Essay Example: Management of Airports

A great source of revenue for an airport is the assessment of a landing fee. What are the steps for developing a landing fee?

The International Civil Aviation Organization (2012) indicates that the aircraft weight formula determines the landing charges. The document notes that the following steps should be considered when establishing a landing fee

The maximum certified take-off weight. The limit is usually indicated in the certificate of airworthiness. When dealing with the maximum take-off weight, the operator should consider local restrictions, which might affect the aircraft maximum take-off weight.

The charges for aerodrome control should be consistent with charging policies for the airport. Additionally, the charges should be levied.

When determining the landing fees, the stage length flown should not be a major factor.

Car parking charges are often the largest generator of non-aeronautical revenue at U.S. airports. Your book, on page 230, names three ways for an airport to handle parking. Name these three and then state which you believe to be the best for the airport?

An airport can handle parking in the following ways,

The airport operator may construct, manage, and operate the car parking facilities by themselves.

An airport operator may build those facilities then sign a contract with the management and car parking operation to a vendor.

The airport operator may get into a BOT (build, operate, and transfer) agreement with a contractor whose work will be to undertake finance, construct, manage, and operate the car parking facility over a specified period.

From a personal perspective, the option, which I believe to be the best for the airport is the second option where the airport builds their structure then calls in a specific vendor to manage it. The reason is that the airport itself will maximize their profits because they will not need a whole team of managers to oversee the entire process. According to (Neufville & Odoni, 2013), benefits gained from having someone build, manage, and operate for an extended period is much smaller.

Study Table 8.7, page 236. What is the greatest source of non-aeronautical revenue? Why is this true?

The greatest source of non-aeronautical revenue is through concessions (Neufville & Odoni, 2013). It is true because since operating an airport is a business itself, the financial expertise is a key driver in maximizing airport revenue. Concessions generate up to 60% annual income. Some examples of concessions in an airport include fuel, in-flight catering, and ground handling. Most airports today have expanded their offerings to food and beverage options. Additionally, their heightened security measures have ensured that passengers are cleared in time to board their flights. More so, negotiating fuel supply prices with airport operators generate revenue to the airport. Primarily, the rising passenger traffic and the improving economy promote a continual growth of income in airports.

4. What are the ICAOs guidelines on computing user charges, aka ICAOs Policies on Charges? The International Civil Aviation Organization (2012) provides the following policies on user charges,

States should require users of international services to pay their portion of cost properly allocated to them to ensure that that the charges levied upon them are properly calculated.

A reasonable cost-recovery system. The document indicates that it could conciliate charges based on the provision of total air navigation services costs sustained on the users behalf.

The document notes that the cost basis for navigation services should follow the following principles

The cost allocated for services should be the full amount.

The costs should be in relation to all services and facilities. Any other facilities and services should be excluded such as those provided on contract or by aircraft operators themselves.

Costs provided during en-route, aeronautical meteorological services (MET), aeronautical information services (AIS), and other auxiliary services should be separated.

Costs related to security measures should be included in the service charges.

The operator should provide a reasonable return on assets to secure financing for investments.

Costs related to oversight functions should be included in the states discretion.

States should determine any other navigation charges to be imposed on users. Additionally, they may choose to recover less than full costs from users.

References

International Civil Aviation Organization. (2012). ICAOs Policies on Charges for Airports and Air Navigation Services. 9th Edition. Retrieved from https://www.icao.int/publications/Documents/9082_9ed_en.pdf

Neufville, R. D., & Odoni, A, R. (2013). Airport Systems: Planning, Design, and Management.

2nd Edition. New York: McGraw Hill.