Study published on the modelling of airport economic value

Jan. 26, 2017

A study undertaken within the context of SESAR 1* has modelled the value of additional passengers or additional capacity at an airport and assessed the main relationships and trade-offs between capacity, quality of service and profitability.

Launched by SESAR 1 member, Eurocontrol, and led by the University of Westminster (London) with partner Innaxis (Madrid), the study provides a better understanding of the interdependencies of various key performance indicators (KPIs) and assesses the existence and behaviour of an airport economic optimum, in a similar way to the early 2000s, when estimating the economic en-route capacity optimum.

Improving airport performance is at the heart of the SESAR airport operations management concept. This requires having access to real-time data from various data sources of different Airport Oprations Centre (APOC) stakeholders in order to anticipate and identify performance shortfalls before they occur and to take informed and coordinated decisions. Such decisions must take into account trade-offs and interdependencies between various processes at the airport with a view to improve the overall performance.

By gathering for the first time real operational, financial and passenger-satisfaction-related data over 32 European airports, it was possible to develop and calibrate a model which produces reliable and realistic results. The fully calibrated results show the presence of a trade-off between the cost of extra capacity and the increase in the number of flights operated. As a consequence, all 32 airports exhibit a maximum in net income as a function of capacity, when the marginal cost of operating extra capacity is sufficiently low. This threshold in the marginal cost is, however, rather different across airports, and only a few airports can sustain a high cost of capacity: these are the largest and most congested airports, which clearly need extra capacity. This threshold is roughly consistent with the airports' current operational cost of capacity, which means that they should be able to manage this growth, subject to the availability of investment

The model and its associated tool provide the capability to analyse and visualise the effect of various selected input variables on the airport economic value and its optima. It is envisaged to develop this model further with a specific airport in order to tailor the airport model based on better and more detailed data with a view to improve its prediction capabilities.

Dr Andrew Cook, Principal Research Fellow at the University of Westminster, said: “This study has demonstrated how effective it is to merge operational, financial and quality of service data both at the flight and passenger level for the setting up of an airport economic value model. The model we have developed provides many useful insights into the interdependencies between various processes at the airport and could be used as a decision-support tool for airport managers or for the SESAR Deployment Manager to prioritise the deployment of specific airport projects”.

The final report is available here.

The APOC solution is part of the broader SESAR Solution that sees the integration of the airport operations plan into the network operations plan. Plans are underway to deploy this broader solution across Europe as part of the European Commission’s Pilot Common Project. 

 

*Within SESAR 1 Project 06.03.01