Free The Impact of Airport Terminal Expansion on Customer Services as a smart airport Dissertation Example
1. Overview of Asian Airport Industry
Global airport industry has taken a long journey through development which is transforming the entire domain of national and international travel. With people taking trips from one part of the world to the other, countries are trying to accommodate these travel attempts to the maximum possible extent. According to Gitto & Mancuso (2012, 40), when it comes to air travel, airports play a crucial role in making the journey comfortable because they are responsible for the transit stay of travellers. In Asia, the airport industry has made incredibly impressive progress lately and compared to a few decades ago, the airports in Asian countries are now way more developed and accommodating in nature (Starkie, 2008, 15). There is a wide variety of literature that covers the Asian airport industry and talks about how much progress it has made.
Clayton (2018), reported that with a rapid economic growth in the Asian region, the commercial sector is becoming more and more competitive by the day. In that context, the travelling sector of Asia has transformed to a full extent as well. Being one of the fastest growing regions in the world, Asia has a vast potential in attracting travelers from across the globe. It is something that makes the travel sector of the region inculcate growth even more. By 2020, it is forecasted that Asian economies will become the fastest growing economies that will influence the travel sector to an equal extent. With that into account, governments and policymakers in Asia are putting more focus on ensuring that future needs are handled in advance and systems are developed in a way that they grow potential for future demand surges (Forsyth, et al., 2011, 52).
In the 1970’s, most Asian economies were closed and did not have enough exposure to the outer world. However, with more open economic policies applies across the continent, flow of labor and goods became common to and from Asia which was an initial stage for the travel industry to liberalize itself. Right now, around 41% of the world middle-class lives in Asia and this number is expected to increase by almost 70% by 2033. It means possible income growth, catching up with the developed countries and more mobility of people living in the Asian region. Many countries within the region are already taking measures into account to contain future growth and get a hold of any unpredictable market scenarios which also includes forming newer travel policies (Low & Tang, 2006, 262).
Current observations of Asian airport industry by Bottasso & Conti (2012, 320) show that the aircraft fleet in the region will grow at an exponential rate shortly. The overall airport infrastructure in the Asian continent is becoming more advanced and to avoid capacity strains; countries are developing airport capacities to develop in short and a long-term as well. Something that makes it a necessity for airports to develop their infrastructure in Asia is the increase in traveller base at an unexpected rate. There have been many cases of flight delays in Asia due to smaller capacities. For instance, in 2013, the percentage of flights that was on time in Asia was only 57% which means that about half of the flights were not in time, requiring a capacity expansion.
2. Airport Terminal Expansion
2.1: Strategy-Making for Terminal Expansion
When it comes to developing a strategy for airport expansion, there are a variety of factors that should be kept into account based on the country. Arfi, et al. (2013, 3), provide evidence that there is a large number of airports in Asia that are operating below their capacity including the international airports of China, Singapore, Dubai, Delhi and many others. Clayton (2018) mentioned that 2013 was explicitly a year of international travels to and from Asia and only in China, the number of flights that were on time was less than one-third. With that challenge, Asian countries are coming up with strategies that can allow them to address the high customer needs. For instance, it is narrated that private aircrafts are becoming more popular in Asia as a strategy to overcome the customer burden in these countries (Charlton, 2009, 119).
Another strategy being developed to address the higher needs is to set prices according to the traveler burden. For example, commercial flights and seats are charged more with higher taxes because of their higher demand in the market. Aviation in Asia is more active compared to North American and other developed regions and with the diversity of their economic systems, they are becoming main travel hubs of the world Neufville, et al. (2016, 211). That is one of the reasons that many airports in Asia including Beijing Daxing International, Al Maktoum International Airport, Hong Kong International Airport’s Three-Runway System, and many other projects are being developed so that the system can be made more efficient and growth-embracing.
Tran (2017) reported that Asian aviation market is the strongest on in the world which its strategic development even more complicated. In Asia Pacific, the airport industry is expected to account for more than 3% of the GDP growth in 20 years while region travel agencies in the South Asian markets will earn billions of dollars for their services. The overall business model of the Asian airline industry is very dynamic and is based on meticulous aviation policies. In that context, something becoming more popular in the countries is the low-cost carrier model (Brauwer, et al., 2017, 94).
Tran (2017) reported that this low-cost carrier model is a popular strategy in Asian countries as a way of dealing with higher customer demand. With their plan to handle more customers and meeting their needs, Asian airports are making an effort to come up with cost-effective strategies that can help them earn a higher profit. For instance, many airlines including Tiger Air, Lion Air, Vietjet Air, Cebu Pacific and Air Asia are cheaper airlines that provide the same services to the travelers. These lower costs help attract more travelers from the pool of increasing travelers and makes it possible for the airlines earn a higher revenue from the industry (Tsui, et al., 2014, 20). This is a good strategy for a long-term travel model because it allows airlines to increase their customer base and increase revenues.
2.2: Contextual Analysis
It is mentioned by Berry, et al. (2002, 87) that global context is crucial for the Asian travel industry. That is so because with the higher customer base in the world and many people mobilizing to and from the Asian countries, the future of Asian travel industry is dependent on the global travel context. Aviation Benefits (2014), reported that in the Asia Pacific, travel industry provides jobs to around 30 million people and a total of $626 billion are contributed to the Asian GDP in total. Out of the total labor force in Asia, around 30% is associated with the travel industry which is a vast number.
With more than 1 billion travellers every year and more than 10 million flights in a year, Asian market has thousands of aircrafts in service which puts it into a good spot for an international level performance. It is argued in the literature that depending on the current growth rate of the Asian travel industry; there is a bright opportunity for the sector to make its market in a global context and provide employment to an even large group of people. The global share of Asian travel industry is growing at a rapid rate which is making it essential for the industry to improve its supply chain and procurement of goods and services (Pantouvakis & Renzi, 2016, 93).
According to Connor (2005, 272), Asian travel industry and terminal expansion are leading to a stronger connection within and across cities in the Asian countries. Many Asian countries, especially the ones falling in the second world category are installing advanced systems in their airports to ensure a smooth transition from primary to advances travel systems. Additionally, infrastructural growth and expansion purely regarding land and area are given special importance in these countries. By analyzing the patterns of travelling and customer demand, countries like Bangkok and Hong Kong are making their airports broader and more substantial in space to ensure that travellers do not face any issue.
Being a growth engine of the world travel industry, the Asian market is said to be in high demand for expanding its infrastructure. It is mentioned by Salikha (2018) that Asia has the highest number of new airports and airport expansion in the world. With this rate of expansion, it is possible that the Asian market will surpass the American airport system and will become a leader in national and international travel. By 2036, passenger journeys in Asia are expected to reach more than a billion that will accommodate a significant portion of the economy. Most of the airlines in Asia order new aircrafts on a constant basis and are adding more and more jets in their reserves in a continuous manner, and some of the most popular aircrafts in the Asian market include Airbus, Boeing and Bombardier CITATION CAP18 l 1033 (CAPA, 2018).
3. Smart Airport Linked to ICT
3.1: Incheon Airport
Incheon Airport is an international airport in South Korea and is a primary airport in the capital city of Seoul. This is the largest airport in the entire country and is falls into the category of one of the busiest ones in the entire world. Given the title of the cleanest and best airports in the world by Airports Council International and Skytrax, the airport provides a large number of facilities to its visitors including spa, golf course, sleeping rooms for passengers in their layovers, ice skating courses, gardens, casinos, museums representing the Korean cultures and countless other services. It is reported that every 19 minutes, an arrival takes place at the airport while a departure occurs every 12 minutes. Globally, this number is more than 40 minutes for one of the largest airports in the world and 60 for some as well (Bottasso, 2011, 500).
Lui (2017, 76) argued that being one of the fastest airports in the world, it has a custom system faster than many global airports in the world. Considering the global context, Incheon Airport is an example of a highly advanced international airport that can accommodate a large number of travelers without any apparent hassle. With that into account, authorities are making efforts to incorporate more and more Information and Communications Technology (ICT) into its infrastructure. That is so because the integration of more ICT will make it more advanced and make it easier for the airport to stay ahead of other airports trying to catch up. The airport is already almost perfect and use of ICT will pave the way for future growth. Something very exciting about the airport is that it is constructed on an artificial land in the west of Incheon city in South Korea. Right now, it has 111 boarding gates and 44 terminals that make it easier to segments various flights and departing and arrival locations (Williams, 2011, 233).
3.2: Smart Airport and ICT
Chen, et al. (2017, 211) mention that Incheon International Airport was not like this from the very beginning. There was a time when the airport was just in its early stages of development in 1992, and by 2006, tests on runways and taxiways were being done to make sure that it is in a safe working condition. After that, the airport went through many developmental stages that turned in into one of the most develop airports in the world. Right now, the airport has all the ICT including smart bag-drop, self-check-in, high tech stores, virtual agents, smart TVs in passenger lounges and many more.
In a global perspective, integrating mediums of ICT in the airport industry is one of the most crucial factors responsible for a long-term growth. That is so because travel industry is already dealing with high-tech devices and infrastructure that is allowing smooth travel of passengers from one location to another. In that context, the airports are responsible for making sure that the communication with its customers is efficient and there are no loopholes that make the passengers lose their interest and trust in the airport services. This also pertains to the security measures at the airport and poor ICT measures can expose an airport to many potential threats (Alberts, et al., 2017, 101).
Baskas (2018) reported that the use of smart technology is something that made the Incheon International Airport made its way up the ladder. For instance, its Terminal 2 has dozens of self check-in machines that allow the passengers to check in automatically and save them plenty of time. First class passengers have their separate check-in booths and high-tech waiting lounges as well. With the smart bag-drop banks, passengers do not have to be worried about their bags and can immediately get rid of them as they enter the airport. After that, they can easily walk around the vast airport and get involved in variety of activities including shopping. There are robots that are used to direct passengers to their gates if they are lost while smart ways of internal heating and ventilation are used to make the terminals hygienic and natural CITATION SAi18 l 1033 (S Airport, 2018).
3.3: Growth Factor and Efficiency
With the use of ICT and advanced technology, the overall growth factor of any airport is said to increase to a wider scale. According to Shin (2017) something that makes an airport efficient and have a higher growth factor is the integration of ICT or any kind of advanced technology that makes the overall functioning of the airport faster. This is so because time crunch is one of the biggest problems for airports in the current global scenario. Especially for Asian airport where there is already a struggle for higher customers and expanding capacities, the value of time is much higher for these airports. That is why installing advanced technologies is something that can make it easier for these sites to accommodate customers at a faster pace. For instance, self-check ins and smart baggage drop points are clear examples of smart technologies at Incheon airport. Check-ins and baggage drops are some of the most time-consuming processes at an airport and turning into a smarter step is something that can actually make an airport smarter (Sol, 2018).
The use of artificial intelligence and robots is something taking the world by storm lately. Incheon Airport is adopting the same thing to grow in size and also in efficiency-drawing an example for the rest of the world. According to Young (2017), installing smart robots at the airport to guide the passengers is something that played a significant role in making the South Korean airport a world leader. It is a height of incorporation of smart technology into something that is majorly based on human services. These robots can be used for other services as well including food serving, helping with check-ins, carrying baggage, shopping assistance and other services as well. It is something that is playing a significant part in the growth factor of the airport and elevating its efficiency level (Lam, et al., 2009, 649).
Literature Review II
1. Customer Service at Airports
1.1: Customer Service and Meeting Customer Demand
According to Jimenez, et al. (2014, 951), travel sector falls within the category of the hospitality industry, and that is one of the reasons that customer service is of very high importance in this sector. Starting from the very initial step of a journey till the very end, everything is based on a customer service experience ranging from booking a ticket, checking in at the airport, getting on the flight and going to your hotel of stay. That is the reasons that airports have to ensure that their customer service is of very high quality to ensure that not at any point passengers feel that there is a lag in the quality of service.
It is reported by Arfi, et al. (2013, 3) that superior customer service leads to higher customer satisfaction which makes the entire travelling experience elevate in the eyes of the passenger. It is essential for the airports and the travelling industry because customers are the ones responsible for rating the airports and their services which eventually leads to the overall ranking of a specific airport or an airline. To be able to understand how customer service can maximize the utility of travellers, airport management needs to understand the common challenges that customers face while travelling. Identifying their common challenges can make it possible for an airport administration to make their experience better by coming up with smart and efficient solutions that solve their problems even before they emerge (Martin & Dorta, 2011, 384).
Overall profits and sales of any airline and airport depend on the number of passengers it gets in a given period. With that in mind, it should be considered that when a passenger gets an excellent experience, he is more likely to come back and take that airline from that specific airport based on the overall experience (Garaham, 2016, 139). In this context, it is argued by analysts and travelling experts that a large number of customers does not care about the prices and would be willing to pay a little higher amount just because the service at that airport is better than others. It makes it easier for airports to understand that along with speed and efficiency, customer service is one of the most crucial factors that attract customers and increase the traveller base of any airport (Bell & Luddington, 2006, 221).
1.2: Competing Globally with Exceptional Service
Customer service is said to be a way to do branding of the airport in the national and international travel industry by Rapti & Medda (2011, 8). That is so because whenever an airport gets new travellers, they would set their expectations about it and will also rate it according to their experience. After they have left the airport, there is a high chance that these passengers would discuss their experience with their friends and family members. In this way, anything that the passengers experience at the airport will stick to them, and they will leave the traces in their community as well.
Customer experience and their tendency to share their experiences in the global community is a reason that airports have to be very careful about their services. Anything that goes off track stays with the customers and can hinder the overall growth of the airport (Chang, et al., 2008, 71). For instance, if the passengers had to wait in a long line for no apparent reason or the flight was delayed because of the mismanagement of the airport, customers will blame everything on the management of the airport. In these cases, some customers will be more affected compared to others based on their purpose of travelling. For example, if someone is travelling in a state of emergency, has to be somewhere and the airport is being responsible for the delay in flight, the customer will be extremely frustrated and will develop a negative perspective about the airline (Berry, et al., 2002, 87).
Global competition in the airline industry regarding customer services is increasing at an exponential rate. Airports across the world are seen to be hiring a large number of the labor force to ensure that they have enough people accommodate a large number of visitors in a single day. It is argued by Choi & Park (2014, 208) that using smart technologies and services at the airport is one of the most useful ways to attract more customers from across the world and the South Korean airport is doing the same thing. When an airport has powerful smart technology across the capacity, customers get an impression of efficiency about the facility and want to visit again due to the experience. This is something that airports across the world need to be mindful if they want to progress in the global market and become a world leader (Chang, 2010, 342).
2. Airport Service Quality
2.1: Maintaining Service Quality
Albalate & Fageda (2014, 6), mentioned that when it comes to airport service quality, something worth noticing mentioned in the literature is the idea of sustainability. Whenever an airport provides an excellent service to a new customer, the person would expect a similar experience the next time he visits the airport. Therefore, sustainability in its customer support and services is very crucial for the rapport of an airport. If the customer received a good service one time and a terrible one the other, it gives an impression of lower and unstable service provision about the airport that leads to a lower customer turnaround rate.
In their research, Fodness & Murray (2007, 500) argued that travellers these days make a very thoughtful choice for their travel agency, airline and airport as well. With an increasing trend of urgency in travelling activities of passengers, they expect the flight schedules, terminals, routes, pricing, location and other factors to be on point. This is so because, with the rising competition between the travelling channels and airports for global dominance, customers expect the airports to provide premium services and meet their need. In that case, if a high-quality service is not provided by the airport, it leaves a lasting impression on the travellers and they might never to compromise quality and change their choice of the airport (Hussain, 2012, 31). Duval (2016, 87) also use the gap theory to estimate the quality of service an airport delivers to its visitors. An overall expectation matrix is taken, and the service quality matrix is subtracted from it to calculate the real overall level of quality of the service. A higher gap reality vs expectation leads to a lower level of service quality delivered to the customer which means that a lower number of customers will visit the airport in the future.
It is mentioned in the literature that at airports, something that can lift up the service quality of airports is the displays across all terminals. Out of the total number of travellers, some percentage is also travelling for the first time and do not know how to move around at an airport. In these cases, how bright and self-explanatory the displays and signboards at an airport play a vital role in providing quality service and meeting customer needs. Many research studies have argued that if the displays are not good enough and travellers have to reach out to other people constantly to find the right way at the airport, they are most likely to develop a negative perspective about its quality (Rendeiro & Cejas, 2006, 875). 2.2: Meeting Customer Expectation
Meeting customer expectations is the core business function of an airport because all the business operations of an airport surround travellers. If customer expectations are not met, it means that the airport is not doing enough build a rapport with the traveller community. In that regard, something pretty standard is a spiral effect which makes the experience of one traveller trickle down to other travellers who have never even been to the airport. For instance, if someone has had a great experience at an airport, he would go ahead and tell his community about it through word of mouth. It will drive more travellers that have never been at that specific airport. These new customers who visit the airport only by the experience that their peers have had, they would have certain expectations with the airport. If these expectations are not met, it will leave an adverse impact on these travellers, and they might never come back (Moon, et al., 2016, 200).
According to Bezerra & Gomes (2016, 90), regarding customer expectations and quality service, this concept is considered more important for frequent travellers by analysts than one-time customers. This is so because retention of one-time travellers is decidedly lower and they might also not have very high expectations from the experience and more interested in the final destination. However, since frequent travellers are more aware of the market dynamics, they are choosier in the process and analyze these airports meticulously before finalizing their travel plans. Therefore, frequent travellers are said to be more prone to building expectations and driving retention compared to other. It is one of the reasons that airports have started to come up with strategies to remember the travelling patterns of their frequent traveller and accommodate them according to their regular patterns (Moon, et al., 2016, 196). For instance, if a class passenger likes to eat salmon when he is waiting for his flight, the airport lounge staff will have all his information saved and will retrieve it whenever that person visits just because they want the customer to notice that he is remembered and cared about.
3. Airports’ Marketing Strategy
3.1: Marketing Requirement for an Airport
According to Jin-Woo & Se-Yeon (2011, 9), marketing strategies play a vital role in the development of customer base for any airline. With a high-quality service, airports have to deliver excellent market strategies and tactics for its regular and one-time customers to ensure that they decide to come back. With that in mind, something worth-noticing is the type of passenger and market techniques. For instance, marketing for a regular passenger would be different compared to a one-time visitor. On the other hand, people getting off at the airport and transfer passengers should also be targeted in different market tactics because of their travel tendencies. Many argue that even if a traveller has not visited an airport, marketing strategies still make it possible to penetrate into the market and let the potential customers know about the services that will be offered to them. Structural models of marketing in the airline industry provide profound insights into the market practices in the sector for all departing, arriving and transferring passengers.
Analysts and travel marketing experts argue that there is a secure connection between the pre and post-purchase experience of customers. Every traveller, no matter if he is a frequent traveller or a one-time visitor will compare both his experiences and will determine if his overall interaction was right or not. This is where the marketing of the airline can prove to be a strong link. If the airport was vigilant in its marketing and was able to attract a more significant number of customers, it should have enough service quality to meet the expectation of these visitors so that they go satisfied.
3.2: Long-Term Market Strategy
Baskas (2018), mentioned that for any airport, no matter its current industry value and state, the literature states that long-term strategy and focus on the market provides a clear route to success and customer retention. The airport industry is going through a significant transformation in this modern era of globalization and worldwide social integration. In that context, it is crucial for airports to ensure that they go into the market with a strong strategy which applies to not only short-term but long-term market scenarios as well. Analysts suggest that technical efficiency is one of the most influential factors that can give a boost to the overall marketing activity of any airport. Since the entire business requires much technological involvement, customers expect the same from the airports, and if an airport fulfils their expectations about the technological advancement through the portrayal through the market, customers develop a positive perspective about that airport. On the other side, stakeholder engagement is essential for active marketing and long-term growth strategy which puts a substantial impact on the overall growth factor of the airport (Aleman & Jimenez, 2016, 15).
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