WSJ.com – Airports Start to Feel the Sting Of Airline Cost-Cutting Efforts
Fat airports? No, I'm not talking about the fast food concessions you find in most airports.
This article discusses the conflict of styles in airport design. One approach, in Toronto, sounds like a Taj Mahal type structure with exhorbinant costs and little regard for passengers. The other type, a terminals built in Eurpoe sounds extreme “lean” and somewhat passenger focused, at much less cost to struggling airlines.
The article starts with a striking comparison:
“The new terminal at Toronto's Pearson International Airport features soaring ceilings, terrazzo floors and millions of dollars of modern art — helping to make it one of the most expensive airports in the world for airlines and passengers.
Then there's the new terminal at Schiphol Airport in Amsterdam. Gates have no bathrooms, no bridges linking passengers directly with planes and only eight seats for each planeload of people. Among the few amenities: some green plastic plants and a few pictures of windmills.”
Do fancy floors and artwork help the passenger experience? Does it help the airline? It sounds like a Taj Mahal airport built to help the “image” of Toronto and, possibly, the egos of the government officials who want bragging rights. Is that something we could consider the “Waste of Overprocessing”, the idea of doing more than your customer values? (click here for the Toyota types of Waste, even the healthcare people are paying attention to that now)
“Airports have long been considered economic-development tools for the communities that own them. Many, like Toronto, erected palatial terminals to showcase their cities and passed on the costs to airlines and passengers. Even as airlines have gone bankrupt, airport earnings have risen.”
As we've discussed before, no business can truly “pass on” costs to customers if the market won't bear the costs/price. Basically, the government, with a monopoly on airports, gets to dictate the costs to the airlines and, ultimately, us as passengers.
Did the Toronto airport listen to the struggling airlines?
“Air Canada, which has its largest hub in Toronto and emerged from bankruptcy reorganization in 2004, says it tried to tell the Greater Toronto Airports Authority that the carrier couldn't afford grandeur before the airport went ahead with plans for a $4.1 billion construction project. The plan includes Terminal 1, a people-mover system and the largest parking garage in North America. Air Canada joined with other carriers in proposing a less-expensive alternative, but the airports authority rejected it. After that, collaboration with airlines waned, says John Segaert, Air Canada's general manager in Toronto, who was involved in the discussions. “They did what they wanted,” he says.
“We found [the airlines' plan] to be very limited in design and not reflective of the connectivity we need for a major hub airport. It had limited capacity,” says Steve Shaw, vice president of corporate affairs for the Toronto authority. “The airlines were consulted and were kept very informed.””
Consulted and informed? Wow, that doesn't sound like the “authority” really considered the airlines perspective. It certainly sounds like they “did what they wanted” to me.
This design isn't particularly good for passengers, nor is the airport even making money.
“Air Canada says its costs in Toronto have increased “hundreds of millions” of dollars a year since Terminal 1 opened. Despite the increased costs, continued construction has left the airline's operations spread over four terminals, with some passengers bused to remote gates. Until next February, passengers from the U.S. connecting to Air Canada flights will have to transfer between terminals. As a result, Air Canada thinks the new terminal, despite its niceties, has actually cost it customers.”
“Since the new terminal opened, the airport has been running deficits. Last year, expenses exceeded revenue by $106 million, which the airport authority said “can be primarily attributed” to increased interest and amortization costs from Terminal 1.”
Let's look at some newer European terminals for comparison:
“The airport also changed procedures to help low-cost carriers empty planes and fill them back up quickly. German law prevents refueling planes while passengers are boarding — unless a fire brigade is in position. “So we send a fire truck and position it at the aircraft every time,” says Mr. Garvens.”
Planes only generate money when up in the air. The airport got creative, in the spirit of kaizen, and didn't make excuses, pointing to the law as a reason to not refuel while boarding. As long as they aren't jeopardizing passenger safety, I'm sure it's good to spend a little on fire brigades to gain efficiency improvements with the planes.
So, there's operational aspects, plus the design of the terminal itself:
“The new terminal, which has glass walls on four sides and a simple metal ceiling, was designed and built in a year and cost $32 million. It's full of retail space and was built without jet bridges that shepherd passengers seamlessly from the building to the plane. Instead, the carriers wheel out portable stairs to the planes, allowing them to load and unload passengers from the front and rear simultaneously. That makes for quicker stops and more flights per day at gates. Rates are also lower for gates without jet bridges.”
I always wondered why more airlines and airports don't use the front AND back doors for boarding and deplaning. Sounds like an obvious way to improve plane turn-around time and save costs (and time for passengers).
Now, the one downside is that the terminals are somewhat spartan with limited bathroom and seating capacity. It's not so bad as long as planes are not delayed, as they recommend passengers arrive at the boarding area only 30 minutes before departure (they have more ammenities in a central part of the airport).
So, tie this back to your lean work. When designing products or facilities, do you really listen to what the customer values? Remember, the Lean Thinking definition that “Value” is defined by the customer. To me, at least, I can do without fancy floors and artwork. I want to get from Point A to Point B safety and on-time. Are you listening to customers or are you “doing what you want” and building in unnecessary features and cost that the market won't bear?
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These giant airports are a prime example of batching and sub-optimizing the system. I fly regularly into DC/Virginia and will always pick National over Dulles, despite the fact that it’s the “old” airport. Less walking, escalators, shuttle buses, etc.