Centerlines - December 2008 - (Page 13)

POLICY CENTER Airports Compete for Service, Passengers AFTER ENSURING T H E safety and secu- rity of passengers and employees, the focus of airport directors is to ensure price and service competition for their communities. Airports of all sizes have focused their energy on enhancing operational and financial efficiency to reduce costs and retain air service in these uncertain economic times. That is just one of the reasons I am amazed when airports are erroneously labeled as “monopolies” by airlines or the media. Unfortunately providing access to a highly desirable market is often equated with being a monopoly. While it is true that some airports have what might be termed “substantial economic power,” the same can be said about many airlines. The bottom line is many reasons for airport profitability – including the fact that airport directors are acute financial managers who are conservative in their approach to both expenses and projected revenues. The airlines often fail to mention those cases where bankruptcy is either declared or imminent, forcing the airport to either renegotiate lease rates or be left holding the bag. Things are far worse when an airline abruptly ceases operations, as has happened in numerous cases this year. While airport governance structures around the world vary, one thing is true—all airports compete vigorously for connecting passengers. In many cases, they also compete for origin and destination traffic. Don’t believe me? Just go to any internet website to book a flight and you will routinely be asked if you would like to “include nearby airports” in your IT is clear as we look back on 30 years of deregulation in the United States and more than 20 in Canada, that airport competition remains vigorous. that airports have no incentive to raise fees, in effect chasing away price and service competition for their communities. Privatized airports that make a profit are also often called monopolies. Simply because airports make money while the airlines do not, provides no justification. There are search. Passengers have made clear they are willing to drive two or three hours to an alternative airport if there are better fares, more frequency or better on-time performance and fewer cancellations. Airport competition is alive and well. International borders do not make a monopoly airport either; just look at the competition between many airports along the U.S.—Burlington, Vt., Plattsburgh and Buffalo, N.Y., and Seattle are just a few of the airports that have benefited from the value of the Canadian dollar vis-à-vis the U.S. dollar and/or the presence of low cost carriers, in attracting Canadian travelers. Plattsburgh even exhibited at the Farnborough International Air Show in England, to position the airport “as Montreal’s U.S. airport.” Airports must even factor in competition from other modes of transportation, such as rail, bus or even automobiles, in their planning. These other, often cost effective alternatives to flying, are gaining popularity with many travelers. In working papers recently discussed at the International Civil Aviation Organizations (ICAO) negotiations, the statement was made that commercialization and privatization of airports has brought “more competition and commercial pressure on service providers.” That is certainly true and the current financial state of the airline industry has only increased that pressure. While not well appreciated, it is clear as we look back on 30 years of deregulation in the United States and more than 20 in Canada, that airport competition remains vigorous. Passengers understand it and it is time that airlines and government officials acknowledge it as well. ■ DEBBY MCELROY EXECUTIVE VICE PRESIDENT POLICY AND EXTERNAL AFFAIRS ACI-NA www.aci-na.org | CENTERLINES 13 http://www.aci-na.org

Table of Contents Feed for the Digital Edition of Centerlines - December 2008

Centerlines - December 2008 Contents President’s Message Canadian Airports Associates’ Corner Policy Center On the Hill and On the Stump Cover Story: Airport Belt Tightening On Management: Pooling DBE Resources Revenue Arena: New Revenue Streams Griesbach Concessions Award Winners Security: Employee Screening Pilot Tests New Technology: Wireless Growth Now Underway Grand Openings New Members Index of Advertisers/Advertiser.com Box Scores

Centerlines - December 2008

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