LOG357 Port & Terminal Management

Study Unit 6
Airport Policy and Planning
Dr. YAP WEI YIM
 Objectives

• At the end of this study unit, you are expected to:

– Describe the essential components of an airport master plan.

– Examine the planning and development aspects of airports.
– Propose suitable performance indicators for airport performance
benchmarking.
– Discuss the economic and social impact of airports.
– Propose feasible options related to the development of airports

Prepared by WY Yap for SUSS

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 Objectives

• At the end of this study unit, you are expected to:

Self study
– Describe the essential components of an airport master plan.
– Examine the planning and development aspects of airports.
– Propose suitable performance indicators for airport performance
benchmarking.
– Discuss the economic and social impact of airports.
– Propose feasible options related to the development of airports

Prepared by WY Yap for SUSS

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 Objectives

• At the end of this study unit, you are expected to:

– Describe the essential components of an airport master plan.

– Examine the planning and development aspects of airports.
– Propose suitable performance indicators for airport performance
benchmarking.
– Discuss the economic and social impact of airports.
– Propose feasible options related to the development of airports

Prepared by WY Yap for SUSS

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 Airport performance benchmarking

• Performance indicators commonly used to assess quality of service

• Response to/analysis of complaints/comments
• Availability of lifts, escalators, moving walkways, seating areas,
trolleys etc.
General • Cleanliness, terminal atmosphere/temperature
• Customer satisfaction in terms of attractiveness, convenience
• Quality of public announcements, flight information displays,
information desk, telephone service

Check-in • Waiting time/queue

Security check • Waiting time/queue
Immigration • Waiting time/queue
Shops, commercial • Quality and range of goods
services (banks, • Value for money
• Staff courtesy
post offices etc.)
Baggage delivery • Delivery/waiting time
• Taxi availability/waiting time
Ground access • Ground access/public transport
Prepared by WY Yap for SUSS
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 Airport performance benchmarking

• Indicators commonly used to assess financial and economic performance

Cost efficiency • Costs excluding depreciation per work load unit (WLU)
• Costs including depreciation per WLU
• Depreciation costs per WLU
• Labour costs per WLU
• Depreciation share of operating costs
• Labour share of operating costs
Labour productivity • WLU per employee
• Revenues per employee
Capital productivity • Capital expenditure per WLU
• WLU/total assets
• Revenues/total assets
• Total assets per employee
Revenue generation • Revenues per WLU
• Aeronautical revenues per WLU
• Non-aeronautical revenues per WLU
• Aeronautical share of total revenues
• Non-aeronautical share of total revenues
Commercial performance • Concession plus rental revenues per passenger
• Concession revenues per passenger
Profitability • Operating margin
• EBITDA margin
• Operating profit excluding depreciation per WLU
• Operating profit including depreciation per WLU
• Net profit per WLU
Prepared by WY Yap for SUSS
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 Objectives

• At the end of this study unit, you are expected to:

– Describe the essential components of an airport master plan.

– Examine the planning and development aspects of airports.
– Propose suitable performance indicators for airport performance
benchmarking.
– Discuss the economic and social impact of airports.
– Propose feasible options related to the development of airports

Prepared by WY Yap for SUSS

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 Economic and social impact of airports

• Impact of economic growth on international air travel by seat class

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 Economic and social impact of airports

• Airports and economic growth

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 Economic and social impact of airports

• Airports provide an additional asset

to the general economy by
generating income in government
taxes, thereby increasing revenues
available for projects and services to
benefit the residents of the
community.

 Cities with good airport facilities

also profit from tourist and
convention business.

 Represent substantial revenue for

hotels, restaurants, retail stores,
sports and nightclubs, sightseeing,
rental cars and local transport.

Prepared by WY Yap for SUSS

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 Economic and social impact of airports

• Airports and economic development

 Airport development often

seen as a way of generating
new employment, creating
wealth and regenerating an
area.

 Wider economic benefits will

depend very much on the scale
of the airport and critically, its
ability to attract air services
(i.e. airlines).

Prepared by WY Yap for SUSS

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 Economic and social impact of airports

• Net benefits should be

considered.

• Impacts should also be

compared with alternative,
non-airport related
economic activities.

• A viable and efficient

transport system is a
fundamental and necessary
component to the economy
of any region.

Prepared by WY Yap for SUSS

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 Objectives

• At the end of this study unit, you are expected to:

– Describe the essential components of an airport master plan.

– Examine the planning and development aspects of airports.
– Propose suitable performance indicators for airport performance
benchmarking.
– Discuss the economic and social impact of airports.
– Propose feasible options related to the development of airports

Prepared by WY Yap for SUSS

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 Feasible options for airport development

• Airports of
the future

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 Feasible options for airport development

• In the years to come, airport industry can expect to see :

– Growth rates differ between market segments, suggesting CRM may become an
indispensable tool.

– Diversification of ownership can place airports in a position of greater sensitivity to the

turmoil of financial markets, especially under scenarios of over-capacity and high operating
costs.

– Strong downward pressure on fares and cargo tariffs likely to continue as threat of the low-
fare (no-frills) phenomenon develops in passenger transport and extends to freight
transport.

– Liberalisation, together with abandonment of ownership restrictions and privatisation can

contribute to accelerate industrial concentration (can lead to dominant market positions
and hinders envisaged competitive environment).

– Falling yields can lead to cost-cutting pressure with a strong emphasis on labour costs.

Prepared by WY Yap for SUSS

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 Feasible options for airport development
Regulation Deregulation Reshaping Consolidation Regeneration
Current situation Asia Europe USA
Stabilised Increased Cost reduction, Industry Loss of stability,
capacity capacity increased consolidation, trend towards
efficiency contestability increase capacity
reaches labour
structures
Market capture New entrants Restructuring Market loses Unbundling
operations to contestability and services by
improve gains discipline market segment
performance,
use of network
effects
Bundled services Unbundling of New service Networks extend Activity-based
services growth to airports and cost
airlines specialisation
Low diversity in Reduction of Weak players Fortress hubs Network
offer prices emerge as fragmentation
structurally
secure positions
Prepared by WY Yap for SUSS Source: Macário and Van de Voorde
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 Feasible options for airport development
Regulation Deregulation Reshaping Consolidation Regeneration
Current situation Asia Europe USA
Slot distribution Slot as a Slots Slot trading Big airports move
based on competitive commercially emerges to slot auctions
grandfather instrument driven, network
rights approach and
partnership
dependency
Airports as a Airport starts Airport as Airport as
strategic tackling intermodal multifunctional
infrastructure competition nodes of a chain logistic platform
Airport moves towards business diversification,
emergence of concepts like airport-city.
Shareholder value concept becomes decisive
Regulation Regulation Regulation Regulation Regulation
focuses on focuses on focuses on focuses on focuses on
enhancing safety/security quality of service enhancing safety/security.
competition and customer competition Need for cross
welfare sector regulation
emerges
Prepared by WY Yap for SUSS Source: Macário and Van de Voorde
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 Feasible options for airport development

• In this new paradigm for the airport business model, the airport management has to
address three concerns:

– Knowing yourself.

– Knowing your customer.

– Knowing your path.

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 Feasible options for airport development

• Hierarchy of airport spaces

Source: Macário and Van de Voorde

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 Feasible options for airport development

• Changi Airport City

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 Feasible options for airport development

• Transformation of airports from transport facilities into more broad-based activity

centres is driven by multiple factors:

– Inexorable rise in passenger numbers.

– Emergence of more entrepreneurial airport owners and managers.
– Airports’ need to create additional revenue streams beyond traditional
aeronautical sources, infrastructure investment and counter-cyclical business
reasons.
– Increasing role of e-commerce and logistics.
– Globalisation of supply chain management and rise of “just-in-time”
manufacturing and delivery.

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 Activity 6.1

• Make a trip to the local airport. Determine the considerations taken into account
during the course of developing the various airport terminals. Also, identify the
shortcomings of each of the terminals, in particular, with regards to the post COVID-
19 world.

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 Activity 6.2

• Can you identify key issues concerning environmental planning for Changi
International Airport? Describe how these were addressed.

Prepared by WY Yap for SUSS http://www.changiairport.com/corporate/csr/sustainability.html#

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 Activity 6.3

• Can Changi Airport be classified as an airport city?

• What are the amenities that would classify it as such?
• What other “ingredients” do you think are missing and should be developed?

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 Activity 6.4 – Reflect on this

• Planning for airport

development takes a long term
view. The future Terminal 5 at
Changi is slated to begin
operations in early 2030s.
• To cater for future growth and
based on your understanding of
land use in Singapore, where
would you propose for Terminal
6 to be located?
• State your assumptions and
reasons for justification.

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Thank you for your attention.
Contact details:
wyyap@suss.edu.sg
+65 9642 1971