04 Sep Is now the right time to talk about…space usage?
Space has become an important topic to many of us over the last few months. Whether in our personal or professional lives, having access to sufficient space to move around and work in to safely, often while respecting social distancing rules, has become a necessity of everyday life. Social distancing has transformed the way we see space; introducing us to different concepts of space, how we access it and how we use it.
The same is true for the aviation industry where airports are asking themselves how they can manage the space they have more efficiently to adhere to these new rules and survive as a business; But it is no longer just about the efficient use of resources; the sustainability of the airport in terms of its economic survival is at stake.
Airports and airlines are increasingly having to reflect on questions that would traditionally have sat outside of their typical business model where there is no ‘one size fits all’ answer. How can they attract passengers again? Where can businesses generate income despite falling passenger numbers? These are questions that the aviation industry is familiar with, but not to the extent that they are being posed now.
Space usage has always been at the forefront of airport planning, passenger flow management, customer experience – and airport flexibility as we discussed in a recent article. Space is a key aspect of planning. Ensuring that terminal capacity matches up with anticipated demand, while leaving some room for growth and meeting a certain level of service, is a major part of that. However, sustainability and space usage are very much relative concepts. Between small, medium, and large airports, space is used in a variety of ways and with varying degrees of success. With new restrictions in place however, this is proving to be a challenge for airports of all sizes.
The aviation industry has undergone a dramatic change in the last five months, with passenger numbers reaching historic lows during the peak of the pandemic and now only just inching towards recovery within a socially distant world that now has lower confidence than ever in air travel.
So just how can airports manage their space more efficiently to increase passenger confidence, safeguard revenues and practice social distancing in line with government regulations and industry recommendations? In the context of the array of constantly evolving rules and regulations across countries, and the diversity in approaches across small, medium, and larger airports, the road ahead will be challenging.
Getting the balance right
Airport staff in particular are having to be as responsive and flexible as possible in this changing situation. With restrictions and new quarantine rules for travellers [returning] from high-infection countries being imposed within a matter of days, and second and third waves of infections flaring up across the world, it’s clear that the space-usage question is not going away any time soon.
At present, many airside and landside food and beverage (F&B) and retail outlets remain closed due to the low number of passengers travelling through airports. In a few extreme cases, to avoid crowding, passengers are barred from entering terminals until their flights are almost ready to board, in effect pushing the problem upstream, outside the terminals.
While the daily passenger numbers remain as low as 20-30% of those achieved last year, the peak numbers could potentially reach as high as 70- 80% of those seen during 2019. Airlines in parallel are now actively managing their loads by cancelling flights that don’t sell and reducing daily flight frequencies in a bid to save costs. Managing both the rapid fluctuations in demand throughout the day and the uncertainty in passenger numbers is a delicate balancing act that will impact the survival of the airport as a business.
This balancing act may also be influenced by geography and geographic location, making it hard to provide a single solution or approach for all airports. Domestic air travel in the US and India constitute a significant market for example and are growing at a steadier rate than international travel. This is to be expected given that domestic travel is generally more predictable and not susceptible to the myriad of different government authority decisions that affect international travel (with the notable exception of Australia where it is impacted by travel restrictions between states).
While there is no silver bullet that can address the challenge comprehensively, implementing efficient space usage techniques in passenger processing and queuing, shopping, dwelling and other contexts, can contribute to the generation of income beyond purely aeronautical revenues. Indeed, this may also ensure that airports remain open and financially healthy throughout times of uncertainty and well into the future.
Does airport size matter?
In this case, it is not the absolute size of the airport that matters, but its demand/capacity ratio measured for each sub-system (e.g., security screening, passport control, reclaim) throughout the day. The lower this ratio, the more space and resources the airport has available to accommodate new protocols, such as health screening, social distancing, fluctuations, uncertainty in demand, and other operational disruptions that might occur. It is also important to bear in mind however that sub-systems are interlinked; so changes to an individual sub-system will affect others.
But this also comes at a cost as underutilisation of space and resources results in negative financial outcomes such as lower returns on investment, higher operating and maintenance costs and increased initial capital spending. At the other end of the spectrum, when the demand/capacity ratio is high, airports have very little room to respond to any changes without compromising operations and levels of service as a consequence.
Size also matters when it comes to having the staff, capacity, and capabilities to model various traffic and concept of operations scenarios, and in dynamically adopting the most optimal solutions for certain situations. This puts larger airports in a good position to avoid major delays and other operational disruptions even when their demand/capacity ratio is high. Smaller airports by contrast often lack the staff and the capability to realise these advantages; a factor which is particularly important given that, in most cases, their demand/capacity ratio will often be quite high.
In addition, the financial position of an airport plays a substantial role in its ability to respond to new health and social distancing requirement, for example, by adding more staff in the short term and investing in innovation in the medium to long term. So while airport size could be a disadvantage for smaller airports, there are exceptions if, for example, the airport is part of a larger group or consortium such as Fraport, Aena, Schiphol Group, Ferrovial etc. which overall, has the scale to implement a consistent group strategy across their portfolio.
Smaller airports that do not belong to a specific group or consortia are often unable to invest in technology and innovation to the same extent as their larger counterparts. Thus, they have to rely on more traditional “manned” resources such as check-in and passport control counters that are harder to scale up or down. Collectively, these factors unfortunately make smaller airports more vulnerable to delays and disruptions.
The unpredictability of airport space needs in tandem with the uncertainty around traffic recovery and health requirements means that larger airports are generally in a better position both operationally and financially to address or adapt to these situations and optimise the space they have. Smaller airports by contrast will have to work “smarter”, employing innovative technologies, solutions, and approaches in order to better utilise their facilities and space.
Biometrics and the new world of air travel
Given the fall in passenger numbers, it is also important to recognise that fewer passengers does not automatically translate into expedited process in airports. Queuing and waiting times will certainly not disappear overnight, and in some cases they will likely increase as a result of new health check requirements. So, it is impossible to innovate around or discuss the use of space in airports without questioning the potential impact on the passenger experience.
At the crossroads of this space usage, innovation, and passenger experience question, is biometrics and the seamless passenger journey. Long seen as a viable solution for optimising space usage pre-Covid-19 and improving the passenger journey, biometrics could be just the solution for the now socially distanced aviation industry.
The use of biometrics is being tested in multiple pilots; Amsterdam Airport Schiphol’s Seamless Flow and Aruba International Airport’s Happy Flow are examples of two that are currently in place. The hope is that biometrics will not only cut waiting time, but inevitably reduce the need for repetitive and multiple checks of the same documents (boarding pass, passport, health certificate) from bag drop-off to boarding, to arrival. Indeed, in the current context where prolonged waiting times can prove detrimental to population management and social distancing, the use of biometrics, coupled with the ready-to-fly concept (i.e., where some traditional processes are completed at home enabling passenger to arrive at the airport ready to fly), could lead to safer and more efficient space usage.
This is not a huge leap in terms of passenger adoption and adaptability; after all, we have had the ability to check in remotely for flights for some time. But pairing this functionality with biometric facial recognition could lead to faster processing times, significantly reducing queues at check in, passport control and during boarding.
Biometric-enabled fast passenger processing will give airports the latitude to convert their space from processing and queuing to relaxed dwelling, which in turn could lead them to consider the introduction of alternative, and indeed more revenue-diversifying income streams and offerings.
Revenue diversification as a survive-and-thrive strategy
The aviation industry is facing an unprecedented challenge with airports and airlines fighting to survive by preserving cash, re-prioritising investments, and aggressively reducing costs.
Airports with carriers that are in a strong financial position are in a more favourable position than those without, as these airlines will most likely weather the current crisis and stimulate traffic. But with airlines equally concerned about their bottom line, negotiations on aeronautical charges and other fees with airports are getting tougher and more asymmetrical with some airlines threatening to halt flights and operate from airports that offer more favourable financial conditions.
As noted previously in this article, the acute drop in passenger footfall has had a knock-on effect on many retail and F&B outlets which for the most part have remained closed. There is little appetite or inclination to shop or purchase food in the current climate.
It is this triple whammy of lower passenger numbers; tougher airline negotiations and lower passenger spend that is now forcing some airports to start thinking outside of the box when it comes to diversifying and sourcing new and diversifying revenue opportunities.
This means airports will need to become savvier in how they utilise their space. In our recent white paper on the subject, we illustrated how vital the “cushioning effect” (i.e., the time and financial buffer created from office rental incomes, hotel investments and airport city-related strategies) can be for airports during and beyond crises. In fact, much of this effect is also linked to space and how it is used by airports.
Tackling “the big question”
So, is now the right time to be talking about space usage in airports?
Current trends in air passenger travel and spend, ongoing social distancing and other measures to curb the spread of Covid-19, the growing interest in potential biometric applications to address these shifts plus, the very real need for airports to seek income diversification, suggest that it is. These developments are not only forcing us to question the availability of space at airports but also to better understand how that space can be used in more sustainable, flexible and financially stable terms that can help cushion the effects of large scale change.
While it is not an easy question to answer, the cost of ignoring or failing to seek answers to it could lead to unfavourable outcomes for airports and the wider aviation industry.