How to win new air routes for your airport
It's often compared to speed dating. Once a year, airline network planners and airport commercial managers get together somewhere in the world for the "World Routes" conference, a whirlwind two days of intense twenty-minute meetings in which airports seek to convince their selected airlines of the profits and market gains to be made by starting a new route to their airport. Routes 2011 took place in Berlin; Routes 2012 will be in Abu Dhabi, and Routes 2013 in Las Vegas. But what is it that persuades airlines to start new routes, and how can airports - especially smaller ones with limited experience and even more limited budgets - win new services?
"It's all about the market size, and incentives are not a replacement for a sustainable market," says the network planner for a leading European regional carrier, a sentiment with which almost all airlines would agree. Although Ryanair is particularly notorious for the level of financial support they demand from airports, most airlines take a more nuanced view, seeking some financial concessions from airports but also placing considerable weight on the numbers of passengers they can reasonably expect to carry.
"Starting a new route is a big financial risk for an airline," says Patrick Edmond, Managing Director of e2consult, an aviation consultancy which specialises in brokering matches between airlines and airports to make new routes happen. "An airport that can reduce that risk to the airline is already putting itself in a good position." Of course offering discounts, financial incentives or rebates is one way to cut the airline's risk, although it may be outside the budget of many smaller airports. "Some airports try to hitch their incentive packages to specific targets, such as passenger numbers," says Edmond. "The danger is that an incentive offer to an airline which is too complex or too conditional just won't make it into the business case for the new route."
Industry experts also point to Rule 1 of business sales: know your customer. Most seasoned airline planners attending Routes can tell at least one horror story of airports coming to see them having failed to do even basic homework: what size of plane does this airline have? Where do they fly to? For a chance of success, an airport needs to be able to articulate clearly:
- What's the market opportunity? Why do we want a route from A to B?
- How many passengers do we estimate will fly on such a route? Why? Are they leisure travellers or are there business links, such as local branches of multinational firms?
- What are those people doing now? In other words, what airports and airlines are competing for their custom today?
- What is it that makes Airline X a good candidate to profitably serve this market?
"This isn't just about money," says e2consult's Edmond. "An airport can materially reduce an airline's startup risk by presenting really good solid forecast data that clearly shows the traffic potential. Good data mean less risk, and that means less need for financial discounts. An airport that shows it's really done its homework is already a step ahead of its competitors."