How do Airports Charge for use of Their Facilities
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Join Date: May 2002
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Woofrey, that was a great explanation. Thanks
However 12 months ago there was no compulsion to park, now there is. Therefore revenues have been increased from short stay parking since 12 months ago.
Momentary lapse, yes, £43.60 doesn't buy much concrete, but multiplied by the over 4 MILION passenger departures, it does buy a fair bit of concrete.
My point is that airports should provide a service. Part of which should be to be collected in a civil way.
However 12 months ago there was no compulsion to park, now there is. Therefore revenues have been increased from short stay parking since 12 months ago.
Momentary lapse, yes, £43.60 doesn't buy much concrete, but multiplied by the over 4 MILION passenger departures, it does buy a fair bit of concrete.
My point is that airports should provide a service. Part of which should be to be collected in a civil way.
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Jemy, fair point about the service and expectations, I too would be a bit miffed about this as it does appear to be a bit "money grabbing".
In theory, the regulatory airports would either have included this income in their forecasts when setting the airport charges tariffs, or if they haven't, and it is genuinely "new money", they will be challenged by the regulator in the next review. The CAA have already said that they believe BAA can do better than the forecasts it has submitted for the next regulatory review, ( i.e. non aeronautical income is too low, leading to higher airport charges ).
Bear in mind though that the regulatory regime only applies to the SE Airports, I believe Scotland operate some kind of voluntary regulation ?
Regarding how far each £10.90 goes, it is used to pay for the terminal
infrastructure including forecourts (?), airfield facilities inc runways, taxiways, and lighting, operational staffing ( terminals, operations, security and engineering ) and other activities.
( p.s. I think you mean 4 million £10.90's )
In theory, the regulatory airports would either have included this income in their forecasts when setting the airport charges tariffs, or if they haven't, and it is genuinely "new money", they will be challenged by the regulator in the next review. The CAA have already said that they believe BAA can do better than the forecasts it has submitted for the next regulatory review, ( i.e. non aeronautical income is too low, leading to higher airport charges ).
Bear in mind though that the regulatory regime only applies to the SE Airports, I believe Scotland operate some kind of voluntary regulation ?
Regarding how far each £10.90 goes, it is used to pay for the terminal
infrastructure including forecourts (?), airfield facilities inc runways, taxiways, and lighting, operational staffing ( terminals, operations, security and engineering ) and other activities.
( p.s. I think you mean 4 million £10.90's )
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Manchester is also regulated, on the premise that at the time, it was a monopoly provider in the north.
Since the success of LPL, Finningley, EMA etc. MAPLC is challenging the need to still be regulated, arguing that there is now competition in the north. Indeed, even with regulation keeping the charges down, MAPLC is still losing out on price to other airports, even after Mr Spooner dropped prices even lower than the regulator demanded.
Since the success of LPL, Finningley, EMA etc. MAPLC is challenging the need to still be regulated, arguing that there is now competition in the north. Indeed, even with regulation keeping the charges down, MAPLC is still losing out on price to other airports, even after Mr Spooner dropped prices even lower than the regulator demanded.
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Usually, fees such as the development are simply added on top of the other fees airlines collect as "fees and taxes" on behalf of third parties (although a fair amount of these taxes a) technically are not "taxes" and b) are stealth taxes pocketed by the airline rather than passed on).
With airlines being more and more forced to include these taxes and fees in the price they quote right from the beginning of the booking process and in ads - and with these fees escalating more and more, making travel more expensive -, they are obviously reluctant to collect any additional fees - such as the "development fee" - on behalf of the airport. Remember the drama with Ryanair and Knock and Kerry airport when they both introduced "development fees".
If the airline is unwilling to collect this fee, the airport's logical solution would be to simply raise handling and landing fees the airline has to pay. Not a smart move nowadays, with more and more regional airports being totally dependent on one or two low cost carriers - that usually threaten to stop services etc etc. whenever such an idea is entertained by the airport.
So the solution is to look for the weakest link, which is the passenger. Will he be seriously annoyed to be forced to pay the fees? Yes. Will he stop using the airprt because of that? 99% will moan and groan, but will keep on using the airport.
If you think the whole thing through, in theory you could have airlines offering just the tickert for a. say, 10 quid fare, and before you enter the plane, you will have to pay a fee separately to:
- the car park operator
- the airport authority for using its terminal
- the handling agent to check you in
- the security company to strip search you
- possibly another handling agent that is doing the airside work
- [add whatever additional ides you have]
.... and the whole set again on arrival at your destination.
With airlines being more and more forced to include these taxes and fees in the price they quote right from the beginning of the booking process and in ads - and with these fees escalating more and more, making travel more expensive -, they are obviously reluctant to collect any additional fees - such as the "development fee" - on behalf of the airport. Remember the drama with Ryanair and Knock and Kerry airport when they both introduced "development fees".
If the airline is unwilling to collect this fee, the airport's logical solution would be to simply raise handling and landing fees the airline has to pay. Not a smart move nowadays, with more and more regional airports being totally dependent on one or two low cost carriers - that usually threaten to stop services etc etc. whenever such an idea is entertained by the airport.
So the solution is to look for the weakest link, which is the passenger. Will he be seriously annoyed to be forced to pay the fees? Yes. Will he stop using the airprt because of that? 99% will moan and groan, but will keep on using the airport.
If you think the whole thing through, in theory you could have airlines offering just the tickert for a. say, 10 quid fare, and before you enter the plane, you will have to pay a fee separately to:
- the car park operator
- the airport authority for using its terminal
- the handling agent to check you in
- the security company to strip search you
- possibly another handling agent that is doing the airside work
- [add whatever additional ides you have]
.... and the whole set again on arrival at your destination.
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Virgin Blue - good points.
Not long ago an Irish carrier tried to force it's handling agents into agreeing to be paid on a per bag loaded basis. Can you imagine trying to staff, provide ground equipment etc. with no guarantee of revenue?
All service compaies on airports suffer from very high rentals. Some of the floor space in UK airports is at the top of the retail rental market, never mind the turnover % that is raked off as well.
Jemy seems to miss one vital point. The arriving passenger does not pay any fees within the UK. Granted the carrier pays for their arrival but the PLS charges are levied on departing passengers only.
The Norwich initiative is up front and needed. Hats off to them for their honesty.
I suppose it comes down to the fact that airports need to raise monies. How they do it will always be contentious in some areas but reality is that they will raise it one way or another. If it's not from car parking it will be somewhere else. At least the car parking charges give people a choice to as to how much they want to pay.
Not long ago an Irish carrier tried to force it's handling agents into agreeing to be paid on a per bag loaded basis. Can you imagine trying to staff, provide ground equipment etc. with no guarantee of revenue?
All service compaies on airports suffer from very high rentals. Some of the floor space in UK airports is at the top of the retail rental market, never mind the turnover % that is raked off as well.
Jemy seems to miss one vital point. The arriving passenger does not pay any fees within the UK. Granted the carrier pays for their arrival but the PLS charges are levied on departing passengers only.
The Norwich initiative is up front and needed. Hats off to them for their honesty.
I suppose it comes down to the fact that airports need to raise monies. How they do it will always be contentious in some areas but reality is that they will raise it one way or another. If it's not from car parking it will be somewhere else. At least the car parking charges give people a choice to as to how much they want to pay.
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Groundhand:
"Can you imagine trying to staff, provide ground equipment etc. with no guarantee of revenue?" You mean like the airport operator has to build and run a whole airport with no guarantee of revenue? Handlers can lease equipment on a contract that they can terminate at any time, and of course they can sack staff if there's no work. Airports can't give their bricks and concrete back to Jewson and get a refund, can they?
"Some of the floor space in UK airports is at the top of the retail rental market, never mind the turnover % that is raked off as well." I think you'll find that shop and services concession fees are based on turnover, with a minimum fee, and offices/ramp space etc. are usually flat-rate rented. I doubt any service partner pays rent and a concession fee.
"Can you imagine trying to staff, provide ground equipment etc. with no guarantee of revenue?" You mean like the airport operator has to build and run a whole airport with no guarantee of revenue? Handlers can lease equipment on a contract that they can terminate at any time, and of course they can sack staff if there's no work. Airports can't give their bricks and concrete back to Jewson and get a refund, can they?
"Some of the floor space in UK airports is at the top of the retail rental market, never mind the turnover % that is raked off as well." I think you'll find that shop and services concession fees are based on turnover, with a minimum fee, and offices/ramp space etc. are usually flat-rate rented. I doubt any service partner pays rent and a concession fee.
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Momentary Lapse
I take the points you are trying to make but GH companies can not, at economic rates, hire or lease GSE to be returned at a moments notice. Most GSE leases are fixed term. Renting for a 'spot' use market is not economic.
Very few airports in the UK have ever built 'on spec'. Expansion development normally follows massive over capacity in current facilities.
I do know of service partner agreements that have both rent and turnover rates.
Retail - agree but you can argue whether or not the minimum fee is just a different term for rent.
I've just paid, this afternoon, £6 for less than 2 hours in a short term car park at a regional airport. I knew I was going to have to pay this. Can't say I was happy but it is a fact of life. I know that if I'd not gone to the airport and I'd gone into my local city to shop it would cost just as much. I believe it is now £3.20/hr in the main carparks in the city centre.
I take the points you are trying to make but GH companies can not, at economic rates, hire or lease GSE to be returned at a moments notice. Most GSE leases are fixed term. Renting for a 'spot' use market is not economic.
Very few airports in the UK have ever built 'on spec'. Expansion development normally follows massive over capacity in current facilities.
I do know of service partner agreements that have both rent and turnover rates.
Retail - agree but you can argue whether or not the minimum fee is just a different term for rent.
I've just paid, this afternoon, £6 for less than 2 hours in a short term car park at a regional airport. I knew I was going to have to pay this. Can't say I was happy but it is a fact of life. I know that if I'd not gone to the airport and I'd gone into my local city to shop it would cost just as much. I believe it is now £3.20/hr in the main carparks in the city centre.
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I'm trying to get some figures so that I can demonstrate how unjustified it is for those who require to be collected by car at an airport to have their friends or relatives pay for a short stay in the pick up car park. I hope to write to my MP about this issue as I feel that BAA and NCP are extracting enough revenue from the travelling public.
I can't quite work out how any figures would justify anything as every airport is different. Some depend upon road access and others are well connected by public transport, so nothing is comparable between different sites.
Any enterprise will charge whatever revenue is possible to fill their operations to capacity: if it discourages you, then unfortunately, there are thousands of others who will and are paying, and justifying the existence of the charge.
Sorry to be so little help, but the government is not responsible for small minutae regulations that people are aggreived by. It is responsible for generating the climate that allows full competition to exist, and if you are aggrieved by BAA at all, you should be campaigning for the breakup up the monopoly that they have.
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Groundhand - fair point, but I hope we can agree that a ground operator can get out of his obligations at a far lower cost than an airport operator can get out of his.
Re speculative airport development - all airports, MAN for example, were speculative at the start. Finningley and STN were also speculative, the latter perhaps less so given the lack of capax at LON airports, but FIN was surely speculative given the spare capax at all its neighbours.
Re speculative airport development - all airports, MAN for example, were speculative at the start. Finningley and STN were also speculative, the latter perhaps less so given the lack of capax at LON airports, but FIN was surely speculative given the spare capax at all its neighbours.
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Momentary Lapse
Our common ground expands all the time.
DSA development had THY commitment to base aircraft before any work on the terminal and infrastructure started; also believe that FR had committed (albeit they probably don't actually pay!) prior to development.
Thinking back - Sheffield (ah, remember that white elephant) was probably purely speculative as it took a lot of persuasion (£££) to get KLMuk to start. At what cost was that little exercise to the local rate payers?
I do agree that in the early days it was all speculative.
Good to have a debat though - have spent more of my life on the M1/M6/M56/M62 corridors than I'd like to calculate.
Our common ground expands all the time.
DSA development had THY commitment to base aircraft before any work on the terminal and infrastructure started; also believe that FR had committed (albeit they probably don't actually pay!) prior to development.
Thinking back - Sheffield (ah, remember that white elephant) was probably purely speculative as it took a lot of persuasion (£££) to get KLMuk to start. At what cost was that little exercise to the local rate payers?
I do agree that in the early days it was all speculative.
Good to have a debat though - have spent more of my life on the M1/M6/M56/M62 corridors than I'd like to calculate.
