Low-Cost Airports

Low-Cost Airports: A Possible Evolutionary path for Airport Enterprises?

In the air transport environment, the term ‘low-cost’ is typically related to a specific value proposition in the airline business.

Low-cost carriers do not offer free-of-charge catering or different service classes, but some of them give rewards to their frequent-fliers,.  But they have to maintain some fundamental peripherals, like ground handling services and minimum seating pitches.  The consequence of this limited service offering is a partial cost saving transfer to customers by means of highly competitive and aggressive fares.

Projected changes in intra-European passenger market shares, 2000-2010

Low cost airlines          5%    -        25 %

Charter airlines                      20%  -        15%

Network carriers          75%  -        60%

Emergence of Low Cost Airports

Low – Cost Carriers achieve economics through Airport services:

1.    Use uncongested airports far from the cities

2.    A small number of check –in –desks Longer check-in-times

3.    Passengers to arrive at airports well in advance of the departure time

4.    No special lounges provided

All these measures result in significant cost savings

Strategic answer to the market upsurge of LCC’s

Emergence of new kind of Airport positioning:  The Low-Cost Airports highly specialized market interface designed to satisfy the operational needs of LCCs

Example: London Luton, Brussels Charleroi – where LCC dominate total airline movements.

LCCs are aggressive in B2B negotiations:

LCC look for economic subsides with Airports for the followings:

1.    Start up costs

2.    Cheaper handling

3.    Landing  and parking fees

4.    Efficiency in ground operations leading to short turnaround times

In order to accomplice the demands of LCC, Low Cost Airport requires,

Ø Significant reduction in the complexity of all organizational levels-streamlining of hierarchies and functional responsibilities

Ø Improvement in staff flexibility in the ground operations area

Ø A greater use of part-time workers at peak –time periods to improve the effectiveness of service to airlines.

Ø Self – ticketing and self check –in kiosks.

Ø Constant supervision by ground staff

Ø Kiosks, end customer satisfaction tool, giving customized information to the passenger about the flight time, real time information to security staff about crowd levels  so as move staff accordingly

Thus Airport transformation should lead customer airlines, to maintain sound productivity.

Finally, Low –cost airports may realize that an average LC passenger tends to spend less at airports than other passenger types, market research studies shows declining levels of average expenditure.

Hence Low-cost airports will thus have to focus

a)    Their retailing offer on impulse goods, like miscellaneous corners, pharmacies, Internet cafes and fast food restaurants,

b)    Avoiding fashion stores and jewelers that will be perceived as distant from the passenger’s low –cost ‘travel   concept’.

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