Air Transport Economics and Management (AIRTECOMAN)

Module/ Title: Overview of Air Transport Economics Page 1 of 5 Pages

and Management

Week 1 - Prelim
Faculty Engr. Jeremy C. Dalina Period

LESSON 1: Air Transportation Overview of Historical Development

Reference:
- Budd, Lucy, ed. (2017). Air Transport Management: An International Perspective
- Wensveen, John G. (2015). Air Transportation: A management Perspective 8 th ed.
- Young, Seth (et. al.). (2011). Airport Planning and Operations

At the end of course or topic the student will be able to:

➢ Understand the beginning of the aviation industry and its development up to present.

Lesson 1.1: Introduction

It is often said that managing an airport is like being mayor of a city. Similar to a city, an airport is comprised of a huge
variety of facilities, systems, users, workers, rules, and regulations. Also, just as cities thrive on trade and commerce
with other cities, airports are successful in part by their ability to successfully be the location where passengers and
cargo travel to and from other airports. Furthermore, just as cities find their place as part of its county’s, state’s, and
country’s economy, airports, too, must operate successfully as part of the nation’s system of airports. In this chapter,
the airport system in the United States will be described in a number of ways. First, the national airport system, as a
whole, will be described. Next, the various facilities that make up the airport system will be described. Finally, the
various rules and regulations that govern the airport system will be described

Overview

The United States has by far the greatest number of airports in the world. More than half the world’s airports and more
than two-thirds of the world’s 400 busiest airports are located in the United States. There are more than 19,000 civil
landing areas in the United States, including heliports, seaplane bases, and “fixed-wing” landing facilities. Most of these
facilities are privately owned, and for private use only. Such facilities include helipads operated at hospitals and office
buildings, private lakes for seaplane operations, and, most common, small private airstrips that accommodate the local
owners of small aircraft operations. Many of these facilities are nothing more than a cleared area known as a “grass
strip.” Nevertheless, they are recognized and registered as civil-use landing areas and are, at least, operationally part
of the United States system of airports
 Air Transport Economics and Management (AIRTECOMAN)

Module/ Title: Overview of Air Transport Economics Page 2 of 5 Pages

and Management

Week 1 - Prelim
Faculty Engr. Jeremy C. Dalina Period

Many airports in the United States were originally owned by the federal government, specifically the military, because
they were created for military use during World Wars I and II. Since then, many such airports were transferred to local
municipal ownership. The transfers of most of these airports were made with provisions that permit the federal
government to recapture its interest under certain conditions and also to review and approve any transfer of formal
federal properties destined for nonairport use. Approximately 600 civil airports have these encumbrances. In addition,
Army, Air Force Reserve, and National Guard units operate out of many civil airports, usually under some type of lease
arrangements. These airports are known as joint-use civil-military airports.

Enplanement - (or enplaned passengers) is used to describe the number of passengers that board an aircraft at an
airport
Deplanements - (or deplaned passengers) is used to describe the number of passengers that deplane an aircraft at an
airport.
Total Passengers - is used to describe the number of passengers that either board or deplane an aircraft at an airport.
At many airports, the total passengers are roughly double the number of annual enplanements.

Cargo activity is typically used to measure the level of activity at airports that handle freight and mail. Airports located
near major seaports, railroad hubs, and large metropolitan areas, as well as airports served by the nation’s cargo
carriers (such as FedEx and UPS) accommodate thousands of tons of cargo annually

The number of aircraft operations is used as a measure of activity at all airports but is the primary measure of activity
at general aviation airports. An aircraft operation is defined as a takeoff or a landing. When an aircraft makes a landing
and then immediately takes off again, it is known as a “touch and go” and is counted as two operations. This activity is
common at many general aviation airports where there is a significant amount of flight training. When an aircraft takes
off and lands at an airport without landing at any other airport, the aircraft is said to be performing local operations. An
itinerant operation is a flight that takes off from one airport and lands at another

The national administrative structure of airports

All civil-use airports, large and small, in one way or another, utilize the United States’ Civil Aviation System. The civil
aviation system is an integral part of the United States’ transportation infrastructure. This vital infrastructure is
administered through the United States Department of Transportation (DOT), led by the secretary of transportation.

In the Philippines CAAP (Civil Aviation Authority of the Philippines) is responsible for implementing policies on civil
aviation in order to ensure safe, economical, and efficient air travel. As an independent regulatory body with quasi-
judicial and quasi-legislative powers, the CAAP is mandated to set comprehensive, clear and impartial rules and
regulations for the Philippine aviation industry. Which is also under DOTr (Department of Transportation).

The administration that oversees civil aviation is the Federal Aviation Administration (FAA). The FAA’s primary mission
is to oversee the safety of civil aviation. The FAA is responsible for the rating and certification of pilots and for the
certification of airports, particularly those serving commercial air carriers. The FAA operates the nation’s air traffic
control system, including most air traffic control towers found at airports, and owns, installs, and maintains visual and
electronic navigational aids found on and around airports. In addition, the FAA administers the majority of the rules that
govern civil aviation and airport operations, as well as plays a large role in the funding of airports for improvement and
expansion. The FAA is led by an administrator who is appointed by the secretary of transportation for a 5-year term.
 Air Transport Economics and Management (AIRTECOMAN)

Module/ Title: Overview of Air Transport Economics Page 3 of 5 Pages

and Management

Week 1 – Prelim
Faculty Engr. Jeremy C. Dalina Period

Airport management on an international level

Internationally, the recommended standards for the operation and management of civil-use airports are provided by
the International Civil Aviation Organization (ICAO). ICAO, headquartered in Montreal, Quebec, Canada, is a
membership-based organization, comprised of 188 contracting states that span the world. ICAO came into existence
as a part of the 1944 Chicago Convention on International Civil Aviation for the purpose of providing a source of
communication and standardization among participating states with respect to civil aviation operations. ICAO publishes
a series of recommended policies and regulations to be applied by individual states in the management of their airports
and civil aviation systems.

The National Plan of Integrated Airport Systems

Since 1970, the Federal Aviation Administration has recognized a subset of the 5,400 public-use airports in the United
States as being vital to serving the public needs for air transportation, either directly or indirectly, and may be made
eligible for federal funding to maintain their facilities. The National Airport System Plan (NASP) was the first such plan,
which recognized approximately 3,200 such airports. In addition, the NASP categorized these airports on the basis of
each airport’s number of annual enplanements and the type of service provided. The NASP categorized airports as
being “commercial service air ports” if the airport enplaned at least 2,500 passengers annually on commercial air
carriers or charter aircraft. Commercial service airports were subcategorized as “air carrier” airports and “commuter”
airports, depending on the type of service dominant at a given airport. Airports that enplaned less than 2,500
passengers annually were classified as “general aviation airports.” In 1983, the final year of the NASP, a total of 780
commercial service airports (635 air carrier airports and 145 commuter airports) and 2,423 general aviation airports
were recognized under the NASP. With the passage of the Airport and Airway Act of 1982, the FAA was charged with
preparing a new version of the NASP, to be called the National Plan of Integrated Airport Systems (NPIAS).

NPIAS Categories:
1. Primary Commercial Service Airports
2. Commercial Service Airports
3. General Aviation Airports
4. Reliever Airports

Primary commercial service airports are categorized in the NPIAS as those public-use airports enplaning at least 10,000
passengers annually in the United States. In 2002, there were 422 airports (less than 3 percent of the nation’s total
airports) categorized as primary commercial service airport

Commercial service airports are those airports that accommodate scheduled air carrier service, provided by the world’s
certificated air carriers. Virtually all of the 650 million passengers that boarded commercial aircraft in 2001 began,
transferred through, and ended their trips at commercial service airports. Commercial service airports operate under
very specific regulations enforced by the Federal Aviation Administration, Transportation Security Administration, as
well as state and local governments. In addition, other federal and local administrations, such as the Environmental
Protection Agency, and local economic development organizations, indirectly affect how commercial service airports
operate. The goal of commercial service airports, of course, is to provide for the safe and efficient movement of
passengers and cargo between population centers through the nation’s aviation system. In 2002, there were a total of
546 commercial service airports throughout the United States striving to fulfill this mission.

Airports with fewer than 2,500 annual enplaned passengers and those used exclusively by private business aircraft not
providing commercial air carrier passenger service are categorized as general aviation (GA) airports. Although there
are over 13,000 airports that fit this category, only a subset is included in the NPIAS.
 Air Transport Economics and Management (AIRTECOMAN)

Module/ Title: Overview of Air Transport Economics Page 4 of 5 Pages

and Management

Week 1 – Prelim
Faculty Engr. Jeremy C. Dalina Period

A general aviation airport is generally categorized as being either a basic utility or general utility facility. Basic utility
airports are designed to accommodate most single-engine and small twin-engine propeller-driven aircraft. These types
of aircraft accommodate approximately 95 percent of the general aviation aircraft fleet. General utility airports can
accommodate larger aircraft, as well as the lighter, smaller aircraft handled by basic utility airports.

Reliever airports comprise a special category of general aviation airports. Reliever airports, generally located within a
relatively short distance (less than 50 miles) of primary commercial service airports, are specifically designated by the
NPIAS as “general aviation-type airports that provide relief to congested major airports.” To be classified as a reliever
airport, the airport must have at least 50 aircraft based at the airport or handle at least 25,000 itinerant operations or
35,000 local operations annually, either currently or within the last 2 years. Reliever airports are located within an SMSA
with a population of at least 500,000 or where passenger enplanements at the nearest commercial service airport
exceed 250,000 annually. As the name suggests, reliever airports are intended to encourage general aviation traffic to
use the facility rather than the busier commercial service airport, which may be experiencing delays, by providing
facilities of similar quality and convenience to those available at the commercial service airport

The hub classifications used by the FAA in the NPIAS are:

1. Large hubs - are those airports that account for at least 1 percent of the total annual passenger enplanements
in the United States.
2. Medium hubs - are those airports that account for at least 0.25 percent but less than 1 percent of the total
annual passenger enplanements.
3. Small hubs - are defined as those airports accommodating greater than 0.05 percent but less than 0.25 percent
of annual U.S. enplanements
4. Nonhubs - are those airports that enplane at least 10,000 annual enplanements but less than 0.05 percent of
the annual total U.S. enplanements.

The rules that govern airport management

As with any system intended for use by the public, a complex system of federal, state, and often local regulations have
been put in place by legislation to ensure the safe and efficient operation of public-use airports. All airports included in
the NPIAS are subject to a variety of Federal Aviation Regulations (FAR). FAR’s are found in Title 14 of the United
States Code of Federal Regulations (CFR) (14 CFR—Aeronautics and Space). The 14 CFR series is made up of over
100 chapters, known as parts, each of which provide regulatory mandates that govern various elements of the civil
aviation system, including regulations for pilots, general aviation and commercial flight operations, and, of course,
airport operations and management. Within airport management, regulations regarding airport operations,
environmental policies, financial policies, administrative policies, airport planning, and other issues of direct concern to
airports are covered.

In addition to the 14 CFR series, regulations regarding the security of airport and other civil aviation operations are
published under Title 49 of the Code of Federal Regulations (49 CFR—Transportation) and are known as
Transportation Security Regulations (TSRs). TSRs are enforced by the Transportation Security Administration (TSA).

The volume of TSRs came into effect on November 19, 2001, with the signing of the Aviation and Transportation
Security Act. As recently as early 2003, security regulations and policies under the Transportation Security
Administration have been in a constant state of change, as the civil aviation industry adapts to increased threats of
terrorism. To assist airport management and other aviation operations in understanding and applying procedures
dictated by federal regulations, the FAA makes available a series of advisory circulars (ACs) associated with each
regulation and policies. The advisory circulars specific to airports are compiled into the 150 Series of Advisory Circulars.
There are over 100 current and historical advisory circulars in the 150 series available to airport management. Those
advisory circulars of particular general interest to airport management are referenced throughout this text.
 Air Transport Economics and Management (AIRTECOMAN)

Module/ Title: Overview of Air Transport Economics Page 5 of 5 Pages

and Management

Week 1 – Prelim
Faculty Engr. Jeremy C. Dalina Period

Organizations that influence airport regulatory policies

There are many national organizational and regional organizations that are deeply interested in the operation of airports.
Most of these organizations are interested in developing and preserving airports because of their role in the national
air transportation system and their value to the areas they serve. The primary goal of these groups is to provide political
support for their causes with hopes to influence federal, state, and local laws concerning airports and aviation
operations in their favor. In addition, these groups provide statistics and informational publications and provide guest
speakers and information sessions to assist airport management and other members of the aviation community in order
to provide support for civil aviation

AIA - Aerospace Industries Association

AOPA - Aircraft Owners & Pilots Association
ALPA - Air Line Pilots Association
ATA - Air Transport Association of America
AAAE - American Association of Airport Executives
ADMA - Aviation Distributors and Manufacturers Association
EAA - Experimental Aircraft Association
FSF - Flight Safety Foundation
GAMA - General Aviation Manufacturers Association
IATA - International Air Transport Association
NATA - National Air Transportation Association
NBAA - National Business Aviation Association
PAMA - Professional Aviation Maintenance Association
RAA - Regional Airline Association

CONCLUSION
As described in these introductory remarks, the complex system of civil airports is made up of individual airport facilities
of varying sizes, serving various purposes, all organized into plans of regional, national, and international levels. The
range of rules, regulations, and policies, administered from varying levels of government, cover the full spectrum of
airport and aviation system operations. Furthermore, a large number of professional and industry organizations play a
large part in influencing the policies by which airport management must operate their facilities. By understanding where
an airport manager’s airport falls within the civil aviation system, what rules must be followed, and what sources of
support and assistance exist, the task of efficiently managing the complex system that is an airport, becomes highly
facilitated.