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MARKETING & COMMUNICATIONS Last modified on June 1, 2014

Shared success

Brad McAllister considers how airports can solve business issues and satisfy key stakeholder needs by leveraging contemporary technology to do more with less.

Commercial service airports of all size and scope are being increasingly confronted by a multitude of issues that are fundamentally changing the nature of the airport business. 

In the US, these challenges span from managing an efficient operation in a recovering economy to a dwindling Aviation Trust Fund and increased pressure to enhance non-aeronautical revenue.

Additionally, the costs to expand and/or enhance facilities are often opposed by carriers, and aged exclusive-use agreements allow airlines to tie up large amounts of terminal real estate – a dynamic that fosters conditions for a troublesome and contentious airline/airport relationship.  

Critical success factors for an effective airport-airline path of partnership and convergence that benefit all airport stakeholders must include cost containment, risk mitigation, and revenue generation.

Cost containment

Vail/Eagle County Regional Airport (EGE) in Colorado, is a four-carrier, five-gate airport that predominantly serves as a winter destination for nearby ski resorts. Nevertheless, the popularity of those resorts such as Vail and Beaver Creek and the small size of its terminal and aviation facilities created “operational difficulties” during peak periods and it turned to ‘shared’ use IT for help.

It favoured this option because the airport handles 70% of its annual traffic during the winter months, and even then it doesn’t have enough traffic at a single gate during the course of a day to justify dedicating it to a specific carrier. 

Aviation director, Greg Phillips, explains: “We had already reached the point where we would have delays and issues that would force aircraft to wait for a gate to open up. It was not good, especially for an airport where we often say we sell convenience.”

All that changed at EGE with the introduction of shared use technology, according to Phillips, who notes that his airport is now able to schedule any airline to use any gate. 

“Any airline, any position, anytime is what we like to say,” relates Phillips. “The primary driver for shared use technology was to facilitate entrant service from Air Canada. All five preferential-use gates were spoken for and we needed capacity. 

“We found the best way to do that wasn’t through new brick and mortar, a very expensive proposition, but to optimise our gates; we needed to make the gates accessible by multiple carriers.”

He goes on: “At EGE, we need to extend our ability to operate within the existing terminal before we add new brick and mortar for as long as possible.

“If we have another new carrier come in, we’ll look at shared use as a way of enhancing our ability to use the ticket counters more flexibly, so we can operate the counters and gates in a virtual representation for the airlines, rather than having to add space.”  

Assistant aviation director, Chris Anderson, agrees. “The key is how we’re able to virtually expand the footprint of the terminal without actually building out; shared use really makes our facility much more operationally flexible,” he says.

Another airport to realise the benefits of shared use IT systems is Fresno-Yosemite International Airport (FAT), which back in 2005 began the process of modernising its facility and optimising functionality within the existing terminal footprint. 

“We knew what we wanted to do; we had a plan in place to put in as many ticket counter locations as we possibly could within the existing footprint of the building, the problem was: how do we keep all the airlines functioning while performing the rehabilitation?” reveals director of aviation, Kevin Meikle.

FAT serves a healthy mix of ten airline partners, and it was critical to have carriers share space in order to keep them operating and keep the project within budget. 

Explains Meikle: “We rehabilitated one-half of the facility at a time – we shut one-half down completely and rebuilt it; we had all of our carriers operating in one-half of the terminal space. We didn’t have the budget for constructing a temporary facility for the ticketing operation.

“We would seriously be looking at facility expansion to accommodate the growth that we’ve been seeing, and that is not something we like, because it would drive up our operating costs. And that’s the message we sent to the airlines: shared use infrastructure technology is a cost-control measure. The platform is absolutely key to meeting our needs and, ultimately, stabilising our costs.”

 

It’s a similar story at Norman Y Mineta San Jose International Airport (SJC), where 12 carriers currently serve around 8.9 million passengers annually.

In 2008, the terminal campus consisted of ageing buildings and it was time for an overhaul, and according to the airport’s director of planning and development, David Maas, the introduction of shared use technology made everything go much smoother than it could have been.

He says: “We utilised shared use as a tool to move carriers around as needed during the construction period.” 

At one point, relates SJC’s deputy director of airport operations, John Aitken, San Jose was considering building a temporary structure to house some airlines during the construction process, but the ability to handle multiple carriers with complimentary schedules at the same gate in Terminal A, meant that this was no longer necessary.

“There was a significant cost savings with the direction we went in adopting shared use and not having to build-out; we’re talking tens of millions of dollars,” says Aitken.

Risk mitigation

Shared use ‘infrastructure’ platform technology should not to be confused with legacy common use passenger processing ‘application’ platforms. 

Indeed, with many carriers averse to being limited by homogenised CUTE/CUPPS functionality, remaining sensitive to air carrier constituents’ resistance to the same, helps airports mitigate risks. 

“At FAT we knew we wanted to adopt the shared use platform,” comments Meikle. “We had the traditional model where airlines had preferential use of the counter with their own equipment. However, that model does not provide for the maximum utilisation for the facility, it just doesn’t.

“The other part of the equation was, we knew we were not interested in a common use system; we wanted an infrastructure platform that would allow the airlines to utilise their proprietary applications.”

SJC’s Aitken, notes: “There was much discussion with the airlines about the lease structure, and about the IT implications – whether their IT groups would embrace shared use. The carriers had used common use systems before and they weren’t excited about it. We had to educate them on how shared use was different. 

“It took some time, but the carriers have embraced the technology. Even if they have preferential gates, many carriers use the shared use equipment because it’s cost effective for them.”

The problem with common use is that the airline has to pay to build software that looks like their original software, says Aitken. Every time the airline modifies native applications, the airline also has to modify its emulated version to deal with the changes.

“So, there’s a significant expense on the airline side to continually have to develop these emulated versions of their host applications,” he adds. 

“With our virtualised shared use infrastructure platform, whenever American Airlines makes an upgrade, someone from our system provider, the AirIT group, just goes to the server, grabs the new version, uploads it, and we’re done. There’s no cost to the airlines for them to upgrade.”

While Maas adds: “With common use and emulation, the airport is kind of in the middle; with virtualisation and shared use, we are not so much in the middle – the airline is directly connected to its native system environment. The carriers don’t want the airport in the middle of their business processes.”

EGE had not used any common use system before, so the concept was completely new to the Colorado gateway.

“The drawback that we saw in common use was the fact that it does not provide a direct link to each carrier’s proprietary system,” comments Phillips. 

“What we heard from the carriers’ IT departments was that they didn’t like what they considered a ‘vanilla’, or ‘bare-bones’ common use approach. The shared use system taps directly into the airline system; their airline agents have full access to the interface they’re familiar with.”

 

Revenue generation

Fresno’s Meikle has no doubts about the economic benefits of shared-use technology for both airports and the airlines.

“Shared use really helps us control costs for our airline partners. We can keep our costs relatively flat and look for other ways to fund adding more gates or other infrastructure,” he remarks.

“We’re fortunate that we’ve had carriers add a lot of seats to our market. The airlines no longer provide and support their own IT equipment here; the cost of a carrier having that infrastructure here is gone. That’s a huge benefit to the airlines.”

SJC modified its airline lease agreement to allow the adoption of shared use and claims not to have looked back ever since.

“A major benefit of the system is that we can bring in new carriers with minimal airline investment,” says Aitken. “Indeed, we have several carriers that started with a single flight, so equipping the terminal is a big investment for an airline for a single flight. 

“For example, ANA operates to Tokyo once per day and they use our shared use system to reduce the capital expense of opening the station. Same with Volaris and jetBlue; they all were able to start and expand with our shared use infrastructure.

“Some of us early adopters of shared use did the bulk of the work in convincing the airlines that this isn’t the same as common use/emulation. And now carriers like Alaska Airlines are asking airports to adopt shared use. It’s come full-circle.” 

He tells Airport World that SJC is currently looking at several new carriers and plans to use the shared use system with them to reduce their start-up costs. 

“And, as our existing carriers grow, our IT infrastructure allows us to help them grow at a pace that’s comfortable for them,” relates Aitken.

The expression ‘win-win’ situation springs to mind.

 

About the author
Brad McAllister is director of marketing at Air-Transport IT Services, Inc (AirIT). Visit www.airit.com for more information about the company.

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