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Airport Competition and Marketing Report

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Updated: Mar 2nd, 2021

Review Questions

  • Discuss the differences between the trade, i.e. airlines who buy the airport facilities direct and the general public or travelers who consume the airport product.
    • The difference between the trade and passengers is in the fact that to attract these customers, airports need to propose different types of adequate services. Thus, when passengers are interested in the easy access to the airport, presence of airline lounges, and costs, airlines are interested in the airport’s capacity and frequency.
  • A common way to segment demand is by airline product type. Assume you were an airport manager. Discuss the following marketing approaches for your airport: full-cost traditional service, a low-cost service, and charter service for your airport.
    • The full-cost traditional service is appropriate for large international airports, where customers are interested in the quality and types of the provided services. A low-cost service is appropriate for domestic airports in order to guarantee the customers’ interest and frequency. Charter can also be used in international airports, but the focus is on timely services, rather than on a variety of services.
  • For airports that attract many business travelers, marketing research related to the size of nearby businesses and any new development can prove very successful to assess future demands. Discuss other marketing research-related activities that could help an airport manager in estimating demand.
    • In order to estimate demand, a marketer should focus on researching the environment and passengers’ interests. It is important to examine the particular features of the geographic location, transport connection, and infrastructure. A marketer should realize the needs of customers to determine whether to propose full-cost, low-cost, or charter services. Much information about passengers is important to examine their purposes of travel and specific behaviors and interests in order to be able to propose the expected services.
  • In Chapter 7 of the Graham textbook the concept of “airport groups” is discussed. Explain this concept.
    • Airport groups consist of several airports that are organized or privatized as one group in order to realize the coordinated management. Airports within the group follow one strategy, and they can share different types of resources in order to reduce costs and risks. As a result, airport groups can effectively compete within the industry (Graham, 2008, p. 237).

Playing the Role of an Airport Manager

In order to attract more customers and increase frequency, the international airport should implement the following discount scheme:

  • New routes discounts on landing charges:
    • Year 1 – Intercontinental (100%), Europe (85%);
    • Year 2 – Intercontinental (90%), Europe (75%).
  • New routes discounts on passenger charges:
    • Year 1 – Intercontinental (100%), Europe (70%);
    • Year 2 – Intercontinental (80%), Europe (50%).
  • Flight frequency discount:
    • Year 1- 40%,
    • Year 2 – 30%.

This discount scheme represents comparably low airport charges that can be discussed as attractive for customers. Decreases in airport charges regarding new routes often lead to increasing the number of new routes and to increases in the overall capacity. Furthermore, decreases in the charges on passengers also lead to encouraging capacity and to the guaranteed increases in the number of travelers (Graham, 2008, p. 248). The provision of the high flight frequency discount has a similar effect that also contributes to increasing capacity and frequency.

Discussion: Airline Discounts

Many types of discounts are used in Warsaw Chopin Airport, Poland, to overcome economic challenges in the aviation market. To increase the number of new routes, Leads Bradford Airport, UK, actively uses the new routes landing charge discount. In the United States, many airports use additional flights landing charge discounts to attract customers to certain destinations, such as Las Vegas. Exeter International Airport, UK, additionally introduced the landing charge discount for non-stop service to increase the number of new routes.

Landing charge discount for positioning flights and aircraft parking charge discount is introduced in the Newquay Cornwall Airport, UK, because of the necessity to base aircraft. Transfer passenger and passenger charge discounts are typical for London Heathrow Airport, UK, because these approaches increase the number of passengers and overall frequency. Daytime flight passenger and landing charge discounts are used in Essendon Airport, Australia, because of the increased capacity and frequency (Graham, 2008, p. 249).

Reference

Graham, A. (2008). Managing airports. London, UK: Routledge.

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