The airport sector in the past may have deserved its reputation as an arm of local government rather than a dynamic player in world aviation. Managers answered more to city fathers and possibly local voters than to the airline customers. Too often their universe barely seemed to extend beyond the perimeter fence. For all the talk, the airport community has rarely campaigned on industry issues to the same extent or to the same effect as their airline counterparts.
How times change. Earlier this year, the airports arrived ready to fight their corner at ANSConf 2000 - the conference convened in Montreal to set ICAO policy on the economics of how airports and air navigation services should be run. Airports Council International(ACI) clearly took the issue seriously, as demonstrated by the size of its expert team and the six months it devoted to preparing a watertight position.
At stake is whether commercial revenues should continue to be thrown into the pot when assessing the level of user charges. Airports claim that this "single till" system is a relic from the old days, which has failed to keep place with the minor revolution which is taking place within the airport sector. Hard won commercial revenues should not, they claim, effectively be used to cross-subsidise airlines in the form of lower charges.
For their part, the airlines, led by IATA, have made it clear that they regard this as no more than a device to allow airports to hike charges in order to make them pay for the full cost of future infrastructure projects. As carriers are fond of pointing out, the airports would have no retail customers unless the airlines brought them to the malls.
Both sides have a point. Airlines cannot be expected to bear the full cost of new infrastructure development, shielding the airport operator from the commercial risk. Neither can the airports claim to have much of a record of transparency and openness when it comes to setting charges in the first place. User charges often bear little or no relation either to the costs of doing business or to the state of the facilities - or even, come to that, the value of the airport served. So London Heathrow is modestly priced while Vienna tops the charging league in Europe. The same could be said of Hong Kong and Singapore.
However, airports too cannot be expected to embrace the new commercialism and then be penalised when they attempt to use their newly-created wealth. Subject to the usual competition concerns, and the necessity for clear and open procedures, there seems little reason why airports should not indulge in something more akin to market pricing. Better still, is the prospect of more joint sharing of risk and cost, like the terminal projects already familiar in the USA and now creeping into Europe.
Whether or not the airports win this particular argument, the bigger message may be that airports have now arrived as a force to be taken seriously. Having flexed their collective political muscle at Montreal (and apparently won the debate), they are not going to give up their hard-won status.
And not only are the airports prepared to talk more global, they are beginning to act that way too. There are already about a dozen airport groups with increasingly international business links around the world.
In a world where going global is hardly a new mantra it is perhaps surprising that airports have not caught on sooner. And admittedly the new airport groupings are hardly in the same league as their airline equivalents. The UK's BAA is by far the world's largest but with revenues of $3.5 billion is still a relative minnow compared to its major airline customers.
However, with a head of steam building up behind privatisation and commercialisation movement is taking place. Talks between Frankfurt and Amsterdam Schiphol on collaboration have finally borne fruit. They will form a joint venture, called Pantares, to go after international airport projects, as well as work in areas like ground handling, cargo and IT.
Aiports should be prepared to take this entrepreneurial spirit not only to their overseas ventures but to cast a critical eye over their own cost bases. Many airports are still encumbered with top heavy staff structures and unwieldy management practices, and a thoroughly businesslike approach to all aspects of their activities could be expected by airlines, in return for a begrudging admission that airports can indeed claim a seat at the top table.
Source: Airline Business
