ABOUT AIRDEV PROJECT

Air transport sector has been undergoing profound changes over the recent decades. Several drivers, such as: globalisation and other similar phenomena, political instability in some regions (e.g.: Gulf Wars), emergence of new threats (e.g.: SARS, terrorism) or economic turmoil (e.g.: early and nineties, or the current worldwide financial crises) have driven the sector towards a turmoil. On the other hand, the sector shows a robust growth, since 1945 world passenger traffic grew at an average annual rate of 12% (Hanlon, 2004, pp 13), since 1960 a 9% annual growth is reported in general with freight growing at an annual rate of 11% and mail at 7%. And forecasts unanimously predict the maintenance of the growing rates into the foreseeable future. The sector is therefore in a major turmoil, not being at this moment possible to predict the future configuration. Nonetheless, some trends are visible, which may shed some light on the direction of evolution of the sector, the most important being: different growing rates across market segments, diversification of ownership will place airlines and airports, strong downward pressure on fares and cargo tariffs, liberalization together with abandonment of ownership restrictions and privatization of airlines hitherto government-owned, falling yields, cost cutting with a strong emphasis on labour costs, or intensify usage of electronic communications.

Airports business has not been left untouched by these changing waves: many have been privatised, while others, even remaining under public control, have been given commercial purposes. This business has, conversely to air transportation business, revealed to be quite profitable, yet only for those airports above a certain annual traffic threshold. Small airports are loss making and need to be supported by public funding in order to survive. Yet, owing to the positive benefits airports generate into the region, local authorities willingly support airports.

Nowadays, in face of the continuous degradation of airlines’ profitability, airports have been searching for alternative sources of revenues; and many have evolved towards truly multi-business, multi-activities areas (with retail centres, logistics areas, business centres, etc), embracing the concept of City Airport. In some airports, airlines revenues count as low as 30% on total revenues.

AIRDEV Project will tackle these issues, by providing a better understanding:

- on the design of business models for airports;

- on the quantification of the hinterland benefits, with particular focus on the benefits generated from the evolution towards the concept of city airport

PROJECT OBJECTIVES

AIRDEV Project will follow two streams of research in order to provide an answer to the problems presented in the State of the Art. They provide a departure basis to nurture the required knowledge on airport development:

- Business models for the implementation and further development of the airport concept;

- Airport hinterland and airport city concept;

These two streams of research analysis complement each other in acquiring the required knowledge for a coherent guidance on airport development, which is an issue of high priority in the Portuguese political agenda in the coming years. In a network dynamics perspective the airport’s interactions with its context world (knowing threats and opportunities, markets and competitors) will be assessed to put forth innovative designs of airport business models and models for development of regional interactions.