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Airport business models and the COVID-19 pandemic: An exploration of the UK case study

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journal contribution
posted on 2023-03-02, 10:07 authored by Ozlem Colak, Marcus EnochMarcus Enoch, Craig MortonCraig Morton

The COVID-19 pandemic had been a major crisis for the air transport industry due to its global reach, duration, and continuing uncertainty. Demand for air travel fell globally by around 90% in the period immediately following the introduction of lockdown restrictions which induced significant revenue loss for the industry and led to widespread bankruptcies and job losses. Within this extremely challenging business environment, commercially operated airports have struggled.

This paper investigates how airport management has been impacted by this sudden and prolonged fall in the demand for air travel. Specifically, the UK case was studied through the Business Model Canvas, with documentary evidence supplemented with 31 in-depth interviews from the Government, airports, airlines, and other aviation organisations and from a variety of stakeholder roles within airports across the country. Interviewees were asked about how airport business models responded to COVID-19 and how they were likely to change in the future as a consequence.

The findings suggest that COVID-19 encouraged airports to restructure key components in their business models. Fundamentally, airports have significant fixed costs, and it has been especially challenging to run terminals and operations with little or no revenue from conventional channels. The study finds airports were introducing more flexibility into their cost base while diversifying their revenue streams into areas such as developing business parks and enhancing retail portfolios. This is leading to a restructuring of airport business models to improve resilience to future systemic shocks. Overall, 4 future airport business drivers and approaches have emerged: 1) Cost-effectiveness and minimisation, 2) Diversification of revenue streams and intensified commercial activities, 3) Enhanced digitalisation and operational efficiency, and 4) Sustainability focused approach.

Funding

Republic of Turkey; Ministry of National Education

History

School

  • Architecture, Building and Civil Engineering

Published in

Journal of Air Transport Management

Volume

108

Publisher

Elsevier

Version

  • VoR (Version of Record)

Rights holder

© The Authors. Published by Elsevier Ltd.

Publisher statement

This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/bync-nd/4.0/).

Acceptance date

2022-11-16

Publication date

2022-11-23

Copyright date

2023

ISSN

0969-6997

Language

  • en

Depositor

Prof Marcus Enoch. Deposit date: 21 February 2023

Article number

102337

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