AIRPORT MANAGEMENT

SIREESH P.

UAV- Flying instructor

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INTRODUCTION

Every thing which flies in the earth’s atmosphere have to obey the Law of Gravity,

as a result they have to land at some point. The location, at which it lands, has to

be safe, secure and reliable. Similarly all the manned aircraft which fly into the

atmosphere have to land after the completion of mission. As aircraft are of different

size, different capacity and for various missions, airports have to gear up to the

challenges in accommodating all kinds of aircraft maintaining high standards of

safety, security and reliability. Because a mile distance (runway) can take you to

any place in the world, hence airports play very important role.

Airports are the gateway for the country; they open doors for trade, tourism and

threat as well. Economy of a country depends on the trade and tourism, in

sequence the trade and tourism depends on the airports. A country without

national carriers can still trade with other countries and catch the fancy of tourists,

but the country without an airport will be handicapped to advance economically.

So it becomes very important for every country to have an airport.

Existence of universe is based on the principle of dependence, in the same way

every thing is dependent on one another. When it comes to the question of airlines

depending on airport or airport depending on airlines, the answer is quite

debatable, at length one can say it as a phenomenon of interdependence and

airport always had to adapt the needs of airplane. The evolution of airport and the

changing phases of airports over the years to valuable business centres are

discussed thoroughly in this paper.

This paper concisely communicates on the subject of air transport economics,

identifying key drivers affecting traffic volume, and the close relationship between

air transport growth and the GDP. An attempt has been made by taking the

present situation to demonstrate the effect on economy, after brief study of Indian

government policies; new thrust areas for successful airport management have

been brought forward.

CHANGING FACES OF THE AIRPORT WORLD.

Airports have grown from simple grass-covered fields into some of the busiest

transportation centres in the world, moving millions of passengers worldwide. As

airline traffic increases, new airports are built to accommodate more passengers.

Local governments usually make the decision to construct or expand public

airports. Selecting a new airport site is a complex, time-consuming, and expensive

proposition. The money to fund construction for these airports comes from taxes or

from the sale of bonds. Airport sites are selected based on airport traffic volume,

the nearby population, availability of ground access, and existing air traffic flows.

Once a proposed site has been selected, a detailed site plan is prepared. Aircraft

noise plans, environmental impact studies, and building designs must be approved

by the authority before funding can be obtained. Only after these tasks have been

completed, then actual construction of an airport will begin.

Flying for pleasure and adventure began during the 19th century, when European

inventors experimented with hot air balloons and gliders, the first powered flights

heavier-than-air machine occurred on December 17, 1903, when Orville Wright

and his brother Wilbur Wright made their historic flights at Kitty Hawk, North

Carolina. By 1910 the air transport industry was established in Germany when

regular air service with gas-filled airships called dirigibles began to provide service

between cities.

Early airplanes were light and had low operating speeds, so they could operate

from any relatively level cleared field, these airfields had no designated runways,

because the airplanes did not require specially prepared or paved surfaces.

Because airfields were relatively easy to create in the early days of aviation, many

cities had more than one airport. Terminal buildings, if they existed at all, were

often multipurpose buildings housing the offices of a few airlines, weather

observers, and air traffic controllers, as well as ticket counters, snack bars, and

passenger-waiting and baggage-pickup areas.

On January 1, 1914, a group of Florida businesspeople launched the first

scheduled air service using an airplane. For a period of four months, the Saint

Petersburg-Tampa Air Boat Line transported a total of 1,200 passengers across

Tampa Bay in a two-seat Benoit seaplane. The trip took about 20 minutes, and the

one-way fare was $5. The service folded at the conclusion of Florida’s winter

tourist season, but it was the first such venture that indicated scheduled air service

could be commercially viable. Similar passenger services in the United States and

Europe soon followed.

Passenger air service developed faster in Europe. World War I (1914-1918)

devastated many of Europe’s roads and railroads. The war also proved the military

value of airplanes and sparked a dramatic acceleration in aircraft production. At the

end of the war, fledgling commercial air carriers took advantage of the ruined

ground transportation system and the large surplus of aircraft and pilots. Air

service within Europe flourished, and by the 1930s government-sponsored airlines

were operating well beyond Europe to numerous European colonies in the Middle

East, Africa, Asia, and Latin America.

Airlines also had opportunities to fly new international routes, gaining an exposure

by meeting military needs, aircraft engineers designed planes that were bigger,

faster, and capable of flying farther than ever. Radar, which allowed pilots and

controllers to get a better idea of situations in the air, made significant advances in

England during World War II. Numerous technological advances were made

between World War I and World War II (1939-1945) key to the development of the

air transport industry. Navigation was greatly improved in the 1920s when rotating

beacons began to mark air routes for night time flight. American aviator James

Doolittle helped design the artificial horizon in the late 1920s. This instrument

shows pilots the angle the aircraft’s wings make with the ground and is important

for flying in reduced visibility. Radio, which developed around the same time as

aviation, made it possible for pilots to communicate with each other and with

people on the ground (airport). By the 1930s radio signals from fixed locations

were guiding pilots to their destinations in darkness and poor visibility. Airports

adopted the necessary infrastructure for night flying. Engineers also made

numerous advances in aircraft design during the 1930s. Air-cooled engines helped

reduce weight and made larger and faster aircraft possible. Cockpit instruments

also improved, with better indicators for airspeed and rate of climb and better

altimeters and compasses.

Multiengine airplanes, introduced were heavier and needed longer paved runways

to take off and land. As a new round of airport construction began, airport builders

favoured sites away from central downtown districts, such as outlying farm areas

or unpopulated marshlands. These marginal sites were inexpensive, provided

enough space for expansion, and were also clear of obstructions such as tall

buildings. These second-generation commercial airports of the 1930s were

designed to serve airplanes that usually carried up to 75 passengers. Because

airplane capacity was still relatively small, all terminal functions were handled on a

single floor. Terminal buildings were usually of the gate terminal design, with

airplanes on one side of the building and automobile parking on the other.

As the war drew to a close, scientists working independently in Britain and

Germany perfected the jet engine. With the introduction of jet airplanes into

commercial service in 1959, facilities at many existing airports became outdated or

obsolete. To correct this, another round of construction and expansion began. To

allow long-range operations by the heavier and faster jet aircraft, runways now

needed to be extended in length. Terminals designed for the passenger volumes

of earlier, smaller aircraft were no longer adequate for the new jet airplanes.

New concepts in terminal design that were implemented in the 1960s featured

much larger architecture than that of earlier terminals. Many new terminals were

built by specific airlines to serve their own customers.

Making air transportation considerably faster and more comfortable for passengers

and reducing airline maintenance costs through improved engine reliability. Jumbo

jets debuted in the 1970s and boosted airline carrying capacity. Also in the 1970s,

the governments of France and Britain jointly developed the first commercial jet to

fly faster than the speed of sound, the Concorde, radically reducing transatlantic

travel times.

Airline deregulation was intended to foster competition in the air transport market

and bring better service and lower prices to air travellers and shippers. Numerous

academic and government studies have concluded that deregulation has been

successful. In the years following the deregulation, domestic air-transport industry,

airlines began converting their operations to hub-and-spoke systems. In this

system, an airline’s passengers are collected by flights from many spoke cities and

are flown to a hub airport, which is normally located at a centralized point in the

airline’s route system. Passengers arrive at the hub in a wave of flights arriving at

approximately the same time. During the time the airplanes are on the ground at

the hub, passengers transfer to other airplanes that are going to their ultimate

destination. Then all flights in the wave depart to the spoke cities and the whole

process begins again. This pattern is repeated throughout the day to provide

service at convenient frequencies During the 1980s the major airlines established

“hub-and-spoke” route networks. These hub-and-spoke networks improved the

service and competition to most areas of the country. Airline prices have also

declined, when adjusted for inflation, and the new competitive climate has fostered

numerous innovations of benefit to travellers, including frequent-flyer programs

and computer reservation systems that make it easier for travel agents to shop for

and book air travel for customers.

As soon as the international service has been started it has become necessary for

airports to develop infrastructure in accordance with large body aircrafts such as

essential runway length, fuel arrangements, taxiways, and maintain safety and

security of the state.

Unlike domestic air service, international service remains highly regulated. Service

levels between most countries is governed by bilateral aviation agreements that

typically specify which cities may be served, the frequency of the service, and

sometimes even the total number of seats that can be offered for sale. Pricing

restrictions also are sometimes included in these government-to-government

agreements, as well as restrictions on what carriers can do on the ground—for

instance, whether they can set up a trucking subsidiary to move freight to off-

airport locations. International air service is growing less restrictive, but very

gradually. Passengers entering any country need to have a visa, formal

endorsement placed by government authorities on a passport, indicating that the

passport has been examined and found valid by the nation to be visited, and that

the bearer may legally go to his or her destination.

Commercial aviation has become significantly safer since the early decades of the

industry. This is due in large part to better, more reliable aircraft and engines, as

well as better navigation and landing aids on the ground. Most accidents today are

due to human error or hijacking or it is also called as skyjacking or air piracy, is

defined as the forcible commandeering of an aircraft while in flight. Air hijacking is

an offence punishable by long prison terms or execution. During the 1960s the

incidence of airplane hijackings has became a serious problem. Planes were

hijacked by exiles, by the mentally ill, by criminals fleeing the countries, and by

those bent upon extorting large sums of money. Beginning in 1968, political

terrorists in Europe and the Middle East began to hijack passenger aircraft both for

the purposes of publicity and to obtain concessions from governments or the

release of imprisoned terrorists.

This circumstances has lead the governments to have a check in the airports

which began searching passengers and checking carry-on baggage by means of X

rays and metal-detector devices at major airports. These precautions played a

critical role in reducing the number of hijackings. Unsuccessful hijackings also

served as deterrents to hijackers. One famous example was the June 1976

hijacking by Palestinian and West German terrorists of an Air France plane to an

airport in Entebbe, Uganda. A daring raid by Israeli commandos resulted in the

deaths of the hijackers and the rescue of more than 100 hostages; three hostages,

however, died in the raid. After that incident, additional security precautions, such

as questioning passengers at the time of check-in, became common. Designated

high-risk national carriers, such as El Al of Israel, adopted measures such as

passenger profiling. In this technique, specially trained security personnel

thoroughly question some passengers to identify patterns of activity or behaviour

characteristic of terrorists and hijackers.

At the beginning of the 21st century, at a time when a terrorist hijacking of

passenger aircraft perhaps was regarded as having become less of a threat, the

most spectacular and lethal terrorist incident in history occurred. On September 11,

2001, 19 hijackers belonging to the radical Islamic group Al-Qaeda seized four

commercial passenger jets to carry out a devastating terrorist attack on the United

States. The jets were deliberately crashed into the twin towers of the World Trade

Centre in New York City and into the Pentagon, in Arlington, Virginia, killing

approximately 3,000 people. Evidence indicated that the hijackers had wielded

knives and box-cutters to hold the crew and passengers at bay while others who

had basic pilot training flew the planes into their targets. The September 11 attacks

rapidly changed aviation security procedures. Formerly, airline policy directed that

passengers and crew should stay calm and cooperate completely with hijackers as

the most likely means of ensuring their safety and survival. With the new possibility

that aircraft would be used as weapons in suicide attacks, however, advisories

were issued encouraging passengers and flight crew to forcibly resist any hijacking

attempt. Pilots were required to remain behind locked, fortified cockpit doors to

prevent anyone from gaining entry and seizing the controls. Additional security

measures were instituted in the airport, including more stringent identification

checks of passengers and more thorough baggage screening.

Several international agreements or conventions outlawing hijacking (Tokyo, 1963;

The Hague, 1970; and Montréal, 1971) have been signed by countries throughout

the world. Three international nongovernmental organizations—the International

Civil Aviation Organization, the International Air Transport Association, and the

Airports Association Council International—have been established to develop

common aviation security polices and guide their implementation.

The threat of terrorism aboard aircraft has motivated airports to increase security

and control over who and what gets onboard airplanes. Passengers must walk

through metal detectors in many airports. Some airports and airlines use X-ray

technology, drug-sniffing dogs, and other security measures to examine baggage

before it is loaded on an airplane.

Epidemic is other major issue, where X-ray technology and sniffing dogs found

helpless. Global spread of SARS and the recent SWINE flue is example of

epidemic. The global spreading of probable SARS cases on May 30, 2003, as

reported by the WHO and Centres for Disease Control and Prevention. The first

cases of SARS emerged in mid-November 2002 in Guangdong Province, China.

The disease was then carried to Hong Kong on the February 21, 2003, and began

spreading around the world along international air travel routes, because tourists

and the medical doctors who treated the early cases travelled internationally. As

the disease moved out of southern China, the first hot zones of SARS were Hong

Kong, Singapore, Hanoi (Vietnam), and Toronto (Canada), but soon cases in

Taiwan, Thailand, the U.S., Europe, and elsewhere were reported. As airports are

the gate ways for any country, it is always easy and better to stop any sort of threat

for the state and its citizens. The modern airports have sophisticated health

checkups for all the international passengers; it has become a necessary for all the

international passengers to be thoroughly checked at the airports, and for the

doctors in the airport it is very important to know and be aware about the epidemic

flu around the world.

The air transport industry has grown enormously in the second half of the 20th

century. The number of passengers worldwide grew from 177 million in 1965 to an

estimated 3.3 billion in 2000.The modern airports around the world have been

constructed with all the basic and luxury amenities to the passenger.

As we have seen the progressive change in airport industry which in the past was

considered to be a simple transit areas but now the modern airports have become

place where one works, eats, makes purchases, and even sleeps. With the

increase in traffic, airports represent very large market potential. In fact airports

have proved their commercial success through London Heathrow, Seoul Inch-eon

with there hundreds of shops. Some of the best airports of today world are as

follows.

It is up to building industry to suggest new commercial perspectives to airports and

potential risk of revenue loss if action is not taken. This is why increasingly the

architectural design of airports is entrusted to internationally renowned designers

such as Renzo piano and Paul Andreu who were asked to design the undulating

structure of the Kansai airport in Osaka, Japan, the Kansai International Airport in

Osaka, Japan, was built on an artificial island located in Osaka Bay. The island is

connected to the mainland by a bridge and is served by several ferries. The airport

opened for business in 1994. Its location away from populated areas eliminated

noise-pollution problems, allowing Kansai to become the first Japanese airport that

is open 24 hours a day. The airport serves over 25 million passengers per year.

The single runway is 3,500 m (11,000 ft) long, and a second parallel runway is

planned for the future. The British designer, Sir Norman Foster, imagined the light

filed space for the recent airport Chep Lap Kok in Hong-Kong, the Hong Kong

Chek Lap Kok International Airport opened in 1998. It has a single runway 3,800 m

(12,400 ft) long, as well as facilities able to meet the demands of 35 million

passengers and 3 million tons of air cargo shipped annually. A second runway is

under construction. The airport was built on an island that was excavated 27 m (90

ft) down to reach solid bedrock and then refilled with topsoil. The terminal, which is

over 1 km (0.6 mi) long, includes 75 gates. The total cost of the airport was $20

billion, Japanese designer Kisho Kurokawa designed the airport of Kuala Lumpur

in Malaysia and Denver International Airport is the newest major commercial

airport in the United States., it opened in 1995. The airport covers an area of 137

sq km (53 sq mi). It has five runways, each 3,700 m (12,000 ft) long. The runways

are at least 1,300 m (4,300 ft) apart, permitting two or three streams of aircraft to

land simultaneously. The control tower is 33 stories tall. The terminal and

concourses are in the centre of the airfield, cover 140,000 sq m (1,500,000 sq ft),

and include 94 airline gates.

The whole idea of modern airports is to provide a pleasant reception area with

increasingly commercial outlook; private rooms, game areas, religious facilities,

malls, shopping centers. In the United States, passengers stop off in Pittsburgh,

sometimes just to take advantage of the duty free shops there. In Chicago, in the

international airport a gaint aquarium was built to relax passengers; in addition

works of art are also displayed. In Singapore, passengers can sunbathe in a

cactus garden next to a swimming pool. Other possibilities can be imagined such

as the setting up training courses for the airport staff in different languages so as to

assist passengers.

INTER DEPENDENCE OF AIRLINE-AIRPORT-AIRSPACE SECTOR IN THE

GLOBAL AVIATION MARKET DEVELOPMENT.

Existence of universe is based on the principle of dependence in the same way

every thing is dependent on other. When it comes to the question of airlines

depending on airport or airport depending on airlines, the answer is quite

debatable, finally one can say it as a phenomenon of interdependence and airports

always had to adapt the needs of airplanes.

The fast and steady growth of the trade and tourism between the nations has

chosen the air transport mode for its Quick, Reliable, Efficient and Safe services.

The recent trends in the development of free trade, globalisation, liberalisation and

deregulation left the mankind to race with time and they found air transport very

appropriate, thus propelled the aviation industry to paramount. It has been

assessed that every job in the aviation industry will create seven other jobs directly

or indirectly through its catalytic impact on tourism and business hence 2% growth

in aviation industry leads to 1% growth in GDP. Alluring situation with enhanced air

traffic population, created a wider space for mushrooming of new airlines. But for

such a drastic transformation in the field of airlines traffic, airports were not geared-

up to with stand the passenger traffic congestion.

Trade-off between operating cost and the revenue from passenger, a large aircraft

costs lot to operate, but can take many passengers, which lead to the recent

developments in the airline manufacturing technology such as huge body aircrafts

and just beginning curiosity of space travel has prepared the airports to upgrade

AIRLINE

PASSENGER

AIRPORT

there existing facilities or move over to green field airports. All markets are

complex, but aerospace has peculiar intricacies involving the interplay among the

aircraft manufactures, aircraft owners, aircraft users, regulatory authorities, airport

operators, municipalities, conservationists and other visited interests and stake

holders. An excellent recent example is the airbus A380. Although design of the

A380 was conventional in most respects, the exceptionally large size of the aircraft

raised multiple new issues with people and organisations involved, directly or

indirectly, with its introduction. Compared to the largest operational airliner of the

time, the A380 weighed 30percent more, had a wing span 16 meter wider, was 6

meters higher, and carried at least 150 more passengers. The positive appeal of

the aircraft was, of course, that it could carry larger quantities of passengers on

high density routes, at costs that were projected to be lower than those for smaller

contemporary aircrafts. However at the time of launch was announced, virtually no

airport in the world could adequately accommodate the aircraft. Runways were too

narrow, or were too small; passenger’s gates were inadequate; hangers were too

small; passengers jet ways could not reach doors on the upper deck; and customs

and baggage-handling facilities were inadequate to handle the surge of

passengers. In additional airworthiness authorities feared lingering turbulence

created by enamours aircraft would create flying conditions unsafe for smaller

aircrafts, so exceptional mandatory runway shutdowns were imposed for several

minutes after each A380 take off and landing. And by 2005, 14 international

airports worldwide had committed to make infrastructure investments, estimated at

$ 100 million per airport, to accommodate the new aircraft. Constructing a new

airport is always a expensive proposition hence It’s nearly always easier to modify

an existing airport than to create new one, however, with the time, city grows

towards the airport and the space becomes inadequate for airport extension and

handling of increasing passenger traffic. Green field airports to be of international

standards demands huge investment, this created opportunity for many private

industries to partner with government. The new business model public private

consortium is a success in revenue generation not only from air side but from

terminal and land side as well.

Development in information technology has come as a support for the aviation

industry in many ways viz. Airline Resource Management System (ARMS),

Centralised Reservation System (CRS), Radio Frequency Identification (RFID),

Baggage Tracking System, Ground Handling and Automatic Check in Scanners

etc. Technology reduced the interaction time between passenger and airline staff,

airport management. More than one passenger can be handled in the same time

where it used to be one before, baggage shipping and discharge time has reduced

to greater extent, resulting in faster turnaround time for airlines. Reduced parking

and turnaround time keeps the airplanes in air for extra time, resulted in increased

revenues. Similarily airports enhancing there revenues by accommodating more

number of aircrafts.

With reduced parking, turnaround time and increasing passenger traffic more

number of airlines are emerging and existing airlines extending their fleet size, so

many airplanes in air shoots new problem air traffic and the situation is very

alarming. Now air traffic control is a biggest challenge for every country.

Communication Navigation Surveillance / Air Traffic Management with the

sophisticated and the latest instruments with new Aeronautical

Telecommunication Network (ATN) when introduced will allow full inter operability

between different air and ground sub systems. The satellite based navigation will

give a global accuracy in order of at least 100 meter of actual position. This will

allow it to be used en-route, terminal and for non precession approach phases of

flight, with suitable ground augmentation, it will achieve accuracy which will permit

precision approaches to be conducted at any airfield, heliport or landing strip.

There are certain things which we cannot avoid but we develop new technology to

sustain significant weather such as thunderstorm, gale, cyclonic storm and such

sever weather conditions are reported as 'SIGMET'. Airport Met offices issue

routine hourly met reports (METAR) and Special weather reports (SPECI) are

issued when weather conditions deteriorate, such as fog, poor visibility etc based

on the minimum visibility and cloud criteria, flight conditions are reported as Visual

Flight Rules (VFR) and Instrument Flight Rules (IFR).

RESEARCH IN AIR TRANSPORT ECONOMICS TO IDENTIFY KEY DRIVERS

AFFECTING TRAFFIC VOLUME AND THE CLOSE RELATIONSHIP BETWEEN

AIR TRANSPORT GROWTH AND THE GDP.

The impact of air transportation on economic activity differs from other

transportation modes because of its distinctive characteristics speed, cost,

flexibility, reliability, and safety. It is the only realistic long-distance Transportation

mode for high-value perishable commodities and time-sensitive.

Air transportation provides employment in the aviation sector and creates wider

socioeconomic benefits through its potential to facilitate certain types of activities in

a local economy. The availability of air transportation services effectively increases

the scope of new business and industrial economic activity. The increasing

economic activity in turn generates the need for passenger travel and freight and

drives the demand for air transportation services. Studies evaluate the direct,

indirect and induced employment impact of air transportation. Direct impact is

employment in the aviation industry, indirect impact is the employment in the

industries down the aviation supply chain, and induced impact is the employment

supported by the expenses of those directly and indirectly employed in the aviation

industry, studies has been assessed that every job in the aviation industry will

create seven other jobs directly or indirectly through its catalytic impact on tourism

and business. At the macroeconomic level, air transportation impacts economy by

providing employment and by enabling effects including enabling access: to

markets, to people, to capital, to ideas and knowledge, to labor supply, to skills, to

opportunity, and to resources. The economy in turn provides capital and generates

demand for passenger and freight travel.

Aerospace trade shows are excited working environments. The large international

shows generally involves huge money, major international air shows generally

biennial, have first-class permanent exhibit facilities, accommodations and logistics

support for large number of flying aircrafts, off-runway space for static display, well

equipped conference facilities, on site luxury hospital facilities and extensive

communication support for media and trade representatives, it requires a million

dollar budget to participate fully at an international air show, with a flying demo , a

hospitality chalet, a major exhibit, and a team of professionals this brings a huge

revenue to the host country.

Airports are among the busiest transportation centres. The business they create is

vital to the world economy and individual national economies. In the United States,

over 500 airports provide airline passenger service to about 600 million people

annually. These airports also handle about 15 million metric tons of air cargo each

year. Canada’s 26 airports in its National Airport System provide service to about

60 million passengers annually. The total annual economic impact of U.S. airports

is estimated at over $500 billion. This value includes the price of airfares

purchased by passengers, the salaries of airline and airport employees, taxes, and

indirect earnings from related businesses and industries. Airports are so important

economically that many companies will locate factories and offices in cities which

have an adequate airport.

Indian aviation industry is one of the most dynamic and fastest growing industries.

India’s burgeoning economy, coupled with loosening of government’s control and

entry of private sector airlines, have exerted a positive impact on the aviation

industry.

Air traffic in term of passenger and cargo movement has increased impressively

from 2003-04 to 2007-08. The passenger traffic has increased by a compound

annual growth rate (CAGR) of 19.14% and cargo by 9.91% which are

116.87million passengers and 1.71 million tonnes respectively.

The air transport industry supports a wide range of businesses. These include

independent maintenance and repair shops, food caterers, aircraft cleaning

services, fuelling services, and airport security firms. The industry supports schools

for pilots, flight attendants, and mechanics, as well as travel agencies, hotels, car

rental companies, and other businesses in the travel and tourism industry. The

promising growth of civil aviation market has attracted so many private players to

participate in scheduled & non-scheduled air services. With so many new players

in market such as Jet airways, Jet-lite, King Fisher, Go air, Indo go, Spice jet,

Paramount, Indian & Air India are still unable to handle the demand of the traffic.

And the forecasts estimate that Indian civil aviation market will progress at a

growth rate of 8.6%. To recover the deficit and with stand the traffic demand many

air lines has placed order for new aircrafts and statistics are follows as.

Average estimation order book of all scheduled airlines operating in India

AIRWAYS CURRENT

FLEET SIZE

ORDERBOOKED

FOR NEW AIR

LINES

Price of order

book

In USD BillionsIndian 61 32 1.9Air India 102 66 3.7Jet air ways 84 44 2.5Jet lite 25 10 0.60Kingfisher 44 107 7Indigo 15 100 6Go air 5 41 2.4Spice jet 6 10 0.60Paramount 12 15 0.65Total 342 393 25.35

Note: All the statistics shown above are taken form 2007-08 financial years

It can be seen from the above statistics that India’s scheduled airlines have booked

the order of 25 billion from different manufacturer’s viz. Boeing, Airbus, ATR, and

Embraer. In large scale international aerospace sales, the customer may insist that

0

20

40

60

80

100

120

140

160

180

Indian Air India Jet air ways Jet lite Kingfisher Indigo Go air Spice jet Paramount

Current Fleet

Order Booked

Expected Fleet Size

Note: All the statistics shown above are taken form 2007-08 financial years

aircraft seller provide the buyer’s country with certain kinds of industrial benefits as

a condition of scale. Commitments to provide these compensatory industrial

benefits, known as offsets, government plays a major in obtaining the benefits from

the exporter, as large amount of money are involved in major international sales of

aircraft and the value of offsets is proportionately high. But the third applicable

agreement is the bilateral 1992 U.S-EC agreement on trade in large civil aircraft.

This agreement interprets article 4.3 of GATT agreement on trade in civil

aircraft as prohibition offsets. Although sales of commercial airlines are not

normally tied to formal offset requirements, the aircraft manufactures often strive to

place industrial work in the country of the purchaser, in order to strengthen

relations with the local government. This is especially true in countries like India

and china where the national government exercises significant influence over

aircraft selection.

Hence it is mistakenly believed that the product is that export country is selling to

an independent government, where as in reality they are selling a package of

benefits that includes aircrafts, jobs, technology transfer, profits for industry, and so

on. The total number of air passengers in India during 2007-08 was 116.87

million including 29.81 million international passengers. Crossing the level of 100

million has made India 9th largest aviation market in the world; even then also air

travel in India is less than 7%, leaving very huge potential for the aviation market.

In future the number of aircrafts flying will be two times of the current fleet size, the

average no of people required to work on each aircraft is 100 hence forth

requirement of 4000 manpower for maintenance, beside of it, new airports has to

be built to accommodate the airlines, maintenance repair and overhaul is a huge

revenue generating segment, air traffic control, airport security are the other

issues. The growth in the aviation industry will broaden business scope for travel

agencies, hotels, car rental companies, and other businesses in the travel and

tourism industry. It has been assessed that every job in the aviation industry will

create seven other jobs directly or indirectly through its catalytic impact on tourism

and business hence 2% growth in aviation industry leads to 1% growth in GDP.

Foreign Trade: Despite odds (raw material prices, high borrowing rates, losses due

to forward contracts) the country did export goods worth USD 60 billion, posting

24.6% growth during the first four months of 2008-09 as compared to 18.22% in

the previous year. The reason ascribed to high exports growth was increased

demand in some of the international markets. The weakening of Rupee has helped

the exporters to recover their (those who have not hedged their funds) losses

made in the past. However, those who opted for a forward cover during the days

when Rupee was maintaining Rs 38-40, failed to insulate themselves from the

quick and sharp weakening of Rupee. The import bill swells due to obvious

reasons and widens the trade deficit even further. The huge potential of Indian

exports cannot be achieved without the support of aviation sector. In order to have

a better imports and exports, country should have established aviation industry.

Hence this relation becomes proportional. The growth in aviation industry is directly

related to the economics of the country.

The following table represents the exports and import with India

Region/Countr

y

Export Import

US $ million %

change US $ million

%

change

2007-08 2008-09 2007-08 2007-08 2008-09

2008-

09 World 10952.8 15960.9 45.72 17744 24753.2 39.5

Africa 1235.1 1341.3 8.6 1952.1 2022.8 3.62

Egypt 69.3 227.4 228.3 126.9 110.4 -12.96

Kenya 120.3 113.2 -5.87 5.3 8.2 55.4

Mauritius 77.7 129.2 66.3 0.7 1.3 77.43

Nigeria 54.6 86.3 57.9 736.3 660.6 -10.28

South Africa 94.6 113.9 20.37 289.5 482.7 66.73

America 1737.7 2427 39.67 1414.4 2281.4 61.3

Brazil 118.6 266.2 124.53 39.2 87.2 122.12

Canada 78.7 101.8 29.32 87.6 122.4 39.73

Mexico 34.8 51.7 48.79 126.3 207.3 64.08

USA 1391.2 1718.2 23.51 818.3 1124.9 37.47 Asia (excl.

Middle East) 3563.2 5058.4 41.96 5117 6799.5 32.88

Bangladesh 182.5 239 30.96 14.8 27 81.75 Korea Republic

(South) 223.2 309.7 38.789 414.7 622.4 50.09

Malaysia 98.9 260.7 163.71 382.5 651.2 70.26

Nepal 103.5 176.6 70.6 25.2 46.8 85.37

Philippines 28.3 57.3 102.42 17.3 11.3 -35.07

Singapore 658.5 854.3 29.73 706.9 916.6 29.67

Sri Lanka 259 304.9 17.74 24.1 35.1 45.38

Taiwan (Taipei) 112.7 102.2 -9.34 149.8 192.3 28.38

Thailand 80 194.2 142.72 169.5 201.6 18.95

Viet Nam 83.4 198.6 137.97 9.9 30.4 208.38

Middle East 1844.9 2786 51.01 4328.7 6862.6 58.54

Iran 132.6 120.7 -8.96 762.8 1015.4 33.12

Iraq 9.2 42.1 358.13 381.4 875.9 129.64

Israel 98.6 130.6 32.49 120.7 67.6 -43.96

Kuwait 57.9 85.7 48.15 501.3 704.1 40.45

Saudi Arabia 154.5 431.1 179.02 941.8 1564.9 66.16

UAE 1080.7 1721.9 59.33 1099.1 1659.9 51.02

Europe 2476.3 4105.9 65.8 4225.4 5799.9 37.26

Belgium 312 399.4 28.02 404.2 152.5 -62.27

Denmark 32.3 45.1 39.61 34.5 39.8 15.56

France 193.5 291.6 50.67 152.7 263.6 72.66

Germany 313 548.7 75.32 699.2 907.6 29.8

Italy 266.2 381.5 43.31 235.1 535.5 127.8

Netherlands 234.9 553.9 135.82 145.3 169 16.31

Russia 61.7 94 52.34 138.6 258.8 86.65

Spain 142.1 407.9 186.98 51.8 73.7 42.31

Sweden 32.5 49.1 50.96 190.8 191.7 0.48

Switzerland 62.8 55.2 -12.02 1334.3 1965.2 47.28

Turkey 121.4 150.3 23.84 80.5 266.1 230.57

UK 445.1 589.6 32.46 366.5 341.7 -6.77

Oceania 70.6 109 54.31 689.8 964.9 39.89

Australia 59.2 86.9 46.79 655 920 40.46

China 660.3 1057.3 60.11 1766.9 2575.9 45.79

Hong Kong 417.6 500.8 19.92 332 116.7 -64.85

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Above graph compares the growth in exports between years 2007-08 to 2008-09

Future Prospect

In the years to come, the Indian aviation industry is poised to grow and would

position itself among the top aviation markets globally. This is very clear from the

fact that the country is geographically spread with huge population. Besides, it is

exports and imports helping India becoming an economic power.” In 2004, the

sector started slowly with probably 100 plus aircraft. It was very small then, for a

country like India. Though we have not grown big, over the years, the size of the

aircrafts which the airline companies have is a clear testimony to the fact that the

aviation industry is here to stay”. As aviation industry and economy are inter

dependent, with the growth in aviation industry economy grows as well.

STRATEGIC OPTIONS AND MANAGEMENT TECHNIQUES TO MAXIMISE

AIRPORT REVENUE.

Airports are owned and operated by many different agencies. Most small airports

can be privately owned. Large commercial airports are usually owned by city

governments, regional port or airport authorities, or state. Most airports are

operated by the agencies that own them, but some are operated by private

organizations that have a contract to operate them or that lease them from their

owners. Some private companies have purchased entire airports from their owners

and operate them for profit.

The transition of airport from a mere platform to an enterprise is new phenomenon,

the goal of airport management becomes profit maximisation from what ever

source of business derived from a broader concept of ‘flight experience’, whether it

be strictly related to aircraft services, or to more diversified value objectives. The

co-branding and co-marketing partnerships between airports and airline operators

or other value chain players, like tour operator and travel agencies, and

announcement of economic schemes for carriers. In order achieve correct market

positioning an airport enterprise will need to conduct an exploratory market

research study, aimed at understanding both the quantity and quality of current

traffic values and the potential purchase intentions of its catchments area. Each

geo-commercial area will show different trends due to stronger business- industrial

or leisure tourist element the basic fundamental principle of marketing is sell what

customer wants in order to generate a consistent value system.

Airports receive revenue from a number of sources. Airports charge landing fees to

the airlines for each airplane that lands and takes off from the airport. Airlines, food

service companies, and retail establishments rent portions of the terminal. An

airport also makes money from fees charged at parking lots. Airports can also

charge a fee on each ticket sold to pay for improvements. Expenses involved in

operating an airport include terminal and runway maintenance; utilities such as

water, electricity, and heat; airport administration and salaries; and fire and

security services.

The Air port revenues mainly divided into aviation related and non aviation related

and they are ‘Land Side and Air Side’, Terminal Side respectively.

Airside: Airside is used for the landing and takeoff of aircraft Runways are the

long, narrow areas where airplanes take off and land. Taxiways are paths that

aircraft follow from the runways to the terminal building, Maintenance and

refuelling facilities for aircraft are located near the runways or in nearby hangars.

The control tower is located near the terminal. From this tower, people involved in

air traffic control coordinate aircraft movement both in the air and on the ground.

Terminal side: Mainly the confined audience consists of traditional origin,

destination and transit passengers. Travellers may pass their time before boarding

the aircraft not only spending by shopping in various arcades of the complex but

also relaxing close to interesting activity such as with a long row of bass and pubs

and possible to have drinks while listening to there favourite music, children’s may

play their favourite videogame in dedicated zone while film lovers will have movie

theatres and sports fans have sports arena There can also be a fitness centre with

sauna & Jacuzzi, for aviation enthusiasts there is a garden terrace with chairs

tables, umbrellas and an excellent view of the runway and there are no limits for

shooting picture When transit passengers have to wait for long hours for next flight

to depart they can have a chance of going for free city tour etc.

Land side: The ‘greeters and meters’ coming to airport to accompany or pick-up

visiting friends and relatives, travellers or job-related contacts. Access from land

side to air side areas is tightly controlled at most airports the parking area bus

stops and train stops come under the land side. Presence at industry fairs, or

events concerning the whole tourism industry, like world travel market in London

this will be a good airport enterprise focus on both aviation and non aviation

related value proposition.

Thrust areas for successful airport management.

• Private sector will be a major thrust area in the civil aviation sector for

promoting investments improving quality and efficiency and increasing

competition. Encouragement of private sector investments in the construction,

up-gradation and operation of new and existing airports including cargo related

infrastructure.

• For the building industry, this new trend is an opportunity.

• The rapidly growing aviation industry of India is facing the huge shortage of

pilots according to the estimates; aviation sector will require 6000 additional

certified pilots from 2008-2013. To deal with the shortage of pilots, government

has taken various steps such as allowing 100% FDI in flying training institute

and technical trading institutions. Training for pilots is becoming more

technologically advanced, extensive and with increasing fuel prices pilot

training has become very expensive affair, major advancement in pilot training

in recent years include the development of flight simulators that enable pilots

to train for adverse conditions and situations that would be difficult or

dangerous to replicate in the real airplanes.

• An FDI upto 100% on the automatic route would be allowed for Maintenance

and Repair and Overhaul was given by the Indian government, with the

increasing no airlines and airplanes it becomes very essential for MRO

facilities. Increased activity in MRO sector has attracted many foreign

companies. Lufthansa has tied up with GMR Hyderabad international airport

limited to open an MRO with a investment of USD 20 million. Similarly, Boeing

plans to invest USD 100million in MRO facility at Nagpur.

• An FDI up-to 74% on the automatic route for ground handling services would

be allowed subject to sectored regulations and security clearance. NRI

investment would be allowed upto 100% on the automatic route.

Conclusion: This paper discusses air transportation and economic activities

interdependence. Air transportation provides employment and stimulates certain

economic activities. The economy, in turn, drives the demand for air transportation

services. The objective of this work is to analyse and understand interdependence

of air transportation and economic activity. More specifically, this work is aimed at

(1) developing a feedback model to describe the relationship between air

transportation and economic activity and (2) identifying the factors which stimulate

or suppress air transportation development. Exploratory Research Method which

combines literature review, aggregate data and case study analysis is used as a

tool in this work for the analysis and understanding. The case study analysis at the

individual segment of value chain is performed to understand the air transportation

impact in each individual level of value chain. These findings help to develop a

feedback model which describes the relationship between air transportation and

economic activity. Specifically, the analysis is used to describe (1) how air

transportation of passengers and cargo enables the flows of goods, services,

knowledge, tourism, investment, remittances and labour among economies and (2)

how air transportation can affect the country’s economic factor, demand and

business conditions. The paper is extended to perform quantitative analysis of the

evolution enabling impact of air transportation in a particular (Indian) economy.

The following factors can stimulate or suppress the economic activities and are

identified both from the air transportation supply and demand sides. The supply

side change factors are identified as: changes in the regulatory framework,

infrastructure capability, airport capability and airline strategy. The air

transportation demand is found to be directly affected by exogenous demand

shocks, economic downturns, political and economic sanctions, and the

development of other transportation modes. The analysis also identifies the

following change factors which affect the demand indirectly by changing the

country’s economic attributes: economic liberalization, institutional and political

reforms, supporting infrastructure investment, exchange rate fluctuations, political

and macroeconomic stability, growing consumer demand, and changes in

management practices. This analysis of stimulating and suppressing factors helps

to describe the role of government intervention in changing air transportation

system development and its impact on economic activity. The results of this work

can guide further development efforts, investment and policy decisions pertaining

to air transportation usage especially in developing economies.

References:

Airport Design And Operation: Antinin Kazda & Robert E. Caves.

Airport Operation: Norman Ashford, H.P. Martin Stanton &

Clifton A. Moore.

Encarta Reference Library

Www.Aerosite.Net

International Civil Airports Association.

ICAO (2006) Safety Management Manual.

Aerospace Marketing Management: Philippe Malaval & Christophe Benaroya

Marketing in the International Aerospace Industry: Wesley E. Spreen

Strategic Management In the Aviation Industry: Werner Delfmann, Herbert Baum,

Stefan Auerbach & Sascha Albers

Studies in Aerospace Law Dr. Nagendra Singh & S.Bhatt

Aircraft Finance Berend J.H. Crans

www.icao.com

www.iata.com

monthly economic analysis

--------------------------------------------------------------------------------------------------------------

SIREESH P.

FLYING INSTRUCTOR (UAV’S)

AIRCRAFT RESEARCH AND DESIGN CENTER,

HINDUSTAN AERONAUTICS LIMITED

Email id: seereesh@gmail.com, Mobile no: +91- 9740287428.