Many airports are privatized and thus have to act according to the desires of stakeholders, the management has the obligation to make the core business run smoothly and efficiently in order to reach satisfying results. This paper deals with airport facility management and its possible alternatives including crucial factors. At first, the problem and background concerning the issues of outsourcing or keeping in-house AFM is presented. Additionally, the scope of AFM is displayed. In the second stage, alternatives and solutions are presented and analysed. It is figured out what has to be considered most importantly in order to shape a convenient solution. The conclusion will highlight the most important findings of the paper.
Table of Content
1 EXECUTIVE SUMMARY
2 AIRPORTS AND FACILITY MANAGEMENT
2.1 AIRPORTS
2.2 FACILITY MANAGEMENT
2.3 SCOPE OF AIRPORT FACILITY MANAGEMENT
2.4 IN-HOUSE VS. OUTSOURCING
3 AIRPORT FACILITY MANAGEMENT APPROACHES
3.1 RETAINING SERVICE IN-HOUSE
3.2. OUTSOURCING
3.3 MANAGING RISKS
3.3.1 PRINCIPAL-AGENT THEORY
3.3.2 MONITORING AND MEASURING THE LEVEL OF SERVICE (PERFORMANCE)
3.3.3 CONTRACTS AND SERVICE LEVEL AGREEMENTS
4 CONCLUSIONS
Objectives and Core Themes
This paper examines the strategic decision-making process for airports regarding the management of facility services, specifically evaluating the trade-offs between in-house operations and outsourcing models. It aims to identify the crucial success factors and management tools necessary to maintain operational efficiency and quality standards in an increasingly competitive aviation market.
- Market evolution and the growing importance of non-aeronautical services in airports.
- Strategic comparison of in-house service retention versus outsourcing models.
- Risk management strategies, focusing on the Principal-Agent Theory.
- Performance measurement through Key Performance Indicators (KPIs) and Service Level Agreements (SLAs).
Excerpt from the Book
3.3.1 Principal-Agent Theory
Despite this problem is already existing in traditional employer to employee relationships, the degree of this issue is on a higher level with an external supplier. It is crucial to hire the best supplier possible. The buyers of external services are at potential risk of opportunism, a key economical concept for every organization. Opportunistic risks can be derived from issues such as cheating or stealing, not keeping promises as contracted and restraining decisive information. Individuals strive for maximizing their own utility. A principal-agent relationship always incurs an information asymmetry, whereby the agent does have an information advantage compared to the principal. The knowledge of the agent will improve in the specified area and can be used for own preferences, which are in contradiction to the requirements of the principal.
Chapter Summaries
1 EXECUTIVE SUMMARY: Provides an overview of the paper's scope, including the challenges of airport privatization and the core conflict between in-house and outsourced facility management.
2 AIRPORTS AND FACILITY MANAGEMENT: Establishes the market context of modern airports and defines the fundamental concepts of facility management and its scope within the aviation industry.
3 AIRPORT FACILITY MANAGEMENT APPROACHES: Explores the practical operational alternatives for managing facilities, detailing the pros and cons of internal vs. external service provision and strategies for risk mitigation.
4 CONCLUSIONS: Summarizes the key findings, emphasizing that the selection of a management model depends on specific organizational needs and that rigorous contracts are essential for success.
Keywords
Airport Facility Management, Outsourcing, In-House, Principal-Agent Theory, Service Level Agreement, SLA, KPI, Airport Management, Operational Efficiency, Risk Management, Aviation Industry, Infrastructure, Service Quality, Privatization, Cost Reduction
Frequently Asked Questions
What is the primary focus of this assignment?
The paper focuses on the strategic decision-making process for airport managers regarding whether to handle facility services internally or to outsource them to third-party providers.
What are the central themes discussed in the work?
Central themes include the impact of market competition on airport operations, the definitions and scope of facility management, strategies for risk reduction, and the implementation of performance measurement tools.
What is the research goal of this paper?
The goal is to analyze the factors influencing the outsourcing decision and to identify the necessary management tools, such as contracts and monitoring systems, to ensure service quality and efficiency.
Which scientific concepts are applied to analyze the relationship between airports and suppliers?
The paper utilizes the Principal-Agent Theory to explain the inherent risks, such as information asymmetry and opportunism, that arise when airports delegate tasks to external providers.
How is the main body of the paper structured?
The main body is structured by first describing the background of airports and facility management, followed by a comparative analysis of in-house versus outsourcing approaches, and concluding with a section on managing the associated risks.
Which criteria are used to measure the performance of airport services?
Performance is measured using Critical Success Factors (CSFs) and Key Performance Indicators (KPIs), which track both objective metrics (like waiting times) and subjective feedback (like passenger surveys).
How do Service Level Agreements (SLAs) help in the outsourcing process?
SLAs serve as a formal contract that defines specific standards, responsibilities, and performance metrics, ensuring that both the airport and the provider share a mutual understanding of required outcomes.
What is the main finding regarding the "in-house vs. outsourcing" dilemma?
The paper concludes that there is no universal solution; success depends on management preferences, the ability to control risks through robust contracts, and the flexibility of the chosen service model.
- Quote paper
- Manuel Jacoby (Author), 2019, Airport Facility Management. In-House Service or Outsourcing?, Munich, GRIN Verlag, https://www.grin.com/document/985639
