HG67 Aviation Management

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02-02-2021

Questions:

1.Select an Airport of your choice that is located within a region (i.e. a continent of your preference). Identify the factors within the chosen airport business environment that most influenced the development of this airport during the past 3-4 years and possibly would influence it within the next decade in view of the global crises, structural instabilities and capacity constraints. Those factors include, but not limited to, Political, Environmental, Social, Technical and Economic (PESTE). Also identify what plans or actions local authorities might have or can adopt to overcome the capacity issues in view of the turbulent times and those influencing factors.

2.By evaluating capacity constraints or development obstacles of your chosen airport, generate a report that list down your chosen airport scheduled and charter flights, frequent airlines users of the airport and local authorities marketing strategies that would make your airport the preferred spot for leisure or business travel i.e. superior or contrary lagging in the industry.

Focus on the success products that made your airport popular destination brought back financial benefits. In other words, draw conclusions of what would be the airport‘s best practice market’s strategies that achieved best in class over other major airports in the industry in view of the increasing competitive environment.

3.As a supplement to the above point, Assess how well the airport had performed financially during 2015, 2016 and 2017, by contrasting yield, revenues (net profit margins) and used passenger/cargo loads. You should also address issues like increased competition, (Rules/Regulations & Governments) impact, marketing strategy, cost control and profits.

All used material studies and financial figures should be referenced using the Harvard referencing system as provided in class.

You should use the airside map for your chosen airport, Suggestions are to what elements to evaluate are listed below;

Are the runways Dependent, operated in mixed mode or segregated mode? – may need to research this if you don’t know the airport ops well – or find out if there are departure routes off both ends of runway headings. Make comments on how this limits the airport or not, or how changing the mode could increase capacity at airport
What is the weather like at the airport? Fog, strong crosswinds, torrando’s? – How common is the adverse weather? What procedures or equipment does airport offer to assist operations and maintain capacity in these conditions? If it doesn’t have any provisions, would you suggest it needed some? If so what? Can you find out what other airport offer with similar weather conditions and how much they cost?
Evaluate the number of holds and (Rapid Exit Taxiway) RETs for each runway, do these limit runway ops, i.e. do they have enough in each direction and along runway to allow use by different aircraft types. Research types of aircraft that use the airport and the frequency. Again do similar airport around world provide RETs better suited to their traffic mix?
Does airport have enough holding stacks, enough to allow ATC to sequence aircraft optimally? If not, what would you recommend? Do they have the space for any more?
Evaluate taxi distance from airport stands to runway ends (all directions of runway operations) – is the distance too close? Which is ideal to reduce emissions and taxiing time, but may be harder for ATC to sequence aircraft in ideal configuration? Are they sufficient parallel taxiways? Is this an advantage or disadvantage?
Stands – how are they laid out? Linear, satellite? Can aircraft manoeuvre easily around airfield? Do they have enough aircraft stands? Are stands remote? Right sized stands? What is the cheapest or easiest solution an airport can adopt to increase stand capacity and reduce airfield delays at your airport in your opinion?
Google map the airport, what is population density around airport? Is airport surrounded by obstacles? High terrain? Sea? What are advantages and disadvantages of this? Is the airport easily accessible by road? Rail? – is this a limitation at airport? Would rail link improve capacity? Does it suit the type of people using the airport? What are your recommendations?
Terminal layout – what style? Satellite, linear, midfield, mix of all? Does that limit airport capacity? Compare to other airports with similar layouts, what is their capacity? Can this layout be easily expanded? Are all airlines grouped together in same terminal? Does the layout support transfer traffic? Any suggestions?
Read airport design materials for overview on how and what cargo facilities should be provided at airports. Describe what facilities are offered at your airport, what airlines fly cargo? Frequency? Should airport increase cargo facilities? Does this support desire by airline currently using cargo facilities – i.e are any of current airlines likely to begin cargo ops with A380 and therefore airport need to provide facilities accordingly?
List down the top 3 recommendations to increase capacity at you airport? And state why you chose those 3, cost benefit? Significant capacity increase or simple to implement or desirable for airport of its size? If can add research on benefits other airport have achieved by implementing these procedures.

Answers:

Introduction

Dubai International Airport is one of the largest airports in the Middle East and a largest cargo hub in the region, the growth of the airport has been appraisable by the people all around the world as it handles more than 70 million customers every year. The airport has 3 terminals out of which terminal 1 and terminal 2 are used for all airlines and charted planes but the terminal 3 is dedicatedly given to the Emirates Airways as it has been hugely profited by them (Biswas, 2018). Emirates currently account for 51 per cent of the airport’s passenger traffic and fly Dubai has 13.2 per cent. Fly Dubai could now operate some flights from Emirates’ Terminal 3, but most of its flights will stay at Terminal 2 after a study found it was not feasible to collocate the two airlines.

PESTE Analysis of Dubai International Airport Affecting the Development in future.

Political Factors

There are no political parties in UAE however that really does not mean that the country does not indulge into politics. The debate says that the oil producing countries who are getting the oil rent are not working to increase the productivity or the efficiency but the case is totally opposite for UAE and Dubai. The major dispute is with Iran over the three islands and therefore the crowd moving towards the Iran is low as compared to the other countries. Moreover, earlier there was a political instability in the Middle East which took a toll on the airline so the region. Egypt, Tunisia and Libya account for about 20 per cent of the region's international passenger traffic but all three countries have recently experienced, or are in the midst, of major political upheaval (Khaleej Times, 2018). Now the situations are stable and the Abu Dhabi’s 100 billion barrel of the oil reserves is regularly complimented majorly by logistics and the aviation industry.

Economic Factors

Economic factors reflect the organisational performance as well as the economic development of the country. The GDP is 3.4% of the country in the year 2017 and the inflation is 1.4%. Dubai’s main revenues are from tourism, real estate and financial services. Revenues from petroleum and natural gas contribute less than 6% of Dubai's economy. Real estate and construction, on the other hand, contributed 22.6% to the economy (Arabian Business, 2014). The local government should focus on development of the airport which may result in greater economic importance within the area. As a result the airport will be benefitted and the operational execution of air terminals is identified with the monetary development in the nation in which it is found. Global business and exchange movement is likewise required for the achievement of an airplane terminal. Customs duties are low at 4% with many exemptions, 100% repatriation of capital and profits is permitted. No foreign exchange controls, no trade barriers or quotas, competitive import duties 4%with many exemptions (Arabian Business, 2014).

Social Factors

Social environment of a region plays a vital role in the success of the organisation, changes in such environment affects the industry directly or indirectly. The changes may be positive or negative which me affect the trade at the airport. Almost 80% of the population in of the UAE are non-nationals. This is one of the most dramatic defining characteristics of the overall structure of the demographic environment. The total population of UAE is 5.066 million and globalization is gradually increasing resulting in a mix of many different cultures within the Emirates (Ziadah, 2018). The Arabs want to work in the public sector and therefore the employment sector is growing and the opportunities are developing in the tourism and travelling industry. The DXB is situated at the most reachable situation and the transport facility is also available.

Technological Factors

The airline industry has been widely affected by the technological changes that are taking place in the world. Technological changes are great concern for the airline industry. The local government of the region are now spending more on research and development for the latest technology, the government is now also making efforts with other countries for the transfer of technology regarding the aviation sector which may help them in achieving their goals effectively and efficiently (Pike and Kotsi, 2018). Advanced aircraft technology that overcomes the barrier of long distances has given some airports, such as those located in the East Asian region, a major source of competitive advantage. The government is also planning to make an aircraft which would reduce reliability on fuel; such initiative would result in the huge transformation in the operations and competitive situation in the aviation industry. Such technological alterations in the aviation industry may transform the operation and competitive situation at airports.

Environmental Factors

Environmental factors are the matter of great concern all over the world, as the impact of aviation industry on the environment has been huge. The impact of the aviation on health issues is seen to have increased with the global growth in the number of aircraft (Halpern, 2018). Such pollution has a great impact on health of the individuals, people nearby the airport has been suffering from both noise and air pollution which are causing them serious health issues. One major concern is the issue of the carbon footprint of airline flights, which is estimated by some researchers to be one of the most dramatic impacts on global warming, with a total contribution of approximately 6% of greenhouse gases to the atmosphere (Alexander and Merkert, 2018). Upon the innovation of such technology the cost of maintaining an aircraft would automatically get low as a result the industry would get profited.

Why PAX chose the Dubai Airport?

The PAX stands for the number of the passengers by guests. The passengers in the year 2017 were 877,22,024 at the Dubai international Airport and it stands out to be on the first number as compared to the London Heathrow Airport and the Hong Kong International Airport. The basic reason for choosing the facility and the comfort the passengers get. The Dubai International airport is the central passage to reach to the different countries (Patel, 2018). This growth is mainly due to higher number of tourists visiting Dubai and new routes opened by several airlines operating in Dubai airports, as well as linking the city to many destinations

Who are the frequent flyers to Dubai International Airport?

Dubai is one of the most common travel destinations around the globe, as it attracts its architectural heritage sites. According to the reports Indians are the frequent flyers in Dubai as they held crucial job positions in Dubai as well as they are the frequent passengers in a view of travelling purposes (Worku and Rao, 2018).

Strategies adopted by the local authorities to make the Dubai International Airport a leisure spot

The government authorities have adopted various strategies to make Dubai International Airport as the tourist spot. One of the best policy of the government authorities is to divide the terminals into three parts where terminal 1 and 2 are for all airline services companies and for charted plane out of which terminal 2 has been made duty free where the customers can do shopping to their ease. The airport has been made in such a way where it can handle over 70 million customers every year. The security parameters at the Dubai International Airport have been outstanding where the travellers can feel safe without any hesitations (Karwowski and Ahram, 2017).

Successful products and services that has made Dubai International Airport a popular travel destination

The local government had realised the future opportunity to increase the economic growth of the country, and the aviation sector plays the major role in the economic sector of the country (Bringmann, et al 2018). The local government has invested in research and development of various products. The research and development team has now been focusing in reducing the reliability of fuel in the aviation sector (Kotsi, Pike and Gottlieb, 2018). A new airplane named Airbus A380 was developed; it is the largest airplane in the world which has even more capacity to acquire passengers than the normal airplanes (Jiang, Ng, Wang, Wang and Yu, 2018). The country has also developed advanced transport and communication networks which have made links between the eastern and the western countries. Various hotels and travel destinations are made in order to promote tourism which has attracted a lot of tourists around the globe.

Achievements of Dubai International Airport

The following are the achievements of Dubai International Airport:

It is one of the busiest airports in the world.
It has the capacity to handle more than 70 million customers in the year (Joyson, et al 2018)
Dubai International Airport has been awarded as Aviation and Transport Company of the year by at Gulf Business Awards at 2017 (Albeshr and Ahmad, 2015).
The Airport has been also awarded as the Most Effective category for exceptional crisis through team work and planning.
Dubai International Airport is now ensuring its long term sustainability by energy management.
The Airport has expanded terminal 2 allowing duty free products for its customer.
It has also expanded the terminal 2 for its fly Dubai services (Piltz, Voltes-Dorta and Suau-Sanchez, 2018).

Why people choose Dubai International Airport?

Dubai is the world’s most common travel destinations as it between the continents like Asia, Africa and Europe which helps the country to entertain more and more passengers around the globe which leads to an increase in passengers at Dubai International Airport. The airport has been made in such a way that it entertains more than 70 million customers a year The (National Staff, 2017). Apart from that country has been running on tax free basis which enables the customers to do more business as the country is providing residency visa to its customers for bringing or establishing company in their country. Even the airport is also offering duty free products to attract more and more customers across the globe.

Layout and infrastructure of Dubai International Airport

When talking about the infrastructure of the Dubai International Airport the length of the airport is 25200 m with a width of 30m (Janic, 2015). The passenger terminal buildings consists the floor area of 1972447 meter square. The handling capacity is 91 million passengers at a time. The parking bays are having 24 aerobridges and 100 remote bays which is why it makes the Dubai airport one of the finest airports (Özdemir, Korkmaz and Yavuz, 2018). Looking at the capacity of the Concourse D the handling capacity is 18 million and a roundabout 19 aircrafts stands in the parking at a single time (Dubai Duty free, 2016). The automated people mover is also used to transfer the passengers between the terminals 1 to terminal 30. The airport also has two closely parallel runways and the gap between the runways is 383m which is 1263 feet (Khaleej Times, 2018).

Financial Performance

Dubai International Performance secured its position as number one in terms of the international passengers for the fourth year consecutively with annual traffic for 2017. The number of passengers amounts to 88.3 million passengers. The markets showed the significant growth during the year which included Russia with the passenger numbers surging up to 28% and in China by 19.3 % over the year 2016. The number of flight movements during the year 2017 totalled to 409500, down by 2.4 per cent. The cargo volumes faced certain fluctuations but the month of March made it pretty well for the Dubai International Airport as the growth reached to 8.4 % and in August 11.8 %. The freight volume reached to a record of 2654495 tonnes, and increased by 2.5% (Khaleej Times, 2018).

The Dubai international airport traffic is expected to reach by 90.2 million in the year 2018. The launch of the DXB programme led to the expansion of the annual capacity of 118 million passengers via various improvement processes and the innovative technology.

The revenue of the Dubai International Airport increased by 2 % as compared to the previous year and a total of 16% of the net profit. The free zone’s total assets rose by 28 per cent as compared to only 3% in the year 2015.

The passenger yield increased to 25.3 fils per revenue passenger kilometre and to fund its fleets the Dubai Airport raised around AED 16.8 million using the financing structures and the acquisition of the different aircrafts.

Aromas keeps on being the most noteworthy offering class with yearly deals topping Dhs1.104 billion (US$306.85 million) and which speaks to 16.55% of aggregate yearly deals. Alcohol took after with offers of Dhs1.063 billion (US$295.40 million) while Cigarettes and Tobacco came in third place with offers of Dhs578.53 million (US$160.70 million). Beauty care products came in fourth place with deals adding up to Dhs535.65 million (US$148.80 million) trailed by Confectionery with Dhs517.48 million (US$143.75 million). In the meantime, deals in take-offs outlets over the concourses represented 86.66% of the aggregate yearly deals at Dhs5.782 billion (US$1.60 billion). The revenue of the airport increased as compared to the previous year as shown in the table below.

Profitability Ratios
	2017	2016	2015
Net profit	2348	1641	1245
Sales	4323	3393	2798
Net profit Margin	54.31	48.36	44.50
	2017	2016	2015
Total assets	1332	1298	1087
Sales	4323	3393	2798
Return on Assets	0.31	0.38	0.39
	2017	2016	2015
Operating Earnings	923	425	546
Revenue	2348	1641	1245
Operating Margin	39.31%	25.90%	43.86%

Conclusion

From the above analysis it can be concluded that the operating margin has improved as compared to the previous year since the higher operating margin is required to adjust the fixed costs. The internal and the external factors both affect the performance of the Dubai International Airport. The vision and the innovation led to the continuous evolution of the airport. The success of Dubai’s aviation sector derives from a number of strengths, which are an awareness of aviation’s economic importance on the part of the government of Dubai; openness; a consensus based approach in the investment; a focus on growth and linking underserved markets; and efficient operations. Moreover, the Dubai airport needs to manage the airport traffic and the passenger traffic accordingly.

References

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Dubai Duty free, (2016) Dubai duty free annual sales reach dhs6.673 billion (us$1.85 billion) in 2016 [online] Available from https://dubaidutyfree.com/media_center/news_detail/770/Dubai-Duty-Free-Annual-Sales-Reach- Dubai International Airport, (2018) Dhs6.673-billion-US1.85-billion-in-2016 [Accessed on 24th July 2018]

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