Therefore, this calls for additional research for understanding aviation in a wider context. I have suggested three themes of research on the basis of this thesis that could be interesting to develop: Investigate airport alliances, Denmark in the global and Airports in the local.
In the next chapter, I will begin an elaboration on how a hub airport is understood based on the conventional aviation research tradition and the wider founded aeromobilities approach.
2 WHAT IS A HUB AIRPORT?
“Airports are one of the key ways in which cities and societies seek to enter or develop their positioning within the global order.” (Urry, 2007, p. 142)
2.1 PROLOGUE
Humanity has dreamt of mastering the ability to fly for centuries. Hydrogen filled balloons allowed humans to elevate from the ground and experience ‘flight’ and by 1903, the Wright brothers managed to take in flight heavier-than-air aircrafts. Initially, it was predominantly military, scientists and sportsmen, who made use of this innovative technology. Militaries used aircrafts for reconnaissance missions and to train pilots in speed and maneuvers in the event of combat, while geographers used aircrafts to collect information for maps. (Blatner, 2005; Gidwitz, 1980; Roseau, 2012). In 1918, the first international air route was established in the Austro-Hungarian Empire: a mail service between Vienna and Kiev (Gidwitz, 1980, p. 37).
The commercial passenger transport slowly developed, with aviation route expansions by the former colonial powers of Britain, The Netherlands, Belgium, France, and Italy to their respective colonies (Gidwitz, 1980, p. 40). At the beginning of modern aviation, airports were only small airstrips, but as civil aviation activities grew, airports evolved from being remote and difficult to access to becoming large, complex infrastructures with terminals, runways, and landside facilities (Dierkx & Bouwens, 1997, p. 13).
In this chapter, I will elaborate on different perspectives on hub airports, and how these have developed in line with structural changed in the aviation industry. An airport can be viewed and understood differently depending on perspective. One way to perceive an airport is as pure infrastructure that is not dependent on the context. As one airline CEO states:
“Airports are simple, just infrastructure6”
(Jesper Rungholm CEO Danish Airtransport A/S, Consultation ini Transport- og Bygningsudvalget, 08-12-2016: 1:39:30).
6 Own translation: “Lufthavnen er altså bare infrastruktur”- see:
https://www.ft.dk/aktuelt/webtv/video/20161/tru/tv.3606.aspx?from=07-12-2016&to=09-12-2016&selectedMeetingType=Udvalg&committee=&as=1#player
However, such a perspective can be contested. In the book The Airport Business from 1992, Doganis describes an airport as:
“Airports are complex industrial enterprises. They act as a forum in which disparate elements and activities are brought together to facilitate, for both passengers and freight, the interchange between air and surface transport. For historical, legal and commercial reasons the actual activities within the airport for which an airport owner or manager is responsible vary between countries and between airports in the same countries.” (Doganis, 1992, p. 7)
As Doganis states, the activity level for an airport is influenced by contextual elements, such as historical, legal and commercial developments. This means an airport needs to be understood in a nexus of controversies. Direkx and Bouwens explain that, due to increased activities at airports, there is an increase in land use due to facility expansion and an increased level of noise – especially by the start of the jet age. As a result, the airport has become a place of controversies. The conflict is between aviation and environmental interests in relation to e.g. land use and noise-externalities and additional, the conflict can also relate to how to settle these conflicts (Dierkx & Bouwens, 1997, p. 13).
In line with this, I will, in this chapter, argue that airports should be understood differently – not as a standalone business but as a production of local, regional, national and global Policies and Materialities. As I will show later, the airports have been confronted with changing framework conditions, which enable new roles and challenges, and consequently new ways to address airports in order to understand the production of aviation.
Aviation System
The aviation system is a multifaceted system. There is a multitude of different actors in the larger scope of the transport system, of which airports are a part.
Viewed in isolation, the aviation system consists primarily of airlines and airports that provide capacity for passengers to travel from one point to another. By expanding the scope we see that, in addition to these primary functions, there is a wide range of actors that provide capacity along the passenger’s journey: e.g., ground transport in various forms provide capacity for the passengers to reach their final destination. In order to support this distribution of passengers, there are different support functions that enable the production of aviation to be safe and secure. These support functions include air traffic control, meteorological services, police, fire and security services (Doganis, 1992, p. 7). In addition to these services, airports and airlines make use of
various suppliers, including catering, cleaning, ground handling companies and maintenance providers (Doganis, 1992, p. 9).
In addition to the actors who are directly involved in the transport system, there are numerous other stakeholders influencing the production of aeromobilities. The political stakeholders, within both the local and global political environments, are setting the frameworks based local, regional and global agendas. An example of global agenda could be control mechanisms, such as the EU institutions or ICAO.
Further, there are different interest groups, such as labor or industry confederations, tourism organizations, environmental organizations, owners of infrastructure and land as well as local neighbors that all have different agendas and seek to influence how the production of aeromobilities takes place. This framing is not exhaustive, but it illustrates some of the stakeholders that either directly or indirectly are influencing the facilitation of the aviation transport chain. This demonstrates that the system itself is quite complex in terms of interdependency between all actors.
Some of the framework conditions (see next chapter) in the aviation sector have fostered new airline business models resulting in changes to the structure of the aviation market. Further, some airports have been privatized to various degrees. These developments have changed the role of airports, which can no longer be perceived as a passive infrastructure that solely provides capacity. The airport is now an active entity in developing connectivity, by actively trying to attract new airlines. This is a possible because there is a tendency for airlines to become more footloose by reallocating capacity or switching routes to match the market demand (Thelle &
Sonne, 2018, p. 232). All airlines, to some degree, are trying to increase and optimize operations. Low-cost airlines have a higher degree of route-switching, while hub carriers even though they have a structural dependency on hub airport(s) still optimize their network by redistributing their route network (Thelle & Sonne, 2018, p. 234).
Airports have become a more active entity in the production of aeromobilities. This motivates a need to increase the understanding of the production of airports and hub airports, which is essential element in the production of aviation.
2.2 DEVELOPMENT WITHIN THE EUROPEAN AVIATION MARKET
The modern organization of the aviation transport system has evolved as a result of the different regulatory frameworks developed and adopted since the early 20th century.
Historically, the Paris Convention in 1919 and the Chicago Convention in 1944 did set some standards for the organization of air traffic and determination of airspace rights. The Paris Convention settled an agreement that sovereign states have the rights
to airspace above their territory. At the Chicago Convention in 1944, 52 countries considered a multinational agreement focusing on three aspects:
• The exchange of air traffic rights;
• The control of fares and freight tariffs; and
• The control of flight frequencies and capacity.
At the Chicago Convention there was no final arrangement in order to generate a multinational agreement to settle traffic rights due to conflicting viewpoints between parties. The US, The Netherlands and Sweden were mostly in favor of liberal and unrestricted – so call Open Sky – agreements; but on the other side, the UK and other European countries were against the liberal approach since their airlines were less competitive as a result of WWII. Instead of reaching a multinational agreement at the Chicago Convention, air traffic became regulated based on bilateral agreements focusing on capacity and frequencies, and tariffs negotiated though IATA7. Even though the Chicago Convention did not reach agreements on commercial traffic rights, the participants at the conference did agree upon a framework for safe aircraft operations, along with the establishment of an international organization, ICAO, for setting up international standards and operational standards for aircraft operations (Doganis, 2010, p. 28-29).
These bilateral agreements on traffic rights had both economic and noneconomic impacts and restricted the airlines to various levels of freedom8. The regulations consisted of three pillars: inter-airline pooling, bilateral air service agreements, and traffic and pricing agreements that were negotiated trough IATA (Doganis, 2010, p.
25). This caused a highly regulated environment within the air transport system that motivated far less innovation and changes. This regulated regime lasted until the late 1970s.
Liberalization of the airline market
In the late 1970s, the regulated aviation industry began to gradually change as a result of a liberalization process that started in the US and later in Europe. (Doganis, 2010, p. 25). This process is exemplified to some degree by the British prime minister Margaret Thatcher, who promoted a politic of liberalization and international co-operation (Jessop, 2000, p.156). The liberalization process within aviation was not applied to all routes, however. Within the European Union market and between the USA and the European Union, an Open Sky approach was applied. Open Sky agreements were also settled between some Asian countries and some European
7 IATA: International Air Transport Association. An international airline organization founded in 1945 initially 57 members, today 280 airlines are member of the organization. See:
https://www.iata.org/about/pages/history.aspx. Located: 15 September 2018.
8 Within these levels of freedom, there are different definitions of how airlines are permitted to operate within a foreign country’s airspace and airports. These rights refers to nine Freedoms of the air, where each of them describe a right for an airline. E.g. 1st freedom, gives foreign airline the right to fly over a foreign country without landing. (see more: (Doganis, 1991)
states. Today there are multiple Open Sky agreements, but a significant part of airline traffic is still regulated to some degree (Doganis, 2010, p. 25).
The liberalization process during this period focused on increased competition for the benefit of the consumer. The European Union liberalized the airline market in Europe between 1987 to 1993 using a three-step process or packages (Doganis, 2010; Iatrou
& Oretti, 2007). The first package was in 1987, the second package was in 1990 and the third in 1993. As part of this process, restrictions on market entry, capacity, frequency and pricing were removed within the European Union for airlines from member states (Burghouwt, Mendes de Leon, & De Wit, 2015, p. 6, 11). As specified during this process, European airlines needed to be owned and controlled by members states or member state companies to be subject to this more liberalized approach (Doganis, 2010, p. 54).
This liberalization in Europe imposed new rules on European airlines to increase the availability of new services, such as new destinations and increased frequencies of trips. Additionally, new airlines entering the European market with new business models, including low-cost airlines, resulted in decreased ticket prices to the overall benefit of the passengers (Burghouwt et al., 2015, p. 11). In the late 1990s, national carriers rearranged their networks and some national carriers increased their hub-and-spoke operations at national hub airports due to the removal of restrictions on capacity, however this redistribution did also led to decreased connectivity in other airports (Burghouwt & Veldhuis, 2006, p. 107).
Traditional airlines, often labeled as “flagship carriers”, “network airlines”, “legacy carriers” or “national carriers” are typically characterized by a multi-market segment focus, online and interline connections with cooperating carriers, membership in a global alliance, adherence to traditional distribution strategies, restrictive fares and complex booking policies, amenities and reward programs, and both short- and long-haul operations with a diversified fleet. Airlines such as SAS, Lufthansa or British Airways are typical of this category (Hvass, 2008, p. 57). Historically, national airlines have had a dominate position in terms of passengers in the major airports.
This would include SAS in the Copenhagen Airport9, British Airways in Heathrow, KLM in Schiphol Airport, Swissair in Zurich Airport, and so forth.
Low-cost airlines in Europe, which were a result of the EU’s liberalization process, are often described as “no-frill airlines” or “point-to-point airlines”. These airlines are typically characterized by a single-market segment focus, no interline connections, a alliance membership, a general bypass of traditional distribution strategies, non-restrictive fares and simple booking policies, no amenities or reward programs, and
9 Copenhagen Airport is the name of the physical airport in Denmark, however the company name is Copenhagen Airports A/S – airports arin e plural since the company also owns and operates the general aviation airport: Roskilde Airport, south-west of Copenhagen.
short-haul operations with a single fleet. Airlines such as Ryanair and easyJet fall within this category (Hvass, 2008, p. 57).
Distinguishing between whether an airline is labeled as a low-cost airline or not depends on the selection criteria applied. Depending on the selection criteria, the number of airlines labeled as “European low-cost airlines” can vary from around twenty to more than forty (Burghouwt & de Wit, 2015, p. 112). This vague approach to low-cost labeling criteria causes some confusion, as there are legacy carriers who regularly adopt elements from the low-cost airlines and vice-versa. Several legacy carriers are also adopting operational elements from the low-cost business models by, for example, establishing low-cost subsidiaries (Graf, 2005), while some low-cost airlines are introducing reward programs, etc. In addition to the categories of low-cost and network airlines there are other business models such as regional, charter or specialist airlines (Whyte & Lohmann, 2016, p. 109).
There has been a tendency for the low-cost airlines to operate within a regionally defined area, such as Europe or North America. Despite this, several low-cost airlines have tried to enter the long-haul segment, with the latest being the Norwegian Airline Group10 which has for example have established long-haul routes between Europe and US. In relation to prior airlines operating long-haul, Norwegian does not operate in a classic hub-and-spoke system but rather operates long-haul traffic from multiple European airports11 (Harvey & Turnbull, 2016, p. 316).
The developments that have come about due to the liberalization process have changed the structure of the aviation industry across Europe. The low-cost airlines have been successful in terms of developing their business models relative to their number of passengers, while the network airlines are, to some extent, challenged by an increase in competition, especially since the low-cost airlines are able to offer competitive airfares (Burghouwt & de Wit, 2015, p. 109). Historically, traditional airlines have focused their business on a specific geographic location (e.g., SAS has been operating to and from Scandinavia, Finnair has connected Finland to the world, and Brussels Airline has had a focus on connectivity to and from Belgium). This is not a universal truth; there have been and still are other setups, but this specific geographical focus has been a predominant tendency.
Due to liberalization, it is recognized that airlines have become more footloose – meaning airlines are no longer focusing in the same way as they have previously on
10 Norwegian group of the parent company for the carriers: Norwegian Air Shuttle ASA, Norwegian Air International Ltd. Norwegian Norway AS, Norwegian Air UK and Norwegian Air Argentina (https://centreforaviation.com/data/profiles/airline-groups/norwegian-group).
11 See: https://centreforaviation.com/data/profiles/airlines/norwegian-air-shuttle-asa-dy [Need password]
one given market and airport. This tendency is especially the case with point-to-point airlines that are more active in configuring their network for profit optimization.
Network airlines are also rearranging their networks by changing frequencies and destinations, but they are still to some extent bound by their hub-and-spoke model (Thelle & Sonne, 2018, p. 2-3). This evolution indicates that the airport, to a considerable extent, must position itself in the market to gain traffic. In this sense, the airport cannot be perceived as a passive infrastructure but as an active actor in creation of aeromobilities.
The change in market composition after the entry of low-cost airlines is illustrated in the figure below. Data constraints have resulted in the data representing only the years 2004 to 2017. The figure illustrates that low-cost airlines have been able to gain a significant market share, from little more than 10% in 2004, to approximately 24% in 2014.
Figure 3: Illustration of the increased market share for low-cost airlines within the European market in the years 2004-2017. Only 21 airlines were labeled as low-cost airlines according
to (Burghouwt & de Wit, 2015, p. 112) (SRS seat data).
0 200 400 600 800 1.000 1.200 1.400
0%
20%
40%
60%
80%
100%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Low‐cost airlines vs Other airlines in Europe
(Distribution share in % and Departing seats in millions)
Low‐cost airline Not low‐cost airline Total seats
Hub airports
The business model for a network airline is an important feature since they often have set up a hub-and-spoke model as opposed to a point-to-point business model. Airlines using the hub-and-spoke model have a central airport(s) in their network acting as the hub airport, where passengers make their transfer. This hub airport has a ratio of transfer passengers, and by this business model the airport is able to serve more destinations than the local catchment area could otherwise support; and therefore an airport with hub activities is able to facilitate more connectivities than an airport without any hub connectivities (Button, Lall, Stough, & Trice, 1999, p. 55). Further, airlines operating within a hub-and-spoke system are able to provide a network with higher frequencies allowing travel back and forth the same day. This is especially beneficial to the business environment (Burghouwt, 2014, p. 30).
It does not have to be a single airport that constitutes an airline’s hub airport. The airline’s hub system can also consist of multiple hub airports where the airline concentrates its operations (Burghouwt, 2014, p. 30). From an airline operational point of view, multiple hubs are generally less attractive than single hub operations, since additional hubs reduce the economic benefits of density and increase operational complexity (Burghouwt, 2014, p. 31). However, there are several reasons to deviate from single airport operations, as Burghouwt lists: spatial coverage, level of demand, frequency gain, capacity shortage at the primary hub, strategic positioning and entry deterrence, better aircraft utilization, bilateral restrictions and aviation laws, and pressure from unions (Burghouwt, 2014, p. 31-32).
Another understanding of a hub airport – apart from an airport that facilitates an network airline’s business model - is where the hub airport is understood as a nexus ground transport and airline systems. In this context, a hub airport is part of a nexus of connectivity between trains, busses, cars, sea links and airlines (L. Budd & Ison, 2016, p. 26-27). According to Cambridge Dictionary the word ‘hub’ means “the central or main part of something where there is most activity.”12 This indicates that a hub airport in this meaning has a slightly wider focus different from a hub airport based on an airline’s business model, as articulated above, where a hub airport is central for a given airline’s business model and facilitates transfer passengers. The hub airport definition articulated in this paragraph does not only relate to any airline business model, but purely indicates an airport that is central to a network of ground and airbourn transport systems.
Another understanding of a hub airport – apart from an airport that facilitates an network airline’s business model - is where the hub airport is understood as a nexus ground transport and airline systems. In this context, a hub airport is part of a nexus of connectivity between trains, busses, cars, sea links and airlines (L. Budd & Ison, 2016, p. 26-27). According to Cambridge Dictionary the word ‘hub’ means “the central or main part of something where there is most activity.”12 This indicates that a hub airport in this meaning has a slightly wider focus different from a hub airport based on an airline’s business model, as articulated above, where a hub airport is central for a given airline’s business model and facilitates transfer passengers. The hub airport definition articulated in this paragraph does not only relate to any airline business model, but purely indicates an airport that is central to a network of ground and airbourn transport systems.