Low-Cost Airports for Low-Cost Airlines: Flexible Design to Manage the Risks

Abstract

Airport planning is shifting from the traditional pattern Á driven by long-term point forecasts, high standards, and established clients Á to that of recognizing great forecast uncertainty, many standards and changeable clients. This is a consequence of economic deregulation of aviation and the rise of lowcost airlines.Low-cost airlines are becoming significant factors in airport planning. Their requirements differ from those of 'legacy' carriers. They drive the development of secondary airports and cheaper airport terminals. They catalyze 'low-cost airports' around the 'legacy main airports' built for the 'legacy airlines'. This paper proposes a flexible design strategy to deal with the uncertainty of this dynamic. This differs significantly from traditional airport master planning. It builds flexibility into the design, to enable airports to adjust to changes in the type, needs and location of traffic. The case of Portugal illustrates the current risks, and indicates how flexible design could manage uncertainties and maximize expected value.

Perceptions of Low-Cost Carriers’ Compliance with EU Legislation on Optional Extras

“…It would appear that airlines have blatantly ignored this legal obligation as outlined in the EU legislation (European Union 2005;2008) governing airlines price information in order to maintain the perception that flights are low cost for as long as possible into the booking process. By preventing the user from realising the true cost of the flight until late in the interaction making comparisons across airlines is more difficult.…”

Book review

“…On the one hand, airports should shift revenues to non-aviation to compensate lower-than-marginal-cost charges often required by LCCs (Graham et al, 2004). On the other hand, given the low turnaround needed by LCCs, their passengers spend less time shopping in the terminal and have stricter limitations on what they can bring on board (de Neufville, 2008;Graham and Ison, 2014).…”

Transitioning the U.S. Air Transportation System to Higher Fuel Costs

“…Incorporating flexibility in design enables airports to adjust to changes in the type, needs, and location of traffic. While airport planners previously worried about how fast traffic might grow, now they must also pay attention to where the traffic might grow, whether there will be abrupt and longlasting breaks in traffic (as can occur when an airline fails), and what kind of facilities future customers may need (23). Real options in airport design give the owner the right, but not the obligation, to take action now or in the future.…”