The Evolving Airline Industry: Impacts on Airports
3.3 Some Useful Distinctions
questions of who, what, and why. These concern the diversity in the decision-making pro-cess and performance criteria.
Diversity in the decision-making process reflects the number and types of stakeholders who strongly influence decisions. In some contexts there is effectively no diversity. This is the case when central authorities or personalities are the final arbiters. In other contexts there is great diversity, as multiple levels of government and numerous stakeholders nego-tiate resolutions to any issue. Countries also differ in the kinds of goals they promote and the criteria they apply. In some cases, decision makers define goals quite specifically and numerically, either in technical or in economic terms. In other cases there never is any clear definition of goals or objectives.
These two dimensions correlate with each other to some extent. Centralized, directive governments have the ability to impose criteria on the decision-making process. Pluralistic decision-making processes that negotiate developments will not be able to maintain, let alone impose, consistent numerical criteria of performance. Centralized decision-making processes are therefore more likely to be able to impose performance criteria—although they do not have to do so.
National Differences in Diversity of Decision Making
Countries that have had salient roles in the development of airport systems differ greatly in the way they expect decisions to be made. Several have strong traditions of central direc-tion and control. Others are pluralistic and feature decentralized decision making.
In the United States, decisions about airports are highly decentralized. The central na-tional institutions have little influence on specific designs—surprisingly so for persons from outside North America.4 Under the Constitution of the United States, the power to make most major decisions—those concerning airports in particular—is in the hands of the states. Moreover, the state constitutions frequently leave decisions about such matters to local communities. Most frequently, local airport authorities and cities are responsible for developing plans and airport proposals. The U.S. FAA can support, encourage, and confirm local decisions but cannot impose its will.
In the United States, all major stakeholders are entitled and expected to have an active voice in decisions about airports. Airlines, for example, frequently operate their own pas-senger buildings. They also participate actively in the design of these facilities. AsChap.
7 indicates, airline tenants at many U.S. airports are guarantors of the revenue bonds and thus effectively have veto power over major investments on airports. Airlines in the United States often control what is built, how it is designed, and when it is implemented. Addition-ally, local communities and interest groups expect to participate actively in the decision-making process. Local stakeholders concerned with the airport may have specific rights to intervene. For example, the board of directors for Massport, the independent state agency responsible for operating Boston/Logan airport, by law includes representatives of local
communities, citizens groups, and labor unions. Decisions about airport planning, design, and management in the United States are negotiated among the many stakeholders. These generalizations about the United States have exceptions, in view of the enormous diversity among the 50 states. However, diversity in the decision-making process is a fact in the Un-ited States.
To illustrate the decentralization and diversity of authority on airport activities in the Un-ited States, consider Massport’s proposal to develop a new short runway for Boston/Logan airport. Airport planners in the FAA widely encouraged this proposal to add capacity. Nom-inally, the FAA administrator has the authority to approve this plan. In practice, however, elected officials from the area effectively have the power to block such plans. Local mem-bers of Congress have done so for many years, by threatening to block portions of the FAA’s budget. In the United States, these kinds of planning issues are resolved through in-tense negotiations between various local authorities, the airlines, the FAA, as well as nu-merous advocacy groups represented by lobbyists. The tradition in the United States is that essentially all stakeholders in an issue have the right to participate in their resolution.
France, by contrast, has a history of central direction. The central government announces decisions and implements them. The public elects the government, of course. The govern-ment also pays attention to public needs, and has prepared and is beginning to implegovern-ment mechanisms for compensation and remediation of damages to people and the environment (Faburel, 2001). However, the public has been neither expected nor is entitled to participate in the decision-making process itself (Block, 1975). Thus, in the 1970s, the French govern-ment located the Paris/de Gaulle airport, established developgovern-ment zones, built the facility, and directed specific airlines to relocate from the other airport, Paris/Orly. Around 2000 they replicated the process to develop two new parallel runways at Paris/de Gaulle. These developments went forward without significant public hearings or effective protest. French authorities expect to be able to act decisively in the best interests of the public.
Historically, many countries have had traditions of centralized national power, both over-all and specificover-ally regarding airport planning. Typicover-ally, countries have had national min-istries responsible for the design, construction, and operation of airports. Since the turn of the twenty-first century, however, the degree of centralization of airport planning and man-agement in major aviation markets has lessened considerably. Australia and Canada vir-tually eliminated their federal airport agencies. These countries devolved responsibilities for airports to companies and local authorities in the traditionally autonomous states and provinces. Britain transformed its governmental British Airports Authority into a company and made local airports—such as Manchester and Birmingham—operate as independent companies. Mexico devolved power from the central government to independent regional companies. This evolution has created more autonomous airport authorities and increased the diversity of airport operators.
Germany, Switzerland, and Italy have traditionally been decentralized. Germany is a fed-eral system of Länder. Thus independent groups own and operate the major German air-ports (Berlin, Frankfurt, Munich, Düsseldorf, Hannover, etc.). Switzerland is also a fed-eration of notably autonomous cantons. Independent companies operate the Zürich and Geneva airports. The situation is comparable in Italy.
Outside the United States, the increased diversity in airport operators has not translated into increased diversity in the local decision-making processes. The power to plan and design airport facilities is still typically in the hands of the airport operator. Airlines typ-ically have little say in the definition of airport investments. For example, British Airways had essentially no part in the design of the $7 billion Terminal 5 at London/Heathrow that was designed for it. Likewise, in the mid-1990s the Frankfurt/International airport designed and built a billon-dollar passenger building for the German national airline, totally unsuited to its hubbing operation. In that case, however, Lufthansa managed not to occupy the build-ing. Local constituencies likewise generally do not have a deciding role in airport decision making. Environmental and other groups may be heard or consulted, but they do not de-cide.
Britain has established the rule that an extensive public inquiry must be held for import-ant issues. The investigation into the construction of the second runway for Manchester took about 5 years. The inquiry into the T5 passenger building at London/Heathrow took longer and reputedly cost over £81 million (about $125 million) (Thorpe, 2001). This prac-tice is totally different from the procedures in France. In Britain, the interest groups have the right to express themselves and delay planning. Legally, however, they have no power.
The Minister of State for the central government decides such issues authoritatively.
A quote from the British political philosopher Edmund Burke illustrates the fundamental differences in perspective on decision-making processes between countries. In this case, he was contrasting the centralized, unitary British view with the pluralistic, negotiated prac-tice of the United States.
Parliament is not a congress of ambassadors from different and hostile interests…
Parliament is a deliberative assembly of one nation, with one interest, that of the whole, where not local purposes, not local prejudices ought to guide, but the general good… (Burke, 1774)
Overt negotiations among stakeholders to determine airport development are rare outside North America. In many contexts, such negotiations would be taboo. A common sentiment is that the duty of government is to govern, and if they cannot do so, they should resign.
The case involving the second parallel runway at Tokyo/Narita illustrates the point. In this situation, several farming families did not wish to sell their land to make way for the con-struction of this facility. For more than 40 years, a handful of people prevented the
com-pletion of a major addition to a significant national asset, yet the national, societal, and political conventions prevented the authorities from negotiating or adjudicating any kind of compromise that would allow the nation to proceed.
Table 3.2summarizes these national differences in assumptions about who gets to decide how airports should be planned, designed, and managed. AsSec. 3.4 indicates, these dis-similar perspectives can influence airport development fundamentally.
TABLE3.2 Some National Differences in Diversity of Decision Making and Operators
National Differences in Performance Criteria
Countries that have led the development of airport systems also differ greatly in the way they define the objectives for airport planning. In some contexts, the objectives are loosely defined. In others, they may be quite specific. Because performance criteria shape the products of design, these differences have significant consequences for how nations devel-op airports.
The nature of the performance criteria depends on who defines them. It is therefore rel-evant to look at the kind of people who run airport planning agencies and operators. The differences between countries can be striking. Some countries recruit elite engineers into careers of management of public works and airports in particular. Other countries prefer generalists or economists rather than specialist engineers. Some countries have no particu-lar pattern at all. These national patterns mark the practice of airport planning and manage-ment for these countries.
In the United States, there is no visible career pattern for the recruitment of airport exec-utives. Leaders in the field are lawyers, managers, engineers, former military officers, and other professionals. They tend to enter airport planning from some other industry. Typic-ally, they have established themselves in a related field, been working for one of the stake-holders in the airport business, and then become involved in airport planning. Recent lead-ers of Massport, the operator of Boston/Logan airport, have included a lawyer who had been a special assistant to the mayor of Boston, a former local Congressman, an activist for local groups concerned about noise, and an aeronautical engineer who had become a
prom-inent entrepreneur. Such people bring a wide range of perspectives and norms for good per-formance to airport planning.
Broad performance criteria define airport planning in the United States. These emerge from distinct negotiations among interested parties. The FAA publishes standards for the airside of the airport, based on their mission to promote safety. These appear in their Advis-ory Circulars and are readily available on the web and in print. However, the FAA does not establish these norms by itself. It works them out through close discussions with industry groups such as the Airlines for America (former Air Transport Association of airlines), the Airports Council International (airports), the General Aviation Manufacturers Association, the National Association of State Airport Operators, and so on.
Criteria for economic performance of airports in the United States come from some-where else entirely. These emerge from the groups that supply the funds, notably the air-lines that pay the fees and the investment bankers that loan the money.5These standards are informal and negotiable. The consensus is loose but has important implications that imprint a distinctive mark on airport planning and management in the United States. Briefly stated, it is that American airports should be
• Operated as businesses with transparent public accounts (to reassure investors and guarantee repayment of the loans)
• Run as a public service and that are not supposed to make profits beyond what is needed to maintain the business
• Charging airlines fees as low as possible consistent with good service and attractive facilities.
France, by contrast, recruits its leaders for airport planning and management from its most talented engineers. Specifically, it usually obtained the future leaders for its national airports company, the Aéroports de Paris, largely from its most selective national engineer-ing school, the École Polytechnique. It inducts about 30 of its best graduates each year and places them in a quasimilitary organization, the Corps des Ponts et Chaussées (of Bridges and Roads). These persons all share the same background, the same analytic and engineer-ing approach, the same esprit de corps (see Suleiman, 1974). Similarly, it recruits lower-level engineers from less demanding national schools, such as that of the Travaux Publics de l’État (State Public Works). As can be expected, these professionals establish analytic and precise performance criteria. Although some say this tradition is in decline, its legacy persists.
Britain traditionally prefers generalists to specialists. A common view is that specialists become too involved in their field and cannot be trusted to have a sufficiently broad na-tional perspective. British education at the elite universities such as Oxford and Cambridge
stresses liberal subjects such as political economy, classical literature, and history. The Brit-ish government has likewise recruited its future leaders from among such people (see Hen-nessy, 1989). These professionals take a broad, pragmatic view of decision making.
An anecdote captures the difference in approach between the technical and generalist approach perspective on airport planning. It involves British and French airport managers when the British Airport Authority (BAA) introduced peak-hour pricing at their London airports. This practice charges higher prices during peak hours. It thus reduces the peak de-mands, and the capacity and capital expenditures that the airport operator has to provide. It is an important means of increasing economic efficiency (seeChap. 12). It is theoretically possible to define the best peak-hour prices analytically from the equation of the demand for services. The BAA recognized, however, that the complexity of airline operations made any estimation of the demand speculative. Pragmatically, it chose to introduce a flat charge on each peak-hour operation. They intended to establish the principle of the charge, and then to raise or lower the peak-hour price until it achieved the intended effect. At this point, a French team came to London to learn from the British experience. They asked to see the equations and calculations the BAA used to determine the charge. The BAA said they could not present these, as they did not have any. When the French left the BAA, they ex-ploded in anger at the “uncooperative, untrustworthy British,” who refused to share with them. Despite the author’s attempts to explain the situation, they would not believe that the British had such a different perspective. Being engineers steeped in equations, they did not appreciate the possibility of such a different outlook. Yet such differences are real and do complicate the international understanding of airport planning.
British authorities have established detailed performance criteria for airports. As a result of their privatization of airports, they needed to regulate airport companies to protect the public against monopoly pricing and excessive charges. Because companies can abuse a monopoly position by lowering standards of service, it is not sufficient to regulate prices.
The British regulatory authorities therefore established complex performance criteria in many different areas (see Graham, 2005). These standards have constrained U.K. airport operators to emphasize the services specified in the regulatory criteria and have shaped the way British airport operators do business.
The important aspect to retain is that different national traditions emphasize distinct as-pects of performance. The criteria prevalent in the United States are pragmatic and value the distinct interests of the important consumer groups, such as airlines and passengers. The French and Japanese traditions give more weight to technical factors. The British approach typically favors economy (Table 3.3). These perspectives strongly influence how airport planners and managers from these traditions build and operate airport systems, as the next section indicates. World travelers will recognize the differences from experience.
TABLE3.3 Some National Differences in Decision Makers and Performance Criteria