Canberra Airport Business Strategies - Case Study Example

Running Head: Climate Change and a Sustainable Business Future for Canberra Airport Name Institution Course Date In Australia, airports are part of key critical national infrastructure. Airports move people and cargo to different destinations in the country and beyond. They support economic development and commercial activity, enable responses to crises and emergencies in a timely manner, and at the same time provide infrastructure that helps in protecting the country. Due to these important functions that airports play, it is of national interest that air transportation sector members and stakeholders develop an internal capacity which is sustainable for purposes of operational resilience. It is imperative for cargo, non-hub, commercial service, reliever and general aviation airports to ensure continuity of their operations as disruptions leads to massive inconveniences and losses. Canberra airport is one of the airports in Australia that is of strategic importance to the air transport industry. Just like any other airport, Canberra airport faces strategic challenges as far as climate change is concerned. Although this is the case, the airport has been and continues to institute responses in ensuring that it remains competitive in the industry and have a business future. This essay discusses climate change and a sustainable business future for Canberra airport. In this context, this essay will discuss in an extensive manner the current state of Canberra airport, strategic challenges to its sustainability, major stakeholders and the strategic responses to climate change. Arguments will be supported by relevant academic sources. Canberra airport was set up in 1927 remaining in public sector until its privatisation in 1998 when Canberra born Terry Snow purchased it (Brown 2014, p. 235). The privatisation of the airport saw general aviation precinct expansion, passenger terminal upgrade, runway widening and building of new freight facility. It then began on ambitious projects of constructing Majura and Brindabella business parks which have since seen extensive development. It opened a new terminal covering 55,000m2 including 10 passenger aerobridges, 6 baggage carousels, 3300 car parking spaces and 34 check-in counters in March 2013 (Canberra Airport 2014). Due to the significant projects it has undertaken in the recent past, Canberra airport now plays a key role as a national transportation hub, retail destination and commercial business park. Canberra airport has two main runways served by Tiger Airways, Brindabella Airlines, Virgin Blue, and Qantas Link. It has direct flights to Melbourne, Gold Coast, Brisbane, Hobart, Sydney, Adelaide and Newcastle (Acil Allen 2011). The major airports in Australia including Canberra are essential mechanisms of economic infrastructure which drives investment, employment and income at local, state and national levels. Airports are not only freight movements, domestic and international travellers’ hub, but they are also centre of myriad of business and workplace for thousands of direct employees. Therefore, it is critical for airports management to ensure ease of access to and from the airports for realisation of end-to-end value chain as journeys never ends at the airports. Airports provide vital general and commercial aviation backbone that connects people and communities across the nation’s remote, rural, and urban localities (Corzine 2013, p. 5). Owing to the vital function in the lives and livelihoods of Australians, private and public aviation entities prolonged, extended or loss of function and capacity at any airport facility poses momentous community, national or regional threat. Australian economy and its citizens way of life depends on crucial and uninterrupted aviation sector hence airports are vital to that imperative. At the moment, access to Australian airports by land transport is a little problematic. Over the last decade, there has been rapid growth in the airport traffic passenger which has strained land transport to airports because investment and planning has not kept pace with growth of airline passengers. Urbanisation has contributed to demand of road networks that surround airports. This has led to massive road congestion to and around airports precincts. In some instances, rapid growth in airport traffic is aggravating problems with current bottlenecks played in large part by commuter and other non-airport traffic flows in major Australian cities traffic networks. Over the last decade, Australia has seen increase in emergence of low cost carriers’ consequently increasing competition in the airline industry as well as opening up air travel to be a price sensitive market similar to land transport. Speedy rise of low cost carriers has generated a strong demand for similar low cost land transport options causing serious infrastructure and service gaps at some airports in the country for modes such as rail or bus not previously used. The current state of land transport to airports and generally the airports sector efficiency in delivery of their services is not as required. The precursors for this are lack of a long-term integrated planning and sustained investment in airport transport services (Stevens, Baker, & Freestone 2010, p. 279). In essence, there exist little government recognition and ownership responsibility of the function that transport to major airports perform in national and wider city transport networks. Airports are a federal government responsibility while urban transport is a territory/state responsibility which is a vital transport infrastructure to Australian airports. This fact has also contributed to the current state of affairs as it seems there is no centralised authority for coordinating the whole airport industry. There has been no adequate embracing of land transport to airports as an important facilitator of economic growth by the territory and state governments. The currents problems will only worsen unless a comprehensive shift in the manner in which airports are viewed by the authorities concerned and prioritisation of land transport to the airports are not undertaken. Land transport to airports in Australia needs a little overhaul and it is imperative for territory and state government land transport agencies to prioritise resources in addressing the current problems. In addition, they also need to recognise that there exists rapid demand of land transport access to airports. Greater co-ordination and co-operation between federal and state government needs to be effected in development and planning of land transport access to major airports. When this is done, it will lead to faster access to and from the airports in the country solving one of the major problems in the airport industry. Airport business has a lot of challenges and proper strategies should be put in place to deal with them ensuring its sustainability. Canberra airport has been expanded on several occasions and this come with its own problems. Any expansion of a facility needs extra piece of land. This is evident by the conflict in 2002 between Canberra airport and a land developer about land use planning (May & Hill 2006, p.438). Canberra airport is a federally certified transportation and commercial centre serving and supporting local, national and regional economies for purposes of public good. The airport must comply with certain local, state and federal regulations, rules, directives and oversight. In most states in Australia, they have statutes that require airports to have operational planning, resilience and sustainability. Example is capacity of airports to recover, resume and remain operational after disruptions. Airports should thus have strategic plans that include capability and capacity to provide operations which are continuous in delivery of the services to their stakeholders (Corzine 2013, p. 5). The current air transport reliance is considered by many as environmentally unsustainable. This is especially due to its effects on climate change as well as its dependent on non-renewable sources of energy. Airports contribute to emissions of greenhouse gases but climate change is a problem which is general in nature. Addressing these challenges involves costs but this can be minimised when air industry is required to borne the environmental costs that it impose. Reliance of non-renewable sources of energy by air transport poses sustainability problem (Forsyth 2011, p. 27). It is to be noted that environmental sustainability can be achieved by Canberra airport as long as it adopts efficient policies. In 2010, Canberra Airport adopted environmental strategy that aims at managing and developing the airport in a safer and environmentally sustainable manner. Canberra airport constructed and upgraded a new terminal together with development of other infrastructural aviation were undertaken in the last five years which is required to meet demand of aviation and ensure efficiency, regularity and safety of the airport upon its completion (Canberra Airport 2010). The airport’s Environmental Strategy of 2010 outlines its objectives of how to minimise the impacts of environment during construction and upgrades of its infrastructural development. Climate change has affected many sectors in the economy including air transport. This change in climate has been contributed by many factors and air transport has played its role in achievement of this negative outcome. Aviation industry contributes two percent of global emissions of carbon dioxide and minimisation of its impacts needs to be the main focus of the industry and governments (Department of Infrastructure and Regional Development 2011). Canberra airport sustainability is hampered by dependency of fuel leading to greenhouse gases emissions which is inconsistent with environmental sustainability. Therefore, some may be of the opinion that reducing air transport use may be the only way of achieving sustainability in light of climate change. The challenges of Canberra Airport to its sustainability concerns financial sustainability that climate change policies will pose to them. These climate change policies will effectively be a cost burden to the airport which will become difficult to bear hence leading to huge losses by the airport and industry as a whole. Forsyth (2011, p. 27) suggested that policies such as comprehensive and effective emission trading scheme or carbon tax can be adopted that will ensure continuity of air transport and environmental sustainability. If Canberra Airport adopts one of these policies, it will have some impacts on its costs especially in the short run but will not likely lead it to non-viability in terms of finance in the long run. Environmental sustainability dimensions are many but climate change perspective is of interest in this discussion of Canberra Airport sustainability challenges. Airports are faced with critical change issue. The emissions of greenhouse gases contribute to larger amounts of carbon dioxide and other gases in the environment hence contributing to global warming. These may be the current largest single airports environmental externality. The current and future business of Canberra Airport at the current level of emissions is obviously not sustainable. Airport business is generally a growing industry hence Canberra airport has a chance of overcoming its strategic challenges. The strategic directions and methods of airports are growth oriented because the industry has not yet reached its maturity (Senguttuvan 2007, p. 193). In order for Canberra Airport to overcome its strategic challenges due to climate change and ensure its sustainability in the future, major stakeholders must perform their roles diligently. Canberra Airport management is the main stakeholder that would ultimately decide the future business of the airport. Management of environment is one key step in achieving a sustainable future for the airport. This is done by Canberra airport. There are various departments and authorities at the airport that ensures environmental management is achieved and it include Board of Directors, director of planning, water strategy committee, environment and sustainability officer and environment and planning committee (Canberra Airport 2010). They each play their delegated functions individually and collectively. The airport have also undertaken environmental action plans that will among other functions provide an overview of the ongoing management practices for various environmental issues including climate change. Moreover, the airport also has environmental policy guides in sustainable management resources of and at the airport. The policy also stipulates how integration of environmental issues with Canberra Airport operations plans can be realised. Government of Australia is also another stakeholder that is involved in charting the way forward for Canberra Airport to have a sustainable future in context of climate change. It has ratified Kyoto Protocol and proposed Carbon Pollution Reduction Scheme which would require domestic aviation industry to meet the targets of carbon dioxide reduction in response to climate change (Department of Infrastructure and Regional Development 2011). Fuel is an essential commodity in airports operations. Supply of fuel in the industry should be supplied in a reliable manner continuously through a competitive market conditions. This responsibility rests with the airport industry. However, Government of Australia is responsible for supporting an improved planning and communication amongst fuels suppliers through regulation. Airport industry has some unique characteristics different from other sectors in the economy. In this regard, the type of regulation that airports needs and are necessary generates a lot of debate. Price cap regulation is the most common form of regulation in the airport industry (Papatheodorou 2006, p. 84). This is the role of the government. In regulating the airport industry by the government, Canberra Airport is set to benefit in its bid to have a sustainable business future despite effects of climate change hugely affecting airport industry. Climate change effects can be catastrophic to any sector of the economy. Airport industry is the most affected industries and strategies are needed to curb the effects of climate change. Canberra Airport employs many people either directly or indirectly. Thus, if its business is affected by the climate change, it also affects the workers as the airport may be forced to lay off some of its workers. In this regard, an approach which is effective in managing the environmental impacts needs to be instituted by Canberra Airport. As earlier discussed, airport industry is still a growing sector which has not attained its full potential. Airport industry and in particular Canberra Airport may not attain its maturity due to climate change taking toll on its business future. The airport should play an effective role in reducing its contribution to climate change. Canberra Airport can have a sustainable business future in spite of climate change challenges by adopting effective strategies. One of the strategies responses is for the airport to apply an improved technology of managing carbon emissions to the environment. In this way, the airport will be playing its role in reducing climate change effects. Although aviation industry contributes small percentage of carbon emissions, but it has consistently downplayed and ignored resource and health concerns despite its widespread increase of environmental impact (May & Hill 2006, p. 437). The rapid expansion of the airport over the last few years has resulted into rise in air travel from the airport consequently playing a larger part in climate change. Canberra Airport should adopt capacity constraints that are environmentally driven but this will hamper its development efforts. Lack of available low cost fuel for aviation and need for curbing greenhouse gas emissions are the two factors that will affect airport industry in its bid to attain envisaged growth (May & Hill 2006, p. 438). Sustainability is a long run notion hence achieving a future sustainable environment for Canberra Airport may need some sacrifices to be made in form of curbing development at the airport. Unless there are some tradeoffs in the airport, little progress will be made as far as sustainable business future for Canberra Airport is concerned. Addressing sustainability for Canberra Airport is both a difficult and complex process having no single solution. Canberra Airport Environmental strategy of 2009 outlines the steps that will complement its 2009 Master Plan that aims at ensuring the airport has a sustainable future. It has implemented some strategies in the last ten years including environmental management system annual review, installation of Trigeneration plants which are gas-powered and monitoring of airports operations green-house gas emissions (Canberra Airport 2010). Canberra has preferred to adopt yearly environmental targets which are in tandem with its 2009 Master Plan in reducing effects of climate change from its operations. All these strategies will play a big role in ensuring that a sustainable future for the airport is achieved in light of climate change. The future expected changes of Canberra airport include international services which will be facilitated by the already constructed new terminal, freight services expansion, Majura and Brindabella business parks expansion, and expansion of regional and domestic air services to new destinations and increase in frequency. Canberra Airport will realise its potential if all the stakeholders involved in creating its sustainable future in context of climate change work together in harmony. References Acil Allen 2011, Economic Impact of Canberra Airport: 2010 to 2030, accessed 13 July 2014, http://www.acilallen.com.au/projects/8/transport/37/economic-impact-of-canberra-airport-2010-to-2030>. Brown, N 2014, A history of Canberra. Cambridge University Press, Cambridge. Canberra Airport 2010, Airport Environment Strategy, accessed 10 July 2014, . Canberra Airport 2014, About, accessed 10 July 2014, . Corzine, S 2013, Operational and business continuity planning for prolonged airport disruptions. Transportation Research Board, Washington D.C. Department of Infrastructure and Regional Development 2011, Urban Policy: Discussion paper, Our Cities-building a productive, sustainable and liveable future, accessed 12 July 2014, . Forsyth, P 2011, ‘Environmental and financial sustainability of air transport: Are they incompatible?’, Journal of Air Transport Management, vol. 17, no. 1, pp. 27-32. May, M & Hill, SB 2006, ‘Questioning airport expansion—A case study of Canberra International Airport’ ,Journal of Transport Geography, vol. 14, no. 6, pp. 437-450. Papatheodorou, A 2006, Corporate rivalry and market power: competition issues in the tourism industry. Tauris, London. Senguttuvan, PS 2007, Principles of airport economics. Excel Books, New Delhi. Stevens, N, Baker, D, & Freestone, R 2010, ‘Airports in their urban settings: towards a conceptual model of interfaces in the Australian context’. Journal of Transport Geography, vol. 18, no. 2, pp. 276-284. Read More