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Operations Management: Challenges at Heathrow Airport

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Operations Management: Challenges at Heathrow Airport

The "Operations Management Challenges at Heathrow Airport" case study enables
students and business stakeholders to understand the complex operational management problems
of Europe's largest airport, one of the world's largest airports. While Heathrow Airport was under
the leadership of Normand Boivin, it faced numerous issues, including constraints on
infrastructure and regulation limitations on the number of passengers it could accommodate at a
given time from 2011 to 2018, despite his efforts to mitigate these challenges. This case analysis
will explore the subject of capacity management, how various factors that influence the
operations of an airport interact, what should be considered when formulating a viable recovery
plan, the key issues concerning the contract between the airport and its suppliers, and relating to
its strategic partners.
Question 1
Managing operational capacity for an airport such as Heathrow is a demanding task as
this is one of the largest and busiest airports in Europe and one of the most prominent
international airports for the global aviation industry. These are issues of infrastructure,
regulation, and demand variability, making exacting balancing of demand against supply a
problematic endeavour in the scenario. The immigration status of the passengers also contributed
to the challenge with operations, which resulted in customers lining up for hours.
Infrastructure Limitations
A critical challenge facing the airport is the number of runways that account for
infrastructure, as it only has two runways. Contrary to more than 1300 daily aircraft movements,
it serves 98% of its potential with only two runways, as illustrated by the airport map in Fig 1
below (Roy et al., 2022). Ironically, this poses serious problems because it determines the
number of aeroplanes allowed to take off and land; therefore, its capacity is severely constricted.
This makes it difficult for Heathrow to handle the influx of traffic during peak traffic times due
to the constraints imposed by the limited number of airport runways, compared to Paris Charles
de Gaulle Airport and Amsterdam Schiphol Airport, which has six runways each.
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Fig1: Map
Regulatory Constraints
Heathrow also has various regulatory prohibitions regarding noise regulation areas and
flight curfews to reduce the adverse effects on the neighbouring community. For example, the
quota count system limits the noise generated by aircraft movements at night, with the noisiest
aircraft banned from operating between 11:30 p.m. and 6:00 a.m. (Roy et al., 2022). These
restrictions are viable for accommodating the community and, hence, reduce the flexibility and
capacity of the airport operation.
Demand Fluctuations
Another significant challenge would be the unpredictability of demand as the passenger
may decide to travel by other means of transport or delay their travel plans. This is illustrated
through the following data: during heavy traffic, such as during the summer holiday season, the
number of passengers, flights, or both may reach their highest level, creating a busy schedule.
Conversely, there is less demand during off-peak periods, but operational efficiency must still be
maintained as showcased in Fig 2 below with data from 2002 – 2023 (Abdelghany et al., 2011).
Since the degree of activity varies between high and low periods, working with the schedule and
distributing adequate staff and resources becomes a significant challenge and a source of
ineffectiveness.
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Fig 2: Passenger traffic at London Heathrow Airport 2002-2023

Technological and Operational Inefficiencies
Heathrow Airport faced technology challenges and operational facilities, especially
passenger and baggage movement. Security line-ups may occur outside the terminal, and people
can spend more than an hour completing formalities at customs and immigration. These
inefficiencies fail to satisfy the passengers and cause time accumulation, leading to an increase in
the operating cost at the airport and decreased efficiency.
Coordination and Communication Issues
Communication and coordination issues need emphasis in managing the capacity within
Heathrow, mainly due to the challenging environment it faces. One main problem identified in
the case study is poor coordination and planning between the departments (Roy et al., 2022). For
instance, the misplaced traffic circulation of aeroplanes from the runways to gates caused by a
lack of proper communication between air traffic control and the planning office leads to
inefficiency of airport traffic.
Strategic Planning and Expansion
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Long-term prospects for development, for instance, through the planned third runway,
entail various challenges and can be impacted by factors, including environmental issues or legal
restraints. Although the third runway may offer partial solutions to the problem of capacity, the
procedure of their approval as well as construction takes a considerable amount of time, and the
fight against would-be opponents appears to be never-ending, all of which contributes to the
complexity of the issue in regards to the airport's management of its overall capacity.
Question 2
Infrastructure and Runway Capacity
The number of runways is a significant state variable affecting the airport's capacity.
Heathrow currently has two runways and accommodates over 1,300 aircraft that move daily
within the airport facility. The existing case study reveals that Heathrow's available runways are
still busy at 98% yearly, whereas annual movement is limited to 480,000 (Roy et al., 2022). This
high runway utilization shows a potential correlation between runway and airport traffic
accommodation capabilities, as shown in the terminals in Fig 3 below.

Fig 3: Heathrow Terminals

Passenger Demand
Passengers' demand makes an airport congested, determining airport capacity. Heathrow
currently serves about 94 million, making it the seventh-largest international airport worldwide.
During peak time, it experiences about 275,000 passengers daily during holiday seasons and a
daily average of 200,000 passengers (Roy et al., 2022). For instance, passenger traffic tends to
fluctuate; therefore, its capacity management must be complex to alter its capacity to
accommodate change without affecting quality in the process.
Regulatory Constraints
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Regulatory constraints such as noise restrictions and curfews directly affect operational
capacity. The quota count system, where the amount of noise is controlled at night, strictly
controls the number of aeroplanes that can operate at night, effectively reducing the airport's
capacity (Department of Transport, 2023). These regulations are essential to minimize
interference with the residents living close to the airport. Still, they promote the airport's growth
through strict measures that limit its operation to a maximum of 24 hours.
Operational Efficiency and Technological Advancements
Airport capacity also depends on operation efficiency, focusing on the processes' outputs.
There are risks associated with time delays in matters related to security checks, customs, and
immigration. For example, long waiting times in security and customs can cut down the time
taken in airport retail space, constraining revenues and creating traffic. Organizational
efficiencies must be well managed for better performance in terms of staff and airline companies
at the airports and government authorities (Roy et al., 2022). For instance, checking-in, security
and baggage handling systems are advancements found to minimize processing time and
throughput rate. However, process re-engineering and adopting new technologies entail
considerable costs and may take some time before the body acclimatizes to new circumstances to
notice related changes in productivity levels.
As suggested by the case study, the following statistical data may help depict how some
of these variables are connected. For instance, for Heathrow airports, runway capacity advocacy
stands at 98%, an inference of nearly optimal infrastructure exploitation. It achieved 84%
customer satisfaction in 2016, indicating operational efficiency as a critical constituent of overall
customer satisfaction (Roy et al., 2022). Additionally, comparing runway utilization to other
world-class airports such as Paris Charles de Gaulle and Amsterdam Schiphol can help conclude
that infrastructure plays a vital role in the capacity level.
Economic Impact
The economic loss due to capacity limitations is also a significant concern. Some of the
consequences include increased operational costs for the airline. For instance, due to an increase
in the number of hours the plane spends in the air, it must spend more on fuel, which negatively
impacts scheduled connections, resulting in economic losses. Capacity management is, therefore,
not simply a functional-academic task of moving tons around or a plain system of managing
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resources involved in shifting volume; instead, it has specific economic considerations and
implications.
Question 3
Operational Efficiency
Operational efficiency involves the creation of value out of the available framework,
structuring the processes, and coordinating all linked-up entities. In the case of Heathrow, this
could be implemented through better cooperation and information sharing between the control
tower, ground handlers, and airlines to address some of the delays in the runway and passenger
throughput. This can be further enhanced by expanding automated technologies for conducting
check-ins, security checks, and bagging handling systems, which may also help increase
operational productivity (Mishra & Mishra, 2010).
Customer Satisfaction
Enhancing customer satisfaction is critical to include in the recovery plan. Indeed,
Heathrow scored a high-end passenger satisfaction position of 84% in 2016, thus pointing
towards the satisfactory significance of a positive passenger experience (Roy et al., 2022).
Reducing waiting time at the security and immigration should be encouraged, information should
be well communicated, and the facilities should be clean and comfortable to improve the results
shown in Fig 4 on different aspects of customer satisfaction based on British Airways, and also
Fig 5 on the number of customers satisfied with security screening from 2016 to 2019. Also,
creating comfortable environments through snacking, relaxation, and shopping areas should be
considered in the recovery process of flying.
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Fig 4: Customers' satisfaction rates for British Airways

Fig 5: Share of Passengers Satisfied with the Security Screening at Heathrow Airport From
2016 to 2019

Regulatory Compliance
Regulatory compliance must be maintained throughout the recovery process. This
includes noise limits, operating hours, and safety measures embraced within the camps. It is
especially relevant for Heathrow, considering its potential expansion since failure to meet the
environmental standards may lead to several issues. Maintaining operational flexibility while
adhering to rules and regulations entails configuring resources and examining overall
performance to minimize penalties that may harm the relationship with the body or agency
enforcing the laws and regulations.
Financial Viability
The effort sustainability is essential and cannot be achieved unless an organization is
financially sustainable. This has made many recovery initiatives financially sustainable;
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therefore, many conditions must be considered depending on the costs and revenues incurred.
Infrastructure and technology solutions should be funded in a format that demonstrates value,
efficiency, and revenues (Nidumolu et al., 2009). Secondly, new revenue sources, which include
diversification of services such as retail stores and dining services, can be of outstanding credit in
financial sustainability. In this regard, Heathrow Airport, based on the case study, had a heavy
debt position and required a proper economic management approach during the recovery phase.
Stakeholder Engagement
Broad stakeholders' involvement is critical for a recovery program's success in this
context. This entails company employees and management, as well as other subgroups like
airlines, government, locals, and other parties, with the social ecosystem of the company in
mind. These reflections suggest that coordination and cooperation can go a long way in creating
a shared understanding of the recovery process and the basic acquirement of everyone's interest
in the process (Tsipursky, 2023). The opportunity to hold periodic meetings to report on the
progress of measures aimed at restoring trust can contribute to the success of their
implementation.
Flexibility and Resilience
A recovery plan must be flexible and resilient to adapt to unforeseen challenges. It entails
creating contingency plans in organizational structures and procedures that address disruptions
and providing staff training in occurrence management. For instance, the purchase of equipment
to remove the accumulation of snow and training personnel to use the equipment can help avoid
the sort of debacle seen in the 2010 snowstorms. Research also noted that flexibility involves the
readiness of firms to modify strategies owing to changes in the market, such as changes in
passengers' traffic or changes in rules and regulations (Halpern et al., 2021).
Question 4
In the supply chain and logistics business, relationship management is critical, as seen in
the case of Heathrow Airport, where logistics management needs suppliers and partners. Both of
these types of relationships rely on positive communication with the parties involved for the
mutual goal of achieving success. The central aspect supporting a solid relationship among the
airport stakeholders is collaboration to facilitate seamless integration.
Collaboration
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Teamwork is the foundation of adequate logistics and impacts how the airport forms a
basis for future endevors. Heathrow has incrementally strategic relationships with airlines,
ground services, and government organizations. The combination guarantees that all processes
connected to airport functioning, including aircraft servicing and passenger processing, are
effective (Fernández et al., 2021). For instance, the cooperation of air traffic controllers, ground
handling services providers, and airlines is crucial to prevent delays and possible hindrances to
the smooth flow of air traffic.
Communication
Communication is another crucial aspect that must be accurate and timely to preserve the
high level of logistics operations at their optimum level. Heathrow has a diverse culture, and
thus, there must be appropriate communication between the various stakeholders within the
organization to oversee the running of the enterprise (Ristovska et al., 2017). This includes real-
time communication between air traffic control, ground handlers, and airlines for effective and
efficient planning of aircraft movement and effective and efficient handling of aircraft for timely
and efficient departure and arrival of the said aircraft. Similarly, communicating with the
passengers is another critical aspect of relaying the position of a flight in case of a delay,
cancellation, or change in expectations.
Supplier Relationships
Strong relationships with suppliers are vital for ensuring the availability and reliability of
necessary resources. This captures such services as fuel, contracting, and food and beverage
suppliers. The relationships with suppliers also enable Heathrow to get the best deal in the
market and quickly adapt to new circumstances. For instance, in the peak season, only reliable
supplies guarantee that the organization will have all the necessary provisions to ensure
continuous operations.
Technology Integration
Managers and directors should effectively use technology to support suppliers and
partners in achieving better logistics performance. Heathrow Airport can employ mechanisms to
help recognize and control the flow of goods and services to guarantee proper cooperation of all
functioning sectors. For instance, baggage handling and tracking with the help of automated
systems can help decrease the time necessary for such actions and increase effectiveness
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(Halpern et al., 2021). Furthermore, linking these systems to supplier logistics networks and
management can enhance coordination and offer real-time data on suppliers' updates.
Regulatory Compliance
It is crucial to remain compliant and often collaborate with other companies and
suppliers. This entails following safe and secure measures regarding products offered, peoples'
safety, and even the environment's safety. Heathrow's partners are responsible for following
these standards to sustain smooth operations with no legal problems (Roy et al., 2022). A
business must perform periodic or once-in-a-while audits or compliance checks to ensure that
other partners and suppliers adhere to the expected standards.
Economic Partnerships
Economic partnerships can provide mutual benefits for Heathrow and its partners. For
example, working together on marketing promotions and campaigns creates loyalty among
travellers and generates extra profits for airlines and airports. Moreover, partnerships with other
retail and dining parties can improve the attractiveness of their service and increase revenue
streams (Fernández et al., 2021). Such relationships should reflect clearly defined contracts that
map the parties' viatical, reimbursement, and related obligations.
Resilience and Flexibility
Logistics must be stable and adaptable, and the systems and structures put into place must
be designed to be robust. This thus involves developing strategies that can be implemented with
suppliers and partners to ensure that disruption is dealt with effectively (Tang, 2006). For
instance, having more than one supplier means an organization can always access relevant
resources despite complications with a particular supplier. Finally, it can be concluded that such
imperatives would facilitate smooth operations, and often flexible contracts are signed, which
envisage modifications depending on the existing circumstances.
Continuous Improvement
Continuous improvement entails stakeholders' and suppliers' engagement to reflect and
enhance processes constantly. To check and balance issues that may require enhancements,
Heathrow can specify precise areas of development and outcomes of the best practices to be
included in the organizational logistics. The parties should be reviewed and checked on the
progress of the agreed issues, and any future problems prevented from arising should be pointed
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out immediately. Thus, these insights present stakeholders with a description of the challenges
that exist at Heathrow Airport in terms of operations capacity management and stress the
necessity of both tactical planning as well as coordination and constant improvement for them to
deal with these issues effectively.
Conclusion
Heathrow Airport has some operational challenges, and its description highlights that
hosting one of the world's largest aviation hubs requires considerable balancing of logistics. This
case study demonstrated a range of operational challenges, such as coping with capacity
limitations and administrative policies or developing and sustaining a strong supplier and
partnership network. A strategic perspective, technological innovation, and improvement
initiatives are critical to establishing a multimillion-dollar enterprise. Whether Heathrow remains
viable as a global airport depends on the efficiency of operations, customer satisfaction, and the
company's financial performance. The findings of this research can provide an essential
understanding of what and how successful elements are significant to the operation management
of airports functioning in a complex and competitive environment.
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References
Abdelghany, A., Guzhva, V. S., & Srinivasan, K. N. (2011). Addressing and Benchmarking
Variations in Airport Demand in the U.S. Domestic Market. Transportation Research
Record: Journal of the Transportation Research Board, 2214(1), 20–26.
https://doi.org/10.3141/2214-03
Department of Transport. (2023). Night flight restrictions. GOV.UK.
https://www.gov.uk/government/consultations/night-flight-restrictions-at-heathrow-
gatwick-and-stansted-airports-between-2022-and-2024-plus-future-night-flight-policy/
night-flight-restrictions
Fernández, X. L., Gundelfinger, J., & Coto-Millán, P. (2021). The impact of logistics and
intermodality on airport efficiency. Transport Policy.
https://doi.org/10.1016/j.tranpol.2021.05.008
Halpern, N., Mwesiumo, D., Suau-Sanchez, P., Budd, T., & Bråthen, S. (2021). Ready for digital
transformation? The effect of organizational readiness, innovation, airport size and
ownership on digital change at airports. Journal of Air Transport Management, 90,
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Tang, C. S. (2006). Robust strategies for mitigating supply chain disruptions. International
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engagement-to-drive-business-success/
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Appendix
Appendix 1: Map

Appendix2: Heathrow Terminals

Appendix 3: Passenger traffic at London Heathrow Airport 2002-2023

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Appendix 4: Customers' satisfaction rates for British Airways

Appendix 5: Share of Passengers Satisfied with the Security Screening at Heathrow

Airport From 2016 to 2019
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