Airport Congestion: An Opportunity for Airlines


By John Wensveen, assistant professor of airline management
 
Many people believe we are heading toward an airport congestion crisis. In reality, congestion is an opportunity for airports and airlines. In the 21st century, the use of secondary and underused airports is the key to freeing congestion at major airports.

As a result of increased tourism, business, and shipping, the demand for air transport worldwide is increasing at a higher rate than the entire system can cope with. Demand for air travel is expected to double by 2010 -- for air cargo by 2007. Airplanes are being purchased and flight routes added, despite the lack of investment in ATC equipment, terminals, runways, and ground transport. The end result is inefficiency, congestion, and delay.

Aircraft at NightIn the United States, domestic travel is growing at a slower rate due to the use of e-mail and teleconferences as alternatives to business trips, but demand for international travel continues to soar. Many hub or primary airports are operating at or near peak capacity, and future development is hampered by increasingly strict environmental regulations. Is it possible to decrease congestion levels at hub airports, and what kind of impact will this have on the industry?

Following the Air Deregulation Act of 1978, carriers reorganized their structure in a way that offered them maximum market connection for minimum unit cost. They developed hub-and-spoke operations based in Chicago, St. Louis, Dallas-Fort Worth, Cincinnati, Atlanta, and other cities. Airline competition increased as new carriers entered the market, making travel more economical. The growth of hub operations has been dramatic. An estimated 40-50 percent of U.S. traffic connects at the hubs. In 14 of the top 30 U.S. passenger airports, 40 percent of the traffic is connecting flights.

Who is complaining about the heavy congestion that has resulted? Not the airports. Delayed passengers spend more time in the terminal and more money on concessions. It is the airlines that dislike congestion, because it disrupts flight schedules and increases taxi time, resulting in more fuel burn. Delaying a Boeing 747 with engines running for one minute per hour costs the world economy $1 million a year in lost productivity as passengers sit and wait. At any given time, 500 jets are idling.

Because the primary airports are no longer able to provide adequate service, airlines are turning increasingly to secondary airports.
An increasing number of new-entrant low-cost carriers are now attempting to compete on major trunk routes and dominate in underserved markets. In order to provide adequate service, however, airlines need slots, aircraft stands, terminals, handling capacity, punctuality, flexibility, low charges, and short connecting times. Because the primary airports are no longer able to provide such services, airlines are turning increasingly
to secondary airports. Southwest Airlines, based at Dallas-Love Field, is an example of a pioneer airline that set out to serve new markets and secondary airports more than 25 years ago. Today, airlines around the world are attempting to copy Southwest's success.

Secondary airports throughout the United States are now offering incentives to airlines in order to attract new business. In southern California, Hollywood-Burbank, Long Beach, and Orange County airports have become serious competitors with Los Angeles International Airport. In central Florida, just down the road from the congested Orlando International Airport, Sanford-Orlando International Airport provides a more efficient facility with full services. Airlines get cheaper landing fees and no congestion, while passengers get hassle-free travel and a central location for ground transport and Orlando's tourist attractions. Another nearby airport, Daytona Beach International, where Delta and Continental are the only scheduled airlines, hopes to compete with Sanford and add routes by offering attractive incentives to new carriers.

New-entrant low-cost carriers will continue to develop new route networks for underserved markets, but they will only be able to compete with major carriers in competitive markets if they operate at secondary airports. Regional airports should promote themselves to these airlines as viable solutions. To do so, however, they need to offer incentives, which most of them cannot afford. The federal government should offer temporary subsidies to secondary airports for this purpose. Another way to reduce congestion levels is to reduce environmental regulations, the number one barrier to future expansion at any airport. Making these regulations less strict will allow secondary airports to expand and accommodate increased demand for air services.

The views expressed in "Perspectives" are those of the writer and not necessarily Embry-Riddle's.