Foundations of Airport Economics and Finance

Hans-Arthur Vogel

• Publisher: Elsevier
• Year: 2019
• Print ISBN: 9780128105283
• eBook ISBN: 9780128105290
• Topic: Technology & Engineering
• Subtopic: Transportation & Navigation
• Index: Technology & Engineering

Foundations of Airport Economics and Finance analyzes the impact key economic indicators play on an airport's financial performance. As rapidly changing dynamics, including liberalization, commercialization and globalization are changing the nature of airports worldwide, this book presents the significant challenges facing current and future airports. Airports are evolving from quasi-monopolies to commercial companies operating in a global environment, with ever-increasing passenger and cargo volumes and escalating security costs that put a greater strain on airport systems. This book highlights the critical changes that airports are experiencing, providing a basic understanding of both the economic and financial aspects of the air transport industry.- Identifies the economic roots of airport financial performance and how the interplay of its major parameters affects profitability- Bridges the gap between the latest airport academic research and real-world airport financial management- Covers cases and scenarios of numerous airports from around the world- Includes learning aids, such as chapter introductions and summaries, glossary and appendices

Part I

General Characteristics of the Airport Industry

Outline

• Part I. General Characteristics of the Airport Industry
• 1 The nature of airports
• 2 The metamorphosis of airports
• 3 Measuring the financial position
• 4 State of the industry

Part I. General Characteristics of the Airport Industry

Part I of this book discusses how airports have evolved over the last 30 years in response to the development of global air transport. Their nature and evolvement over time will be described, advancing from being mere infrastructure providers into sophisticated and business-oriented service providers. Nowadays, many have become complex businesses, operating in unique and ever-changing physical, financial, and regulatory environments. As in every other industry, the pressure to operate efficiently and price competitively is enduring and arises from both customers and stakeholders. In order to accommodate future traffic growth, significant infrastructure investments are indispensable which need to be financed. The state of the industry will be presented after the fundamental tools for measuring the financial position of an airport have been introduced.

1

The nature of airports

Abstract

This chapter presents the historic development of global air transportation. As it is the main function to accommodate this traffic growth, airports have advanced in response to it. First, their role within the air transport system will be described. A picture of their social, environmental, economic and political impact will be given next. This chapter’s feature is on airport products and services.

Keywords

Air traffic development; the role of airports; airport products and services

Chapter Outline

• 1.1 Introduction 3
• 1.2 The role of airports within the air transport system 4
  • 1.2.1 Common airport characteristics 4
  • 1.2.2 Traffic development 5
• 1.3 The social, environmental, economic, and political impact of airports 8
  • 1.3.1 Economic and social effects 8
  • 1.3.2 Environmental impact and mitigations 10
  • 1.3.3 Aviation and airport policy 11
  • Feature 1.1 Airport products and services 11
• 1.4 Summary 14
• References 15

1.1 Introduction

Airports are complex systems, providing infrastructure and services for the operations of aircraft and handling of passengers and cargo. This requires an adequate airfield, including a runway, aircraft parking apron, and terminal facilities for passengers, cargo, general aviation, and aircraft maintenance as well as supporting fixtures for access circulation/car parking, utilities, and other nonaeronautical use facilities. All of them are multifaceted in nature, while the commonality is that they have long lead times to plan and develop and are costly to build and maintain.

This very nature of the airport business is a major determinant of the financial performance. Another equally important factor is the demand side. Airports have developed in response to the overall traffic growth, providing infrastructure and services to their airline customers. The success of aviation and the significant growth rates associated with that is causing an equally significant problem in terms of lacking infrastructure on the ground and in the air.

Various countries strongly support the industry on the whole, in order to participate in its benefits, for example, economic development and generation of employment. The population in other countries, however, is more critical regarding the environmental effects—especially when living in the vicinity of an airport.

1.2 The role of airports within the air transport system

1.2.1 Common airport characteristics

Since each flight begins at an airport, airports share many similarities in terms of general function and operations. Nevertheless, their nature has changed over time, making them rather different in a number of aspects.

From an operational point of view, the airport is the physical site at which a modal transfer is made from the air mode to land modes. This makes it an essential part of the air transport system, where interaction with airlines and other users takes place (Ashford et al., 2013).

More practically speaking, airports are one or more runways and complementary facilities for aircraft, such as taxiways, apron area, aircraft stands, etc. and associated terminals and facilities for passenger and freight handling (Doganis, 1992; Kazda and Caves, 2007).

Within this airport system, the typical role of an airport operator is to provide and maintain all necessary infrastructure as well as essential services. These core activities regularly include passenger search and perimeter security, firefighting, and cleaning and maintenance of passenger areas. The operator also allocates space and resources, both between airlines (i.e., check-in counters, departure lounges) and concessionaires. Additional servic...

Table of contents

• Cover image
• Title page
• Table of Contents
• Copyright
• List of figures
• List of tables
• List of features
• Preface
• Acknowledgments
• Abbreviations
• Part I: General Characteristics of the Airport Industry
• Part II: The Roots of Airport Economics
• Part III: Financial Management in the Airport Sector
• Appendix A. Airports covered
• Appendix B. Airport codes
• Appendix C. Selected current and future airport investment projects in excess of USD 1bn
• Appendix D. Copenhagen Airports common-size comparative financial statements for the years 2006–15
• Index