AIRLINE & AIRPORT

MARKETING
MANAGEMENT
August 2023
Market for Air Transportation

 Marketing – Is an activity a company undertakes

to promote the buying or selling of a products or
services

 Marketing management is the process of setting

the goals for an airline.
 Organizing planning and taking decisions for
the company to get maximum profitability by
catering to the consumers requirements.
Application of marketing principles to Airline management

1. Product – Airline
2. Price – Ticket fares - retail travel agents, online
travel agents, Consolidator travel agents,
corporate companies
3. Place – Destination points, routing and onward
destinations
4. Promotions – Advertising in movie theatres,
Billboards, social media (Digital Media), Events
(Formula one races), Sponsorships (Football
teams etc)
Airline Business and Customers - Market segmentation

General segmentation
 Leisure travelers
 Business (corporate travelers)
 Students
 Visiting family and friends (V.F.R)
 Religious
 Seaman (merchant navy sailors and oil rig
workers)
 Medical treatment
 PESTEL Analysis

PESTEL analysis is
a tool that allows
organizations to
discover and
evaluate the
factors that may
affect the
business in the
present and in
the future.
Unit – 2
Air Travel – Marketing Strategy & Product Analysis
Micheal Porters Five factors and their application to the airline
industry
Micheal Porters Five factors and their application to the airline
industry

Supplier Power
Power

Airlines require three inputs to operate successfully fuel, aircraft, and labor
• The price of aviation fuel is subject to the fluctuations in the global market for oil, the prices varies wildly because of taxes imposed
by a country or region and other factors.
• An example of this is when air carriers plot their route in a manner where the aircraft can touch down in the gulf and refuel as
fuel cost are significantly lower in that region leading to saving for the airlines
• Airlines are Labor intensive systems and is subject to the power of the unions who often bargain and get unreasonable and costly
concessions from the airlines. Air India is one such example which led to loses and finally to the sale of the airline
• The airline industry needs aircrafts (equipment) on outright sale or wet lease basis , most airlines take aircrafts on lease basis , two
suppliers dominate the market Airbus and Boeing

Buyer Power

Travelers can choose and shop around for lowest deals between the traditional travel agents, online travel agents or purchase directly
from airline websites.
Also, the entry of low-cost carriers and price wars has greatly benefited the fliers.
Government regulations protect the passenger and fliers enabling to them to have hassle free travel
All these factors have given high power to the flyers over the airlines
Micheal Porters Five factors and their application to the airline
industry

Supplier
Entry andPower
Exit Barriers

• The airline industry needs huge capital investment to enter and even when airlines have to exit the sector, they need
to write down and absorb many losses. This means that the entry and exit barriers are high for the airline industry.
• Airlines require large capital infusion to start an airline. As the industry is subject to many market factors the company
will find it hard to exit and wind up as well.
• Also employees of suitable knowledge and expertise are required to start an airline, due to safety standards required
to be maintained and achieve the necessary profitability to keep the company afloat. Experienced individuals are
required to navigate the airline through competitive markets
• Airlines work on industry economies of scale and hence, the entry barriers are high. We find that the airlines have
significant high entry and exit barriers

Threat of Substitutes and Complementarities

Airlines can be substitutes and complementarities consumers can switch to a train or bus for journeys if they find it
cheaper. Surface journeys tend to be more scenic, recently road trips in one’s own vehicle is increasing due to
improvement of roads in the country
Which means that there is the threat of this substitute.
Complementarities airlines can offer are the provision for free Wi-Fi, a la carte meals, and inflight entertainment however
fliers are more attracted to lower fares then anything else
Micheal Porters Five factors and their application to the airline
industry

Supplier Power
Intensity of Competitive Rivalry

• The airline industry extremely competitive because of a number of reasons which include
• Low-cost carriers
• Full service carriers
• Charter services
• Also strict government regulation of the industry with regards to safety leading to high operating
expenses, and that airlines operate in an environment of constant staff turnover and churn in the
industry.
• Airlines being not free to choose all the routes they operate; example government of India has made
certain routes mandatory in order for the domestic air carrier to operate in the country and reciprocal
arrangements for foreign airlines to fly into the country
Cost Leadership
Cost leadership is a competitive strategy that businesses leverage by reducing their costs to
the maximum extent possible to enhance profits
The airline business is very competitive so the focus is to keep the cost low, in order to pass on
Definition
lower rates to the customers

Purchase aircrafts Landing fees Packaged Commission

of the same brand and parking Meals to trade
and model charges partners

Fuel-efficient Baggage
Refueling and Seat Low Cost
aircrafts Charges Advertising
Selection

Navigation Reservation
Air Freight
charges Cost
Examples
Cost Leadership - Examples
Common Mistake – Concept of Product and Relation to Airline

 Underutilisation or bad planning of routes on the network leading to low revenue across the board

 Fast pace of expansion without proper planning – example purchase of a rival carrier with the funds
from the airlines

 Misuse of the airline capital – E.g. Kingfishers purchase of a Formula 1 team

 Offering low rates – Some airlines tend to offer low rates in the market to attract business, this
strategy can be sustained and over a long period of time eats into the capital of the carrier

 New entrants in the market usually follow this strategy, using investor funds to compensate for the
loses due to the low rates on tickets and freight.

 Over spending on infrastructure – Airlines in the later stages tend to spend valuable capital on
infrastructure like office building etc

A badly planned business plan will result in losses. When formulating a plan one must account for
sudden rise in fuel, certain routes being closed suddenly due to various reasons.
 Fleet and Schedule Related Product Features
Cabin configuration and classes of service
 When an airline decides to purchase equipment (aircrafts) the process is based
on the type of service they plan to offer

 Full service or Low cost

 Once an airlines selects the aircraft fleet they have to commit to it for a
longtime, as various services have to be integrated into it

Economy First Class

 Fleet and Schedule Related Product Features

Changes are
The schedule planning
sometimes introduced
step typically begins 12
to the existing schedule
Airline Flight months before the
to account for
schedule goes into
Schedule operation and lasts
changing demands and
travel environment; this
approximately 3 to 6
is referred to as
months.
schedule development.

Schedule Design

 The objective of frequency planning is to match daily or weekly frequency to the

anticipated demand in every market ensuring that the level of demand anticipated
and the frequency are balanced and reasonable.

 After the airline decides on how many flights it wants to offer in each market, the
next step is to decide at what times should these flight be offered. This depends on
market characteristics as well as schedule constraints.
 Fleet and Schedule Related Product Features

Fleet Assignment
 The purpose of fleet assignment is to assign the particular aircraft to the flight leg so that the seating capacity on the
aircraft matches the demand for that flight. If the aircraft assigned is to small many potential passengers are turned
away, or spilled of onto competing airlines resulting in potential lost revenue. If an aircraft assigned is too big there will
be empty seats, leading to some drop in revenue as bigger aircrafts consume more fuel and require higher number of
cabin crew

 Airlines cannot assign more aircraft than are available. If the schedule cannot be matched with the available number
of aircrafts, changes have be made to the schedule.
 Fleet and Schedule Related Product Features

Aircraft Rotations.

 The objective of aircraft rotation is to find a maintenance rotation within the routing
of the aircraft, given a fleeted schedule and the available number of aircraft of each
type.

 A rotation is a sequence of connected flight legs that are assigned to a specific

aircraft, beginning and ending at the same location.

 A maintenance rotation is a routing of an aircraft that takes into account the service
rules of the manufacturer and regulatory agencies.

 Maintenance opportunity exists mostly when the aircraft is parked overnights at one
of its maintenance locations. While this ensures that, on average the aircrafts of each
type are in maintenance on a regular basis.

 However in some cases service and maintenance check may also be done during the
day, depending on schedule set by the airline for the route
Network frequency and timings
 Network planning is one of the most important commercial functions within an airline

 This is based on inputs from the sales department, industry data, and other economic and
socio-political trends to help develop a profitable revenue network.

 There are two common airline networks — point-to-point and hub-and-spoke.

Point-to-Point Network
 Where there is passenger
demand, non-stop flights are the
least expensive means to serve
destinations.
 Eliminating a connecting stop
provides an average savings of
about 20 to 30%.
 It Reduces the total travel time
for the traveler.
 Aircraft turn around times can be
minimized, allowing for increased
utilization
× A limited reach – most small and
mid-sized cities have insufficient
demand to support more than a
few non-stop flights.
× Routes that tend to have enough
demand to support non-stop
service also have other
competing airlines doing the
same route which effects
profitability.
× Demand varies significantly – it is
challenging to balance route-
specific demand changes with a
point-to-point network design.
Hub-and-Spoke Network
 The ability to serve a network
with the fewest number of routes
(and the fewest number of
aircraft).
 The ability to serve many cities of
varying sizes.
 Adding a new city requires only
one additional route but can
potentially provide access to
every city in the airline’s network.
 Major carriers can dominate
operations in their hub cities,
effectively creating a barrier to
entry
× High operating costs, with extensive
facilities and personnel required to
accommodate connecting
passengers.
× Varying aircraft models are
sometimes required to match
supply (capacity) with demand. In
this type of a network an airline
requires both long haul aircrafts as
well as short haul aircrafts
× Aircraft and airline crew scheduling
becomes more difficult and
constrained as fleet complexity
increases.
× It's highly susceptible to delays.
× Revenue management can become
very complex.
Punctuality – On time performance (OTP)
 Airlines strive for on time performance and this is a central issue for all carriers

 Ground operations of airlines have become the second major cause of flight
delay at airports

 Management of operational efficiency of aircraft ground services is very

important

 If a flight arrives at their gate late or depart late, it effects other flights from
using those gates. This leads to flights waiting longer on the runway to take off
and burning fuel unnecessarily.

 This leads to passengers missing their connections specially in network

airlines.

 In Europe, passengers are entitled to compensation for late flights, this

increases the cost associated with poor punctuality.

Punctuality can be improved by when airlines use the latest technology and newer aircrafts.
Spend more revenue on ground handling, this however will lead to escalation in cost Finally it is
up to the induvial airline on arriving at the best compromise to achieve the goal of punctuality
Customer service and controlling product quality
Customer service This is a very important part of airline service and should not be
(Service Quality) ignored at any point in the passengers travel process.

Point of sales (the moment the customer purchases a ticket on the carrier)

Baggage services (Proportion of bags mishandled and which fail to arrive at the destination)

Customer complaints (monitoring customer complaints, number of complaints )

Cabin crew – Hiring experienced and correct crew for the particular route will make all the difference on
the flight and help reduce customer complaints

Reservations (this process can be quantified by the number of calls dropped and calls taken and resolutions
reached by the staff)

Punctuality (flight departure time in relation to the published departure time)

Feedback – In this regard the sales staff of the airline will provide accurate feedback on service as they are
constantly facing the customers
Air freight product
 Amidst the slowdown of the aviation business due to Covid-19, there was one business that
survived the situation that was the air cargo business

 During the pandemic when passenger business dropped significantly approx. 90%, air cargo
business decreased by just 1%

 Air cargo is the supporting business of most airlines. However due to the pandemic, most of the
airlines found air cargo as a solution to remain functioning in the market and making it in to their
primary strategy for the duration of the pandemic

 Most of the business in air cargo comes from air freight forwarders and cargo agents. Direct
corporates in this line of business is very rare.
Air freight product

 Unique to air freight operations is that air cargo needs to adhere to a certain height and width in
order to fit into the aircraft. Narrow bodied air freighters can accept consignments upto 86 inches.
Wide bodied aircraft can accept standard rectangular size of 8 feet by 8 feet. Also, volumetric
capacity is important, in some cases an aircraft will be full volumetrically before its maximum
payload level is reached

 All air cargo must be loaded onto pallets of standard size. Pallets may be made of wood or plastic.
Most European countries allow only plastic pallets. Wood pallets require to be fumigated, as they
maybe contaminated with wood worm, white ants etc, to avoid such issues it is advisable to use
plastic pallets

 Specialised ground handling services are required for dealing with air cargo

 Airlines will be competing with courier service providers like Dhl, Ups, Fedex which have their own
dedicated cargo aircrafts

 Dgr (Dangerous goods) mostly cannot be put on flights carrying passengers due to the consignment’s
dangerous nature, the shipper will have to transport the consignment on a full cargo air freighter
Strategic Airline Alliances

Airline alliances are formed when different airlines agree to cooperate with each other. Advantages for
customers include more destinations and more convenient connections, while the airlines benefit by
passengers traveling within the group airline instead of competitors.

Advantages
Disadvantages
₊ By joining the networks,
× Some airlines will be forced
member airlines can offer
flights to many more to abandon certain routes
destinations. This system due to the competition from
works well for all the members an Airline alliance.
× Budget airlines do not join
of the alliance
₊ Frequent flyer benefits for alliance
× One alliance of low-cost
passengers
₊ Alliances do not stop airlines airlines exist in Asia - the
from making code share Value Alliance offers basic
agreements, close cooperation connection guarantees
between two airlines within between six airlines, but no
the group frequent flyer benefits.
Strategic Airline Alliances
Building block in airline pricing policy – uniform and
differential pricing

 Deregulation - Previously most governments had regularized fares. Airlines could

sell tickets withing a certain price. However, in recent times this has been removed
allowing for market forces to function. This leads to dynamic pricing
Differential pricing
1)First and business class - Bookings made in first class and business class are
charged at a much higher rate.
2)Economy class – Bookings made in the economy class are charged at very low
rates
Airlines have a method to set up boundaries and keep the market segments separate.
For example, airline use differential pricing and charge higher prices for business
travelers and discounted prices for tourists.
Airlines make the tickets non-transferable to enforce this.
Differential pricing

 Air carriers use differential pricing on the basis of the below points

1)Brand image
2)Market segmentation
3)Product
4)Geographic location
5)Discounted price offers
6)Group discounts
7)Seasonal discounts
8)Refundable and non refundable tickets
Uniform pricing

 Uniform pricing - Is a system where the airline charges one price for a route
irrespective of the season and demand
 This is a relatively old concept, which is not really viable in todays market scenario
The Structure of Air Freight Policy

 When goods are shipped from one place to the other, the amount paid for the
movement of the goods is called freight. Air freight means the charges paid for air
transport.
 Unlike travel agents in air cargo air freight forwarders play a narrow roll in case of
small packages and parcels, these are mostly handled by the courier companies
which have their own aircrafts
 Heavy freight and dangerous goods is handled by the freight forwarders.
 Freight forwarders usually bargain with airlines to get the lowest rates, which leads
to very narrow profit margins for the air carriers
 Booking for air freight was until recently still done by telephone, it happens even
today. The GFX system for air freight is still catching up with the freight forwarders.
Distribution Channel Strategies – Travel Agency Distribution System

 Global Distribution system (GDS) has been around from the 1970’s .
 American airlines designed the Sabre system which is a very popular gds system
even today. Many airlines rent the reservation system, where software is tweaked for
the particular carrier. This is a profitable product for American airlines
 To counter this competition, two gds systems which were designed in Europe came
into being.
 1)Amadeus
 2)Galileo
 There have been smaller systems but all are now merged in with one of the three
gds, with the advent of high-speed broadband, some airlines have set up their own
systems to save on gds cost. As most of the gds fees are paid by the airlines
Selling & Distribution Channel in Air freight market

 The growth of e-commerce in the world market market, supported by strong

investment in technology and infrastructure and rapidly growing number of internet
users has led to an increase in air freight usage. Most manufacturers use a three-
tier selling and distribution structure involving distributors, wholesalers, and
retailers.
 Most companies use clearing and forwarding agents for distribution due to the high
cost of operating warehouses, these clearing and forwarding agents handle
inventories in limited geographic areas only.
 Certain products like pharmaceuticals, medical devices, diagnostic kits, cosmetics
and food products, the Indian government legally demands the appointment of an
authorized agent or distributor. Quality assurance and standardization certificates
are required for some products, like telecommunications equipment and home
appliances.
Brand building strategies in airline industry

 Kotler (2011) states that ‘to have low prices is not enough to build a feasible
business, you need to add quality and services for the customer to feel that he is
buying based on value
 A brand’ is “a distinct name and/or a symbol that aims to identify a seller’s goods
or services and differentiate these goods and services from competing airlines
 For an airline to succeed, branding in aviation is essential. 30 to 40% of flyers
decision are based on branding of the particular carrier
Brand building strategies in airline industry

 Livery - Some aircraft with corporate logo brands are more recognizable than others.
Ever more artistic liveries appear on aircrafts, some have cartoons etc painted on the
side
 Slogans -Another important factor in the world of airline branding is catchy and
meaningful slogans.
 Symbol -Airline also use a memorable and significant emblem.
 Colors -Regional and national airlines usually choose a color scheme that reflects the
nation
 A carrier within a carrier - very traditional airline carriers design sub brands within
their airline or as a separate airline. This is done in order to look as a fresh carrier
and attract travelers who consider the main brand as to traditional or boring.
Lately airline strategy for branding is mostly centered around women, specially to target
leisure destinations and carriers that touch a lot of leisure points
Relationship marketing and components of marketing
strategies

 Customer loyalty via loyalty programs

Every airline is interested in rewarding its loyal customers. All airlines develop their own ways to cater to
regular flyers either on a certain route, or brand loyalists. Loyalty programs work the same way - travelers
collect bonus points called flying miles for all their journeys on the airline which can be turned into reward
points.
 social networks as a part of travel experience

Flight status update via WhatsApp, Twitter, and Facebook Messenger.

customer support of the airline can also be accessed via social media channels.
 Promoting a small number of ultra-low fares – to travel agents and direct to customers via social media
 Advertising stopover destinations – This allows customers to travel to two or more destinations in one
trip
 Advertisements – planned advertising is expensive but a great way to connect to customers
Frequent flyer programme – Anatomy of sales and planning

 Frequent flyer programs have been active in the airline the industry for a long time.
The first carrier to introduce this program was American airlines in the 1980s
 Frequent flyer programs are used by many airlines. This allows passengers to earn
points or miles that are redeemable for free flights, upgrades, hotel stays, car rentals
or shopping.
 Participation in these programs can save you money by traveling free as well as it
may offer you many other perks
 When joining a frequent flyer program, certain amount of data will be mandatorily
required by the airline. This helps airlines build up their data base and make
decisions on travel destinations, time slots, meal requirements.
Frequent flyer programme – Anatomy of sales and planning

 Co-branded credit cards – Airlines tie up with credit card companies and banks and
launch credit cards, benefits of this can be points when client uses the credit card.
Extra points when used for purchase of flight tickets. Which can be redeemed for free
tickets or partially free tickets for travel on that particular airline
 Upgrades – Frequent flyers with certain number of points accumulated can use the
points for free upgrades to business or first class
 Other travel expenses - Redemption options might include airport lounge membership
fees, hotel stays, car rentals, cruises and gift card
 Airline elite status — which may be called silver, gold, platinum or similar. Passenger
qualifies for earning more award miles when they fly, seat upgrades, priority check-in,
complimentary checked baggage, better award-seat availability, discounted and
waived fees, and other benefits.
 Purpose of frequent flyer programmes – is to make travellers fly often, fly far and
spend money on the airline, thus generating increased revenue and sales
Unit 4 – Airport Marketing
The Role and scope of activity of the airport enterprise

 Airports are transportation hubs that connect travelers from all over the world, if
managed correctly airports can generate profits
 Airports provide the necessary infrastructure and services for airline scheduled and
charter operators, handling of passengers and cargo services
 Activities also include – Flight refueling, Maintenance and service of aircrafts, Cafes,
Duty free shopping for passengers
 Intentional airports – Customs and Immigration checks
Economic impact of countries and regions

 Airports significantly improve the economy of the surrounding region

 A fully functional airport provides -

1)Employment – in airlines, car rentals, general sales agents, travel and tour
operators, hotels, restaurants etc
2)Airports which are used as a hub by airlines make much higher revenue
3) By facilitating tourism, airports also help generate economic growth and alleviate
poverty – providing employment opportunities, increasing revenues from taxes for the
government
4) Indirect impact - when a person employed at an airport uses their earnings to
purchase goods and services, they support additional jobs and economic activity. As
the economic cycle that starts with the airports and visitors who arrive via the airports
spend money which again benefits the economy
Main governance patterns in the airport business

 Airports are usually operated as not-for-profit entities – as a public agency within a

county, city, or state government.
 Airports work on generating revenue to cover some or all of their operating and
capital costs.
 Recently many airports are managed by private companies, this has helped improve
profitability and service of the airports
 Adani Airport Holdings - operates Ahmedabad, Lucknow, Mangalore, Jaipur,
Guwahati, Thiruvananthapuram and Mumbai international airports
 GVK – operates Bangalore and the under-construction Navi Mumbai airport
The international path of evolution in the airport business

 The designation of international airport is stated in the International Civil Aviation

Organization's (ICAO) Convention, which requires countries to designate airports
that provide certain services, such as customs, immigration, firefighting and law
enforcement as an international airport
 Airports started of as military establishments, as commercial aviation became
popular, they were transformed into civil enterprises
 Airports and airlines in future will offer personalized baggage drop-off and pick-up
options, where passengers will no longer need to travel to the airport with their
baggage. For example, luggage will be sent to the airport from home or hotel before
departure through luggage pickup and checking services.
 Passengers using personal devices and integrated travel apps to manage every
aspect of their journey is already a reality
Air Transport Value Chain

The purpose is to provide updated an analysis of profitability along the air transport
value chain
 The demand for air transport services has risen much faster than demand for most
other goods and services, the airline industry has found it difficult to make an
adequate level of profits
 Reasons for this: -

Airlines have to pay interest costs on their debt as well as payments of tax to
governments.
Investors have to be paid for risking their capital in the airline business. They will
measure profitability as a return on capital invested. The industry has rarely managed
to generate returns that meet the investors minimum demands
Air Transport Value Chain

 In the next twenty years the airline industry is expecting to triple or quadruple its services in order to serve the
demand for air travel and cargo services due to the expansion of the middle-income classes in Asia-Pacific regions
which will increase profitability in the industry
The Value chain –
1. Aircraft manufacturers
2. Global distribution system
3. Air navigation service provider
4. Travel agents
5. Air cargo agents
6. Ground handlers
7. Aircraft lessors
8. Carters
9. Airports
10. Fuel
Airport enterprises

 GMR Airports, GVK Group and Adani Ports, Egis India Consulting Engineers Pvt Ltd, Flemingo Duty Free
Shop Pvt Ltd, Siemens Postal Pacel & Airport Logistics Pvt Ltd, International Business development
Flughafen Zurich AG Postfach.

 International airport security companies (these companies operate only internationally for airport duties)

Honeywell International Inc.

Bosch Ltd
Smiths Group plc
L3Harris Technologies Inc.
Siemens AG
Grp4 falk
 Airport Companies are mandated to undertake the acquisition, establishment, development, provision,
maintenance, management, operation and control of the airport, any part of the airport, or any facility or
service at an airport which is related to an airport function.
Rise of Airport marketing for the aviation related business

The main factors influencing the choice of Airport by an Airline :-

1 Slot availability
2 Presence or absence of direct competitors;
3 Network and operational consistency;
4 Airport charges (landing and handling fees plus fuel prices);
5 Minimum guaranteed turnaround times;
6 Presence of economic and commercial incentive at start –up of operations;
7 Availability of airport infrastructural facilities;
8 Availability of a range of intermodal solutions for accessing and leaving the airport
Rise of Airport marketing for the aviation related business

9 Absence of environmental restrictions (fundamental in the case of overnight cargo

services)
10 Availability of maintenance centres at the airport
11 Twenty-four hrs. nonstop opening times
12 Presence of upgrade projects for terminal expansion;
13 Low rate of accidents on apron caused by handling operations
Rise of Airport marketing for the aviation related business

What airport offer to attract airlines

 Co-marketing and co-branding partnerships between airports and airline operators

 Promotions and sales pitch at the airlines headquarters to illustrate technical facilities and market
research studies on the Airport

 Airports take part in Industry fairs. Like Otm, ttf or events concerning the whole tourism industry, also the
World Travel Market in London

 Marketing support system plans and the cut in monetary incentives associated with the opening of new
air connections;

 Aggressive handling charges which is structured by categories of aircraft with similar flight performance.
Airports market positioning

 Airport marketing is becoming increasingly important, as new airports come into existence.

 Successful marketing campaigns can improve brand awareness, offer value-add promotions and enhance
airport customer experience leading to an increase in number of airlines selecting that particular airport

 In the aviation industry, airports partner with retailers, food and beverage companies and airlines to offer
services like airplane-to-gate sales that allow passengers to buy online in-flight and pick up products as
they land.

 Travelers promote an airport by sharing photos and videos and posting positive feedback on social media
this helps airports make their sales pitch to clients.

 Airport content marketing department provides a way to share useful information with potential and
current travellers and also promotes the airport
Primary hub, Secondary hub airports

Primary Hub

 An airport aims to operate as hub focusing on passengers and goods travelling on a domestic and
international level. This is achieved by first attracting one or more airlines that will develop their main
base of operations at that airport.

 The strategies and performance of the hub carrier are important in terms of growth potential and long-
term economic viability of the primary hub airport.

 Primary hubs have always been developed at major political and business areas. In these locations, the
hub carrier will able to count on a significant base of Origin & Destination traffic. The airline will create
opportunities for growth in connecting and transit traffic due to its links with spoke destinations. The
primary hub strategy targets both business and leisure.
Primary hub, Secondary hub airports

Secondary Hub

 An airport enterprise with a secondary-hub objective acts within a smaller geographical and commercial
horizon than that of primary hubs. These airports are usually regional airport which manage connecting
(transit passengers) and domestic travellers.

 The location of secondary hub is based, where there is regional business or leisure centres with strong
origin and destination inbound and outbound traffic. These airports are usually in upcoming cities and
special economic zones

 The commercial success of secondary hubs can be related to lower congestion level that permit
smoother transfer times and lower charges levied to airlines, stores and restaurants within the airport
Airport Alliances
The consolidation of the airport in the services industry

 Consolidation in the airport industry takes place by forming strategic alliances or

entering into mergers.
 Privatization of airports increased through airport mergers in late 90s and early
2000s, after that airport meagres have gone silent, this is possibly due to world
events.
 Recently governments internationally have kept airports in their hands, as they feel
security will be better if managed by the state.
 In India we see an increase in airport privatization thanks to the forward thinking of
the central government
Airport management contract

 Management contracts are the agreements signed between the airport management
companies and the Government.
 The ownership of the airport mostly will always remain with the state or central
government, the management is handed over to the private party for a fixed amount
of time as per the contract singed by both the parties
Evolution pattern for airport enterprise

 The evolution of airports towards a standalone firm has been achieved through the
implementation of more complex forms of services to satisfy the needs of
passengers, rather than identifying with the traditional air passengers and air
transport employees.
 The goal of modern airports is to attract passengers (customers) to use the airport
repeatedly. Like taking a flight route which transits that particular airport.
 These passengers when comfortable in an airport will spend money on the services
such as duty-free shopping, restaurants, pay to use the airport lounge etc.
 If the service and infrastructure proved is very good, passengers tend to take long
lay overs to visit the city which brings in added revenue to the state
Commercial airport philosophy

 Problems faced with turning a profit in an airport

 When compared with a city mall or city high street, the products on offer are far less
which does not allow the departing passengers to spend their money
 Covert buyers through offering product duty free and special discounts
 Expand target groups to include non-travellers and nearby communities