Passengers waiting to board their flights at Sweden’s Ängelholm– Helsingborg Airport can be forgiven a strange feeling of déjà vu as they watch its employees go about their daily routines.
That’s because the airport, which handles nearly 400,000 passengers a year, can be run at quiet periods by a tiny workforce of just 28 people, each one capable of swapping jobs as required.
For instance, a member of staff can swap being a security guard for a stint as a baggage loader, ground handler or even a fire fighter – some of the 11 roles and responsibilities for which they have been specifically trained for.
Located 34 kilometres from the town of Helsingborg, Sweden’s closest point with Denmark, Ängelholm is one of 14 airports where Swedish operator LFV rolled out its ‘Basic Airport’ initiative in 2004 – a radical €100 million cost-cutting programme designed to cope with a 28% dive in traffic in the wake of the September 11 terrorist attacks.
“We were in a very tough downturn and it was economic pressures that squeezed us into changing our business model,” says Olle Sundin, managing director of LFV’s Regional Airport Division. “What we said at the time was that success would depend on finding efficiencies and we challenged ourselves and our staff to find exactly this.”
As revenues went into freefall in the winter of 2002/03, LFV conducted an investigation into its 14 regional airports and discovered that while the airport operations may differ, their traffic trends were very similar, with flights peaking in the morning, slowing down at midday before rising again during the afternoon.
With many of its airports handling less than one million passengers per annum and in most cases staff levels calculated to suit a general level of traffic, LFV management realised they could be brought to a minimum during off peak times through flexible working hours and supplementing people from other departments at peak periods.
Meanwhile, tasks were divided into time-critical and non-critical groups, allowing pressing issues to be dealt with immediately while those that are less pressing can be handled at quiet periods.The model has proved so successful that the only limit on further reductions is the requirement to adhere to national and international safety guidelines stating there must be a minimum of five fire fighters per airport.
Newly appointed in 2003, Sundin oversaw the implementation of the Basic Airports concept across LFV’s regional airports; and although he was confident of its benefits from an early stage, convincing the unions of this proved to be a significant early challenge.
“Some of the managers were extremely opposed to it, at least one of them left over the issue as they doubted it could be applied without compromising safety so we had to prove it could be a success. We were fairly confident that 89% of the concept was going to work – now the unions have accepted this and they support the
model,” comments Sundin.
And while the process did mean losing staff, for the remainder, the concept provided them with multiple skills giving them greater career prospects and a varied work experience.
Roughly 90-95% of staff are now trained to perform multiple tasks and their salary and advancement structure is tied into a set of goals and incentives that encourage the learning of new skills and showing initiative, something Sundin believes is key to the whole operation.
“These guys really take responsibility for their company because they know they are sharing in the success of the airport. I consider them to be in charge of themselves to some extent.”
“If we didn’t have motivated people we wouldn’t have achieved it; as part of the process, leadership, conviction and motivation are essential.
It’s not just about providing a text book and saying get on with it, you have to convince the staff we all benefit together,” he adds.
And the benefits are clear – since 2005, Basic Airport has saved LFV 20% in costs and reduced personnel levels by 25%. No wonder LFV has some of the most efficiently run small airports in Europe.
This has also meant that of Sweden’s total of 42 airports, five of LFV’s 14 regional gateways are making a profit.
“A colleague from another department said to me at an early stage that it wasn’t possible to make a profit at an airport that handled less than 600,000 passengers a year, but I knew it could be achieved,” Sundin says.
The results seem even more impressive given that LFV is a wholly state-owned enterprise, a reality at odds with current thinking that only through privatisation or public/private
partnerships (PPPs) can public organisations deliver efficiencies.
To operate its 16 airports, LFV employs just 3,800 staff; and since 2002 it has seen overall revenue rise steadily as costs are reduced. In 2008, the operator handled an impressive 30.3 million passengers and announced a profit of €30 million.
But just as the Swedish airport group prepared to celebrate the result, the global economic downturn struck, producing what looks likely to be the same chilling effect as September 11.
The crisis has already taken a heavy toll across Sweden’s airports and led LFV to cut its landing fees at Stockholm-Arlanda, Stockholm- Bromma and Göteborg Landvetter airports.
And while the Basic Airport is still helping LFV squeeze every possible saving out of running costs and infrastructure, the focus now is on boosting other revenue sources.
“Over the last four years we have been able to consume each rising cost by making savings, this is especially true in terms of staff which accounts for around 45% of the budget; but as we came into 2009, we couldn’t find any new rationalisations and this led us to adopt initiatives to increase commercial and connecting revenues,” Sundin comments.
Through the connecting airport scheme, managers actively work as tourism partners to raise the profile of their airport and region as a leisure and/or business destination, along with the development of new routes.
Meanwhile, the attractive airport is based around maximising non-aeronautical revenues and creating a friendly environment that will encourage passengers to relax and part with their cash.
This takes the form of traditional revenue sources such as new retail opportunities but also several innovative schemes, including one day experiences as an airport fire fighter; advertising on control towers; a dedicated radio station; airport based conferences, and events such as children’s parties.
“LFV is fighting a battle to recover after losing 20% of its passengers in the economic downturn and at the same time increase commercial revenue, so our aim now is to increase passenger spend at the airports in comparison with what it was before.”
“We are looking at different practices to compensate for the passenger downturn. One advertising billboard, for example, generates the equivalent Krona revenue of 55 passengers,”
Taken together, these initiatives form the basis of a three-pronged Airport ABC + E business model, (A for Attractive, B for Basic, C for Connecting an finally E for Environmental) to
maximise growth in every sector, which Sundin is confident will help LFV to find ever more ways to increase revenue until traffic picks up again.
While there is little doubt that 2009 will prove to be a very tough year for the world’s airports, LFV can be confident that its innovative business model has put its small airports in the best possible position to weather the storm.
Airport World 2009 - Issue 2