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London Airports Operations Analytical Essay


Introduction

London is one of the most significant cities in the world. Very few cities can boast of a rich heritage such as London. The city is centuries old and has been the seat of the monarchy.

London is a very important city, not just in Europe, but also in the world. It provides vital access to Europe from other continents.

In addition to the role London plays as a transport and communication hub, it is also the financial hub of the European continent. It is a centre of commerce and an international meeting point for various cultures, traders, scholars and scientist.

These responsibilities continue to inform the transport and communication design of the city. London is home to some of the most sophisticated air, water, road and rail infrastructure that help the city to keep moving.

Currently, London has six airports. These are, Heathrow, Gatwick, Stansted, Luton City and Southend. Each of these airports plays an important role in ensuring that London maintains its international leadership status.

The goal of this paper is to examine London’s airport strategy. The examination will consider the organization of each of the six airports to uncover the general strategy in use to manage air transport in the city.

It will include the study of the impact the airports have on the economy of London, as well as the economic opportunities they bring to London. It will be paramount to find out the traffic size and patterns for the airports in order to appreciate the difficulties inherent in developing an airport strategy for the city.

Finally, the paper will consider the strategic initiatives that the city can use to enhance its airport strategy, against a backdrop of the initiatives currently underway.

Background to London

The rise of London as the most important city in Europe in the industrial age came with a heavy burden to streamline transport. In response, London developed a rail and bus system.

At the turn of the century, the airline industry began operations, initially as part of the war efforts in the First World War and then the Second World War. After the Second World War, London quickly became of the busiest air transport hubs, and currently houses the world’s busiest international airport.

The UK Civil Aviation Authority (CAA) regulates the entire industry. Different companies own and run the airports in different areas of the UK.

London is of itself a very vibrant market. Arguably, it is one of the largest markets anywhere on earth in terms of buying power. It is a relatively affluent city by comparison. Therefore, international business people from different countries seek a presence in London as a gateway to the commonwealth nations, and for the opportunity to buy into the lucrative London market.

Having presence in London usually gives companies a competitive advantage because of the seriousness that the city’s name holds in business arenas. The city houses many of the headquarters of international companies, while the London Stock Exchange is one of the most influential stock markets in the world.

The city’s unmatched connections to different cities across the world make it an important connection point for both goods and services. Both travellers and airlines find it easy to connect via London because of the opportunity that the city gives to them.

London is also home to some of the most reputed institutions of higher learning, or is the transit route to access internationally reputed learning institutions scattered across the UK. This makes students and professors to be among the important users of the London airports.

Other users include tourists on vacation seeking to enjoy the historical views that London has to offer. In fact, they comprise the largest traffic at Heathrow.

In addition, a number of people who visit London to access advanced healthcare services. These, among other factors, contribute to the importance of London as an international air traffic hub.

Analysis of Physical design of London Airports

The six London airports have distinct features and characteristics. This section analyses the airfields, terminals, use and access of the six London airports.

Heathrow

The London Heathrow Airport is the world’s busiest international airport by passenger traffic. The airport is in the Borough of Hillingdon, and is twenty-two miles from central London. Heathrow’s history as a large airport goes back to the Second World War.

There was need to build a large airport to support the war effort. However, the war ended before the completion of the airport. This did not halt the project, but led to its repurposing a civilian air terminal. It has since grown to become the world busiest airport by passenger traffic.

The airport has five terminals. Four are operational, while the fifth will be operational in part after completion of its first phase in 2014. The airport is currently operating beyond its capacity. While it should handle 55 million passengers per year, it handled 70 million passengers in 2011.

There extra passengers cause overcrowding at the airport making it one of the least favoured airports by travellers in Europe. The airport serves eighty-six airlines, which operate fights between one hundred and eighty six destinations in ninety countries.

The British flag carrier, British Airways operates from Heathrow while Virgin Atlantic uses Heathrow as one of its major hubs. The airport supports a mix of local and international flights with the latter forming the greater source of traffic.

Heathrow has two runways, each of them dedicated to either landing or taking off. There are plans to increase the number to three in order to increase the capacity to the airport. Initially, the airport had six runways but the other four became unusable as the needs of the airport changed.

To access Heathrow, passengers use the M25, high-speed trains using the subway or passenger buses from central London. There is access to parking for London residents, and there are cars for hire for those that want to drive themselves to their destinations. Taxis also provide transport services in and around the airport.

The airport is famous for its innovative methods aimed at increasing the efficiency of operations. As planes approach the airport, the join four holding stacks and spiral on their way down to the airport.

A plane leaves the bottom of the stack to the runway from each stack in succession while new planes join the top of the stack. This arrangement is unique to Heathrow, and is part of the reason why the airport has been able to keep up with demand despite serious capacity constraints.

Gatwick

The London Gatwick Airport is the second busiest airport in London after Heathrow when measured by passenger traffic. The history of the airport dates back to the late twenties when an aerodrome begun operations adjacent to the current airport site.

It was also part of the war effort. It provided a base for the Royal Air force. Gatwick has the largest number of point-to-point flights in Europe. It serves an average of fifty-two aircraft every hour.

The airport has two terminals, the Northern terminal and the Southern terminal. The airport is operating at seventy-eight percent capacity, which will run out by 2030. The airport will handle forty million passengers by the year 2020.

There is a proposal to construct a new runway and terminal, which will double the effective capacity of the airport. However, there are complaints by conservationist who oppose the expansion of the airport because it will increase noise and air pollution in the area.

Another plan that is in the works is the linking of the Heathrow and Gatwick airports by high-speed rail to turn the two airports into a single hub which will only require one check at Customs and Immigration. If this plan materialises, then it will make this hub the largest of its kind in the world.

It will make it possible to transfer flights between the two airports seamlessly. This idea aims at increasing the efficiency of both airports. It will allow one airport to relieve the other in case of any emergency.

Just like Heathrow, Gatwick provides services to many airlines including British Airways, Virgin Atlantic and Ryan air. Initially, most American bound planes used Gatwick airport, but this changed because of the Bermuda II treaty that led to the use of Heathrow as the airport of choice for American air companies.

Gatwick holds the key to the continued leadership position of London as an international business destination. London’s capacity to increase its potential lies in the expansion of the Gatwick airport to take up future traffic.

Stansted

Just like Heathrow and Gatwick, Stansted’s life as an airport received momentum during the Second World War, but did not begin civil aviation until the early sixties. The UK government decided to develop the Stansted airport as the third airfield in London to ease capacity constraints on Heathrow and Gatwick in the future.

The airport supports local and regional flights and is the main hub of Ryan air, among other airlines. The airport mainly serves low cost carriers because of its lower operational charges compared to Heathrow and Gatwick. There carriers include charter services. Stansted is the third busiest airline in London and the fourth busiest in the UK.

The M11 serves the airport as the main road access to the airport. In addition, there is access to other nearby towns via the A120. In addition, there are coaches and buses that provide transport to the airport. High-speed rail also provides passengers with another option of accessing the airport.

The airport operates with a single runway. Plans to construct a second runway failed to materialise because of local opposition, changes in the political landscape, and pressure on BAA, the then owners, to sell the airport.

BAA owned three out of the six airports in London, which presented a challenge to regulators charged with control of competition in the industry. In addition to the single runway, the airport operates using one terminal, which has three wings. A fourth wing is under construction and it will help to expand the existing capacity.

Luton

The London Luton Airport, located in the Borough of Luton, is the fourth busiest airport in London. The airport is relatively small with a total land area of 245 hectares. In 2010, ten million passengers used the airport, marking its highest number of passengers in its history.

The number fell to nine and a half million in 2011. Luton will need to serve up to sixteen million passengers by the year 2030. There is a master plan underway to increase the airport’s capacity to handle the rising passenger numbers.

The airport is the base for easyJet, and other low cost airlines. While the airport mainly serves local routes, it handles chartered flights to nearby continents. Access to the airport is via junction 10a which branches off from the M1 motorway. Like the other London airports, access to Luton can be by road, or rail, using cars buses and coaches.

The owner of the airport up to the mid nineties was a consortium of companies called the London Luton Airport Operations Limited. This consortium was a public private partnership that brought together Airport Group International (AGI) and Barclays Private Equity. However, the parties sold their interest in the airport to the TBI plc.

There is a lot of activity going on in the approval process of the expansion plans that include extending the runways and the taxiways to increase the capacity of the airport. Currently, it cannot carry craft with heavy payloads because of these constraints. The main opponents to the project cite environmental concerns including noise pollution, landscape and visual impact, and destruction of the local ecology and heritage.

London City Airport

The London city airport serves the financial district of London because of its proximity to the centre of the city. In 2011, three million passengers passed through the airport.

Operations at the airport began in 1987 after its original conception in 1981. The current owner of the airport is a consortium made up of Global infrastructure Partners (GIP) and AIG Financial Products.

There are some significant restrictions on the London City Airport. The first restriction came about because of the location of the airport in one of the busiest air spaces in London. A new authority came up to control airspace use.

The second restriction is that the airports runway is short and thirdly, in order to abate noise pollution, the airport allows only aircraft that can manoeuvre a steep glide slope. These restrictions mean that there are only certain types of aircraft can use the London City Airport.

The airport has only one terminal. Its location makes it very competitive for business travellers. However, the number of tourist travellers is on the rise.

Southend

The London Southend Airport also has its roots in the world wars. It started operations in First World War. After a brief return to its use as a grazing field, it gained prominence in the Second World War.

The current owner of the airport is the Stobart Group, which also operates the Carlisle Airport. Southend airport, located in the east of London at Essex, was the third busiest airport in the UK until Stansted took up that position in the seventies. Just like many of London’s airports, the Southend airport operates one runway.

The airport hopes to raise its passenger traffic to two million by the year 2030.Like the other London airports, access to Southend is by road, train, bus, and coaches. In addition, there are taxis and cars for hire at the airport to facilitate personal travel.

One of the major prospects for the airport is the upcoming London Olympic Games. Due to its location, the airport will have a major advantage as the airport serving the games. The airport anticipates a lot of business from visitors coming into London to participate in the 2012 Olympic Games.

The airport currently operates from a single terminal. There are major works underway to make it possible for the airport to support intra European flights once again.

Two airlines operate flights from the Southend Airport. Aer Lungus and easyJet operate flights to destinations within the UK, but easyJet has plans to expand its flight routes beyond the UK via the airport.

Airlines using London’s airports

The list of airlines using London’s airports is long. The British flag carrier, British Airways, flies to three London airports. The airports are Heathrow, Gatwick and London City Airports. The British Midland Airways, a fully owned subsidiary of Lufthansa operates almost two thousand flights from London’s airports every week making it one of the largest users of London’s airports.

The airlines serve routes in Europe, Asia and Africa. Virgin Atlantic is the other significant airline operating from London airports. It has destinations in America, Europe, Asia, and Africa and Australia. A number of national airlines from other countries operate flights to London with five or less flights per week from various capitals of the world. This makes London one of the most connected of all international cities in the world.

Apart from international long haul flights, London’s airports also support a large number of local and regional flights from its airports. The most prominent among these are Ryan Air and easyJet, which operate point-to-point no frills services to many destinations in Europe and in the UK.

Ryan air is the largest low cost carrier in Europe followed by easyJet. easyJet’s headquarter is in London Luton Airport while its main operating hub is the London Gatwick Airport. It is the largest airline by passenger traffic as s result of its point-to-point flights. Ryanair on the other hand largely operates its flights from London Stansted Airport, though its head office is at the Dublin Airport.

London is one of the busiest aviation routes with over a hundred airlines operating flights to the city. It is impossible to list each of the airlines within the scope of this paper. London has one of the best networks of international flight destinations in the world. This position will remain in that state for some time to come.

London’s Existing Capacity limitations

London has three significant capacity limitations that will limit its growth as an international air transport hub. First, most of London’s airports use single runways. While this is not an immediate problem, it is a very risky position for the city given the capacity constraints witnessed at Heathrow.

Heathrow has two runways, but it is operating at almost full capacity with very little margin for emergencies. Most of the other London airports will approach full capacity usage within the next two decades. The runway problem will be more difficult to mitigate because of the increasing pressure from social and environmental activists who are against the expansion of airports in their neighbourhoods.

The second significant capacity constraint that London airports face comes from the single terminal structure of most of its airports. While this is not necessarily a problem if the airport functions efficiently, it limits the overall capacity of the airport.

Heathrow has increased its passenger carrying capacity by the construction of new larger terminals demonstrating the potential impact of increasing terminal capacity. The single terminal structure used on more than half of London’s airports will become a significant constraint on the city once it exceeds its capacity to handle all the passengers in the city.

Thirdly, most of the airports do not own sufficient land to make it possible for them to expand their runways, taxiways and terminals. The worst affected airport is the London City Airport, which cannot extend its runway to allow aircraft with larger payloads to access it.

In addition to this limitation, the cost of real estate surrounding most of these airports is prohibitive to enable the airport authorities to acquire and develop them conveniently. If the city does not take radical action, it will find itself in a situation where it does not have any reserve capacity, which will in turn stall the city’s growth.

Consequences of Physical Design

Air Service Provided in London’s Airports

Due to their strategic nature, London’s airports provide a number of air services for both airlines and passengers. These services include aircraft maintenance, hotel, airport transfer services and parking service. The range of services is much broader.

The airports provide hangers for aircraft maintenance for the airlines with local bases. Airlines such as British Airways and easyJet use their bases in London airports to maintain their aircraft.

In addition, international aircraft that require emergency maintenance services get them from the London airports while on transit there. This is a significant economic resource for London because it provides jobs for maintenance crews and thereby stimulates the local economy.

The hospitality industry is also a critical provider of services at the London airports. The high numbers of passengers using London’s airports make them a perfect place to put up hotels. These hotels provide connecting passengers and crew with an opportunity to rest between flights.

This is very critical in London because of its place as an international hub. The presence of hotels also adds value to the local economy because it makes the provision of services a source of foreign exchange. The two largest airports, Heathrow and Gatwick have a number of hotels near their locations while there are plans to build an airport hotel at Stansted.

The third service area that is significant is the array of transport services linking the airports to the city of London. All the airports have road, and rail connections. Under road transport, several options exist for users. It is possible to use buses and coaches, or taxis to access locations within London.

In addition, there are car hire services for people who want to drive themselves into town. There are concepts in the books relating to the linking of the airports directly to facilitate better connection for passenger with connecting flights.

Airports also provide parking services for people flying out of London. The provision of parking is an important part of the service industry provided by airports that determines which airports people prefer to use.

As a result, the airports make it possible for passengers to book their parking spaces in advance to reassure them that they will have space to park their cars when they arrive.

How Airports Affect London’s Economy

The impact of the airports to London’s economy is very significant. The airports provide both direct and indirect jobs to the city residents and to some international workers. In addition, the airports bring in many business people from all countries of the world seeking trading opportunities in London. It also makes it possible for students, tourists and people seeking specialised services to travel to London.

Heathrow airport employs seventy six thousand people directly in the various services it provides there. These people come from all cadres from aeronautical engineers to baggage handlers.

The sheer numbers of people that pass through the airports make it necessary to have a very large number of people working in different departments. Passengers must go through security checks, medical exams, and other types of screening to ensure that the airport is safe for everyone.

This means that there are police officers, medical service providers and anti-terror operatives active at all times. The passengers also need food when they land or when they are stopping over for flights. This calls for hotel and fast food services. Some travellers like to get gifts from different countries hence the need to have souvenir shops at the airports.

The major impact the airports have on the UK economy is that it provides direct jobs for many Londoners, and gives London a special place in the world as a trading centre. Indeed, London is the financial capital of Europe because of the ease of access to it from different cities across Europe and the world.

Tourists also come to London bringing in foreign exchange. On the outward bound, Londoners can access jobs and opportunities in any city in the world that has a connection with London through one of its airports. They can export goods and services through these vital links. The airports are arguably the lifeblood of the city of London.

Consequences of Capacity Limitations

There are stark warnings that if London does not address its capacity limitations in the coming days then it may end up making huge losses in lost opportunities. Heathrow already has a bad reputation as a crowded airport, and one that may not handle an emergency effectively.

Most of the other airports have some reserve capacity, which will run out by 2030. The lack of space to expand airport runways in some airports and the already tight schedules that Heathrow operates threatens London’s expansion as an international destination.

In particular, London is very vulnerable in the South East where there is no international airport. A report by FTI Consulting showed that there will be “lost long benefits from around twenty million pounds to forty seven million pounds in net present value terms over periods of thirty to fifty years”.

The report adds that this is equivalent to loss of the opportunity to create fifteen thousand jobs every year . If London does not spruce up its capacity, then there is a real chance that the city will lose the related opportunities to other cities in Europe that have greater capacity for expansion.

London’s strategy

London’s airport strategy has several aspects informing its development. The first key feature of this strategy is that it evolved over time. Most of the airports did not arise from a citywide design but came up because of the needs at their time. The Second World War was especially influential in the location of the current airports.

Most of them came up to support the war effort as bases for the Royal Air Force, and the American forces. The administration of civil use airports also underwent several changes further demonstrating the fact that the London Airport strategy evolved over time as a reactive and not a proactive process.

This strategy development process explains the fact that there are issues currently with London’s vulnerability in the South East relating to its access to air transport.

The second significant element of London’s strategy is that it responded to demand, and still does. While this make a lot of business sense, it adversely affects the long range planning potential of the city hence exposes the city to serious bottlenecks.

The growth of Heathrow, and its expansion plans all respond to demand. The case of Heathrow is testament to the fact that demand patterns alone are a dangerous way of planning because of the potential for demand patterns to change. Currently, Heathrow is approaching full capacity and there is little space left to expand the airport.

The opening of terminal two will help to ease current congestion but it does not address the strategic issues relating to the airline industry. Other airports such as Gatwick are under increasing pressure to take up the Load from Heathrow with plans to connect the two airports to increase efficiencies.

This overreliance on Heathrow is very dangerous for London because of the adverse effects the economy would experience if Heathrow went offline.

The third aspect of London airport strategy is that the city is currently under immense pressure to increase its demand if it hopes to remain competitive. The only two airports with the capacity to handle international flights using long haul, heavy payload aircrafts on a constant basis are Heathrow and Gatwick.

If either of them went offline, then the city will simply be unable to cope with the consequences and it will lose its attractiveness as an international business and travel hub. This is the source of the pressure behind efforts to develop a second runway for Gatwick and a third one for Heathrow.

The final element of London’s airport strategy is that it is under increasing pressure from conservationists not to expand. There is very little that the London City Airport can do to expand its size because of its limited space.

Gatwick and Heathrow can annex some of the nearby land, but this is not acceptable to many conservation groups within London because they feel it will only increase pollution, and destroys heritage sites. Heathrow called off plans to builds new access routes based on concerns by conservationists and lack of political support.

Finally, each airport seems to respond to its challenges using its own priorities. While this is fine for business, it can be dangerous for London because it means that strategic decisions with a large upfront cost but greater longer-term benefits will not feature in the current plans.

This element of London’s airport strategy may cost the city future revenues because of the capacity limitations. It is true that some locations have better chances of hosting successful businesses, but neglecting others bring about problems as described by FTI consulting, where the South East of London lacks access to an airport.

This example demonstrates the need to develop a proactive strategy that looks at the longer term than simply those that make the most business sense in the short term.

The final feature of London’s airport strategy is the move towards greater efficiency with existing resources as compared to expansion of the resource base. This is one of the most promising trends in the London airport strategy.

This strategy is what makes Heathrow operational today despite its traffic load. Without the efficiencies that the airport uses to handle landings and takeoffs, it would not be possible to operate Heathrow at its current levels.

The only issue is the risk that these methods bring. If an accident took place at Heathrow, the economic cost will be very high. This explains why there is need to develop more capacity at Heathrow.

Alternative strategy

The following proposals can help London to improve its airport strategy.

Coordinated development: London’s airports have different owners who have different priorities hence they pursue different development models. While this is the main philosophy behind liberalization of markets, it often fails to deliver all round development.

Business people go for the best opportunities to make a profit as soon as possible hence they may fail to consider the overall needs of the communities that host them. There is a critical need to control the development of London’s airports to enable the city to respond better to both unforeseen disasters and opportunities.

For instance, there is need to develop risk analysis models to determine whether London can survive the catastrophic loss of either Gatwick or Heathrow.

Expansion of Gatwick and Stansted: The second proposal for London to consider is expanding the physical size of both Gatwick and Stansted to ensure that they can handle Heathrows traffic if need arises. It will be better if the city uses a longer planning horizon such as fifty years as opposed to the current fixation with 2030.

All the airport expansion plans seem to look at 2030 as the crunch year for London’s airports. A longer planning horizon can look at issues like reserving space for development such that when the time comes for further airport expansion, then the process will be quicker.

It will eliminate constrains such as those outlined regarding the London Luton Airport, which is currently too small, and it cannot acquire the land it needs because of local resistance.

Work on an efficiency focussed paradigm: There is a real opportunity for the airports in London such as the London City Airport to expand its operational capacity by increasing its operational efficiency. The example of Heathrow on this front provides lessons on how to manage increasing demand versus dwindling capacity.

The idea behind this proposal is that if there is an airport that cannot expand its capacity simply by increasing the size of its runways and taxiways, and also its terminals, then it can improve the efficiency of handling the passengers to ensure that they take as little time as possible at the airport.

It means that the airports should invest in efficiency by studying better handling methods, such as online check in and remote security checks, and faster baggage handling to reduce check in and checkout time.

Development of a gateway to the South East of London: On the issue of South East London, it may not be viable to construct a new airport, but it may be sensible to connect the nearest airports to the southeast using high-speed dedicated rail service.

In fact, the idea of remote check in and remote frisking can work here. Using remote sites to conduct security checks means that the airports will become rapid transit zones. It will be even safer because no one, such as terrorists seeking access to the airport will be near enough to inflict any damage on it.

This approach will also ensure that there is an area in London free from air traffic. This in itself will make the place attractive to locate facilities evading noise from aircraft.

Conclusions

  1. London is a strategic city with a lot of economic potential because of its network of airports. The city has six airports each with some kind of capacity to handle international flights. The connections of the airports to many cities around the world make London a convenient connection point and stop over for many flights and passengers.
  2. The current capacity constraints threaten future prospects for the city as an international hub. The airports cannot expands as easily as they would like hence London stands to lose some of the aviation business to better placed European countries. This will lead to massive losses in future opportunities in both revenues and jobs.
  3. The most significant forces derailing the expansion of London’s airports include rise in property prices and conservation activism. Airports that must acquire land to expand have to spend much more that it cost to acquire the original sites because of the rise in value of lands adjacent to airports because of their commercial value. In addition, there is pressure from social activists and environmental activists who are against the expansion of airports citing air and noise pollution, and the destruction of natural habitats and heritage sites.
  4. Efficiency is one of the major opportunities for the growth of the aviation industry in London. Airports can significantly increase their operating capacity by improving the efficiency of operations. The model available for the development of this concept is Heathrow Airport.
  5. A possible idea to use to increase airport efficiency is the development of remote immigration and customs, and security checks to help expand the airports capacity. It will transform the airports to rapid transit zones. It also calls for a similar baggage handling system.

The future of London rests in the actions that the current industry players will take. If they choose a strategic route that takes into account the future needs of the city, then all will be well. However, if they follow the current demand driven models and short range planning, then London will lose its competitive advantage as an international hub.

Reference List

Bazargan, M., 2010. Airline Operations and Scheduling. 2nd ed. Hampshire: Ashgate publishing.

Bieger, T. & Agosti, S., 2005. Business Models in the Airline Sector: Evolution and Perspectives. In Strategic Management in the Aviation Industry. Hampshire: Ashgate Publishing, Ltd. pp.41-48.

Button, K., 2010. Transport Economics. Cheltenham, UK: Edward Elgar Publishing.

Cento, A., 2008. The Airline IndustryL Challenges in the 21st Century. Heidelberg: Springer.

FTI Consulting, 2011. The Importance of Aviation Infrastructure to Sustainable Economic Growth. Consultancy Report. London: FTI Consulting Gatwick Airport.

Goedeking, P., 2010. Networks in Aviation: Strategies and Structures. Heidelberg: Springer.

Heathrow, 2011. . Web.

, 2011. Press Release December 2011 traffic performance summary. Web.

O’Fallon, M.J. & Rutherford, D.G., 2010. Hotel Management and Operations. 5th ed. Hoboken, NJ: John Wiley and Sons.

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