Categories
Airlines Airports Transportation

Master Degree Thesis: The Intitiation

Working TitleExploring the prospect of operating low cost carriers and legacy carriers from the same main airport terminal by interventions on the revenues generated by the airport. 
 
ProposalThis thesis strives to explore the prospect of operating low cost carriers and the legacy carriers out of the same main airport terminal. In doing so, this thesis also strives to explore a possible correlation of reducing the aeronautical charges for low cost airlines at the main airport terminals by seeing the potential of the airport to cover up those reduced charges by the expected increase in the non aeronautical revenue that the airport stands to gain by this measure.
 
Literature Review: A large amount of the existing literature on these aspects have been consulted and referred to, on the course of this work. It is believed that while the secondary airports seem to be a solution for the low cost phenomenon, it can be seen only as a solution, which will keep things at bay in the short term (Forsyth., 2007). Many airports which serve the LCCs maybe unable to take any advantage of the economies of scale which are bound to come up with the booming low cost revolution. Local authorities may believe in subsidising as a means to attract more traffic which will stimulate the local economy. But this might not be a stable solution for the secondary airports which may simply use subsidies to finance lower charges to win traffic from main airports with spare capacities, since it will lead to a misallocation of traffic (Forsyth., 2006).
On the argument for low cost carriers using the main airport terminals, it has been observed that there is no statistical difference between a passengers flying by a low cost carrier or one who is flying by a legacy carrier (Manzano, C., 2010). This has been observed in the study involving 7 Spanish airports. The passengers flying low cost have the probability to make a purchase or consume food and beverages before a flight. (Manzano, C., 2010) There is mixed evidence which proves that passengers on low cost carriers are no more ‘budget shoppers’ at airports, particularly because low cost carriers do not have in – flight catering, thus requiring these passengers to make purchases for food and beverages before the flight (Graham., 2009). Further studies on Canadian airline companies Westjet (low cost carrier) and Air Canada (legacy carrier) by McDonald and Gillen (2003) have shown that while a Westjet passenger spends an additional C$6.20 at the airport while an Air Canada passenger spends C$1.22. This has been attributed to the fact that low cost carriers do not provide in – flight meals and thus have higher chances of passengers purchasing Food and Beverages from the airport terminals. Another reason is due to the fact that a major portion of the passengers flying low cost carriers are leisure travellers who are expected to spend more than the passengers flying by legacy carriers, thus increasing the revenues at the airports.
De Neufville (2006) explores further on the aspect of accommodating low cost carriers in main airports – both as a means of describing the problem at hand and a possible solution for the same. According to him, the managers of the main airports have not formed a consensus about how to deal with the rise of the low – cost carriers. Some airports have taken a no compromise decision when it comes to providing cheap facilities while some others have started work in that direction (cheaper landing fees, budget terminals, refurbishment of old terminals etc.). He also describes the inevitability of the situation at hand and expects the main airport managers to show merit to the rising trend, by providing differentiation in the products they offer to the airlines as a possible solution to this problem.
Literature regarding the methodology to be proposed has been studied in detail as well. James (2009) discusses on a framework for developing categories of simulation models related to strategic, operational and tactical problems of an airport terminal. The airport terminal under the study was the Cochin International Airport Limited (CIAL) situated in the southern Indian state of Kerala. The simulation software used was Extend (of Imagine That Inc.). Brunetta and Jacur (2001) conduct a similar study by creating a new flexible simulation model adaptable to the various airport configurations for determining the capacity and delay experienced at airport terminals. The validation of this model, called AIRLAB has been conducted by comparison with similar research on the Milan Malpensa Airport, Italy.  
 
Methodology: The methodology being proposed for the current work shall involve interviews being carried out of the experts in the field of aviation – possible both academia and industry. Main actors in this process would be the airport managers of airports across Portugal and the rest of the continent on the basis of availability of information and the willingness of the professionals in sharing the information for the purpose of this study. Economic Models shall have to be resorted to, to determine the expected change in revenue from Non Aeronautical revenue by operating the low cost carriers out of the main airport terminal instead of the existing low cost terminal or the secondary airport.
 
A word of thanks already for Prof Juergen Muller of the German Aviation Performance (GAP) Project (Berlin School of Economics and Law) for being kind enough to mail his work for reference and possible inspiration on this regard. 
Categories
Europe Life

First Thoughts – 2012

Ola people! Hope everyone had a fantastic new years eve and a grand welcome into 2012. Happy New Year from the bottom of my heart, wish it turns out to be as special as it possibly could be. And I hope a few have already started ruing over their new year resolutions, if not broken them once or twice already. Just a real quick update on life and an extremely interesting incident which has been occupying a good enough space inside my head. Life is quite dull again since work has already kicked off. Exams on the 9th and 13th with a possible resource exam to be taken for Transport Economics and a project due on the 18th, which is evidence enough for the word “dull ” being tagged along with life. It isn’t really that I hate doing this, but there is really nothing else and thus life is quite predictable until the 19th. A bit of travel is also on the plans after the 19th since I have like 4 days before the next semester begins, though not sure how much of that is going to materialize. Now to the incident.
So I had a visitor on New Years eve. Nobody else was in the apartment and I opened the door when the bell rang. A Portuguese lady was standing outside – neatly dressed, posh, in her 40’s if not older. The conversation started in Portuguese, but soon turned to English when she figured out that her English was way better than my Portuguese. And she told me that she was the daughter-in-law of my neighbour, a lady in her 70’s. To talk more about my neighbour, she is Ana Maria, 75+ , rich with two houses in Lisbon alone, knows 6 languages including English (which is way too impressive for a European), quite a rare visitor to our place, largely peaceful and nice. She was working in the Portuguese department of transportation during her hay days, so we found a lot of things in common for a conversation to sprout up. Besides her career, she is vastly read, knows a lot about world culture and history and is very interesting to talk to, something which is very rare nowadays as far as I am concerned.
So yeah, the daughter-in-law. She is  accompanied by another lady who is Ana Maria’s sister, asks for Ana Maria who hasn’t been in touch with them for almost 3 weeks now and they are worried. So they came by to check on her. Soon we realize she is not present at home as nobody answers the door. Realizing that she has a key to this apartment, she opens the apartment to check for her. Its all very dark inside, so she asks me if I can come in too. I say yes and we go in. This apartment is a 6 room, old school place, large with a long alley and rooms on either side. Surprisingly, there is no power inside the apartment. We try the different switches and realize the power supply has been disconnected. And that’s when things start getting weird. I get a torchlight from my apartment and we go in. Its pitch dark and as soon as we reach the living room, its a scene of distress. Papers, books, flyers, clothes, unwashed plates, cutlery are all strewn around. I nearly pierce a fork onto my leg since it was lying on the ground in the dark, largely unnoticeable. And it was hard to imagine that someone lived here, amidst all the confusion that was called this apartment. The six other rooms resembled a similar picture and after seeing all this, I didn’t really have the courage to check the kitchen or the rest rooms. The daughter-in-law was being way too normal throughout this time and I was inching to ask her about her reaction.
So when we came out of the ghost house, I invited them to my apartment and asked her about her reaction on seeing the apartment all messy and weird. To which she replied, “Maria used to be such a task master lady until her 60’s until Miguel (her husband ) was around. After his demise, she lost all interest in life. She did not understand why she had to tidy up the place, and for whom, since no one ever visited her anymore. More so, since she didn’t want them to.” To see the condition of such a well learned lady, in her 70’s reaching a stage where she didn’t appreciate living life anymore was a hard thing to digest. She was very wealthy, but still lived the life of a gypsy. Why did she have to live life anymore if this was so meaningless for her? And that was the hard reality of life, that even a lot of money could not bring any happiness into her life. That’s because the essence of life is not entirely dependent on material things, though it does play only a small role in making it better. People run so much behind material comfort that they forget to live life in between. I have a professor at Tecnico whose story is equally interesting, though that is a story for another day. Though for the sake of debate, if I ever had to encounter that stage in life that Ana Maria was going through, I would just renounce myself from this world and move away. I am sure we all have different takes on it though.
Nevertheless a strange new year realization indeed.