Detailed description of key processes in the feedback model

The model captures sets of processes that affect the state of the airport systems.

These processes are divided into 7 sets of processes that are named after the main stakeholders involved in these processes; (1) passengers (i.e. latent and realized demand), (2) airline sector, (3) regulatory sector, (4) local and regional governments, (5) infrastructure investment groups, (6) airport operators and (7) airport planners and developers.

a. Passengers (i.e. latent and realized demand)

The decomposition of the air transportation system presented in Figure 4, into demand, passenger, airlines and airport infrastructure is reflected in the layout of the feedback model. The passenger and demand layers of the system have been merged into one set of processes and system attributes. The “passengers (i.e. latent & realized demand)” box captures the attributes that generally underlie the generation of demand for transportation (i.e. population distribution, socio-economic factors such as discretionary income). It also captures the key processes that influence how demand for air transportation is distributed across airports within the metropolitan region (i.e. mode choice).

Figure 63: Passenger (latent and realized demand) component of the model

Airport attractiveness to passengers Passenger demand forecast (used by airport planners and developers)

Passenger demand forecast (used by airlines)

Gross Regional Product

Realized demand

By definition, latent demand is the demand for a product or a service if the market is served efficiently¹. Generally, latent demand is greater than realized demand. In the case of the air transportation system, latent demand can be seen as the total number of trips that passengers would be willing to take per unit of time (e.g. in one month or in one year) if service was provided efficiently² from an economic stand point (i.e. produced with the minimum amount of waste or the maximum output for given inputs and technology).

As represented Figure 63, latent demand for air transportation is directly influenced by population size and distribution in the metropolitan region and socio-economic factors (i.e. discretionary income allocated to travel) that influence this demand.

The supply of air transportation services (i.e. airport attractiveness for passengers) is then used as an input to the passenger mode/airport choice. The resulting output of this process is realized demand that is distributed among the set of airports in the region. The demand that has not been assigned to air transportation can be diverted to other modes of transportation or just not be realized.

b. Airline sector

The airline sector is represented by a set of key processes that capture the decision making process of airlines. The decisions made by airlines result in service offerings across the different airports in the metropolitan region. The airline decision making process, with regard to the service offering, is generally composed of a multi-step process that spans from the strategic to operational levels (Barnhart, 2003). Demand on routes is assessed based on a passenger demand forecast that is taken into account in the route development (based on available resources; aircraft fleet, crews, etc.). Then a schedule is developed, followed by pricing. The final output of this set of processes is the provision of flights across the set of airports in the metropolitan region. The choice of airports to

1 Note: In a more precise version of the definition of latent demand, it is defined as industry earnings of a market when that market becomes accessible and attractive to serve by competing firms. It is a measure of potential industry earnings (P.I.E.) or total revenues (not profit) if a market is served in an efficient manner.

2 Note: Economic efficiency implies that; (1) no one can be made better off without making someone else worse off, (2) the most output is obtained from a given amount of inputs and (3) production proceeds at the lowest possible per unit cost.

serve in a region is also driven by high level strategic and business models (cf. low-cost carrier entries in section 8.3).

Figure 64: Airline sector component of the model

c. Airport sector

The processes that affect airport infrastructure are captured in the airport planners and developers and the existing non-utilized airports in the metropolitan region boxes.

Figure 65 shows the processes that affect airport infrastructure and that result in capacity expansion and construction of new airports.

Figure 65: Airport planning and development component of the model

The general planning and development process of airport is composed of planning studies, real estate acquisition and development. The planning studies box is composed of a sequence and iterative processes; planning, environmental approval, engineering plans and design specifications. This phase of the process is influenced by forecasts (i.e.

Regulatory constraints

Set of airports available in the metropolitan region

Passenger demand

Airport attractiveness to airlines

Airport entry incentives

Supply of air transportation services (i.e. routes, schedule, fares, quality, reliability etc.)

Passenger and airline demand forecast Airport development and

financing decisions

Need for capacity expansion

Need for new airport

Added capacity New airport

passengers and airline traffic), financing, existing airport characteristics (i.e. airport footprint) and available land space for the case of the construction of a green field airport.

The output of this process is a generally a master plan. In the case of the construction of a green field airport, the output of this process is a decision with regard to the selection of a site.

The decision of the selection of a site serves as input to the real estate acquisition process. There are generally two tracks in this process, the appraisal, negotiation and acquisition track and the acquisition by eminent domain track.

The development process is only presented here at a high level of description, showing the two cases of development that are of importance for this research;

construction of green field airports and capacity expansion of existing airports.

Existing non-utilized airports in the metropolitan region

The airport sector processes is also composed of processes affecting existing non-utilized airport in the metropolitan region. There are two key processes affecting this set of airports; (1) airport status conversion by which military airports can be transformed into joint use or civil use airports, and (2) airport closure.

Figure 66: Component of the model representing the set of existing non-utilized airports in a metropolitan region with associated processes

Acquisition of an airport Unavailability of non-utilized airports in the metropolitan region

Airport infrastructure capabilities

d. Regulatory sector

The regulatory sector is represented specifically for its influence on the airlines and airport management through the provision of regulations that impose demand management (e.g. slot restrictions) or mandatory transfer of traffic.

Figure 67: Regulatory sector component of the model

e. Infrastructure investment component

For the purpose of this research, the infrastructure investment components are represented by the local and regional governments and infrastructure investment groups for their role in the acquisition and financing of airports.

Figure 68: Infrastructure investment component of the model

Pressure to reduce delays

Regulations

Gross Regional Product

Existing non-utilized airports in the metropolitan region

Airport Planning &

Developing

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8.2 Dynamics and Factors Influencing the Emergence of Secondary