Airport Marketing In recent years, the airport sector has moved from an industry characterised by public sector ownership and national requirements into a new era of airport management, which is beginning to be dominated by the private sector and international players. Airports are now complex enterprises that require a wide range of business competencies and skills to meet the needs of their users, just as with any other industry. Moreover, deregulation of air transport markets has made the airport sector much more competitive and given airports greater incentives to develop innovative, proactive and aggressive marketing strategies so that they can reap the benefits of these developments. New types of airline business model, such as low cost carriers, have emerged through deregulation; in many cases these require airport marketers to adopt a completely different approach and have encouraged a further deviation from past practice. The travelling public is also becoming more experienced, and is generally placing greater demands on the airport operator to deliver a quality product at a time when more stringent controls, especially as regards security, have been introduced. This book fills an important need for an up-to-date, accessible and in-depth textbook that introduces students and practitioners to the principles and practice of airport mar- keting, as well as the major changes and future marketing challenges facing the airport sector. It applies principles of marketing to the airport industry, and examines airport marketing and its environment, how to define and measure the market for airport ser- vices, airport marketing planning and individual elements of the airport marketing mix (product, price, promotion and distribution). The book integrates key elements of mar- keting theory with airport marketing in practice. Each chapter contains extensive industry examples from different types of airport around the world to build on the theoretical base of the subject and show real-life applications. The dynamic nature of the airport industry requires students and practitioners to have athorough contemporary appreciation of airport marketing issues and challenges. This comprehensive and accessible textbook, written by two airport marketing experts, satisfies this need and is essential reading for air transport students and future managers. Nigel Halpern is Associate Professor at Molde University College. Nigel is also Senior Research Scientist with Molde Research Institute and Visiting Research Fellow with the Centre for Tourism Research at the University of Westminster. He was previously Principal Lecturer and Subject Group Director in Aviation at the Centre for Civil Aviation, London Metropolitan University. Nigel currently teaches and conducts research and consultancy in transport and tourism, focusing largely on airport marketing. Anne Grahamis Reader in Air Transport and Tourism at the University of Westminster, having previously worked in air transport consultancy. She is Editor-in-chief of the Journal of Air Transport Management and the author of Managing Airports. She has been involved in air transport teaching, research and consultancy for over 25 years. This page intentionally left blank Airport Marketing Nigel Halpern and Anne Graham First published 2013 by Routledge 2Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada byRoutledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business ©2013 Nigel Halpern and Anne Graham The right of Nigel Halpern and Anne Graham to be identified as the authors of this work has been asserted by them in accordance with sections 77 and 78 ofthe Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice:Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing in Publication Data Acatalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Halpern, Nigel. Airport marketing / Nigel Halpern, Anne Graham. pages cm Includes bibliographical references and index. 1. Airports—Economic aspects. 2. Airports—Management. 3. Aeronautics, Commercial—Economic aspects. I. Graham, Anne. II. Title. HE9797.4.E3H35 2013 387.7'360688—dc23 2012046166 ISBN: 978-0-415-52938-9 (hbk) ISBN: 978-0-415-52939-6 (pbk) ISBN: 978-0-203-11790-3 (ebk) Typeset in Sabon and Frutiger by Keystroke, Station Road, Codsall, Wolverhampton Contents List of figures vii List of tables ix Preface xi Acknowledgements xiii List of abbreviations xv 1 Introduction 1 1.1 Evolution of airport marketing 1 1.2 Approach to airport marketing in this book 7 References 11 2 The airport marketing environment 13 2.1 Introduction to the airport marketing environment 13 2.2 The airport’s microenvironment 15 2.3 The airport’s macroenvironment 24 References 42 3 The market for airport services 45 3.1 The airport’s customers 45 3.2 Airport market segmentation 52 References 61 4 Airport marketing research 63 4.1 Definition and the role of marketing research 63 4.2 The nature of airport marketing research 65 4.3 The ASD process 66 4.4 Secondary research 71 4.5 Primary research 79 References 87 5 Airport marketing planning 88 5.1 Introduction to the marketing planning process 88 5.2 The airport marketing planning process 89 v Contents 5.3 Example airport marketing programmes 115 References 115 6 The airport product 117 6.1 Definition of the airport product 117 6.2 Features of the airport product and its controllability 120 6.3 The airport brand 125 6.4 Evaluating the product on offer 130 6.5 Planning airport products 133 References 140 7 Airport pricing 142 7.1 Factors that can affect airport pricing decisions 142 7.2 Sources of airport cost and revenue 144 7.3 Types of airport user charge 147 7.4 Economic regulatory environment 156 7.5 Incentive mechanisms 159 References 167 8 Promotion of airports 169 8.1 The promotional mix 169 8.2 The changing communications landscape 186 8.3 Integrated and effective marketing communications 188 References 190 9 Airport distribution 193 9.1 Introduction to airport distribution 193 9.2 Evolution of airport distribution 195 9.3 Approaches to airport distribution 195 9.4 CRM 209 References 217 Index 219 vi Figures 1.1 Change in marketing staff at selected UK regional airports, 1991–1997 5 1.2 Methods used by airports to market themselves to airlines 6 1.3 Marketing expenditure at US large hub airports, 2011 7 2.1 The marketing environment 14 2.2 Organisational chart for Copenhagen Airports 15 2.3 Organisational chart for Dallas/Fort Worth International Airport 16 2.4 Organisational chart for CAG 17 2.5 Organisational chart for Dubai Airports 18 2.6 International airport passengers at African airports by month, 2010–2012 25 2.7 Scheduled RPKs by alliance, 2011 30 2.8 RPKs by airline type, 2003 and 2011 31 2.9 Economic growth and airport passenger demand, 1996–2011 32 2.10 Forecast growth rates of GDP, RPKs and RTKs by region, 2011–2031 33 2.11 Share of airport passengers by global regions, 2009 and 2029 34 2.12 Jet kerosene price and fuel as a proportion of total airline operating cost, 2002–2012 35 3.1 Accompanying visitors at Los Angeles International Airport by purpose of trip and type of passenger, 2006 47 3.2 Key positioning strategies for airports in Europe 60 4.1 Stages in the ASD process 67 4.2 UK CAA passenger survey for London Heathrow Airport 74 4.3 Types of survey performed in the last five years at US airports 81 4.4 London City Airport Budapest questionnaire 82 5.1 Main stages in the marketing planning process 88 5.2 Portfolio analysis models 92 6.1 The airport product for airlines 118 6.2 The airport product for passengers 119 6.3 Homepage of Turin Airport 123 6.4 Homepage of Gold Coast Airport 124 6.5 Airport logos 128 6.6 Importance–performance grid 132 6.7 The passenger experience at the airport 133 6.8 LCC product preferences 136 vii List of figures 6.9 Advert for family-orientated product features at London Heathrow Airport 138 7.1 Factors affecting airport pricing decisions 143 7.2 Total airport revenue by region and source, 2010 146 7.3 Worldwide airport revenue by item, 2010 146 7.4 Main mechanisms for regulating airport charges 157 8.1 The promotional mix 170 8.2 Castellón Airport sponsorship of Villarreal Football Club 170 8.3 Fort Smith Regional Airport ‘Simply Fly Fort Smith’ campaign 171 8.4 Promotional leaflet used by Pajala-Ylläs Airport 172 8.5 Airport banners on anna.aero, October 2012 174 8.6 Swedavia World Routes advertisement 176 8.7 Singapore Changi Airport ‘2x7%’ campaign 178 8.8 Prince George Airport advertisement for Facebook 181 8.9 Social media used by airports worldwide, as of year-end 2010 183 8.10 ‘Check-In to Great Deals at DFW Airport’ social media campaign 184 8.11 London Heathrow Airport advertising campaigns, summer 2011 187 9.1 Distribution structure of an airport 194 9.2 Freedoms and possible restrictions of Council Directive 96/97/EC 201 9.3 Ground handling market at airports in Europe, 1996 and 2010 202 9.4 Frankfurt Hahn Airport’s homepage 209 9.5 Comarch’s CRM suite for airports 210 9.6 FlyDBQ Rewards programme 213 9.7 Bristol Airport Rewards 214 9.8 RIX Club 214 9.9 iPhone screenshots for myLJLA 216 viii Tables 1.1 Expenditure by US commercial service airports on marketing, advertising and promotions, 2011 6 1.2 Characteristics of a service and implications for airport marketing 7 2.1 Suppliers of airport services at Humberside Airport and East Midlands Airport, 2011 19 2.2 Stakeholders at Amsterdam Schiphol Airport, 2012 23 2.3 Stakeholders at London Heathrow Airport, 2012 23 2.4 Examples of airport privatisations 27 2.5 Use of self-service, mobile and social network services by airports in Europe, 2011 38 2.6 British social attitudes survey, 2003–2011 40 2.7 Factors likely to influence future scenarios for aviation in the UK 41 3.1 Airport information provided on The Route Shop and Routes Online websites for potential airlines 49 3.2 Factors influencing cargo operators’ choice of airport 49 3.3 Reasons for passenger airport choice at UK airports (% respondents), 2011 51 3.4 Reasons for passenger airport choice at Washington Airports (% respondents), 2009 51 3.5 Segmentation variables for key airport customers 53 3.6 Factors influencing LCCs’ choice of airport 54 3.7 Passenger segmentation variables related to trip characteristics at Frankfurt Airport, 2011 57 3.8 Passenger segmentation variables related to trip characteristics at Athens International Airport, 2010 58 3.9 Passenger lifestyle segmentation based on demographic variables at Dallas/Fort Worth International Airport, 2009 59 3.10 Passenger segmentation related to shopping behaviour at selected European airports 59 4.1 Typical information provided by airport marketers for airlines at ASD meetings 70 4.2 Examples of types of data obtained from BSP sources used by Nice Côte d’Azur Airport to support its ASD activities in 2012 72 ix