News
Low-cost Airlines Are Now The New Major Players

Leading low-cost airlines with a preference for small, inexpensive
airports are now the largest airlines in the United States and Europe,
according to an MIT expert on airport design and operations, who said
that airport planners in major metropolitan areas need to accept this
paradigm shift and build flexibility into airport design.

The low-cost airlines are not necessarily small anymore; they are a growing sector that represents the future.

Professor Richard de Neufville of MIT's Department of Civil and
Environmental Engineering said that airport planners have been slow to
grasp the reality that the business model of their largest customers
has changed dramatically. Low-cost airlines require terminals about
half the size of those of the legacy airlines, because they use space
more intensively-shared gate lounges, and none or few retail shops and
restaurants. The reduced commercial activity results in fewer airport
employees going through security checks and helps cuts passenger
turnaround time in half.

"Airport planners are still building airports with fancy
architecture and lots of retail space, but the low-cost airlines often
won't use them. And the low-cost airlines are not necessarily small
anymore; they are a growing sector that represents the future. They
want smaller, cheaper airports that increase efficiency," said de
Neufville, who added that, in general, smaller airports have fewer
ground and air traffic control delays than large airports.

In a recent issue of Transportation Planning and Technology, de
Neufville states that the largest carriers in the U.S. domestic and
European markets are now low-cost airlines that have outpaced the
traditional large legacy airlines in terms of market capitalization,
airplanes owned (as opposed to leased), and newness of aircraft. To
meet the needs of these new industry leaders, airport planners should
rely on flexible design, so that a terminal's shape can be altered, say
by building and tearing down walls, or expanding up or out.

De Neufville recommends flexible design that encourages airport
planners to recognize that major airlines may go out of business, air
traffic patterns and distribution may change or move to another
airport, and incoming airlines may well reject the facility vacated by
a previous customer. The solution is to think through the likely
possible scenarios, anticipate responses to those, and incorporate
maneuverability into design and operations. This may prevent business
failures, such as expensive new terminals designed specifically for
legacy airlines that later declare bankruptcy, leaving empty space that
low-cost airlines won't use.

"The traditional airport design process is based on a 'most-likely
forecast' that ignores uncertainties. These forecasts are always wrong,
in that the actual level of traffic in five, 10 or 20 years and the
types of traffic occurring are routinely very far off from original
predictions," he said. "This can lead to some very embarrassing
situations and expensive failures for airport owners."

According to de Neufville, the new JetBlue terminal at New York's
JFK Airport will serve twice the number of passengers (20 million) as
the recently built international terminal, using just half the space.
The new building will cost about the same as Delta's new terminal at
Logan Airport (roughly half a billion dollars), but it will serve four
times as many passengers. At Logan, JetBlue processes about 0.5 million
passengers per gate annually, about twice the number of its neighbor,
Delta.