Protecting the Aviation Ecosystem

Shifting to a more service-focused business model can help airports increase revenue

• By David Lenot
• Feb 01, 2020

Today’s airports are bigger and more inviting than ever before. With so many people moving through them as well as an increasingly wide array of services on offer, they can start to feel like miniature cities. It would be easy to think of these complex ecosystems as having multiple ways to make money. However, the reality is that, for airports, there are only two sources of revenue: aviation and non-aviation revenue.

Aviation revenues mean airports make money when aircraft take off and land. Airlines pay airports to use their infrastructure, including runways and buildings. Aviation-related activities represent half the revenue generated by an airport. The other half is generated by non-aviation activity, including retail, parking and any other services that an airport can provide to a passenger or an airline.

Essentially, airports have an infrastructure that is used by airlines, ground handlers, retailers and passengers every day. But, in order to improve operations and increase revenue, airports are going to have to think about more than just infrastructure.

Instead of simply being a place where aircraft land and where people complain about wait times, airports need to start seeing themselves as service providers for these various groups. By adopting this mindset, they will be able to increase their ability to deliver better services while helping to make the entire ecosystem run smoothly.

Aviation-side Revenue

Most airports struggle with capacity. It takes time for an aircraft to land, get to a gate, offload passengers, board passengers and then take off again. This process is the turnaround time. When an airport can reduce the turnaround time, everyone benefits.

First, airports benefit because they can schedule more flights to access their infrastructure. This leads to an increase in revenue because they collect fees from more airlines. At the same time, individual airlines save money because they actually access the infrastructure for a shorter amount of time.

If an airport wants to increase aviation revenue, they need to increase the number of aircraft landing and taking off. But there are some fundamental problems here. From the outside, it might seem that the easiest solution would be to add more runways and terminals to their infrastructure. Unfortunately, given the limited space in and around airports, this is all but impossible for most of them.

That said, in the traditional way of thinking, even if they could add more infrastructure, airports do not actually control turnaround time. They simply provide the infrastructure for the airlines to use. This means to increase aviation revenue, airports are going to have to expand their offering to include infrastructure and services.

By providing services that help airlines and ground handlers perform their tasks more efficiently, airports can support them in their efforts to reduce turnaround times. This will result in a greater number of aircraft using the airport, which is positive for everyone.

Standalone Processes Slow Operations

One of the challenges associated with decreasing turnaround time has been security. Security is a standalone process that exists within the airport but is driven by third parties, namely governments through police and customs.

From the airport’s perspective, one of the main impacts of security is the imposition of hard stops between passengers and aircraft. This can draw out turnaround time and exists outside of the airport’s control. As a result, security can be seen as a significant pain point for both airports and airlines because it keeps everyone from doing things faster.

From our perspective, the top priority is always to make sure that things are done in a secure fashion. Previously, this has meant that airport security was conducted by people through processes that were not interested in operations. Rather than being concerned with aircraft taking off and landing, the sole focus of airport security is on whether or not it is safe to do so.

Just because security has functioned separately from airport operations in the past does not mean that it has to continue. In fact, some vendors are now working toward developing partnerships with airports to support them in their business.

A Unified Platform Can Facilitate Cooperation

Bringing stakeholders together is an important step in creating successful business strategies. When vendors help connect airport security staff with the departments that are concerned with revenue generation, operations, passenger experience and wait times, they can improve both operations and revenue generation.

The challenge here is to bring different groups with different roles, responsibilities and objectives together in such a way that they can communicate and share information. The solution is to enable them to use the same infrastructure by supporting their cooperation at the system level.

But how does this happen? When it comes to airports, security staff focus on areas that are at higher risk. Locations that have a higher risk of theft, for example, are often those areas where people come together or a lot of activity takes place. In an ideal situation, security staff will move toward high-risk areas in order to prevent theft or mitigate risk.

So, for example, security does not need to focus on areas around closed gates because it is unlikely that anything will transpire there. However, if an aircraft arrives from a country that has demonstrated security risks, then security should be looking at the gate where that specific aircraft from that specific country of origin is landing.

In order to inform security staff, an airport needs to use a platform that makes sharing this information possible. They need a platform that can ingest data from other systems and make it easily accessible to security staff. It requires a solution that receives operational data and then automates processes to allow for faster reactions.

Linking security systems with operational systems allows everyone to deliver better service. By shifting their focus toward providing services in this way, an airport enables security, airlines, and ground-handlers to receive actionable information.

Working with a unified platform can help make security operators more efficient because they are able to focus on places that present the greatest risk. At the same time, it can facilitate operational efficiency by automating the process of dispatching people to locations where they are needed. The result is faster, more efficient service, which has a positive impact on passenger experience as well as aviation revenue.

The Impact of Ride-sharing on Airport Revenue

The non-aviation side makes up the other half of an airport’s revenue. It is comprised of different streams, including parking and retail. Of these, parking is the most significant although it has been on the decline in recent years.

Traditionally, people had three ways to come into an airport: driving and parking, public transportation and taxis. The first was the most lucrative for the airport.

Passengers would drive into one of many lots and pay to leave their vehicles for the duration of their trip. Of the other two methods, public transportation generates no income for airports, but taxis do in the form of contracts and licenses issued to taxi companies and drivers.

The arrival of ride sharing on the market has had a dramatic impact on airport revenue. Because ride-share cars are essentially private cars, they cut down on the number of contracts and licenses being issued. At the same time, they also significantly reduce the number of cars parked at the airport as ride shares simply drop passengers off.

Ride-sharing companies are clearly making money taking passengers to and from the airport. For their part, airports are providing these companies with the service and infrastructure, including road access, necessary to generate that revenue. The question is, how can they recoup their investment from these companies?

Increased Revenue with Automatic License Plate Recognition

As a service provider who is losing parking revenue and who has had to increase investment in roads, because ride-sharing companies use them so much, airports want these newly-established companies to contribute.

To do this, airports need to be able to differentiate between ride-share and private vehicles in order to recoup their investment.

The best way to achieve this is by capturing the license plate of every car that drives into an airport’s environment. With this information, airports can then track vehicles that frequently drive through their jurisdiction and can also cross reference them against the list that ride-sharing companies are having to provide.

Some airports already have contracts with ride-sharing companies. Until now, the terms of the contracts have meant that the ride-sharing company would inform the airport about how many of their vehicles had accessed the airport and then pay the airport accordingly.

With an automatic license plate recognition system, the airports have greater visibility into which cars are accessing their infrastructure and how often.

By shifting to a more service-focused business model, airports can improve their offering and increase their revenue. When they unify their operational systems with their security platform, they can improve service through the sharing of important information. This can help them increase revenue generation on both sides of their environment.

This article originally appeared in the January / February 2020 issue of Security Today.