Wednesday, September 19, 2012

The need for airport performance indicators

All businesses, whether in the public or private sector, need to measure and monitor their performance. The use of performance measures in the airport industry is particularly important because of the specific characteristics of airports. In a perfectly competitive environment, market forces will ensure that optimal performance can be equated with profitability. However, the conditions under which airports operate, are far from competitive. Regulatory, geographical, economic, social, and political constraints all hinder direct competition between airports. At the same time, the extent to which airports can attract other airports' traffic with different price levels or service levels is also very limited. Most airports therefore enjoy a quasi-monopolistic position and may abuse such a position by extracting high revenues from their customers. Profit may not equate with efficiency and productivity. Moreover, overall profitability is totally inadequate as a measure of the economic performance of discrete activity areas within an airport.

However, many airports still assess their performance by solely measuring profit or traffic growth. This in spite of a growing awareness by airport management of the financial and commercial implications of operating an airport.

Example: Sydney Airport Performance

Only a few airports have developed a systematic approach towards measuring performance. In general, there is no accepted industry practice for measuring airport performance. Additional indicators measuring the inputs and outputs in both physical and financial terms are essential.

In the coming weeks, we will explore more about how to measure an airport operation's efficiency and productivity. We will discuss performance indicators which serve as a management tool for the airports themselves. They are used to analyze and monitor past and present performance. Most importantly, they should make sure that management understands the financial mechanism of airport operation.

Tuesday, September 11, 2012

The role of an Airport Management Center for efficient operations

It is certainly a challenge to improve or at least maintain on-time performance and service quality with a continuously growing number of passengers. Airports are establishing structures, processes and technologies to address the challenges of today and the future. Eurocontrol's initiative of Airport Collaborative Decision Making (A-CDM) aims at improving the airside process with a focus on the aircraft turnaround. What about the rest? What about structures, processes and technologies to address this area of business together with the airport partners?

Coordination on ground is a quite complex matter. There are multiple players with their own coordination centers providing disparate services. You will find many shared processes and responsibilities though. Service levels are not aligned and processes have many interdependencies. Even though there are infrastructure limitations, airport and ATC slots, winter operation or specific passenger behavior, you will find rarely a 'superordinated' coordination.

An Airport Management Center (AMC) can address this challenge. The airport operator manages the operation together with their partners. Supported by the top managers of all partners the common goal is operational excellence. The key services are coordinated in one room, moderated by the airport, based on a free flow of information. This will not only require a room but also efficient IT systems.

However, are you ready for this change of culture? The airport's top management must be convinced that this change is necessary in order to achieve its goal. Unfortunately, most of the time such a re-thinking is triggered only after a bigger or smaller crisis. The starting point is a paradigm shift from administrating to orchestrating the operation. There the airport operator takes a leading role in managing the airport operation. The next challenge will be internal shifts of power and responsibilities. This is usually where such projects fail because it may include organizational changes.

After having overcome the mostly internal hurdles, the airport will have to take the initiative and convince their partners to join the center, build the room, implement new IT systems, and to provide know-how transfer and training.

What are the main functions of an AMC? It is an information center which collects and disseminates information. It facilitates communication because peers are sitting in the same room and can talk freely and efficiently. Decisions are made in a collaborative and coordinated manner. Of course, it also creates goodwill amongst the airport partners and a community feeling. Eventually, efficient teamwork, control over operational activities and a leading role by the airport will be achieved.

Monday, September 3, 2012

American queuing 76% better than individual queues

Once the flow of passengers passes a control point (security, passport) which has more than one control position, American Queuing system has clear psychological and physical benefits against individual queues.

  • Passengers is neither stressed by long lines even before he lines up nor does it give the impression of chaos.
  • They will not ask themselves whether they are in the wrong line, because the waiting time is the same for all passengers.
  • The queue will not block because of a "difficult case" which takes longer than usual.
  • The waiting time in the queue is not dependent on the performance of a single counter but depends on the number of occupied counters and on the average processing times.
  • The movement of the waiting passenger accelerates according to the number of available counters, i.e. the waiting time seems shorter for the waiting passengers (the queue moves constantly forward).
  • Individual queues need 76% more waiting area. With large number of passengers, passenger circulation is very limited or even prevented.
Sure there are disadvantage of the American Queuing system: It must be actively managed by 1-2 people in order to ensure optimal throughput at the checkpoint. And, when there are empty queues the posts and tapes interfere with the aesthetics of the waiting area.