Airport Marketing

Nigel Halpern, Anne Graham

• Publisher: Routledge
• Year: 2021
• ISBN:
  9781000466485
• Edition: 2
• Topic: Business
• Subtopic: Transportation Industry
• Index: Business

This accessible, up-to-date, comprehensive, and in-depth textbook introduces students and practitioners to the principles and practice of airport marketing as well as the major changes and future marketing challenges facing the airport sector.

It applies principles of marketing within the airport industry, and examines airport marketing and its environment, how to define and measure the market for airport services, airport strategic marketing planning and individual elements of the airport marketing mix (product, price, distribution and promotion). The book integrates key elements of marketing theory with airport marketing in practice. Each chapter contains extensive industry examples for different types of airports from around the world to build on the theoretical base of the subject and show real-life applications. This new second edition has been updated to include:

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• New and expanded content on branding and the passenger experience, marketing partnerships, engagement marketing and customer relationship management.

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• Three brand new chapters on digital marketing, marketing for a more sustainable future, and crisis communications and marketing, in light of the Covid-19 pandemic.

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• New, global case studies and examples throughout.

This comprehensive textbook written by two airport marketing experts will be essential reading for air transport students and future managers.

Chapter 1

Introduction

DOI: 10.4324/9781003039563-1

This chapter provides an introduction to the book and to the subject of airport marketing. It consists of two main sections. The first section considers how airport marketing has evolved including the forces that have influenced change, how airport marketing has emerged within the context of the marketing era and the growing interest for airport marketing in industry and academia. The second section outlines the approach to airport marketing taken in this book including how definitions of marketing can be applied to airports and the implications of service industry marketing. The second section also provides an overview of the book’s structure.

1.1 Evolution of airport marketing

1.1.1 Forces that have influenced change

Until the 1980s, airports generally adopted a passive approach to marketing. The view from many was that airports were natural monopolies and were not in a position to influence the decisions of target markets through marketing. Indeed, that is still the view of some (e.g. see Wiltshire, 2018), while others debate the extent to which airport competition is feasible, or even desirable (Socorro et al., 2018). However, it has been challenged by others. For instance, Tretheway (1998) asks whether airport marketing is an oxymoron – ​a contradiction in terms such as the phrases ‘jumbo shrimp’, ‘accurate estimate’ and ‘American English’. Fortunately for this book, Tretheway answers in the negative, suggesting that a large proportion of products and services at most airports are subject to competition, and that airport marketing decisions can help to build relationships that have a profound impact on airport customers. Tretheway accentuates these opinions in later articles (e.g. see Tretheway and Kincaid, 2010), while others add compelling evidence of airport competition, at least in the deregulated European aviation market (e.g. Barrett, 2000; Forsyth et al., 2010; Thelle et al., 2012; Bush and Starkie, 2014; Thelle and la Cour Sonne, 2018; Bilotkach and Bush, 2020).

Much of the focus of previous studies has been on Europe. However, there is also evidence of competition elsewhere. For instance: Pels et al. (2003) between airports for passengers in the San Francisco Bay area in the United States (US); Grosche et al. (2017) between major hub airports in Europe and the Middle East for long-haul connecting traffic; Wong et al. (2016) between Asia Pacific’s major airports for cargo markets; Liu et al. (2019) between airports and high-speed rail in China and Japan; and Gao (2020) between airports for passengers in Indiana in the US.

Airport competition has been encouraged by several factors that are mentioned briefly here and examined in more detail in Chapter 2. First, demand for air transport has been characterised by long-term growth. It approximately doubled every 15 years from the 1970s to 2019 and was forecast to double again in the next 15 years. In 2019 alone, the world’s airports handled over 9.1 billion passengers, 119.9 million metric tonnes of cargo and more than 102 million aircraft movements. However, growth has been dramatically affected by the coronavirus pandemic (a global pandemic of the coronavirus disease 2019, also known as Covid-19, caused by a severe acute respiratory syndrome coronavirus called SARS-CoV-2). For the first half of 2020, passenger demand decreased compared to the same period in 2019 by 58.4 per cent (and by 64.5 per cent for international passengers), cargo demand decreased by 12.4 per cent, and aircraft movements decreased by 41.6 per cent (ACI, 2020). At the time of completing this book in April 2021, the long-term implications of the coronavirus pandemic on demand for air transport are not yet known but the industry of course hopes for a strong recovery once the pandemic is under control.

Second, in combination with long-term growth, air transport markets have become increasingly deregulated. This process began in the US domestic market in 1978, followed by the liberalisation of a number of international routes to and from the US such as the so-called ‘open market’ agreements signed by the US and the Netherlands, Belgium, Germany, Singapore, Thailand, Korea and the Philippines between 1978 and 1980. Similar agreements were made in Europe during the 1980s such as those signed by the United Kingdom (UK) with the Netherlands, Ireland and Singapore from 1984 (Doganis, 2010).

Many domestic markets are now fully deregulated. For instance, Chile, New Zealand and Canada deregulated during the 1980s, while Australia, India, Venezuela, Peru, South Africa, Mexico, Argentina, Malaysia, Thailand, Kenya, Brazil and countries in Europe deregulated during the 1990s (Williams, 2002). The European air transport market was the first international market to be deregulated and this was achieved through three packages of liberalisation introduced in 1987, 1990 and between 1993 and 1997. Each package reduced restrictions on the setting of fares, frequency and capacity, market access, and the ownership and control of airlines. The European Union (EU) has since negotiated a number of so-called ‘open skies’ agreements with other countries such as with the US in 2008. Elsewhere, an Association of Southeast Asian Nations (ASEAN) open skies agreement to create a single aviation market (known as ASEAN-SAM) between ten Southeast Asian countries was ratified by all members in 2016, while a Single African Air Transport Market (SAATM) programme was launched by the African Union (AU) in January 2018.

Prior to deregulation, each country tightly regulated its own domestic market, while international regulation was based on bilateral air service agreements (ASAs) between governments; these set fares, frequencies, capacities and market access. Many international routes are still based on bilateral ASAs, but the restrictions traded by them are generally not as strict as they have been in the past. One of the main consequences of deregulation has been that airlines are now more footloose. They are freer to choose where they fly to and from, and generally set fares, frequencies, capacities and routes according to commercial considerations. This has provided airports not only with increased opportunities to attract new routes through marketing but also with challenges associated with retaining existing routes as a result of high rates of route churn (Thelle et al., 2012; de Wit and Zuidberg, 2016).

New types of airline business models such as low-cost carriers (LCCs) emerged through deregulation. These provided further opportunities for airports, in many cases requiring them to adopt a completely different approach and encouraging a further deviation from past practice, initially affecting mainly secondary and regional airports (e.g. see Francis et al., 2003; Barrett, 2004; Francis et al., 2004) but more recently affecting major airports too (e.g. see Dobruszkes et al., 2017).

Third, the travelling public is becoming more experienced and less loyal, enjoying a greater choice of airports and air services, and generally placing greater demands on airports to deliver a quality product at a time when more stringent controls are being implemented, especially with regard to security, and more recently, health and safety. Also, competition for air cargo has intensified and several airports now focus entirely on air cargo, while others are placing much greater attention on developing air cargo, in addition to passenger services – ​because demand for air cargo has been less negatively affected by the coronavirus pandemic compared to passenger services.

Fourth, as airports grew (prior to the coronavirus pandemic), they were able to exploit opportunities to develop commercial activities and increasingly seek to do so in order to diversify their business. This means that airport marketing often extends to a much wider range of customers, targeting not only airlines, passengers or cargo companies but also airport workers; the so-called ‘farewellers and weepers’, ‘meeters and greeters’ and the general public; providers o...