The Airport Option

Could a growing interest in airline services by airports impact the ground handling landscape?

The airport has developed a customer service department that is fully dedicated to the ground handling needs of its carriers. The airport has gone one step further in its passenger services offerings, including terminal services such as a luxury passenger lounge and travel-booking services. The department has employed four full-time staff members and nine part-time employees, cross-utilizing the employees’ skill set to for services across the board.

With the initial investment in place, Hanna says there is potential to bring on more airline customers.

A History of Service
For some airports, the concept of offering ground handling services is not new. Bangor International Airport has operated the FBO since the 1970s, serving private charters and military flights.

It recently expanded its services for Allegiant Air in November 2007. The carrier had traditionally scheduled two flights per week out of the airport, but now during its busy season, the carrier has increased its frequency to up to 10 flights per week, according to Rebecca Hupp, director of Bangor International Airport.

“We already had the resources, because we do the ground handling in other areas,” she says. “It was easier and more cost-effective for us to do it than for them to do it.”

Springfield/Branson National Airport in Springfield, Mo., has also been offering services for many years. It has offered fueling since 1946. It expanded its ground support services in 2002 for charters, replacing the service provider that at the time decided to discontinue business at the airport.

It went on to handle Delta Comair flights for about three years. It has since attracted Allegiant Air, which it currently services for 17 flights per week.

It has also managed to generate revenue from its services, at a margin of about 20 percent.

But Gary Cyr, director of aviation at Springfield/Branson, points out that the success of such an operation is often dependent upon the specifics of a location. “The method we do here may not be applicable to other airports,” he says. “Because we do well with what we do here, doesn’t mean it applies well to other airports.”

Assessing the Impact
And just how far-reaching an airport model will become is a central question.

John DeCoster, senior vice president at Trillion Aviation, an aviation consulting firm specializing in business strategies and programs, believes it is a trend that will continue, as an airport option offers airlines the opportunity to operate in or enter into new markets with little overhead or risk.

“I think as airlines look at all of their cost structures and really with the yield crisis in the industry right now, they’ve got to find some way to deliver the quality they are looking for at the lowest possible cost,” he says. “I think as long as the airports are offering competitive quality service at a competitive price, this will be a continuing trend.”

An airport option has heightened the level of competition at some locations.

Such is the case at Abraham Lincoln Capital Airport. “We have had some soft interest from an FBO on the field to possibly get into the business, but nothing significant has transpired since most of the demand is covered already by contract with a third-party airline ground handler and the airport, and in our case by virtue of being the lowest cost — not that we were wanting to compete, but we wanted to at least be able to offer the service at a time when no one else would or could,” Hanna says.

And if Fort Wayne International Airport decides to get into the business, it could be in a position to compete with its existing FBO.

“We have a good relationship with our FBO now and we have had in the past,” Richardson says. “It’s one of those things where we’re going to continue in the dialogue and the discussion and keep them a part of it.

He continues, “We would anticipate some fierce competition by them, but what we would hope to do in the long run is be able to work with them through this. If we aren’t the ones to provide it, because we haven’t made this decision, then work with them to convey to them what our priorities are in terms of customer service and fuel pricing and see if we can work with them on those aspects.”

A Different View
The airport option has brewed some controversy, initially arising a few years ago when the National Air Transportation Association opposed the use of certain DOT funding by airports to compete with private service companies.

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