Conducting Business At Airports

l Dr. Ruwantissa Abeyratne

The Hong Kong International Airport is very clean, modern and impressive. It offers a huge array of services that are enjoyed by travelers who are entering and leaving Hong Kong.

Nature of the Modern Airport

(January 29, Montreal, Sri Lanka Guardian) 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’s 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.

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.

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 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 per cent 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?

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.

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.