2) BAA Airports Limited operates London's Heathrow Airport. Between 2008 and 2009, with the Great Recession,...

 

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2) BAA Airports Limited operates London's Heathrow Airport. Between 2008 and 2009, with the Great Recession, Heathrow passenger traffic fell by 1.5%. However, the proportion of long-haul traffic increased from 52.2% to 52.9% and the proportion of transfer passengers increased from 35.9% to 37.4%. (Source: BAA Airports Limited, Results for the year ended 31 December 2009.) a. Explain how passenger traffic affects the demand for retail services such as restaurants and shopping at the airport. b. Using relevant demand curves, compare airport passenger traffic at: (i) airports with retail facilities; and (ii) airports without retail facilities. Which airports would spend more on promoting passenger traffic? Assume that the airport maximizes the net benefit to all parts of the airport (including the retailers, if any). c. BAA's financial report remarked that "strong in-terminal shopping performance reflected a higher proportion of intraterminal transfer passengers, providing longer departure lounge dwell times for such passengers." Would you advise BAA to extend the transfer times between flights, so that passengers must spend more time at the terminal? 2) BAA Airports Limited operates London's Heathrow Airport. Between 2008 and 2009, with the Great Recession, Heathrow passenger traffic fell by 1.5%. However, the proportion of long-haul traffic increased from 52.2% to 52.9% and the proportion of transfer passengers increased from 35.9% to 37.4%. (Source: BAA Airports Limited, Results for the year ended 31 December 2009.) a. Explain how passenger traffic affects the demand for retail services such as restaurants and shopping at the airport. b. Using relevant demand curves, compare airport passenger traffic at: (i) airports with retail facilities; and (ii) airports without retail facilities. Which airports would spend more on promoting passenger traffic? Assume that the airport maximizes the net benefit to all parts of the airport (including the retailers, if any). c. BAA's financial report remarked that "strong in-terminal shopping performance reflected a higher proportion of intraterminal transfer passengers, providing longer departure lounge dwell times for such passengers." Would you advise BAA to extend the transfer times between flights, so that passengers must spend more time at the terminal?

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Step 1 a When there is more inflow of the foreign tourists then it leads to more demand of the resta... View the full answer