Airport Economics takes a call for future dimensions

Airports prepare to own Airlines

The Indian Government is in the process of discussions to allow the airport operators to own airlines or things like that; as per the recent press reports. No doubt, GAL and AAHL, the largest operators of airports have come of age in providing world class airport systems in India and abroad. These two airport operators have even ventured in peripheral infrastructure development at their airports including the airport-city-hospitality concept.

 

The question of vulnerable airline purchases by airports has been lingering on sidelines for quite some time. Time is ripening for its unveiling.

Airport-Led Economic Development

In an airport led economic development, it is the aim which is most important; not who fulfils it! Similar is the situation in a port-led economic development of the region. There are different approaches but one goal, how to achieve the economic upliftment of the country’s people. How to achieve world class standards and best efficiencies in providing air transportation of passengers and air cargo!

 

Next Phase of Aviation: Integration & Consolidation

This is the next phase in Airport Economics and of aviation development where integration of various sectors takes a new dimension. Airports owning airlines and airlines owning airports may look odd at the moment but there are already many examples of airline-led airports.

Since, airline based airports are already well proven examples; for international airlines viz Lufthansa, British Airways, DXB, Air France, Air India etc; and Luton/Gatwick for LCCs like Easy Jet at Luton and Gatwick; Southwest at Chicago Midway; Ryanair at London Stansted, Air Asia at Kuala Lumpur etc. Same is true for ground handling and various other domains of airport/aviation management. It will be exciting to see how airlines and/or airports connect and provide an end to end travel experience with over all consolidation in the next decade.

A shield against Airline Failures

In a way, airline failures which are very common, could be avoided since, airports have their revenues spread across broader and different streams. Airports venturing in the real estate development like commercial business districts is common place in India and abroad. Every airport is taking part in real estate development extensively.

As the interconnectivity expands, airport owners get a twin head & tail connect (airport-airline-airport city) in hospitality, tourism, medical, MiCE, goods transport, logistics parks, ground handling and many other areas where a service is needed or can be provided.

 

There is nothing that should prevent airline-airport ownership. Question of economics applied in business principles is simple and possible under appropriate regulatory framework. It would be exciting to watch this spectacle happening. It can be any one, airline or airport, a third party or a combination of these which can be seen soon.

Question : Do you have thoughts and views that will be exciting on this new phase in future aviation? Do share.

Dinesh Kumar, IAP

 Chief Editor at “infraLOG”