Program: MSc Strategy & Innovation

(1)

Airport Development

Program:

MSc Strategy & Innovation

Title:

The Added Value of an Off-Airport Terminal

Author:

I.M. Visser

Student id:

s1541056

First Supervisor:

Dr. P.M.M. de Faria

(University of Groningen)

Second Supervisor:

Dr. T.L.J. Broekhuizen (University of Groningen)

Supervisor:

Ing. M.W.S. Schaafsma (Schiphol Group)

(2)

Abstract

The objective of this thesis is to find out how an off-airport terminal can be of added value to its major stakeholders. A literature review forms the basis of the concept of the off-airport terminal, however gaps were identified and therefore subsequently a benchmark was done. The benchmark, consisting of three different cases of off-airport terminals, delivered new insights into: who the major stakeholders of an off-airport terminal are; what airport related activities can create value there; and what factors are critical for the success of an off-airport terminal. The main findings showed that the most important stakeholder are the passengers and, depending on type of services provided and who is the initiator or owner of the off-airport terminal, the airport, railway operator, and airline (s). The airport related activities which can create value at an off-airport terminal are the availability of a dedicated connection to the airport and the provision of check-in facilities, with or without baggage but with baggage is most value adding. The critical success factors of an off-airport terminal are determined to be the availability of a dedicated connection which must be: the best alternative compared to other transport modes to the airport; be reliable; punctual; and fast. Furthermore, the availability of check-in which has to be supporting to the service of the dedicated connection as a service enhancement in the case of only passenger check-in and issuance of boarding pass. However, the availability of baggage check-in as well is seen as the best case. In addition, total service quality is considered to be a critical success factor. The research not only identified factors critical to the success of an off-airport terminal, also risks were identified such as security issues with baggage check-in, too low passenger volumes for off-airport services to work, and the influence of future developments in airport services on off-airport terminals which raise the question if such off-airport services will still exist in the long term. However, the main findings of this research show that an off-airport terminal can be of added value to its major stakeholders in: providing a dedicated connection to the airport which is reliable, punctual, and fast; and providing off-airport check-in, with or without baggage, as a customer service enhancement.

(3)

Acknowledgements

"It always seems impossible until it's done." - Nelson Mandela

In front of you lies the final product of my master studies Strategy & Innovation at the University of Groningen. More than a year ago, September 2010, I started with my graduation internship at Schiphol Group, at the Airport Development department. The decision to do an internship at Schiphol Group was due to my eagerness to learn more in practice and based on my interest in the concept of the AirportCity. The actual topic chosen turned out to be the concept of the Off-Airport Terminal and proved to be very interesting but also very challenging. I am proud of the final result and would like to thank a number of people for their contribution to this study.

First of all, I would like to thank my supervisors Pedro de Faria and Maurits Schaafsma for their guidance, feedback, and patience which helped me in writing this thesis and working towards the final version. Second, I want to thank my colleagues at Schiphol Group for their continuous support and confidence, which I really appreciate. Third, I want to express my gratitude to the interviewees and all other persons who contributed to this research by providing knowledge and experience. Moreover, I want to thank my colleagues for their willingness to support me in getting in touch with my interviewees or contact persons via their professional network.

Last, but certainly not least, I would like to say a special word of thanks to my family and friends for their continuous support and confidence. Thank you for believing in me, no matter what.

Ilse Visser

(4)

List of Figures and Tables

Figure 2.1 The Commercial Airport Model p. 15 Table 1.1 Chapter outline p. 12

Figure 2.2 The enriched service package for the airport provider p. 16 Table 2.1 Airport definitions p. 13

Figure 2.3 The passenger departure process at terminal AAS p. 19 Table 2.2 Sources of concession income p. 18

Figure 2.4 The passenger process p. 19 Table 4.1 Details dedicated connection Hex p. 43

Figure 2.5 The departure process landside p. 20 Table 4.2 Hex ticket prices p. 44

Figure 2.6 The OAT concept p. 27 Table 4.3 Summary of main findings OAT Paddington Station p. 46/47

Figure 2.7 The departure process landside p. 28 Table 4.4 Details dedicated connection CAT train p. 49

Figure 4.1 OAT services at Paddington station p. 43 Table 4.5 CAT Train ticket prices p. 49

Figure 4.2 The CAT at Wien Mitte p. 48 Table 4.6 Summary of main findings OAT Wien Mitte station p. 53/54

Figure 4.3 The CAT terminal at Wien Mitte p. 51 Table 4.7 Details dedicated connection Air France train p. 56

Figure 4.4 (A) Signage CAT p. 51 Table 4.8 Summary of main findings OAT Brussels Midi station p. 60/61

Figure 4.5 (B) Signage CAT p. 51 Table 4.9 Future OAT services p. 69

Figure 4.6 The OAT at Brussels Midi p. 55 Table 5.1 The OAT concept ideas of SG p. 78

Figure 4.7 The manned check-in desks p. 57 Table 5.2 Details train connection station Zuid p. 81

Figure 4.8 Customized items in the OAT p. 58 Table 5.3 NS ticket prices p. 81

Figure 4.9 The ticket office at Brussels Midi p. 59

Figure 4.10 The passenger departure process p. 67

Figure 5.1 Schiphol Strategy p. 73

Figure 5.2 The projected growth at railway station Zuidas p. 75

Figure 5.3 The Airport Corridor p. 76

Figure 5.4 Context of the Extended Terminal p. 77

Figure 5.5 The departure process p. 80

Figure 5.6 Most frequently chosen transport mode from Zuidas to AAS p. 83 Figure 5.7 Preferred OAT services at the Zuidas p. 84

Figure 5.8 OAT services short term scenario p. 92

(8)

Abbreviations

AMS Amsterdam Airport Schiphol

LHR London Heathrow Airport

VIE Vienna International Airport

AAS Amsterdam Airport Schiphol

ACI Airport Council International

BAA British Airports Authority

CBD Central Business District

CUSS(CI) Common – Use Self Service (Check – in)

F&B Food and Beverage

IARO International Air Rail Organization

IATA International Air Transport Organization

Kiosk Automated self-service check-in machine

LCC(s) Low Cost Carriers(s)

OAT(s) Off-Airport Terminal(s)

O/D Origin / Destination

Passengers The end users of airport facilities and services

Pax Passengers

Schiphol Amsterdam Airport Schiphol (airport site)

Schiphol Group Schiphol Group N.V. (airport authority)

(9)

1. Introduction

“International gateway airports drive and shape business location and urban development in the 21st century as much as highways did the 20th century, railroads in the 19th and seaports in the 18th.” -John Kasarda-

Over the past 30 years, airports have evolved from being simply municipal or government infrastructure providers into sophisticated and business-oriented service providers (ACI, 2007). These are airports which are not only seen as modal interfaces but as leisure attractions and primary destinations in their own right (Freathy, 2004). Along with the global trend in airport governance towards market-driven commercial operations, there has been a growth in non-aeronautical activities of airports which are not always directly linked to aviation (Morrison, 2009). In addition, shifting demographics, new corporate governance requirements, and emerging and maturing communications technologies are driving new travel patterns that will require innovative business models and strategies (Fattah et al., 2009). However, not only such changes influence and foster the development of new products, services, strategies, and business models, the increasing expectations of passengers also have to be taken into account. Better, cheaper and faster services are expected because people are accustomed to sophisticated, continuously improving technology which, for example, facilitates high quality self-service and immediate access to resources and information (Fattah et al., 2009). Passengers want real-time information about flight delays, gate changes, special offers and a seamless flow for check-in, transit, and boarding is expected. From this perspective, airports and airlines have a significant opportunity to build an integrated, high-value experience for travellers, from booking the reservation, to travelling to and through the airport, on to journey’s end. In creating this unified customer journey, the airport’s role must evolve from passive landlord to active participant, enriching the passenger journey as a key ecosystem partner. This means that there exist opportunities to expand the value chain by considering passenger experience in an integrated, end-to-end framework that includes the airport, airlines, concessionaires, tenants, governments, businesses in the airport city, and other stakeholders (Fattah et al., 2009).

(10)

be traced back to the early 1950s when it was first examined in the United States by airlines that wanted to improve services to their customers (Goswami et al., 2008). However, through the years, the OATs have developed from only being a ticketing office into facilities located in the central business district of large cities or at suburban locations where the services can include check-in (with or without baggage), issuance of boarding passes, and transportation to the airport. The preliminary investigation revealed that many OATs exist throughout the world and that they seem to mainly differ in terms of location and type of services provided. Furthermore, besides OATs that still run successfully also cases were found where the operation of the OAT was completely withdrawn or some services removed. However, clear causes for such failures cannot be directly detected because these outcomes are not or not well published. However causes could be for example that demand, revenue, and profit have not met expectations (Sharp, 2005). Although there are many experiments with such off-airport services, there is almost no observational research into outcomes which can lead to a real waste of resources as mistakes are repeated over and over again. Therefore, according to Sharp (2005), it would be useful to know and publish more about for example what passengers really want, what they and other stakeholders are prepared to pay for and what makes an off-airport terminal a success? Key questions that arise are (Sharp, 2005):

 Why are such facilities provided?  Are the facilities valued?

 What do passengers and other stakeholders want and what are they prepared to pay for?  What is success in the context of an intermodal off-airport terminal for air passengers?

According to Sharp (2005) there currently is no specific answer that holds for the first question since this depends on the aims and policies of many agencies involved in the project and tend to vary between regions. For the remaining question neither is found a concrete answer. Since it seems that a gap can be identified here in the information available on OATs and, in addition, the decision making of AAS needs some support, the following problem statement can be derived (section 1.1).

1.1 Problem statement

(11)

This is the main research question of this thesis and the key questions that arose from the research of Sharp (2005) form the underlying elements. To determine how an OAT can be of added value to its major stakeholders an understanding has to be gained about: why such facilities are provided; if and what type of facilities are valued by passengers and other stakeholders; and what actually makes an OAT an success and what are the critical factors needed for this. As a result, to be able to answer the main research question, the specific research questions for this research are defined as follows (section 1.2).

1.2 Research questions

1. How can an off-airport terminal be defined?

Since there seem to be many types of OATs it is regarded necessary to firstly gain a thorough understanding of what elements are essential for an OAT.

2. Who are the most important stakeholders?

To determine what types of facilities are valued by passengers and other stakeholders, it is essential to determine who the most important stakeholders of an OAT actually are.

3. Which airport related activities can create value at an off-airport terminal?

This research question can directly be linked to what the passengers and stakeholders actually want and what types of services are valued at an OAT. 4. What are the critical success factors of an off-airport terminal?

By means of this question the factors that are critical for making an OAT a success have to be identified.

In answering these research questions and thereby the main research question this thesis has to contribute to the literature on OATs in delivering new insights as indicated by Sharp (2005). Furthermore, it is assumed that the information can help AAS in supporting the decision making in delivering knowledge essential for making a good start in the first phase of planning to develop an OAT.

(12)

1.3 Chapter outline

The following table (1.1) provides a brief outline of each chapter in this research.

Chapter Outline

1. Introduction Provides background information to this research and highlights the aim of this research. Based on the problem indication a problem statement is formulated and accordingly research questions are defined. The chapter outline gives an impression of how the research is structured and what steps are taken to answer the research questions.

2. Literature Review The first part of this chapter reviews secondary data on the airport to give some background and develop an understanding of the airport industry in working towards the concept of the OAT. In the second part of this chapter secondary data on the concept of the OAT is reviewed and discussed. Gaps are identified and subconclusions are made in attempting to (partially) answering the research questions.

3. Research Methodology Outlines the selected methods to gather primary and secondary data towards achieving the aim and objectives of this thesis.

4. Benchmark

[Research Findings and Analysis]

Presents and discusses findings from gathered data and an analysis in relation to secondary information. Three cases on OATs are discussed and analysed to provide input for answering the research questions.

5. The Case

[Applying Research Findings]

Presents and discusses the case of Amsterdam Airport Schiphol. The findings from chapter 2 and 4 are applied to the case and subsequently case specific recommendations are given.

6. Conclusions and Recommendations Summarises key findings by answering the research questions and outlines conclusions with regard to the added value of an OAT from a stakeholder perspective. Managerial and theoretical implications are given with regard to this research. Potential research bias and limitations are acknowledged and recommendations for future research based on the experience with this research are provided.

(13)

2. Literature Review

This research is about the off-airport terminal (OAT), with the focus on the word “off”: a terminal not located at the airport. However, to start with, this chapter firstly gives an overview of what an airport actually is, how it is organized and which developments characterize the airport industry. This literature review forms the theoretical foundation of this research which can be regarded as a solid basis to further develop on the literature of the OAT.

2.1 The airport defined

Over the past couple of decennia, it has become clear that airports can be run as highly successful and profitable businesses (Doganis, 1992). However, until the 90’s the industry had no defined economic theory to base itself on. Since then, an increased number of books, articles, and conference papers appeared dealing with particular aspects of the airport business. To get an understanding of what an airport exactly is a short overview of a selection of definitions on airports found in literature is given here (see table 2.1).

Author(s)

Airport definition

Doganis (1992) “The airport consists of one or more runways for aircraft with buildings or terminals where passengers or freight are processed”

Freathy (2004) 1. “An airport ensures the efficient movement of passengers between one destination and another”

2. “Airports which are not only seen as modal interfaces but as leisure attractions and primary destinations in their own right”

(14)

Going back to its very essence, airports have the same primary function which is clearly indicated in the definition of Doganis (1992) and Kazda and Caves (2007). According to the authors going back to its very essence “the airplane came first and a suitable ‘airfield’ was searched for to accommodate the needs of the aircraft.” Following Doganis’ (1992) definition, “the airport is essentially one or more runways for aircraft together with associated buildings or terminals where passengers or freight transported by the aircraft are processed.” They act as a forum in which disparate elements and activities are brought together to facilitate, for passengers and freight, the interchange between air and surface transport. According to Freathy (2004), the role and purpose of an airport seems to be far from defined. Argument for this is that “some airports remain close to the traditional view which means that it ensures the efficient movement of passengers between one destination and another, whereas others are viewed as within a broader framework of economic change and commercial opportunity.” In other words, “these are airports which are not only seen as modal interfaces but as leisure attractions and primary destinations in their own right” (Freathy, 2004).

The definitions on airports above make clear that the primary function of an airport is to facilitate an interface between ground and air transportation where passengers and/or freight are processed. However, referring to the definition of Freathy (2004), the economic functioning of an airport or said otherwise, the commercial character of some airports is also reflected. This latter one is developed further below, where the developments in the airport industry are described.

One of the first significant developments is that after World War II the requirements for aerodromes1 changed dramatically. This was in a short period of time due to new aircrafts, importance of regularity of service and the development of terminal facilities for the processing of passengers (Kazda and Caves, 2007). Furthermore, also the first non-aeronautical services were being developed such as restaurants and duty free shops which influenced the lay-out of the terminal building. However, the more recent changes to airports have been caused by political and economic developments. The privatization of airports, for example, represented a fundamental change in the way airports are administered and financed in Europe. Although most airports still have some form of public sector ownership, there exists considerable variation in the level and the extent of government intervention (Freathy, 2004; Graham, 2009). The

1

(15)

reduction in state’s control and regulation of the air transport industry has caused greater commercial sector involvement. This is because in many countries there was a shift in the view on airports as being run more like a commercial enterprise instead of being operated and financed by local or central government (Doganis, 1992). In addition, there also are numerous cases where autonomous airport companies or corporations are created which are able to operate as independent commercial enterprises while still remaining under (partial) government ownership. Below, figure 2.1 explains the commercial airport model.

Figure 2.1 – The Commercial Airport Model. Source: adopted from Doganis (1992)

Other factors that influenced the airport industry are primarily: political/terrorist and threat/health concerns, and the decline in aeronautical revenues. These factors had a significant influence on the change of emphasis in the industry on different levels (Freathy, 2004; Graham, 2009). The political unrest, terrorist activity and health epidemics had strong economic implications for the airport industry primarily in terms of increased security measures. Another influence on the development of the airport industry is the charges levied on airlines by airports for using facilities. These have remained relatively static due to government policies and partly because of pressure from airlines due to competition in the airline industry. The airlines carefully manage all cost items including airport

“The commercial airport model has the aim to maximize income from any appropriate activity at the airport. This in turn means that one regards the airport as a business opportunity which not only serves its direct and traditional customers (e.g., airlines, passengers, cargo shippers etc.) but also a wider range of potential customers including airport and airline employees, visitors, people meeting passengers, local residents in the surrounding communities as well as local businesses and industries. The design implications of such a strategy are that while every effort is made to facilitate the movement of passengers and cargo through the airport every effort is also made to

maximize the opportunities for generating additional commercial income even from activities which may not directly related to air traffic such as light industry or leisure complexes. To be most

(16)

charges, operating on limited margins and keeping fares low. Thus airlines are demanding lower costs and revenues from landing and in turn it is difficult for airports to increase the handling fees due to regulations in some countries (Kazda and Caves, 2007). This resulted in the increasing search by airports for opportunities to earn revenues by opening up new areas of business (Morrison, 2009). In addition to the reasons stated above of decreasing aeronautical revenues, airports and airlines also recognized the importance of providing the passenger a pleasant environment to spend time before boarding. The search for new business areas resulted in a strategic measure of diversification which was designed by airports to generate commercial revenues and to ensure the future viability of the airport (Freathy, 2004). The scope of non-aeronautical airport activities sometimes includes business with little or no connection to aviation (Morrison, 2009). Brand extension is also a reason where examples are 24h trading, catalogue shopping and consumer loyalty schemes. Figure 2.2 reflects the expanded service package of the airport provider.

Figure 2.2 –The enriched service package for the airport provider. Source: adopted from Jarach (2001)

Wide Product logistic services;

commercial services; congressional services; tourist

services; consulting services.

Expected Product multi-modal

services.

Generic Product frequency of

routes; service personalisation; cargo; comfort; baggage handling; information; check-in; operational efficiency; ticketing.

Core Benefit passengers’ and

(17)

2.2 Core airport services

Airports provide a wide range of services and these can be divided into three distinct groups (Doganis, 1992): essential operational services, traffic-handling services and commercial activities. It is important for this research to gain an understanding of the core services and to be able to distinguish them in determining which services are essential within different parts of the airport. This will help in determining the type of services which are already being provided or would be feasible to (also) be provided off airport. The different services can be explained as follows:

Essential operational services – such services are primarily concerned with ensuring safety of aircraft and airport users. They include: air traffic control, meteorological services, telecommunications, police and security (baggage search, access control etc.), fire and ambulance services, and runway and building maintenance. Air traffic control and policing/security are the major operational areas.

Traffic-handling services – a variety of handling activities exist where some are associated directly with the aircraft itself such as cleaning, provision of power and (un)loading of the baggage/freight hold. In short, this is also called “ramp handling”. Furthermore, there are also handling activities which are more directly traffic related. These are for example the processing of passengers, baggage or freight through the terminal(s) and onto the aircraft. The various parts of such processes may be the responsibility of different authorities.

(18)

Below in table 2.2 an oversight can be found of income from concessions oriented towards passengers and towards airlines.

Concessions oriented towards:

Passengers, airport employees and other users of terminal facilities

Concession income from services geared to meet the needs of airlines

Duty- and tax free shops (departing and transit) Catering facilities (both landside and transit)

Services (banks, post office, travel agents, car hire and hotel reservations) Leisure facilities (cinemas, discotheques, night clubs, billiard rooms, a gym, health centre)

Car parks Advertising

Aircraft-related services (marshalling, aircraft cleaning, and provision of in-flight catering)

Passenger, baggage, or freight handling (generated from specialist companies or airlines)

Table 2.2 – Sources of concession income. Source: adopted from Doganis (1992)

As mentioned above, the actual activities within the airport for which an airport owner or manager is responsible vary between countries and often between airports in the same country which is due to historical, legal and commercial reasons (Doganis, 1992).

2.3 The airport terminal and processes

In this section the airport terminal’s function is shortly explained because the focus is on the “off-airport terminal”. Therefore, it is important to start with explaining what a terminal’s function exactly is. This means that also the main processes which take place within the building are discussed.

(19)

international passengers associate with a country, making it a national frontier. The terminal time as part of the total travel time has an important role due to the processes within the terminal such as for example check-in, baggage handling, and walking distance. An example of the passenger process from pre-journey activities to actual boarding can be found in figure 2.3.

Figure 2.3 – The passenger departure process at terminal AAS. Source: Blekxtoon (2010)

The major functional areas in the terminal system which belong to the different steps in the passenger process above (fig. 2.3) are shortly described in sequence in the figure (2.4) below and are as follows (Correia et al., 2008):

The access interface

•Where the passenger transfers from the access mode of travel to the passenger processing functional area.

•Includes circulation, parking, and curbside loading and unloading of passengers.

Processing

•Here the passenger is processed in preparation for starting, ending, or continuation of an air transportation trip.

•Includes ticketing, baggage check-in, baggage claim, seat assignment, federal inspection, services and security.

•This is where passengers transfer from the processing functional area to the aircraft.

(20)

As indicated earlier, some components concerning the processes in the terminal are not directly managed by the airport operator, however they may have considerable influence during the planning and management stages. The check-in counters or kiosks for example, are usually managed by airlines but often planned and built by the airport operator. In addition, in many countries the airport operator is responsible for assigning check-in areas according to demand priorities (Correia et al., 2008).

With regard to the passengers using the terminal, these can be divided into three groups according to their movement type (Correia et al., 2008). These are departing, arriving, and transfers. The passengers in each of these groups will have a different set of needs and wishes. In this research the focus is on the departing passenger (Origin passengers) focused on the part of the process which is specified in red in figure 2.5 below. The main parts of the passenger process or “passenger journey” that is focused on in this research are: the pre-journey activities such as looking for flight info; the mode of travel to the airport; and the services that take place in the departure hall of the terminal, these are check-in and baggage drop-off. These activities fit within the “access interface” and part of the “processing” according to the passenger process explained by Correia et al. (2008) in figure 2.4.

Figure 2.5 – The departure process landside. Source: author, adopted from Blekxtoon (2010).

2.4 Airport service quality

(21)

with greater control over how they experience their waiting time. What people do with their time can be divided into three major activities (Fodness and Murray, 2007):

Productive – such type of activities can for example be job-related work or education-related study. The time that people spend on such activities depends for example on their stage in the life cycle and their employment status.

Maintenance – the maintenance activities also take a significant part of time and these can be directed at both people’s bodies and their possession. The former consists of, for example, eating and resting whereas the latter can consist of, for example, housework and shopping.

Leisure – this is an activity which consists of the discretionary time left over from productive or maintenance activities. Three primary forms are: media consumption (e.g., watching television, listening to the radio); conversation; and more active leisure (e.g., hobbies, sports, visiting restaurant etc.).

(22)

2.5 Airport access modes

As indicated, within the departing passenger process, the transportation to the airport is also part of it. Therefore, here the different possibilities of modes for transportation to the airport are shortly considered.

One has to take into account that the passenger’s trip does not start or finish at the airport (Kazda and Caves, 2007). The origin can be home, the hotel, or the workplace for example. The total amount of time with regard to transportation from door to door is decisive for passengers in choosing the airport of departure. The most important factors affecting the decision process of the passenger are: transportation time; price of the flight ticket; and the frequency of flights offered. The total travel time between origin and destination is comprised of access time, terminal time and air time (Correia et al., 2008). The actual time for a trip will depend on the distance, the mode used, and the traffic conditions (Kazda and Caves, 2007). The access time is a matter of major concern and in some cases the ground time even exceeds the air travel time. Therefore, the quality of surface transport to and from the airport is important. It affects the size of the catchment area which is in turn important in the competitive market between airports (Kazda and Caves, 2007).

The issues of road congestion and environmental concerns have contributed to a wider focus and emphasis on the use of public transport modes to access the airport. However, in designing the airport and planning on its development, also other types of transportation have to be taken into consideration. These are: passenger cars; taxis, rental cars; buses; coaches; and railway transport. According to Kazda and Caves (2007), the decisive factors of passengers in their choice of transport mode are: price, transportation time, and the number of changes and baggage handling.

It is necessary to know the factors which distinguish airline passengers from other groups of surface transport users because of the effect it has on the selection of kind of transport provided. The business passenger2 for example needs fast and reliable transport. This has led to dedicated railway connections, the Heathrow Express for example, on which will be elaborated later. Factors that distinguish different categories of passengers using surface transport are for example the reason of the trip to the airport (e.g., leisure vs. business); type of flight (e.g., scheduled –vs. charter, short haul vs. long distance flight); duration of stay; social and economic factors (e.g., income, age, occupation, size of household, car ownership). In appendix III a description of the most common access

2

(23)

modes to the airport is provided. The type of access mode is described as well as its benefits and drawbacks (Kazda and Caves, 2007). Since the access mode is part of the departing process and is therefore also assumed to of importance to the OAT, there will be further developed on this subject in the next section.

(24)

2.6 The Off-Airport Terminal defined

In this chapter the literature on the off-airport terminal (OAT) is reviewed. Where the focus in the previous chapter was on the actual airport and terminal, here the focus is on the off-airport location and type of services provided. With the information and insights obtained in this chapter, expected is that some or part of the research questions can be answered. First, the definitions on OATs are reviewed to determine which definition best reflects the view on the concept of the OAT. This has to deliver an answer on the first research question. Second, the link to airport and OAT accessibility is discussed with regard to the type of access modes and important related factor. This is regarded to be of importance since from the previous chapter it became clear that airport accessibility is an important issue for passengers in choosing an airport for example. This section is expected to partially deliver an answer for the research question on value adding activities at OATs. Third, the pros and cons of the OAT are reviewed which means that the difficulties and the benefits associated with the OAT will be discussed. In reviewing the pros en cons it is expected to also be able to (partly) answer the research question about value adding activities, however also in providing insights into what the Critical Success Factors (CSFs) of developing and operating an OAT might be. A short conclusion is drawn at the end of this chapter to determine if any research questions can already (partially) be answered. If there are gaps identified in this chapter of which knowledge is necessary to answer the research questions, this will be researched by means of a benchmark which can be found in chapter 4. The benchmark is assumed to provide more detailed and practical insights into some topics discussed here on the OAT.

(25)

many names which has been given to what is called an off-airport terminal (OAT) in this research. Other terms which exist in literature on OATs are an “airport offsite passenger facility”; “offsite airport intermodal facility”; “offsite terminal”; “satellite terminal”; or “offsite facility”.

Goswami et al. (2008) argue that OATs were first examined in the United States during the early 1950s by airlines that wanted to improve services to their customers. These offsite terminals were usually located in the central business district of large cities. Due to growing demand, some facilities were moved to suburban locations to meet this demand. At these suburban locations only transportation to the airport was offered without baggage handling or check-in. The concept of the OAT can thus be traced back to the early 1950s, however the literature on OATs is scarce. The first literature on the concept of OATs can be traced back to 1981. The OAT was discussed and researched by Kaplan (1981) and shortly after by Gosling (1987). According to Kaplan (1981), OATs were developed as a means to reduce landside congestion at metropolitan airports. However, this is more a reason or motivation of why OATs were developed. When searching for specific definitions in the literature, Shapiro et al. (1996) make a distinction between ‘limited-service’ or ‘full-service off-airport intermodal facilities’. The ‘limited-service’ OAT is defined as “a classification that generally refers to ‘Park-n-Fly’ type facilities that provide parking for airport-bound travellers and convenient transfers to a dedicated airport service (e.g. direct rail or bus services). In this case, some facilities may also offer additional passenger amenities including waiting areas and airline ticketing services.” The ‘full-service’ terminal is defined as “a facility operating as a remote airport passenger terminal which offers ticketing and baggage check-in services in addition to transportation to the nearest major airport.” As can be noticed, the main difference between the limited-service terminal and the full-service terminal is that the latter has baggage check-in and the former has not.

(26)

self-service kiosks at convention centres that enable to print boarding passes. The appeal of such facilities is that they provide a benefit to both passengers and airport authorities.

In this research the definition of Gowsami et al. (2008) is will be used from the perspective that it is more complete compared to those of Shapiro et al. (1996), Chebli and Mahmassani (2002), and Sharp (2005). The definition does not place limitations on the characteristics of the OAT and therefore acknowledges that many different types of OATs can exist.

(27)

(28)

From the previous figure the assumption can be made that the services provided by the OAT are in line with the figure shown in the previous chapter on the departure process landside (figure 2.5). The elements that can be found in the definition and figure are for example: direct rail or bus services (in line with “travel to Schiphol” in figure 2.7 below); dedicated or shared access system; ticketing- and baggage check-in services; issuing of boarding passes.

Figure 2.7 – The departure process landside. Source: author, adopted from Blekxtoon (2010)

In this research is assumed, according to the definitions given, that off-airport terminals can be located near airports, close to the downtown city, in the downtown city, and that the location also depends on the travel mode to the OAT and between the OAT and airport. From this point of view it could be that OAT can be located next to the airport, at bus stations, train stations, ferry quays, and also metro stations for example, according to the travel mode.

2.7 OAT and airport accessibility

As discussed in the previous chapter on airports, the accessibility of the airport is a major decisive factor for passengers in choosing an airport. When going back to early airport ground transport, this typically involved trips between the central district of a city and an airport on its outskirts (Chebli and Mahmassani, 2002). However, major changes have taken place with regard to both ends of this trip pattern. The metropolitan areas have grown in both population and extent (e.g., residences, commercial and industrial activity centres which are located throughout the area) and the result is that origins and destinations for passengers have become more widely scattered and more difficult to serve by fixed route operation.

(29)

very different between airports. The access mode shares do not only differ widely between airports, they also differ significantly between travel segments within one airport. Differences between these segments can be found with regard to location of residence and trip purpose, (e.g., leisure vs. business). Taking non-residents for example, these have a much lower car share because in most cases they can’t use their own private car and therefore there is a higher probability that they will use the public transport more intensively. Furthermore, business travellers generally have a stronger preference for taxi since they are willing to pay for this more expensive mode in order to save access travel time and prevent transfers (Kouwenhoven, 2008). Most passengers as well as airport employees have depended almost exclusively upon the automobile as a primary mode of access to and from the airport. However, recently, many major airports around the world have emphasized the development of comprehensive options to facilitate intermodal connections for passengers between aviation and ground transportation systems (Chebli and Mahmassani, 2002).

The most important attributes for passengers that determine the mode choice to the airport are access travel time and access cost, according to Kouwenhoven (2008) and also Kazda and Caves (2007) as shown in the previous section on airport access modes. It also depends on the type of passenger as a business traveller for example, may choose a more expensive but faster mode while a different type of traveller (e.g. leisure) may prefer a cheaper but slower mode. Additional factors such as the reliability of travel times and the predictability of arrival times are important as well. The previous named factors; access travel time, access cost, reliability, and predictability, will primarily determine the passenger’s ground access mode choice. Overall, the total trip experience of the traveller is of significant importance in pursuing successful access strategies.

(30)

savings and the positioning of the product (Kouwenhoven, 2008). From the previous section on airport access modes and the current section with regard to OATs, the assumption made here is that access time, access cost and reliability are major factors of importance concerning the choice of transportation to the airport from a passenger perspective.

2.8 The pros and cons of OATs

First, the problems and challenges found in literature which could possibly hinder the development and/or operation of OATs are discussed in this section. Differences can be found in the type of difficulties where, for example, one can be related to the processes taking place within the operation of the OAT whereas another can be related to the different parties (e.g., passengers, airports etc.) involved. Second, the benefits associated with OATs are highlighted which can again be segmented into different types of benefits, related to the travel process or the passenger process for example.

2.8.1 The cons of OATs

Some failures of off-airport terminals are known where operations ceased or services withdrawn such as the baggage check-in for example. The failure in provision of such services were due to for example security issues of checked bags, distribution of personnel at the offsite facilities, costs of operation, and decline of demand (Goswami et al., 2008). However, also a poor level of service at the OAT and/or a lack of passengers in the vicinity of the facility were among the reasons that such services failed. In addition, besides the factors already named, a major key problem that can be found is within the pricing model of the OAT (Sharp, 2005). In some cases the operation of OATs only worked when airlines were making money because when the airlines were hit by an urgent need to conserve cash, the provision of OAT services were seen as expensive and optional. As a direct consequence of this urgent need to conserve cash, OAT services were removed. Concrete examples of OATs and the issues described here will be discussed in chapter 4 where a benchmark will be done. Firstly, in this section is elaborated more in depth on the issues of security, passenger volume, and customer acceptance, discussed in literature.

Security

(31)

concerning security, there also has to be taken into account that off-airport check-in facilities which already existed were withdrawn due the post-September 11 sharpened security rules (Donoghue, 2002). The issues related to security at OATs which will be taken into account in the benchmark to identify and further elaborate those.

The passenger volume

The volume of passengers (pax) is important and will to a certain degree drive the scale of the off-airport facility provided (Sharp, 2005). A lack of passengers in the vicinity of the facility, or a lack of demand among passengers in general, is a reason why off-airport services can fail. Baggage handling for example, requires a high level of daily passenger throughput to be economically viable because establishment of check-in, customs and facilities to serve this process are then needed at train stations (Grimme, 2006). In short, the above thus indicates that a certain volume of passengers is needed to make the operation of the OAT viable. However, what a viable measure is of the volume of passengers is not indicated and will be taken into account in chapter 4.

Customer acceptance

The concept of off-airport check-in can raise some customer confidence issues when baggage check-in is included (Sharp, 2005). This primarily deals with the passenger’s trust of letting an airline carry their bags from point to point. Passengers can be especially reluctant to entrust their bags to a railway for the initial journey to the airport. However, Grimme (2006) argues that, concerning air-rail intermodality, the first prerequisite to achieve a high level of customer acceptance is through baggage handling. To determine what kind of customer acceptance issues are associated with services provided at OATs, the benchmark is assumed to provide more insight into this topic.

2.8.2 The pros of OATs

(32)

derived from an OAT depend heavily on the type of service(s) provided (e.g. baggage check-in vs. no baggage check-in). For this research it is important to identify the benefits for different types of OATs in determining the CSFs and the added value of an OAT.

Baggage check-in

The greatest benefits can be derived from in-town check-in for passengers either with cabin baggage, hold baggage, or both (Sharp, 2005). Passengers can travel hands-free to the airport and obtain their boarding pass and eventually preferred seat earlier than if they would check-in at the airport. Furthermore, also if passengers have other business to conduct (e.g., sightseeing, attending meetings etc.) prior to their arrival at the airport this service can be beneficial (Goswami et al., 2008). However, most of the premium rail links have offered baggage check-in facilities at their city terminus in the past but most have subsequently removed the service because take-up was poor for a service that was costly in terms of labour and space utilisation at the station. An alternative could be providing ample luggage space on trains, luggage trolleys and accessible platforms at OAT locations. As seen in the previous section, difficulties exist with baggage check-in at OATs, with regard to security as well as the trust among passengers. While in this section it is argued that benefits can be derived from the check-in of baggage at an off-airport location there thus also exist drawbacks. This raises questions if there are more benefits associated with baggage check-in in comparison to the drawbacks. In other words, is baggage check-in of added value at an OAT? An answer to this question will be given in chapter 4.

Reduced delay

(33)

important (Kazda and Caves, 2007). The most important attributes for passengers that determine the mode choice to the airport are access travel time and access cost (Kouwenhoven, 2008). Additional factors such as the reliability of travel times and the predictability of arrival times are important as well. The previous named factors; access travel time, access cost, reliability, and predictability, will primarily determine the passenger’s ground access mode choice. It is assumed here that all those factors have to be taken into account in providing a proper working service at an OAT with regard to transportation to the airport. This will be further researched in the benchmark to find out how such a service that adds value and what its Critical Success Factors (CSFs) are.

Reduced uncertainty

The decrease in uncertainty throughout the whole process of origin of the journey to airport and boarding the airplane would be a very important benefit to the passenger (Sharp, 2005). This uncertainty is a result of, for example, not being able to predict the traffic conditions, parking availability, shuttle connections to the main terminal, and processing times at the various queues in the terminal. Here can be made an assumption that the previous point on “reduced delay” probably has a direct relationship with “reduced uncertainty”. Where uncertainty originates through not being able to predict the time that the different steps in the passenger process will take, the uncertainty will probably only grow when delay occurs and in contrast will be reduced if delay can be reduced as well. Therefore, it would be valuable to know if OATs will make the passenger process more efficient and thereby reduce the uncertainty. To be able to find out, this will be taken into account in the benchmark in the chapter 4.

Increased amenities during the waiting period

(34)

commercial activities at the OAT with regard to the dependence on non-aeronautical revenues as discussed in the previous chapter on airports. Therefore, in the next chapter the benchmark will have to provide some insights into if, and if so, what (commercial) services and facilities are common to be provided at OATs and if these are value adding or critical to its success.

Improved terminal efficiency

The benefit for airlines of an OAT is that they can reduce the amount of stress at the check-in facilities at airports by relieving pressure on the check-in desk at the airport (Sharp, 2005). This airport congestion is influenced by the demand for service facilities during peak periods and it is conceivable that if passengers or baggage might be processed off-airport in a shorter time, the queues at the airport could shorten (Goswami et al., 2008). There would be more time to scan bags and smooth the loading of the system so it is not peaked (Donoghue, 2002). In addition, the airlines get better notification of check-in ahead of time and know the passenger is on its way. Referring to the previous discussion on the points of reduced delay and uncertainty it is assumed here that an OAT could reduce congestion within the airport terminal by also locating part of the passenger process (i.e. check-in) at another place than the airport. However, this probably also depends on the amount of passengers being processed at the OAT and if this will have a direct influence on the traffic within the terminal during peak periods. Therefore, to determine if efficiency is of added value by means of locating airport services at an OAT will be taken into account in the benchmark.

Expand catchment area

(35)

Reduced congestion and emissions

Extensive automobile activity is of concern to airport authorities as much as the environment capacity of the airport is a constraint on aviation growth (Goswami et al., 2008). Besides aircraft and ground service equipment being sources of airport-related emissions, vehicles accessing the airport are responsible for the emission as well. In the case of emission reductions in a metropolitan area, solutions might be implemented such as the use of OATs in an effort to reduce automobile emissions attributable to airport activity. An OAT may ease congestion at and around the airport since the increase in landside congestion combined with, for example, the limitations of satellite-parking lots has resulted in renewed interest in the use of OATs linked to the airport by bus or rail service (Chebli and Mahmassani, 2002; Sharp, 2005).

Here it is assumed that the airport and the direct environment would benefit if more passengers travel by public transport to the airport because this would reduce congestion and emissions. If this is a direct measurable result when an OAT is used in the daily operation of an airport is not clear, neither is it clear if this is a primary reason for airports to develop an OAT. The benchmark has to provide more clarity on this subject.

Limitations on benefits

The limitations on benefits have to be emphasized here because each benefit may be limited at a particular site by external factors. Thus, certain situations exist that may reduce the magnitude of benefits claimed for the OAT. For example, according to Sharp (2005), technological change is both helping and potentially reducing demand for OATs. Especially internet check-in and home collection and delivery of baggage may lead to a decrease in the demand for off-airport facilities, however common-use self-service (CUSS)-kiosks may ease the provision of off-off-airport check-in at reasonable cost. These CUSS-kiosks would need less space and less cabling than regular check-in kiosks dedicated to one airline.

(36)

2.9 Planning and financing

With regard to the financing of OATs, joint financing efforts are very interesting, however possibilities vary and are location specific. The financing arrangements for in-town check-in vary, according to Sharp (2005). In some cases the railway operator for example part-finances the facility by paying the up-front costs of fitting out the check-in area. The airlines then, for example, pay an annual rental for the check-in facility to the railway operator. This can also include the cost of transferring the bags from the city to the airport. Another structure is for example a multi-agency development where parties such as the airport, airline and railway are involved and each pay an amount in proportion to the investment made. According to Shapiro et al. (1996), in planning for OATs, this often requires close coordination among various public and private entities, including private commercial vehicle operators, rail and transit agencies, the airport, local communities, and metropolitan planning organizations.

From the previous information on the financing of OATs, three main parties can be identified: the airport, the airline(s) and the railway operator. There seem to be different options for the planning and financing of the OAT, being a joint financing effort between railway operator and the airline(s) or a multi-agency development. In the chapter on airports it became also clear that within an airport different parties are responsible for different activities within the airport. To determine which parties are most often involved in the development and operation of an OAT and how the OAT is financed, more information is needed. This will be further elaborated on in the benchmark in the next chapter.

2.10 Subconclusion

In this section, an effort is made to try to answer some of the research questions. From the literature on OATs dealt with in this chapter, it is clear that there exist some gaps in literature and for this reason, in the next chapter a benchmark will be done to gain insights from OATs currently in operation. It is assumed that this will support the research on the OAT in finding (more complete) answers on the specific research questions.

How can an off-airport terminal be defined?

(37)

description recognizes that there are differences amongst OATs in the types of services that are included and also differences with regard to the location. In the next chapter there will be reflected again on this sub question to determine if this view can be supported in this research according to the different cases discussed.

Who are the most important stakeholders?

The main users of the OAT are the passengers, however it is not clear if there also are clear differences between passengers using the services of an OAT. In other words, if there is a link between passengers using an OAT and their travel purpose for example. According to Kouwenhoven (2008), access mode shares differ significantly between travel segments within one airport. Such differences between segments can be found with regard to location of residence and trip purpose, (e.g., leisure vs. business) for example. Since from the literature review a link can be found between access modes and the OAT, it could be that depending on the type of services provided at the OAT that there are also different types of users (i.e., segmented passengers). In short, passengers are assumed to be a major stakeholder of the OAT and within this group there probably exist different type of passengers. Furthermore, regarding potential other stakeholders the “planning and financing” section in this chapter is regarded to be of relevance here. Several different stakeholders can be identified there: the airport; the railway operator; the airlines; public and private entities, including private commercial vehicle operators; rail and transit agencies; local communities; and metropolitan planning organizations. However, who the most important stakeholders are cannot be concluded yet and therefore this will be taken into account in the benchmark.

Which airport related activities can create value at an off-airport terminal?

(38)

OAT. With regard to the argument of the indicated benefit of “increased amenities” from the point of view of Freathy (2004, this could be linked to the development of commercial activities at an OAT. It is assumed here to be a possible value-adding activity because many airports already follow the strategic measures of diversification to generate commercial revenues and to ensure the future viability of the airport through higher financial returns and brand extension. However, to identify if such airport related activities do create value by means of an off-airport terminal and are of added value to the major stakeholders of an OAT, this has to be further developed in the benchmark.

What are the critical success factors of an off-airport terminal?

(39)

3. Research Methodology

“A research design is an action plan for getting from here to there, where here may be defined as the initial set of questions to be answered, and there is some set of conclusions (answers) about these questions. Another way of thinking about a research design is as a “blueprint” of research, dealing with at least four

problems: what questions to study, what data are relevant, what data to collect, and how to analyze the results” (Yin, 1994).

3.1 Research goal

In delivering a unique contribution to the scientific literature, the major goal of this research is to identify what the added value is of an off-airport terminal, especially from a stakeholder point of view. In the previous chapter where the literature on OATs was reviewed, gaps were identified and therefore the goal of this research is to deliver answers on the sub- questions and main question below in section 3.2.

3.2 Research question and sub-questions

To reach the ultimate research goal the main research question is as follows:

“How can an off-airport terminal be of added value to its major stakeholders?”

To come to an answer for the main research question the following sub-questions have been created:

1. How can an off-airport terminal be defined? 2. Who are the most important stakeholders?

3. Which airport related activities can create value at an off-airport terminal? 4. What are the critical success factors of an off-airport terminal?

(40)

3.3 Research approach

This research tries to give a clear insight into the added value of an OAT because in developing such a facility it is important to know if and how value can be created for the major stakeholders involved. Furthermore, by defining the critical success factors of an OAT it is assumed that this can help the airport and related parties in the process of planning, developing, and operating an OAT.

The research can be roughly divided into three major parts. In the first part, a background on the airport business was given and subsequently a literature study was done about the OAT to develop a thorough understanding and identifying gaps. The second part consists of a benchmark and the last part of a case study. These latter two are explained further below. The results from the benchmark and the application to the specific case have to deliver answers to the research questions to be able to make a contribution to the literature on OATs.

3.3.1 Benchmark

The insights gained from the literature on OATs in the previous chapter will help to accomplish the objectives of the research by already being able to partly answering the sub-questions. However, to develop a thorough understanding on the concept of OATs, additional information on the specific subject is needed, as indicated earlier. More detailed information to answer the research questions is gathered by means of collecting primary data through semi- structured interviews and questionnaires. The persons being interviewed are airport experts in different fields of the industry, a detailed overview can be found in Appendix II. Furthermore, questionnaires are send to people involved in the management or operation of existing OATs. The case specific selection consists of

(41)

the OAT at Paddington Station (by Heathrow Express), the OAT at Wien-Mitte station (the City Airport Terminal) and the OAT at Brussels Midi station (by Air France). The information obtained from the benchmark is complemented with information about OATs resulting from expert interviews.

The reason for choosing a benchmark approach in this research is that the literature on OATs from scientific sources is scarce as well as up to date information on past and current OATs in operation (Sharp, 2005). This latter type of information is mostly not publicly available and not easy to obtain. However, by means of obtaining information through questionnaires, conducting interviews with OAT experts, and bring a field visit to the OAT at Brussels Midi, primary data on the OAT is obtained. In addition, besides scientific sources more information on OATs can be found on the internet. This information stems from, for example, publicised interviews, articles, reports, and company websites. The information stemming from those sources are also used in the research, to be able to process the most recent information on current and future developments of OATs in answering the research questions.

3.3.2 Case study

The literature study and the benchmark on the OAT is used to try to make generalizations about the concept of OATs in answering the research questions. In addition, within this research a case study is done about Amsterdam Airport Schiphol (AAS). Schiphol Group, the airport authority, is planning to develop an OAT in the business district called the “Zuidas”. The scope of this case study is limited to planning-level considerations which means that recommendations are given to provide support for the decision making of Schiphol Group in developing an OAT at the Zuidas.

(42)

4. Benchmark

In this chapter there is further elaborated on the OAT by means of doing research on direct examples of OATs in operation to obtain primary data. Three cases are selected, the one of the OAT at railway station Wien-Mitte, the CAT terminal, where a full OAT service package is provided to passengers. Another selected case is the OAT at railway station Brussels Midi where a limited service package is provided to passengers. In addition, the case of the OAT at Paddington station is selected where also a limited service package is provided to passenger. The OATs at Wien-Mitte and Brussels Midi run successfully from the beginning, however the OAT at Paddington Station removed some of the services due to factors which are further specified in this research. The selection of cases makes this benchmark twofold, where not only the factors which contribute to success of the OAT are determined but also the factors which have to be taken into account as possible risks or threats. In addition to the benchmark, in this chapter any gaps still existing after the information on the cases is analyzed are specified in more detail with additional data from secondary sources. Furthermore, an additional section on the current and future developments in technology is added because it is assumed that these developments could have an influence on the OAT services according to the findings.

First, the case of the OAT at Paddington station is discussed. The sources of information are the answers to the questionnaire, output from the interviews and additional sources such as (online) articles and (company) websites. This is also the case for the discussion on the second case of the OAT at Wien-Mitte and lastly the one at Brussels Midi.

4.1 The OAT at Paddington Station

(43)

of flight information displays and check-in kiosks, as can be seen in figure 4.1 below. The service package of the OAT at Paddington station consists of the dedicated connection by rail to the airport and the supporting airport services (i.e., flight information displays and check-in kiosks).

Figure 4.1 – OAT services at Paddington station. Source: heathrowexpress.com [accessed 20-05-2011]

OAT location and accessibility

Linking central London with the airport is the primary purpose of the Hex service. Car travel from to the airport from London is slow and the risk of being caught in traffic is high. In contrast, the Hex offers the reliability and speed of the 15 minutes service. In table 4.1 below, detailed information about the distance and travel time of the dedicated connection can be found.

Location OAT [railway station]

Airport Transport Mode Distance

[km]

Connection Time [min]

Frequency of Service [per day]

London Paddington Heathrow Heathrow Express 24 15 73