Conducting business at airports - issues to ponder upon
Dr. Ruwantissa Abeyratne
Airports serving travelling public while catering to their
commercial needs
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More and more, airports are evolving from being basic aeronautical
infrastructures into complex multi-functional enterprises serving the
travelling public while at the same time catering to their commercial
needs and those of others who visit the airport. Such enterprises
include duty free shops, specialty retail and brand name shops,
restaurants, hotels and accommodation, banks, business and office
complexes, leisure, recreation and fitness centres just to name a few.
For instance, Hong Kong's international airport, has more than 30
high end designer shops. Singapore's Changi International pampers the
human' physical fitness cravings and the continuing need for
entertainment by hosting cinemas, saunas and even a swimming pool in the
airport itself. Frankfurt has the world's largest airport clinic having
the facilities to serve 36,000 patients annually while Detroit
Metropolitan Wayne County has a 420 bedroom hotel in its main concourse.
Munich airport has its own hospital while Amsterdam Schipol has a Dutch
master's gallery. Beijing has quite a few banks carrying on business
within the terminal building while Stockholm's Arlanda airport
solemnized marriages and officiated over 450 weddings in 2008 in the
vast Chapel located within the terminal.
Operational management
All this is of course due to the fact that the average air traveller
is more affluent than the non traveller (they have higher incomes,
typically three to five times the average) and a busy airport has scores
of them continuously flowing through the airport. This has prompted
airport managers to re structure their operational management. For
example, many airports have established separate real estate management
and property units and divisions to capitalize on their landside
commercial activities and enhance real estate values. One of the
foremost in this area is Aeroports de Paris which established its real
estate division in 2003 to manage landside commercial activities coming
under the purview of the airport both in Paris and Orly. Some others
have aggressively put in place free trade zones, customs free zones,
golf courses, child and day care centres, factory outlet stores and
fitness centres. Amsterdam Schipol has also done the same in developing
its real estate potential to build large office complexes, meeting and
entertainment facilities logistics parks, shopping and other commercial
activities.
Beijing Capital International Airport, which built its Terminal 3 for
the 2008 Olympics, is coming up as one of the busiest airports, and is
going ahead with building its Capital Airport City, which will provide
shopping, entertainment, education, sports and leisure activities while
accommodating activities related to commerce, finance trade and housing.
Dallas Fort Worth (US) has concentrated its activities in the field of
real estate development as a profitable adjunct to its traditional
airport activities. Hong Kong airport's SkyCity is a colourful and
fabulous project, which will contain a million square meters of retail,
exhibition, business, office and hotel complex very near to the
terminal. This complex will also accommodate cinemas and mini theme
parks.
Yet another spectacular development is the airport city of Kuala
Lumpur International Airport which will be commercially held together by
its large Gateway Park. This Park will host office complexes retail
stores, an automotive hypermarket and leisure venues which will cater to
the aviation and non aviation market in the city. In Seoul, Incheon
International Airport would have its own mega complex in its Winged City
which provides for large business areas, shopping and tourism districts,
housing and medical services for airport workers and residents.
Business areas
While still in Asia, Suvarnabhumi, the Bangkok International Airport,
has an entire airport city within the boundaries of the airport that
houses an international business centre, international conference and
exhibition complex, shopping malls, car parks, hospitals, restaurants
and a large entertainment centre.
It is clear that what these airports are doing is merely anchoring
their strategically placed airport resources and potential on a
metropolitan commercial business district (CBD) formula to create
employment and generate revenue. This is a highly lucrative and
eminently strategic commercial practice among the major airports of the
world that are aware of the trends with regard to passenger movements in
their terminals.
Who are the airports clients? Airports are a complex, big business.
The first element in the airport business equation is the customer and
it is therefore a good starting point to determine who the customers of
the airport are. It is incontrovertible that airline passengers generate
the bulk of the concession revenue and that the airlines who bring them
would normally generate most of the rental or lease income. However
other market groups are by no means inconsequential.
Airport employees
Airport employees who work for airlines, the airport authority, the
concessionaires and other enterprises within the airport premises form a
substantial customer category although their modus vivendi in purchasing
goods and services, particularly from the concessionaire stores could be
different from those of the passenger. While the former would look for
convenience in buying goods in house during their work breaks without
having to travel to the local stores and supermarkets in their
neighbourhoods, the latter would buy gifts to take home. A good example
of an airport which caters to the airport employee is Frankfurt Airport
which has released the statistic that employees working at the airport
spend approximately 15 percent of their net household income at the
airport's shops and service facilities.
Airline crews are another category of customer, particularly at
larger airports where crew movement is prolific. Their needs are mostly
work related and they may look primarily for clothes stores, dry
cleaning, shoe repairs, hair-dressing salons and tailors in addition to
some goods that are in demand for airport employees. Another category of
customer is the person who goes to meet and greet an arriving passenger
or one who goes to drop off a passenger. The meeter who comes in early
and finds himself with time on his hands until the arrival of the flight
in which the passenger whom he meets is travelling, could well stroll
around and purchase goods that he needs or is attracted by. The same
goes for the person who accompanies a departing passenger and hangs
about until the passenger is admitted to security clearance. A prime
attraction in this regard is the restaurant as well as other catering
outlets. Airport shops would usually have much longer opening hours than
other shops offering goods and services to local residential areas,
which could in turn attract visitors to the airport who would come in
for the convenience of shopping after hours. Although not as significant
as the ones already mentioned, this category of customer could include
local residents who are attracted to the airport by the convenience of
late shopping hours at airport shops, unlike those of their neighbouring
supermarkets and shops. Today's airport, in its typical form, is
primarily a commercial entity and operates as a business oriented
entity. Most airports provide retail shops and parking facilities not
only for airline passengers and their visitors but also to residents of
the area. They are, in this sense, as much profit centres as are such
retail outlets as K'Mart and Walmart. In addition, there are also
airport free zones which are bonded areas, adjacent to the airport
premises which, as the name suggests, are duty free areas promoting
industry and other commercial activity. Are Airports Public Places to
Conduct Open Business?
Key issues
We have discussed various aspects of the airport business and law.
One factor remains to be discussed and that pertains to the approach of
the airport executive to the public who uses the airport. Does a
passenger consider the airport private premises that only permits him to
embark or disembark and airport? Could the public consider the airport a
public place where they could conduct their own private business? Or
solicit contributions? The 1992 case of International Society for
Krishna Consciousness v. Lee where a regulation of the Port Authority of
New York and New Jersey, which owned and operated three major airports
in the New York City area and controlled certain terminal areas at the
airports, prohibited repetitive solicitation of money in the premises of
the airport terminal but did not prohibit such activity on the sidewalk
outside the terminal building, the members of a religious sect who
solicited contributions in the terminal building were brought to court.
It was observed by the court that the First Amendment historically
protected various kinds of speech, including the charitable solicitation
of money and the distribution of literature. The Hare Krishna movement,
which requires that its members solicit money and distribute literature,
had routinely turned to airports as one place to beg and proselytize
simultaneously. The court further observe that travellers making their
way through the airports were likely to be confronted not just by
Krishna groups but by a host of other individuals either seeking funds
or pressing a spiritual agenda or both.
The Port Authority of New York and New Jersey beginning in the 1970s
attempted to ban these activities. The Krishnas, however, had been
successful in defending themselves in every other federal jurisdiction
save the federal Court of Appeals for the Second Circuit in Manhattan,
whose judges had sustained the Port Authority's ban on begging but
overturned another provision that prohibited the distribution of
literature as a violation of the First Amendment.
The key issues before the Supreme Court involved the question of
whether an airport could be construed as a public forum under the First
Amendment. The Court's precedents in this area held that such a forum,
like a park or a street corner, had greater protection from government
interference than did a so-called non-public forum. If an area was
designated a public forum, then government had to prove a compelling
state interest in order to regulate speech there; if the area was a
non-public forum, then government could regulate speech as long as its
actions were reasonable.
Security requirements
Chief Justice William H. Rehnquist's opinion for the majority of the
court held that airports were not public forums. Airports were subject
to special security requirements and their terminals were meant to serve
travellers and employees, not the public at large. Therefore, the Port
Authority had the power to make whatever reasonable regulations it
thought necessary to avoid congestion and disruption to passengers
seeking to board planes, claim luggage, or purchase tickets. It was also
held that the Port Authority's ban on solicitation is reasonable.
Solicitation may have a disruptive effect on business by slowing the
path of both those who must decide whether to contribute and those who
must alter their paths to avoid the solicitation. In addition, a
solicitor may cause duress by targeting the most vulnerable persons or
commit fraud by concealing his affiliation or short-changing purchasers.
The fact that the targets are likely to be on a tight schedule, and thus
are unlikely to stop and complain to authorities, compounds the problem.
The Port Authority has determined that it can best achieve its
legitimate interest in monitoring solicitation activity to assure that
travellers are not interfered with unduly by limiting solicitation to
the sidewalk areas outside the terminals. That area is frequented by an
overwhelming percentage of airport users, making petitioner's access to
the general public quite complete. Moreover, it would be odd to conclude
that the regulation is unreasonable when the Port Authority has
otherwise assured access to a universally travelled area. While the
inconvenience caused by petitioner may seem small, the Port Authority
could reasonably worry that the incremental effects of having one group
and then another seek such access could prove quite disruptive.
The dissenting judges, led by Justice David H. Souter, argued that an
airport was undeniably a public facility and that solicitations could
not be banned inside or outside of it. Justice Souter argued that the
airport lounge was the modern-day equivalent of a city park and that his
colleagues should treat it as such. All this leaves one to conclude that
the fundamental premise of airport business law is that airport builders
and managers look at airports as business enterprises that contribute to
efficient air travel. The terminal is used to enable passengers and
freight to connect with aircraft for their transportation on departure
and to connect with ground transportation on arrival. As such airport
business law must take into account elements that are not exclusively
related to the carrying on of a business, but also those principles that
are essential for the safer, secure and efficient running of an airport. |