       Common technique for private participation involves Build –Own - Transfer
       (BOT), Build – Own Operate – Transfer (BOOT), Lease – Develop-Operate-
       management Contract (LDC). The limited past experiences of airport
       privatisation, however, does not confirm to any single model with a single
       definition as yet. Financing of airport projects however continues to be the
       critical constraint and a major challenge for the airport sector.

43.     Change Management- Challenges. The first task for the airport management
therefore, is to cope with the transformation from being largely state owned/ supported
entities to more and more commercial and competitive entities with private
participation. Airports are therefore challenged to re-organize themselves and cope
with the organizational stress in the wake of this ownership changes. Additionally,
airports will have to face the conflicting demands from airlines for increased capacity
due to the changes in their own business models and high service expectations of
customers and stakeholders, at the same time there is a mounting pressure from
environmentalist seeking to ensure that progress will not be made at the expense of
environment. Regional and local planning authorities expect increased social and
economic activity in the form of employment and new business opportunities. From
the technological point of view, airports are beginning to face the waves of advanced
Information Communication Technology (ICT) and it certainly calls for a
comprehensive airport management system. There is yet another area that is likely to
involve airport operations and that is the on-going efforts to form air traffic alliances.
Euro control is talking about such an alliance, the re-organisation of air space focused
on efficiency and cost-effectiveness from Iceland to Turkey. As the ICAO initiated
CNS/ATM gets its way, several such advanced measures including reorganization of
airspace would have to be introduced despite the likely political uncertainties.
Nevertheless, airports have to be on board in all such new ventures. In order to
achieve the financial viability, airports have also been diversifying their business-
direct operation in ground handling, management involvement at other airports (BAA,
Schiphol, Frankfurt etc.), providing training or consulting services (Montreal, Airports
de-Paris, Singapore Etc.), airline partnerships and diversification into non-aviation
activities(real estate, production of aviation related items such as fire - fighting
equipment etc.) Faced with the emerging changes, airports in most parts of the world
have been forced to re-examine their operational capability and managerial style. A
new buzz word “ World Class” has emerged and quite a few airports/Department of
Civil Aviations/Civil Aviation Authorities have also duly filed their flight plan to
destination ‘World Class’ and are now obsessed with ‘VISION’, ‘MISSION’, ‘VALUES’
and ‘STRATEGIC OBJECTIVES’ to reach their destination. Interestingly, most of the
VISION /MISSION statement reads “to be a world class airport”, “to be a world
leader,” “to be a world class airport in the region,” and so on. They all want to be world
class players. Apparently, both the management and staff are being sensitised to go
through the strategic management path, a clear shift towards commercial
management philosophy.
Management Techniques and Airport Revenue

44.    With construction costs increasing, available funding decreasing, and periodic
economic downturns affecting the industry, airport operators find themselves
continually looking for additional revenue sources to fund projects and sustain
operations. Fuel sales, hangar leases, agricultural leases, and grants are typically
thought to be the primary sources of revenue, but there are other ways to bring money
into an airport. According to survey results of Airport Cooperative Research Program
(ACRP), the airports in US have developed many programs to maximize revenue
sources. These include:

      (a)     Fuel sales. 63 percent of airport managers responding to the general
      aviation survey reported using fuel sales and flowage as a means to generate
      revenue at their airports. Pilots may stop at a general aviation airport simply
      because it has fuel and to avoid the congestion and traffic at a larger airport.
      Among the many considerations when initiating fuel service are storage,
      staffing, insurance, and environmental issues.

      (b)    Airport parking revenues. Parking continues to be a reliable funding
      source for airport operators. Additional opportunities for increasing parking
      revenues include premium parking services, parking lot enhancements, parking
      for non-airport use, and off-airport privilege fees.

      (c)    Rental Car Revenues. In addition to privilege fees and rentals, rental
      car concessionaires at some airports collect a customer facility charge, or CFC,
      from customers. These funds are used to pay the operating and capital costs of
      a consolidated rental car area or a structured facility and may also include the
      cost of transportation to the terminals.

      (d)     Terminal concessions. A survey of the Airport Technical Assistance
      Program of the Center for Transportation Studies at the University of Minnesota
      in Winter 2007 offers insight and ideas on generating airport revenue. The
      survey results is placed as Annexure III. Primary sources of revenue for
      general aviation airports continued on the principle that pilots may stop at a
      general aviation airport for fuel to avoid the congestion of larger airports. At
      commercial service airports, concession sales have increased dramatically as
      airlines discontinue meal service and passengers arrive earlier to get through
      security. Airport operators have been able to maximize revenues through
      reinventing their terminal concessions programs by recognizing the customer
      and creating an inviting shopping or dining experience.2
(e)   Advertising Programs. Several airports are cashing in on advertising
revenue. Modern airport advertising programs specialize in the sales and
maintenance of advertising sites at airports by using technology, sponsorship
opportunities, and nontraditional advertising locations.

(f)    Commercial Development and Land Use. Airport operators generate
revenue from a variety of revenue producing leases from non-airline operations
including manufacturing, warehousing, freight forwarding, and farming on
airport land. Commercial development and land use have been implemented
through coordinated planning efforts and consideration of restrictions on land
development. In addition to the more typical revenue generators, the ACRP
survey uncovered some innovative methods airports are using as well. These
examples include:

      (i)    Late Fees on Leases: Several airports reported that they charge
      late fees on leases, and one airport noted that it received more than
      $15,000 one year on late fees alone.

      (ii)   Innovative Pavement Use: Airports are charging for the use of
      closed runway and other pavement for driver training and motorcycle
      safety courses. Several airports rent out their facilities for use in filming

      (iii)   Golf Course Land Lease. Airports are leasing land adjacent to the
      airfield, but owned by the airport, for golf course development.

      (iv)    Industrial Park Land Leases. Many airports reported building
      industrial parks and warehouse space on airport land adjacent to the

      (v)     User Fees for Crop Sprayers: One airport charges an annual fee
      to all business aircraft based at the airport.

      (vi)     Donations and Fundraisers: Several airports hold fundraisers and
      solicit large donations from airport supporters.

      (vii) Leasing Other Spaces: One airport indicated that it leases space
      on the beacon tower for a cell phone antenna.
Airport Management

45.    Airport has been traditionally viewed as a strategic entity of a nation and
therefore they have been traditionally operated to meet the just needs from that
perspective. The concept of ‘airport management’ as a discipline is a new adoption
borne out of the progressive traffic growth, both of passengers and cargo during the
past few years. Airport leaders have now realized that complexities of airport
operations can no more be handled by a mere traditional ‘organisation’ structure and
have visualized that the airport management is too demanding, and started looking at
it as a ‘Business’. Apparently there is a distinction between ‘Organisation’ and
‘Business’. Difference is that the business focus is ‘outward’ while the organisation
focus is ‘inward’. A business entity is successful when it establishes a niche in the
market place; it satisfies the legitimate needs and wants of its clients efficiently with
products and services. Business elements include markets, clients, their demands and
needs, and it operates in a business environment that comprises of competition,
economic and social trends, emerging technology, and it operates with a business

46.   Airports are becoming the bottleneck of the air transport network. To reduce
congestion, airports face three major challenges:

      (a)    Satisfy customer needs with increased services and efficiency.

      (b)    Increase revenues while reducing costs.

      (c)    Get the right data to the right people at the right time to aid aircraft

47.   Management Concerns. Some of the management concerns at an airport
which should be addressed using systems approach:

      (a)   Multi-agency environment – an airport has multiple agencies working
      and each tends to create its own empire with its own infrastructure.

      (b)   Fragmented automation – islands of information exists at the airport and
      a consolidated view is lacking.

      (c)     Duplication of Infrastructure – besides spoiling the aesthetics at the
      airport it taxes space availability and sometimes creates operational confusion.
      (d)     Reliable flight information lacking – single point flight data is missing
      resulting in each agency operating its own data with its own means of acquiring
      information which is normally not reliable.

      (e)     Analog Surveillance of Terminals - makes it tedious to track risky

      (f)   Security Systems not on-line – any security lapse or hazard detected
      cannot be conveyed to all concerned without loss of time.

48.   The new concept in airport management essentially revolves around:

      (a)   Creating Work flows for on-line working in Back-office automation.

      (b)   Integrated systems environment.

      (c)   Having a Centralized Database.

      (d)   Deployment of Business performance and Intelligence Tools.

      (e)   Creation of Airport Operational Control Centres.

      (f)   Rugged Information Display Systems.

      (g)   Intelligent Surveillance.

      (h)   Resource Management System.

      (j)   Access Control Systems.

      (k)   Common Use Infrastructure to keep operation cost to minimum

49.     A total automation in information management along with process definition
and process based integration of systems for each of the activity performed at the
airport, monitored in real-time scenario, is the crux of modern management style.

50.   Steps in the implementation of the above concern involve the following:

      (a)     A common use network and other common use facilities are created in
      the first step to provide a platform for further systems creation and integration.

      (b)     Next step is to study and upgrade systems, wherever necessary, at the
(c)    Office automation is essential to facilitate creation of database. Manual
operation, if any, will remain unmanaged. It has to be avoided and kept to

(d)   Integration of the systems follows - this may be using various techniques
depending upon the architecture of the consolidated system design. Simple to
very complex techniques are available but it is always advisable to go for
simpler techniques for easy subsequent maintenance, management and future

(e)    Creation of Airport Operational Database (AODB) - which may be
created separately for an airport or it may be a customized database for the
airport forming a part of a group of airports having remotely installed
Centralized Servers. Larger airports can be thought of having local servers in
addition to Centralized Servers.

(f)     Once the AODB is available it has to be linked to the processes
identified for the activities at the airport, and Workflow to carry out each
process is then created and assigned to the relevant users.

(g)    Control Centres are created to monitor group functions having perfect
integration and data flow among them. These control centres are called Airport
Operational Control Centres (AOCC). Following are some of the centres a
bigger airport will have.

      (i)     Operation Management Center

              (aa)   Resource Management System.

              (ab)   Access Control System.

      (ii)    Flight Slot and Scheduling Center.

      (iii)   Flight Crisis Management Center.

      (iv)    Building Management Center.

      (v)     Airport and Flight Safety Control Center.

      (vi)    Flight Information and PAVA Control Centre.

      (vii)   Security Control Centre.

              (aa)   Security Surveillance Center.
                    (ab)   Security Investigation Center.

      (h)    Helpline and Helpdesks are created for contact with the passengers,
      public at large and the visitors at the airport.

      (j)    Self-service kiosks are essential for accessing information and services
      availed by the passengers and visitors.

      (k)    An intelligent access control is also essential to restrict the access to
      authorized areas only.

51.    Constraints. Modern management concepts have their own constraints
because it is capital intensive exercise which a Finance man does not easily approve
as lot of its benefits are not measurable, and cost benefit analysis becomes a difficult
exercise. Then as it needs a great deal of automation a timely and accurate data input
is very essential. Regularity in working is normally abhorred. Modern Airport
Management needs to be technology laced and people friendly to benefit the user
fraternity .Unless we resort to “TOTAL AIRPORT MANAGEMENT CONCEPT” we
cannot usher in best solutions and services for airport users.


52.    Air transport is one of the world’s most important services. Its development and
its technical and service achievements place air transport as one of the greatest
contributors to the advancement of modern society.

53.      Air transport is now a massive and economically vital business encompassing
manufacturers and operators of engines and aircraft, fuel suppliers, airports and air
traffic control systems. Their customers represent every sector of the world’s economy
and every segment of the world’s population and support a wide range of businesses.
It is said that growth in air transport drives economic progress and in turn benefits
from it. A study by ICAO of Global GDP and air transport activity as measured by
Revenue Passenger Kilometers over the 20-year period from 1975 to 1995 showed a
positive correlation between this sector and global prosperity.

54.    The industry carries with it 10% of world’s domestic gross product (GDP),
10.3% of the global wages, 11.7% of the indirect taxes, and 9.8% of the global profits
thus making the travel and tourism industry a creator of maximum wealth and
employment in the world. The air traffic growth is closely related to the GDP of a
country. Thanks to the deregulation of the economy, India is finding its due place
globally. The World Bank has estimated that for every one percent of the GDP
growth, there is 1.5 to two times the growth of air traffic.

55.    From mere providers of airline infrastructure, airports have become important
drivers of economic development and genuine gateways to the economic regions they
serve. They have become assets to their communities, acting as magnets to a wide
range of high added value, and “cutting-edge” businesses and industries. They are
creating wealth and employment in their own right. No surprise then that Heathrow is
one of Britain’s largest business enterprises. Similarly, visitors arriving at Los Angeles
airport spend US $ 65.70 billion each year in the country. Airports are thus active
partners in developing economies.

56.    Given the global recession, flat to negative passenger growth, significant drop
in premium class travel, less carriage of cargo, rising costs and increased security
measures, the airport managers are increasingly focusing their attention on capturing
non – aeronautical revenue. The main non – aeronautical revenue areas include duty
–free retail, catering and restaurants, car parking and car rental, new stands, shops,
banks, airline terminal rents, real estate and cargo.

57.     Traditionally, worldwide, non – aeronautical revenues have contributed 20% -
30% of the total revenues of airports, while aeronautical revenues, primarily consisting
of aircraft landing charges, have contributed 70% - 80%. Now more and more airports
especially the prominent airports in the world, such as JFK in the US and Changi in
Singapore are relying on ‘retail mix’ (non – aeronautical activities) to form over 50%
of their overall revenue. This figure is increasing in a substantial number of
international airports including in the Greenfield airports in India such as Bangalore
and Hyderabad, which along with modernization have brought with them space and
opportunity to generate new levels of non – aeronautical revenues.

58.     Signs of globalization in airport management are emerging, with transnational
ownership and/ or operations becoming more widespread, as a greater number of
States are seeking to transfer their airports from direct government management and
control to autonomous entities or private enterprise. With the expanding number of
privatized airports and the increased prospects of their profitability, interest is
mounting and competition increasing within private industry to assume the leading role
in airport operations globally. As a consequence major airport management
companies, most of them associated with prominent airports in developed regions, are
applying for, and in many cases, obtaining management contracts for individual
airports or groups of airports in States that are located in other regions.

59.     Even though global aviation represents a growth market, for the airline industry
in total it has been a no profit business. While most airlines have struggled to achieve
acceptable profit margins, airports in general have been in a much more comfortable
situation. Profitable growth in the airport industry requires a sound business design
and is based on fulfilling five key success factors

       (a)    Prudent capital expenditure

              (i)   Optimize capacity utilization before new infrastructure

              (ii)    Sequential capacity expansion.
              (iii)   ROI as major decision criterion.

              (iv)    Profitability overrules beauty
      (b)    Strict cost management

             (i)     Market-oriented tariffs / compensation schemes

             (ii)    Flexible working regulations / worker´s deployment

             (iii)   Overhead reduction

             (iv)    Outsourcing

      (c)    Business centric organization

                     (i)     Lean/ transparent organization structure.

                     (ii)    P/L-responsibility.

                     (iii)   Tailored corporate management systems.

                     (iv)    Spin-off, sale or outsourcing of nonstrategic business.

      (d)    Non - aviation expansion

             (i)     Aviation and non-aviation on equal footing

             (ii)    Broaden customer base beyond air travelers

             (iii) Transform from infrastructure provider to airport business park

      (e)    Partnering/ cooperation with airlines

             (i)      Incentive models/ risk sharing

             (ii)     Integrated processes (Pax, cargo,)

             (iii)   Financial participation

60.     For regional and medium sized airports low cost has been a driver of enormous
growth where low cost is the only significant growth opportunity. The Low cost

      (a)    Stimulate growing demand for air travel.

      (b)   Draw existing traffic from other airlines / airports and other means of

      (c)  Low cost bases are often located in the periphery of a larger catchment
61.    Customer requirements differ significantly for hub airports and low cost bases

        Criteria                   Hub airport                     Low cost base

Capacity and growth       (a) Long term capacity            (a)     Cost efficient
potential                 reserves (for more than 50m       infrastructure
                          (b) Tailored terminal design      (b)    Limited capacity
                                                            requirements (max. 5 - 10 m

Efficiency of offering    (a) Fast / convenient             (a) Basic offering tailored to
                          transfers                         particular needs of airlines
                          (b) Efficient hub operations      (b) Minimum turn-around
                          (delays, lost baggage, turn       time

Flexibility / speed       (a) Well-established              (a) High degree of flexibility
                          business processes                (b) Processes ad hoc
                          (b) Joint planning (medium /      adjusted to specific
                          long term)                        requirements

Fees                      (a) Good value for money          (a) Minimum fees
                          (b) Growth fuels unit cost        (b) Philosophy of “We only
                          reduction                         pay for what we need.”

Service integration       (a) Fully integrated services:    (a) Simple, reliable services
                          (b) Customs, security,            (b) Collaboration with service
                          ground handling                   providers/ outsourcing

Regional connection       (a) Proximity to finance and      (a) Passengers accept
                          business centers                  significant ground travel time
                                                            to/ from airport
                          (b) Intermodal integration /
                          LD train

62.   Due to fundamental changes in the market and competitive landscape,
pressure on airports will increase significantly and the key factors to ensure the
success of the airport managers/ management, would be:

       (a)   Tailoring ‘Airport Business Design’ towards the needs of the airline

       (b)    Foundations of profitable growth - prerequisite for all airports.
(c)    Particular characteristics like ‘Retail Mix’ to be tailored towards specific
strategic positioning.

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