Home Economics & Policy Clever planning keeps airports aloft


Clever planning keeps airports aloft

Strong operational thinking can overcome unavoidable problems

by Fadi Majdalani

Unexpected disruptions are a regular ocurrence for air travelers across the globe, including in the Middle East. Bad weather, civil unrest, industrial action or even a volcanic eruption in Iceland can be the culprit. While the impact on travel is considerable, the potential damage to airports’ reputations and long-term business can be even worse. It can result in travelers avoiding certain airports or regulators pushing for costly controls and financial penalties. Ultimately, such disruptions have detrimental consequences for the Gulf Cooperation Council’s thriving aviation industry, which plays an important role in the region’s economic diversification.

Disruptions can severely affect the main priority of an airport: to maximize revenues by having as many passengers board planes as safely as possible. Airports achieve this goal through sophisticated and complex procedures that, if disrupted, limit valuable capacity and the number of flights they can operate.

Airports that lack the ability to handle these disruptions can face severe repercussions. Major and even minor operational disruptions can lead to significant revenue losses, incur massive response costs and cause broader economic losses at the local, regional and national levels. Disruptions from the 2010 spread of Icelandic volcanic ash over European airspace had a $253 million net impact on the aviation sector in the Middle East and Africa, according to Oxford Economics, a United Kingdom-based forecasting and analysis firm.

The disruption resulted in roughly $11 million in lost business each day for Emirates Airlines, whose European routes make up a third of the carrier’s operations.

In addition to facing knock-on effects from other regions, GCC airports experience local disruptions such as those that stem from fog, which annually causes disruptions of more than 200 flights, affecting 30,000 passengers in the United Arab Emirates alone.

Airport disruptions are typically caused by one of three types of factors: circumstantial, structural or administrative. Circumstantial factors, such as political instability or natural disasters, can have low to high impact on airports and are nearly impossible to control. Structural factors are those that involve infrastructure and facilities, regulatory constraints and operational complexities, which can have low to medium impact on airports. Airports have a low to medium degree of control over these factors.

Lastly, there are administrative factors that can be fully managed, but will have considerable impact on airports if ignored. These problems stem from a lack of collaborative planning, command and control, use of information and technology or dedication of resources, or from the failure to make continuous improvement to airport operations.

While some disruptions caused by circumstantial and structural factors are clearly unavoidable, others can be eliminated or reduced by administrative improvements. But all potential disruptions, whether avoidable or inevitable, must be addressed, meaning that operational resilience should be a strategic priority for every airport in the Middle East.

Operational resilience

With the region’s airports becoming increasingly important global hubs, operational resilience should be considered crucial for the future economy of the entire GCC. One regional hub, Dubai Airport, has become the world’s second-busiest airport for international traffic, accommodating 57 million passengers in 2012, compared to 10 million in 1998. Similarly, Jeddah Airport served 19 million passengers in 2010, up from 10 million in 1998. Additionally, regional air traffic is set to rise further due to investment in airport infrastructure in places such as Qatar, Oman, Kuwait and Bahrain.

So far information on the number and type of disruptions at regional airports has largely remained anecdotal and exact numbers on administrative disruptions are not available for analysis. If anything, this highlights even more the urgency for regional airports to deal with not only resolvable but also circumstantial and structural factors by achieving and maintaining operational resilience.

Attaining operational resilience requires airports to plan for the foreseeable and prepare for the unexpected. A resilient airport should be able to prevent or manage and recover from a disruptive event. In essence, airport managers have to proactively get on top of manageable resilience issues, such as clear command and control structures and well-coordinated management of passenger welfare. By improving operational resilience airports can mitigate the impact of disruptions, maximize their capacity and continue to maintain their high standards.

Moreover, operational resilience can enhance an airport’s overall performance, not just during disruptions. For this reason, efforts to improve operational resilience should be implemented in line with a coherent strategy that addresses the short and long-term priorities of the airport as a business and the interests of the entire community of airport stakeholders.

Operational resilience involves focusing on 10 key areas. Successfully focusing on these will likely require substantial and often transformational changes to airports and their management, but all will make them better businesses.

The first is ensuring that resilience is a strategic priority for the airport. This is best done by making operational resilience a key part of the chief executive’s agenda and securing support from senior executives who can champion it constantly.

The second area involves taking additional steps to maintain solid relationships among key stakeholders, including base carriers and providers of priority services such as air traffic control and emergency response. Airports can achieve this by conducting regular meetings with stakeholder representatives so that resilience plans can be shared and coordinated, ensuring synchronized readiness among stakeholders when a disruption occurs.

Enabling proactive ways to respond and manage disruptions is the third area of focus. Airports can do this by increasing their capabilities, setting up early warning indicators that are monitored and acted upon and establishing an airport operating plan so that decisions are made in the interest of the entire airport.

The fourth area involves leveraging information such as historical and real-time information and making it available to all stakeholders. Airport executives will likely find that using information platforms and databases are helpful and can provide analysis on everything from operational performance to forecasts and threats.

The fifth area involves uantitatively measuring performance and impact to better understand an airport’s strengths and areas for improvement. Airports should aim to capture a complete view of the situation, which they can do by employing a response scorecard that assesses key performance indicators, and by taking into account media coverage and financial impact.

Sixth, coordination among command and control centers is key. Airport executives must ensure these centers operate in close coordination, and that roles and responsibilities are well defined so crisis responses are quickly implemented.

New and innovative technologies are the seventh area of focus for airport executives. Airports should employ closed circuit television with automatic incident detection and airside and landside vehicle tracking to enhance operational resilience.

The eighth area revolves around preparedness. Airports and stakeholders need to exceed regulatory requirements with additional scenario planning, training and testing based on potential disruptions common to the airport.

The ninth focus involves remembering that passengers are the airport’s number one priority. One way to achieve this is by developing a cohesive and effective airport passenger welfare plan in coordination with the airlines.

The 10th and final area is continuous improvement. Airports have to review and refine contingency plans every year and examine the previous year’s disruptions. The aim is to ensure that sub-par responses are not repeated and that positive aspects are praised.

By coping with disruptive events through operational resilience, Middle East airports can maintain their capacity and value, and they will be able to contribute to the growth of the global aviation sector. Most importantly, they can improve their operations year-round and consistently offer passengers a first-rate experience.

 

Fadi Majdalani and Alessandro Borgogna are partners, and Marwan Bejjani is a senior associate at Booz & Company

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Fadi Majdalani

Fadi Majdalani is a board member at Alsulaiman Group and a former senior partner at Strategy& (PwC), where he led various industry practices and human capital policies in the Middle East. He co-founded Delta Capital, a private equity firm, and previously worked at Oracle Systems and Booz Allen Hamilton. Fadi holds an MBA from Harvard, a Master’s in Civil Engineering from MIT, and a Bachelor’s in Civil Engineering from the American University of Beirut.
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Alessandro Borgogna

Alessandro Borgogna is a Partner with Strategy& and a member of the firm’s Industrial Manufacturing and Automotive team in the Middle East.Alessandro holds a university degree in aerospace engineering from the University of Naples Federico II in Italy; and an MBA in finance and business development from SDA Bocconi School of Management in Italy and UCLA Anderson School of Management in the U.S.
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Marwan Bejjani


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