Critical Assessment of the Heraklion Airport Relocation Project

TABLE OF CONTENTS

ABSTRACT

ACKNOWLEDGEMENTS

LIST OF FIGURES

LIST OF TABLES

LIST OF ABBREVIATIONS

Chapter 1: Introduction
1.1 Background
1.2 Aims and Objectives
1.3 Research Methodology
1.4 Chapters’description

Chapter 2: Cretan transport network
2.1 The island of Crete
2.2 Tourism in Crete
2.3 Transport Network in Crete
Chapter 3: Cretan airport network
3.1 Heraklion International Airport
3.2 Chania International Airport
3.3 Siteia airport
3.4 Kastelli, Maleme and Tympaki airports
3.5 Cretan airports competitive position
3.5.1 Main airside and landside infrastructure assessment
3.5.1.1 Heraklion airport
3.5.1.2 Chania airport
3.5.1.3 Siteia airport
3.5.2 Cretan airport network external competition
3.5.3 Internal competition between Cretan airports
3.5.3.1 Domestic traffic
3.5.3.2 International traffic

Chapter 4: Heraklion airport and Cretan network in 2030
4.1 Existing forecasts
4.2 Heraklion airport forecast
4.2.1 HER domestic traffic forecast
4.2.2 HER international traffic forecast
4.3 Chania airport forecast
4.3.1 CHA domestic traffic forecast
4.3.2 CHA international traffic forecast
4.4 Domestic Traffic forecast for Siteia airport
4.5 Forecasts’ observations
4.6 Heraklion airport’s capacity evaluation by 2030

Chapter 5: New Heraklion airport location assessment
5.1 Problem diagnosis phase
5.2 Suggested governmental solution
5.3 Proposed new airport location scenarios
5.4 Main stakeholders value systems analysis
5.5 Main criteria prioritisation
5.6 Scenarios evaluation
5.6.1 Criterion A
5.6.2 Criterion B
5.6.3 Criterion C
5.6.4 Criterion D
5.6.5 Criterion E
5.7 Optimum scenario selection

Chapter 6: Conclusion
6.1 Key Research Findings
6.2 Recommendations
6.3 Limitations of the study
6.4 Future Research Directions

References

Appendices

ABSTRACT

The thesis considers the critical assessment of the new Heraklion airport relocation project in the island of Crete, in Greece. Greek government decided the relocation of Heraklion International Airport in the Kastelli area, 35 kilometres away from its current location, adjacent to an operational military airport. This decision is critically evaluated considering the historical and future development of the Cretan airport network and the role of tourism, as a critical factor of airport development. Cretan airports’ current and future infrastructure and traffic are accessed, using historical data since 1994 as well as generated annual traffic forecasts until 2030. At the same time passengers’ market analysis is attempted, based on passengers’ segmentation, catchment areas orientation and tourism evolution. Competition is set as a critical parameter for future development and is considered not only internally, between Cretan or Greek airports, but also externally concerning peer airports in other international tourist places.

Additionally, critically assessing the planned new airport location, nine different relocation scenarios concerning are suggested and a framework for their evaluation is developed. Based on identified main relocation criteria, value management techniques like priority matrix and decision matrix are used for the framework analysis. Finally, the retention of Heraklion domestic operations in its current location is suggested, together with the relocation of all international operations in Tympaki airport, a prior military airport, situated 67 km away from the Heraklion airport.

Keywords:

Cretan airport network, Heraklion airport, Competition, Relocation, Tourism, Decision Matrix

ACKNOWLEDGEMENTS

The author would like to gratefully acknowledge Richard Moxon, supervisor of the study, for his support including information provision and useful comments throughout the whole duration of the dissertation. Additionally many thanks to Georgios Pliakas, Heraklion Airport Manager. Furthermore the author would like to express his appreciation for the total support of his family in every step of his life including this study. Finally many special thanks to Evgenia Smirnaki, and all faithful friends for their notable help.

LIST OF FIGURES

Figure 2.1 The island of Crete

Figure 2.2 Population distribution in Cretan Prefectures in 2011

Figure 2.3 Residents and non-residents overnights in hotels and campsites (2012)

Figure 2.4 Non-residents overnights and arrivals in hotels and campsites­Hotels used capacity for different prefectures (2012)

Figure 2.5 Tourists’ destination zones in Crete

Figure 2.6 Tourists’ arrivals in HER and CHA distribution zones

Figure 2.7 North Main National Road of Crete (VOAK)

Figure 2.8 North Main National Road near Heraklion airport

Figure 2.9 Comparison of air and sea ticket price for Heraklion to Athens route

Figure 2.10 Trip duration comparison for air and sea transport

Figure 3.1 Cretan airports location

Figure 3.2 Heraklion International Airport

Figure 3.3 HER International and domestic traffic development (1994­2013)

Figure 3.4 HER International and Domestic Passengers percentages (1994-2013)

Figure 3.5 HER annual passengers’ and ATM growth (1994-2013)

Figure 3.6 Domestic and international passengers per ATM in Heraklion airport (1994-2013)

Figure 3.7 HER international passengers by county of origin (2012-2013).

Figure 3.8 Main nationalities of tourists arrived in HER (2009-2013)

Figure 3.9 Traffic Seasonality in HER (2007-2012)

Figure 3.10 Average monthly traffic distribution (%) in HER (2007-2012)

Figure 3.11 Domestic Heraklion flights’ monthly distribution (2012-2013)..

Figure 3.12 Destinations from HER in June 2014

Figure 3.14 CHA international and domestic traffic development since 1994

Figure 3.15 International and Domestic Passengers percentages in CHA (1994-2013)

Figure 3.16 CHA annual passengers’ and ATMs’ growth (1994-2013)

Figure 3.17 Domestic and International passengers per ATM in CHA (1994-2013)

Figure 3.18 CHA international Passengers by county of origin (2012­2013)

Figure 3.19 Scandinavians tourists in CHA (2012-2013)

Figure 3.20 Increment of non-Scandinavians in CHA

Figure 3.21 Ryanair passengers’ service in Chania airport in 2013

Figure 3.22 International Chania flights’ monthly distribution (2012-2013)...

Figure 3.23 Domestic Chania flights’ monthly distribution (2012-2013)

Figure 3.24 Chania airport destinations in June 2014

Figure 3.25 Siteia airport

Figure 3.26 JSH international and domestic traffic development since 1994

Figure 3.27 JSH International and Domestic Passengers percentages in Siteia airport (1994-2013)

Figure 3.28 JSH annual passengers’ and ATMs’ growth (1994-2013)

Figure 3.29 JSH Annual passengers’ and ATMs’ growth (2004­2013)

Figure 3.30 JSH domestic and international passengers per ATM (1994­2013)

Figure 3.31 JSH flights’ monthly distribution (2012-2013)

Figure 3.32 Scheduled destinations from Siteia airport in June 2014

Figure 3.33 Kastelli airport

Figure 3.34 Maleme airport

Figure 3.36 Hourly ATM distribution in the day with the ATM peak hour in HER

Figure 3.37 15-minutes’ aircraft distribution in the ATM peak day in HER...

Figure 3.38 15-minutes’ passengers distribution in the ATM peak day in HER

Figure 3.39 Hourly ATM distribution in the annual peak day in CHA

Figure 3.40 15-minutes’ aircraft distribution in the ATM peak day in CHA

Figure 3.41 15-minutes’ passengers distribution in the ATM peak day in CHA

Figure 3.42 Hourly ATM distribution in the ATM peak day in JSH

Figure 3.43 15-minutes’ aircraft distribution in the ATM peak day in JSH

Figure 3.44 15-minutes’ passengers distribution in the ATM peak day in JSH

Figure 3.45 International and total passengers’ traffic for peer and Athens airports in 2012

Figure 3.46 Main aircraft, passengers and total charges for peer and Athens airports

Figure 3.47 Heraklion to Chania population and domestic traffic correlation in 2001 and 2011

Figure 3.48 HER to JSH domestic traffic ratio (1994-2013)

Figure 3.49 HER to CHA domestic and international traffic ratio (1994­2013)

Figure 4.1 HER passengers’traffic forecasts

Figure 4.2 Domestic, international and total passengers’ diagrams in HER (2014-2030)

Figure 4.3 Passengers’ traffic evolution in Cretan airport network until 2030

Figure 4.4 HER and Cretan airport network traffic forecast until 2030

Figure 4.6 International KPI for HER (2013-2030)

Figure 4.7 HER international KPI (2013-2030)

Figure 5.1 New airport’s draft layout as suggested by the government

Figure 5.2 Existing Cretan airports considered in the scenarios

Figure 5.3 Suggested new airport location as per scenario 8

Figure 5.4 Zoomed view of scenario 8 location

All Maps are taken from http://www.openstreetmap.org and © OpenStreetMap contributors. Please visit http://www.openstreetmap.org/copyright for further information.

LIST OF TABLES

Table 3.1 Main Cretan airports’ airside and landside infrastructure

Table 3.2 International tourists arrivals in Cretan international airports (January - April 2014)

Table 3.3 International passengers annual growth (%) in Cretan international airports (January - April 2014)

Table 4.1 HER Domestic passengers’ - annual growth forecasts (2014­2030)

Table 4.2 HER international passengers’ - annual growth forecast (2014­2030)

Table 4.3 HER total passengers’ and annual growth forecast (2014­2030)

Table 4.4 CHA domestic passengers’ - annual growth forecast (2014­2030)

Table 4.5 CHA international passengers’ - annual growth forecast (2014­2030)

Table 4.6 CHA total passengers’ and annual growth forecast (2014­2030)

Table 4.7 JSH passengers’ estimation (2013-2030)

Table 4.8 HER domestic and international ATM and passengers

Table 4.9 HER ATM, stands and terminal 2030 occupancies in domestic and international levels based on the 2013 second busiest hour of the year

Table 4.10 Current and future runway, stands and terminal occupancies’ comparison

Table 4.11 Current and future runway, stands and terminal occupancies for CHA and JSH

Table 5.1 Priority matrix

Table 5.2 Critical Parameters weight factors

Table 5.3 Percentages of international passengers’ accessible destinations

Table 5.4 Scenario assessment as per criterion A

Table 5.5 Distance to Heraklion city centre for all potential domestic airports

Table 5.6 Scenario assessment as per Criterion B

Table 5.7 Adjacent to airport population regarding set scenarios

Table 5.8 Assessment as per Criterion C

Table 5.9 Required runway length cost indicator for A330 operations

Table 5.10 Scenarios’runway cost metric

Table 5.11 Scenarios’ apron stands cost metric

Table 5.12 Scenarios’terminal stands cost metric

Table 5.13 Assessment as per Criterion D

Table 5.14 Assessment as per Criterion E

Table 5.15 Decision Matrix

LIST OF ABBREVIATIONS

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Chapter 1: Introduction

1.1 Background

Crete is the biggest island of Greece, representing around 5.8% of the Greek population. The facts that Crete contributed by 5.1% to the national GDP in 2011 and trade-tourism sector represents 35% of the regional GVA, set tourism development a critical factor for regional and national economic development (ELSTAT, 2014). The Greek climate, combined with the island’s monuments and sandy beaches, Cretan coastline seem to attract many tourists during the summer period. Considering that tourists’ demand is strongly influenced by tourists’ overall satisfaction, Heraklion airport role is significant. However, there is evidence that increased passengers’ traffic in airport during the summer creates major airside and landside congestion, resulting into flight delays and passengers’ complaints. At the same time, the location of the airport, situated within Heraklion city, might be convenient for passengers departing from Heraklion, but generates major adverse environmental effects, especially noise impact, for residents living adjacent to the airport. All the above together with the forecast of future traffic increment, indicate a need for immediate action in order to avoid further passengers’ dissatisfaction, which can negatively influence future tourism development. For that reason, the Greek government suggests the construction of a new airport 35 Km from Heraklion city and the relocation of all airport operations in the new area. The tender process for the airport relocation project has already started and tendering documentation is already sent to OJEC for publication (Cretalive.Gr, 2014-a). The proposal considers the termination of airport operations in the currently operating Heraklion airport and its relocation in the Kastelli area, adjacent to a military airport. The new airport will be designed to handle 10,000,000 passengers and will operate in parallel with the current military airport. The project considers a BOOT scheme similar to Athens International airport, as the airport is handed over to its operator for a period of 35 years including its construction phase.

1.2 Aims and Objectives

The aim of the thesis is to set the challenge for the critical evaluation of the Heraklion airport relocation project, emphasising on the selection of the new airport’s location. Additionally the paper stresses critical parameters affecting the selection of the optimum airport’s location, considering main stakeholders’ value systems.

In achieving the dissertation’s aim the following objectives have been set:

- Current and future Cretan airports’ position observation within a competitive environment considering passengers’ traffic and airside and landside infrastructure.
- Further examination of current and future competitive forces in internal level, between Cretan airports, as well as in relation to other transport means. Additionally the external competition between peer airports is investigated.
- Main stakeholders value systems analysis, including passengers, airlines, airport operator, government and local community.
- Suggestion of framework for the optimum airport relocation place selection, considering value management techniques and critical success factors.

1.3 Research Methodology

In thesis’ initial phase, the Heraklion airport network operational environment is investigated. This includes not only the potentially competitive sea transport network, but also the whole Cretan airport network. So, assessment of current Cretan airports’ performance in terms of traffic and infrastructure is made. Furthermore, passenger segmentation and orientation of catchment areas in domestic and international level follows, in order to identify potential competition between different Cretan airports. In order to further examine Heraklion airport’s competitive position within the broader environment of tourist market, peers to HER airports are identified and a comparison among airport charges is generated.

In the thesis second phase, Cretan airports’ future performance is assessed in terms of forecasted traffic and required airside and landside infrastructure; considering future internal airports’ competition evolution. The diagnosis of future operational problems of Heraklion airport and the need for potential further action are also identified and considered.

In the third phase of the study, a framework to select the optimum location of the new Heraklion airport is suggested considering nine different relocation scenarios, the evaluation of which is based on critical parameters. In order to set and define these parameters, different stakeholders’ value systems are considered. After the main relocation criterion identification; their weight factors are set, by the use of priority matrix, a value management technique. Another similar technique, the decision matrix, is used in order to proceed with the optimum scenario’s selection. Furthermore the suggested government’s scenario is further evaluated, based on the study’s suggested framework.

1.4 Chapters’ description

In the second chapter, Cretan residents’ distribution in the island and tourism development are investigated as parameters affecting domestic and international traffic evolution. Additionally, surface access influenced by the internal transport network and also potential airport competition with sea transport means are considered.

Prior to analysing current airports’ competition, all Cretan airports’ main characteristics are examined in the third chapter, including existing non-operating airports like Tympaki airport in south Crete. A Focus on the main operational airports, ATM, passengers’ and carriers’ market analysis is attempted. Estimation of current airside and landside capacity for Heraklion, Chania and Siteia airports, considering traffic development, seasonality and peak figures is made. In addition, competitive forces are investigated concerning not only the Cretan network at the domestic and international level, but also the external network considering similar to Heraklion airports.

Annual passengers’ traffic forecasts concerning the three main Cretan airports are generated until 2030 and stated in the fourth chapter. Regarding future competition, any potentially competing airports are identified, followed by an infrastructure capacity evaluation in 2030.

In the fifth chapter, nine different scenarios concerning airport operations’ relocation are proposed, including the suggested government’s relocation plan. Main stakeholders’ value systems are specified so that the main criteria for scenarios evaluation are identified. Value management techniques; such as priority and comparison matrix are used for criteria weight factors’ specification and final optimum scenario’s selection.

In the last chapter the study results are summarised and government’s relocation project is critically evaluated, considering alternative scenarios. Additionally, risks and uncertainties concerning Heraklion airport’s future development regarding proposed scenario are also examined. The study is concluded with further recommendations, study limitations and future research directions.

Chapter 2: Cretan transport network

Cretan transport network is investigated in this chapter in relation to surface access and potential competition between Cretan airports and sea transport network. Additionally, concerning airports’ traffic development, data relevant to domestic population’s distribution and tourists’ potential destinations within the island are analysed.

2.1 The island of Crete

Crete is the biggest island of Greece and the southern edge not only of the country, but also of the European continent. It covers 8,336 Km2 corresponding to 6.3% of the Greek land (Saitakis, 2013).

Figure 2.1 : The island of Crete

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Source: (Kreta-abc, undated)

The population of the island is 623,065 inhabitants, representing 5.8% of the Greek population, according to the last census in 2011 (ELSTAT, 2011). It is distributed into four prefectures, namely the prefectures of Chania, Rethymno, Heraklion and Lasithi. Chania, Rethymno, Heraklion and Agios Nikolaos are the main and capital cities of the mentioned prefectures. Additionally Heraklion is the island’s capital city and Heraklion prefecture hosts almost the half -49%- of the Cretan inhabitants as shown in figure 2.2 below.

Figure 2.2: Population distribution in Cretan Prefectures in 2011.

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2.2 Tourism in Crete

Regarding the regional economy, Crete contributed to the Greek GDP by 5.1% in 2011, noting the critical role of trade-tourism, contributing by 35% to the regional GVA in 2010 (ELSTAT, 2014).

The sunny summer weather of Crete, combined with the Cretan sandy beaches and resorts, are the main incentives for tourism development (Saitakis, 2013). In addition, plenty of archaeological places enhance tourism evolution. Based on tourists’ arrivals in the island, it can be stated that it is mostly concentrated between May and October showing a clear seasonal character (CIHEAM, 2013).

As international visitors’ numbers and their potential destination play a key role for the whole Cretan airport network evolution, nights spent in hotels and campsites sorted by Cretan prefectures, together with hotel capacity are examined in appendices 1 and 2, together with arrivals in hotels and campsites in appendix 3.

Comparison of non-residents’ and residents’ overnights for the Cretan prefectures, is shown in the following figure. The non-residents dominance is clear, representing 95% of the total hotel and camping overnights.

Figure 2.3: Residents and non-residents overnights in hotels and campsites (2012)

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Figure 2.4: Non-residents overnights and arrivals in hotels and campsites­Hotels’ used capacity for different prefectures (2012)

As shown in figure 2.4, visitors’ overnights and arrivals percentages for the different prefectures are similar. Additionally Heraklion prefecture absorbs most of the visitors, almost double than Chania. Considering tourism sector’s further development, it is notable that there is spare capacity for all the prefectures’ hotels, as their usage percentage is between 54% and 61%.

Regarding international passengers’ destinations arrived in Heraklion and Chania international airports, NTUA conducted a survey, with the participation of 3,800 tourists. Based on this, six destination zones are defined as shown in figure 2.5.

Figure 2.5: Tourists’ destination zones in Crete.

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Source: (Ampakoumkin et al, 2001)

The above results seem to agree with the ones stated in Figures 2.3, 2.4, considering that the majority of Zone 1 is located in Heraklion prefecture and Zones 4 and 5 mainly concern Chania prefecture.

2.3 Transport Network in Crete

Crete is located around 160 Km from the Greek mainland (Saitakis, 2013), which results in the absence of any direct surface access to the country and generally to the rest of Europe. Regarding the internal transport network it only comprises a road network system.

The main national road of the island is the North Main National Road of Crete, known as VOAK, which connects all the four Cretan prefectures and is located all along the northern part of the island, parallel to its north coast line, as shown in the figure 2.7.

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Source: OpenStreetMap (c) OpenStreetMap-contributors

VOAK total road length is more than 300 kilometres and more than 4 hours are required to cover it. However the fact that the majority of the road delivers only one lane per direction together with the absence of any protective median barrier are important parameters that should be carefully considered and improved. In the summer period, when tourists’ presence significantly increases the traffic flow, major congestion is observed especially in the parts of the road where only one lane per direction exists. Additionally in these congested parts, safety problems can arise due to frequent overtaking of impatient drivers, considering the absence of protective barrier, separating different road directions as well. The only part of VOAK, where increased safety measures are in place, is the one near Heraklion airport as shown in figure 2.8.

It is a high speed- two lanes per direction national highway which covers 25 Kilometres equally distributed in both Lasithi and Rethymno directions. Considering the rest of the network, a dense network of secondary national roads and other public roads connects the remaining Cretan cities and villages, noting that for the prefecture of Heraklion there are 0.10 linear Km of secondary national road per Km2

Considering the external transport system, sea and air transport means are broadly used. Regarding sea transport, all four Cretan prefectures have operational ports, Heraklion port absorbs more than 50% of the total traffic in Crete. Currently, all destinations connect Crete with the Greek mainland and mainly Athens, and there are not any scheduled international trips (Gavras, 2008).

However, in the summer period, there are increased scheduled trips to Greek islands due to domestic and international leisure visitors, as well as cruises transferring tourists from international points of origin. It is noted that in Heraklion port there is evidence of 343,111 cruises passengers in 2013 in terms of seat capacity, representing 7% of HER international traffic (HCAA, 2013). The anticipated traffic for 2014 reaches 310,594 tourists, indicating a minor decrease by 9.5% (HPA, 2014).

Considering transportation costs in the case of sea and air transport, a direct comparison cannot be made in the case of cruises due to the different type of product cruises sell, which is not simply a direct transport. However in the case of domestic trips, the choice of sea instead of air transport means is not regarded as quite challenging in terms of time and cost. For example checking in the 1st of July 2014 for one way ticket’s price in the 3nd of August 2014, for Heraklion to Athens route the following chart is made.

Figure 2.9: Comparison of air and sea ticket price for Heraklion to Athens route.

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Sources: (ANEK, 2014), (Minoan Lines, 2014), (Aegean Airlines, 2014)

Figure 2.9 depicts the prices charged by Aegean airlines and Anek and Minoan Lines sea carriers. Checking Figure 2.10, which indicates the trip duration, it is obvious that given the current situation, only limited competition between air and sea transport in the domestic field can exist.

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Figure 2.10: Trip duration comparison for air and sea transport.

Source: (ANEK, 2014), (Minoan Lines, 2014), (Aegean Airlines, 2014)

Chapter 3: Cretan airport network

As shown in figure 3.1 there are 6 airports in Crete, Heraklion, Chania, Siteia, Kastelli, Tympaki and Maleme airports. Two of them -Heraklion and Chania- are international and located in the northern parts of the two highest populated prefectures of Crete, near their biggest cities. Siteia airport in Lasithi prefecture mainly deals with domestic operations and is also located in the north coastline. There are two more airports in Heraklion prefecture: Kastelli, which is a military airport and Tympaki, which is an ex-military airport, currently non-operational, as is the case of Maleme airport in Chania prefecture (HCAA, 2014-a).

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Figure 3.1: Cretan airports location

Source: OpenStreetMap (c) OpenStreetMap-contributors

HCAA is the civil aviation regulatory body in Greece, acting under the supervision of the Ministry of Development, Competitiveness, Infrastructure, Transport and Networks. Regarding military aviation, it is under the responsibility of the Ministry of Defence (Eurocontrol, 2012).

Considering ownership, except for Athens International Airport which is 55% government owned privatised entity leased for 30 years (IATA, 2005); all other Greek airports are government owned. However there is evidence that the government is willing to negotiate the private sector’s involvement in the majority of the airports, not only by following an airport strategy similar to Athens in the case of Heraklion airport, but also by leasing smaller Greek airports into groups. In detail the government already started the tender process for the privatisation of two airport groups having included Chania airport in one group together with six other airports, representing more than 20% of the total traffic in Greece (HRADF, 2014).

3.1. Heraklion International Airport

Heraklion International airport "Nikos Kazantzakis” is located 4 Km from Heraklion city centre and handles domestic and international flights. It is the second busiest Greek airport after AIA and the first one in non-scheduled flight operations, with a percentage of more than 90% (Heraklion Airport, 2014).

Figure 3.2: Heraklion International Airport

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Source: OpenStreetMap (c) OpenStreetMap-contributors

Although there are military facilities within the airport’s airside infrastructure, there are few military operations taking place in the airport any more (Emiris, 2012), except for refuelling of military aircraft, without further occupancy of the apron area, especially in the peak hours (Pliakas, 2014).

In 2013 the airport accommodated 43,544 movements, corresponding to 5,778,764 passengers and only 288 tonnes of cargo (HCAA, 2013-a). Figure 3.3 indicates passengers’ traffic development since 1994, considering their segmentation into domestic and international.

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As is clearly shown, the total passengers’ curve follows the same trend as the international passengers’ one, because of the constant high percentage of international passengers as shown in figure 3.4, being 85.1% in 2013 and 82.5% for the whole period 1994-2013.

Figure 3.4: HER International and Domestic Passengers percentages (1994­2013).

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Source: (HCAA, 2013-a)

Checking annual traffic growth in figure 3.5 below, since 2013 the traffic started recovering after the EU financial crisis started in 2008, which had negative influence on traffic movements in 2008-2010 period and in 2012. In addition, terror attacks in Turkey in 1994 and in USA in 2001 may also be the reasons of traffic annual reduction in the relevant periods (Ministry of Environment, 2009).

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Figure 3.5: HER annual passengers’ and ATMs’ growth (1994-2013).

Source: (HCAA, 2013-a)

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Considering ATM-passengers relationship, the following figure indicates their ratio for the domestic and international sector separately.

As expected, international operations show more optimum use ofaircraft, due to the use of larger capacity aircraft and higher load factors. Domestic and international load factors do not indicate major fluctuations. In 2013 the average numbers of passengers for domestic and international flights were 74 and 154, noting that the period 1994-2013 the average numbers were 68 and 153 passengers respectively.

Considering passengers’ further analysis, the country of origin of international passengers at the Heraklion airport is examined.

Source: (CIHEAM, 2013)

As demonstrated in figure 3.7 above, mainly Russians, Europeans and secondly Israeli passengers are dominant in Heraklion airport in the last years. In relation to Russian passengers, a 323% growth of Russians visitors has been observed in 2013 compared to 2009, as shown in figure 3.8.

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Figure 3.9: Traffic Seasonality in HER (2007-2012)

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Source: (SETE, undated)

As shown in more detail in figure 3.10 below, more than 73% of passengers’ traffic in Heraklion airport takes place within the 6 months period May to October, when massive tourism arrivals exist.

Domestic flights’ monthly distribution demonstrated in Figure 3.11 proves that seasonality is mainly relied on international traffic as domestic traffic does not indicate major seasonal character.

Figure 3.11: Domestic Heraklion flights’ monthly distribution (2012-2013)

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Figure 3.12: Destinations from HER in June 2014

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Source: (CAPA, 2014-a)

3.2 Chania International Airport

Chania International airport "Ioannis Daskalogiannis” is the second busiest Cretan airport situated 15 Kilometres away from Chania city centre. Its road connection to the city is made through a rather old road network, delivering one lane per direction (Chania Airport, undated). Except for domestic and international flights, the airport also operates as a permanent military base (Emiris, 2012).

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Source: OpenStreetMap (c) OpenStreetMap-contributors

In 2013 the airport served 15,076 ATM, corresponding to 2,078,857 passengers and 549 tonnes of cargo (HCAA, 2013-b). Passengers’ traffic evolution since 1994 is shown in figure 3.14, concerning their domestic and international nature.

Figure 3.14: CHA international and domestic traffic development since 1994

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Similarly to Heraklion airport, total traffic is strongly influenced by international operations, which get a percentage of 81.8% in 2013 and 72.5% in average in period 1994-2013 although lower than the one in Heraklion airport.

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Source: (HCAA, 2013-b)

Concerning annual traffic growth in figure 3.16, it constantly increases after 2010, despite the financial crisis in Europe and Greece, potentially having been negatively influenced the previous years by 2001 terror attack in USA.

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Figure 3.16: CHA annual passengers’ and ATMs’ growth (1994-2013)

Source: (HCAA, 2013-b)

Passengers to ATM correlations are similar to the Heraklion case, indicating higher increment in the domestic sector after 2004. As shown in Figure 3.17, the relevant

ratios are 88 and 158 passengers for domestic and international operations in 2013, being 72 and 158 respectively for the whole period 1994-2013.

Figure 3.17: Domestic and International passengers per ATM in CHA (1994­2013)

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Checking passengers’ further segmentation, visitors’ country of origin is demonstrated in figure 3.18.

Figure 3.18: CHA international Passengers by county of origin (2012-2013)

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The situation is slightly different compared to Heraklion airport, as the majority of visitors are Scandinavians in a percentage of more than 50% followed by Europeans, as shown in figure 3.19.

Figure 3.19: Scandinavians tourists in CHA (2012-2013)

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Figure 3.20: Increment of non-Scandinavians in CHA

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Figure 3.21: Ryanair passengers’ service in Chania airport in 2013

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Based on the high international passengers’ percentage, traffic seasonality is also examined. As happens with Heraklion airport case, Chania international flights indicate major seasonal character as shown in figure 3.22.

Figure 3.22: International Chania flights’ monthly distribution (2012-2013)

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Sources: (CAA, 2013), (CAA, 2012)

On the other hand, domestic sector does not demonstrate high seasonality levels, similarly to Heraklion airport, as presented in figure 3.23.

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Figure 3.23: Domestic Chania flights’ monthly distribution (2012-2013)

Considering carrier market, it is observed that currently 12 carriers operate in Chania airport and Aegean Airlines is the only domestic one. However Ryanair is the dominant carrier demonstrating 52.6% of the total seat capacity and 54.1% peak time ATM share in the last week of June 2014. Furthermore, out of 50 offered destinations in a typical day of June 2014, 90% are international located within Europe with10% in Greece, according to the following picture (CAPA, 2014-b).

Figure 3.24: Chania airport destinations in June 2014

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Source: (CAPA, 2014-b)

3.3 Siteia airport

Siteia public airport is located 1 Km away from Siteia city centre in the north part of Lasithi prefecture and mainly deals with domestic operations (HCAA-ELENG, undated).

Figure 3.25: Siteia airport

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Source: OpenStreetMap (c) OpenStreetMap-contributors

In 2013 the airport served 2,064 ATM corresponding to 35,962 passengers, shown in figure 3.26 where traffic development since 1994 is demonstrated.

Figure 3.26: JSH international and domestic traffic development since 1994

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It is noteworthy that there is evidence of international flights since 2012, generating less than 12% of total passengers in 2013, as shown in figure 3.27.

Figure 3.27: JSH International and Domestic Passengers percentages in Siteia airport (1994-2013)

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Source: (HCAA, 2013-c)

The minor international operations in the airport are coming from non-scheduled flights, originating from Netherlands and France (Verigos, 2014). However Siteia airport is not a designated international airport.

Regarding annual traffic growth there is a major increment in the year 2003, when the new runway became operational the 1st of May (HCAA-ELENG, undated).

Figure 3.28: JSH annual passengers’ and ATMs’ growth (1994-2013).

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Checking the passengers per ATM ratio for domestic and international operations, both are found lower compared to Heraklion and Chania airports as shown in figure 3.30. For example the passengers’ ratio for domestic operations is 16 in 2013, and 20 in the period 1994-2013. The low aircraft load factors and the extensive use of low capacity aircraft, despite the new runway delivery; are the main reasons for this observation, noting that turboprop are currently used in a percentage of 80% (Flightglobal, 2013).

Investigating monthly flights’ distribution, moderate seasonality is identified, despite the domestic character of the airport, as indicated in figure 3.31. The reason for this is potentially related to airport users, who are not only Siteia city’s residents, but also domestic and international tourists visiting the broader Lasithi prefecture in the tourist period. It is also reminded that tourist destinations are identified near Siteia as mentioned in paragraph 2.2.

Figure 3.31: JSH flights’ monthly distribution (2012-2013)

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Sources: (CAA, 2013), (CAA, 2012)

According to CAPA database, currently only three domestic airlines operate in the airport and Aegean is the dominant one demonstrating 46.5% of the total seats capacity and 41.7% peak time ATM share in the last week of June 2014. Furthermore five destinations to Greek mainland shown in figure 3.32 are observed; however not in the same frequency like in Heraklion airport.

Figure 3.32: Scheduled destinations from Siteia airport in June 2014

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Kastelli military airport is located in the Heraklion prefecture mainland, 35 kilometres from Heraklion city and is operational.

Source: OpenStreetMap (c) OpenStreetMap- contributors

Maleme airport is located in northern Chania prefecture, 38 Kilometres from Chania airport and 20 Kilometres west from Chania city.

Source: OpenStreetMap

(c) OpenStreetMap-contributors

It was a former military airport and operated as the main Chania airport until 1959, when operations shifted to the Chania international airport. Currently, commercial use of the airport has stopped and only minor general aviation and training operations are organised by Chania Aeroclub (Maleme Air Athletic Centre, 2014).

Tympaki airport is the only Cretan airport located in the south side of the island, in Heraklion prefecture. It previously operated as military airport, but currently only glider flights and car races are hosted there. It still belongs to the Greek Military Aviation Authority and is used as a leisure accommodation facility for military professionals during the summer months (HAF, undated).

Figure 3.35: Tympaki airport

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Source: OpenStreetMap (c) OpenStreetMap-contributors

3.5 Cretan airports competitive position

3.5.1 Main airside and landside infrastructure assessment

Considering the airports’ current operational infrastructure comparison, in table 3.1 the runways’ length and aircraft parking stands are presented as indicative for the airside infrastructure. Concerning landside infrastructure, terminal buildings’ surface area is given in the same table.

Table 3.1: Main Cretan airports’ airside and landside infrastructure

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Sources: (Ministry of Environment, 2009), (Pliakas, 2014), (HCAA, undated-a),

(HCAA, undated-b), (HCAA, undated-c)

However regarding Heraklion airport airside capacity, due to obstacle limitations, runway 09 threshold is displaced by 477m, reducing the actual runway length into 2,237 meters (HCAA, 2013-d). In addition, only two out of the three existing runways are operational; however runway 12-30, intersecting with the main runway 09-27, cannot be used at night due to improper lighting. Considering the apron area, according to the Airport Manager, 10 out of the 25 stands are coming from airport’s latest development, which is planned to continue by taking advantage of the area designated for military operations in the past (Pliakas, 2014).

Regarding Chania airport, which has the largest runway in the island and a parallel taxiway on its full length, construction work for the extension of the terminal has already started and by 2015 the building is anticipated to cover 31,500 m2 in total (Ministry of Transport, 2012).

Also in Siteia airport, there is evidence of a project in progress, to expand the terminal to finally reach 7,560 m2 in 2015 (Verigos, 2014).

Considering the non-commercially operational Cretan airports in Kastelli and Maleme, their runway length is approximately 3,000 and 800 meters (Google Earth). On the other hand, Tympaki has two runways as shown in figure 3.35, which cover 2,713m x 35m the largest and 1,650m x 35m the smallest of the two.

In order to assess the Heraklion airport capacity, the date of 25 of August 2013 is used, found to be the day which includes the peak hour of the year 2013 (Pliakas, 2014). According to HER database during that day the airport served 270 flights: 132 departures and 138 arrivals. The ATM hourly distribution is shown in the below figure.

Figure 3.36: Hourly ATM distribution in the day with the ATM peak hour in HER

illustration not visible in this excerpt

Sources: (Author), (Pliakas, 2014)

As indicated in the above diagram, during the peak hour between 10:00-11:00, 28 ATMs are served. However, it is observed that hourly ATMs are not normally distributed, noting that the hourly ATMs are 12 in day average base and 16 in average considering day time flights between 08:00-24:00. The abnormal ATM distribution happens not only due to the air carriers’ flight time preferences, but also because of external factors, such as late aircraft arrivals and departures mainly due to weather conditions (Pliakas, 2014). ATMs related to military aircraft and low capacity regional jets -less than 70 seats- are not included in the above figure. This type of flight constitutes the 11.8% -36 flights- of the total ATMs for the peak hour day, but are considered of minor importance at this stage, not only due to the low passengers’ number generation, but also due to the difficulty to be included in the traffic forecast, which is mainly based on passengers’ numbers.

Considering runway capacity evaluation, the aircraft "mix index” based on the percentages of C and D aircraft classes is used and is found:

(% Class C aircraft) + 3 x (% Class D aircraft) = 107. Assuming single runway configuration, based on the fact that mainly runway 09-27 is used, the initial hourly runway capacity is found to be 55 ATM, (Fewings, 2014-a). Using the simplified

methodology for runway capacity, considering approach radar and half parallel taxiway existence as shown in figure 3.2, the capacity is reduced to 0.65 x 55 = 35 ATM per hour. So, based on the ATM peak hour it can be stated that the runway has reached 80% of its capacity in the peak hour, which is considered high usage level (Fewings, 2014-a).

Considering the apron area capacity, the following figure illustrates 15-minute aircraft distribution in the apron area.

Figure 3.37: 15-minutes’ aircraft distribution in the ATM peak day in HER

illustration not visible in this excerpt

Sources: (Author), (Pliakas, 2014)

As observed, the maximum aircraft number in the apron is 19 and happens between 09:30 and 10:00. Furthermore the 24 hours average number of aircraft is 9, and the 08:00 to 24:00 average is 11 aircraft, indicating abnormal distribution. Checking apron capacity, based on the 25 existing remote stands, the peak occupancy of the apron is 76%.

Regarding passengers’ distribution, figure 3.38 demonstrates total passengers’ number every 15 minutes of the busiest day of 2013.

illustration not visible in this excerpt

Sources: (Author), (Pliakas, 2014)

It is assumed that arriving passengers use the terminal for half an hour after aircraft disembarkation, departing domestic passengers stay in the terminal for one hour before their flight, while international departing passengers occupy the building two hours before flying. In addition, the passengers’ numbers used in the above diagram are actual numbers as given by the airport authority, considering aircraft occupancy.

It is observed that 5,552 passenger is the peak number in the terminal and similarly to maximum aircraft stands’ occupancy, exists between 09:45 and 10:00. However the 24 hours average passenger number is only 2,178 and the 08:00 to 24:00 average is 2,909, indicating the abnormal passengers’ distribution as shown in the diagram in figure 3.38. Concerning aircraft load factor, it is 85.8%, a really high number, as 43,771 passengers are using aircraft of total seat capacity of 51,007 passengers (Pliakas, 2014).

Checking landside infrastructure capacity, assuming minimum anticipated space per passenger as six square meters (Fewings, 2014-a), the total required terminal building surface should be 33,312 m2 in the peak time which indicates 128% under capacity based on current terminal surface.

Similarly to Heraklion airport case, the 2013 peak day in terms of ATM, found to be the 17th of August, is used in order to estimate airport’s capacity.

Figure 3.39: Hourly ATM distribution in the annual ATM peak day in CHA

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Sources: (Author), (Chania Airport Authority, 2014)

As shown in the figure above, the peak ATM number is 12.

Concerning runway capacity, the same methodology used in Heraklion airport is followed. The mix index is found 100, which indicates initial runway capacity of 55, for single runway configuration. After the use of simplified methodology and considering the absence of approach radar (Cretalive.Gr, 2014-b), the final capacity is estimated 24 ATM per hour and the runway occupancy in the peak hour is 50%.

Regarding the apron capacity, the figure 3.40 illustrates the 15 minutes aircraft distribution in the apron.

illustration not visible in this excerpt

Sources: (Author), (Chania Airport Authority, 2014)

As observed, there are 10 aircraft present in the apron area during the peak 15 minutes of the busiest day, which corresponds into stands under capacity of 125%, indicating marshalling option.

Passengers’ distribution in the terminal building is also demonstrated in figure 3.41, making the same assumptions as in Heraklion airport case regarding their terminal occupancy time.

Figure 3.41: 15-minutes’ passengers distribution in the ATM peak day in CHA.

3500

illustration not visible in this excerpt

Sources: (Author), (Chania Airport Authority, 2014)

It is observed that the maximum number of passengers is 2,989 happening between 11:45 and 12:00, resulting into 17,934 m2 of terminal building requirement. In that case the terminal occupancy is 122%, without considering terminal future expansion.

3.5.1.3 Siteia airport

In order to check Siteia airport infrastructure, the ATM distribution for the busiest day, found to be the 14th of August 2013, is shown in figure 3.42.

Figure 3.42: Hourly ATM distribution in the ATM peak day in JSH

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Three hourly movements is the peak in this case, happening between 11:00 and 12:00. Runway capacity, according to simplified methodology, is found to be 20 hourly ATM, considering the absence of approach radar and exit only at runway ends. So, the runway occupancy is estimated to 15%.

Regarding apron occupancy the 15 minutes aircraft distribution for 14th August is demonstrated in figure 3.43.

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Source: (OAG, 2013)

Two aircraft is the maximum number present in the apron area, which results to 33% stands’ occupancy.

Concerning passengers’ distribution, it is shown in figure 3.44, below.

Figure 3.44: 15-minutes’ passengers distribution in the ATM peak day in JSH

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Source: (OAG, 2013)

The maximum passenger number is found to be 170 according to OAG, which is reduced into 141 concerning 83% load factor, found from Siteia airport database considering the day of 14 of August 2013 (Verigos, 2014). In that case the terminal

occupancy percentage is 121%, which indicates congestion in the passengers’ peak time. However, as already mentioned, an expanded terminal is under construction.

3.5.2 Cretan airport network external competition

The two main Cretan international airports mainly deal with international leisure passengers, considering the island as a tourist destination. For that reason, the existence of similar tourist places not only within the Greek territory but also in broader Europe can significantly affect tourists’ arrivals and Cretan airports’ traffic development. In addition airport charges play a key role on tourism evolution, influencing air carriers’ costs and consequently individual travellers’ expenses, as the fare is potentially highly dependent upon charges. Regarding Greek tourist destinations, except for the case of Athens international airport, airport charges are similar for all Greek airports, not influencing internal tourist traffic competition. Concerning international tourist orientations, different European airports’ aeronautical charges are compared, in order to define their potential level of influence on tourism and traffic development. For that reason, an airport charges comparison between Heraklion and five similar European airports is attempted. The peer airports’ choice is based on two main criteria: the total annual passengertraffic and the high percentage of international passengers- tourists. Naples airport in Italy, Ibiza airport in Spain, Dalaman airport in Turkey, Faro airport in Portugal and Larnaca airport in Cyprus are chosen to be compared to Heraklion airport. It is notable that all the countries where the above mentioned airports are located are regarded as competitors to Greece in the tourist sector (SETE, undated). Additionally, Athens airport charges are also examined, in order to investigate the difference between the only Greek airport where the private sector is involved and the government owned ones; although the traffic number is not similar. Figure 3.45 shows total and international passengers’ traffic levels for the chosen seven airports.

Figure 3.45: International and total passengers’ traffic for peer and Athens airports in 2012.

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Source: (Flightglobal, 2012)

In order to compare airport charges, an A319 aircraft with 64 tonnes MTOW, a payload of 100 passengers and one hour turnaround time is selected, which is a common case in Heraklion airport (Airbus, undated). It is additionally assumed that the flight is considered as intra EU flight, arriving at 10:00, carrying adults and the aircraft is registered in an EU state. The main aircraft and passengers charges are demonstrated in the below figure 3.46 and in appendix 4 in detail.

Figure 3.46: Main aircraft, passengers and total charges for peer and Athens airports

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Sources: (HCAA, 2014-b), (AIN, 2014), (AIA, 2013), (ANA Group, 2014), (AENA Aeropuertos, 2014), (Hermes Airports, 2014)

Regarding airport charges estimation, landing and parking charge are mainly included in the aircraft charges. Furthermore main passenger charges are relevant to passengers’ infrastructure, security, passengers’ service and air bridge use. It is also noted that in the Greek airports, a fee relevant to AIA development is payable and included in every passengers’ fare irrespective of the flight route. The airport development fund is 12 euros per passenger in case of a European flight route and 22 euros in case of non EU route (AIA, 2013). However there is evidence that this surcharge will be suspended at the end of 2014, enhancing the possibility of further fare reductions, dependent on air carriers’ policy.

Heraklion airport currently offers the lowest aircraft and passenger charges compared to all other peer airports as demonstrated in figure 3.46. Furthermore Heraklion airport gets similar traffic compared to its peer airports; even if its total charges are lower by 27% to 55%. In addition, it seems that there is a huge difference between charges in Heraklion and Athens airport, which probably indicates the charges increment in case of private sector involvement in the airport. In such a case, the future traffic increment scenario can be set into risk as peer airports, which are found competitive due to tourism factor, may be preferred by airlines and travel agencies, gaining a competitive advantage over Heraklion airport. On the other hand any charges reduction in Heraklion airport due to the suspension of airport development fund can undoubtedly enhance the opportunity for international passengers’ increment.

3.5.3 Internal competition between Cretan airports

3.5.3.1 Domestic traffic

Internal competition between Cretan airports is examined separately for domestic and international traffic. Firstly domestic passengers’ traffic in the two international Cretan airports in Heraklion and Chania seems to be related to domestic residents of each prefecture. The below figure 3.47 shows the two airports’ prefectures population ratio together with the domestic passengers’ ratio for comparison.

Figure 3.47: Heraklion to Chania population and domestic traffic correlation in 2001 and 2011

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Sources: (HCAA, 2013-a), (HCAA, 2013-b), (ELSTAT, 2011)

As domestic traffic is potentially dependent upon each airport’s prefecture residents, figure 3.47 indicates potential separation of Heraklion and Chania catchment areas in the domestic level, dependent on driving distance from the airport. It is noted that all of the three main Cretan airports are maximum one hour driving distance from their prefectures’ capital cities, with Heraklion to be in the most advantageous position, being located only 4 Kilometres from the city centre.

Regarding domestic passengers coming from Rethymno prefecture, located between Heraklion and Chania airports as already shown in figure 2.1, it seems that they are distributed between both international airports. Their airport choice should be influenced by the driving distance between the airport and their residence, the availability and frequency of their desired flight destination and the air carrier’s fare. The Heraklion to Siteia domestic passengers ratio’s development is also examined in figure 3.48.

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As shown in the figure 3.48, the ratio is getting lower and relatively stable after 2003, when the new JSH runway was delivered, resulting into more regular domestic flights from Siteia airport. Siteia airport’s domestic catchment area lies within Lasithi prefecture and undoubtedly in case it did not exist, Heraklion airport would absorb the total of Siteia traffic benefiting from its geographical position. From this point of view, Siteia negatively influences Heraklion domestic catchment area without affecting Chania airport. However the variety of frequencies and destinations offered by Heraklion airport in domestic and international level surely causes the expansion of Heraklion airport catchment area within Lasithi prefecture, even in areas near Siteia city. It is mentioned for the last week of July 2014 there is only one flight per day from Siteia to Athens whereas at the same time Aegean airlines offers seven different Heraklion to Athens daily flights (Aegean Airlines, 2014).

3.5.3.2 International traffic

Regarding international traffic interrelation for the two international airports, the situation seems different compared to the domestic sector case. Figure 3.49 shows the international traffic correlation analysis. In this figure, the Heraklion to Chania domestic and international passengers’ traffic ratios development since 1994 are demonstrated and expressed as domestic and international KPI.

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Figure 3.49: HER to CHA domestic and international traffic ratio (1994-2013)

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Domestic KPI International KPI

Sources: (HCAA, 2013-a), (HCAA, 2013-b)

As expected, domestic KPI is relatively stable due to the mentioned clearly separated domestic catchment areas. However, international KPI indicates a decreasing trend since 1994, as Chania airport is continuously developing. Given the generally increasing trend of tourists’ arrivals in Greece, the above diagram indicates competition existence in the international traffic between the two airports. This observation is supported by the fact that international passengers are mainly tourists who as leisure passengers are focused on cost factor more than driving time to their final destination. As both airports seem to have overlapping catchment areas concerning international passengers, the following table showing international tourists’ arrivals for the first six months of 2014 in both airports is presented.

Table 3.2: International tourists arrivals in Cretan international airports (January - June 2014)

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Source: (SETE, 2014)

As observed, Heraklion airport demonstrated less international traffic from January to March 2014 and gets higher numbers since April, when the massive tourism season starts. However compared to 2013, Chania airport shows positive annual traffic growth for all the first four months, which is not the case for Heraklion airport, as shown in table 3.3.

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Source: (SETE, 2014)

The reason for Chania airport’s dominance in the first quarter of 2014 is strongly related to Ryanair presence in the airport. The offer of new scheduled European routes by a low cost carrier can undoubtedly enhance international traffic growth, especially in a season when there is not similar offer by another competitive carrier in Heraklion airport.

Chapter 4: Heraklion airport and Cretan network in 2030

After the assessment of current airside and landside Cretan airports’ infrastructure and a potential competitive forces investigation, the future position of HER and generally the Cretan airport network is evaluated in this chapter. For that reason traffic forecast generation for domestic and international passengers for Heraklion and Crete until 2030, is presented.

4.1 Existing forecasts

Regarding existing forecasts for Heraklion airport, figure 4.1 demonstrates three different scenarios, presented in the environmental impact assessment coming from the Greek ministry of Environment, according to appendix 5 (Ministry of Environment, 2009). It is noted that scenario A is divided into three sub-scenarios based on the worst, medium and optimum traffic development case.

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Figure 4.1: HER passengers’ traffic forecasts

Source: (Ministry of Environment, 2009)

As observed scenario C forecasts more than 7,700,000 passengers by 2030 and considers a conservative approach compared to other scenarios generated for different forecast years. Due to the fact that available traffic forecasts concern different years of generation and forecast, a new forecast is generated by the author.

4.2 Heraklion airport forecast

The forecast is made separately for domestic and international traffic due to the different parameters influencing each traffic type. Firstly the independent variables potentially influencing the traffic level are identified, forming a regression model. In the next stage, statistical multiple regression analysis using SPSS 21, is performed for the defined model and the SPSS results are examined. Checking R2 and correlations between independent variables; are critical parameters in order to define model’s accuracy, avoiding multicollinearity existence at the same time. After that, forecasted dependent variables’ results are extracted until 2030. In order to improve forecast’s accuracy the MAPE for the year 2013 is found based on the defined regression model. Correction for the following years based on 2013 MAPE is performed assuming that the same error exists for every year.

4.2.1 HER domestic traffic forecast

The regression model concerning Heraklion airport domestic traffic is as follows:

Ln(Her.Dom.) = 4.101 + 0.801 Ln(Greek GDP) - 0.371 Ln(Euro to Dollar rate)

As shown in the above equation the selected dependent variable is Ln(Her.Dom.) standing for the logarithm of Heraklion domestic passengers.

The independent variables influencing Heraklion airport’s domestic traffic are as follows:

Ln(Greek GDP), is the logarithm of the Greek GDP and

Ln(Euro to Dollar rate) is the logarithm of the exchange rate between US Dollar and Euro currencies.

The selection of the domestic GDP variable was based on its correlation to domestic residents’ welfare, assuming that increased income enhances travel demand, especially in case of leisure travel purpose.

Euro to Dollar exchange rate is also selected as a metric of the local currency value, which also affects welfare.

Following the above model statistical analysis, R2 value -indicating the level independent variables combination explains the dependent variable- is found relatively high -0.86- which means that domestic passengers’ development is explained by the model by 86%, (Lei, 2013) as shown in appendix 6.

In order to generate the dependent variables’ forecast, Eurostat forecasts concerning the Greek GDP and the Euro to Dollar exchange rates are used (MIRC, 2014).

Heraklion domestic passengers and relevant growth rates are shown in table 4.1.

illustration not visible in this excerpt

Source: (Author)

It is noted that annual traffic growth in 2020 is assumed as 3.5%, as the initially estimated figure is found to be 0.8%. This happens due to the independent variables forecasted figures used.

Based on the above table, domestic passengers in Heraklion airport in 2030 are estimated around 1,400,000, increased by 63.5% compared to 2013.

4.2.2 HER international traffic forecast

The regression model equation concerning Heraklion airport international traffic is the following:

Ln(Her.lnt.) = 6.572 + 0.532 Ln(EUPPP) -0.361 Ln(Euro to Dollar rate),

where Ln(Her.Int) stands for the logarithm of Heraklion airport international passengers.

The chosen independent variables in this case are:

Ln(EUPPP), which stands for the logarithm of EU Purchasing Power Parity and

Ln(Euro to Dollar rate) is the logarithm of the exchange rate between US Dollar and Euro currencies.

Considering independent variables, EU PPP is selected, as an indicative factor of EU residents’ welfare and Euro to Dollar exchange rate represents European currency international value. All the variables refer to the European environment, as the vast majority of the international passengers come from European countries as already mentioned in paragraph 3.1.

Except for the selected independent variables, more variables were checked in the SPSS regression analysis, but finally their use was rejected due to inadequate model explanation or multicollinearity issue. Such variables were relevant to Greek population for domestic traffic, EU population for international traffic, crude oil price and unemployment rate in Greece and EU. In addition, dummy variables relevant to unexpected events occurrence were examined, such as a terror attack in Turkey in 1995, USA terrorism in 2001, SARS expansion in 2002, Heraklion Olympic events in 2004, Madrid airport bombing in 2006, and financial crisis started in 2008. However after checking R2 figures, the influence of the dummy variables was not found critical.

As found after SPSS regression analysis, the international passengers’ variable is 75% explained by the combination of the chosen independent variables, as shown in appendix 7.

Estimating international passengers until 2030, same forecast source like in the case of domestic passengers forecast is used for the EU PPP and Euro to Dollar exchange rate. The results are presented in table 4.2.

illustration not visible in this excerpt

Source: (Author)

It is noted that annual traffic growth in 2020 is assumed as 2.2%, as the initially estimated figure is found -0.3%. This happens due to independent variables forecasted figures used.

As observed, the international traffic in 2030 is estimated in approximately 6,875,000 passengers, indicating 39.7% increase compared to 2013. Concerning tables 4.1, 4.2, domestic traffic demonstrates higher annual growth rates after 2015 compared to the international one, potentially based on Greek economy recovery after the deep financial crisis.

Additionally, total passengers forecasted numbers and annual growth rates for the period 2014-2030 are presented in the table below.

illustration not visible in this excerpt

Source: (Author)

Passengers’ traffic is additionally graphically shown in figure 4.2.

Figure 4.2: Domestic, international and total passengers’ forecasts in HER (2014-2030).

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Forecasted traffic in Heraklion airport demonstrates an increasing trend, reaching more than 8,000,000 passengers by 2030, which is mainly aligned with the forecasted number stated by the most conservative traffic forecast in paragraph 4.1.

4.3 Chania airport forecast

4.3.1 CHA domestic traffic forecast

The regression model in the case of Chania airport domestic passengers’ traffic is as follows:

Ln(Cha.Dom) = 3.087 + 0.823 Ln(Greek GDP) - 0.458 Ln(Euro to Dollar rate),

where Ln(Cha.Dom) stands for the logarithm of Chania airport international passengers.

The selected independent variables are the logarithm of Greek GDP and the logarithm of Euro to Dollar exchange rate. Their selection was based on the same criteria like in the Heraklion case, due to the similarities of both airport passengers’ characteristics.

After statistical analysis, based on R2 value, the domestic traffic in Chania is explained by the model by 82% as shown in appendix 8.

Similarly to Heraklion airport, the table below shows the domestic passengers’ number and respective annual growths considering 2013 MAPE.

illustration not visible in this excerpt

Source: (Author)

The annual traffic growth in 2020 is assumed as 3.6%, as the initially estimated figure is found 0.3%. This happens due to independent variables forecasted figures used.

Based on the above table, domestic traffic in Chania is estimated around 625,000 passengers, increased by 64.8% compared to 2013.

4.3.2 CHA international traffic forecast

The regression model equation for the international passengers of Chania airport is the following:

Ln(Cha.lnt.) = -6.940+ 1.260 Ln(EuropePPP) - 0.374 Ln(Euro to Dollar rate),

where Ln(Cha.Int.) is the logarithm of Chania international passengers,

Ln(EuropePPP) is the logarithm of Europe Purchase Power Parity and

Ln(Euro to Dollar rate) is the logarithm of Euro to Dollar exchange rate.

The R2 value is shown in appendix 9 and found to be 0.94 indicating appropriate model’s selection. Forecast results generation is shown in table 4.5 below.

illustration not visible in this excerpt

Source: (Author)

It is noted that annual traffic growth in 2020 is assumed as 5.6%, as the initially estimated figure is found 2.9%. This happens due to independent variables forecasted figures used.

Considering table 4.5 the estimated international passengers in 2030 are more than 4,000,000, increased by 142.2% compared to 2013, at the same time when the respective increase in Heraklion airport is found 39.7%.

Passengers’ forecasted total traffic in Chania airport is shown in table 4.6.

illustration not visible in this excerpt

Source: (Author)

4.4 Domestic Traffic forecast for Siteia airport

The regression model for Siteia airport’s domestic passengers is as follows: Ln(Siteia.Pax) = 0.442 + 0.717 Ln(Greek GDP) + 3.803 Ln(Euro to Dollar rate), where Ln(Siteia.Pax) stand for the logarithm of Siteia domestic passengers,

Ln(Greek GDP) is the logarithm of the Greek GDP and Ln(Euro to Dollar rate) is the logarithm of Euro to dollar rate.

The regression model explains Siteia airport passengers’ development by 66%, as shown in appendix 10.

Passengers’ forecasted traffic is shown in table 4.7.

Table 4.7: JSH passengers’ estimation (2013-2030)

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Source: (Author)

It is noted that annual traffic growth in 2020 is assumed as 3.1%, as the initially estimated figure is found 34.0%. This happens due to independent variables forecasted figures used.

In the case of Siteia forecast, a slightly different approach compared to previous forecasts is followed, as data for the period 2004-2013 is used in regression analysis. This happens due to high variation in traffic numbers due to the construction of the new runway in 2003. In addition, the MAPE for the year 2013 is not applied for every year like before due to high generated forecasted 2030 annual passengers’ number compared to the Lasithi region’s population. The anticipated traffic is more than 50,000 passengers by 2030, translated into 65.8% growth compared to 2013.

4.5 Forecasts’ observations

Concerning the above forecasts’ results for the Cretan airports; the following figure demonstrates passengers’ traffic development until 2030.

Figure 4.3: Passengers’ traffic evolution in Cretan airport network until 2030

illustration not visible in this excerpt

Source: (Author)

Obviously, traffic generally demonstrates an increasing trend for the Cretan airport network as a whole, exceeding 13,000,000 passengers by 2030 in total, as shown in figure 4.4 below.

Figure 4.4: HER and Cretan airport network traffic forecast until 2030

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As figure 4.4 indicates, total traffic in Crete is growing faster than in Heraklion airport, which means that although Heraklion air-traffic generally increases until 2030, the airport cannot fully benefit from the passengers’ increment in the island.

Considering airports’ traffic share, as shown in figure 4.5, Heraklion airport will still be the dominant Cretan airport, demonstrating a decrease of 10% on its share though. Chania airport 10% share increase is mainly the reason for that.

Figure 4.5: Forecasted airports’ traffic share development in 2030

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Source: (Author)

Checking internal airport competition, Heraklion airport KPI used in paragraph

3.5.3.2 for evaluating airport’s performance are considered. In the international traffic sector, KPI expressed by the ratio of international passengers in Heraklion and Chania airports, is used and its evolution is indicated in figure 4.6.

Figure 4.6: International KPI for HER (2013-2030)

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It is obvious that competition between the two international Cretan airports becomes tougher in the future and Chania airport seems to improve its international status negatively influencing HER traffic numbers.

Considering internal competition between Heraklion and Siteia airports in the domestic sector, the ratio of domestic Heraklion passengers to Siteia ones is examined, indicating domestic status for Heraklion airport.

Figure 4.7: HER domestic KPI (2013-2030)

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Regarding the above figure it is notable that due to the conservative approach followed for the Siteia traffic forecast, the indicator shows an increment trend. However JSH future traffic should be closely monitored due to evidence of latest development in its landside infrastructure. This means that competition between Heraklion and Siteia airport in the domestic traffic sector can become stronger in the future.

4.6 Heraklion airport’s capacity evaluation by 2030.

In the case of Heraklion airport, due to major variations in ATM, occupied apron stands and passengers’ diagrams, as shown in figures 3.36, 3.37, 3.38 the peak figures are decided not to be used, although the use of the peak hour figures enhances the option of evaluating an airport which can appropriately accommodate peak traffic. The second busiest hours’ peak is selected instead. It is decided that this approach assesses airport capacity in a more sensitive manner, considering traffic’s seasonality at the same time. In addition, the purpose of the study is to develop evaluation metrics for Heraklion airport in 2030 and not to design the airport from its initial phase. So, the assessment of airport’s capacity during its second busiest hour provides only a performance indicator and is not used for design purpose. The decision to use the second peak instead of the busiest hour is based on the mentioned abnormal traffic distribution during the day. So, the high traffic variation in the case of the busiest hour enhances the generation of misleading results in terms of capacity evaluation.

Before assessing 2030 runway capacity ATM and passengers percentages based on the ATM busiest day are found and presented in table 4.8.

Table 4.8: HER domestic and international ATM -passengers

illustration not visible in this excerpt

Source: (Pliakas, 2014)

Based on previously stated forecasts, considering domestic and international traffic growth in 2030 compared to 2013 along with the above table as well, the following table is made. In table 4.9 estimated ATM, occupied stands and passengers for 2030 based on 2013 second busiest hour of the year, are shown.

Table 4.9: HER ATM, stands and terminal 2030 occupancies in domestic and international levels based on the 2013 second busiest hour of the year

illustration not visible in this excerpt

Sources: (Author), (Pliakas, 2014)

Based on the table 4.9 and appendix 11, table 4.10 indicates occupancy comparison for runway, apron and terminal building, based on the busiest and second busiest hour in 2013.

Table 4.10: HER current and future runway, stands and terminal 2030 occupancies’ comparison

illustration not visible in this excerpt

Source: (Author)

Chania and Siteia airports infrastructure occupancy estimation are shown in table 4.11, based on appendices 12, 13, 14 and 15. The above table indicates extra capacity requirements mainly concerning the apron and terminal areas.

Table 4.11: Current and future runway, stands and terminal occupancies for CHA and JSH.

illustration not visible in this excerpt

Source: (Author)

It is noted that extended terminal capacity has been considered for both airports, as both terminal projects are going to be delivered within 2015. Additionally, table 4.11 orientates future capacity problems concerning Chania airport infrastructure.

Chapter 5: New Heraklion airport location assessment

5.1 Problem diagnosis phase

The airport’s current infrastructure cannot adequately accommodate 2030 anticipated traffic. The problem is of major consideration especially in the apron and terminal areas. An additional problem arising from the current airport’s operations is noise generation. As the airport is located in close proximity to the city centre, residents are and will be complaining on a regular basis in the tourist period, when traffic significantly rises. In this chapter different scenarios relevant to airport relocation, in order to face current and future traffic congestion are stated and the optimum solution is suggested. The process considers the use of critical analysis based on value management techniques (Male, 1998).

5.2 Suggested governmental solution

The Greek government suggested the abolition of the current Heraklion airport and its relocation in the Kastelli area, adjacent to the existing military airport, which will still be operational.

Figure 5.1: New airport’s draft layout as suggested by the government

illustration not visible in this excerpt

Source: (Cretalive, 2014-a)

The initially proposed new airport’s airside infrastructure considers 3,200 meters runway with a parallel taxiway and 30 aircraft stands in the apron, including 5 contact stands. The terminal building will be designed to serve 10,000,000 annual passengers and the airport’s area will be around 600 hectares, according to governmental sources (Cretalive.Gr, 2014-a).

5.3 Proposed new airport location scenarios.

This research considers the proposal of the optimum airport location, considering the appropriate service level for domestic and international operations. The scope of the study is not only to judge the proposed governmental solution, but mainly the selection of the airport operations’ location based on critical factors analysed in the following paragraphs.

In the first stage, different airport locations are considered mainly based on their geographical position and any existing infrastructure availability. Regarding existing infrastructure parameter, current commercial aviation airports, like Heraklion and Siteia and non-operative military airports, like Tympaki are considered. Regarding geographical criteria, the official proposal of Kastelli, is also examined together with the construction of a new airport in the north side of Rethymno prefecture. After indicating the potential sites for the new airport, the nature of operations as domestic or international has to be specified, since differences occur in terms of traffic numbers, catchment areas, and passengers’ characteristics. For that reason Heraklion airport is divided into domestic and international sectors, examined as two separate airport systems. So, the relocation of the airport as a whole entity is not a prerequisite and different options considering partial relocation of domestic or international operations into different airports, shown in figure 5.2, are considered.

Figure 5.2: Existing Cretan airports considered in the scenarios.

illustration not visible in this excerpt

Source: OpenStreetMap (c) OpenStreetMap-contributors

Concerning the above, nine different scenarios for future airport operations are suggested as follows:

Scenario 1 considers the continuation of operations in the current Heraklion airport until 2030, with airside and landside infrastructure improvements where required.

Scenario 2 regards the relocation of Heraklion airport’s operations in Siteia airport.

Scenario 3 concerns the whole airport’s relocation in Tympaki airport.

Scenario 4 considers the development of Heraklion airport in a solely domestic airport and the transfer of its international sector to Siteia airport.

Scenario 5 deals with the potential of Heraklion airport to operate only in international level and domestic operations to be transferred in the adjacent prefecture’s Siteia airport.

Scenario 6 considers domestic operations in Heraklion and international ones in Tympaki airport.

Scenario 7 regards domestic operations in Tympaki and international ones in Heraklion airport.

Scenario 8 concerns the construction of a new international airport in the northern part of Rethymno prefecture, as indicated in Figure 5.3.

Figure 5.3: Suggested new airport location as per scenario 8

illustration not visible in this excerpt

Source: OpenStreetMap (c) OpenStreetMap-contributors

In more detail the proposed scenario 8 location is shown in figure 5.4 below.

Figure 5.4: Zoomed view of scenario 8 location

illustration not visible in this excerpt

Source: OpenStreetMap (c) OpenStreetMap-contributors

The choice of the above site is made by the author, based on a holistic approach to attract not only Heraklion but generally Cretan tourists. Considering tourist zones analysed in paragraph 2.2, in the case of scenario 8, 87% of tourist destinations are covered within 1.5 hours driving time from the airport. This is the highest coverage percentage considering all scenarios, as shown in table 5.3 in following paragraph. The total surface of the available area, which is currently covered by olive trees and grapes for agricultural purposes, is more than 800 hectares and its elevation vary between 20 and 80 meters above the sea level.

Scenario 9 is the one suggested by the Greek government, concerning Heraklion airport relocation adjacent to Kastelli military airport, in an area which is also currently used for agricultural activities.

5.4 Main stakeholders value systems analysis

Before setting the criteria for the different scenarios evaluation, different stakeholders’ value systems are identified (Dixon, 2013). Passengers, airlines, airport operator, government and the local community are the main identified stakeholders.

Firstly regarding passengers’ value systems, the flight cost, dependent on airport charges and airlines’ policy is very important. The cost parameter is even more critical considering that the majority of the airport traffic is related to leisure passengers, who usually choose their travel package mainly based on its total cost. On the other hand, airport privatisation enhances airport charges increment based on profit orientated policy, potentially resulting in passengers’ fares increment from air carriers’ side. Additionally airport charges can become even higher in the case of high airport construction cost during the project’s payback period. For that reason airport ownership and initial construction cost are regarded as critical factors affecting flight cost. Furthermore, the airport’s distance from the passengers’ final destination in terms of driving time is considered. It is assumed that this parameter is not valued in the same way for domestic and international passengers, due to the fact that tourists, as leisure passengers, are more lenient as far as distance is concerned in case they are offered a better flight ticket price. On the other hand domestic Cretan passengers are not used to driving long distances, which combined with the inappropriate high speed national road network and the rail absence in the island, makes them inelastic in the distance parameter. So, it is assumed that one hour driving distance to the airport is the upper limit for domestic passengers, which is extended into 1.5 hours in the case of international passengers.

Regarding to air carriers’ value system, as it is based on profit generation; it mainly depends upon travel demand and airport charges. So the parameter of airport construction cost and ownership defining its charging policy, as well as the airport’s driving distance from passengers’ destination, influencing travel demand, are also crucial.

Defining airport operator’s value system the public or private identity of the owner is critical. In the case of the public airport, the appropriate passengers’ service level is crucial, considering local community’s demand. On the other hand private airports are more focused on profit generation, considering also passengers’ expectations, airlines’ attraction, travel demand and adjacent local community’s requirements. The current Heraklion airport is government owned; however private sector involvement in the new airport scheme is expected. So, construction cost, airport’s distance from final destination and noise generation are critical parameters relevant to airport’s profitability, travel demand and local community.

Considering government value system and its correlation to airport operations, travel demand is really critical especially in the international level. Undoubtedly, international airport traffic is strongly related to tourism development in Greece, benefiting Greek GDP growth. So, factors like construction cost affecting airport charges and airline fare, and distance to tourist destinations influencing tourists’ satisfaction are important parameters. Furthermore construction cost importance is enhanced by the current difficulties the Greek economy faces. Additionally, local residents’ requirements are also important for the governmental value system, referring to noise and generally environmental impacts on population affected by airport operations.

Concerning the local community value system, adverse environmental impacts generated by aviation and affecting the quality of life are of major importance. As already mentioned noise generation is a constant problem in current Heraklion airport, where “Alikarnassos” residents, an adjacent to the airport Heraklion suburb, are seriously affected mainly in the tourist period.

5.5 Main criteria prioritisation

Based on critical parameters affecting different stakeholders’ value systems, the criteria for scenarios assessment are identified as follows:

A. the driving distance from the airport to international passengers’ final destinations,
B. the driving distance from the airport to Heraklion city centre considering domestic passengers,
C. the noise generation influencing adjacent to airport residents,
D. the new project’s construction cost,
E. the distance of the airport’s international operations from Chania airport.

The selection of the E factor is based on the current competition between Chania and Heraklion airport in the international level, which is anticipated to become tougher in the future as stated in previous paragraphs.

The priority matrix is the technique used for the above criteria prioritisation, as shown in table 5.1.

Table 5.1: Priority matrix

illustration not visible in this excerpt

Source: (Author)

In the above table, all the selected parameters are compared in pairs and - according to their importance considering all mentioned value systems - the prevailing one is indicated in the relevant box. The final criterion assessment is demonstrated in the table 5.2.

Table 5.2: Critical Parameters weight factors.

illustration not visible in this excerpt

Source: Author

As indicated in the table above, construction cost and noise impact have the biggest weight factor. Noise impact is given great importance due to the mentioned significant problem existing in the tourist period in Heraklion airport and the Cretan residents’ low tolerance in airport disturbance in general. Additionally, distance from Chania airport, corresponding to airports’ international competition is the next critical parameter.

Furthermore, tourists’ and locals’ surface access described by the driving time to final destination are in the last position of importance, found relevant to passengers’ satisfaction.

5.6 Scenarios evaluation

5.6.1 Criterion A

In order to evaluate each scenario according to the surface access for international passengers, the final tourists’ destinations as determined in the paragraph 2.2 are considered. As the percentages of international passengers for each one of the six defined tourist zones are given in figure 2.6, the surface accessibility is estimated as a percentage of total tourists able to access their final destination within 1.5 hours driving time from the airport. The relevant percentages of tourists per zone and airport are given in table 5.3.

Table 5.3: Percentages of international passengers’ accessible destinations

illustration not visible in this excerpt

Sources: (Author), (Ampakoumkin et a 2001)

It is noted that in case of scenarios relevant to airport combinations, the criterion A value considers only the airport relevant to international passengers. So, the determined scenarios are assessed as shown in table 5.4, adjusting the relevant values into a scale from 0 to 5.

Table 5.4: Scenario assessment as per criterion A

illustration not visible in this excerpt

Source: (Author)

As demonstrated in the above table the optimum scenario considering criterion A is the one which regards the new airport in Rethymno prefecture, covering 87% of total tourists’ final destinations within 1.5 hours driving time.

5.6.2 Criterion B

In order to proceed with criterion B assessment, the driving time from domestic airport to Heraklion city centre is considered and presented in minutes of driving in table 5.5.

Table 5.5: Distance to Heraklion city centre for all potential domestic airports

illustration not visible in this excerpt

Sources: (Author), (Google Maps)

The following table 5.6 demonstrates the evaluation of each scenario according to the airport of domestic operations. The assessment is based on the assumption that 0 driving distance gets grade "5” and 117 minutes driving time is evaluated by grade "0”.

illustration not visible in this excerpt

Source: (Author)

5.6.3 Criterion C

Evaluation according to Criterion C is based on the estimated population living adjacent to the airport, which is mainly affected by airport operations. Table 5.7 indicates residents in neighbouring to airport areas for each airport case.

Table 5.7: Adjacent to airport population regarding set scenarios

illustration not visible in this excerpt

Sources: (Author), (ELSTAT, 2011)

Population estimation comes from the sum of residential areas adjacent to each airport case.

Additionally, the nature of airport operations especially in the scenarios which include two airports is investigated considering the higher traffic level of international operations compared to the domestic ones. For that reason, in these scenarios, the total affected residents come from the accumulation of the international airport’s residents multiplied by 0.73 and domestic airport’s residents multiplied by 0.27. The multiply factors are selected according to international and domestic traffic in terms of ATM in 2013 (HCAA, 2013a). Based on this assumption, Table 5.8 indicates the finally affected population and scenarios’ assessment.

illustration not visible in this excerpt

Source: (Author)

According to the assessment’s concept, the worst case scenario including maximum affected population is assessed by "0” and the ideal scenario where nobody is affected by noise is assessed by "5”.

5.6.4 Criterion D

In order to roughly access the different scenarios according to construction cost, three main cost parameters are considered: airside construction cost relevant to runway and apron area and landside cost related to terminal building. Furthermore, given that C type is the current dominant type of aircraft in Heraklion airport, consideration about the operation of E type aircraft should be done in domestic and international level. To proceed with runway construction cost estimation, the required runway length for the landing of a common E type aircraft, A330-200, is estimated according to airport elevation. An indicative estimation of runway cost is given in table 5.9.

Table 5.9: Required runway length cost indicator for A330 operations

illustration not visible in this excerpt

Sources: (Author), (Fewings, 2014-b)

It is noted that the above estimation does not regard the total cost for the construction of the new runway and improvement of any old one. It is only a runway cost metric, where an average cost of $11,250 per runway meter is assumed, where $250 per runway square meter cost is used (Fewings, 2014-b), concerning runway width of 45 meters.

Based on the above and considering that a single runway configuration can serve the airport assuming appropriate slot allocation for both Heraklion and Siteia airports, table 5.10 shows the runway cost for each scenario.

Table 5.10: Scenarios’ runway cost metric

illustration not visible in this excerpt

Source: Author

Regarding apron area cost, the assumption of 100% E stand availability for the year 2030 is made. Based on the previous paragraph the required stands to accommodate Heraklion airport traffic in 2030 are 23 for international and 3 for domestic operations. Heraklion airport apron stand capacity for 2030 is found just over the limit, 104%, however it only considers number of stands and not surface. So, based on the current apron area and the largest E stand type, which surface is estimated around 10,000 square meters, the following table 5.11 indicates a metric for the required apron area construction cost. It is noted that in Heraklion airport the average type of stand is assumed to be C type (Fewings, 2014-a) with total average surface of 4,000 square meters. So, totally Heraklion airport stands’ area is assumed 100,000 square meters, due to 25 stands presence. Due to limited current apron area in Siteia airport (Google Earth) and also concerning the more than 100% anticipated operations increment by 2030; it is assumed that the existing Siteia apron area cannot be used for Heraklion airport operations.

illustration not visible in this excerpt

Source: (Author), (Fewings, 2014-b)

It is noted that the cost per square meter of the stands’ apron area is assumed $245 per square meter (Fewings, 2014-b) without considering any equipment cost.

Terminal construction cost is estimated based on the passengers’ numbers for the second busiest hour of 2013 in Heraklion and Siteia airports and the assumption of space requirement of 6 m2 per passenger (Fewings, 2014-a). In addition the cost of THE terminal building’s construction is assumed to be $1,700 per m2(IPE, undated).

Table 5.12: Scenarios’ terminal cost metric

illustration not visible in this excerpt

Regarding scenarios where Siteia airport is involved, Siteia airport new terminal building, covering 7,560 m2 is considered (Verigos, 2014).

In order to proceed with scenarios’ cost assessment, all the sub cost metrics estimated in tables 5.10, 5.11 and 5.12 are added and presented in the following table 5.13, together with scenarios’ total cost assessment.

Table 5.13: Assessment as per Criterion D

illustration not visible in this excerpt

Source: (Author)

The assessment methodology is similar to previous paragraph, noting that the most costly scenario is assessed by "0” and the ideal zero cost scenarios are assessed by

5.6.5 Criterion E

The assessment regarding E criterion is based on the driving time of each scenario’s international operations from Chania airport, as shown in table 5.14.

Table 5.14: Assessment as per Criterion E

illustration not visible in this excerpt

It is noted that the assessment is based on the assumption that 0 driving distance gets grade "0” and 237 minutes driving time is evaluated by grade "5”.

5.7 Optimum scenario’s selection.

Considering weight factors for defined criteria and each scenario assessment as presented in previous paragraphs, decision matrix is used for the final assessment and optimum scenario selection as shown in table 5.15 (Male, 1998).

Table 5.15: Decision Matrix

illustration not visible in this excerpt

Source: (Author)

According to the decision matrix, scenario 6, which considers the relocation of international operations in Tympaki airport and the development of Heraklion into a domestic airport, is the optimum solution. Additionally, the construction of the new Heraklion airport in Kastelli, which is the existing government’s plan, gets the second highest score.

Chapter 6: Conclusion

6.1: Key Research Findings

Heraklion airport’s current infrastructure does not guarantee the provision of adequate service level, mainly considering landside infrastructure capacity in the peak hours of the summer period. If no action is taken, the ATM anticipated increment until 2030, will cause additional airside and landside infrastructure capacity problems.

On the other hand, Chania and Siteia airports are found competitive to Heraklion, regarding international and domestic traffic respectively. It is notable that Chania airport has the longest runway in Crete and extension work of its terminal building is in place, which is anticipated to reach 121% of Heraklion terminal by 2015. The above combined with the generated traffic forecasts and Ryanair offered scheduled international flights in Chania since 2013, are expected to cause a future fierce competition between the international sectors of the two main Cretan airports.

Heraklion domestic traffic competition with Siteia airport is also anticipated to continue in the future and can potentially become more intensive based on latest Siteia landside infrastructure development.

Except for the internal competition within the island, HER is also found to compete with Greek airports located in tourist areas, and other peer airports in famous tourist destinations mainly within Europe and Turkey. It is notable that HER airport has the potential of further increment of its traffic considering the relatively low charges’ level assuming adequate infrastructure capacity.

As Heraklion airport competitive analysis, capacity evaluation and Cretan network traffic forecast indicate, immediate action has to be taken in order to ensure appropriate airport future development. So, the Greek government’s concept of airport relocation is quite reasonable; however the potential airport charges increment caused by the new project can negatively influence Heraklion airport’s position in the tourist international market.

Given the need for the Heraklion airport relocation project, it is suggested that the whole concept should be examined in a different manner concerning domestic and international operations, which are relevant to different passenger groups. Domestic operations are relevant to Heraklion residents and international operations have to do with European and Russian tourists. Additionally, the use of currently operating Heraklion and Siteia airports, the development of the non-operating airport of Tympaki and the construction of a new airport in Kastelli or near Rethymno are considered in the potential relocation scenarios developed.

Following main stakeholders’ value systems analysis and using priority matrix technique, construction cost and noise generation are assessed as the most important criteria for scenario evaluation. The current financial crisis in Greece combined with the identified noise problem for residents adjacent to Heraklion airport make the above selection reasonable. The second most important factor to be considered is the driving distance from Chania airport, based on the main airports competition in international level which represents the vast majority of traffic. The last criteria in terms of importance are the Heraklion domestic residents within one hour driving distance from the airport concerning the domestic sector and tourist destinations accessible within 1.5 hours from the airport concerning international sector. Both criteria are considered metrics for passengers’ service level and overall satisfaction.

6.2: Recommendations

Considering criteria weight factors and after the use of the decision matrix, the optimum scenario considers the retention of domestic operations in Heraklion airport and the relocation of international operations in Tympaki airport, taking advantage of the existing airside infrastructure. So, based on that scenario, Heraklion residents, who are not considered tolerant in long driving distances, will continue to use their domestic airport, in only 7 minutes driving distance from the city centre. At the same time noise generation situation will be significantly improved for residents living adjacent to the airport, as the ATM traffic will be radically decreased. On the other hand international passengers are transferred to north Crete, in a place which is less convenient for them considering their final destination. However their tolerance in driving distances due to passengers’ leisure identity is not anticipated to have a main negative impact on their trip, as long as ticket charges remain in the same level. Additionally the shift of international operations in south Crete can provide incentives for further tourism development, as this part of the island is less developed compared to the north part.

However, the surface access from Tympaki airport to the south of Crete where the main national road operates should be considered. By further developing the existing road network into a high speed national road, driving distance to VOAK connecting all Cretan prefectures is further reduced, and passengers’ catchment area is further extended.

It is noted that the scenario of airport relocation in Kastelli, currently supported by the government, is assessed as the second optimum one. However in the case of this scenario’s implementation, the relocation of the military operations from Kastelli to Tympaki airport should be examined together with the use of the current Kastelli military airport’s runway. This way the construction cost of the new airport will be reduced.

In addition the construction of a brand new airport for domestic and international operations contains increased risk. The observed seasonal traffic combined with significant tourist presence in the airport can result in an empty airport not only during the 6 months of non-tourist period, but also for more time in case tourism in Crete is negatively influenced by competing countries or other Greek cities. Furthermore increased construction cost or the involvement of the private sector in the government owned Heraklion airport can potentially result into airport charges’ increment. However high charges’, should be avoided as air ticket fare can be increased in that case, negatively affecting international passengers’ travel demand.

Furthermore, scenarios 1, 3 and 4 collect relatively high assessment scores. Scenario 1, which considers the expansion of the current Heraklion airport, located within Heraklion city, is not assessed as the optimum one. The noise impact, affecting Heraklion residents and space limitations are the main negative factors for this option’s selection. Regarding scenario 3 -which concerns the development of Tympaki airport for both domestic and international operations-, the anticipated inconvenience caused to domestic passengers from Heraklion, due to the long driving distance requirement, prohibits such an option. Also scenario 4, relevant to the developments of the Heraklion domestic airport and the Siteia international airport, it is not regarded as a good choice. The dissatisfaction of leisure international passengers due to the significantly increased driving time to their final Cretan destinations can negatively influence tourist traffic in the island.

Additionally, scenarios 7 and 8 are not considered as the optimum choices. The driving distance for Heraklion residents visiting Tympaki domestic airport and the increased noise impact in the tourist period concerning Heraklion international airport, are the main scenario’s 7 implementation barriers. Furthermore the high construction cost of the new Rethymnon airport and the domestic Heraklion residents’ inconvenience in the case of scenario 8, do not set this choice as the optimum one.

6.3: Limitations of the study

Concerning the collection of data for the Cretan airport network, OAG database is not found accurate, after comparison with Heraklion and Chania airport traffic data. For that reason current ATM and passengers’ traffic, provided by the two Cretan International airports through personal communication is used. Furthermore, Heraklion airport latest airside infrastructure development concerning apron area has been considered following communication with the airport’s manager, even if the relevant data is not included in HCAA website.

Regarding Siteia airport, international passengers’ traffic observed in the last two years was not mainly considered, due to the non-international character of Siteia airport and the low percentage of its international traffic. In addition information coming from personal communication with Siteia airport’s manager regarding latest infrastructure development and flights load factor is used.

Considering the construction cost of the generated airport relocation scenarios, it is noted that for comparison purpose only a metric of the cost is used and not an accurate total cost estimation. Airside and landside total cost or the cost for physical barriers limitation considering aircraft landing and take-off route, dependent upon different areas’ geological characteristics, are not estimated.

6.4: Future Research Directions

Except for the examined relocation scenarios, the existence of one international airport for the whole island can be further examined, even if domestic airports continue their operations in big Cretan cities.

In addition the way government plans for the privatisation of Greek airports can influence Cretan airports development, is another area of further investigation. As already mentioned Chania airport is included in a group of Greek airports whose privatisation tender process has already started, as also happens with the new Heraklion airport. On the other hand all generated traffic forecasts do not consider private sector involvement and its potential influence on airport charges, ticket fares and travel demand. Furthermore, Siteia airport’s future position within the Cretan network, after HER and CHA privatisation, can be further analysed based on its infrastructure expansion and the potential of international traffic increment

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Appendices

Appendix 1: Nights spent in hotels by residents and non-residents and bed places in different Cretan prefectures (2012)

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Source: (ELSTAT, 2012)

Appendix 2: Nights spent in camping by residents and non-residents in different Cretan prefectures (2012)

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Source: (ELSTAT, 2012)

Appendix 3: Arrivals in hotels and camping by residents and non-residents in different Cretan prefectures (2012)

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Sources: (HCAA, 2014b), (AIN, 2014), (AIA, 2013), (ANA Group, 2014), (AENA Aeropuertos, 2014), (Hermes Airports, 2014)

Appendix 5: HER passengers’ traffic forecast.

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Appendix 6: HER domestic passengers’ regression model summary.

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Appendix 7: HER international passengers’ regression model summary.

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Appendix 8: CHA domestic passengers’ regression model summary

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Appendix 9: CHA international passengers’ regression model summary

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Appendix 10: JSH domestic passengers’ regression model summary

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Appendix 11: HER ATM, stands and terminal 2030 occupancies in domestic and international levels based on the busiest hour of the year

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Appendix 12: CHA ATM, stands and terminal 2030 occupancies in domestic and international levels based on the busiest hour of the year

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Appendix 13: CHA ATM, stands and terminal 2030 occupancies in domestic and international levels based on the second busiest hour of the year

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Sources: (Author), (Chania Airport Authority, 2014)

Appendix 14: JSH ATM, stands and terminal 2030 occupancies in domestic level based on the busiest hour of the year

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Sources: (Author), (Verigos, 2014)

Appendix 15: JSH ATM, stands and terminal 2030 occupancies in domestic level based on the second busiest hour of the year

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