Miami International Airport operational performance and business environment analysis

Airport Operations: Analysis of Miami International Airport KMIA

The objective of this study is to conduct an analysis of Miami International Airport from a business and operational point-of-view. This work will analyze the operating and business environment of Miami International Airport as well as analyzing the major issues and challenges faced by the airport and finally state conclusions and make recommendations.

The Miami International Airport (MIA) is a large hub airport with 15.4 million enplanements in 2005 and is 62% American Airlines Hubs and International Gateway. There are 130 gates at the Miami International Airport and parking capacity includes a 152 short-term parking garage capacity and a 7,499 long-term capacity. Total operating revenues for 2005 is stated at $442.5 million or $28.64 per enplanement with 52.4$ of the revenues from passenger airlines with total commercial revenues stated at $139 million and concession revenues stated at $72 million while parking revenues are stated at $34 million. (Dooley, nd, paraphrased)

I. ANALYSIS OF THE OPERATING AND Business ENVIRONMENT

The Centre for Asia Pacific Aviation reported on the first day of June 2009 that Miami International Airport, which is "...one of the key gateways into Latin American and Europe from America's South, reported a traffic increase of 5.1% year-on-year for April 2009." (Centre for Asia Pacific Aviation, 2009) While traffic levels declined through 2008 and the first months of 2009 it is stated that the "return to positive traffic was a welcome sign for the airport." (Centre for Asia Pacific Aviation, 2009)

Figure 1

Miami International Airport Passenger Number Growth and Cargo Volume (May 2008 -- April 2009)

Source: Centre for Asia Pacific Aviation (2009)

Domestic traffic was reported to be weaker than international travel "with passenger volumes to U.S. destinations rising 3.3% in April, while international traffic was up 7.4%. Domestic and international passenger volume are roughly even, although the decline in passenger traffic during the recession has been more significant for domestic destinations." (Centre for Asia Pacific Aviation, 2009) Stated as reinforcing this trend is a shift of capacity "...from domestic from international markets by U.S. carriers, including American Airlines." (Centre for Asia Pacific Aviation, 2009)

Figure 2

Miami International Airport Domestic & International Passenger Traffic: Year to April 2009.

Source: Centre for Asia Pacific Aviation (2009)

Commercial aircraft movements fell 7.6% in April 2009 and total seating capacity is stated to have fallen approximately 0.8% which indicates that "carriers are operating fewer and larger aircraft at the airport and/or achieving higher passenger load factors." (Centre for Asia Pacific Aviation, 2009) However, the cargo segment's performance is described as "dismal...with volumes down 23.1% in April 2009." (Centre for Asia Pacific Aviation, 2009)

Reports state that IATA made the suggestion that "international air cargo has found a floor, stabilizing at around 20% and offering a glimmer of hope that there may be a recovery period around the corner." (Centre for Asia Pacific Aviation, 2009) Passenger traffic is stated to have declined approximately 1.2% over the first five months of 2009 with cargo declining 23.7% over the same period.

The top ten airlines which utilize Miami International Airport are the airlines shows in the following figure with accompanying capacity and frequency share.

Figure 3

Miami International Airport Capacity and Frequency Share: Top Ten Airlines

M

Source: Center for Asia Pacific Aviation (2009)

The top five international routes by capacity share to and from Miami are shown in the following figure.

Figure 4

Top Five International Routes by Capacity Share (% of total) to and from Miami

Source: Center for Asia Pacific Aviation (2009)

It is stated that the outlook for the rest of 2009 is somewhat dimmer than the results of April 2009 due to the factor of Swine Flu. Since Miami is a major entry point for traffic to and from Mexico it is likely that "airlines and service providers will have to wait longer for sustained passenger recover, while cargo remains depressed." (Center for Asia Pacific Aviation, 2009)

It is reported that the impact of the Miami International Airport and the impact on employment in the locality is approximately $13 billion with direct and indirect jobs in South Florida. Direct employment statistics for the direct employment of individuals by Miami International Airport are stated at 1,500 for the aviation department and in the category of 'other' 32,442 with a total of 33,942.

Figure 5

Economic Impact and Employment

Estimated impact

$13 Billion

Direct/Indirect jobs in South Florida

196,000

Direct Employment

Aviation Department

1,500

Other

32,442

Total

33,942

2001 Total Passengers

31.6 Million

Source: Department of Transportation Federal Aviation Administration Southern Region, Atlanta Georgia (2002)

The total passengers served by Miami International Airport are stated as of 31.6 billion. Miami International U.S. Airport rankings list the following rankings for MIA:

1st in U.S.

International Freight

3rd in U.S.

International Passengers

3rd in U.S.

Total Freight

3rd in U.S.

Total Cargo (Freight and mail)

11th in U.S.

Total Number of Operations

12th in U.S.

Total Passengers (Department of Transportation Federal Aviation

Administration Southern Region, Atlanta Georgia, 2002)

World airport rankings are stated for Miami International Airport as follows:

6th in World

International Freight

5th in World

Total Freight

5th in World

Total Cargo (Freight and mail)

19th in World

Total Passengers

19th in World

International Passengers (Department of Transportation Federal

Safety Issues

There are issues and challenges which the Miami International Airport must necessarily address and these include safety issues. The Miami International Airport terminal is stated to present "notable life safety challenges because of large occupant loads, presence of significant combustible loads, complex security restrictions, and less than ideal egress provisions from interior spaces." (Miami International Airport, 1998) The Life Safety Master Plan (LSMP) is stated to provide a summary of the fire safety surveys and studies conducted. The first line of defense is stated to be that of prevention of fire however, the facility's size and complexity makes a requirement that there is complete coverage "by automatic fire protection systems...in place in case prevention fails." (Miami International Airport, 1998 ) Also required in combination with highly reliable automatic protection systems are manual fire fighting capabilities of an enhanced nature.

Drug Trafficking Threats

The South Florida HIDTA reports that the Miami International Airport (MIA) is not only the busiest airport in the United States for international cargo but it is also the busiest airport in the U.S. For international passenger traffic and is "used extensively as an entry point for narcotics in bulk shipments." (Office of National Drug Control Policy, 2009) The Office of National Drug Control Policy states that Miami is "considered a "high-demand" destination for designer drugs and is a transshipment point between the suppliers in Europe and organizations in South America. Marijuana remains readily available in South Florida. The increasing role of small-grow operations and indoor hydroponics operations is adding to the drug's supply." (Office of National Drug Control Policy, 2009)

The drug trade combined with money laundering and cash smuggling as well as a host of other illegal gang-related activities make South Florida "...a transportation and financial center vulnerable for exploitation by criminal organizations. South Florida remains as a significant command and control center for international narcotics trafficking organizations; is an international hub for drug traffickers and money launderers from Central America, South America, and the Caribbean; and has been identified as having the country's second largest concentration of Russian and Eurasian immigrants and proportionate career criminals and organized crime." (Office of National Drug Control Policy, 2009)

Layoffs Expected

It was reported December 19th, 2008 that American Airlines had plans for layoffs at Miami International Airport. AMR, parent company of American Airlines is stated to have approximately 9,000 employees at the Miami International Airport. The company has been hard hit by high gas prices and the economy resulting in AMR announcing "thousands of job cuts, double-digit reduction in capacity percentage and the retirement of 75 to 85 gas-guzzling planes." (Frogameni, 2008)

Infrastructure Challenges

To answer the need for a solution to improve the Miami National Airport a major intermodal hub was designed. The work of Marie-Elise Dowell entitled: "Simulating Traffic Operations" states as follows:

"Traffic congestion in Miami-Dade County has been a concern for citizens and transportation agencies for several years. It continues to worsen because of the county's continuous and rapid increase in population, particularly in its suburban areas. Concerns about airport congestion go hand-in-hand with those related to roadway congestion. Located at the southeastern tip of the U.S., Miami has been called the Gateway to South America." (Dowell, nd)

Dowell goes on to relate that the Miami-Dad Aviation Department has "...developed a $6 billion capital improvement program for the next twenty years to address the airport congestion concerns." (ND) Two primary goals are the focus of the program:

(1) Improve access to the airport;

(2) Increase airport's capacity to meet the ever-increasing demand. (Dowell, ND) These goals are also stated to provide challenges since the increase of airport capacity "...would also increase travel to and from the airport, taxing the already deficient roadway system." (Dowell, ND) Not only were the costs stated to be "prohibitive...the airport is surrounded by major freeways, arterials, office buildings and airport related facilities." (Dowell, ND)

Florida Department of Transportation (FDOT), the MIC is being developed as two major facilities stated to be those of:

(1) Rental Car Facility. This facility will consolidate the entire major rental car agencies scattered throughout the area into a 7,500-space parking facility that provides full rental car services. It will include customer service counters, administrative offices, return car lot, employee parking, and service maintenance areas; and (2) The MIC Core. Adjacent to the rental car facility, the MIC core will house limited passenger ticketing and baggage claim, as well as other non-airport land uses, such has hotel, shopping, and employment. Rail and bus stations as well as taxi and cruise bus staging areas are also incorporated into the MIC in order to provide connections to the local and regional transit system." (Dowell, ND)

The MIC core, rental car facility and Miami International Airport will be linked to each other by a people mover, and to the rest of the region by the following:

(1) Tri-Rail, a heavy rail line between Miami-Dade, Broward, and Palm Beach Counties;

(2) Metrorail, a light rail line that provides service in selected areas of Miami-Dade County;

(3) Metrobus, which provides bus service throughout Miami-Dade County;

Private bus service to the seaport for cruise ship passengers.

(4) Both the rental car facility and the MIC core are still under development. Their specific uses, densities, access and locations are being refined. (Dowell, ND)

III. RECOMMENDATIONS & CONCLUSIONS

It is not possible to consider the Miami International Airport with blinders on to the other very necessary components in the transportation and aviation infrastructure of the Miami area but instead required is considering the many intricately linked solutions in the area of human being transportation methods. This must be examined in term of the needs of optimal and efficient movement that is coordinated within a defined system.

This system must smoothly flow with costs being contained and optimization remaining in predefined ranges of satisfaction on timing and quality measures. In order that the Miami International Airport achieve this type of transportation system flow optimization it is necessary that all the smaller wheels and even the wheels found within those wheels are examined.

This research has related the various aspects of operation and specifically within the area of International Airport administration and operations for the Miami International Airport. Because the area in which this airport is located is so congested the various sub-layers of the airport and specifically of the infrastructure of the transportation system from the largest to the smallest parts be analyzed and examined for efficiency and for optimal links and efficient integration factors.

The Miami International Airport should focus on the overall aspects of transportation integration in view of factors including the challenges noted in this study which include those of economic, environmental, and demographics coupled with the physical demands of the mass movement of human beings within a condensed system such as is represented by the Miami International Airport and the area in which this airport is located as a major world hub. Disease factors, transportation of bacteria and insects are all considerations that must be addressed as are the occasional terrorist event or accident that occurs.

Transports of illegal drugs require security as well as do other threats. Networking and communication will be vital within and throughout the aviation workers for purposes of efficiency and security and certainly in consideration of efficiency and satisfaction of customers. Miami International Airport will be required to cautiously develop it is likely and in an ongoing or incessant manner in order to keep pace with the needs and demands that present in the near future of the aviation transportation industry. Lastly, the 'climate change' or 'global warming' as the present changes to the earth are called should be further and additionally examined in research studies.