Competencia entre aeropuertos: Una perspectiva europea

La semana pasada escribí un breve artículo para Aviation Platform (un espacio on-line para que investigadores, expertos y estudiantes del área – aviación – compartan sus conocimientos) sobre competencia entre aeropuertos. El tema surgió hace ya unos años, en 2010, cuando hacía mi tesis de maestría y fue desarrollado un poco más al comienzo de mi doctorado. Si bien en su momento poco se hablaba del tema y aún era comúnmente aceptado que los aeropuertos son, de cierta manera, monopolios naturales, en estos años la discusión se ha nutrido bastante y cada vez hay más evidencia de la existencia de competencia entre aeropuertos, particularmente en Europa.

El artículo se titula Airport competition: Where do we stand? y lo transcribo a continuación para contribuir a esa discusión. Particularmente porque en América Latina (y diría también que en Asia y África) la competencia directa entre aeropuertos está limitada por las condiciones del sector, que son todavía muy diferentes a las que se encuentran en Europa y América del Norte.

En el contexto latinoamericano, el mercado internacional todavía está muy limitado por acuerdos bilaterales; la infraestructura no siempre es adecuada para garantizar continuidad y calidad en las operaciones (en especial los aeropuertos, más aún los aeropuertos que no sirven capitales o una que otra ciudad grande); los pasajes aéreos siguen siendo muy caros para gran parte de la población y, por lo tanto, no hay mucha competencia efectiva entre las aerolíneas; el acceso a Internet es más limitado, así como la popularidad de las compras on-line (igualmente limitadas por niveles más bajos de “bancarización”).

Sin embargo, en estas regiones también hay gran potencial para desarrollar un mercado aéreo más competitivo y los aeropuertos deben estar preparados para ello. A medida que las economías locales crecen también crece la demanda y las oportunidades de explorar nuevas rutas (lo cual trae implicaciones ambientales que deben ser consideradas igualmente).

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Airport competition: where do we stand?

Publicado originalmente en: http://www.aviationplatform.com/index.php/research/93-airport-competition-where-do-we-stand

The reality of flying is much different today than what it was during part of the 20th Century. Far behind are the glamorous days of commercial aviation when flying was also far from affordable. Market liberalisation (or deregulation) has been a game-changer experience since the last decades of the previous millennium. As airlines entered a truly competitive environment flying became affordable and more of a mass transport means.

Although airlines can still argue they are in a very competitive industry but subject to monopolistic providers (few options of aircraft manufacturers, air traffic control providers, airports, handlers, distribution systems, etc. in many markets), the reality is that the competitive pressure has transpired to other actors in the value chain of commercial aviation. Airports are, perhaps, a great example of this: traditionally considered as natural monopolies, times have changed significantly for them as well.

In a regulated era, most airports regarded themselves as mere infrastructure providers. In that context, airlines were the natural clients that bought airport services at published fares on a rather “take it or leave it” basis. But liberalisation (particularly in the intra-US and intra-European markets) now allow airlines to start and drop routes between any airport-pairs almost at will. This ability to switch, complemented by the rise of Low-Cost Carriers (LCC) and the popularisation of the Internet, brought about real competition for airports.

The role of the Internet, and the World Wide Web in particular, cannot be neglected. It was crucial to help LCCs skip traditional distribution of air travel (i.e. travel agents) and to reduce their costs when entering new markets. But it also helped customers to gain awareness of market alternatives, both of airlines and airports, and to more easily compare prices and characteristics.

Gradually, the airport industry witnessed the emergence of competition. In Europe this trend is more visible, as many wartime airfields were converted to civilian use and keen to capture growth, especially from LCCs.

The customers of airport services

In order to understand the full extent of airport competition in the current context, it is necessary to realise that airport customers have changed too. And clients are moving far beyond just the airlines as users of airport infrastructure. The customers of a current airport can be grouped in three sets according to their characteristics and, more importantly, to their interests in airport services:

  • The aviation trade group: includes the customers who are directly interested in the air-side facilities of the airport. For the most part this group includes companies (as opposed to individuals, hence the trade part on the name) that focus on aeronautical infrastructure and services, provided by the airport or other suppliers, and that normally would use the airport as a gateway to provide air traffic (passengers or cargo). Occasionally, customers in this group may also be interested in land-side facilities, such as offices or warehouses.
  • The individuals group: includes the customers that act on their own behalf, i.e. they do not represent any business interest (for instance, they cannot be regarded exclusively as “profit maximising” entities). So this group is composed by people whose main interest is to have a pleasant “stay” at the airport while they travel, shop or work there. There are two sub-groups within this group, each with different motivations, requirements and expectations:
    • Travellers (i.e. passengers): Those who use the airport as the point to connect the surface part with the air part of their trips, or to connect two air segments of their journey in the case of transfer passengers.
    • Non-travellers: Basically visitors (meeters and greeters for instance), local residents of the surrounding neighbourhoods, and employees (of all the companies located in and around the airport, including the airport itself and the airlines). Non-travellers benefit from surface commuting connections or from extended opening hours at retail shops.
  • The commercial trade group: is the land-side counterpart of the aviation trade group. It includes companies who are interested in the market opportunities provided by the clustering of the previous two groups (think of hotels, car-rentals and retail stores for example), or in the advantages provided by logistic facilities (think of distribution centres) and connectivity provided by the airport (think of companies or institutions with highly-mobile employees). Their focus is usually on the land-side developments of the airport. Additionally, as the airport industry gets populated by global players, other airports are also potential customers of consultancy or managerial services.

Besides these three groups of customers, who directly “buy” services supplied directly or indirectly by the airport, there is a group of non-users who may be crucial to support airports both economically and by publicly defending their interests. Although these non-user stakeholders are not customers strictly speaking, they play a key role in airport competition because airports can “sell” the benefits produced by the airport activity (such as employment, tourism or economic development). This group includes entities or institutions such as national and local governments (who may also share ownership in the airport), tourism promoters, and regional and local development or commercial associations.

Aviation trade Individuals Commercial trade Non-users
·Commercial airlines
·General aviation
·Travel agents and tour operators
·Travellers:
– Passengers
·Non-travellers:
– Visitors
– Employees
– Local residents
·Tenants
·Concessionaires
·Local and global businesses
·Local and global institutions
·Other airports
·Government
·Tourism promoters
·Commercial/Industrial associations

How do airports compete?

In the current context airports may compete in several areas, as described next. However, it is important to note that not all airports compete in all areas simultaneously, as this would depend on the specific characteristics and strategy intended by the airport management. In general terms, there are 7 areas that present airports with competitive pressure or opportunities:

1. Provision of services to airlines

Nowadays, airports actively compete with each other to attract airlines both for cargo or passenger services. Airports can offer their distinctive characteristics and propositions for airlines to use the airport as a hub (a central point in the airline’s network where traffic is coordinated to connect between incoming and outgoing flights), a traffic node (also a central airport in the airline’s network, in terms of traffic, but where connections are not explicitly coordinated), an airline station (an airport that serves exclusively as an origin or a destination point, like a “spoke” in a hub and spoke system), or an airline base (an airport where aircraft and crew are permanently stationed so that they return at the end of the day’s rotations, particularly for LCCs or freight integrators).

Provision of services to airlines
Examples
Hub: Philadelphia vs. Pittsburgh (US Airways shifted hub)
Traffic node: Lisbon vs. ? (TAP privatisation)
Airline station: New European destination for an Asian/Middle East carrier
Airline base: European airport vs. European airport (Ryanair new base)
Key factors
* Availability of slots
* Incentive programs
* Dedicated infrastructure

2. Traffic: outbound (catchment area)

When two are more airports are located in close vicinity such that their catchment areas overlap, passengers (or cargo, for the matters) can choose among them if they offer similar alternatives for their desired destinations. This, along with the next one, is perhaps the most debated area of airport competition, as it has become popular in the case of Multi-Airport Systems serving large metropolitan areas. Usually, traffic that was normally served by a given airport may “leak” to another airport nearby.

Traffic: Outbound (catchment area)
Examples
Rio de Janeiro/Galeao vs. Rio de Janeiro/Santos Dumont
Brussels/National vs. Brussels South Charleroi
Porto vs. Vigo
London/xxx vs. London/xxx
Key factors
* Destination network
* Surface connectivity
* Availability of low fares
* Convenience for the users (proximity, simplicity, FFP)

3. Traffic: transfer

This form of competition, as the “leakage” described above, is also one of the most widely recognised types of competition between airports. It relates to airports that serve as transfer or connecting points for air-to-air travel segments. In fact, it is not uncommon to have large European hubs (and their respective hub carriers) commenting on the pressure felt by the development of competing hubs in the Middle East (and their corresponding airlines). From the passengers perspective (and even more so for cargo), a transfer airport is much more replaceable than their origins and destinations, so a great deal of elements can influence their choice (route detour, connecting times, flight times, frequent flyer programs, airport characteristics, migration and security controls, and so on). Moreover, with the expansion of LCCs many other airports offer an effective alternative for medium-haul transfers.

Traffic: Transfer
Examples
Frankfurt vs. Paris/CDG vs. Amsterdam vs. London/Heathrow
All above vs. Dubai Intl. vs. Doha Intl.
European flag carriers’ hubs (FRA, CDG, MAD, FCO, etc.) vs. London/Stansted vs. London/Luton vs. Frankfurt/Hahn vs. Paris/Beauvais vs. Milan/Bergamo vs. …
Key factors
* Availability of slots
* Minimum connecting time
* Convenience for the users (detour, FFP, lounges, shopping, etc.)
* Low fares

4. Traffic: inbound (destination)

As with “traffic leakage” in the case of airports that share similar catchment areas, inbound traffic can also choose among different alternative airports to reach their final destinations. But beyond that, passengers also have different alternatives when deciding where to go, especially for leisure traffic. Imagine one wants to have a short “city break” within Europe. Plenty of alternative cities are available for this getaway and their respective airports would be willing to catch that additional traffic.

Of course the attractiveness of the destination is probably more important than the airport itself. That is why the collaboration with non-user stakeholders may be key to promote the airport’s hinterland and, at the same time, inbound traffic for the airport. Moreover, airports can actively promote themselves as destinations. The growth in the number of “airport city” projects shows this is a reality, as well as the growth in offers like airport tours, temporary exhibitions, concerts, etc.

Traffic: Inbound (destination)
Examples
Faro vs. Palma de Mallorca vs. Casablanca
Faro vs. Geneva! (sun vs. snow for holidays)
Vancouver airport (as a destination)
Zurich “The Circle” vs. Frankfurt Airport City vs. Schiphol Airport City
Key factors
* Tourism attraction
* Supplementary services
* Activities and real estate development in the hinterland

5. Global competition

Airports are growing in a global scale in the sense that “airport companies” are extending their services far beyond their “natural catchment areas”. In fact, as airports grow they accumulate good know-how that can be exploited to offer consultancy services to third parties (mostly other airports). Moreover, as airport companies look for other sources of revenue, they can compete to operate retail facilities or terminal buildings in other airports, or even bid for management or ownership of entire airports elsewhere.

6. Competition for funding

Airports can also compete to obtain funds for upgrades or expansions. This is particularly true for airports that belong to the same airport group or are owned by a government agency, but it is not restricted to such cases. Funds in the form of grants, tax reductions, subsidies or capital increases can be provided by governments, tourism authorities or private shareholders. The most important part, however, is not just that airports compete to gain additional funding, but that the funds can be used to improve the competitive position of the airport.

7. Competition with substitutes

Finally, it is important not to forget that air transport is also in competition with other modes, in particular for short- and medium-haul journeys. Therefore airports are affected by developments in competitive alternatives, such as private cars, long-distance coaches and trains (high speed rail in particular).

Moreover, as the airport business becomes more complex and the array of customers extends, airports also compete with providers of similar services. Notoriously, airports can compete with local retailers and shopping malls (especially for the ‘non-travellers’ customers). Also, segments of the airport business, parking for example, can compete with local suppliers.

Final thoughts

Surprisingly, there is still some resistance to the recognition of competition between airports. This is key as it relates to airport regulation in the sense that the competitive pressure should prevent airports from charging monopolistic rents and render regulation unnecessary. The important point is that competition occurs, as described here, but the degree of competition varies from case to case. Therefore it should be assessed case by case whether airports enjoy market power, this is, to make the case for regulation instead of implementing it by default.

Moreover, for airport operators, it is important to recognise the existence of competition in order to explore market opportunities. In this sense, airports should engage in an explicit form of strategy formulation and execution that recognises their competitive advantages and tackle their weaknesses.

Further reading

ACI Europe. (2013). How airports compete. ACI Europe. Retrieved from https://www.aci-europe.org/component/downloads/downloads/3435.html

ACI Europe. (2014). ACI EUROPE Analysis Paper: Competition in the European Aviation Sector. Retrieved from https://www.aci-europe.org/component/downloads/downloads/3829.html

Bush, H., & Starkie, D. (2013). Competitive drivers towards improved airport/airline relationships. Journal of Air Transport Management. doi:10.1016/j.jairtraman.2013.09.002

Copenhagen Economics. (2012). Airport competition in Europe. ACI Europe. Retrieved from https://www.aci-europe.org/component/downloads/downloads/3302.html

Jimenez, E., Claro, J., & Pinho de Sousa, J. (2013). The airport business in a competitive environment. European Journal of Transport and Infrastructure Research, 13(4), 315–335. Retrieved from http://www.ejtir.tbm.tudelft.nl/issues/2013_04/pdf/2013_04_03.pdf

Starkie, D. (2008). The airport industry in a competitive environment: A United Kingdom perspective. OECD Publishing. Retrieved from http://storage.globalcitizen.net/data/topic/knowledge/uploads/20100627161148290.pdf

Starkie, D. (2012). European airports and airlines: Evolving relationships and the regulatory implications. Journal of Air Transport Management, 21(0), 40–49. doi:10.1016/j.jairtraman.2011.12.016

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