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ECONOMICS Last modified on March 24, 2016

Every little counts

Nightfall at LAX. Image courtesy of Jay Berkowitz/LAWA. Nightfall at LAX. Image courtesy of Jay Berkowitz/LAWA.

Airport World takes a closer look at a handful of new initiatives designed to either boost airport revenue streams or reduce unnecessary expenditure. 

In a move that could potentially transform how passengers and staff travel by road from the world’s major airports, Los Angeles International Airport has started allowing travellers to use the ride-share companies Lyft and UberX for pick-ups.

The pioneering move, which has been vehemently resisted elsewhere in the world by taxi drivers fearing that they will take their business, was rubber stamped earlier this year by the Mayor of Los Angeles, Eric Garcetti.

Airport operator, Los Angeles World Airports (LAWA) claims that the decision gives travellers “expanded transportation options” and could earn it $600,000 in revenue this year.

The figure is based on receiving $300,000 each from Uber and Lyft in 2016 as LAWA receives a fee of $4 for every arriving and departing trip to/from LAX made by the transportation network companies (TNCs). 

However, such has been the usage of both Lyft and Uber in the first few weeks of operations that LAWA staff now believe that the initial estimates may be conservative. 

Under its scheme, kerbside drop offs and pick ups are possible by the Ride Share signs located on the kerbside Upper/Departures Level of its terminals.

“We are bringing LAX passengers what they have been asking for — better access to reliable, convenient transportation from the airport,” says Garcetti.

“As we invest billions to make LAX one of the world’s great airports — and welcome more travellers than ever before — my administration is ensuring the best experience possible for all our visitors.”

LAWA held several public comment periods and considered input from dozens of stakeholders, including passengers, neighbourhood groups, transportation network companies, taxicab firms, limo companies, disability advocates, and environmental advocates before giving the green light.

“Uber has changed the way Angelenos and visitors to Los Angeles move around our city. Over the last year we have worked to bring Uber to LAX in a way that is regulated, monitored, and above all, safe,” explains Bob Blumenfield, chair of the Los Angeles City Council’s Innovation, Grants, Technology, Commerce and Trade Committee, which oversees the airport.

LAWA executive director, Deborah Flint, enthuses: “LAX passengers can now make use of the same transportation options at the airport that they already have throughout Los Angeles. 

“The license agreement governing TNCs was designed to benefit travellers, help decrease traffic congestion at the airport, promote fair competition among transportation companies in both regulations and fees, and generate revenue from commercial users of airport property that can be invested to further improve the guest experience at LAX.”

Los Angeles World Airports admits that it will probably be a few more months before it is able to get an accurate picture of the financial success of the initiative and it is possible that more TNCs may join Uber and Lyft.

It is also quick to point out that it doesn’t yet know how much of the income being generated by the TNCs is new revenue as it might be offsetting the loss of monies from other more established ground transportation services such as door-to-door shuttles and taxicabs that also pay similar fees to the airport.

 

New business division

Hartsfield-Jackson Atlanta International Airport is so committed to diversifying its revenue streams that it has set up a new ATL Business Ventures division to actively find new sources of income.

According to general manager, Miguel Southwell, the new unit will focus on how best to use the large chunks of land the airport owns beyond the perimeter fence. 

About sixty miles north of the airport, in Dawson County, is a 10,000-acre tract of airport-owned land that may be used for real estate development. 

The gateway also owns some 500 acres of land just beyond the airport fence. The land, which has been sitting dormant for years, is ideally located to foster the development of an aerotropolis.

Hartsfield-Jackson (ATL) also owns an additional 9,400 acres of land in Paulding County, some forty miles away from the airport. However, the tract of land is likely to be left alone for now as it sits within a wildlife management area run by the Georgia Forestry Commission.

The newly established ATL Business Ventures team is spearheaded by former Chicago Department of Aviation managing deputy commissioner, Cortez Carter, and is also tasked with boosting non-aeronautical revenues on the airport site.

Another new arrival is assistant general manager of planning, Frank Rucker, who comes with a reputation for getting things done on time and on budget and is expected to oversee capital projects.

“We’re really pressing to find ways to diversify revenue, and we’re looking to the future,” confirms Southwell.

Southwell recognises that selling the land now would lead to an immediate cash infusion, but points out that the airport will gain far more financially by wisely leasing out its precious land assets in an effort to generate revenue for the next 20 to 30 years.

It is believed that Carter’s responsibilities will include looking at “non-traditional real estate development” and considering how to take dormant assets and turn them into revenue-producing assets.

 

Collaborative Decision Making

Helsinki Airport has been hailed for the success of its Collaborative Decision Making (CDM) initiatives by Eurocontrol, which claims that its introduction has saved the gateway and its airlines up to €4 million per annum in operating costs.

The glowing assesment is based on a Eurocontrol commissioned study of airport operator Finavia’s approach to CDM since introducing it at Finland’s capital city gateway in 2012. 

In addition to the savings, the study says that CDM or Airport-Collaborative Decision Making (A-CDM) as it is often referred to within the industry, has also been good for the environment.

 “The evaluation confirmed the observations that we have compiled in regard to CDM use. The benefits mostly align with what we anticipated when introducing the new operating method in 2012,” says Heini Noronen-Juhola, Helsinki Airport’s deputy director.

The study evaluated the benefits from January 2014 to January 2015, during which period aircraft taxiing times decreased by 60,000 minutes or almost 42 days. Also the time spent on delays decreased by 86,000 minutes or nearly 60 days.

As a result of the A-CDM operating method, the study reveals that the airlines saved more than 800 tonnes of fuel due to the shorter taxiing times and having more detailed information about the best time for aircraft to push back from gates. 

Burning less fuel meant that carbon dioxide emissions at the airport decreased by 2,600 tonnes and sulphur dioxide emissions by 0.7 tonnes. The benefits achieved translate into costs savings of €650,000 in fuel and €3.5 million in shorter delays.

“Thanks to CDM, airlines will save money,” enthuses Noronen-Juhola. “The main benefits of CDM to Finavia are based on operations being easier to predict and that we will be capable of using our infrastructure more effectively than before.”

The study adds that A-CDM has ensured more effective winter operations at Helsinki Airport based on the fact that the ice removal process is now integrated better with production control, ultimately allowing for improved utilisation of the airfield.

As part of the new operating methods, Helsinki Airport’s ice removal areas have also introduced electronic message boards with the goal of ensuring a high level of safety and taking traffic into account. The message boards are part of the same information flow as the A-CDM system.

Finavia became the first airport operator in northern Europe to introduce A-CDM in 2012. It is currently being used by 35 airports across the continent.

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