Adopting a leisure-orientated marketing mix: some challenges and opportunities for airports

This article aims to discuss some of the challenges and opportunities that are faced by airports when adopting a leisure-orientated marketing mix in order to attract leisure carriers (e.g. charter, low-cost or niche regional carriers) for tourism.

The format of the article is structured in a way that considers each of the four elements of the product marketing mix; the 4P's (product, promotion, price and place). Airports obviously offer a service (as opposed to a product) and so the three elements of the services marketing mix (processes, physical evidence and people) will also be considered but this will be done within the context of the 4P's as quite often, elements such as processes and people can be discussed within the context of the product. The main points of the article and areas for future research will be summarised in the conclusion.

The airport product

Airports wishing to compete in leisure markets need to be aware of the facilitation requirements of leisure carriers. Runway length, terminal capacity and landing systems will all contribute to the decision of whether or not to operate to a particular airport however; this applies to all types of carrier, not just those that offer opportunities for the development of tourism.

The level of infrastructure available at an airport will to a large extent determine the types of markets or carriers that can be targeted. For instance, only airports with a runway length of over 1600 meters can realistically target low-cost and charter carriers operating dense routes with a Boeing 737 or Airbus 319. Many of the airports in Europe's northern periphery have fairly long runways that were built for military purposes and can therefore accommodate the typical range of aircraft used by low-cost and charter carriers. Airports with smaller runways will need to target niche regional carriers operating thin routes with smaller aircraft.

The harsh operating conditions that are typically associated with Europe's northern periphery (e.g. frequent adverse weather and permanent obstacles such as mountains) may provide further constraints to some airports, especially those that are not equipped with modern landing systems and accurate real time weather monitoring, both of which have the capacity to improve airport safety and the reliability of flight operations.

Tangible infrastructure is a basic need of the airline and does not really provide much of a competitive advantage to airports, especially when competing airports offer a similar level of infrastructure. In such instances, airports should look to compete at the augmented level (where additional benefits can be offered).

Leisure carriers are especially focused on achieving low operating costs and an efficiency of operations. Therefore, they will want to see how airports can facilitate cost savings (e.g. by providing simple terminals and minimal services), speed (e.g. by providing fast aircraft turnarounds and an efficient positioning of aircraft), flexibility (e.g. by providing multi-functional and flexible staffing), and access (e.g. by providing longer opening hours and surface transport to the destination). Prestwick Airport in Scotland was able to adapt its augmented product in order to attract low-cost and charter carriers. The airport developed a multi-skilled workforce that is able to provide all airport services and a quick turnaround of aircraft. In addition, the airport made a conscious effort to reduce costs and to pass these savings onto their airlines and tour operators. In the first year of implementing such initiatives, Airtours (a leading tour operator) added seven new routes from the airport and the airports total number of annual passengers increased by over 30% (Lang, 1999).

For airports that target multiple carriers (e.g. traditional full-service or business charters in addition to leisure carriers), increasing consideration is given to whether or not to segment the product offering (e.g. by offering separate terminal facilities that offer different service levels to different types of carrier). Although not located in Europe's northern periphery, Marseille Airport in southern France is one of the first airports in Europe to offer and actively promote separate facilities for different markets. At Marseille Airport, airlines can choose whether to use a full-service terminal that offers airbridge access to the aircraft or a low-cost terminal that offers remote stand access to the aircraft. The principle here is that the user pays for a superior product.

Associated with the airport product is the idea of the airport brand. Branding has been widely used by airports in Europe's northern periphery and especially by those seeking to attract charter carriers. In this instance, the brand that is developed may be based upon natural or man-made attractions or aspects of historical importance. A few examples include Lakselv Banak Airport in Norway (now known as North Cape Airport), Kemi-Torino Airport in Finland (uses the logo 'For Golf in the Midnight Sun'), and Keflavik International Airport Terminal in Iceland (inaugurated in 1987 under the name of Leifur Eiriksson Air Terminal after the Norwegian navigator who, according to Norse sagas, was the first to discover North America). Airports have also been branded in a way that demonstrates their size or scope of services. For example, Prestwick Airport in Scotland is now called Glasgow Prestwick International Airport in order to create awareness of the fact that the airport offers international services.

Branding creates distinctiveness and adds tangible cues to what is essentially an intangible service. In addition, branding can promote recognition, preference and loyalty amongst target markets. However, branding can have a potentially negative impact by being too distinctive and encouraging aspects such as seasonality. Rovaniemi Airport in Finland was branded as Santa Claus Airport in 1984 in order to contribute to the development of 'Santa-based' tourism in Finnish Lapland. The airport has become a major tourism gateway to the region and during Christmas 2003, the airport attracted over 200 foreign charter flights and nearly 80,000 international tourists (Rovaniemi Tourist Board, 2004). The problem is that traffic at the airport is concentrated in the winter months and at certain times of the day and week, leading to seasonal and inefficient airport operations. In addition, the dominance of charter traffic, which provided 92% of the airports international passengers in 2003 (Finnish Civil Aviation Authority, 2004) may be a deterrent to the attraction of scheduled low-cost carriers that offer higher frequencies and a year-round service.

Promoting the airport

Advertising is a basic form of marketing that airports do to create awareness and communicate certain messages to target markets. However, advertising tends to communicate general messages to a general audience and can be very costly. For example, it costs an airport ?10,000 to place a one page colour advertisement in the publication Airline Business.

Attending exhibitions is another basic form of marketing that airports do to create awareness amongst target groups. For example, Highlands and Islands Airports Limited (HIAL), operators of the 10 airports in the Scottish Highlands and Islands targeted tour operators at VisitScotland Expo 2004 to promote its airports to around 1,000 buyers from the international travel trade (HIAL, 2005). However, it should be noted that scheduled carriers, especially low-cost carriers increasingly reduce links with the travel trade in order to reduce costs so the effectiveness of attending exhibitions may only be restricted to airports competing in charter markets.

Increasingly, airports adopt a more direct and aggressive means of communicating with target markets. One recent development that has supported this type of direct selling is the World Route Development Forum called “Routes”. Routes is a type of speed dating for airports and airlines as it provides networking opportunities through one-to-one meetings (e.g. see www.routesonline.com). However, airlines increasingly expect to be presented with market research on new route potential and will be particularly interested to know about the tourist appeal of the catchment area for inbound passengers and the purchasing power of residents in the outbound market(s) (Favotto, 1998).

Many smaller airports may not have the financial or human resources to carry out detailed market research and therefore, may find it difficult to target carriers in this way. One way of overcoming this constraint is to develop strategic partnerships with local stakeholders such as tourism and regional development agencies. This enables airports and local stakeholders to pool resources, develop an integrated approach to regional tourism development, and provide airlines or tour operators with a wider overview of the area and its potential. Aberdeen Airport in Scotland has tried to achieve this through the creation of an Airport Business Development Forum; a group of airport stakeholders that meets every two months to discuss route development opportunities and provides potential airlines or tour operators with a one-stop shop for data on the airport, the local catchment area and on potential demand.

Pricing the airport product

Offering price incentives has become particularly important at airports wanting to attract scheduled low-cost carriers (Francis et al., 2004). Such incentives vary greatly between airports but have traditionally included the offer of reduced or discounted airport user charges and/or the provision of marketing support.

One of the constraints faced by airports that belong to national or regional airport systems is the inability to offer flexibility in airport user charges. Quite often at these airports, charges are levied in the same way throughout the entire airport system and may be set and controlled by the State. This relinquishes the opportunity for airports to compete on pricing and is one of the reasons why low-cost carrier concentration is higher at privately or locally owned airports where there is more opportunity for them to offer flexible and discounted airport user charges.

Another way in which airports are known to offer price incentives is through the provision of marketing support. This is in recognition of the fact that airports are a derived demand and that instead of conducting their own advertising and promotional campaigns, it may be more effective for them to support campaigns via intermediaries such as airlines or tour operators. These intermediaries have a much greater level of brand recognition amongst end users (i.e. passengers) and are able to penetrate markets more effectively than airports, through aggressive marketing campaigns.

Price incentives such as reduced or discounted airport user charges and/or marketing support have traditionally been offered by airports as one off payments or discounts, or on a scale that diminishes over time. The assumption here is that the start up risk is shared until the route becomes more established and commercially viable however, airlines have often argued that such discounts should always be available and this has been a source of friction between airports and their airlines in the past (Graham, 2003).

On 3rd February 2004, the European Commission ruled that the incentives granted to Ryanair by the Walloon government for the use of Brussels South Charleroi Airport (BSCA) breached EC State aid rules. The ruling means that state-owned airports in Europe can only offer incentives that meet strict criteria. For instance, they will only be accepted by the Commission if: they are necessary to the opening of new routes and granted in a transparent and non-discriminatory manner; their duration is limited (5 years for direct flights); they do not represent more than 50% of the costs incurred to start the new route; and, they are available to any airline established at the airport. he ruling will have profound implications on the ability for airports to offer incentives and the arrangements at a number of airports, especially those that are locally owned, will have to be reassessed.

The Commission ruling does not apply to privately owned airports and because of this; we may see an increasing level of private investment at state-owned airports, especially those seeking to attract low-cost carriers through incentives.

Placing the airport product

Airports sell direct to airlines or tour operators for rights to use the airport. They then rely on intermediaries such as airlines, tour operators, travel agents or travel planning portals to reach end-users. Despite this, airports are increasingly involved in providing online travel planning support to passengers and also to their airlines or tour operators. This is particularly important considering that online travel sales in Europe increased by as much as 41% between 2003 and 2004 (Marcussen, 2005).

The provision of online timetable services (as provided by companies such as OAG and Innovata) is a basic level of online support but surprisingly, less than 10% of world airports currently buy into online timetable services (Compton, 2005). In addition, whilst most airports have an online presence, their support for airlines or tour operators is fairly limited and especially at airports that belong to large national airport systems where websites tend to be fairly plain and simple. HIAL maintains a fairly good level of online presence and support. The company provides online timetable services and links to the tourism industry, airline websites, and Expedia (a travel planning portal) (e.g. see www.hial.co.uk).

Concluding remarks

This article has provided a preliminary discussion on the challenges and opportunities for airports in Europe's northern periphery that aim to adopt a leisure-orientated marketing mix in order to facilitate the development of tourism. Greater debate on this subject is required before a more balanced and informative analysis can be conducted however, initial discussions have identified the following issues and considerations.

Firstly, airports need to understand the facilitation requirements of target markets and the ability for airports to compete at the augmented level is especially strong. Branding can also be used to gain a competitive advantage. The challenge is in deciding whether or not to specialise or to develop multiple product offerings that offer a range of service levels. This does not only apply to the infrastructure and services available but also to the airport brand.

Secondly, airports should adopt more direct and aggressive means of communication and events such as “Routes” offer tremendous opportunities however, this means of communication needs to be supported with detailed market research. For those airports that do not have the resources to conduct such research, strategic partnerships with local stakeholders are vital and enable the pooling of resources. Strategic partnerships also facilitate a more integrated approach to the development of tourism and are therefore of importance to all airports, not just those with resource constraints.

Thirdly, airports can offer incentives to encourage routes that may otherwise not have been considered however, the European Commission ruling has affected the way in which these may be applied. Airports may subsequently seek private investment in order to overcome the effects of the ruling.

Finally, airports should do more to support the distribution channels of their airlines or tour operators and the travel planning needs of end users. Airports that belong to large national airport systems tend to offer plain and simple support in this area and should consider developing a more advanced and personal approach.

Perhaps it is the nature of airport ownership or the style of airport management that facilitates the ability of airports to adopt such marketing principles. In addition, it is unclear as to whether or not such marketing principles affect the performance of airports. These are some of the issues that I hope to address in future studies?..

References:
-Compton, P. (2005). “Timetable for success,” Airport World, 10(2), April-May, 56-57.
– Favotto, I. (1998). “Not all airports are equal,” Airport World, December, 17-18.
– Finnish Civil Aviation Authority. (2004). “CAA's Air Traffic Statistics, Ilmailulaitos A 5/03,” Vantaa.
-Francis, G., Humphreys, I. and Ison, S. (2004). “Airports' perspectives on the growth of low-cost airlines and the remodelling of the airport – airline relationship,” Tourism Management, 25, 507-514.
-Graham, A. (2003). “Managing airports: an international perspective,” 2nd ed. Butterworth-Heinemann, Oxford.
– HIAL (Highland and Islands Airports Limited). (2005). “HIAL targets tour operators at VisitScotland Expo 2004,” HIAL Press, Inverness.
– Lang, H. (1999). “Attracting business to Prestwick airport. In: 1st Forum on Air Transport in Remoter Regions,” 2-4 April, Nairn.
– Marcussen, C.H. (2005). “Trends in European Internet distribution – of travel and tourism services.” [http://www.crt.dk/uk/staff/chm/trends.htm] (accessed 26th October 2005).
– Rovaniemi Tourist Board. (2004). “Rovaniemi Region Marketing Strategy 2005,” Rovaniemi Tourist Board, Rovaniemi.