Elevating airport horizon: Managing air service development process

Douglas Nyekete

Last week, I articulated the Air Service Development (ASD) strategy as a critical tool for growing airport business and enhancing route connectivity.
In this article, I unpack the ASD process in detail and examine how strategies are financed.

Financing the Air Service Development Strategy
In the African context, ASD strategies face unique hurdles such high operational costs, fragmented regulations, and a historical lack of connectivity.
Many African airports financing models have shifted toward Public-Private Partnerships (PPPs) and Risk-Sharing to bridge the gap. The financing strategies used for other project like decarbonization basically apply to the financing of the ASD.
Airports traditionally draw financing from a variety of sources outside their own retained profits and capital reserves.
The budget to support ASD is generally not huge compared to other airport projects. State-owned airports receive state funding and most airports of sufficient size look to financial markets, private capital or regional banks for financial support.
Global financing support is another source of financing.
African Civil Aviation Commission (AFCAC) received support of 5 million Euro from European Aviation Safety Agency (EASA) meant to accelerate outstanding and new actions under SAATM Joint Prioritized Action Plan.
While the specific financing options available to an individual airport may vary, there is a range of funding sources that support Air Service Development Strategy. Incentive-Based Financing (Landing Fee Waivers). Almost all successful ASD strategies in Africa utilize a tiered incentive model rather than upfront cash.
According to ACI 68% of the airports offer incentives that include rebates, volume discounts, as they compete for airlines.
Instead of the airport giving the airline money, it simply foregoes revenue to lower the airline’s overhead during the critical startup phase of a route.
ASD development process
ASD strategy is generally built on a rigorous three-pillar framework: Diagnostic, Strategy defining, and Implementation.
1. The Diagnostic: Understanding Our DNA
This is the stage that looks inward and outward of the aviation industry for a particular country. The diagnostic phase is the bedrock of ASD strategy, ensuring growth plans are rooted. Zimbabwe had so far designed targeted ASD plan meant to drive tourism and aviation for RGM International Airport and the tourism hub Victoria Falls Airport. The most critical issues under diagnostic phase include among others:
• Benchmarking: This measures performance against peer airports to identify gaps in the service and competitive advantages in the catchment area.
• Historical Evaluation: By analysing past traffic trends, seasonal fluctuations, and previous route successes or failures, this identifies patterns that inform future stability. National statistics offices are the most widely used individual source of data for airport route development purposes and are a useful and often free source of data on catchment area characteristics. Collectively, the most widely used sources are of true origin and destination demand and schedules data such as Sabre, OAG, IATA, Innovata and ICAO (Bhatia and Shukla, 2022) and ACI. Published reports and national aviation authority data from a civil aviation authority or government department are also widely used. A large proportion of airports have used ‘other’ sources including government/immigration records, BEONTRA, data from consultants, internal airport records, CAPA, Data Miner, Flight global, travel surveys, tourism/Chamber of Commerce data, IATA PaxIS and PTM data. Almost 85 per cent airports use a range of data sources for route development purposes. Researchers published by banks such as the World Bank, African Development bank and aircraft manufactures provides authentic useful information.
• Airline Intelligence: The potential airline partners information gathering includes their fleet capabilities, business models (LCC vs. full service), and existing network gaps, airline partnerships and code sharing approaches. This ensures that when route is pitched, it aligns perfectly with the airline’s long-term goals.

2. Defining the Strategy: From Data to Decision
Once the landscape is understood, we shift from analysis to selection. Implementing the bilateral Air Service Agreements (BASAs) is key for market development. Countries don’t just want any traffic; they prefer sustainable traffic.
• Identifying Opportunities: The diagnostic phase pinpoints unserved or underserved markets where a clear “business case” exists for a direct connection. The Airport Master Plan focuses on the future of the airport while the ASD strategy focuses on the commercial future, these two must perfectly synced. An effective Master Plan supports the ASD strategy through capacity validation, risk mitigation, and airport competitive positioning. Situations where ASD strategy targets heavy aircraft like A350, the Master Plan must confirm the availability of runway, payload capability and equipment capacity.
• Estimating Demand: Using advanced data analytics, we quantify the “leakage” (passengers using other airports) and the potential “stimulated demand” that a new service would create.
• Prioritization: Not every route is viable today. We prioritize targets based on their potential for economic impact, revenue generation, and strategic importance the economy.
3. Implementation: Turning Plans into Planes
A strategy is only as good as its execution. The implementation phase is where we take our value proposition to the market.
• The Communicating the Plan: We craft a narrative that speaks the language of airline executives, highlighting our market’s unique strengths.
• Active Engagement: Through international conferences and face-to-face meetings, countries build the relationships necessary to close the deal.
• Business to Business (B2B) Support Channels: Airlines don’t just launch a route and walk away. Airports should provide ongoing support through marketing collaborations and B2B channels to ensure the route becomes profitable for the airline as quickly as possible.
The Secret Weapon: The Business Case
The image of our strategy culminates in a critical tool: The Business Case. As airlines are engaged the goal is to “tell the airlines things they don’t know.” Airlines have their own data, but they don’t have our local insight. Airport master plans detail some of the critical aspects to be included in the business case. The Business Case provide:
• Granular demand statistics.
• Proposed itineraries that optimize aircraft utilization.
• Detailed traffic and revenue projections.
Bhatia and Shukla (2022) said, “A comprehensive package of incentives, operational support, successful engagement with airlines needs to be focused on: • Identifying and introducing the opportunity, • Providing robust traffic and yield forecasts, • Setting out key economic and/or leisure indicators that will underpin the proposed services, • Providing insights into airline route economics, • Ensuring the route can become financially sustainable within a reasonable timeframe.”

Implementation of SAATM is one of the key enablers of the African Continental Free Trade Area leading to sustainability of the Africa’s air transport. The ASD strategy if fully supported by the full implementation of SAATM could build a strong aviation sector for Africa where airport remains a vital gateway, driving economic prosperity for African region and providing world-class connectivity for passengers.
Douglas Nyekete is a finance and airport operations specialist. He is Registered Public Accountant, a holder of Master in Aviation Management, Masters in Business Administration (MBA), BCom Accounting and Associate member of the Chartered Governance and Accountants Institute. He writes in his own capacity. He can be contacted on dnyeki123@gmail.com, Cell: +263717688336