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Airports as platforms: towards a new business model

Article  in  International Journal of Business Performance Management · September 2019

DOI: 10.1504/IJBPM.2019.10026919

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Int. J. Business Performance Management, Vol. X, No. Y, xxxx 1

Airports as platforms: towards a new business model

Comment [Y1]: Author: Please
confirm if N.M. Brilha is the
Nuno Mocica Brilha* corresponding author.
Department of Economics, Management,
Industrial Engineering and Tourism,
University of Aveiro, Portugal
Email: a32581@ua.pt
*Corresponding author

Helena Nobre
GOVCOPP,
Department of Economics, Management,
Industrial Engineering and Tourism,
University of Aveiro, Portugal
Email: hnobre@ua.pt

Abstract: Traditionally, airports were seen as air transport infrastructures for

airline operations, passenger, and cargo processing. This traditional view
has evolved beyond the aeronautical function, to offering non-aeronautical
equipment and services. As air transport becomes a pillar for globalisation, and
airports intermodal platforms for transport and business, the airport city
concept emerges from a strategic vision in which airport development is now
integrated with urban planning and regional land use. Yet, the airport city
concept does not address one of the main stakeholders – the consumer –
especially when the consumer is at the epicentre of the current technological
revolution. Therefore, this paper proposes the Airport 3.0 concept as the new
business model for the airport as a two-sided platform. The concept is founded
on three strategic business vectors that must be managed as concentric,
complementary, and synergic for superior business performance. The paper
addresses some managerial remarks, limitations, and future directions for study.
Keywords: airport operator; airport business model; Airport 3.0; two-sided
platforms; entrepreneurial management; brand value co-creation; business
performance.
Reference to this paper should be made as follows: Brilha, N.M. and Nobre, H.
(xxxx) ‘Airports as platforms: towards a new business model’, Int. J. Business
Performance Management, Vol. X, No. Y, pp.xxx–xxx.
Biographical notes: Nuno Mocica Brilha has over 15 years of experience of
developing airport non-aviation business portfolios and global internet
businesses. He obtained his BA (Hons.) in Business Studies from the
University of Westminster, Postgraduate in Air Transport, Airports and
Intermodality from Cranfield and ISTC, and MSc in Management and Tourism
from the University of Aveiro. He is currently completing his PhD research
project in Strategy and Marketing from the University of Aveiro, Portugal. His
MSc dissertation assessed ‘The strategic convergence of transport and tourism
national policies: the case of Portugal’, and has contributed to the book,
Aviation and Tourism – Implications for Leisure Travel. He lectures Strategic
Management and Airport Management at the ISEC School of Aeronautics in
Lisboa.

Copyright © 20XX Inderscience Enterprises Ltd.

2 N.M. Brilha and H. Nobre

Helena Nobre is an Assistant Professor of Management from the University of

Aveiro (Portugal) and Senior Researcher at the GOVCOPP of University of
Aveiro. She has several papers published and a book. She taught several
topics in Management at graduate and undergraduate levels, namely in
Boston University as an Adjunct Assistant Professor, and has experience in
international companies.

This paper is a revised and expanded version of a paper entitled [title] Comment [t2]: Author: If a previous
presented at [name, location and date of conference]. version of your paper has originally been
presented at a conference please complete
the statement to this effect or delete if not
applicable.

1 Introduction

Airports are a key component of the air transport system. They provide the entire
infrastructure and most of the processes needed to support passengers and freight
transfers and traffic and are essential for airlines activity. From a traditional point of
view, airports were seen as just dedicated to intermodal transport infrastructures,
interfacing air, road, railroad and maritime modes of transport. Presently, more than
transport infrastructures, airports are platforms (Gillen, 2011; Thelle and la Cour Sonne,
2018) for business, increasingly broader in scope, managed by a growing number of
global airport companies. With the evolution of the airport sector, a public national sector
has moved into a new paradigm with altered dynamics between agents in which airport
business is in a competitive environment and airport management is performed by private
global companies (Graham, 2014; Jimenez et al., 2014; Wiltshire, 2018). Airports thus
have become complex enterprises that demand a wide range of business competencies
and skills just as any other company or industry. Looking at airports as platforms
connecting airlines and passengers requires a new business perspective. Airports ought to
be seen as two-sided platforms able to provide value to both passengers and airlines
(Gillen, 2011). More passengers will result in more profit to airlines and more flights and
carriers will serve better passengers. In this ‘multi-sided’ market perspective, airports’
revenues come from airlines (one side) and passengers (other side), while airports assume
an important role as a distribution centre attracting both sides and getting them connected
(Thelle and la Cour Sonne, 2018).
From a strategic perspective, incumbent airports have strong competitive positions as
a result of the sector’s high barriers to entry, strong bargaining power with suppliers and
clients and low competitive rivalry. Moreover, airports may tap into potential several
revenue streams (Freathy, 2004) from a large scope of potential customer segments,
namely airlines, passengers, cargo operators, concessionaires, resident staff, and even the
local population. Airlines and airports share a privileged customer base of passengers
that, in general, presents a medium-high socio-economic profile and is available in a
large number when compared to other industries (see Appold and Kasarda, 2010a).
Notwithstanding, some existing airport models apparently fail to address and capture all
the potential business opportunities arising from its privileged competitive position as an
engine for regional economic development, and its impact on the overall tourism value
chain (Gillen, 2011; Paraschi et al., 2019).
Despite its potential, only recently the airport sector raised the interest of economists,
institutions and public decision-makers as a commercial setting (Appold and Kasarda,
2010a; Gillen, 2011). This paper discusses the evolution of the airport business sector and
 Airports as platforms 3

envisions, based on the literature, a future business model for the field. The authors
propose a descriptive framework of the evolution of the sector. According to this
framework, commercialisation is the initial stage followed by the globalisation stage, and
then by the upcoming Airport 3.0 stage, presenting the airport as a two-sided platform.
The concepts of airport city and aerotropolis, discussed in this paper, help to explain and
bridge the different evolutionary stages. The paper discusses the new trends of airports
management under the light of entrepreneurial management and branding, including
brand value co-creation management theories. Finally, the paper addresses a debate on
how to achieve superior business performance in the Airport 3.0 model.

2 From commercialisation to globalisation

The traditional airport assumes a utilitarian and elementary role, usually, constrained to
the functions of processing aircraft, passengers, and freight. This traditional business
model assumes the airport as a public utility and focuses on its functional operation
(Gillen, 2011). At this level, airports’ relationships are almost limited to their largest
clients, the airlines, resulting in an unbalanced relationship that reinforces the reduced
scope of the airport as mere infrastructure, leaving to the airlines the role of leading air
transport and deal directly with passengers. In the last decades, the airport business
entered 80a new phase – commercialisation. New commercial services and equipment Comment [Y3]: Author: Please
were added to the traditional airport’s aeronautical functions, expressing the new airport confirm what 80a means or delete from
the text if not required.
vision as a platform for doing business (Freathy, 2004). In such model, airports include
the provision of complementary commercial services and, in most of the cases, are
directed by two parallel business vectors: aviation and non-aviation or aeronautic and
non-aeronautic (Graham, 2014).
The democratisation of the airline sector was possible due to the deregulation of the
two largest air transport markets – the USA and Europe – respectively in the ‘80s and
‘90s of the 20th century, resulting in exponential growth of the passenger traffic
(Kesselring, 2010). Airports have timely captured the inherent value of this traffic
growth, in particular, the non-aviation vector, representing nowadays an important part of
the total revenue through the concession of services designed for passengers, such as
retail, food and beverage, car parking, car rental or advertising. The successful
progression of these non-aviation activities illustrates the new airport capabilities for
developing business relationships with third-party entities thus turning concession
management into a new key business competency for airport operators (Graham, 2014).
According to Freathy (2004, p.196), airports have not followed a “single strategic
trajectory” of non-aviation business development. The author identified four typologies
of commercial relationships within the airport retailing sector:
1 ‘concessionaire-based retailing’, the dominant commercial form
2 ‘airport authority managed retailing’ which is self-explanatory
3 ‘management contract’, in which a third party is contracted to run retail operations
4 ‘joint-venture’, a kind of strategic alliance between trading partners.
This new commercial reality based on retail and service diversity, new competencies
and new relationships with different partners reinforces the advantages of the
4 N.M. Brilha and H. Nobre

commercialisation model and its superior capability to monetise the airport infrastructure,
which is a relevant feature for privately owned airports under strict economic regulation.
At the beginning of the 21st century, the airport vision expanded in scale and scope
with the emergence of the airport city concept integrated into the airport’s commercial
and land use plans (Kasarda, 2010). Some airports followed a new business model –
globalisation – in which the airport becomes an international hub. According to IATA
(2017), the global air transport network has carried in 2015, approximately, 3.6 billion
passengers and 35% of the global trade of goods by value, illustrating how the
globalisation business model can leverage the economic potential of a region. Moreover,
air transport is one of the key infrastructures on today’s global economy and, as
facilitators of the exchange of goods, people and information across the globe, are
defined as networked systems. In this context, Lordan and Sallan (2019, p.727) divide the
world airport network into seven global region airport networks (GRANs) and identify
the main cities at the network core: “Core cities are strongly interconnected and therefore
play a relevant role in the regional economy.”

2.1 The airport city and aerotropolis

The contemporary trend in airport planning and operation envisions the development of
additional commercial activities that optimise infrastructures and bring revenue to the
airport companies. Airport master plans include passenger terminals with space and
flexibility to develop shopping centre retail concepts. This flexibility is extended to the
airport perimeter, where a commercial concept emerges with hotels, leisure and
conference centres, office and logistics parks, as well as other equipment and services
aimed to support firms, staff, and local residents. The airport city thus becomes a
multimodal transport hub integrated into a service environment for air travellers,
businesses, and consumers in general, with a positive impact on non-aeronautical
revenues (Kasarda, 2010). More than just a new master plan, the airport city concept
requires a strategic visioning and sophisticated management capabilities able to assess
global economic trends, regional resources, potential competitors and partners, and to
drive the airport management with full benefits to the metropolitan region it serves
(Appold and Kasarda, 2010b). The pursuit of these benefits includes the expansion of the
airport non-aviation competencies and also the need for changes in the organisational
structure, leading to the establishment of commercial or real-estate departments or
business units, or partnerships with commercial developers and investors.
The airport city’s perspective calls for rethinking and redesigning the airport business
model and, specifically, the non-aviation revenue strategies. According to Appold
and Kasarda (2010b), there are now five non-aviation revenue strategies: services
enhancement, value capture, business process reengineering, horizontal and vertical
integration, and portfolio diversification. A non-aviation revenue strategy redesign may
also have a positive indirect impact on the airport business model by reducing airline
operating charges, providing funds for commercial aviation, shifting revenues among
value chain participants or sharing more efficiently risk (Appold and Kasarda, 2010a).
From a regional planning perspective the airport city becomes the urban centre of the
geographically expanded aerotropolis where the airport now acts as the region’s
multimodal and commercial hub, “with the immediate airport area serving as a
region-wide multimodal transportation and commercial nexus, strings and clusters of
airport-oriented hotels, convention, trade and exhibition facilities, office parks,
 Airports as platforms 5

information and communications technology complexes, recreation and entertainment

venues, time-sensitive goods handling and mixed-use residential/commercial
developments are forming along airport corridors up to 30 kilometres outward” (Kasarda,
2010).
The airport city and aerotropolis concepts emerge from the geographical advantage
that airports represent as hubs for modal transport. Airport hubs are critical for a
fast-paced global economy, namely for industry-critical and time-sensitive products and
processes; and global supply chains or lean and flexible production models. The work of
Flores-Fillol et al. (2013), on the distribution of economic activities surrounding airports,
validates logistics as an increasingly important issue for firms in searching for flexibility,
speed and agility, and already for price and quality seeking, in particular, for firms that
adopt or pursue a just-in-time strategy. According to the same authors, the increasing
importance of e-tailers leads to the airport be considered as a new type of ‘central
business district’, with sufficient capacity to leverage air commerce into high profits.
Alkaabi et al. (2013), in a study of the aerotropolis model in the United Arab Emirates,
corroborate the importance of establishing an aerotropolis-based growth strategy in
connection with transportation-related service industries, keeping high standards in the
way they interact with each other and with the airport. This perspective claims for
adequate planning and use of the urban space around the airport and the level of global
connectivity of the airport with other companies, including the airlines. Kasarda (2018)
defines aerotropolis as ‘new urban form’ in which the airport is a central business
platform that allows ‘time-sensitive’ firms to be connected with their different partners in
their business networks, such as, suppliers, customers, and others. This time-sensitive
context assumes that “time and cost of connectivity supersede space and distance as the
primary planning metrics” (p.2). Hence, it is no more how far, but how fast aerotropolis
firms can connect to their regional, national and global stakeholders. The airport city
vision embodies the new business model – the globalisation. This vision leverages the
airport as a global hub, including master plans designed to maximise the development of
an integrated airport with regional planning, transport systems, and the regional or
national economic context.
Landside commercial development often leads to wider collaborative relationships
with strategic partnerships, as it is the case of the Schiphol Area Development Company,
with equivalent stakes from the Schiphol Airport, the Noord-Holland province and
the Haarlemmermeer and Amsterdam municipalities (Schaafsma, 2009). In fact,
Schiphol Airport pioneered the airport city vision, taking a stake in the Schiphol Area
Development Company to strengthen Amsterdam Metropolitan Area’s international
competitiveness, commercial development, and domestic and international promotion.
These activities require new airport skills and strategic partnership management
competencies, involving public and private stakeholders. Schaafsma (2009), when
recalling his own experience with the Schiphol Airport Group, points out several
elements that are critical to the nature and success of these models. Specifically,
Schaafsma refers to the ‘airport corridor’, positioning the airport with a broad role in the
society and region. These elements include:
1 developing synergies between the city region, the airlines, and the airport, in order to
improve the city’s competitive and sustainable position in the global market
2 special and social integration with the direct environment
6 N.M. Brilha and H. Nobre

3 governance, that is, the public and private support and involvement of all
stakeholders in the market and in the region.
The public-private alignment for regional development is also noted by Stevens et al.
(2010) on what they call the airport metropolis interface model and the roles of several
Australian airports in the regional economy. The authors argue in favour of the need to
find synergies between core airport functions and regional airport-oriented activities,
involving a more coordinated focus on economic development issues, land use policies,
infrastructural provision, and government matters. The challenge for policy-makers is to
promote more ‘information-sharing protocols’ and more control over the decisions
regarding airport land use and commercial initiatives. Scholl (2010), drawing on the
experience in Zurich Airport, notes the need for innovative spatial planning to be called
upon to deliver integrative solutions for airport development and air traffic problems
between regions. Hence, the airport company is presently facing new challenges and this
decade may witness the emergence of the airport brand, which is the basis for the
Airport 3.0 concept.

3 The Airport 3.0 concept

The Airport 3.0 concept arises from the natural evolution of the airport company business
model. The concept expands the airport business in scale and scope. It demands a
strategic, specialised and sophisticated professional management, and offers an
organisational framework and a business culture that is proactive, instead of reactive.
Therefore, it rejects the traditional passive airport presence in the air transport value
system. This model seeks the assertive assessment and capture of the strategic value
inherent in the airport’s natural competitive positioning. The strategic, organisational and
cultural shift of the modern airport company can be seen through the lenses of the
entrepreneurial management concept. This concept is based on the dialectic contradiction
between entrepreneurial freedom and central and directive management.

3.1 Entrepreneurial management

To understand the proposed Airport 3.0 concept and illustrate its deviation from classic
industry norm, it seems relevant to comprehend the entrepreneurial management
concept, which is industry agnostic. Ries (2017, p.122) defines entrepreneurial
management as a “leadership framework designed specifically for twenty-first-century
uncertainty.” Rather a substitute for traditional management, entrepreneurial management
acts as complementary, calling for rigour in the management of the entrepreneurial
initiatives as it is usually accepted for the general management activities. The topic is not
new, as it has been discussed for several decades before. The idea that start-ups search for
new business models and corporations implement existing business models has been
responsible for a dichotomy that is only partially true, but comes from this apparent
oxymoron between ‘corporate’ and ‘entrepreneurship’.
Stevenson and Jarillo (1990) offer an attempt to bridge this gap. By studying the
‘results’ of entrepreneurship and the ‘causes’ of entrepreneurship, the authors propose the
‘act’ of entrepreneurship and hence ‘entrepreneurial management’. They also argue in
 Airports as platforms 7

favour of the feasibility of the application of entrepreneurship to a corporation through

entrepreneurial management. They refer three key components of the process:
1 detection of an opportunity
2 willingness to pursue it
3 confidence and the possibilities of succeeding.
According to this perspective, entrepreneurial management may be seen as a ‘mode of
management’ that is different from traditional management and requires different control
methods and rewards schemes. Entrepreneurial management requires a proactive
organisational culture that impels the staff to be aligned with the detection of business
opportunities (Ries, 2017).
Entrepreneurial management has also been discussed in the air transport industry. An
example is a paper by Rae (2001) on strategic management, which is based on the case of
Easyjet. Easyjet was at the time the leading European low-cost airline company, just five
years after its foundation. With this case study, Rae explored the entrepreneurial
management concept and its convergence with the strategic management literature. He
concluded that Easyjet is a clear example of entrepreneurial management, which creates
value via two ‘work’ sources. Rae proposed a number of characteristics of an
entrepreneurially managed business. Figure 1 illustrates the characteristics of an
entrepreneurial managed business as proposed by Rae (2001). These two modes of work
are successfully integrated when there is an entrepreneurial focus on customer
attractiveness and rapid innovation in response to new opportunities, without losing the
focus on the direction, processes, relationships and resources of the business organisation.

Figure 1 Entrepreneurial and managerial work

This vision clearly identifies three strategic business vectors to leverage the airports’
competitive position in order to maximise value. From a strategic, organisation and
cultural standpoint, the comprehension and implementation of the Airport 3.0 concept
require that each strategic vector:
1 has a distinct and unique focus
2 needs to acquire or develop distinctive competencies
8 N.M. Brilha and H. Nobre

3 is developed through different relationships.

It should be noted that the amplified scope and specialisation of the Airport 3.0 business
model is known as unbundling and, although innovative in the airport industry, it is not
totally original, as it is based on the business models of other industries, for instance,
telecoms and banking (see Hagel and Singer, 1999; Osterwalder and Pigneur, 2010). The
practice has shown that the principles of entrepreneurial management can be applied to
any industry, company size or sector of the economy (Ries, 2017).
As referred before, entrepreneurial management requires a proactive organisational
culture, in which the staff is aligned with the detection of business opportunities.
Analysing the evolution of the global air transport industry through the entrepreneurial
management lens, it is possible to observe the arising of business opportunities and the
increase of value creation. Entrepreneurial management is a mean to improve business
efficiency and effectiveness in traditional business areas (Ries, 2011, 2017). Hence, a
proposition of study is specifically formulated for the airport industry: entrepreneurial
management allows for addressing untapped opportunities for airports, such as the
creation of a consumer-centric value proposition. This approach calls for the need to
consider the brand perspective in the implementation of an airport business model.
Taking into consideration the strategic, organisational and cultural impact of such
perspective, the Airport 3.0 concept is presented as the one that conveys a holistic vision
for the airport company. The Airport 3.0 offers guidance on how to develop a modern
platform-based airport business model, based on the concept of airport branding. Figure 2
illustrates the airport business model framework, describing the evolution of the airport
business model from the traditional approach to the Airport 3.0 vision.

Figure 2 Airport business model framework (see online version for colours)
 Airports as platforms 9

3.2 The airport brand

Since the commercialisation and privatisation of airports, in the commercialisation era,
airport companies have placed greater emphasis on airport marketing and branding
efforts. Branding is a top management priority for airports to stay competitive in the
global economy. The modern airport needs to identify and communicate its brand value
(Chung et al., 2013). Airport marketing practices have also accompanied the evolution of
the industry, moving away from the traditional focus of serving airline’s needs, towards
developing additional customer segments and the need to reinforce the airport’s attraction
for new passenger and cargo business (Jarach, 2005). Nowadays, airport operators put
efforts on developing new marketing skills (e.g., relationship marketing, social
marketing, and e-marketing), and there is an increase in the importance given to the role
of internal marketing (Halpern and Graham, 2013). These marketing trends suggest that
the industry operators are embracing new approaches, by introducing loyalty schemes,
collaborating with local stakeholders, and using internet or social media marketing
(Halpern and Graham, 2013). Although airport brands often are synonymous of quality of
service, retail choice, premium lounges, among other benefits, airports on the other hand,
play a shopfront role for destinations as they are the first and the last impressions either
for arrival and departure passengers, or transfers (Kefallonitis and Kalligiannis, 2019;
Sezgin and Demiral, 2019).
More than ever, organisations present themselves in the marketplace through their
brands, which represent products, services, experiences, values, or principles. This brand
approach is no longer top-down but achieved in a new horizontal and collaborative
fashion with consumers and other stakeholders, in which they are seen as co-creators of
brand value through their networks, forming strong communities that corporations no
longer control (Vargo and Lusch, 2004). Despite the importance of traditional marketing
techniques for brand development such as advertising, sales promotions, and others, to
look at branding based on these practices remains incomplete and limited in scale and
scope. The service-dominant logic approach gives ground for the evolution of the brand
as a representation of the firm’s co-creation philosophy (Merz et al., 2009). The brand
concept evolved from a product differentiation aim into new forms, including service
brands and corporate brands, which show the new role of brands as a social process in
which diverse stakeholders participate (Payne et al., 2009). Based on the brand value
co-creation model, Iglesias et al. (2013) state:
1 although the traditional paradigm of brand management is based on control, brands
are organic entities that develop multiple interactions between stakeholders
2 the loss of control and heightened stakeholder influence recalibrate the purpose and
direction of the brand
3 sharing is a precondition for authenticity in a connected, participative, and
transparent environment
4 this approach requires new management techniques and leadership styles.
Internet and, consequently, digital media – web, mobile and social – empowered
consumers, transforming their relationships with brands (Payne et al., 2009). This new
digital context is far from just another communication channel but a true core component
of a new framework and frame of mind, resulting in a new set of relationship rules and
10 N.M. Brilha and H. Nobre

even new platforms and marketplaces. The digital social media provides brand
engagement platforms that entail both relational activities and offerings. Firm offerings
are integrated into own digitalised platforms of engagement, which constitute a ground
for co-creational experiences that transcends the mere exchange of products and services
(Ramaswamy and Ozcan, 2016). Airport 3.0 can also be seen as a bundle of services,
products, and features, representing a brand engagement platform where consumer and
co-creation experiences may occur. By the use of social media marketing, airports
companies can develop new offers and provide innovative service, resulting in
competitive advantages and giving space for the development of a global airport brand
(Hussain et al., 2017).
Castro and Lohmann (2014), in a study on airport and tourism destination ‘business
and governance arrangements’, analysed 91 airport branding statements. In contrast to
initially hypothesised, findings indicated that globalisation and the shift from the airport
as a public utility into a commercial entity have led to more airports adopting the
principles of management used by large companies, including marketing strategies.
Notwithstanding, one could argue that airports may still regard the brand under its
traditional approach, not realising the paradigm shift enclosed in the Airport 3.0
perspective. The Airport 3.0 model stresses the need to address the market with a
stakeholder-focused brand that redefines organisational affinity, provides a holistic
approach to customer service and increases airport brand value (Paternoster, 2008).
Consequently, airports, as ‘large corporations’ (Castro and Lohmann, 2014), face the
challenges of dealing with brand value co-creation in the 21-century when brands entail a
holistic vision that seamlessly connects the digital and physical experiences, creating
value through simplicity and convenience. The Airport 3.0 model challenges the
development of a co-creational brand that favours services instead of products, simplicity
instead of complexity and dialogue instead of monologue, in an increasingly omnichannel
environment.

4 Achieving superior business performance in the modern airport

The new airport company business model – brand – is rooted in the entrepreneurial
management concept (Ries, 2011, 2017; Rae, 2001; Stevenson and Jarillo, 1990). The
concept features to constantly search; anticipate and identify potential opportunities. It
thus validates ‘concentric differentiation’ as a tactic for sustainable business growth with
a higher success rate when compared to other approaches to diversification
(Rijamampianina et al., 2003). Considering that sustainable growth is a key challenge for
any firm, managers rely on strategy as the ‘art of creating value’ and on ‘knowledge and
relationships’ also know as organisation’s competencies and customers as the ‘only two
resources that really matter’ [Normann and Ramires, (1993), p.65; cited in Lusch et al.,
2007]. According to Rijamampianina et al. (2003) business performance can be achieved
through concentric diversification in four key ways, namely:
1 strengthening competitive advantage
2 broadening the core business
3 enhance the capabilities of the organisation
4 improve the profitability of the firm.
 Airports as platforms 11

The strategic purpose behind the Airport 3.0 business model arises from the current
diagnosis of the airport’s competitive position in the air transport value system and
considers two key resources – knowledge and relationships – to outline a clear value
creation approach towards its main stakeholders: airlines, regional economic agents, and
consumers. Following the concentric diversification tactic, the Airport 3.0 company
should be focused on three strategic business vectors, as illustrated in Figure 3: aviation,
non-aviation, and consumer and media. These vectors are the new pillars of the central
business performance and ought to be managed as concentric, complementary, and
synergic. In this context, the value creation and value capture approach are clearly
defined for each vector in the Airport 3.0 concept, allowing for potentially different
individual managerial practices, in terms of accountability, processes, people and
leadership, while still retaining a clear view of its direct impact on the key competencies
and key performance indicators (KPI). Such competencies may be vector-specific as
operational excellence, partnership management or customer intimacy, and vector
agnostic as innovation, although applied differently according to the context.
Additionally, each vector is associated with generic KPI on planning, measuring and
controlling, such as passengers (Pax), and vector specific relationship metrics, such as
pax per square metres per hour, revenue per square metres or revenue per pax, or
lifetime customer value (see Figure 3).

Figure 3 Airport 3.0 – competencies and performance indicators (see online version for colours)

Notes: Kpi = generic key performance indicators; Pax = passengers; Pax/m2/h

= passengers per square metres per hour; €/m2 = revenue per square metres;
€/Pax = revenue per passengers; € LCV = life-time customer value.
Besides the need for managing specifically each vector, there is an overarching strategy
layer that measures and calibrates synergies between vectors for the maximisation of
aggregate value co-creation. This overarching strategy layer is grounded on the notion of
achieving competitive advantage and superior performance through a service-dominant
logic (i.e., competing thought service), as proposed by Lusch et al. (2007). In this
context, in particular, for the Airport 3.0 model, competition becomes a “matter of
knowledge creation and application” and business performance a “comparable advantage
in service provision” (p.17).
Hence, the first main pillar of the airport business – aviation – corresponds to the
airport’s core function as a facilitator of air transport operations. However, the
paradigm changes in several ways. Namely, concerning the expectation of the operational
12 N.M. Brilha and H. Nobre

performance of the infrastructure and also of the process innovation and resources
allocated to route network development, and terminal management in order to achieve a
maximum output capacity in terms of airlines, passengers, and cargo. A fresh approach is
also used when assessing relationships, potential alliances, and benchmarking stand-alone
versus outsourcing opportunities. The second main pillar of the airport business –
non-aviation – expands the scale and scope of the role of an airport as a driver for the
regional economy. An airport business must proactively search for commercial
development opportunities while creating new relationships with public and private
entities. The performance of this vector is measured by the monetisation of the airport
perimeter as well as passenger revenue. The relationships can be based on the traditional
concession model, but also on strategic partnerships or joint-ventures. They are tactical
for knowledge acquisition, value chain integration, value-creation and value-capture
maximisation. Finally, the third pillar of the business model – consumer and media –
changes the paradigm of the traditional airport relationship with consumers. Consumer
and media vector proposes an approach commonly used by the technology, media and
telecom (TMT) sector, to leverage the two previous vectors and carefully plan and
monetise touch-points along the consumer journey, offering convenience and process
simplification. This vector specifically embodies the brand value co-creation approach
referred earlier, relying strongly on online service and engagement platforms. It focuses
on the role of the customer for co-creating experiences, as, for instance, self-service. The
vector’s performance can be measured by increasing passenger revenue while introducing
the lifetime customer value concept to effectively measure this new planned relationship.
Considering the general lack of specific skills in this area, the consumer and media vector
calls for competencies acquisition and development via strategic partnerships and
joint-ventures.
The airport consumer strategy is designed as a planned relationship marketing
strategy that pursues to objectively assess and monitor the consumer’s path-to-purchase
for air travel services, orchestrate solutions to meet their needs and aspirations, serving as
the main broker between the provision and the consumption of air travel services in its
region. This vector illustrates the innovative approach of the Airport 3.0 framework
towards the concept referred by Gillen (2011) of the airport as a two-sided platform.
From the entrepreneurial management perspective, the airport’s strategic position in the
value chain is clearly a two-sided platform, as airports bring passengers and airlines
together, adding value to both sides. Considering that airports achieve better performance
with more passengers and passengers are better served with more destinations and flights,
embracing the concept and managing airports as two-sided platforms entail a potential
paradigm shift, and thus a valuable area for future research.

5 Conclusions

Airports have a privileged natural competitive position, which raises the interest of a
large number of investor profiles attracted by a reasonably protected investment and
sustainable long-term growth and return. When establishing an airport’s strategic
positioning, it is essential to be aware of the full role of the airport in the travel and
tourism industry; otherwise a conformist perspective will not seize all the potential value
capture opportunities in this industry. This would be idiosyncratic in the context of an
increasing privatisation of airport governance. As it is the case of most industries,
 Airports as platforms 13

21st century airport companies must challenge their business model and quickly absorb
the concepts of entrepreneurial management, business model unbundling, and value
creation to become first-rank players in the airport industry. This strategic perspective is
especially relevant in economic regulated markets where the need to maintain
competitive costs on core activities demands for counterbalancing the contribution
margin through the investment in non-core activities. The legal and regulatory
environment can constraint the possibility to offer and invest in non-nuclear activities,
especially when there is limited access to new activities and low process and
organisational flexibility. Restricting the ability to develop activities, actually speaks
contrary to the spirit of regulation and to the airport’s expected positive social and
economic impact. By hindering the monetisation capability required to keep cost
competitive on core activities and, by diminishing the airport’s catalytic effect on
regional development. Independently of a public or private airport ownership, the
implementation of the Airport 3.0 model demands an entrepreneurial vision and
management style indispensable to a modern airport company.
The gap in the literature of a consistent theoretical body on modern airport
management reinforces the relevance of the study, as it reviews the existent literature and
further proposes a conceptualisation of the Airport 3.0. The main contribution of this
paper is towards discussing and organising ideas and concepts around the airport business
sector and envisioning, based on the literature, a future business model for the field. The
paper offers a descriptive framework that seeks to set the airport company on a path for
growth rand adaptability in the long-term. In this way, the paper aims to contribute to the
academic literature and managerial practice in three ways. Firstly, by discussing the topic
of airport business outside the traditional public-private framework and thus contributing
to the knowledge on the topic. Secondly, by producing a framework for evaluating the
evolution of airport business model and proposing a next evolutionary stage grounded on
an industry-agnostic perspective of the concepts of entrepreneurial management and
brand value co-creation. Thirdly, by detailing the specificities of the three strategic
vectors of the industry – aviation, non-aviation, and consumer and media – in terms of
focus, relationships, skills, and KPI, making it simpler for comprehension and practical
application.
The present investigation has limitations. The main limitation is related to the scarcity
of extant research and recent publications that specifically address this research topic,
contrasting with the key role airports play as levers of regional development in a
globalised economy. Airport research has kept the traditional infrastructure locus,
regarding planning, operation and finance, and only recently there has been growing
interest in the areas of airport marketing, competition and customer service (Jimenez
et al., 2014). Considering the theoretical and exploratory approach of the paper, it is
recommended further conceptual and empirical investigation to respond to the study
limitations and consolidate our proposed framework for the future airport business model.
Further research is also suggested regarding the Airport 3.0 concept assessment and
implementation of the necessary strategic, organisational, and cultural change entailed by
the concept. Finally, reflecting on the concept of an airport as a two-sided platform, new
research directions emerge on the role of airports in the air transport value system.
14 N.M. Brilha and H. Nobre

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 Airports as platforms 17

Appendix

Airport business model framework (see online version for colours)

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