Dealing with the airline industry’s ongoing market turmoil

Tuesday, 18 February 2014 00:01 - - {{hitsCtrl.values.hits}}

By Sarah Hannan “In the last decade the airport and airline industry has experienced a rapid change in terms of the evolving technology, methodologies and capacity usage. With the ongoing changes it is vital that each and everyone involved in the aviation industry is educated about it,” stated Massachusetts Institute of Technology (MIT) Professor of Engineering Systems, Civil and Environmental Engineering Prof. Richard de Neufville. Delivering a lecture to a gathering of professionals and industry experts in aviation, he noted that much has changed during the last decade in the aviation industry and it is facing generations of turmoil. Therefore it is important to think about the infrastructure of the airlines and the services and facilities provided to passengers in airports. Prof. de Neufville in his presentation remarked that he was impressed by the investments made in the Mattala Rajapaksa International Airport and in building its runway, which he said was a step ahead of the plans underway to build a runway at London Heathrow Airport. The status of the aviation industry is uncertain with the rapid changes to global flight policies and there is turmoil in the US deregulations and fundamental observations. It is compulsory for experts to think and forecast ahead. Flexibility in design needs to be improved to cater to future amalgamations within the aviation industry. Shifting regional hubs There is increasing competition among airports with the emphasis on systems perspectives globally as well as regionally. New regional hubs have been developed and the best example is how Qantas has shifted its hub from Singapore’s Changi Airport to Dubai International Airport. These shifts have occurred since the plan, design, management aspects are integrated with the present requirements of the airline. “We need to consider design as an extension of planning to enable the range of growth and possible future choices in development. The design should also be managed appropriately; for instance the capacity usage of a room in the lounge area depends on how it is operated and managed. Singapore’s Changi Airport uses its lounge rooms to its maximum capacity.” Management an efficient key in design In the past the aviation industry focused much more on airports and looked at flight routes being changed slowly and decided that airlines did not greatly influence air traffic. But times have changed and airlines keep creating new routes, increasing the air traffic. Nowadays the airport and the airlines have to work in tandem. The evolving airline industry has an impact on airports. With many airlines switching to wide-bodied aircrafts to fly across the world, airport operators and planners are faced with many challenges. When an emergency situation occurs, it disrupts normal airport operations, including customer core needs and safety. The importance of including Irregular Operations (IROPS) events as well as Chemical, Biological, Radiological, Nuclear or Explosive (CBRNE) events when developing and evaluating Airport Emergency Plans (AEPs) is essential, as are effective communication systems to provide for regional assistance during such emergencies. A plane on the ground is not making money; therefore airlines now expect to have fast turnaround time as short as 25 minutes. Flexibility is crucial and flight policies around the world are having an impact on environmental concerns in routes and aircraft take offs, weather conditions and noise concerns.

Facing a generation of turmoil Major airlines such as Northwest, Swissair and Iberia are disappearing and it has been forecast that Dubai International Airport will surpass the services and facilities provided by London’s Heathrow Airport in one to two years. Transfer hubs such as St. Louise and Pittsburgh are changing for transfer hubs in the Middle East regions. Due to direct mergers among airlines, there are issues that need to be addressed regarding country and regional regulations. London was a key hub that connected North America and Asia but it has now shifted to Dubai making it a hub and Istanbul too is attracting new routes. Low-cost airlines are catching up in the market and one of the major low-cost airlines, Air Asia, occupies most of the Asian runways with an impressive 27% YoY rate. With the actual costs of staffing and turnaround time being significantly lower, these airlines are draining out traditional airlines. To overcome these challenges, airports and airlines need to consider the future of low-cost airlines, switching to hubs in the east and focusing on the types of service and aircrafts used. Airports will have to create better relationships with the airlines that use their facilities and should consider the types of terminals that would cater to future needs. Reducing the number of gates to increase turnaround time and implementing self-check-in operations could also benefit airports. Airport business is facing a generation of turmoil and necessary facilities need to be implemented to recognise and address these issues. The lecture held on Thursday 6 February at Hilton Colombo Residence was attended by industry experts and interested individuals while the Secretary to the Ministry of Civil Aviation Dr. T.R.C. Ruberu was the Guest of Honour. The event was organised by the Chartered Institute of Logistics and Transport – Sri Lanka and the University of Moratuwa. Footnotes Refer Airport Systems: Planning, Design and Management second edition co-authored by Richard de Neufville, Amedeo Odoni, Peter Belobaba and Tom Reynolds for further information. Pix by Upul Abayasekara