Airport business models and the COVID-19 pandemic: An exploration of the UK case study
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.
Republic of Turkey; Ministry of National Education
- Architecture, Building and Civil Engineering
Published inJournal of Air Transport Management
- VoR (Version of Record)
Rights holder© The Authors. Published by Elsevier Ltd.
Publisher statementThis is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/bync-nd/4.0/).