STRATEGIC ANALYSIS
BASM 502 –Corporate Strategy
Carolyn Beaumont
Kalpana Bisht
Lucie Cornish
Mihir Ghael
3/26/2013
Strategic Analysis: YVR and the Global Airport Industry
BASM 502
Contents
Contents ........................................................................................................................................................ 1
EXECUTIVE SUMMARY .................................................................................................................................. 3
INDUSTRY ANALYSIS...................................................................................................................................... 4
Industry Overview ..................................................................................................................................... 4
Scope of Analysis....................................................................................................................................... 4
Industry Supply Chain ............................................................................................................................... 5
Porters Five Forces:................................................................................................................................... 7
Competitor Analysis .................................................................................................................................. 9
PESTEL Analysis ....................................................................................................................................... 10
Dynamic Industry Analysis ...................................................................................................................... 11
INTERNAL ANALYSIS OF YVR ....................................................................................................................... 13
Activity Analysis ...................................................................................................................................... 14
Value Chain of YVR .............................................................................................................................. 14
Secondary Activities ............................................................................................................................ 14
Primary Activities ................................................................................................................................ 17
SWOT Analysis......................................................................................................................................... 19
Resource Analysis.................................................................................................................................... 21
Benchmarking ......................................................................................................................................... 22
RECOMMENDATIONS ................................................................................................................................. 27
C. Beaumont, K. Bisht, L. Cornish, M. Ghael
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Strategic Analysis: YVR and the Global Airport Industry
BASM 502
We would like to acknowledge the assistance of YVR and the UBC Sauder School of Business, without
whom the following analysis would be less comprehensive. Thanks to David Gillen, Director of the Centre
for Transportation Studies and the YVR Professor of Transportation Policy at the Sauder School of
Business; Michael O'Brien, Corporate Secretary and Vice President of Strategic Planning and Legal
Services at YVR and Mike Brown, Senior Planner in the Strategic Planning division at YVR met with our
team on three separate occasions to provide clarification, answer questions and further expand our
understanding of YVR, its operations and strategic direction. These conversations are referenced
throughout the document. It is important to note that some facts, figures and opinions were recorded
through personal conversations and may not reflect the official position of YVR or the Sauder School of
Business.
C. Beaumont, K. Bisht, L. Cornish, M. Ghael
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Strategic Analysis: YVR and the Global Airport Industry
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EXECUTIVE SUMMARY
This analysis is a strategic review of the Vancouver International Airport Authority (YVR) and its position
both within the greater Vancouver community and the Canadian and global airport industries. It is
important to understand the history of YVR and the changes within the Canadian air transport sector to
analyze where YVR is positioned compared to its competitors. Additionally, knowledge of the global
airport industry, emerging market segments and differences among ownership and operations will help
to provide insight on YVR’s competitive advantages and help to form the basis for recommendations.
Key success factors for the airport industry include capital investments in infrastructure, physical
location, frequency of aircraft movements, number of city pairings and connections to globally
important locations, and balance of aeronautical and non-aeronautical revenues. Research suggests
that the industry is mature, yet dynamic evidenced by increased security, pioneering visa-in-transit
programs, the emergence of low-cost and long-distance carriers and changes in environmental
regulations, fossil fuels and carbon emission schemes. Airports need to be cognizant of these changing
aspects of the industry to remain successful and ensure that their short and long term strategic plans
are dynamic enough to remain competitive.
YVR is in a strong position both in North American and globally. Its focus on company culture provides it
with the knowledge and leadership to retain its strategic position in the world’s top 10 airports.
Additionally, its focus on capital investment in infrastructure and relationship building with airlines and
contractors is another key to YVR’s success. YVR has developed such a strong position that it has
expanded its operations to global consulting and ownership investment in other airports (beyond the
scope of this analysis). The organization had been able to position itself strongly despite limiting
regulations by Transport Canada and is a leader in lobbying for changes within the Canadian air
transport industry. YVR should be able to maintain a strong position into the future, competing
successfully in the global market.
Future success depends on YVR capitalizing on its current assets and new opportunities to maintain its
competitive advantage. In combination, these areas include: Diversifying risk and monitoring key
players, expanding and formalizing lobbying activities, further developing the full-service model and
infrastructure investments. Recommendations cover both short and long term planning and should
allow YVR to maintain or improve its position within the airport industry.
C. Beaumont, K. Bisht, L. Cornish, M. Ghael
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Strategic Analysis: YVR and the Global Airport Industry
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INDUSTRY ANALYSIS
Industry Overview
The global airport industry is just one sector of a much larger aviation industry that includes airlines, air
freight, aircraft manufacturing, tourism and more. Airports globally are owned and operated in different
structures and partnerships that vary by country. In North America, US airports are owned and funded
by municipal governments and operated by a fixed-base operator (FBO), a commercial entity granted
the operations by the city.1 Canadian operations were previously government owned by Transport
Canada, but starting in 1994, the Federal government leased the airport land to private, not-for-profit
organizations to run.2 UK airports are privately owned companies, formerly grouped under the British
Airport Authority, but recently splitting up.
The sector is a mature industry that is growing in conjunction with personal and business travel and
increased global shipment of goods. While growth declined in 2001 and in 2008 due to political and
economic events, overall airport traffic jumped 4.7% in 2012 and 3.5% in 5 years3
Scope of Analysis
The global airport industry is inclusive of all organisations that own & operate international, national or
civil airports and public flying fields. Additionally, support operations including aircraft refuelling, aircraft
parking, hangar space, air traffic control, baggage handling, cargo services and others relating to, or
located on airport property are included in the industry however these services are usually provided by
outside contractors.
Due to the nature of the information available, the scope of the following analysis of the industry and of
YVR includes all flight related airport operations for both passenger & cargo services. While a major
source of revenue for YVR and other airports, non-aeronautical revenues such as retail and other
contracted services are not directly under the control of the airport authority. All airports operate
differently, contracting and controlling different operations. However, in this report it is assumed that
Canadian competitors (YYZ and YYC) operate and contract similar services.
1
IBIS World Industry Report H4912-GL –Global Airport Operation. Jan 2013.
Gillen, D. (2013, March 6). Director of the Centre for Transportation Studies and the YVR Professor of
Transportation Policy (Sauder School of Business).
3
IBIS World Industry Report H4912-GL –Global Airport Operation. Jan 2013.
2
C. Beaumont, K. Bisht, L. Cornish, M. Ghael
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Strategic Analysis: YVR and the Global Airport Industry
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Industry Supply Chain
An understanding of the airport supply chain is key to understanding YVR’s operations and their ability
to differentiate themselves strategically from competitors. Globally, the airport supply chain is
summarized in Figure 1 which shows the key players and economic drivers that affect the supply chain.
Crude oil prices, the industrial production index, world GDP and tourism have a major impact on air
traffic, operational costs and passenger ticket prices which ultimately affect the industry as a whole.
Figure 1. Airport Supply Chain
The major players in an airport’s supply chain are
Airport suppliers
Airport operator
Airlines and air cargo operators
Passengers and freight
Airport suppliers play a critical role in the supply chain. These include government agencies, contract
service providers, fuel suppliers, and construction and engineering firms. Suppliers play a pivotal role in
an airport’s operations because all other players rely heavily on them for services.
Airport operators comprise of airline staff, ground-handling staff, government employees, security
personnel and more. Airports provide immigration, customs, security, air traffic control, and passenger
and cargo services. Flexibility and reliability of these services is a key success factor.
Airlines and air cargo operators are responsible for the safe transport of passengers and cargo. Their
role is to operate aircrafts and provide pre- and in-flight services to passengers.
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Strategic Analysis: YVR and the Global Airport Industry
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Passengers and freighters are the ones who pay for the services provided. Passengers go through a
series of procedures and checks while utilizing airport services ranging from check-in service, security
checks to airline lounge service and more.
Handling Agents
Customs
Security / Police
Concessionaires
Airport Authorities
Airport Operator
Air Traffic Control
Immigration
Government
Inspections
Freight Forwarders
Figure 2. Passenger & Freight Process Flow
Figure 2 shows the key players that interact with airport operators to deliver services to passengers and
freight. It is imperative for operators to share information and collaborate with these stakeholders to
deliver services effectively to customers.
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Strategic Analysis: YVR and the Global Airport Industry
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Porters Five Forces:
Figure3. Porter’s Five Forces
Industry Rivalry: (Medium)
Industry rivalry for passengers and cargo potentially comes from airports in nearby large cities
that can compete on price of tickets, frequency and timing of flights, and connecting hubs and
city pairs.
Rivalry for airlines is from airports with similar strategic advantage such as location, size and
scale of operations. Additionally, government control of air service agreements and airline city
pairs increases rivalry between countries and decreases the ability of airports to create a
competitive advantage.
Supplier Power: (Low - High)
The construction & engineering industry that undertakes the development & infrastructure
upgrades of airports worldwide has low differentiation. Some contracted suppliers such as retail,
food services, parking and airlines have low differentiation however other suppliers including
customs & border services, security, and air traffic control are monopolies and thus have
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Strategic Analysis: YVR and the Global Airport Industry
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significant power in the industry. Ground handling services also have high supplier power as
there are only a few competitors in the industry and can exert a significant amount of control
over operations at YVR.
Buyer Power (Medium)
Passengers –Traditionally passengers have had little power because there are few competitors
within a reasonable travel distance. However as small, low-cost airports increase and airlines
can fly farther and ticket prices are decreasing, buyers are increasingly gaining power as they are
willing to travel farther for airline travel.
Airline Industry -Airlines are primary users of airport services. Both the industries are
dependent on each other and a major portion of airport revenues come from airlines. They have
some power, especially as new aircraft development allows flights to travel farther without
stopping, opening up previously inaccessible city pairs. However in Canada the government
controls air-service agreements in conjunction with airlines and negotiates them one-on-one
directly with other countries and airline competitors. Airports are excluded from these
discussions.
Air Freight Logistics Industry -This industry has grown significantly over the last decade or so.
The industry relies heavily on airport services and is one of the major sources of revenue for
many airports. On the west coast however, cargo logistics are increasingly difficult due to the
time difference with the major east coast business centers so YVR, SeaTac & LAX are less reliant
on cargo revenues.
Commercial Real Estate Industry -One of the major beneficiaries of the era of airport
modernization has been the Commercial Real Estate Industry. Real estate and retail rental at
airports has grown substantially over the years contributing close to 50% of airport’s revenues.
As the airline industry becomes increasingly commoditized, airports need to compete on fullservice amenities by renting space to retail and food service outlets. However, there is low
differentiation in this industry and so they have little buyer power.
Substitutes (Low-Medium)
Road, Rail and Waterway -Road, rail and waterway transport using cars, buses, high speed rail
or ships provide an alternate mode of transport over short or long distances for both cargo and
passengers. These modes of transport in emerging markets are cheaper and more convenient.
In developed nations; however, with highly competitive airline industry, flights are often
cheaper and more convenient than trains and boats. Busses are cheaper but long,
uncomfortable and not the obvious choice for passengers. These modes of transport take longer
than air travel over long distances.
Video- conferencing and Online Technology-With advances in Internet and wireless technology,
more and more businesses prefer video-conferencing and paperless transactions over travel to
far off destinations because it is cheaper, saves time and is convenient.
Barriers to Entry: (High)
Due to the large amount of infrastructure and capital investment required by airports, in
addition to government regulations, the threat of potential entrants into the market is low.
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Strategic Analysis: YVR and the Global Airport Industry
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Recently, smaller, low-cost, no frills airports have emerged in smaller cities such as Bellingham,
Buffalo and Abbotsford that provide cheaper services for alternative airlines. In some cases
these are poaching traffic from large airports, however worldwide, most airports see these
smaller locations as generated traffic that would not have purchased tickets from a full-service
airport.
Competitor Analysis
Competitors are those North American airports that compete for airline traffic with YVR. With advances
in airline technology, flights are able to travel farther, therefore bypassing previous refuelling locations
and creating new competitors for the Asian market including Chicago O’Hare.
YVR4
Toronto (YYZ)5
Chicago O’Hare
(ORD)6
SeaTac (SEA) 7
Calgary (YYC)8
Business
Model
Not for profit ;
operated by
Vancouver
Airport
Authority
Not for profit ;
operated by
Greater Toronto
Airports
Authority
Owned and
operated by Port
of Seattle
(Municipal
government)
Not for profit;
operated by
Calgary Airport
Authority
Strategic
Advantage
Located on
west coast;
gateway to
Asia
Commercial
capital of
Canada; Hub for
Air Canada
Municipal
Government
owned. Operated
by City of Chicago
Department of
Aviation.
Hub for American
Airlines and United
Airlines; strong
international
presence. Lower
9
airport tax.
Growing
importance as a
business hub;
attracts a lot of
business
travelers
Contribution
to GDP (B)
Revenues (M)
International
Connectivity
$ 1.9
$ 24
$ 38
Located on West
Coast; proximity
to sea making it
an attractive
destination for
cargo. Lower
airport tax.
$ 13.2
$ 369.2
10 locations in
Asia, 4 in
Europe
$ 290.1
1 location in
Asia, 6 in
Europe.
17
$ 879.2
Close to 20
destinations in
Europe, 6 in Asia
and 1 in Middle
East.
66.8
$ 483.2
5 locations in
Asia, 5 in Europe
and 1 in Middle
East ( UAE )
Passenger
traffic
annually (M)
Cargo traffic
annually
$ 1,137,592
Over 20
destinations in
Europe, 10 in
Asia and 2 in
Middle East
33
31
12.8
224000 tons
492171 tons
1443569 tons
346000 tons
100-200000
10
tons
$6
Figure 4. YVR’s direct North American competitors 11 (2011 figures)
4
Vancouver Airport Authority 2011 Annual and Sustainability report
GTAA Annual Report 2011
6
http://www.flychicago.com/OHare/EN/AboutUs/Facts/Performance-Data.aspx
7
http://www.portseattle.org/About/Organization/Pages/default.aspx
8
YYC-Annual report 2011
9
http://en.wikipedia.org/wiki/O'Hare_International_Airport
10
http://www.yyc.com/en-us/media/factsfigures/factsheet.aspx
5
C. Beaumont, K. Bisht, L. Cornish, M. Ghael
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Strategic Analysis: YVR and the Global Airport Industry
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PESTEL Analysis
Airports do not compete in isolation and are subject to differing global factors depending on location.
Therefore, it is important to consider political, economic, social, technological, environmental and legal
implications on airports when examining competitive advantages.
Political
In Canada ASAs are developed in
conjunction with airlines and
Government (Transport Canada).
12
Airports are not involved.
Previously a government
monopoly, Transport Canada
protects national carrier Air
Canada despite declaring
bankruptcy in 2003 and being at
risk of a second bankruptcy less
than 10 years later.
Airspace blocks are governed by
countries and subject to
negotiation and agreements
(currently undergoing major
changes).
The majority of airports
worldwide are fully governmentowned, while others are owned
by a shared public-private entity
or privately owned.
Technological
Electronic visas and Visa-intransit increase the ease of
travel.
Increased security measures
cause longer connections and
decreases the ease of travel.
Infrastructure changes, to
accommodate new A380 and
other new aircraft models, create
a competitive advantage for the
airports that invest in new
infrastructure.
The industry experiences a
moderate level of technological
change on both the passenger
Economic
Industry revenue has increased
3.5% to $120.3 billion, including
a 4.9% jump in 2012. This stems
from passenger numbers
recovering 4.7% and operators
13
increasing prices.
Expansion in developing
economies, primarily in the
Middle East and Asia.
Greater number of privately run
airports lead to efficiency gains
and wider profit margins.
High fuel prices dampen air
cargo demand.
Airport industry is in the mature
phase of its economic life cycle
It costs a Canadian carrier three
times as much to land a plane at
a Canadian airport compared
14
with a major European airport.
Social
An increase in available leisure
time for consumers will
encourage higher participation
in air travel especially for cashrich, time-poor tourists, or
those wishing to visit remote
areas and thus demand for
airport operators.
As unemployment declines
people will have less time to
spend on leisure activities such
as travel, however business
travel may increase.
International events like the
World Cup and the Olympic
Games will further contribute
to rising passenger volumes.
An increase in tourist activity
boosts demand for airport
operations.
Environmental
Fuel prices increase as the global
price of oil does and the airline
industry is one of the most
reliant on fossil fuels.
Noise pollution is a significant
concern of municipalities
surrounding airports and causes
restrictions on flight arrival and
departure time, affecting the
competitive advantage of
airports connecting with east
coast and European cities.
The carbon output of airlines
and thus airports is fairly
significant and when flights are
Legal
(Intersects with political,
economic and environmental
factors significantly.)
There are significant legal
regulations surrounding air
traffic safety and security.
Tougher regulations on
greenhouse gas emissions raise
prices for airlines and airports
and may be a deciding factor
when choosing between two
competitive airport
destinations.
11
Vancouver Airport Authority 2011 Annual and Sustainability report
Gillen, D. (2013, March 6). Director of the Centre for Transportation Studies and the YVR Professor of
Transportation Policy (Sauder School of Business).
13
IBIS World Industry Report H4912-GL –Global Airport Operation. Jan 2013.
14
http://www.conferenceboard.ca/economics/hot_eco_topics/default/08-1006/clipping_the_wings_of_canada_s_aviation_industry.aspx
12
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Strategic Analysis: YVR and the Global Airport Industry
and airline sides.
Runway technology is highly
advanced at major airports, and
is important to minimizing wear
and tear on aircraft when
departing and landing.
Technological developments in
self-serve kiosks for check in are
helping clear queues and
reducing wait times for
passengers and airlines.
BASM 502
price competitive, passengers
are generally unwilling to pay
additional costs to purchase
offsets.
The contamination of
surrounding soil due to jet fuel
spills, burning and ground
leakage is a concern.
Environmental events (volcano,
ash cloud, earthquakes, and
tsunami) affect air travel and
thus airports.
Figure 5. PESTEL of global airports.
Dynamic Industry Analysis
The airport industry will continue to grow as the rate of air transportation use grows. Industry revenue
is expected to grow at an annualized rate of 3.9% to $ 145.7 billion15. Passenger and cargo traffic is set
to increase particularly in developing countries increasing revenues for the industry.
Global Airport Operation Industry Revenue
8
% change in
Revenue
6
4
2
0
2008
2010
2012
2014
2016
2018
-2
Figure 6. Industry Revenue Graph 16
Airports are investing in new infrastructure projects and technology to expand their current capacity to
handle cargo and passenger traffic, increase safety standards and provide customers with a whole new
shopping and entertainment experience. After the economic recession in 2008, the industry has
continued to grow but is still vulnerable to key drivers such as GDP and fuel prices. Competition is
15
16
IBIS World Industry Report H4912-GL –Global Airport Operation. Jan 2013.
IBIS World Industry Report H4912-GL –Global Airport Operation. Jan 2013.
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Strategic Analysis: YVR and the Global Airport Industry
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expected to grow in the industry with increase in number of airports as air travel increasingly becomes
commoditized. The number of low cost airports in growing cities is expected to rise competing against
the more established high end airports in larger cities.
As demand for energy increases, fuel prices will continue to remain volatile increasing steadily each
year. Environmental and government regulations will become more stringent because of increased focus
on environmental issues and safety standards. These factors will increase the operational cost of
airports as well as airlines and as a result airfares will increase but increased competition in these
industries and improvements in fuel efficiency and passenger capacity of aircrafts will keep fares low
commensurate to income and inflation.
Emerging markets in Asia, Middle East and South America will continue to fuel the growth of the
industry with growth in middle class population, high disposable income and a growing economy. These
markets will attract tourist and business travelers from across the globe. With increase in demand for air
travel, the airline and airport industry in these markets is poised to become more competitive.
Governments in countries such as China and India have made huge investments in the airport industry
to increase the number of airports, expand current facilities, and improve infrastructure and raise safety
standards at key airports.
Advances in technology have made aircrafts bigger and more fuel efficient enabling them to carry more
number of passengers over longer distances. In future, this will lead to more number of direct flights
over long distances bypassing airports which would have previously been an in-transit destination.
Improvements in air traffic control technology means increased number of flights in a given airspace
allowing for increased traffic and flight paths while adhering to safety standards. With growing impetus
on reducing environmental impact and government regulations over safety standards, technology will
play a key role in achieving these goals.
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Strategic Analysis: YVR and the Global Airport Industry
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INTERNAL ANALYSIS OF YVR
The internal analysis of YVR is divided into three parts; an analysis of activities, an analysis of resources,
and benchmarking. This helps to explain how YVR was able to move over 17 million passengers in 201117
and how they can meet future increases in air traffic.
Figure 7. YVR Operations
17
Vancouver Airport Authority 2011 Annual and Sustainability Report
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Strategic Analysis: YVR and the Global Airport Industry
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Activity Analysis
Value Chain of YVR
Figure 8. YVR’s current activities
Secondary Activities
Infrastructure: The main infrastructure components for YVR’s value chain are explained below:
Financial System: As YVR is a non-profit corporation and has no access to shareholder equity,
they fund their growth and expansion needs with debt. Equity can be cheaper than debt
financing; however, not having shareholders allows YVR to make long term plans and projects
without focusing on short term evaluations. The financial model and community focus also
creates a unique advantage for YVR when dealing with government, because they are viewed as
being unbiased and only interested in community well-being. This increases YVR’s ability to
influence policies and regulations in favor for the airport.
Accounting: YVR has a ‘dual till’ system under which the two main revenue generators,
aeronautical and non-aeronautical business, are divided into distinct income and expenditure
accounts. A third source of revenue is the Airport Improvement Fee (AIF) that is collected from
passengers by the airlines on behalf of the airport to generate capital for capital intensive
projects.
The dual till system ensures that income from the aeronautical side of the business is used for
aeronautical expenditure, leaving the non-aeronautical income to provide for non-aeronautical
expenditure and to make up company profits. Most airports have a single till system where all
revenues of an airport are combined; however, this leaves airlines covering a larger portion of
the costs and results in higher landing fees. YVR's dual till system has better control of revenues
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Strategic Analysis: YVR and the Global Airport Industry
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and can offer superior long term contracts to air carriers with regards to landing fees and other
costs.
Legal Affairs: YVR is restricted by regulation from the government. Bilateral Air Service
Agreements (Fig. 5) limit YVR’s ability to attract foreign airlines to Vancouver. Canada also has
regulations that limit foreign ownership of Canadian airlines to 25%, decreasing the
competitiveness of the Canadian airline industry and reducing available airlines to operate from
YVR. YVR has been successful in lobbying the Government of Canada to allow the adoption of
the China Transit Trial that reduces the requirement for Chinese citizens to obtain a transit visa
when connecting through YVR. This allows for more economical flights between YVR and China
by increasing the volume of travelers on the route.
Management: The Vancouver Airport Authority (VAA) board is comprised of directors from
government and the community. Transport Canada owns the airport land and leases it to VAA to
operate YVR as a “first class international airport”.18 The current ground lease has been
extended until 2072 and requires YVR to pay Transport Canada rent based on 12% of airport
revenues.19 20 YVR has a five tiered planning process to guide and manage the development and
operations of the airport in the short, medium and long term.21 A set of strong corporate
governance structures, policies and procedures ensures that YVR’s business is conducted
responsibly.
Human resource management: At the end of 2011 the airport authority employed 396 people, 306 of
which were member of the Public Service Alliance of Canada (union)22. YVR recognizes the value and
importance of their employees and uses the following four values as a guide for their corporate
culture.23
- Promotion of collaboration and team work
- Accepting accountability
- Pursuit of creativity
- Results driven focus
Employee development is promoted and the YVR target is to provide employees with an average of
35hrs of training per year (they exceeded this in 2011 with an average of 45hrs per employee)24.
Training activities include environmental management, cross-functional training, personal development,
safety and technical training.
18
Vancouver Airport Authority 2011 Economic Report
Brown, M. (2013, March 20). Senior Planner, Strategic Planning (YVR).
20
Vancouver Airport Authority 2011 Economic Report
21
Vancouver Airport Authority 2011 Annual and Sustainability Report
22
Vancouver Airport Authority 2011 Annual and Sustainability Report
23
Vancouver Airport Authority 2011 Annual and Sustainability Report
24
Vancouver Airport Authority 2011 Annual and Sustainability Report
19
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Strategic Analysis: YVR and the Global Airport Industry
2007
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2008
Total training and
21,698
22,985
apprenticeship hours
Average
training/apprenticeship
58
55
hours per full-time
equivalent position
Figure 9. YVR Employee Development
2009
2010
2011
16,695
16,462
17,200
40
42
45
The airport authority has developed various safety initiatives and strategies that enable them to reduce
and maintain low levels of work-related injuries. These safety initiatives are extended beyond YVR’s own
employees to include everyone at the airport.
Figure 10. YVR Work-related Injuries
In 2011 YVR introduced a new performance management program to align employee objectives with the
YVR’s annual business plan and help to further develop an environment for open communication,
coaching, and feedback.25
Technological Development: YVR is considered as an industry leader and pioneer of technologies that
simplify passenger travel and reduce wait times. This means looking at how lead users and early
adopters are altering the airport’s service offering and using it as inspiration.26 Some of these
technological developments are listed below:
Common Use Terminal Equipment (CUTE) - 1996: This system allows the airlines to share
hardware and plug in to the airport’s host computers.27
25
Vancouver Airport Authority 2011 Annual and Sustainability Report.
Brown, M. (2013, March 20). Senior Planner, Strategic Planning (YVR).
27
YVR Future Travel Experience Fact Sheet.
26
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Strategic Analysis: YVR and the Global Airport Industry
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Common Use Self-Service (CUSS) Check-in - 2002: Using this service, customers self-check-in
and print their boarding passes for multiple airlines from one machine. YVR was the first
airport in the world to introduce CUSS check-in kiosks.28
On Board Check-in - 2003: Through this service, airline boarding passes are delivered
directly to the cabin of cruise ship passengers, and baggage is tagged on board the cruise
ship and delivered directly to the airport.29
CUSS Baggage Check-in - 2007: YVR expanded CUSS to allow passengers to print their own
luggage tags.30
Automated Border Clearance (ABC) -2009: This service automates the process of crossing
the border into Canada (reduced customer wait time from 90 min to 15 min) was a
partnership between CBSA and YVR. 31
Procurement: The Vancouver Airport Authority has concentrated on enabling its employees to do what
they best can and contracting out other aeronautical and non-aeronautical services to other specialized
suppliers. YVR also focuses on attracting more airlines to increase its aeronautical revenue. The
acquisition of services and goods at YVR is done through competitive bidding (open contract) or through
best value purchasing.32 YVR only makes exceptions to the way it allocates contracts under specific
circumstances.
Primary Activities
Inbound Logistics: We have considered inbound logistics as the activities that are specific to arriving
flights. The airport provides Canada Boarder Services Agency (CBSA) with space to provide customs
services for passengers and cargo arriving from international flights. YVR also invested $300 Million to
extend the sky train to the airport to improve accessibility to and from the airport and at the same time
helped YVR promote sustainability.33
Operations: Airport operations are the activities YVR performs for both arriving and departing flights.
These activities include cargo, seaport, ground handling, and baggage handling activities. As previously
mentioned, YVR choses to contract out a number of specialized activities including ground handling
services to other companies (Handlex, Servisair, and Swissport) to operate at the airport and provide
services to airlines without their own ground handling capabilities.34 YVR has chosen to take
responsibility for the baggage handling inside the terminal building, but once the baggage leaves the
building it is the responsibility of the airline’s chosen ground handling providers to load and unload it
from the planes.35
28
YVR Future Travel Experience Fact Sheet
YVR Future Travel Experience Fact Sheet
30
YVR Future Travel Experience Fact Sheet
31
YVR Future Travel Experience Fact Sheet
32
Vancouver Airport Authority 2011 Annual and Sustainability Report
33
Vancouver Airport Authority 2011 Annual and Sustainability Report
34
www.yvr.ca
35
Brown, M. (2013, March 20). Senior Planner, Strategic Planning (YVR).
29
C. Beaumont, K. Bisht, L. Cornish, M. Ghael
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Strategic Analysis: YVR and the Global Airport Industry
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Outbound Logistics: Outbound logistics are activities specific to departing flights, such as passenger
security, de-icing, re-fueling, and passenger check-in/boarding. YVR provides airlines with the space and
equipment for passenger check-in and boarding; however, it is the airlines that provide the service to
passengers, not YVR. YVR also contracts out the mandatory passenger screening/security to G4S.36 The
airlines are responsible for purchasing their own fuel and have created a consortium that purchases fuel
and manages fuel logistics. It was in YVR’s best interest to invest in a fuel system that was installed
under the apron in order to improve safety at the airport. As a result, they own the equipment that is
being used for re-fueling planes; however, they do not generate any revenue from it and view it as a
benefit they provide to airlines.37 PLH Aviation Services has the contract for aircraft refueling services at
YVR.38 YVR has also chosen to control the de-icing contracts in order to improve efficiencies in
operations. YVR selects a single provider of de-icing services (Aeromag) that airlines pay directly based
on services used.39 YVR has again chosen to purchase the de-icing equipment in order to ensure that the
proper investments are being made and views it as a value added service to airlines.40
Marketing & Sales: YVR markets advertising opportunities for businesses by highlighting that they
provide a captive audience and have over 17 million passengers traveling through the airport. A variety
of advertising services are available including signage, information kiosks, floor displays, and flight
information video screens.41 YVR also needs to market their services to the public to reduce passenger
leakage to Bellingham and Seattle.42
Service: YVR views itself as a “full-service” airport and positions itself to provide the highest level of
service and customer experience as possible.43 These services enhance the passenger experience at YVR
and include shopping, food & beverage, duty free, hotel, free and unlimited Wi-Fi, and various other
services.
YVR has some of the best retail selection in North America, for example the first Victoria secret in B.C.
opened at YVR44. They also have the second largest duty-free space in North America with over 56,000
square feet in 10 stores.45 YVR is specifically targeting its retail to match customer demands, such as the
rare whisky and cognac business that is popular with the Chinese market.46 YVR has also moved away
from its previous overpricing strategy and instead now insists that stores offer “street prices” using
36
YVR Website
Brown, M. (2013, March 20). Senior Planner, Strategic Planning (YVR).
38
YVR Website
39
YVR Website
40
Brown, M. (2013, March 20). Senior Planner, Strategic Planning (YVR).
41
YVR Website
42
O’Brien, M. (2013, March 8). Corporate Secretary and Vice President of Strategic Planning and Legal Services
(YVR).
43
Brown, M. (2013, March 20). Senior Planner, Strategic Planning (YVR).
44
B.C.’s first Victoria’s Secret opens at YVR (http://www.straight.com/life/bcs-first-victorias-secret-opens-yvr
37
45
YVR reaches beyond the sky with expanding retail operations
(http://www.vancouversun.com/reaches+beyond+with+expanding+retail+operations/7096001/story.html#ixzz2ObcJKLJq)
46
YVR reaches beyond the sky with expanding retail operations
(http://www.vancouversun.com/reaches+beyond+with+expanding+retail+operations/7096001/story.html#ixzz2ObcJKLJq)
C. Beaumont, K. Bisht, L. Cornish, M. Ghael
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Strategic Analysis: YVR and the Global Airport Industry
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Robson Street as a reference.47 This translates into the second highest consumer spending in
international terminals in North America. On average $20.11 per passenger is spent before boarding
flights from YVR.48 YVR is opening an outlet mall with 97 shops by 2014 that will create jobs in the
community, generate more revenue for YVR, and possibly act as a disruptor for outlet stores in the US.49
The Fairmont Vancouver Airport Hotel is directly connected to YVR and provides lodging, spa, and
conference facilities for YVR’s customers. Echoing YVR’s “full-service” mantra, the hotel has been voted
as the best airport hotel in North America in both 2011 and 2012.50
SWOT Analysis
In addition to understanding YVR’s value chain, it is important to categorize the activities, resources and
assets that contribute to YVR’s market position and whether they add to or subtract from its
competitive advantage both now and in the future.
47
YVR reaches beyond the sky with expanding retail operations
(http://www.vancouversun.com/reaches+beyond+with+expanding+retail+operations/7096001/story.html#ixzz2ObcJKLJq)
48
YVR reaches beyond the sky with expanding retail operations
(http://www.vancouversun.com/reaches+beyond+with+expanding+retail+operations/7096001/story.html#ixzz2ObcJKLJq)
49
50
YVR Website
Skytrax World Airport Awards (http://www.worldairportawards.com/)
C. Beaumont, K. Bisht, L. Cornish, M. Ghael
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Strategic Analysis: YVR and the Global Airport Industry
Strengths
Strategically located – gateway to Asia - Pacific,
particularly China
Independent board of directors – incentive to
work towards the welfare of the stakeholders
Not-for-profit model gives them greater
lobbying power and possible tax exemptions.
Not having shareholders means YVR can make
long term decisions without worrying about
short term evaluations.
Dual-till model gives them a better
understanding of sources of revenue
Increased emphasis on safety, security and
sustainability helps to reduce cost and increase
trust levels among passengers.
Credit rating of AA ( second highest in the
industry) gives them easy access to capital
Considered as industry leader and pioneer of
technology. Credited with several operational
innovation using technology such as on- board
check in and automated border clearance
Opportunities
Improvements in infrastructure and use of
advanced technology to provide state-of-the
art services to passengers.
Infrastructure expansion to handle growing
passenger and aircraft traffic in the future
Increase non-aeronautical revenues by
providing superior value-add services such as
retail, food and entertainment and parking.
Air travel is fast becoming the preferred mode
of transport presenting an opportunity for YVR
to tap into.
Growth of Asian economies will increase air
travel to and from Vancouver which YVR can
potentially benefit from.
BASM 502
Weaknesses
Lack of free space limits future expansion of
infrastructure
Not having shareholders means YVR has to
raise capital through debt to fund investments
YVR Operates in a highly regulated industry
where most decisions are made by the
government, therefore it lacks the power to
take decisions that are in its best interest
YVR relies heavily on contractors with
monopoly powers to provide services to
passengers which lead to lesser control in
airport’s operations.
Threats
Increased competition from low cost airports
such as Bellingham leading to passenger
leakage.
Growing business importance of other major
cities such as Calgary
Lack of space on the Sea Island could restrict
YVR’s expansion plans raising environmental
concerns
Greater lobbying power lies with the airports in
the east such as Toronto and Montreal which
could work against their business interest.
Profitability depends on several external
factors beyond YVR’s control which makes
them vulnerable to changes in economic and
political environment.
The SWOT analysis is aligned with industry view of YVR as a currently strong airport with a good future
outlook. However, it is vulnerable to a number of threats that are both controllable and uncontrollable
by YVR. Considering these when planning for the future is imperative.
C. Beaumont, K. Bisht, L. Cornish, M. Ghael
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Strategic Analysis: YVR and the Global Airport Industry
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Resource Analysis
Resources are assets that help perform YVR’s activities and can be categorized into tangible and nontangible resources.
Tangible resources are physical and financial resources. As with any large airport YVR has a high
percentage of their assets as tangible assets, however, YVR also has a healthy financial position. Some of
their main tangible resources include:
Cash on Hand:
$66,626,000 on December 31, 2011
Credit Rating:
AA according to Standard and Poor
AA (low) - Dominion Bond Rating Services
Investments:
$52,570,000 – in subsidiary Vantage on December 31, 2011
Runways:
North Runway (08L/26R) – 3030m x 61m
South Runway (08R/26L) – 3505m x 61m
Crosswind Runway (12/30) – 2225m x 61m
Terminals:
Main terminal = Domestic (DTB) & International & Trans-border (ITB)
- Approx. 3.5 million square feet
- 51 bridged gates + 16 ramp loading gates
South Terminal (STB) – 8 ramp loading positions & common use floatplane dock
Parking:
Parkade (3 levels)
Economy Parking Lot
South Parking Lot
JetSet Parking Lot (formerly- Long-Term)
Retail shopping space:
Approx. 166,000 square feet of retail space
Baggage handling system: Bags travel at a rate of 1.2m/s
Ground Run-up Enclosure:
Approx. 1,950 sound-absorbing panels
Cargo Village:
YVR handled 228,000 tonnes of cargo in 2012
Figure 11. YVR’s Tangible Resources. 51 52 53 54 55
51
Vancouver Airport Authority 2011 Annual and Sustainability Report
YVR Website
53
Vancouver International Airport: Quick Facts 2012
54
YVR Cargo 1992-2013
55
Airport Guide (http://airportguide.com/airport/Canada/British_Columbia/Vancouver-CYVR-YVR/runways.php)
52
C. Beaumont, K. Bisht, L. Cornish, M. Ghael
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Strategic Analysis: YVR and the Global Airport Industry
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Intangible Resources: are resources which are not physical in nature. It is YVR’s intangible assets that
allow YVR to continue to innovate and be a leader within the community. Their main intangible assets
include:
Leadership:
Approximately 160 years of combined YVR airport authority experience
on the current executive leadership team
Human Resources: YVR has 396 employees
Operations at YVR support 23,600 direct jobs
17 million passengers in 2011
Technology:
4 significant new technologies introduced since 1992
rd
Reputation:
Ranked as the best airport in North America for the 3 year in a row in
2012 (Skytrax World Airport Awards)
Ranked as the 9th best airport in the world in 2012 (Skytrax World Airport
Awards)
83% of Metro Vancouver residents gave the overall impression of YVR 4
out of 5 or higher in 2011.
Benchmarking
The key performance benchmarking areas for the airport are:
Traffic activity - Total passengers, cargo, & operations.
Physical facilities - Number of runways, land area, taxiways, terminals, gates, parking space
Aeronautical related charges - Landing and take-off fees, aircraft apron, parking and gate fees
Design of the airport and efficiency of operations
Airport industry is highly competitive and in order to attract more customers (both passengers and
airlines), an airport needs to perform well in all the above mentioned parameters. However, it is also
important that an airport manages its funds well because the capital investments in an airport have slow
return on investments. Therefore, how and when the capital is invested is important.
C. Beaumont, K. Bisht, L. Cornish, M. Ghael
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Strategic Analysis: YVR and the Global Airport Industry
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Figure 12. Strategic Capital Investment of Infrastructure
YVR’s strategy (Fig.12) is to delay the influx of capital in the system until as close as possible to when it
is needed, this gives them an early return on investments and frees up capital faster. This strategy of
capital investment and infrastructure development at YVR has helped them churn capital quickly and
stay low on debt.
Almost all airports provide similar services and have similar supply chain components (Fig. 1), thus
benchmarking airports on operational or supply chain parameters would not have brought clarity to
performance. Thus, we benchmarked YVR’s financial performance against their competitors (Toronto,
Calgary, Seattle and Chicago).
The number of passengers travelling through YVR has been steady since 2002 and is expected to grow
despite that Settle and Bellingham are offering lower airfares. Chicago has the highest number of
passengers travelling through. Calgary’s airport at the same time has the lowest number of passengers,
but is growing quickly due in part to Calgary’s growth as business center.
C. Beaumont, K. Bisht, L. Cornish, M. Ghael
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Strategic Analysis: YVR and the Global Airport Industry
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Figure 13. Airport passenger traffic.
Because aeronautical and non-aeronautical services are the major revenue generators for airports it is
important to decide on how to account for them both. In the case of YVR, a key advantage is their
decision to operate as a dual till model, which is unique to them among their major competitors with
only SeaTac following a similar model. Referencing Fig. 4 it is important to remember the different
business models of North American competitors.
Calgary
Revenue
$ 290,064
EBITDA
$ (123,425)
Net income
$ (239,410)
Shareholders' equity $ 152,334
Total debt
$ 1,244,560
$ 1,494,727
Total assets
Figure 14. Selected financial data
Chigaco
Seattle
Toronto
$ 679,402 $ 483,172 $1,137,592
$ 443,040 $ 415,968 $1,073,412
$ (5,191) $ 107,750 $ (36,412)
$1,392,546 $2,912,124 $ (719,758)
$7,338,756 $3,510,594 $7,710,530
$9,480,843 $6,660,419 $7,199,891
for YVR and competitors.
YVR
$ 369,262
$
198,781
$ 59,060
$1,087,874
$ 547,389
$1,766,954
Calgary
Chigaco
Seattle
Toronto
YVR
ROS
-82.54%
-0.76%
22.30%
-3.20%
15.99%
ROE
-130.86%
-0.29%
1.95%
5.42%
1.68%
ROA
-16.02%
-0.05%
1.62%
-0.51%
3.34%
Asset turnover
0.194
0.072
0.073
0.158
0.209
Financial leverage
817%
527%
121%
-1071%
50%
Figure 15: Selected financial metrics for YVR and competitors.
Figures 14 and 15 demonstrate that YVR was in good financial shape in 2011. It has the least debt
compared to other airports and its net income is positive. Both Seattle and YVR have similar financial
performance compared to others. The high return on sales represents high operational efficiency of the
airports in terms of profit produced per dollar of sales. Similarly, ROE indicates the net income returned
as a percentage of shareholders equity. Since Canadian airports are non-profits their shareholders
equity is equal to net assets, and thus ROE represents the return on net asset of the airport. ROA is the
C. Beaumont, K. Bisht, L. Cornish, M. Ghael
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Strategic Analysis: YVR and the Global Airport Industry
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return on total asset and accounted by the net income generated by the firm. YVR is generating the
maximum profit relative to its total asset which is positive. Equally, the low financial leverage of YVR
shows its low dependence on debt financing which also strengthens its financial position.
Figure 16. Relationship between operations, assets and capital
Figure 16 represents the relation between operating efficiency (determined by ROS), asset utilization
(determined by asset turnover) and strength of capital structure (determined by financial leverage). The
position of the bubble is determined by the ROS and asset turnover and size is determined by financial
leverage. YVR’s dual till model is helping them to keep their debt low and run their operations
efficiently. Seattle is YVR’s closest competition and has been a both a disruption and simulator to YVR’s
business by causing passenger “leakage” but also stimulating the overall number of passengers
traveling. YVR is out performing their Canadian competititors; however, it is important to note that
Calgary is currently investing heavily into a 2 billion expansion plan.
Figure 17. Benchmarking
In Figures 17 through 21, benchmarking of YVR and its competitors on finacial parameters clearly show
that YVR is finacially very strong which gives them advantage to make decisions more independently.
C. Beaumont, K. Bisht, L. Cornish, M. Ghael
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Strategic Analysis: YVR and the Global Airport Industry
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Seattle also follows a similar revenue model and is on par with YVR. Calgary appears to be ina difficult
finacial situation, however this is likeley due to the execution of their investment-heavy expansion plan
currently underway.
Figures 18-21. Financial Benchmarking
C. Beaumont, K. Bisht, L. Cornish, M. Ghael
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Strategic Analysis: YVR and the Global Airport Industry
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RECOMMENDATIONS
YVR’s ability to maintain its top 10 global position is contingent on factors both within and beyond its
control. It is imperative that YVR continues to plan strategically in the future and recommendations for
future development fall into four main categories:
Diversify Risk and monitor key players
Diversifying Risk: Currently YVR is the second largest hub for Air Canada (AC) after Toronto
airport; however Air Canada continues to face financial difficulties since late 2000. Air Canada
had huge liquidity risk in its Q1 2009 and had problems conserving cash for its 2010 operations.
Air Canada is YVR’s largest carrier and thus highly dependent on AC for aeronautical revenue.
YVR should diversify its risk by becoming a hub for other airlines. As WestJet is a growing
competitor it is an attractive option for YVR.
Monitor loss to Bellingham/Seattle:
Figure 22: Increase in household ticket purchases 56
Recently, YVR has lost passenger traffic to Bellingham (BLI) due to its close location and lower
fares. BLI can be termed as “The Classic Disruptor” to YVR by stealing away passengers. YVR
currently loses up to 1 million passenger trips to US airports annually. Figure 22 shows the
percentage growth of Vancouver households that fly since 1953. Since early 2000, passenger
traffic rose steeply from 35% in 2000 to 46% by the end of 201057. 75% of this growth is
attributed to fare generation58 leaving 25% of the 1M passenger trips being poached from YVR.
YVR has several options to curb this leakage:
1. Buy or invest in Bellingham
56
Brown, M. (2013, March 20). Senior Planner, Strategic Planning (YVR).
Brown, M. (2013, March 20). Senior Planner, Strategic Planning (YVR).
58
Brown, M. (2013, March 20). Senior Planner, Strategic Planning (YVR).
57
C. Beaumont, K. Bisht, L. Cornish, M. Ghael
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Strategic Analysis: YVR and the Global Airport Industry
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2. Create its own disruptor i.e. build a low cost terminal.
3. Ignore and focus on its own strategy
Currently, the best option for YVR would be to focus on its own strategy by growing organically.
YVR’s competitive advantage is the full- service it provides to its passengers so it should
concentrate on providing the additional value-added services included in these
recommendations.
Expand and formalize lobbying operations
Government regulations: To maintain its competitive advantage in the face of growing Asian
expansion and increasing destination cities for airlines, YVR needs to continue to push for
changes to the current Transport Canada regulations. It is recommended that YVR establishes a
dedicated team or department to continue to lobby Transport Canada and other global air
transport groups. It would be to YVR’s advantage if airports could participate in the negotiation
of ASA’s and the expansion of city pairs alongside the Canadian government and airlines. YVR
would also benefit from relaxation of the regulations surrounding rights of establishment and
foreign ownership of airlines (which maintains 75% of a Canadian-based airline must be
Canadian owned) which currently protects Air Canada and WestJet’s duopoly on domestic
flights.
Tour Operations: Additionally, the lobbying group could address regulations in the tourism
industry which would also benefit both YVR and Vancouver as a tourist destination. Currently,
tour operators in BC, Ontario and Quebec are required to be located within the province59. This
prohibits foreign tour operators and airlines from offering tour-packages from YVR and
therefore discourages them from choosing Vancouver as a destination, reducing flights and
passengers to the city.
Cargo-In-Transit: YVR had success in increasing airport traffic with the visa-in-transit program.
We recommend lobbying for a similar program for cargo. One of the reasons for YVR low cargo
volumes is because of the added complication of clearing customs, however, if a similar
exemption was made for cargo only passing through the airport, YVR would be able to increase
its attractiveness for cargo routes between Asia and the USA because they would be able to
send products to/from both Canada and the US on the same planes.
Further develop full-service model
Develop commercial space for passengers and community: Non-aeronautical revenues are an
important part of financial solvency for airports. As a result, YVR should develop commercial
space, making it more attractive to passengers. YVR is currently developing a mall with 94
designer outlets to attract tourists and the local community. Opening public access to retail
59
Gillen, D. (2013, March 6). Director of the Centre for Transportation Studies and the YVR Professor of
Transportation Policy (Sauder School of Business).
C. Beaumont, K. Bisht, L. Cornish, M. Ghael
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Strategic Analysis: YVR and the Global Airport Industry
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shops (like Schiphol airport) and pushing security nearer to boarding gates (as in Singapore) will
result in increased non aeronautical revenues and possible indirect increase in aeronautical
revenues as more passengers choose YVR.
Increase transportation options: YVR can further increase their full-service airport model by
increasing the transportation options to and from the airport. We recommend looking at the
option of creating a “cell phone” parking lot to ease congestion created by passenger pick-ups.
With widespread mobile use passengers are now able to call people picking them up to meet
them at the arrival gates. However, because it is hard to predict both the exact arrival time of
the passenger and driving time to the airport, people picking up passengers from YVR often
drive around in circles at the airport, creating excess emissions, or chose to park illegally in areas
that cause increased congestion. By creating a designated “cell phone” parking lot on or close to
Sea Island, YVR will make it more convenient for passenger pick-ups, reduce emissions, and at
the same time could generate revenue by offering retail and food services to those waiting
(Starbucks etc.). Another option to improve access would be a partnership with Car2Go that
would see the creation of Car2Go parking in the parkade. YVR could generate revenue from
Car2Go and at the same time would not be cannibalizing their revenues from parking because
the passengers who use Car2Go would not normally park at the airport.
Business services: Business customers have low price sensitivity and as a result are an ideal
match for YVR’s full-service model; however, Vancouver is not a major business hub in Canada
and as a result we recommend that YVR focus on increasing its attractiveness to business
travelers transferring through the airport. One method would be to create dedicated lines
through customs for business travelers connecting from an international flight. Another option
could be to have a priority luggage carousel for business class making it easier and faster to get
through the airport. An additional benefit is that with every minute they are not spending
waiting they are more likely to spend money in the airport60.
Tourist Attraction: YVR is an airport that is reflective of the culture and environment of Western
Canada. It is one of the few airports that immediately upon landing broadcasts the city, culture
and beauty of Vancouver. It is also developing a large retail presence both within the airport and
in nearby Richmond and was a significant investor in the Canada Line rapid transit. Therefore it
is recommended that YVR furthers its development as a unique tourist destination in addition to
just being a transport hub. YVR is working in 2013 to expand Flight Path Park a popular
destination for plane enthusiasts, to be a view point and environmental park for local residents,
tourists and employees on Sea Island. By developing a future waterfront park on the North side
of Sea Island and expanding existing summer children’s and family programs, YVR can become a
destination for locals and tourists encouraging more non-aeronautical revenue.
60
Brownlow, N. (2013, March 25) Sr. VP of Revenue Management & Information Services. InterVISTAS Consulting.
C. Beaumont, K. Bisht, L. Cornish, M. Ghael
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Strategic Analysis: YVR and the Global Airport Industry
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Infrastructure investments
Install fuel pipeline: Currently, most of YVR’s fuel requirements are delivered via a 40km pipeline
owned by Trans Mountain61, supplying fuel from a Chevron facility in Burnaby. The pipeline is
not sufficient to meet peak demand requirements and therefore YVR also ships fuel from a
BP/ARCO refinery at Cherry Point, Washington via tanker truck. This transport method has
increased safety concerns, traffic congestion, and carbon emissions, and is unsustainable.
Trans Mountain’s pipeline is old and being the only source of supply any disruptions could
impact YVR’s operations. Upgrading the pipeline or installing a new one would involve huge
investments while supply uncertainty remains. VAFFC currently owns a wharf facility in
Richmond on the south arm of the Fraser River62 which could store fuel delivered by barge or
taker. A new pipeline connecting to YVR airport will increase the reliability of fuel supply and
minimize environmental impact and safety risks. However, development is currently opposed by
the City of Richmond and may be subject to environmental conflict too.
Extending north runway: Currently, the North runway is used primarily for arrivals, restricting
YVR’s capacity of aircrafts. Extending the facility to also handle departures would increase YVR’s
runway capacity and double its departure capacity63. To extend the runway, YVR will have to
build a north-south taxiway allowing for simultaneous take-off and landing on both runways.
Extending the length of the North runway will allow long distance aircrafts to use the runway for
departures. Having two entirely functional runways will help YVR manage peak hour traffic more
efficiently and cater to the expected increase in traffic, generating additional aeronautical
revenue.
61
VAFFC – www.vancouverairportfuel.cawww.vancouverairportfuel.ca
VAFFC – www.vancouverairportfuel.cawww
63
YVR: Your Airport 2027: 20-year Master Plan
62
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