Airlines, airports in changing times across the world
With major airlines disappearing from the aviation industry a change is observed with most long haul operations now looking at competing with the budget carriers, an aviation expert highlighted at a seminar in Colombo last week.
Prof. Richard de Neufville, Professor of Engineering Systems and Civil Environmental Engineering at the Massachusetts Institute of Technology (MIT), made these observations, that the airport business faced a generation of turmoil for which they needed to prepare ahead, during his speech on the topic of “Planning, Design & Management for Airports and the Airline Industry – to deal effectively with the on-going market turmoil” organised by the Chartered Institute of Logistics & Transport of Sri Lanka (CILT) in conjunction with the University of Moratuwa.
It was noted that today most major airlines were disappearing and that in the US from about 10 there were only three remaining while some others were absorbed.
Prof. De Neufville predicted that Dubai which was currently the third largest international airport could surpass London within two years.
In fact, he noted that airlines like Kingfisher that looked good had now disappeared and in this respect, he explained the “future is unclear.”
Today changes take place in transfer hubs and the St. Louis airport went bankrupt having only half the traffic it envisaged.
He explained that change in the sector was clearly evident in view of the low cost airlines that have become the dominant players. In this respect, the major carriers were looking at partnering and joining alliances and even merge to stay afloat like KLM and Air France.
Prof. De Neufville observed that it was not just the change in rate structures and transfer hubs that was bringing about the difference but reasons like increased convenience that cause people to avoid London and use Dubai instead as a result of which the Gulf was found to be competing today with the traditional hubs.
He pointed out that with low cost carriers operating at significantly low rates they were able to reap better profits whereas the traditional airlines were compelled to compete with them.
Planning ahead would mean ensuring a rapid turnaround time with fewer gates required and ensuring that designs were in place for low cost terminals, he said.
In this respect, he noted the airport business faced a generation of turmoil as a result of which they needed to prepare ahead.
Moreover, he stated that while airports in the US were operated to provide a service and ensure that the air transport stays united, on the other hand in the UK they were run to gain a profit advantage.
In a sense, most forecasts have been proved wrong like: though it was thought that the A380 would be the dominant aircraft today the smaller aircraft dominates that sky; development of new regional hubs are coming up and competition between the airports are increasing; alliances between airlines were the order of things to come; and airline costs have become consolidated; in addition the environmental impact was of prime concern, he explained.