SIC 4581
AIRPORTS, FLYING FIELDS, AND AIRPORT TERMINAL SERVICES



This category includes establishments primarily engaged in operating and maintaining airports and flying fields; in servicing, repairing (except on a factory basis), maintaining, and storing aircraft; and in furnishing coordinated handling services for airfreight or passengers at airports. This industry also includes private establishments primarily engaged in air traffic control operations. Government air traffic control operations are classified in SIC 9621: Regulation and Administration of Transportation Programs. Aircraft modification centers and establishments primarily engaged in factory type over-haul of aircraft are classified in transportation equipment industries, and flying fields maintained by aviation clubs are classified in SIC 7997: Membership Sports and Recreation Clubs.

NAICS Code(s)

488111 (Air Traffic Control)

488119 (Other Airport Operations)

561720 (Janitorial Services)

488190 (Other Support Activities for Air Transportation)

Industry Snapshot

The North American Airports Council International (NAACI) estimates that the total economic impact of U.S. airports grew from $379.7 billion to $506.5 billion, in terms of output, between 1997 and 2001. Over the same period, earnings grew from $155.5 billion to $190.2 billion, and employment grew from 5.8 million to 6.7 million. According to the Federal Aviation Administration (FAA), more than 19,300 airports operate in the United States; nearly 30 percent of these are public entities. With more than 50 percent of the top 20 airports in the world, North America transports more passengers and cargo via air than any other region.

The airport, flying field, and airport terminal services industry can be divided into two distinct parts. One segment of the industry offers airport terminal services, covering everything from baggage handling to food service. Typically these companies work with commercial airlines, both domestic and international, and airport management. The other segment of the industry offers aircraft services, including maintenance, repair, aircraft conversion, and sales of equipment and parts. These companies work with commercial passenger airlines but have also provided service to the U.S. military, to makers and end users of general aviation aircraft, and to air cargo carriers.

Airports that can increase the number of runways and thus increase capacity stand to benefit more than those airports that do not have more room for additional runways. While the decrease in traffic following the September 11, 2001, terrorist attacks on the United States eased congestion at airports across the globe, the FAA predicts that U.S. airlines will see a 64 percent increase in revenue passenger miles by 2012. Airplane passenger mind-sets have changed significantly since the early days of flight, and many airports across the country are finding that they need to update their facilities to reflect this change. The five largest airports in the United States based on arriving and departing passenger traffic in 2001 were Atlanta Hartsfield (75.8 million), Chicago O'Hare (66.8 million), Los Angeles International (61 million), Dallas/Ft. Worth International (55.1 million), and Denver International (36 million).

The aircraft and airport services industry has always included a broad range of companies, from small private firms, to divisions of large conglomerates that offer transportation-related services, to divisions within an airline operation. A long recession in the passenger airline industry from 1988 to 1992 hurt the industry, and many airlines ceased operations, merged with other airlines, or cut back in service. All service companies, especially those dependent on the large air passenger carriers, struggled to survive. Smaller maintenance companies merged operations, while the larger conglomerates sold off unprofitable services. Surviving companies diversified both their services and their markets, and many moved into the international arena. During the latter 1990s (excluding the Northwest pilot strike in 1998), the industry reported steady profits. Consolidation continued into the twenty-first century, as many of the industry's leading players changed hands.

Organization and Structure

Airports in the United States typically contract with outside vendors for the services they provide to their customers, both airlines and passengers. Those vendors, which make up the companies listed in this industry, provide a number of services to people and to planes. Providers of airport terminal services operate food and beverage concessions, gift shops, and newsstands in airport terminals, while providers of airport passenger services offer bus and limousine operations, consulting and training services, passenger screening, airport security, interline baggage service, and skycaps. Aircraft in-flight service companies provide catering operations for commercial passenger airlines.

Other companies provide aircraft terminal services, including ground handling services for commercial carriers, aircraft fueling and cleaning, and baggage handling. Maintenance, repair, and overhaul (MRO) companies provide heavy maintenance, usually working on aging-aircraft programs or on conversions for commercial carriers and military aircraft. Fixed-base operation (FBO) vendors work as a "service station" for aircraft, providing refueling and ground handling services for corporate jets and general aviation aircraft. FBOs sometimes have a terminal lounge for flight crews. Aviation after-market companies sell parts and equipment for new or used aircraft, usually as a division of an aerospace company.

Depending upon the type of service provided, aircraft and airport service companies operate on airport grounds, within the airport terminal, or at nearby hangers or production facilities. Most companies have corporate headquarters physically removed from these working sites.

The combination of the Gulf War, skyrocketing fuel prices, airline fare wars, rising debt service costs, and the slowdown of the American economy had a devastating effect on the financial condition of several domestic airlines in the late 1980s and early 1990s—and left no airline untouched. By 1993 the air transportation industry had lost a record $10.5 billion, three large carriers had ceased operations, two were operating in bankruptcy, and one had just emerged from bankruptcy protection. Companies providing service to the air transportation industry shared in the recession; however, the unprecedented recovery of the airline industry in 1995 through 1996 helped rebuild many of the service companies that survived the downturn.

Passenger Services. During the slowdown of the early 1990s, companies providing terminal services were hard hit by price-conscious travelers who limited their out-of-pocket spending in the airports. One company, Dobbs Subsidiaries, a division of the Dial Corporation, was sold to Host International in 1992 due to rising costs. In turn Host, a division of the Marriott Corporation, lowered its prices, offered promotions, redesigned its concession stands, and brought in well-known, fast food chains to entice passengers to use their services.

Unlike most of the other companies in this industry, those offering in-flight catering have been directly dependent upon the operations of the major commercial passenger airlines. Companies capable of accommodating the ever-changing demands of these carriers during the turbulent years of 1988 to 1993 were the ones that survived. Dobbs International was one such company. According to a company report prepared by Donald, Lufkin, Jenrette Securities, despite the difficulties posed by the price wars in the airline industry, Dobbs continued to earn more in revenues and profits because of its success in winning new contracts. Consequently, Dobbs has maintained approximately a 19 percent market share. Other catering companies included CaterAire (formerly Marriott), with 26 percent, Onyx (formerly Sky Chefs), with 19 percent, and UAL Services, with a 15 percent market share.

Aircraft Services. Maintenance operations were also affected by the recession, but this segment of the service industry stabilized by the end of 1993, due in part to diversification. For example, Pemco Aeroplex, a large third-party maintenance operator, maintained a 50-50 mix of military and civilian work to level off the peaks and valleys of the market.

Many providers of fixed-base operations responded to the recession by consolidating operations. The best-known merger took place between Page Avjet Airport Services and Butler Aviation International, thus creating the world's largest multisite FBO company. Some industry analysts have predicted that merged operations such as these may be the model for FBOs in the early 2000s.

Industry Growth. Many airport and aircraft service companies have looked to strategic alliances or partnerships to create further market growth. For example, UNC, Inc. has developed long-term contracts with major aviation firms and has formed trading company partnerships to add leasing and parts distribution services.

Air transport service companies will continue to improve their services with a reliance on computerization. For example, UNC, Inc. has been using cutting-edge information technology to provide its customers with computerized online parts status. Commodore Aviation also has become completely computerized, allowing instant tracking of work hours required and materials expended.

While 1998 data were affected by the September 1998 Northwest Airlines pilot strike, domestic air traffic nonetheless reported a 4.9 percent increase. However, the net effect of this was lost in the fact that capacity rose 9.5 percent during the same period. The resulting overall load factor dropped 2.9 points to 65.9 percent. The excess domestic capacity resulted in a 2 percent decline in average ticket price.

Current Conditions

Over the five years preceding 2002, employment at U.S. airports grew 16 percent, earnings grew 22 percent, and output grew 33 percent. As a result, many airports undertook major renovations and upgrades. The FAA prediction that revenue passenger miles for U.S. airlines would grow 64 percent by 2012 suggested that this trend was likely to continue, despite reduced passenger and cargo traffic in 2002. According to the North American Airports Council International (NAACI), "While the events of September 11 and the current depressed state of domestic air carriers has slowed growth temporarily, projections are that the volume of passengers will return to 2000 levels by 2003 or 2004. Now, before congestion returns, is the time for the aviation industry to adopt measures to increase capacity." Analysts believe that airports can make better use of their existing facilities as well.

The aviation services industry saw consolidation continue into the twenty-first century. In the late 1990s, Swissport International acquired DynAir, a leader in airport and aircraft services, and Gate Gourmet Co. added to its European, Asian, and Latin American airline catering operations with the purchase of U.S.-based airline caterer Dobbs International. Menzies Aviation Group paid $105 million for Ogden Aviation Services, the world's largest independent provider of airport services, in late 2000. The following year, France-based Vinci SA acquired Worldwide Flight Services for $295 million.

Industry Leaders

A leader in airport and aircraft services has been DynCorp's Commercial Aviation Services Group, better known as DynAir. With approximately 4,000 employees and $1.2 billion in revenue, DynAir has provided total ground support services to both domestic and international carriers at more than 80 airports in the United States. DynAir has delivered services to over 100 airlines on more than 150,000 flights and has processed more than 15 million passengers annually. With facilities in Arizona, Florida, and Texas, DynAir has offered a complete range of aviation-related technical services to the operations of commercial aircraft, including periodic checks, nonroutine maintenance, structural inspections, repair and overhaul, and stripping and painting. Other specialized services have included the repair, modification, and installation of transport aircraft avionics and navigation systems, including wind shear alerts, weather radar and radio altimeter systems, complete cargo handling, and fueling services for commercial and general aviation customers. DynAir Technical Services has also provided the professional expertise of contract engineers, mechanics, and technicians. Ground handling firm Swis-sport International bought DynAir in 1999. As of the early 2000s, the firm continued to operate under the DynAir name.

In the early 2000s, Ogden Aviation Services, the world's largest independent provider of airport services, worked with more than 80 airports in the United States and abroad and with more than 180 commercial airlines. The company provided fueling facilities, baggage loading and off-loading, aircraft cleaning and maintenance, and passenger checking. Once a private subsidiary of Ogden Corp., Ogden Aviation Services was acquired by Menzies Aviation Group in 2000.

Formerly known as Dobbs International, Gate Gourmet Division Americas has been one of the world's largest airline caterers, providing in-flight food service for domestic and international airlines at 52 kitchens in 44 airports in the United States and Great Britain. Gate Gourmet has served 11 major U.S. airlines, 19 national carriers, and 36 international carriers. Gate Gourmet Co. acquired Dobbs in 1999 and eventually replaced the Dobbs name with Gate Gourmet Division Americas.

One of the premier suppliers of aircraft maintenance, repair, and overhaul services has been Goodrich Aviation Technical Services, formerly known as Tramco Inc. The BF Goodrich Aerospace subsidiary has performed maintenance for the fleets of Federal Express, Southwest Airlines, and United Parcel Service (UPS). It services more than 400 aircraft annually. Company headquarters are located in Everett, Washington.

Created in 1981 as a subsidiary of AMR Corp., Worldwide Flight Services (formerly known as AMR Services Corp.) has provided flight operations services, including passenger services, cargo handling and warehousing, cabin services and facility cleaning, fuel services, and aircraft handling services. The company also has operated flight service centers, marketed used aircraft, provided ground transportation services, and offered security services. By the turn of the twenty-first century, Worldwide Flight was handling cargo at 86 airports throughout the world. Employees totaled 10,000. Castle Harlan Inc., which had acquired Worldwide Flight in 1999, agreed to sell the ground services provider to Vinci SA for $295 million in 2001.

Lockheed Space Operations, a private subsidiary of the Lockheed Corporation, has provided launch pad preparation, operation and maintenance of facilities, flight hardware processing, and flight technology services. Headquarters are in Washington, D.C.

Workforce

According to North American Airport Council Inter-national (NAACI), U.S. airports provide nearly seven million jobs to the communities they serve. Most of the employment in the airport, flying field, and airport terminal services industry has been concentrated in the maintenance, repair, and aircraft service segment. Additional employment in this industry can be found in companies that are not considered primary providers but have been secondary providers of services categorized in this industry. These companies generally have included the food, beverage, and other airport terminal services companies.

Some companies, such as Commodore Aviation, have a large part-time contingency employment base, which has offered flexibility in an industry that has been highly seasonal. For example, Commodore Aviation has full-time employment of about 150 people but has operated with a total of 180 to 500 employees, based on workload needs.

According to the U.S. Department of Labor, jobs in the air transportation industry have been projected to increase 37 percent over the period from 1990 to 2005—much faster than the overall average. An increase in passenger and air cargo traffic—and related employment—has been anticipated in response to increases in population, income, and business activity. New technology was not expected to have any significant effect on air transportation in the long-term future, as most labor saving technology has already been introduced.

It was estimated that 1 in every 15 people employed in the United States owed his or her job to civil aviation, and jobs directly attributable to U.S. airports were estimated at 2.3 million, with total jobs attributable to U.S. airports estimated at 7.6 million. Job opportunities in this industry varied by occupation. Sources estimated that for every $1 billion invested in airport development, 50,000 jobs were created and sustained. Due to an expected shortage in qualified applicants, the job market for aircraft mechanics has been expected to be very favorable in the long-term future. Job opportunities have also been predicted to be good in entry-level positions, where job turnover has been high, such as baggage handlers, aircraft and interior cleaners, and food service workers.

Further Reading

"Airlines Begin Service Plans." Travel Weekly, 20 December 1999, 2.

Air Transport Association. "2002 Annual Report." Available from http://www.airlines.org .

"The Economic Impact of U.S. Airports.". Washington, D.C.: North American Airports Council International, 2002.

Kaye, Ken. "ValuJet Crash Spurred Tightening of Aviation Safety Rules." Sun-Sentinel (Florida), 6 December 1999.

"North America Report." Air Transport World, December 1999, 15.

Pilling, Mark. "Empire: The Turbulence in Global Ground Handling Is Unlikely to Die Down This Year as Further Consolidation, Alliance Maneuvering, and Outsourcing Continue to Dominate an Industry in Flux." Airline Business, January 2001, 52.

U.S. Department of Labor. Career Guide to Industries. Washington, D.C.: Government Printing Office.

Ward's Business Directory of U.S. Private and Public Companies, 2000. Farmington Hills, MI: Gale Group, 1999.

"Worldwide Flight Services to Be Sold to French Firm." Airline Financial News, 17 September 2001.



User Contributions:

Comment about this article, ask questions, or add new information about this topic:

CAPTCHA