The rise and rise of low cost terminals: New 270-page CAPA study
As reported in today’s edition of The Australian newspaper, the rapid development of low cost carriers (LCCs) has stimulated massive change in the airline industry – and for the airports serving them.
According to a new Centre for Asia Pacific Aviation study of LCC terminal developments worldwide, an industry evolution is now occurring, founded in a low cost culture. The Centre’s study states the problems of airport infrastructure facing carriers, especially LCCs, include:
- Major airport infrastructure usually has a long planning lead-in time. For that reason, airlines, especially LCCs, often prefer minimal infrastructure that can enable experimental expansion without excessive financial exposure.
- Airport infrastructure has an economic life of 20-30 years and is not easily shifted;
- By comparison, airline-planning horizons have shortened considerably. Their largest investment category – the fleet - is by definition highly mobile;
- Airports can therefore easily build passenger terminals based on earlier appropriate airline requirements that quickly become unsuitable for current needs.
- The question also arose as to how the low cost airline model would work at congested airports. Congestion is anathema to the scheduling of LCCs.
In addition, airline industry changes and trends can have significant implications for airports, such as:
- Consolidation of the business through mergers and alliances, reinforcing the hub model and underpinning the demand for adjacent gates and lounges;
- Restructuring (or bankruptcy) of a key airline, with route and frequency implications;
- Greater reliance by airlines on alliance partner services – IT, handling, maintenance and so on;
- Growing emergence of LCCs serving primary airports.
Typically designed for traditional network airline operations, airports often exhibit the same profile of ‘bundled’ services, many of which the LCCs do not to require, yet still must pay for. Simultaneously, as network airlines adjust their operations to compete with LCCs (including establishing their own low cost subsidiaries), they too are challenging the airport pricing model.
In these circumstances, it was only a matter of time before airports also began to diversify, with new facilities opening specifically to LCC traffic and longstanding airports adjusting to meet the new demands by building low cost terminals.
To be published next week, the Low Cost Airports and Terminals Report is the only management report published on low cost airports and terminals.
The 270-page report covers the prospects for their proliferation worldwide and the demands placed on airports by low cost carriers and how to cope with them. It discusses the prototype low cost airport and market making – methods of improving non-aeronautical revenue streams
A benchmarking tool, this report also discusses differentiating the costs and benefits of a separate low cost airlines terminal versus a mixed use one…and much, much more!