Airport Practices for Onboarding a New Passenger Airline (2024)
Chapter: 3 Literature Review
CHAPTER 3
Literature Review
Aviation Industry
America’s transportation system has aviation at its core—aviation has provided the most direct path to a global economy. The movement of people and goods is enabled more efficiently, cost effectively, and expediently through aviation. Airlines are the core of this dynamic industry.
It would be short-sighted to recognize the role of airlines without lauding the integral role airports play in the national air transportation system. Airports serve as the backbone of the aviation industry. Providing safe and secure runways, waterways, and helipads is the business of airports. However, airports are only successful if aviation users, including airlines, are properly served. Aviation is one of the most interdependent and synergistic industries on the planet—One aspect of the industry cannot exist without the other.
As the industry continues to experience significant growth, especially following the COVID-19 pandemic, airports have evolved to meet the needs of all tenants, including airlines. It is common practice for airports to work not only to retain existing airlines (by maintaining reasonable costs, ensuring exceptional customer service, and maintaining a safe and secure airport environment), but to exert considerable effort to recruit new airlines. Being perceived by the traveling public as an airport with excellent airline service providing sufficient nonstop and connecting destinations reinforces the synergistic roles airports and airlines have for the benefit of their communities.
The process of attracting airlines to begin serving an airport is common in the airport industry. Known as air service development or route development, catering to airlines in the hopes of attracting them to begin service at an airport is a long process that requires many months or years of research, planning, and collaboration. Route development encompasses the “marketing activities undertaken by airports with the aim of attracting new routes, for example through participation in route development conferences, offering incentive schemes, meetings with airlines, etc.” (Halpern and Graham 2015, p. 214). Airports engage in the “attraction, initiation, expansion, retention, or any improvement in air service and can include changes in pricing, frequency, capacity, hub connectivity, or the number of nonstop destinations served” (Halpern and Graham 2015, p. 214). Often, airports hire former airline route/network planners to engage with airlines for air service development initiatives.
Martin (2009), in ACRP Report 18: Passenger Air Service Development Techniques, does a thorough job of reviewing the topic of air service development. This synthesis, on the other hand, focuses on the activities undertaken by airports after an airline has announced plans to begin serving an airport—the behind-the-scenes preparation for new airline service.
Categories of Airlines
Airlines can be categorized into four groups:
- Network/legacy carriers (e.g., American Airlines, Delta Air Lines, United Airlines). These carriers are the largest airlines, typically with global reach. They have hundreds of aircraft in their fleets and tens of thousands of employees. Such carriers serve leisure, business, and first-class passengers—often on the same flight. These airlines typically have airport lounges and well-developed frequent flier programs and commonly provide in-flight entertainment and Wi-Fi on each aircraft.
- Low-cost carriers (e.g., Southwest Airlines, JetBlue Airlines, Alaska Airlines, Hawaiian Airlines). These airlines have low operating costs and typically offer tickets that may not always be the lowest priced but may not be consider high-priced. Commonly, these airlines include some amenities in their ticket prices.
- Ultra-low-cost carriers (e.g., Allegiant Airlines, Avelo Airlines, Breeze Airways, Frontier Airlines). These airlines offer “no-frills” tickets and may charge extra for checked and carry-on luggage, seat selection, and in-flight food and drinks. These airlines are extremely cost-conscious in their operations and management, which allows them to offer the lowest airfares. By not including the cost of a bag, snacks, drinks, in-flight entertainment, and other amenities in the ticket price, these airlines can often offer extremely low fares and perceived high value.
- Regional carriers (e.g., SkyWest Airlines, Envoy Air, Mesa Airlines). These airlines generally fly smaller regional jets or turboprop aircraft and fly as feeders to larger airlines, commonly in a codeshare agreement. Regional carriers can also operate under Capacity Purchase Agreements (CPAs) with other carriers (typically network/legacy). The network carrier purchases capacity from a regional carrier based on an agreed contract. The regional carrier is generally responsible for its own profit, although the elements of the contracts differ according to the specific agreement. The network carrier schedules the regional airline’s aircraft.
Each of these categories of airlines has different target markets, different cost structures, and different requirements from an airport. “It is possible for an airport to have all . . . types of carriers serving its community, as each services a distinct segment of the travelling public” (Gordin and Galvan-Peterson 2015, p. 5). This variety of categories can create a challenging dynamic for an airport as it strives to retain existing airlines by maintaining a reasonable cost structure and delivering exceptional customer service (including sufficient gate space and so forth), while recruiting new airlines to begin service.
Costs
Airports assess rates and charges to (1) recover the costs of operating the airfield and terminal, (2) ensure financial self-sufficiency, and (3) comply with FAA grant assurances. “Airport cost is defined as any cost associated with operating at the airport. The lower the airport costs, the better position an airport is to maintain and expand air service” (Gordin and Galvan-Peterson 2015, p. 15). “[Airline] costs typically include terminal fee, gate-use fees, rental fees, landing fees, cost per enplaned passenger (CPE), fixed base operator (FBO) charges, and charges for other services” (Abdelghany n.d., para. 17).
According to the FAA:
All commercial-service airports operating in the United States and most other airports that are open to the public have accepted grants for airport development under the Airport Improvement Program, authorized in Title 49 of the United States Code, Subtitle VII, Part B, Chapter 471. Under § 47107, in exchange for receiving grant funds, airport operators must give a variety of assurances regarding the
operation of their airports and the implementation of grant funded projects. Among other things, airport operators pledge to make the airport available for public use on reasonable conditions and without unjust discrimination [49 U.S.C. 47107(a)(1)]. This obligation encompasses the obligation to establish reasonable and not unjustly discriminatory fees and charges for aeronautical use of the airfield. The Department’s rules of practice and procedure for enforcement proceedings involving Federally assisted airports are set forth in 14 CFR Part 16 (FAA 2018).
The various rates and charges are to be applied without discrimination, meaning new airlines will be subject to these costs, just as incumbent airlines. This can be a significant concern. “Cost was identified by both airports and air carriers as a primary factor in maintaining service to a community and cannot be underestimated. This includes the total cost of operating at the airport” (Gordin and Galvan-Peterson 2015, p. 15). Even though the assessment of reasonable rates and charges is expected, “Constantly seeking alternatives to raising airline rates and charges is beneficial for the airport in maintaining current air service” (Gordin and Galvan-Peterson 2015, p. 16).
Systemwide, airlines perennially voice concerns with airport rates and charges and want to keep costs as low as possible so as to produce lower costs per enplaned passenger (CPEPs), which can translate into lower ticket prices and greater airline operating efficiencies. “As an airline, we don’t differentiate airport costs versus non-airport costs on the ground. When you sum up the total ground costs from one airport and compare them to the next, that is what we look at” (Airline analyst in Gordin and Galvan-Peterson 2015, p. 16). “When asked about strategies for maintaining air service at their facilities, survey respondents emphasized that controlling costs and lowering them as much as possible was of paramount concern” (Gordin and Galvan-Peterson 2015, p. 24.).
British Airways Onboarding at Pittsburgh International Airport
When Dennis Murrio and his Pittsburgh International Airport (PIT) paint crew finished painting the apron in anticipation of British Airways’ arrival in a 787 Dreamliner, he knew it was a big deal.
“As far as BA coming in, it’s great. We gave (the apron) a little extra TLC,” Murrio said.
At PIT, British Airways’ inaugural flight was a culmination of more than 4 years of work—from selling the carrier on Pittsburgh to making sure BA’s computer needs were met for operation.
British Airways arrived April 2 after a 20-year hiatus with plans to serve Pittsburgh 4 days a week, year-round, with nonstop service to London Heathrow. The airport garnered accolades in the industry for securing the service amid tough competition around the world for BA planes.
The flight arrived on time and taxied to gate C59 with British and American flags waving from the cockpit. Both arriving and departing passengers lauded the service and convenience of the flight.
“Our No. 1 job, aside from safety and security, is to create a business environment where airlines serve our region seamlessly and that’s going to take everybody doing their jobs well. If not, it’s a hard sell that this is a good place to do business,” said Allegheny County Airport Authority CEO Christina Cassotis. “Everything we do is meant to facilitate air service. It’s everybody’s victory that BA is here.”
From Airline Services training BA’s ground-handling company on the jetbridges to Terminal Operations leading high-level set-up coordination to Finance and Legal reviewing agreements to Facilities Maintenance prepping office space, welcoming airlines touches all departments at the airport, Cassotis shared.
As one example, manager of IT applications, Dan Carness, and his team ensured the carrier was connected to the common-use gate system with proper equipment installed at ticketing counters and gates.
“We knew we really had to be on our ‘A’ game. We want them—and all carriers—to be pleased with the airport,” Carness said.
Cassotis and Carness were joined by hundreds of colleagues across the Authority who worked for months to make sure BA had a smooth arrival.
“From the ticket counters to preparations on the airfield and the ramp, we have some real, specialized talent in our operations and maintenance crews, along with our fire department. Preparing for a world-class airline like British Airways required all hands on deck to ensure the seamless experience we had last week,” said April Gasparri, senior vice president of public safety, operations, & maintenance.
Source: Kerlik 2019, para. 1-17
New Airlines
Historically, the U.S. airline industry has had dozens of airlines in operation at any one time. However, consolidation via mergers and acquisitions, as well as bankruptcies, has concentrated the industry into fewer airlines. Today, four airlines (i.e., Delta Air Lines, American Airlines, United Airlines, and Southwest Airlines) represent more than 75% of the U.S. market. That being said, new airlines start up regularly.
Airline start-ups operating in early 2024 included the following:
- Avelo Airlines. Avelo is an ultra-low-cost carrier that flies underserved routes across the United States, including flights from the West Coast at Hollywood Burbank (BUR), California, to Colorado, Connecticut, Delaware, the District of Columbia, Florida, Georgia, Idaho, Illinois, Massachusetts, Michigan, Missouri, Montana, Nevada, New York, North Carolina, Oregon, Puerto Rico, South Carolina, Tennessee, Texas, and Wisconsin. The airline uses Boeing 737-800s on West Coast routes and was expected to use Boeing 737-700s on East Coast routes. Each aircraft includes one cabin class (Economy Class) and one fare (Basic). Avelo sells seat-only tickets, meaning the ticket includes the seat, but anything extra (e.g., baggage and food) is added to the ticket price at an extra cost.
- Breeze Airways. Initially launched with 36 nonstop routes across 16 destinations in the United States, 95% of Breeze’s routes are not served nonstop by another airline. Breeze’s flights are point-to-point, meaning that rather than connecting one airport with several destinations, all the destinations within its route network connect with two other destinations or more. Similar to Avelo, Breeze flies underserved routes in the United States, including Charleston (CHS), Norfolk (ORF), New Orleans (MSY), Tulsa/Oklahoma City (TUL), San Antonio (SAT),
Richmond (RIC), and Providence (PVD). Breeze flies the Airbus A220-300 and Embraer E190 & Embraer E195. On the E190 and E195 aircraft, Breeze offers two fares: “Nice” and “Nicer.” The Nice fare is a basic, economy-class, seat-only ticket, with extras available for purchase at additional cost. The ‘Nicer’ fare (also an economy-class ticket) provides seats that have extra-legroom, as well as baggage allowances and complimentary food and drink included within the price. The A220 includes a “Nicest” fare that is the equivalent of Business Class (Herrera 2021).
Each of these new carriers engages in route development, selecting airports to serve based on market conditions, market mix, and so forth.
Additionally, existing airlines may add new routes after serving an airport for the first time. “If you build it they will come—but only if you convince them they can generate profits operating there” (Schwartz 2000, para. 1).
“Before launching a new route, every airline must make sure there is enough passenger demand to support the route and make it profitable” (Ismaaili-Erny 2023, para. 5). “Once the airline has finished its market research, selected the aircraft for the route, decided it can be competitive against its competitors, received all of the authorizations needed, and managed to ensure its logistics at the airport, it can finally plan the flight schedules” (Ismaaili-Erny 2023, para. 38).
Onboarding
The concept of onboarding is not unique to airports. In fact, all organizations “onboard” new employees at one time or another. According to the Society for Human Resource Management (SHRM):
‘Onboarding’ refers to the processes in which new hires are integrated into the organization. It includes activities that allow new employees to complete an initial new-hire orientation process, as well as learn about the organization and its structure, culture, vision, mission and values. For some organizations, the onboarding process consists of one or two days of activities; for other organizations, this process may involve a series of activities spanning one or many months (SHRM n.d., para. 1).
Onboarding differs from orientation. New-employee orientation involves completing required paperwork and other routine tasks, but onboarding “is a comprehensive process involving management and other employees and can last up to 12 months” (SHRM n.d., para. 2).
How does an understanding of new-employee onboarding relate to new airline onboarding? Simply, an airline that first begins serving an airport requires integration into the airport environment, including knowledge of airport rules and regulations; reserved space, including gates, ticket counters, baggage claim, and various office areas; signed agreements; and rates and fees to be assessed. It is the onboarding process that is the focus of this synthesis.
The onboarding process is unique to each airport, although there are likely to be similarities. Depending on the airline, airport, airport staff experience with onboarding new airlines, and specific airline requirements, the onboarding process can require months or even years of collaborative work ultimately leading to the first day of inaugural service by the airline.
