Airport Strategic Planning
Over the past 10 years, airport businesses have become more complex. The reasons include:
- Changing regulatory frameworks
- Shifting airline business models and consolidation
- New point-to-point routes made viable by new long-haul airframes
- Deregulation and increasing international passenger travel
- The changing nature of airport competition
- Broadening sources of commercial income
- New digital technologies enabling improved customer experience (and higher customer expectations)
- Portfolios of airports formed directly and through investment groups
- Increased financial expectations from new private-sector owners who have paid high prices in hotly contested auctions
These factors have forced airports to become more sophisticated commercial enterprises. Although we have helped clients navigate these trends successfully, the environment is becoming more complex again as new forces affect the airport sector:
- Millennials behave differently to their forebears. They are growing as a consumer group, and their behaviors are spreading to older cohorts. What is the offer for the future, and how should airports connect with the travelling consumer?
- Ground mobility is changing rapidly, with the transition to Mobility as a Service (MaaS) and the longer term migration to Connected Autonomous Vehicles: what ground transport services need to be developed, and how should precincts and assets be planned and built today to avoid redundancy in the future?
- Congestion is growing, both on the ground and in the air: how to manage demand, and where to most efficiently add infrastructure?
- Large internal and external datasets are creating opportunities to better understand and respond to passenger flows. What to do with all this data?
These shifts demand a clear focus on the core capabilities of the business, airline customer and passenger requirements. They also require a competitive position in order to create value and ensure airport relevance.
As the aviation landscape shifts to global “megahubs” for air traffic, combined with focused secondary airports catering to spoke points and LCC traffic, you need to establish where you fit within that model and the best way to succeed against competing airports. Airport design, terminal build-outs, route and airline development, regulations, and ownership structures all play into a well-defined airport strategy to best meet your niche and succeed against the relevant competitive set.
We have significant experience helping airports address a broad range of corporate strategy issues, including:
- Structuring an optimal airport portfolio, including assessing group businesses and optimal position in the value chain
- Translating best practices across airport groups and identifying group-wide synergies
- Identifying business development opportunities to leverage group assets
- Developing regulatory strategy, through an assessment of regulatory frameworks and the airports’ best responses to them
- Shifting strategy in response to disruptive changes in the airline and airport industries (e.g., growth of LCCs and development of new hub airport competition)
- Developing smart airport solutions that deliver tailored offers to the airlines’ key value drivers
- Developing the right organizational structure to maximize value at the asset and portfolio level
- Advising on M&A in airports and in structuring airport joint ventures and alliances
We help you make better decisions by developing a clear understanding of group capabilities and ways to use these to develop business across a broad range of airport customer and market segments.
Airport Strategic Planning Successes
Airport alliance development: A major European airport was considering a joint venture and cross shareholding with another capital city European airport. We evaluated the proposal based on key factors affecting the competitive position of the airport, the development of its key airline customer groups and the requirements of the main passenger segments. Then we assessed the commercial and operational synergies. Based on our analysis, our client was able to form a successful joint venture.
Regulatory strategy development: A capital city airport faced an upcoming regulatory review, during which a number of potential regulatory frameworks and investment decisions involving the airport were under consideration. We created scenarios of expected passenger flows based on the possible outcomes, helping our client understand expected return on capital depending on the regulatory framework. Based on this, we identified the optimal regulatory and investment strategy to pursue. This enabled our client to navigate the regulatory process to a successful outcome.
Long-term airport strategic planning: A regional airport owner and operator sought to develop medium- and long-term strategic plans for presentation at its annual board strategy day. We guided the portfolio airport and corporate head office managers in developing comprehensive strategic plans. As a result of our work, the client was able to present a series of well-articulated and well-supported strategic business plans, which were accepted by the board.
Airline relationships and value partnerships: A major international hub airport was considering a significant infrastructure investment. It was likely that the planning consent would depend on reducing the number of early-morning flights. We analyzed the effect this would have on the airlines — not only directly, but also through loss of passengers hubbing through the airport who would now find a more convenient alternative. L.E.K.’s advanced proprietary QIS applications helped assess the potential impact. The airport used the results in developing its own strategy and in discussions with the affected airlines.