Airport World, Issue 1, 2019

In the spotlight: Investing in airports Airport report: Hong Kong Special report: The digital marketplace ;OL THNHaPUL VM [OL (PYWVY[Z *V\UJPS 0U[LYUH[PVUHS

Plus: Route development & Autonomous vehicles

Investing in airports: Enabling growth and development Volume 24 - Issue 1, 2019 www.aci.aero

OPINION ;OL THNHaPUL VM [OL (PYWVY[Z *V\UJPS 0U[LYUH[PVUHS

Airport World Editor Joe Bates +44 (0)1276 476582 joe@airport-world.com Design, Layout & Production Mark Draper +44 (0)208 707 2743 mark@airport-world.com Sales Directors Jonathan Lee +44 (0)208 707 2743 jonathan@airport-world.com Gary Allman +44 (0) 7854 239 426 gary@aviationmedia.aero Advertising Manager Andrew Hazell +44 (0)208 384 0206 andrewh@airport-world.com Subscriptions subscriptions@aviationmedia.aero Managing Director Jonathan Lee +44 (0)208 707 2743 jonathan@aviationmedia.aero

Published by Aviation Media Ltd PO BOX 448, Feltham, TW13 9EA, UK Website www.airport-world.com

Airport World is published six times a year for the members of ACI. The opinions and views expressed in Airport World are those of the authors and do not necessarily reflect an ACI policy or position.

ISSN: 1360-4341 The content of this publication is copyright of Aviation Media Ltd and should not be copied or stored without the express permission of the publisher.

Printed in the UK by The Magazine Printing Company using only paper from FSC/PEFC suppliers www.magprint.co.uk

Time to invest Editor, Joe Bates, reflects on the investor appeal of the world’s gateways in this ‘Investing in airports’ themed first issue of 2019.

O

ne of the first articles I was asked to help produce when I joined Airport World back in 2000 was a comprehensive look at the companies that owned and operated an international portfolio of airports.

We called the feature the ‘A to Z of Global Airport Operators’ and it basically proved so popular that we have produced it every other year for nearly 20 years, and although many of the names and the types of investor have changed, a few key ones remain and continue to flourish and expand today.

They include Fraport AG, TAV Airports and VINCI Airports (which acquired the airport assets of Groupe GTM in 2000), all of which come under the microscope for their global activities and airport investments in this issue, along with Ferrovial Airports and CCR Airports.

The first three represent the ‘mature’ investor in the article while Ferrovial provides an example of a former international powerhouse returning to the market and CCR provides some perspective from a relative newcomer to the global airport arena with a growing asset list.

The demise of former airport investors such as Meinl Airports International (MAI) and Planestation (formerly the Wiggins Group) and the withdrawal from the airport market over the years of companies like Abertis, Penta Investments and others, just goes to show how tough it can be to successfully own and operate a portfolio of airports in different countries.

In addition to the above-mentioned global airport investor article, the ‘Investing in airports’ themed section of this issue also includes the ‘Buying game’, where we look back at the big privatisation deals of 2018 and ponder what might be on the horizon this year.

We also consider IT innovation and the types of new technology airports are investing in; get a sneak preview of China’s new Chengdu Tianfu International Airport; and learn about the changing landscape of airport development.

As you would expect from the issue being distributed at the upcoming ACI Asia-Pacific/ ACI World Annual General Assembly, Conference & Exhibition in Hong Kong (WAGA 2019), our main feature is on Hong Kong International Airport (HKIA).

Indeed, Airport Authority Hong Kong CEO, Fred Lam, talks to us about everything from HKIA’s incredible multi-modal links, traffic growth and some of the most ambitious development plans in the world to new technology and training and development.

Elsewhere in the magazine you can learn more about the potential of digital commerce; read about some of the latest airport retail/F&B initiatives; discover how artificial intelligence will benefit airport security in the coming years; and find out why airports should not be afraid of the arrival of autonomous vehicles.

ACI World director general, Angela Gittens, provides a taster of what we can expect from the ACI Airport Economics & Finance Conference and Exhibition in London this March; we cover human resources issues in our regular ‘People matters’ column; and introduce the new regular route development focused feature, ‘Cleared for take-off’.

If that’s not enough, you can always turn to the ACI World news and World Business Partner pages to discover the latest news from Montréal HQ and the organisation’s growing list of WBPs. I am not sure what part of the world you will be reading this in, but in the Northern Hemisphere it is just beginning to feel like winter is nearing its end. The days are slowly becoming longer and the daffodils in my garden are beginning to bloom, which can only mean one thing, that ACI’s annual Airport Economics & Finance Conference and Exhibition in London in the Spring is just around the corner!

I look forward to seeing you all there, and if you cannot make London, perhaps our paths will cross in Hong Kong this April at WAGA 2019!

AIRPORT WORLD/ISSUE 1, 2019

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CONTENTS

In the spotlight: Investing in airports Airport report: Hong Kong Special report: The digital marketplace ;OL THNHaPUL VM [OL (PYWVY[Z *V\UJPS 0U[LYUH[PVUHS

Plus: Route development & Autonomous vehicles

Investing in airports: Enabling growth and development Volume 24 - Issue 1, 2019 www.aci.aero

Issue 1 Volume 24

In this issue 3 Opinion Editor, Joe Bates, reflects on the investor appeal of the world’s gateways in this ‘investing in airports’ themed first issue of 2019.

8 World in motion Sabrina Guerrieri reports on the decision to enhance ACI’s market leading Airport Service Quality (ASQ) programme to make it even better and more relevant.

11 View from the top ACI World director general, Angela Gittens, sets the scene for the upcoming Airport Economics & Finance Conference in London, where the theme of the event is ‘Paradigm shifts in airport business’.

12 Coming of age CEO, Fred Lam, and his team talk to Joe Bates about what’s in store for Hong Kong International Airport in 2019 and beyond.

20 Going global Joe Bates finds out more about the history, plans and future ambitions of a handful of global airport investors at different stages in their development and investment cycles.

32 The buying game Modalis chief executive, Curtis Grad, provides his annual review on private-sector investment in the global airport market, taking stock of 2018’s biggest deals, success stories and other transactions that didn’t quite get across the line.

AIRPORT WORLD/ISSUE 1, 2019

5

CONTENTS

Director General Angela Gittens (Montreal, Canada) Chair Martin Eurnekián (Buenos Aires, Argentina) Vice Chair Aimen Al-Hosni (Muscat, Oman) Immediate Past Chair Fredrick J Piccolo (Sarasota, USA) Treasurer Emmanuel Menanteau (Osaka, Japan) ACI WORLD GOVERNING BOARD DIRECTORS

36 Investing in innovation IT can help airports keep pace with rising demand and meet growing passenger expectations, writes Bruno Spada, head of airport IT at Amadeus.

41 Work in progress The new $11 billion Chengdu Tianfu International Airport in China’s Sichuan Province is beginning to take shape ahead of its early 2020s opening, writes Joe Bates.

42 Time to get personal Gensler’s Ty Osbaugh and Lee Billington discuss how enhancing the passenger experience, embracing cutting edge IT and taking cues from the hospitality industry hold the key to designing world class airports.

47 Always learning Kevin Riordan, head of airports and checkpoint solutions at Smiths Detection, considers how artificial intelligence can help airport security.

48 The digital marketplace AOE’s Kian Gould provides his thoughts on how the key players can thrive in a changing travel retail world.

51 Window of opportunity New concessions, store openings and the power of sense of place retail come under the microscope in our round-up of the latest retail/F&B stories from across the globe.

53 Friend or foe?

Mark Streeting of LEK Consulting considers the pros and cons of transportation network companies and the potential impact of autonomous vehicles on airports.

55 Cleared for take-off Airport World provides a snapshot of the latest route development news from Malta, Brisbane, Athens and Nice Côte d’Azur airports.

56 WBP News The latest global news from ACI’s World Business Partners.

58 People matters Richard Plenty and Terri Morrissey provide their thoughts on self-development.

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Africa (2) Saleh Dunoma (Lagos, Nigeria) 1 Vacancy Asia-Pacific (9) Aimen Al-Hosni (Muscat, Oman) Kjeld Binger (Amman, Jordan) Geoff Culbert (Sydney, Australia) Fred Lam (Hong Kong) Seow Hiang Lee (Singapore) Xue Song Liu, (Beijing, China) Emmanuel Menanteau (Osaka, Japan) PS Nair (Delhi, India) Sasisubha Sukontasap (Bangkok, Thailand) Europe (7) Daniel Burkard (Moscow, Russia) Elena Mayoral Corcuera (Madrid, Spain) Michael Kerkloh (Munich, Germany) Yiannis Paraschis (Athens, Greece) Stefan Schulte (Frankfurt, Germany) Sani Şener (Istanbul, Turkey) 1 Vacancy Latin America & Caribbean (3) Ezequiel Barrenechea (Lima, Peru) Martin Eurnekián (Buenos Aires, Argentina) Andrew O’Brian (Quito, Ecuador) North America (7) Lew Bleiweis (Asheville, USA) Joyce Carter (Halifax, Canda) Howard Eng (Toronto, Canada) Deborah Flint (Los Angeles, USA) Joseph Lopano (Tampa, USA) Candace McGraw (Cincinnati, USA) Tom Ruth (Edmonton, Canada) Regional Advisers to the World Governing Board (10) Zouhair Mohamed El Aoufir (Rabat, Morocco) Diego Arrosa (Montevideo, Uruguay) Arnaud Feist (Brussels, Belgium) Pascal Komla (Lomé, Togo) Bashir Ahmad Abdul Majid (Delhi, India) Hector Navarrete Muñoz (Merida, Mexico) Augustin de Romanet (Paris, France) Brian Ryks (Minneapolis-St Paul, USA) William Vanecek (Buffalo, USA) 1 Vacancy World Business Partner Observer Thomas Duffy (ADB SAFEGATE) Correct as of March 2019

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The Summit, expected to attract more than 400 delegates, “To ensure that the ASQ programme keeps pace with the changes we will comprise three main elements: an international Airport see in the airports industry, we have made improvements to the existing Service Quality (ASQ) Forum, a Customer Excellence Global Summit, ASQ Awards and have launched new awards.” and the prestigious annual ASQ Awards Ceremony.

This is being done so that high-scoring airports will be recognised; “The ACI Customer Experience Global Summit is dedicated to with so many airports achieving very high scores from their customers, helping airport operators understand and meet the ever-changing the previously-used system is no longer fit for purpose. needs of their customers by exploring trends in passenger As well, some airports that excel in important segments of customer experience,” adds Gittens. experience but may not be able to deliver in all areas; especially airports “Airports are taking a leading role in improving passenger that have outdated or insufficient infrastructure. experience and the ASQ programme helps them to meet the higher ACI has now added awards for airports whose customers tell them levels of service passengers are demanding.” that they are providing excellent service in a major category. The award In 2018, overall passenger satisfaction on a global level categories in 2019 are: increased to 4.21 from 4.19 year-on-year, according to the latest • Top 20% of Africa per size and region ASQ barometer, and reflect the importance placed on customer • Top 20% Asia-Pacific per size and region experience and satisfaction by airports around the world.

• Top 20% Europe per size and region Airline check-in and passport/ID control processes generated • Top 20% Latin America and Caribbean per size and region the highest levels of satisfaction in 2018, while airport facilities • Top 20% Middle East per size and region are the points of contact that have improved the most. Value • Top 20% North America per size and region for money of restaurants and shopping facilities is one of the There is no change to the size categories. main challenges.

ACI World is also introducing three new awards to the Departures Survey.

The quarterly barometer reports, based on objective measurements These awards will represent the top 5% across the world: derived from the ASQ Departures survey, enable airports around the • Top 5% of airports rated highest in ambience world to gain valuable insights to excel in the crucial arena of customer • Top 5% of airports rated highest in customer care based experience, increasingly a competitive driver.

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AIRPORT WORLD/ISSUE 1, 2019

ACI WORLD NEWS

ACI events

2019

2019

2019

2019

2019

March 12-14

September 15-17

June 25-27

September 2-5

April 2-4

ACI Airport Economics & Finance Conference and Exhibition London, UK

ACI-NA Annual Conference & Exhibition Tampa, USA

ACI Europe General Assembly, Congress & Exhibition Limassol, Cyprus

ACI Customer Experience Global Summit Bali, Indonesia

ACI Asia-Pacific/ACI World Annual General Assembly, Conference & Exhibition Hong Kong

ACI offices ACI World Angela Gittens Director General PO Box 302 800 Rue du Square Victoria Montreal, Quebec H4Z 1G8 Canada Tel: +1 514 373 1200 Fax: +1 514 373 1201 aci@aci.aero www.aci.aero

ACI Asia-Pacific Patti Chau Regional Director Hong Kong SAR, China Tel: +852 2180 9449 Fax: +852 2180 9462 info@aci-asiapac.aero www.aci-asiapac.aero

ACI Africa Ali Tounsi Secretary General Casablanca, Morocco Tel: +212 660 156 916 atounsi@aci-africa.aero www.aci-africa.aero

ACI Latin America-Caribbean Javier Martinez Botacio Director General Panama City, Panama Tel: +507 830 5657/58 jmartinez@aci-lac.aero www.aci-lac.aero

ACI Europe Olivier Jankovec Director General Brussels, Belgium Tel: +32 (2) 552 0978 Fax: +32 (2) 502 5637 danielle.michel@aci-europe.org www.aci-europe.org

ACI North America Kevin Burke President & CEO Washington DC, USA Tel: +1 202 293 8500 Fax: +1 202 331 1362 postmaster@aci-na.org www.aci-na.org

As of January 2019, ACI serves 646 members operating 1,960 airports in 176 countries. ACI is a non-profit organization whose prime purpose is to advance the interests of airports and to promote professional excellence in airport management and operations. According to ACI’s 2018 Annual World Airport Traffic Report, in 2017 airports worldwide welcomed 8.3 billion arriving and departing passengers and handled 118.6 million metric tonnes of cargo and 95.8 million aircraft movements.

AIRPORT WORLD/ISSUE 1, 2019

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ACI VIEWPOINT

View from the top ACI World director general, Angela Gittens, sets the scene for the upcoming Airport Economics & Finance Conference in London, where the theme of the event is ‘Paradigm shifts in airport business’.

T

he airport industry must continue to anticipate and adjust to changes in the wider world as it fulfills the demands of its customers and communities, safely, securely and sustainably.

Demographic changes, shifting business models and technological disruptions that have occurred in a relatively short period of time, have propelled airports to evolve into complex businesses.

Whether airport operators are financed and operated by public or private entities, these changes have important implications for the business and its revenue streams.

The commercial side of the airport business, most notably retail, is experiencing increased competitive pressures which limits its growth prospects over the short run in mature markets.

New aircraft fleets coupled with greater airline consolidation and heightened airport competition has meant that the aeronautical side of the airport business is also facing intensified competition.

Meanwhile, air transport demand remains resilient and irrepressible, with passenger numbers soaring year-after-year.

Global traffic is expected to be reach a volume of over 22 billion passengers by 2040 at an average growth rate of 4.5%.

While airports welcome future growth prospects, the investment needed to accommodate such growth outpaces the investment planned. Many governments are either unable or unwilling to finance these much-needed capital investments.

Privatisation or public/private partnership arrangements have become more common solutions to fill the infrastructure gap. Of the top 100 airports in terms of passenger traffic, the number with private sector participation grew to 51 in 2017, five more than in 2016. Of the top 500 airports in 2017, 39% had private sector participation, a 1% increase over the previous year.

A wide variety of privatisation models have proven to be effective, embodying unique combinations of government goals and private investor requirements; no single model fits all circumstances.

Just as airport managers must adapt to new business realities, so must policymakers and regulators. That is, regulators must also adjust their levers to reflect the new playing field and to fill the infrastructure gap.

In this climate, do the old rules of the game still apply? What impact do these new economic paradigms mean for future capital investments, the risk-reward trade-off and the role of the regulator?

We will explore such questions at the upcoming 11th Annual ACI Airport Economics and Finance Conference and Exhibition,

taking place from March 12-14, 2019, in London, United Kingdom, under the theme ‘Paradigm shifts in airport business’.

Through sessions, presentations, live interviews and panel discussions, investment experts, industry leaders and top-level decision makers and influencers will cover pertinent topics such as: Economic regulation in the era of airline consolidation and airport competition; The changing dynamics of airport commercial revenues; The fork in the road on Brexit eve; Where do we go from here?; Roadmaps to manage scarce capacity; The economics and politics of slots; Competing for passengers; Route development and incentives; Risky business; Crafting the concessions agreement in foreign lands.

And, we continue our successful pre-conference collaboration with the World Bank. They will open with the 5th Annual ACI-World Bank Aviation Symposium to explore the risks and opportunities of global lenders and investors in the airport industry.

Participants can expect valuable analyses of global and regional economic forces that airport executives and investors need to understand.

The programme we have prepared will allow decision makers to reflect upon and share their lessons learned, renew collaboration, and jointly craft investment and growth strategies.

I look forward to seeing you in London to partake in the discussions that will help set a strong foundation for our industry for the next years.

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AIRPORT REPORT: HONG KONG

Coming of age CEO, Fred Lam, and his team talk to Joe Bates about what’s in store for Hong Kong International Airport in 2019 and beyond.

I

ts land, sea and air links arguably make Hong Kong International Airport the best-connected gateway on the planet, so it is fitting that it will bring the world’s airports together in April when operator, Airport Authority Hong Kong (AAHK), hosts this year’s joint ACI Asia-Pacific/ACI World Annual General Assembly, Conference & Exhibition.

The much-anticipated event is expected to attract over 1,000 delegates and add the icing on the cake in what promises to be another memorable year for Hong Kong International Airport (HKIA), which continues to break traffic records and make progress on a number of development projects as it turns 21 years old on July 6.

So, was the decision to host the ACI Asia-Pacific/ACI World Annual General Assembly, Conference and Exhibition a difficult one and what can delegates expect from the event?

“It was an easy decision to make as it gives us the opportunity to showcase Hong Kong International Airport and Hong Kong – with its vitality as an international financial and business centre, its diversity and innovation as a metropolis, and its profound cultural mix of East and West – to the world,” says AAHK CEO, Fred Lam. “We are honoured to host the high-profile gathering of global aviation leaders. HKIA is proud to have long been one of the busiest and the finest airports in the world and is a regional aviation hub in the fast-growing Asia-Pacific region.

“I believe through experience sharing, exchanging ideas and collaboration between different airports, together we will demonstrate

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and set standards for the overall operations and services of all airport operators.”

The airport is already a key economic generator for Hong Kong, directly employing 73,000 staff as it supports the city’s major economic pillars of tourism, trading and logistics, professional and producer services and financial services.

Multi-modal connectivity With over 1,100 flights a day, rapid train links to downtown Hong Kong and beyond, over 90 daily ferry services to neighbouring Macau and Mainland cities in the Greater Bay Area (GBA) via its SkyPier, and hundreds of daily coach and bus connections to the city and surrounding territories across the boundary in Mainland China, HKIA is without doubt one of the world’s best-connected airports.

SkyPier, HKIA’s ferry terminal, handles around 2.6 million transfer passengers a year travelling between HKIA and the GBA ports of Dongguan Humen; Guangzhou Lianhuashan; Guangzhou Nansha; Macau (Maritime Ferry Terminal and Taipa); Shenzhen (Fuyong and Shekou); Zhongshan; and Zhuhai Jiuzhou.

And things just got better for passengers flying with home-based carriers Cathay Pacific, Cathay Dragon, Hong Kong Airlines and HK Express as they can now check-in for flights from Hong Kong International Airport at the passenger clearance building of the new Hong Kong-Zhuhai-Macao Bridge (HZMB).

AIRPORT REPORT: HONG KONG “The development of the Greater Bay Area is one of the key strategic planning projects in China’s development blueprint, and the region will see great growth potential in the future,” states Lam. “With the new HZMB and HKIA’s new initiatives in place, it will be easier for more people to travel between GBA and the rest of the world, strengthening our multi-modal transport hub status in the region.”

Infrastructure development

With the new bridge, the time required to travel from HKIA to Zhuhai has been significantly reduced from four hours to just 45 minutes.

Located in the Arrivals hall of the passenger clearance building of the Hong Kong port of HZMB, the new check-in centre boasts check-in counters and smart check-in kiosks, which passengers can use to check their baggage and obtain boarding passes.

This means that after checking in, passengers can either go direct to the airport or spend the day in Hong Kong without the hassle of carrying their luggage around with them.

The upstream check-in services set up by AAHK at the Zhuhai Boundary Crossing Facilities started operations in October 2018, in tandem with the opening of the bridge, while the same service will be available at the Macau Boundary Crossing Facilities later this year.

For passengers who prefer to check-in at HKIA, dedicated transportation services are also available for them to proceed from Zhuhai or Macau via Hong Kong port to the airport directly.

“Leveraging HKIA’s advantageous geographical location as a gateway to the Mainland, we will continue to strengthen our multimodal transportation services, striving to offer HKIA’s extensive connectivity to passengers travelling to and from cities throughout the GBA and beyond,” enthuses Lam. Next up is a new bonded bridge that will provide vehicle access between the HZMB and a planned new Intermodal Transfer Terminal opening at HKIA in 2022.

The HK$3 billion new additions mean that passengers who have completed upstream check-in procedures in the Mainland and Macau and travel to HKIA via the HZMB will no longer need to undergo border clearance procedures at Hong Kong port as they would just need to take bonded transportation to the airside and head directly to their boarding gates.

How significant are these developments (the HZMB, Hong Kong port and new Intermodal Transfer Terminal) to the future growth of HKIA?

With traffic soaring to a record 74.7 million passengers (+2.5%) in 2018 and set to exceed 100 million passengers and nine million tonnes of cargo per annum by 2030, the need for HKIA to open a host of new facilities over the next decade just to cope with demand needs little explanation.

By far and away the biggest project underway today is the $18 billion (HK$141.5bn) Three-Runway System (3RS) programme, which involves the construction of a third runway and associated taxiways, the third runway passenger building and an apron on 650 hectares of reclaimed land; the expansion of the existing Terminal 2; new Automated People Mover (APM) system; new baggage handling system and more.

The third runway is scheduled to open in 2022 and, when the whole system is operational in 2024 – ongoing works will force the original north runway to close for two years after the third runway opens – the airport will be capable of accommodating around 600,000 aircraft movements per annum.

The new 280,000 square-metre, 57-gate terminal – located north of the existing Terminal 1 and connected to an expanded Terminal 2 by a 2,600-metre long Automated People Mover (APM) system – is scheduled to open in 2024.

The airport’s existing Terminal 1 is also being upgraded and expanded over the next two to three years to ensure that its facilities are on a par with those in the new buildings.

Indeed, when finished, the new more passenger-friendly T1 will have 48 additional check-in counters and two new baggage reclaim carousels, its own central courtyard with an outdoor garden, a host of new retail outlets and new self-service technologies such as self-boarding e-gates designed to create a smooth and hassle-free airport experience.

AAHK actually describes the planned upgrade as a “refreshing revamp” that will transform the look, feel and ambiance of the terminal.

A key part of project will be dividing the entire boarding area into 12 feature zones with different themes. These will include an ‘entertainment and technology’ zone showcasing digital games and movies; an interactive ‘kids-friendly’ zone where children can play; and a ‘leisure’ zone, which among other things will provide a host of comfortable seating areas and greenery where visitors can relax in a quiet environment.

Lam says: “Other changes to T1 will include the revamp of the binnacles and cabins to make the entire terminal more luminous; the main F&B area in the East Hall will provide more cuisine choices and more seats in a more spacious environment; and over 100 toilets will undergo a make-over from this year.

“It will take us three to four years to finish everything, but when it’s done the interior of T1 will look totally different and like a new terminal.”

Terminal 1 will be connected to the North Satellite Concourse (NSC) by an eye catching new 200-metre long SkyBridge over the airfield, scheduled to open in early 2020.

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AIRPORT REPORT: HONG KONG

AAHK CEO, Fred Lam, and chairman Jack So Chak-kwong receive an on-site update on the progress of the $18 billion Three-Runway System (3RS) programme.

The lofty new addition will save up to 400 bus journeys a day between T1 and the NSC complexes and provide passengers with a brand new experience when travelling between the two complexes.

The air-conditioned footbridge will boast its own restaurant and bar and provide spectacular views of the airport. And at 28 metres in height, SkyBridge will be high enough for an A380 to pass under it.

“SkyBridge will be a cool new addition to the airport that I believe that will quickly become one of our most popular attractions,” promises Lam.

New technology Talking about some of the new passenger friendly and capacity enhancing technology we can expect to see introduced at HKIA over the next few years, Lam first reminds me that biometric initiatives such as e-gates are already beginning to transform the gate experience at the airport.

The airport has recently installed 44 e-gates in Terminal 1 and other queue-busting technologies either recently installed or on the way include self check-in kiosks, self-bag drop counters and e-boarding gates.

Biometric enabled ‘single token’ travel, which allows passengers to pass through the airport using facial recognition technology – effectively eliminating the need for passports and boarding passes – is the ultimate goal, reveals Lam. He says: “With end-to-end biometric deployment, passengers will be able to get rid of repetitive document checks and go through check-in and boarding procedures with minimal queuing time.

“The airport will also be able to process a greater number of passengers than ever before, providing a seamless, stress-free experience for the millions of people we welcome each year.”

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Airport city The airport received a huge boost in late 2018 when the Hong Kong government announced its vision to develop an Aerotropolis on its Lantau Island home in the Chief Executive’s Policy Address.

In line with its vision of transforming HKIA from being a “city’s airport to an airport city”, in the last few years AAHK has undertaken a series of strategic projects which it is confident will further integrate the airport’s development with the broader regional economic activities, in particular those of Lantau Island.

“Our Airport City strategy complements the government’s overall planning for Lantau, which will generate enormous synergy and further consolidate Hong Kong’s position as an international aviation hub and the major business centre in the GBA,” enthuses Lam. Projects that form the crucial parts of AAHK’s Airport City strategy include SKYCITY, which is set to be the largest commercial development in Hong Kong and a new regional destination comprising entertainment, retail and dining facilities, as well as hotels and offices.

Last year, AAHK acquired the rights to run Asia World Expo, where this year’s ACI Asia-Pacific/ACI World Annual General Assembly, Conference and Exhibition takes place, and is studying the future development of it to create synergy for the overall airport development.

Another key driver of AAHK’s airport city strategy is the premium logistics centre (see the cargo and logistics section) which will capture the opportunities arising from the exponential growth of e-commerce and consolidate the global cargo leadership of HKIA. “Our airport city is not just about shopping,” points out Lam. “It also very much about cargo and other services as proven by the recent contract award to a subsidiary of Alibaba to build an e-commerce/logistics centre at the airport.

AIRPORT REPORT: HONG KONG

HKIA has been the world’s busiest cargo airport for a decade and now handles over five million tonnes of freight per annum.

“We feel that Lantau Island’s location next to the Hong Kong-Macau bridge crossing, which connects to other parts of the Greater Bay Area, means that our airport city can eventually extend beyond the airport island itself to the benefit of all of Hong Kong and the region.”

He notes that the airport’s success has prompted the Hong Kong government to expand the town nearest the airport site and to reclaim more land from the sea for residential and other developments, which could create more manpower and resources for HKIA. “The airport city will provide further enhance our status as a key economic driver of Hong Kong’s economy,” says Lam. “Yes, of course, the airport’s success is our priority, but when we develop HKIA we cannot do so without considering and taking into account the overall interests of Hong Kong as the two cannot be separated. If Hong Kong doesn’t do well, the airport doesn’t do well, and vice versa.

“So, from this perspective, we must have the higher goal of making sure we best use the airport and all the planned new facilities to drive Hong Kong’s overall growth.”

Cargo and logistics With passenger numbers soaring it easy to forget that Hong Kong is actually the world’s biggest cargo airport and has been for the last decade, handling in excess of five million tonnes of freight per annum.

And it is clearly not resting on its laurels as in December, AAHK and the Alibaba Group confirmed their commitment to working together to jointly build a global smart logistics network to foster more inclusive trade.

The collaboration entails the creation of a premium logistics centre on a 5.3-hectare site at Kwo Lo Wan in the South Cargo Precinct of the HKIA.

Set to be built and operated by Cainiao Network – the logistics arm of Alibaba Group – Lam confirms that AAHK wants to establish “a world-class digital logistics centre in Asia” that serves the fastgrowing global cross border e-commerce trade and strengthens Hong Kong’s international competitiveness.

According to AAHK, the complex will be future-proofed, with high design specifications for large-scale, cutting-edge robotics and automation as well as temperature-controlled features.

In response to why this is important for HKIA, Lam says: “The centre is anticipated to become a smart hub in Asia, reinforcing the cargo leadership position of HKIA. “This also aligns with our overall cargo development strategy to capture opportunities arising from increased cross-border e-commerce and related businesses, as well as the growth in the logistics business related to temperature-controlled products such as pharmaceuticals.”

Talking of pharmaceuticals, earlier this year HKIA and Brussels Airport announced the launch of an airport-to-airport pharma corridor to meet the needs of pharmaceutical shipments.

Both airports have attained IATA Centre of Excellence for Independent Validators in Pharmaceutical Logistics (CEIV Pharma) Certification by community approach, which guarantees that airport cargo service providers adhere to high standards in handling pharmaceutical shipments.

AAHK’s general manager for aviation logistics, Alaina Shum, says: “We are pleased to collaborate with Brussels Airport, Europe’s key air cargo hub for handling pharmaceutical shipments to establish this A2A pharma corridor.

“It marks another milestone in our continuous endeavours to make Hong Kong a preferred pharmaceutical trans-shipment hub and strengthen our status as the world’s busiest cargo airport.

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AIRPORT REPORT: HONG KONG

HKIA handled a record 74.7 million passengers in 2018 to maintain its status in the top 10 of the world’s busiest airports.

“Moreover, to ensure seamless temperature-controlled handling across the whole of the airport, we are taking delivery of 19 additional cool dollies for common-use by the airlines. This means that all our airlines will always have the option to deploy cool dollies for their temperature-sensitive shipments.

“We are also building apron shelters to protect the pharmaceutical shipments from direct weather elements.”

Training and development A total of 73,000 staff work at the airport today, and the figure is set to rise to more than 123,000 when the new runway opens in 2024. And, if all goes to plan, many will learn the skills necessary to do their jobs at the Hong Kong International Aviation Academy, established by AAHK in 2017.

The Academy helps nurture young talent and also fulfil the training needs of professionals for the fast-expanding aviation industry. Since its inception, it has provided some 430 courses to over 10,000 participants.

The Hong Kong government recently announced the allocation of HK$200 million in funding for its Maritime and Aviation Training Fund, which will encourage more young people to receive training related to the aviation industry.

The Academy itself recently received a TRAINAIR Plus Programme Full Membership Certificate from ICAO secretary general, Dr Fang Liu, recognising its capability to host ICAO-compliant training packages.

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Coping with growth With 90 million people alone living in neighbouring Guangdong Province in south east China and another 60 million in the Pearl River Delta area – the nation’s wealthiest and one of its fastest growing regions – there is simply no getting around the fact that growth will be on the cards for HKIA for the foreseeable future.

Indeed, China’s vast population and huge growth potential means that rather that viewing airports such as Guangdong Baiyun, Shenzhen Bao’an and Zhuhai Junwan as rivals, Lam states that the long-term future for all of them might be best served on finding ways that they can work together to meet demand.

“According IATA Consulting, even after factoring in all the anticipated expansions in the handling capacity of the airports in the Pearl River Delta region, the combined supply of capacity will still fall short of the forecast demand by 52 million passenger trips in 2030,” muses Lam. “In Mainland China today, the propensity to travel is low compared to other parts of the world. This will change in time, but how will the system cope with it?

“Most people on the Mainland can now afford to travel by air once a year, and just imagine what would happen if everyone wanted to fly once or twice a year like in Europe or the US? “So, rather than talk about rivals and worry about competition, we all actually have to find out ways of better working together and possibly co-ordinating operations to cope better with the expansion of the Chinese market.” Sounds like Fred and his team are going to be very busy over the next few years.

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Going global

Porto is one of VINCI Airport’s 10 Portuguese gateways.

Joe Bates finds out more about the history, plans and future ambitions of a handful of global airport investors at different stages of their development and investment cycles.

T

he news that owner, Global Infrastructure Partners (GIP), is set to pocket close to £3 billion later this year from the sale of a 50.01% stake in London’s Gatwick Airport tells you everything you need to know about the continued appeal of airports to investors.

The deal, set to be rubber stamped in mid-2019, represents a tidy return for GIP which paid £1.9 billion for the airport in 2009, although it has invested £1.9 billion on upgrading Gatwick’s infrastructure and facilities since then, and with the new shareholders, will spend a further £1.1 billion over the next five years.

While the global market might not be quite as hot as it was 10 to 15 years ago when traditional airport operators first began to join forces with or compete directly against new cash-rich entrants like pension funds to buy airports outright or purchase shares in them, deals such as the recently announced London Gatwick transaction, MAG’s stated interest in Sofia Airport in Bulgaria and Groupe ADP’s 2018 purchase of a controlling stake in Airport International Group (AIG), operator of Jordan’s Queen Alia International Airport, show that airports remain firmly on the radar of investors.

And investments are becoming increasingly diverse, with concessions for standalone projects now firmly on the agenda such as the ground-breaking PPP projects in the US for LaGuardia’s new Terminal B and the concession to revamp and operate the Great Hall in Denver International Airport’s Jeppesen Terminal.

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This article focuses on five airport operators/investors at various stages in their investment cycles in the global arena. We discover more about what they own, operate and manage and talk to their respective CEOs about their business development strategies and possibly what comes next in terms of new airports, facilities and services.

The five in the spotlight are ‘mature’ investors VINCI Airports; TAV Airports and Fraport AG; relative newcomer to the scene, the CCR Group; and a familiar name that is back in the game after a spell of concentrating on its UK airport assets, Ferrovial Airports.

VINCI Airports World Headquarters: Rueil-Malmaison, France.

Airport investor since: 1995.

Airports 100% owned and operated: Belfast International Airport in the UK courtesy of wholly-owned subsidiary Airports Worldwide (AWW).

Others: VINCI Airports holds a 50-year concession to operate, build and develop the 10 Portuguese airports of Lisbon, Porto, Faro and Beja on the mainland; Ponta Delgada, Horta, Flores and Santa Maria in the Azores; and Funchal and Porto Santo in Madeira.

In Japan, VINCI Airports has a 40% stake in Kansai Airports, operator of Osaka’s Kansai and Osaka (formerly Itami) airports, and a long-term concession to operate and develop Kobe Airport.

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Osaka’s Kansai International Airport joined VINCI’s portfolio in April 2016.

In Cambodia, it owns 70% of the shares in Cambodia Airports, which operates Cambodia’s three international airports of Phnom Penh, Siem Reap and Sihanoukville.

In Latin America, it has a 40% stake in the Nuevo Pudahuel consortium responsible for operating Santiago’s Arturo Merino Benítez International Airport in Chile; a 45% shareholding in Coriport, operator of Costa Rica’s Liberia-Daniel Oduber Quirós International Airport; 100% owns Aeropuertos Dominicanos Siglo XXI (AERODOM), which has the concession for six gateways in the Dominican Republic, including capital Santo Domingo’s Las Américas International Airport and Gregorio Luperón Airport in Puerto Plata; and holds the concession for Deputado Luís Eduardo Magalhães International Airport in Salvador da Bahia, Brazil.

At home in France, a VINCI Airports-led consortium has a 60% stake in Aéroports de Lyon (ADL), operator of Lyon-Saint Exupéry and Lyon-Bron. It also manages the French gateways of Clermont-Ferrand Auvergne, Chambéry Savoie Mont Blanc, Grenoble Alpes Isère, Toulon Hyères, Poitiers Biard and Ancenis (courtesy of mid-to short-term contracts), Nantes Atlantique and Saint-Nazaire Montoir (through an 85% stake and long-term concession), and Rennes Bretagne and Dinard Bretagne due to a 49% interest in the consortium responsible for operating the airports until 2024.

Elsewhere in Europe, VINCI Airports holds the 25-year concession to manage and upgrade Nikola Tesla Airport in Belgrade (Serbia) and a 51% stake in Portuguese airport retailer, Lojas Francas Portugal (LFP), which operates more than 30 retail outlets across 10 Portuguese gateways managed by VINCI Airports.

In North America, through AWW, VINCI Airports operates and develops five airports – Orlando Sanford International Airport in Florida courtesy of a concession contract that runs until January 2039; Hollywood Burbank Airport and Ontario International Airport in California; and Macon Downtown Airport and Middle Georgia Regional Airport in Georgia. The AWW portfolio also includes partial management contracts at three additional American gateways: Atlantic City International Airport in New Jersey; Raleigh Durham International Airport in North Carolina; and Hartsfield-Jackson Atlanta where it manages part of the international terminal.

Plans to expand/reduce portfolio: Always looking for new opportunities.

News: VINCI Airports officially took over the concession for Belgrade’s Nikola Tesla Airport on December 22, 2018, and is close to pulling off the biggest single airport deal in its history after agreeing to pay Global Infrastructure Partners (GIP) £2.9 billion to acquire a 50.01% stake in London Gatwick. The transaction, which is expected to be ratified in mid-2019, means that VINCI Airports will boast a network of 46 airports in 12 countries across the globe.

Speaking at the time of the deal, VINCI Airports CEO, Nicolas Notebaert, said: “The creation of synergies and the sharing of best practices is included in our core values and the entire VINCI Airports network will benefit from the world-renowned management and operational excellence of Gatwick Airport, which has continued its growth despite a very constrained environment.

“As a new industrial partner, VINCI Airports will support and encourage operational efficiency and traffic growth, while leveraging its business development expertise to continue to improve passenger satisfaction and experience.”

VINCI Airports added eight new airports in Europe, the US and Central America to its portfolio in August 2018 when it acquired Florida-based Airports Worldwide (AWW). The new additions are in the UK (Belfast); the US (100% ownership of Orlando Sanford and full management contracts for California’s Hollywood Burbank and Ontario airports and Macon Downtown and Middle Georgia Regional in Georgia); Costa Rica (Liberia-Daniel Oduber Quirós); and Sweden (Stockholm Skavsta).

To complete the Belgrade airport transaction in December 2018, VINCI took out €420 million in loans from 10 different institutions that included the World Bank’s International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD), DEG (KfW Group) and UniCredit Kommunalkredit and CIC merchant banks. The financing arrangements constitute a milestone in Belgrade airport’s development and is one of the largest financial transactions ever carried out in Serbia.

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VINCI has a 70% stake in Cambodia Airports, which operates the country’s three international gateways, including Phnom Penh, pictured above.

The big spender VINCI Airports is set to add London Gatwick to its fast-expanding portfolio after agreeing to pay owners GIP £2.9 billion to take a controlling 50.01% stake in the UK gateway. The deal, struck in December 2018, is expected to be ratified later this year.

What will VINCI Airports bring to the table at London Gatwick and will this immediately be obvious to passengers?

“Under the custodianship of GIP and its co-shareholders, London Gatwick has improved significantly. The offering to consumers and service quality measures have improved substantially, significant capital investment has been made in the infrastructure, processes have been optimised and new airlines and routes introduced. We intend to continue this good work,” says VINCI Airport CEO, Nicolas Notebaert.

“As Gatwick’s new industrial partner, VINCI Airports will also support and encourage traffic growth and leverage our international expertise in the development of extra-aeronautical activities to further improve the airport’s commercial offering, where there is still great potential.”

There is simply no denying that VINCI Airports has been one of the big spenders in the airport investment market over the last few years, and Notebaert refuses to rule out adding to its portfolio in 2019.

“The pursuit of our development leads us to examine all international investment opportunities, either through participation in tenders, partnerships or acquisitions,” he tells Airport World.

“Where does the US fit into our growth strategy? The US is a very interesting market for many reasons. While it is the largest aviation market, it is still somewhat uncharted territory with very few airport concessions. At the same time, many US airports need to be modernised or renovated, which means that there is potentially a strong need for private investment.

“The acquisition of the Airports Worldwide portfolio is quite strategic in this regard because it enabled VINCI Airports to establish a presence/entry point in this market.”

VINCI Airports has always prided itself on being a long-term investor in airports and Notebaert insists that the company has no plans to abandon this business strategy despite my suggestion that it might make sense for the company to divest itself of some of its assets if it keeps expanding its portfolio.

He says: “Airport concessions are a major focus in our group’s development strategy, and as our recent acquisitions have not impacted on our capacity to invest in future opportunities, we have no need to divest of our existing assets and intend to remain the long-term partner that

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delegating authorities around the world have come to trust for the development of their airports. We believe in the development potential of our airports and in our ability to create value.”

Notebaert believes that the airport investment market has changed significantly in the 20 years that VINCI Airports has been operating in the global arena.

“We are seeing less and less resistance from public authorities to privatisation projects, and that the trend is global, both in emerging and mature markets like Japan or France,” reveals Notebaert.

“Airports are also increasingly being perceived as popular assets by investors. This means we are able to secure very good financing and refinancing. In Brazil, for instance, we were able to reach an agreement with Banco do Nordeste (BNB) on the financing of Salvador airport’s expansion and modernisation project, which is the first full non-recourse loan implemented for airport financing in Brazil.”

He notes that VINCI fared equally well in the Dominican Republic where it has managed to gain very favourable terms for the refinancing of its existing debt following its 100% purchase of airport operator, Aerodom.

Another thing that VINCI Airports has learned, says Notebaert, is that winning a concession is only the beginning of a long process, the success of which can only be measured over the long-term by the quality of the integration of new airports and the teams that operate them daily.

He adds that another vital lesson to take onboard is the fact that all airport projects are different. “While airport operating standards are global, all airports and regions are unique, with different cultures, challenges, operational modes and governance models and must be treated this way,” says Notebaert.

TAV Airports Holding World headquarters: Istanbul, Turkey.

Airport investor since: 1997.

Airports 100% owned and operated: Ankara Esenboğa, Izmir Adnan Menderes, Milas-Bodrum and Alanya-Gazipasa in Turkey and Skopje Alexander the Great and Ohrid St Paul the Apostle airports in Macedonia.

Others: TAV has a 49% shareholding in Turkey’s Antalya Airport with equal voting rights; a controlling interest in the companies responsible for operating Tbilisi (80%) and Batumi (76%) airports in Georgia and a majority 67% stake in both Monastir Habib Bourgiba and EnfidhaHammamet airports in Tunisia.

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TAV has a controlling 80% stake in the company responsible for operating Georgia’s Tbilisi International Airport.

In Saudi Arabia, the TAV-led Tibah Airports consortium (TAV, Saudi Ogerand and the Al Rajhi Holding Group each hold a 33.3% stake) has a 25-year concession to operate Medina’s Prince Mohammad bin Abdulaziz International Airport.

In Europe, TAV has a 15% stake in the ZAIC consortium which has a 30-year concession to operate and develop Zagreb Airport in Croatia. Its consortium partners in Zagreb include ADP International, Bouygues Bâtiment International (BBI), Croatian construction company, Viadukt, Marguerite Fund and IFC. Elsewhere, TAV operates the commercial spaces at Latvia’s Riga International Airport.

Plans to expand/reduce portfolio: TAV is part of the consortium with Groupe ADP and Bouygues Batiment that has been invited for negotiations to discuss possible concessions to modernise and operate Cuba’s Havana and San Antonio de los Banos airports. The company has previously expressed an interest in buying shares in Sabiha Gokcen Airport in Istanbul, Turkey, and admits to eyeing airport privatisation opportunities in the Middle East, Eastern Europe, Africa and the CIS countries.

News: TAV Airports acquired a 49% stake in Antalya Airport operator, ICF Antalya (now Fraport TAV Antalya), early last year as it began to plan for life without Istanbul Atatürk ahead of its scheduled March 2019 closure. The latest deals mean that TAV and its subsidiaries/partners – global airport operator Groupe ADP holds a 46.12% stake in TAV Airports – have a footprint of 76 airports in 21 countries.

Next chapter for TAV The opening of Istanbul’s new airport and imminent closure of Atatürk means that for the first time in 19 years, Turkey’s biggest airport won’t form part of TAV Airports’ global portfolio.

Atatürk ended the last full calendar year of its life as Turkey’s international hub to the world by handling a record 68 million passengers and 454,000 flights in 2018.

Its closure leaves TAV Airports with quite a hole to fill, but as CEO, Sani Sener, reveals, it is a scenario that they are more than ready for after preparing for it for the last five years. “As no single project can replace Atatürk, our strategy has focused on the organic growth of our existing portfolio, and inorganic growth through winning new airport projects and promoting our service companies to grow beyond TAV,” says Sener.

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“As of now, this strategic change has paid off. The addition of Antalya Airport – which is the second busiest in Turkey in terms of international traffic – and the expansion of our global footprint to 62 other airports through our service companies, has recovered almost half of our expected losses.”

Sener says that TAV’s investment criteria focuses on two main points. “Firstly, we strive to create added value for all our stakeholders in a sustained manner. Secondly, we won’t invest in any project that is beyond our financial capabilities and operational abilities,” he reveals.

“As a public company, we’re responsible to our partners, shareholders, employees and business partners Therefore, good governance, responsible investing and accountability, are at the heart of our business conduct.

“Within this framework, we are looking for new opportunities on a global scale. ACI expects a 4.1% compound annual growth rate in global air traffic between 2017 and 2040. Accordingly, major investments will be needed in airport infrastructure to meet the demand.

“With a unique business model to provide integrated services in all areas of airport operation and a successful track record of PPP and BOT projects, TAV is well placed to benefit from this trend.”

What key lessons has TAV Airports learned from operating in the global arena for over 20 years? “Seizing the moment and taking the right opportunity at the right time is very important,” remarks Sener.

“We realised and understood the value of airports early on in the privatisation process and recognised the growth potential of air travel.

“This foresight and the resilience of the aviation industry, which has seen passenger numbers continue to grow despite economic, political and social impacts worldwide, has helped establish TAV as a global brand.”

He goes on: “It is easy to forget that when we entered this business, Turkey’s airports were only handling 30 million passengers per year.

Today, the figure is over 200 million. Our first airport, Ataturk, used to welcome 10 million passengers per year, and now it has 68 million passengers per year. We captured and forecasted this tremendous growth. This is the primary reason for the success of TAV.” Sener also believes that TAV’s ability to manage and complete projects on time, on budget and with “desired quality” have proven key to the company’s success as has its commitment to sustainable development.

He concludes: “We have placed ourselves in a superb strategic position and therefore the future is now all about smart growth strategies.”

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Fraport’s Dr Stefan Schulte says that his company makes targeted investments in airports that have considerable growth potential.

Fraport AG/Frankfurt Airport Services Worldwide World Headquarters: Frankfurt, Germany.

Airport investor since: 1997.

Airports 100% owned and operated: Frankfurt Airport in Germany and Ljubljana–Jože Pučnik Airport in Slovenia.

Others: Through its 73.4% majority stake in Fraport Greece, Fraport AG operates 14 regional airports in Greece that include Thessaloniki, Aktion, and Kavala on the mainland and the island airports of Corfu; Kefalonia; Kos; Mykonos; Rhodes and Zakynthos.

Elsewhere in Europe, Fraport has a 25% stake in Northern Capital Gateway, the operator of St Petersburg–Pulkovo Airport in Russia; a majority 60% shareholding in the Fraport Twin Star Airport Management consortium responsible for running Bulgaria’s Black Sea gateways of Burgas and Varna; and owns 51% of Antalya Airport concessionaire, Fraport TAV Antalya, in Turkey.

In Latin America, Fraport has a controlling 70.1% interest in Lima Airport Partners (LAP), which operates Jorge Chavez International Airport in Lima, Peru, and through 100% owned Fraport Brasil holds long-term concessions to manage and develop Fortaleza’s Pinto Martins International Airport (25 years) and Porto Alegre’s Salgado Filho International Airport (30 years) in Brazil.

In Asia, Fraport AG has a 24.5% share in Xi’an Xianyang International Airport in China and a 10% shareholding in the DIAL consortium formed to operate and develop Delhi’s Indira Gandhi International Airport in India. Fraport is also a minority partner (18.75%) in Tradeport Hong Kong Ltd, operator of a high-tech logistics centre at Hong Kong International Airport.

In the US, it wholly-owns Fraport USA, a concessions developer for airport shopping and F&B areas. The company currently operates at five US airports – Cleveland, Pittsburgh, Baltimore/Washington, Nashville and New York-JFK where it has a contract with JetBlue for Terminal 5.

Plans to expand/reduce portfolio: Fraport continues to look for new opportunities around the world and further expansion is on the cards with Fraport admitting that it is closely watching the markets in Brazil and elsewhere in Latin America.

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News: Last year, Fraport added two Brazilian airports (Fortaleza and Porto Alegre) to its portfolio, while fully divesting its small minority stake in Hanover Airport in Germany. Fraport USA launched new concessions at New York-JFK in April 2018 and at Nashville in February 2019. As a result, the Fraport Group is now active at 30 airports worldwide, including the five Fraport USA locations.

Talking about Fraport Brasil taking over the concession for Fortaleza and Porto Alegre airports in January 2018, Dr Stefan Schulte, chairman of the executive board, says: “Our mandate is to enhance the passenger experience while strengthening the role these airports play for their respective regions and stakeholders.”

International pioneer Fraport AG has a long track record of investing in airports outside of Germany, ensuring that its international assets today play a key role in the company’s overall success.

“Achieving traffic and financial growth – at Frankurt and globally – is one of our five core goals underlying Fraport’s corporate mission,” notes Dr Stefan Schulte, chairman of executive board of Fraport AG. “For the Group, in particular, this means continuously expanding Fraport’s international portfolio and increasing revenue gained from the international business over the long-term.

“We do this by making targeted investments in airports that have considerable growth potential and by systematically leveraging potential for development and improvement, as well as by transferring our expertise from Frankfurt to our airports worldwide.

“Ultimately, the aim is to position the Fraport Group on an even broader and stronger foundation for long-term profitability – for the benefit of employees, customers and partners.”

In fiscal year 2017, international activities and services segment (which includes Fraport’s international investments) accounted for 27.8% of the Fraport’s Group revenue and 32.4% of its EBITDA. He notes that Fraport Greece’s ambitious €415 million construction programme at its 14 Greek regional airports is in “full swing”, with

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Quito’s Mariscal Sucre International Airport is one of the most modern gateways in Latin America.

completion of all the planned upgrade projects expected by the end of 2021. They include a new terminal at Thessaloniki Airport with work starting on the project in September 2018 as part of a €100 million enhancement package.

CCR Group Head office: Saõ Paulo, Brazil.

Airport investor since: 2012.

Airports 100% owned and operated: None.

Others: CCR Airports, the wholly-owned airports division of the CCR Group, has a 75% stake in the private consortium which has a controlling 51% interest in the concessionaire awarded the rights to operate Brazil’s Belo Horizonte International Airport for 30 years.

Elsewhere in Latin America, it has a 50% stake in Corporacíon Quiport, operator of Quito’s Mariscal Sucre International Airport in Ecuador; and a 97.25% interest in Costa Rica’s San José–Juan Santamaria International Airport courtesy of operator, AERIS Holding Costa Rica.

In the Caribbean it owns 79.8% of the shares in Curaçao Airport Partners NV (CAP), which operates Curaçao International Airport.

CCR also has a 70% stake in Total Airport Services (TAS), an aviation service company that provides cargo, passenger, ramp, ground handling and warehousing services at eight US airports that include HartsfieldJackson Atlanta (ATL), Chicago O’Hare (ORD), Los Angeles (LAX) and San Francisco (SFO).

Plans to expand/reduce portfolio: CCR Airports states that it is potentially interested in any project that meets the company’s investment criteria and commitment to infrastructure development.

News: CCR purchased Airports Worldwide Holding BV’s shares in AERIS Costa Rica in May 2018 to take a controlling 97.5% interest in the company responsible for operating Costa Rica’s capital city gateway.

Although a growing force in the airport market with 2,400 employees and annual revenues of $267.4 million, CCR Group’s huge network of toll roads and other interests in railways and ports in Latin America means that airports still account for less than 10% of its gross revenues.

Careful expansion for the CCR Airports Created to manage the airports under the responsibility of the CCR Group, CCR Airports now has major or controlling stakes in the operators of four airports in Latin America and the Caribbean and a 70% shareholding in US airport focused service company, Total Airport Services (TAS), which has a presence at eight airports across the country.

In Eduardo Camargo, CCR Airports has a CEO with experience of operating in the global arena having previously been responsible for representing CCR in the international market from 2007 to 2009.

He notes that over the last two decades the CCR Group has stood out for its capital discipline and precise analysis for the acquisition of new assets, and believes that this strategy serves it well in the airport industry.

“We believe that there are good opportunities for investments in the global market, however, every project needs to be analysed on an individual basis to ensure that it aligns with the governance and capital discipline policy that have made the CCR Group one of the largest players in the Latin American market,” says Camargo.

“In recent years, CCR Airports has taken advantage of some timely opportunities to place it as one of the main airport operators in the region. We recently increased our share in Juan Santamaria International Airport, in San Jose, Costa Rica, for example, and another important action in this sense was the acquisition of Total Airport Services (TAS) in 2015, as it expanded the company’s operations to the United States, one of the largest global markets.”

Does CCR Airports view its airport acquisitions as short or long-term investments?

“Infrastructure projects are very much seen as long-term investments due to the intense cycles of work and investment involved over the period of the concession agreement,” Camargo tells Airport World.

“Our expansion to date has been in the Americas, and we now have teams based in Houston in the United States and São Paulo in Brazil, but this doesn’t mean that the company can’t see good opportunities in other markets in other parts of the world.

“The acquisition of TAS in the United States shows the direction that CCR Airports intends to explore businesses in the near future, expanding our territory and services.”

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London Heathrow handled a record 80.1 million passengers in 2018.

Talking about the lessons CCR has learned from operating in the global market, Camargo says: “I believe there’s no secret formula for success.

Companies must achieve their goals based on a concrete model of management and corporate governance, engaging their internal audience.

“CCR is a 20-year-old company, with a history of success based on clearly defined rules and strong commitment to enhancing infrastructure.

In the case of airports this means better facilities, improved security and services and a better airport experience. That’s what encourages us to keep exploring new markets, territories and challenges.”

Ferrovial Airports World Headquarters: Madrid, Spain.

Airport investor since: 1998.

Airports 100% owned and operated: None.

Others: Ferrovial Airports has a 25% stake in London Heathrow Airport and a 50% interest in AGS Airports which owns and operates the UK gateways of Aberdeen, Glasgow and Southampton.

In 2017, the company re-entered the US market when its Great Hall Partners consortium was awarded a 34-year contract to redevelop and operate the Great Hall in Denver International Airport’s Jeppesen Terminal.

Ferrovial Airports has a majority 80% stake in the consortium.

Plans to expand/reduce portfolio: After consolidating its current portfolio, Ferrovial Airports is actively looking to identify new opportunities in the global market, placing a particular focus on the US.

Back in the game It is easy to forget that Ferrovial Airports was once one of the biggest global airport operators on the planet with a portfolio of assets across Australasia, Europe, Latin America and the US. Indeed, the company has been involved in the aviation industry since 1998 and has more than 20 years’ experience of investing, developing and operating 34 airports around the world. Its former assets included interests in Aeropuertos del Sureste (ASUR), BAA, Bristol and Belfast airports in the UK, Cerro Moreno International Airport in Chile and Sydney Airport in Australia among others.

However, after a period of consolidation when it shed most of its

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assets either because it had no choice (the UK’s Competition Committee forced it to sell Gatwick, Stansted and Edinburgh airports) or by its own doing to help raise funds to invest in Heathrow and AGS Airports, Ferrovial Airports is once again looking to expand its global portfolio.

So what tempted Ferrovial Airports to re-enter the global airport investment market at Denver in 2017 and how will the project work in terms of targets and development timescales?

CEO, Jorge Gil, opens by pointing out that Ferrovial never left the global stage, noting that it participated in a number of privatisation processes around the world before winning the Denver Great Hall concession.

“First, I would like to state that our involvement in the remodelling and commercial operation of the Jeppesen Terminal at Denver International Airport did not happen by chance, the fact is that we never left the global airport investment market.

“Over the last six years we have participated in a number of airport transactions such as Puerto Rico, Chicago Midway or Westchester in the US, and other privatisation processes around the world.

“We closely monitor growth opportunities where we are confident that we could create solid, lasting value for all stakeholders involved.

The Denver Great Hall concession is one such example of this strategy.”

Talking specifically about Denver, he says: “Our goal for Denver’s Great Hall is simple. We want to create an airport experience that meets the demands of tomorrow’s travelling public and, working in partnership with Denver International Airport, gives each passenger a journey through the facility that’s tailored to their individual needs and tastes.

“To achieve this, we will deliver a new check-in area and arrivals zone, increase the shopping and food and beverage offer, relocate and expand security areas, update terminal systems and technology, and improve building access and passenger flows.”

He admits that Ferrovial Airports would potentially be interested in other similar P3 type projects in the US. “We are a global airport investor and operator and we will continue to monitor opportunities on a global scale,” reiterates Gil. “Ferrovial provides an integrated approach to development through industry-leading capabilities in design, finance, build, operation and maintenance of infrastructure throughout its lifecycle.

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The shape of things to come for the Great Hall in Denver International Airport’s Jeppesen Terminal.

“The US is a strategic growth market for Ferrovial Airports as we expect public-private partnerships (P3s) to arise in the coming years.

We have recently opened our US office in Austin that will allow us to be closer to key airport industry stakeholders.

“We also believe that our track record and experience in investing and operating different types of airport uniquely positions us as key player ready to contribute to the much-needed transformation of the US’s aging airport infrastructure.”

He believes that P3s can provide a variety of benefits to cities and municipalities as by partnering with the private sector, public bodies can transfer risks they would normally have to cover themselves.

Other benefits, says Gil, include gaining efficiencies in the design, construction, finance, operation and maintenance of infrastructure assets; access to wider opportunities in terms of CAPEX and asset monetisation, with better access to alternative funding and financing sources; and boosting job creation opportunities for the local community.

According to Gil, P3’s can also act as the catalyst to transform the passenger experience; improve an airport’s commercial offerings while increasing commercial revenues; and find innovative and efficient solutions to lead the transformation of airports.

He notes that Ferrovial’s toll-roads division has carried out a number of successful P3 projects globally.

“There are several approaches to investing in the US that can vary from full privatisation, partial privatisations, terminal management, and long-term lease to design-build-finance-operate-maintain models (DBFOM),” says Gil. “We have the flexibility to adapt to any of those models. It’s an airport-by-airport approach. We create value for passengers by

identifying unique tailor-made solutions for every airport, community, city, region and nation we serve.”

What is Ferrovial’s criteria for investing in an airport and does it view each acquisition as short or long-term investments?

“We only invest in airports in which we believe our long-term, integrated approach can help meet passenger expectations while creating value for customers, employees, shareholders and the communities in which we operate,” states Gil. “That means we study opportunities on an asset-by-asset basis. We are convinced that traffic records will continue to grow and that the expected rise in demand will help create more airport privatisation opportunities in different regions for us.

“At Ferrovial Airports we create partnerships for the long-term.

We are active members of the community and work collaboratively with governments, private businesses and local citizens to achieve their social, economic and environmental objectives.”

Is Ferrovial Airports concerned that BREXIT will have an adverse effect on its UK airports and therefore the airport business as a whole?

“We still don’t know how BREXIT will be implemented and how it will eventually roll out. Although we are closely monitoring its advances, we are not yet in a position to be sure of its impact on the UK airport industry,” explains Gil. “Having said that, we do not expect BREXIT to cause many disruptions in our airports. So the key question regarding uncertainty over BREXIT is the potential impact it will have on the UK economy and thus its impact on air-traffic demand.

“Nevertheless, Heathrow is a very robust and resilient asset and should be able to easily navigate through that period of uncertainty.” AW

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The buying game Modalis chief executive, Curtis Grad, provides his annual review on private-sector investment in the global airport market, taking stock of 2018’s biggest deals, success stories and other transactions that didn’t quite get across the line.

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n terms of the number or size of transactions, 2018 was far from a banner year for the industry, although it was still an active and intriguing one despite the tough operating market.

And once again VINCI Airports dominated the field with its acquisition of Florida-based Airports Worldwide (AWW) and its portfolio of airports in the US, Europe and Central America, along with separate deals for Belgrade’s Nikola Tesla Airport and, most recently, London Gatwick.

Asia Growth of private-sector participation in south east Asian airports continues to be far out-paced by the double-digit increases in passenger traffic throughout the region, setting the stage for a potential capacity crunch fuelled by the rise of middle-class spending power.

At the same time, more established privatisation players like Japan and India saw several new airport projects and transactions working their way through the pipeline.

Elsewhere, after effectively binning the previous regime’s tried-and-tested PPP framework early in its mandate in favour of unsolicited offers, in the Philippines, the Duterte administration is starting to show some limited progress in closing new airport deals.

Most recently, just prior to Christmas, the San Miguel Corporation received the green light on its bold $14 billion development plan for Bulacan Airport. An operate and manage (O&M) agreement was also awarded to a Changi-led consortium for Clark Airport late in the year.

On the other hand, the Manila–Ninoy Aquino Airport project appears to remain in slow-motion while various unsolicited proposals for regional airport redevelopments have been stalled or rejected by the government.

In Thailand, the government is forging ahead with plans to find investors prepared to operate and develop U-Tapao Rayong Pattaya International Airport, located about 140km south east of Bangkok and an hour’s drive from Pattaya.

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The process is attracting broad interest from local/regional players and a full spectrum of international airport operators. If all goes according to the government’s plan, we should see an award by mid-year.

Various other projects making headway in the region include Myanmar’s Hanthawaddy International Airport, currently being constructed by a Japanese-Singaporean consortium that includes Changi Airport Group subsidiary, Changi Airport Planners and Engineers, while Vietnam’s Sun Group recently opened Van Don International Airport.

Europe After a series of fits and starts, the Serbian government finally concluded its concession process for the Nikola Tesla Airport in Belgrade (BEG), with VINCI Airports once again coming out on top. With a bid of just over €500m in concession fees and €732m of capital investment, VINCI secured the right to develop and operate BEG for 25 years.

Aiming to emulate the success of its Balkan neighbour to the north-west, Bulgaria rebooted the concession process for Sofia Airport (SOF) in the first quarter of 2018. The original proposal call was terminated in mid-2017 following numerous deadline extensions and various political contortions.

If the government stays the course, an award is anticipated early in the second quarter of 2019. UK airport operator, MAG, supported

by Chinese construction giant, BCEG, is just one of the well-known industry names to throw its hat into the ring and declare an interest in the SOF concession.

SPECIAL REPORT: INVESTING IN AIRPORTS

Meanwhile the much delayed Brandenburg-Berlin project plodded forward with the latest opening date now targeting the fall of 2020, a full nine years after it was initially slated for completion.

Beset by a host of planning delays and technical problems since its conception over 25 years ago, this saga has been a huge national embarrassment for Germany and a cautionary tale of failed project planning and execution. Amid this quagmire, the project’s government sponsors have once again floated the idea of private sector involvement in the project – a very tough sell given its chequered history.

In Greece, the €1.38 billion Athens International Airport (AIA) concession extension and €480 million Kastelli greenfield project gained traction, AIA secured critical EC approvals to add 20 years to their term, while the GEK-Terna/GMR consortium finally received critical and long-awaited grantor sign-offs, as well.

With the March 2019 Brexit deadline looming, pundits have painted a very bleak picture for the United Kingdom’s aviation prospects upon cutting ties with the European Union. However, this downbeat mood clearly isn’t shared by VINCI Airports, which in the dying days of 2018 declared its resolute optimism in the UK’s future with its £2.9 billion offer for a 50.01% controlling stake in Gatwick Airport at 19 times EBIDTA.

Latin America & the Caribbean After a false start and some solemn self-reflection, the Jamaican government relaunched a new and restructured concession process for Kingston’s Norman Manley International Airport, with Montego

Bay lead investor and operator Grupo Aeroportuario del Pacífico (GAP) getting the nod.

Once again, Brazil played a prominent role in the LatAm region with the launch of the fifth round of concessions involving a dozen airports in three blocks.

Initiated in the latter half of the year, this so called “steak and bone” strategy includes Recife, the busiest of the lot at 7.7 million passengers per year, and a melange of medium-sized and smaller airports. The bid deadline is currently set for the end of Q1 2019, with concession awards set to take place shortly thereafter via Brazil’s favoured ‘auction’ process.

At the same time, several of the concessions from previous rounds continued to flounder in the aftermath of Brazil’s protracted political and economic crisis. The newly elected right-wing President, Jair Bolsonaro, has vowed to privatise the remaining 50+ Infraerorun airports.

Elsewhere, in Peru, Fraport-led Lima Airport Partners (LAP) has, at long last, received the grantor’s go-ahead for the next stage of the development including an additional runway and terminal. The works were stalled as the state struggled to secure lands required for the expansion. LAP was granted a 10-year extension to its concession to compensate for the delay.

It was also year a tough year for grand mega-projects in the region with the Mexico City greenfield airport falling victim to a change in government. Newly elected President, Andrés Manuel López Obrador or AMLO as he’s been dubbed, made good on his campaign promise to pull the plug on this highly ambitious project.

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Turkey’s new €10 billion mega hub, Istanbul Airport, opened in late 2018 and is set to become one of the world’s biggest airports.

While El Dorado II in Bogota also withered in the vine, as the government opted to double-down with OPAIN SA to expand the existing El Dorado airport to meet anticipated mid-range demand.

Paraguay’s Asunción Airport concession process was also axed.

United States & Canada St Louis Lambert International Airport remained at the forefront of the US privatisation agenda, making progress but drawing considerable opposition and controversy in the process.

St Louis has revealed that it is prepared to seek and review bids from private investors willing to operate and develop the airport on a multi-year lease and, if all goes to plan, the city’s Airport Advisory Working Group is expected to review bids from companies qualified to run the airport in Q3, 2019.

Any concession would, however, need approval by the FAA as well as the city government and the airlines serving Lambert.

Elsewhere in the US, the Big Apple saw plenty of action, with the LaGuardia project marking several initial milestones in its $4 billion construction programme, while JetBlue, the operator of JFK’s Terminal 5, pressed forward with its development plans, giving Vantage the nod to lead its comprehensive multi-billion-dollar expansion programme.

Fraport USA was also brought onboard to manage and develop the T5 commercial programme including retail, food and beverage. And in a bid to keep pace with its cross-bay rivals, in mid-December authorities announced that Munich Airport subsidiary, Munich Airport International (MAI), will operate Newark Liberty’s new $2.7 billion Terminal 1.

On the west coast, the Hochtief/ACS consortium was awarded the $1.95 billion LAX automated people mover project under a 25-year PPP agreement. Construction on the privately funded Paine Field passenger terminal also forged ahead.

As for Canadian prospects they remain in limbo, however, if the ruling Liberals are re-elected in the fall of 2019, a fresh push is likely in 2020.

CIS & the Middle East Consumed by diplomatic issues on multiple fronts, Saudi Arabia’s progress on its ‘Vision 2030’ strategy has been slow. Termination of the

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Jeddah concession early in the year also set back the programme.

However, the General Authority of Civil Aviation (GACA) has regrouped and is expected to relaunch a new proposal call in the latter half of the year.

Saudi authorities also put the brakes on the Riyadh (RUH) process in late April, but it and several of the other 20 some odd remaining airports are expected to advance over the coming year.

Seizing on the opportunity to fortify its role as a key aviation player in the region, Turkey inaugurated its new Istanbul ‘mega-hub’, which will eventually have six runways and be capable of handling up to 200 million passengers per annum.

Kuwait, Oman and Uzbekistan, among others, have shown varying levels of interest in attracting private sector players to invest in their airport networks, while Russia saw some activity and positioning on the secondary market including Moscow’s Sheremetyevo and Vnukovo airports.

Africa Nigeria and Kenya were the focal points in Africa, but with two very different visions for achieving their airport development objectives.

Nigeria continued its struggle to pursue a conventional airport concession model in the face of fierce union opposition, whereas Kenya is looking to Kenya Airways for operation of Nairobi’s Jomo Kenyatta International Airport. Meanwhile, Angola, Namibia, Zambia and Zimbabwe are also exploring P3 options.

Wrap up Unmistakably, the key take-away from 2018 is that the airport asset class is moving into the mainstream, with growing interest from pension funds and other institutional investors.

As a result, we can expect even greater intensity/competition for quality assets and a downward pressure on returns in the year to come.

It seems that others have now discovered what we’ve known all along, that airports are a great business. I suppose we couldn’t have expected to keep our secret fishing hole off the map forever!

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SPECIAL REPORT: INVESTING IN AIRPORTS

Investing in innovation

IT can help airports keep pace with rising demand and meet growing passenger expectations, writes Bruno Spada, head of airport IT at Amadeus.

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he airport as we know it is evolving in response to a continually changing operating environment where more demands than ever before are being placed on them to up their game.

Firstly, passenger numbers continue to rise year-on-year, placing increased pressure on airport infrastructure.

It is estimated that in 2018, the world’s airlines carried 4.3 billion passengers on scheduled flights, up 200 million on 2017 alone.

This is particularly challenging for airports that are inhibited from expanding infrastructure due to finances, regulation or simply by a lack of space.

Secondly, the world’s airports are entering an especially competitive era. Downward pressure on landing fees are forcing them to look to ancillary services, such as retail and other non-aeronautical options, to drive and bolster revenues.

This is true of many airports, from the smaller ones catering to regional traffic to the mega-hubs that connect the globe.

And lastly, airports are not immune from wider technological trends reshaping how people work, spend their leisure time and interact with family and friends.

New technologies that people use in their everyday lives to communicate and find information have increased passenger

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expectations of air travel. For example, the transformation of the retail and hospitality sectors mean that queues and long delays are seen as belonging to another era. The question for airports is, how to respond.

Technology can unlock greater operational effectiveness and advanced passenger processing As always, change provides both significant challenges and opportunities to airports. By investing in technology, airports are able to build more compelling offers to airlines, differentiating themselves from competition and delivering value in terms of operational effectiveness and passenger processing.

Investment in technological innovation also allows airports to meet rising passenger expectations in terms of personalisation, speed of transit and access to information during times of disruption.

In the past, the modernisation of technology systems required a fundamental rip and replace of systems, long migration times and severe upheaval for airports. However, the emergence of cloud technology means that airports are able to upgrade their technology infrastructure and capabilities with relative ease.

SPECIAL REPORT: INVESTING IN AIRPORTS This is where modern cloud-based technology can have a major impact. It makes it easy to switch on new portable check-in terminals and kiosks to meet spikes in demand.

At the same time, capacity constraints in the terminal can be addressed by thinking beyond the terminal. Innovative companies such as OACIS (Off Airport Check In Solutions) have built their services around the cloud, pioneering the use of ‘pop-up’ check-in desks, which can be deployed anywhere with a basic internet connection, such as at cruise terminals, conference centres, hotels or at major sporting events.

Pop-up check-in desks can effectively remove congestion from the airport, ensuring that passengers and their baggage are processed before they arrive at the airport.

Not only does this allow airports to better manage and increase their capacity but eases the passenger experience, allowing more time for relaxation and leisure.

Meeting rising passenger expectations with biometrics

Cloud technology frees airports from legacy constraints Much of the transportation sector has often approached technology and innovation with caution. Understandably, considering systems are supporting mission critical processes that keep travellers moving.

However, all too often legacy technology has been a barrier to innovation and agility. For airports that need to attract airlines, as well as passengers, it is no longer an option to be left behind. This is where cloud technology comes in.

The cloud is highly agile, allowing airports to scale up and down operations depending on demand. It affords greater security and a higher level of resilience with its third-party data centre staffed by hundreds of dedicated professionals.

It also gives much more flexibility to the airlines, drastically cutting the length of time it takes to open new routes, from months to days. This is a crucial innovation when it comes to attracting and retaining airlines in a highly competitive market.

Increasing capacity by implementing off-airport solutions Typically, the most common cause of long airport queues are capacity issues in the check-in and security control lanes.

There are, of course, a number of factors that can put constraints on capacity. An unexpected surge at check-in due to the early arrival of large groups or other events can overload available check-in desks, even when airports are fully staffed. The inflexibility of legacy IT can leave airports unable to respond effectively to such surges.

We are also seeing technology innovation transform the airport terminal. In the same way that technological disruption is transforming the world of work and leisure, the same is happening in travel.

What unites airports, airlines and ground handlers is the passenger, which is why it makes sense to look at how technology can be deployed to benefit the passenger, and in turn the industry at large.

One area which offers significant benefits to both the passenger and the industry is biometrics. For passengers, lengthy queues at check-in, immigration or at the boarding gate can be some of the most frustrating aspects of travel. Biometrics has the potential to remove these frustrations.

A recent trial by Lufthansa at Los Angeles International Airport saw the airline board 350 passengers onto an A380 in just twenty minutes. Working with US Customs and Border Protection (CBP), we were able to ensure passengers could be processed at the selfboarding gates in real-time.

Within the next 5-10 years, biometrics will have a transformative effect on passenger processing, making a tangible difference to the experience of passengers. At Amadeus, we can imagine an airport free from friction points and one that makes passports and boarding passes a thing of the past.

Seamless passenger processing will not only improve the passenger experience, but help airports capitalise on ancillary services by encouraging greater leisure time in the airport.

Building airports fit for the 21st century While change presents airports with challenges, it also provides them with opportunities to innovate and rethink processes and approaches to passenger processing.

The adoption of cloud technology and the removal of legacy systems, for example, offers airports the chance to step into the future.

Embracing innovation also provides airports with the opportunity to lead the industry and reshape the experience of air travel for passengers.

IT really is the great enabler that is already removing some of the common pain points on our journeys and will lead the way in restoring the romance and excitement of travel!

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Work in progress The new $11 billion Chengdu Tianfu International Airport in China’s Sichuan Province is beginning to take shape ahead of its early 2020s opening, writes Joe Bates.

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ichuan Province’s planned new Chengdu Tianfu International Airport is being designed by the China Southwest Architectural Design & Research Institute Corp Ltd (CSWADI) in partnership with ADP Ingénierie.

Located 50 kilometres from downtown Chengdu and slated to open in the early 2020s, the airport will initially be equipped with two terminals and three runways capable of accommodating up to 40 million passengers and 700,000 tons of cargo per annum.

However, with future expansion, the gateway is ultimately expected to have four terminals and six runways capable of handling up to 90 million passengers and two million tons of cargo annually.

Its opening will mean that Chengdu becomes the third largest Chinese city to operate a two airport system after Beijing and Shanghai.

CSWADI and ADP Ingénierie – a wholly-owned subsidiary of global airport operator, Groupe ADP – won the architectural competition to design the new airport in 2015 and have since developed and enhanced their design for the terminals.

Designed to resemble flying sunbirds, a symbol of China’s cultural heritage, Tianfu’s initial two terminals will be located on the north east of the airport site and, at full build out, will be connected to the additional two passenger terminals by an automated people mover system.

Upon opening, Terminal 1 will accommodate both international and domestic traffic while the adjacent Terminal 2 will exclusively handle domestic flights.

Talking about the project, ADP Ingénierie’s regional managing director for Asia Pacific, Jean-Yves Coulot, says: “Based on the client’s requirements, our planners and architects put forward a concept where the two buildings are distinct while sharing the same architecture. One mostly dedicated to the international traffic while the other is domestic, giving a clear understanding of their respective functions.

“Their piers and processors are slightly angled in order to propose an airside corridor connecting them as they share this idea of two terminals hand in hand.

“The space in between them allowed us to build a compact ground transportation centre, commercial areas, hotels, and parking facilities

that help create a lively hub for the airport city and a comfortable connection between air travel and ground transportation where passengers can move freely walking from one place to another without crossing any traffic.

“We wanted to build something on a human scale to maximise efficiency, keep walking distances to a minimum and enhance the passenger experience.”

He goes on: “The inclusion of ‘swing gates’ into the design Terminal 1 will ensure operational flexibility by allowing them to handle different types of aircraft and traffic throughout the day.

“Other priorities considered by the design team included the need for a strong mix of retail/F&B outlets and commercial facilities to maximise the airport’s non-aeronautical revenues and the importance of sustainable development.

“Indeed, CSWADI and ADP Ingénierie have specifically worked on sustainable design and airport green energy-saving, with the objective of obtaining the highest environmental certification in China.

“While always trying to echo the local aesthetic references and heritage in our design, we feel that it is equally important to bring to our client an extremely efficient and up to date facility, matching the most stringent international standards of the industry.”

The airport is needed because the booming local economy and growing international appeal of Chengdu – nearly 300 Fortune 500 companies are already based in the city – means that the existing Chengdu Shuangliu International Airport simply won’t be able to cope with future demand on its own.

Chengdu Shuangliu handled close to its 50mppa design capacity in 2018 to maintain its status as China’s fourth busiest airport, but with demand expected to exceed 62 million by 2020, the new capacity enhancing infrastructure provided by Tianfu will ensure that the city doesn’t become a victim of its own success.

Tianfu will also have some of the best multi-modal ground connections in China courtesy of a new high speed rail link between Chengdu and Kunming, inter-city express trains, urban light rail and new roadways.

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AIRPORT DESIGN

The future is here: San Francisco International Airport’s Terminal 3. © Joe Fletcher

Time to get personal Gensler’s Ty Osbaugh and Lee Billington discuss how enhancing the passenger experience, embracing cutting edge IT and taking cues from the hospitality industry hold the key to designing world class airports.

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cross the globe, new terminal facilities are rising in the world’s growing cities. Whether expanding a major global hub or transforming an existing terminal, these new facilities boost customer and civic expectations of what airports can and should be.

Take, for example, the recently opened Terminal 2 at Incheon International Airport. Accommodating 18 million passengers per annum, the terminal welcomes customers with lush expanses of indoor green space, cultural exhibitions and performances, and high-street shopping.

Today, there is an increasing demand for authenticity, personalisation, seamless travel, and on-demand functionality within the airport experience. But what does that really look like in the ever-changing landscape of the here and now?

The answer lies beyond massive architectural forms, retail and dining offerings or the latest ‘it-amenity’. To quote historian Janet Bednarek, “Just because an amenity-filled terminal looks impressive doesn’t mean it functions well.”

True, world-class status can only be achieved, especially in today’s social media-fuelled world, when the terminal succeeds in its foundational role of facilitating air travel and moving passengers seamlessly.

The identifier of ‘world-class’ is only achieved when the foundational elements support the ever-changing demand of the human experience.

Designing for the human experience The world is experiencing change at an unprecedented pace. Technology advances, global economic instability, weather disruptions – things that were unheard of five years ago are now part of daily life.

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And in this era of dramatic change, people are the one constant. This historic confluence of change means that we must rethink and re-imagine how people experience every aspect of their airport journey.

More than ever before, there is an opportunity to create not only a better airport, but a better world through people-centred design.

As part of this era of change, there are more passengers than ever, and that number is growing. According to both ACI and IATA, by 2035 there will be almost twice as many travellers as there are today. Traditionally, airport terminals were designed largely around passenger typologies and planning that anticipates passenger needs. Moments within the airport journey were pre-determined by either the designer or the airport operation.

Working on a confidential assignment for a major global hub airport, Gensler identified that physical separations between potential activities and the gate often leave passengers having to choose between one or the other for fear of missing the call to board, creating a sense of ‘I can have this or that’. In turn, a multi-layered space allows passengers to have both. ‘I can have this and that’.

As airports expand to meet the needs of travel growth, we must ask ourselves, are we providing more of the same design at a new scale?

Customer diversity is also on the rise, in terms of age, income level, and cultural background. Add to this the fact that people live integrated lives. We have moved far beyond the notion that an airport is a static place to wait for an airplane with a singular type of user.

Each and every customer in an airport comes with a unique set of circumstances, wants, and needs. To deliver a world-class experience, it is essential to provide a multi-layered space to enable customers to craft unique moments of energy and calm.

AIRPORT DESIGN

Big, green and impressive: Incheon International Airport’s Terminal 2. Image courtesy of Gensler.

By streamlining flows, customers are liberated from traditional compartmentalised layouts and are offered a variety of public spaces.

Choice for customers creates a rewarding and valuable experience and helps them find value in their time at the airport.

This personalisation and convenience is a differentiator. As time becomes an increasingly valued asset, customers are willing to pay a premium for places, products, and services that in effect give them back their time.

At San Francisco International Airport, where Gensler helped develop the Revenue Enhancements and Customer Hospitality (REACH) Guiding Principles and multiple terminal assignments, this ability for customers to curate their experience has helped the airport to consistently achieve industry-leading concessions performance.

Influenced by the hospitality industry, pre-security spaces were designed with upscale hotel lobbies in mind. Customers assess their own travel needs as they pass through the terminal doors – providing customers with the freedom to choose what’s next, shifting the mentality of the check-in experience, and lessening anxiety.

The role of digital in airport design Technology, more than ever, is impacting daily life and will impact the experience that customers have in a terminal. Almost every traveller has a smart device with them, capable of complex tasks that previously required enormous resources.

Other technologies, such as autonomous vehicles and the future ability to take the internet wherever one travels, has allowed people to be connected to each other in ways unimaginable just a short time ago.

Amidst this new and ever-changing reality, to best design for the human experience we must also consider the context of the fastchanging world around us. Technology advances and processes change, yet human needs remain. Fundamentally, we must meet customers where they are.

In the late 2000s, it felt like every company was developing an app to deliver services to their customers, however, over time, this led to an enormous amount of ‘noise’ and cognitive overload.

The simple truth is that often customers are better served when existing technologies are repurposed. The digitisation of boarding passes is an example of this as, according to SITA, 97% of airlines today provide options for mobile device boarding passes.

It’s once again about choice – travellers can use a paper boarding pass, or a digital version on their phone or smartwatch.

This has started to evolve to even trial runs of such technologies as biometric fingerprints and facial recognition. Technology has also changed the approach of planning a trip as real-time and user-generated information has introduced flexible booking.

Airports and airlines need to deeply understand how and where travellers are connecting with them so they can best interface with them in the future.

And, as we move toward an ever-more digital world, the tools available to airport customers should deliver flexible, scalable and more personalised experiences.

When done well, a seamless experience is created that integrates both analogue and digital elements together, delivering value to customers.

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Quick and easy: The passenger experience in JetBlue’s Terminal 5 at New-York JFK. ©Paul Rivera.

New opportunities for a seamless experience – Personalisation Advances in technology drive travellers to look for more control over their entire travel experience.

Hitwise discovered that 60% of travel searches begin from a mobile device – the entire travel experience originates as a personal, mobile interaction. The ability to speak directly to these passengers leads to a better user experience and additional revenue opportunities.

On-demand and personal technology will allow passengers to move through the airport seamlessly by cutting out lines and stress, and by prioritising motion over waiting. Airlines will know their passengers’ preferences, allowing them to offer more tailored experiences.

As personal and airport technology continue to improve, terminals must continue to employ strategies that put self-directed experiences in the hands of the passenger.

Last year, Delta launched facial recognition at Hartsfield-Jackson Atlanta for international travellers, an update to their fingerprint scanning launched in 2017. While the impact is minimal per user – saving a mere two seconds per passenger – the compounded effects are felt at a sum of nine minutes of saved time per boarded flight. At scale, this has rather large cost implications.

– Artificial intelligence and machine learning Customer service, hospitality in particular, is being transformed via artificial intelligence (AI). Hotels such as Aloft are incorporating more and more robotic assistants. AI and machine intelligence will also have a large impact on logistics, including reduced baggage handling time, as well as improved flight path and traffic efficiencies.

With improved data-analytic tools, operators can profile guests with greater accuracy, and understand, treat, and service them as individuals.

– Time as currency

– Intelligent buildings

Customers and travellers are making stronger associations with efficiency and value, and in this new world, automated processes and services drive perceived worth.

Indeed, according to SITA’s Airport IT Trends Survey, the satisfaction levels of passengers who use self-service technology is 8% higher than for those that used face-to-face processes. After US airline JetBlue and Gensler collaborated on a modernisation of the check-in process at their home terminal at JFK International Airport, the airline reported a 63% decrease in adverse social media comments about the ‘long lines’.

Prior to the new design, queue times averaged between 15 to 20 minutes whereas today passengers using the new self-service kiosks can expect to spend less than two minutes checking-in – and in effect more quickly partake in the services and amenities the post-security environment offers.

Not only will the experience of the airport change, but the terminal building itself must change. To meet community and sustainability expectations, ‘smart’ buildings must become genius buildings.

The near-future airport campus will utilise an ‘all of the above’ sustainability strategy, harvesting its own energy and water, recycling its own waste, and growing its own aviation fuel.

As smarter technology is integrated into buildings, we learn more about customer behaviour, identifying and improving foot traffic flow, and measuring the health of both the building and the people in it.

A truly intelligent space is having a conversation with its inhabitants and responding and reacting to their needs.

As we continue to discover what the future holds, what we know now is that if we do not begin to integrate technologies today, the future airport will lack the key offering that travellers desire: a personalised and seamless experience.

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– Biometrics Long considered one of the most secure ways of granting access to information, pilot programmes are using biometric data to verify passenger data and expedite the boarding and immigration control processes.

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About the authors Ty Osbaugh is Gensler’s global practice area leader for aviation and Lee Billington is its director of digital experience design.

SECURITY

Always learning Kevin Riordan, head of airports and checkpoint solutions at Smiths Detection, considers how artificial intelligence can help airport security.

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rtificial Intelligence (AI) is beginning to permeate every aspect of daily life, from garnering film recommendations on Netflix, through to fraud detection and cognitive robotics, and airport security is no exception.

Machine learning is key to supporting the development of self-teaching algorithms that allow airports to maximise the efficiency and safety of airport checkpoints.

Security screening processes generate large volumes of data, which are primarily used to identify and prevent security breaches. The exponential growth in computing power, combined with the spread of data analytics and the sheer amount of available data, now make it possible to develop AI algorithms, which deliver truly meaningful insights and improvements for both the screening and operations.

Automatic object recognition Smart, adaptable algorithms are now being developed for the automatic detection of an expanding list of dangerous, prohibited and contraband goods and substances.

The application of deep learning algorithms for automated threat detection requires the availability of a considerable image database, categorised in threats and unsuspicious images. Deep learning algorithms scan this information to ‘learn’ which objects are potentially harmful and which are benign. These algorithms provide invaluable support for security operators, customs officers and other controlling authorities. This new form of detection reduces the burden on image analysts and increases efficiency and throughput.

Delivering improved levels of both safety and security, the algorithms can identify potential threats and help combat the movement of unsafe, undeclared or illegal goods.

Risk assessment The concept of risk-based screening is designed to increase the operational efficiency of screening resources and processes as well as improve security levels.

Advanced data analysis can help airports ensure that their resources and measures are where they’re most needed, which ultimately makes for a smoother passenger experience.

Deep learning algorithms can combine a comprehensive set of passenger information to create a risk profile.

This includes travel data, passport data, visa and biometric information, and flight behaviour patterns, as well as critical data from government and security services on criminal records, ‘person of interest’ files, and other relevant intelligence sources.

Artificial intelligence is able to efficiently pass through the data to identify key patterns and help inform the assessment.

With risk-based screening, integrated networked checkpoints could trigger personalised security measures in response to a change in threat levels.

Biometric identification Biometric identification is already being used at many airports around the world to create a secure and seamless passenger experience from check-in to boarding and is now making its way to security checkpoints as well.

This integration will be a key enabler to match passengers with their trays at divestment and allow for dynamic passenger differentiation during the screening process as part of a risk-based screening approach.

AI techniques have significantly improved facial recognition accuracy levels to reach an all-time high, which in turn has resulted in fewer manual interventions being necessary allowing processes to become much quicker.

We believe that these rapid improvements in AI technology along with the clear benefits associated with its use will continue to push its integration into checkpoint security and every other part of an airport’s operations.

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DIGITIALISATION

The digital

marketplace AOE’s Kian Gould provides his thoughts on how the key players can thrive in a changing travel retail world.

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ravel retail today is a vastly different industry than it was five years ago, let alone ten or twenty.

Changing demographics; the ubiquity of low-cost carriers; declining per passenger spend, despite steadily increasing passenger numbers; changed purchasing behaviour; and the omnipresence of smartphones are just a few factors that are forcing airports, airlines, travel retailers and brands to rethink their business models.

On a global basis, approximately 50% of all revenues at airports is from non-aviation sources, making non-aeronautical revenue the most important single source of income for airports today.

Non-aviation revenues thus represent one of the most important strategic areas for the future of the industry.

But, what does that future look like? How can airports, airlines and retailers meet the manifold challenges they face? And, how can they tap into the vast potential that new non-aviation revenue streams represent?

The digital arport commerce ecosystem as a foundation for growth

The travel retail ‘quaternity’: Collaboration of all key players

Airports need to be innovative and creative in rethinking their business models. Travellers are spending more and more of their money online, thereby leaving less for airport shopping.

Airports and airlines need to be present on those digital channels if they wish to stand a chance at improving retail revenues and winning back the business of digital passengers.

At the same time, passengers are increasingly planning their purchases, rather than shopping on impulse. Current figures indicated that more than 70% of all purchases are pre-planned. In other words, travel retail disruption, digital and otherwise, is well underway; major airports and airlines have already begun to digitalise their businesses dramatically.

The problem is that many efforts to date have been standalone solutions, based on Reserve & Collect systems that are outdated, with low conversion rates and little focused communication with the target audiences.

To meet customer expectations, tailor-made product promotions and communication must be offered on a smart platform that enables cross-selling and upselling of products and services of all integrated shops and service providers.

If airlines, airports and retailers want to engage travellers digitally and convert them into shoppers directly at the airport, they will need to build a more holistic, end-to-end solution – the digital airport commerce ecosystem.

To achieve this ecosystem, the key players of the aviation industry need to redefine their business model along the lines of what can be called ‘the new quaternity of travel retail’, comprising the four major groups of stakeholders – airports, airlines, retailers (duty free) and brands.

Although the players pursue different, and sometimes competing interests, they need to collaborate to be successful. The overall goal for everyone is to create a truly seamless customer experience within the ecosystem.

Each stakeholder contributes his or her core strengths to this joint proposal. In this model, the airport evolves into the (digital) marketplace provider, bringing everyone together and providing the required services such as logistics, wayfinding, real-time delivery, real-time flight information, etc – services that only airports have the facilities to provide.

Retailers and brands can provide a fitting and compelling product offerings, both digital and physical. Collaborating with airlines, retailers and brands allows airports to engage with the passenger from the very beginning, even before the passenger starts his or her journey.

In this model, airlines play a special and vital role as many have realised that pure inflight shopping from the cart is no longer a viable business case, as it almost 100% relies on impulse purchasing.

Cost of transport for goods is high, while range is extremely limited.

In addition, luxury products often remove themselves from this equation as they fear damaging the premium image of the brand.

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DIGITIALISATION In addition, such a platform provides airlines with the possibility of focusing their marketing on very specific target audiences, even down to the individual passenger level.

The ecosystem also provides airport services, thus providing airlines with additional ways to generate revenue. Or, to put it in another way, the digital airport commerce ecosystem is a way for airlines to monetise customer data, which, until now, was primarily used for flight-related information.

Brands and retailers also stand to benefit considerably from the ecosystem. Some of the benefits include the creation of an additional sales channel beyond the actual store as well as any existing digital channels.

Through access to valuable customer information, retailers can provide personalised shopping offers to suitable target groups, offer premium products, generate more traffic and increase their conversion rates.

In addition, the digital airport commerce ecosystem also provides retailers with numerous opportunities for cross- and upselling.

Finally, there also many benefits to passengers within the ecosystem. One of the most important of these is immediate product availability – passengers can look at and examine products in the store before purchasing.

Shopping within the ecosystem, be it online or offline, leads to higher conversion rates and a more satisfying customer experience.

In addition, it provides a number of delivery and pick up options such as pick up in stores, collection points or at lockers as well as home, lounge or gate delivery.

Building the ecosystem: Necessary building blocks and success factors

Nevertheless, the airlines possess a treasure trove of passenger data that in theory could enable all stakeholders in the quaternity to sell products and services of the airport with a high degree of personalisation and accuracy.

Unfortunately, in today’s travel retail industry, airports and airlines still tend to work against each other rather than co-operate; it will require a significant change of perspective to realise that, together, everyone can increase the size of the pie – and corresponding revenues and customer loyalty – significantly.

Obviously, this is far more preferable than each side continuing to cannibalise the other stakeholders’ shrinking piece of the total, smaller, pie.

Benefits for airports, airlines, retailers and passengers Beyond such overarching benefits such as customer loyalty, increased revenues and expanding one’s target audience, there are benefits that are specific to each stakeholder group.

For example, the digital airport commerce ecosystem provides airports with their own digital marketplace, which offers a wide range of products. Other benefits, especially for airports, include additional generation of traffic and revenue, use of additional sales channels via API commerce and – above all – a seamless digital customer experience.

Airlines, on the other hand, can offer a larger product range in channels they control. By offering goods through an omnichannel platform, they can sell products without having to have them on-board, as in a traditional in-flight sales model.

An end-to-end digital airport commerce ecosystem cannot be built with out-of-the-box software. Such a set-up requires an API-based, digital solution that can be integrated into any IT environment and can deliver on a number of fronts.

Not only must such an ecosystem be capable of providing omnichannel e-commerce, it must also be connected to all available airport services such as parking, fast track, lounge access or loyalty programmes.

In addition, it must also support the integration of numerous products and data formats as well as different software solutions such as business intelligence, ERP, PIM, CRM, order management, fulfilment, logistics, etc.

To be successful, the ecosystem must offer passengers multiple touchpoints before, during and after their journey as well as an attractive premium product range that goes beyond the model of traditional, impulse-driven duty-free shopping.

Other success factors include sufficient customer traffic in relevant channels, personalised communications and promotions across multiple channels and features that support planned shopping, cross and upselling.

Building a digital airport commerce ecosystem is a daunting task for any airport. It requires a change in mindset as well as changes in business models, processes and sometimes, organisations. It is, however, the only viable option in the face of manifold challenges faced AW by travel retail.

About the author Kian Gould is the CEO and founder of AOE, a leading global omnichannel e-commerce and digital transformation experts within the open source space. He is a regular speaker at global conferences and a well-known expert in airport digitalisation.

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RETAIL/F&B NEWS

Window of opportunity New concessions, store openings and the power of sense of place retail come under the microscope in our round-up of the latest retail/F&B stories from across the globe.

Grand Ole contract for Fraport USA! Wholly-owned Fraport subsidiary, Fraport USA, has taken over the management of the retail and F&B operations at Nashville International Airport (BNA).

According to the terms of its agreement with the Metropolitan Nashville Airport Authority, Fraport USA will be responsible for the design, construction, lease and management of concessions space across the passenger terminal’s four concourses for the next 10 years.

“We have a vision to bring the heart and soul of the region to the concessions programme at Nashville International Airport,” enthuses Ben Zandi, president and CEO of Fraport USA. “The response has been outstanding. After months of planning, recruitment and outreach, including reviews of more than 430 RFP responses, we can now celebrate the launch of what will be an iconic concessions programme at BNA – one that emphasises participation by local restaurateurs and retailers and includes unprecedented opportunities for small, minority, and woman-owned businesses.

“These local innovators and independent operators will transform the BNA environment and provide travellers with a truly authentic Nashville experience.”

Upon completion, the programme will include more than 90 new locations for F&B, specialty retail, passenger services, news and gifts and amenities. Under Fraport’s operating model, most of these will be independently owned, allowing local businesses to manage their brands and bring improved customer service to BNA.

Food stories SSP America has opened The Manufactory Food Hall at San Francisco International Airport (SFO) in collaboration with multi award-winning San Francisco chefs — Chad Robertson and Elisabeth Prueitt of Tartine Bakery, Pim Techamuanvivit of Kin Khao and Gabriela Cámara of Cala.

Located in Boarding Area A of SFO’s International Terminal, the new addition mirrors Robertson and Prueitt’s Tartine Manufactory in San

Francisco’s Mission District and is described as a “foodie factory” where guests can choose dishes from three separate and distinctly different food stations – Tartine Bakery, Tacos Cal and Kin Khao Thai Eatery – and enjoy a full service bar.

Paul Loupakos, SSP America’s vice president of business development, enthuses: “The Manufactory brings an exceptional, elevated dining experience driven by four of the Bay Area’s hottesttrending, most prominent and successful local chefs. The Manufactory Food Hall is destination dining-defined.”

Welcome to Toulouse The retail transformation at Toulouse-Blagnac Airport is a powerful demonstration of how regional airports can adopt local themes to develop a unique and authentic ‘sense of place’, according to The Design Solution (TDS).

The holistic design programme at Toulouse-Blagnac includes the enlargement, reconfiguration and refurbishment of the airport’s commercial areas across a total of 1,800sqm of retail space, principally focused on a new walkthrough 1,700sqm duty free store operated by leading retailer Dufry.

TDS claims that the expression for the main duty free store presents a multi-paced retail experience that offers in-store category destinations tailored to each key customer profile while dynamic designs convey the stories of a historic city that effortlessly blends old and new – from its architectural heritage to its leading role in the aerospace industry as the ‘home’ of Airbus.

Complementing this, it adds, is the characterful mood of the city’s streets, especially the bustling street markets, sharing the stories of Toulouse throughout the shopper journey.

TDS director, Nick Taylor, says: “I see Toulouse-Blagnac as part of a pioneering wave of ambitious regional and relatively smaller airports committed to matching any major hub in expressing a unique local personality for their airport.”

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GROUND TRANSPORT

Friend or foe?

Mark Streeting of LEK Consulting considers the pros and cons of transportation network companies and the potential impact of autonomous vehicles on airports.

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round transport into and out of airports is already experiencing unprecedented levels of disruption. Digital technology and the business model innovations of transportation network companies (TNCs) are generating new transport modes at higher convenience and often lower cost to current alternatives.

Illustrating this trend is the growth of TNCs from 8% of US business traveller spending to a staggering 62% between 2014-2017.

Airports are indeed a key battleground for disruptors — in major cities, up to 25% of TNC revenues are from rides to and from airports. For consumers and passengers, these new mobility options are increasing choice. For airports and investors, they are bringing uncertainty.

The arrival of TNCs is affecting airports in three significant ways: • Financially. Parking and ground access charges typically contribute one-quarter of total airport revenues. TNCs are already generating substantially less revenue per passenger than parking, taxis and rental cars.

• Infrastructure planning, decision-making and return on capital.

Parking facilities, access roads and kerbside pick-up/drop-off areas are capital intensive and have long life spans, leaving them at risk from changes in mobility trends.

• The passenger experience. TNCs may improve the passenger experience, making point-to-point travel easier and offering new features such as location sharing, but they may also worsen it, increasing kerbside congestion. Airports could be left with reputational as well as operational issues to manage.

And this is just the beginning because the advent of autonomous vehicles (AVs) promises an acceleration of current trends over the next decade if they are deployed as ‘robo-taxis’, raising crucial questions about the future-proofing of airport infrastructure.

By removing the need for drivers, AVs further decrease costs per journey. Fleet-owned, cheap and constantly moving, AVs will increase passenger utilisation and accelerate adoption rates — resulting in an increase in demand for kerbside space, and potentially a decrease in demand for parking spaces.

How airports can respond?

TNCs and the emergence of AVs need not be viewed as a threat. Airports have an opportunity to improve the health of their business, increasing

returns, reducing congestion, enhancing passenger experience and building greater brand equity.

To ensure future success, airports and investors must be proactive and consider six key steps: 1. Ensure that ground access and parking pricing is providing appropriate economic signals, and differentiate between kerbside and other pick-up/drop-off areas.

2. Develop a more sophisticated parking offering, including dynamic pricing and new products.

3. Develop tailored strategies based on a firm understanding of passenger responses to mobility options, and conduct robust analysis and research based on their own unique situation.

4. Manage the key trade-offs between ground transport revenues, operational efficiency and reputational implications created by the future proliferation of AVs. While financial and operational outcomes have always been a priority, reputation (influenced by a multitude of factors including customer journey and perceptions of safety) is increasingly important, given the wide stakeholder ecosystem and the growing influence of social media.

5. Plan now for AVs and incorporate flexibility into infrastructure plans wherever possible, such as considering alternative uses for parking spaces.

6. Adopt a broader view of the passenger experience, by considering the journey to — and arrival at — the airport. Airports may even be able to take ownership of the passenger experience during the ground travel-planning phase, participating directly in service provision via a fleet of shared automated vehicles that manage pick-up/drop-off.

TNCs are transforming airport ground transport and the arrival of AVs promises more disruption. Airports and investors that are proactive in their approach and adopt a disruptive mindset will find themselves at a distinct advantage in the future.

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About the author Mark Streeting is a partner in LEK Consulting’s Sydney office and also a member of the firm’s global New Mobility practice. He regularly advises airports, public and private surface transport operators in the area of new mobility.

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ROUTE DEVELOPMENT

Cleared for take-off Airport World provides a snapshot of the latest route development news from Malta, Brisbane, Athens and Nice Côte d’Azur airports.

Malta magic Its expanding route network and the growing year-round appeal of Malta means that the island nation’s international airport is already so confident of a good 2019 that it has predicted that a record 7.2 million passengers (+5.8%) will pass through its facilities this year.

A bold forecast, certainly, but perhaps it’s not so surprising when you consider that passenger numbers at Malta International Airport have soared by 47% over the last three years and reached an all-time high of 6.8 million (+13.2%) in 2018.

CEO, Alan Borg, notes that the airport achieved its target of serving over 100 destinations during its summer schedules for the first time in 2018, and that traffic to its five top markets – the UK, Italy, Germany, France and Spain – increased by between 2% and 37.8% during the year.

The fact that passenger growth during the airport’s shoulder and winter months outpaced that of its peak summer months was also significant, says Borg, who attributes the development down to nine airlines extending their routes or increased frequencies into the winter schedules.

Looking ahead to summer 2019, Borg reveals that the airport’s route network will feature 18 new developments, including flights to Amman and the launch of daily operations to Doha by newcomer Qatar Airways.

Malta’s Minister for Tourism, Konrad Mizzi, says: “The Government of Malta works collaboratively with Malta International Airport on a strategy of growth and route network expansion.

“By means of the significant investment programme which is being rolled out, Malta will continue to improve airline connectivity across neighbouring and strategically important areas.”

Boost for Brisbane AirAsia has announced it will launch services between Bangkok and Brisbane from June 25, 2019.

Operated by AirAsia’s Thai affiliate, Thai AirAsia X, the new services will bring around 25,000 visitors per year to Brisbane (BNE), while at the same time providing the opportunity for Queenslanders to explore Thailand’s capital and its many exotic island destinations such as Phuket, Koh Samui and Krabi.

Brisbane Airport Corporation secured the services with Queensland government support under the Attracting Aviation Investment Fund

(AAIF), along with partners Tourism and Events Queensland and Brisbane Marketing.

Airport CEO, Gert-Jan de Graaff, says: “With Brisbane’s new runway opening in less than 18 short months, the decision by AirAsia to bring its first-ever aircraft from the low-cost hub, Don Muang International Airport in Bangkok, to Brisbane, was a prudent move.

“Thailand is an aspirational destination for Australians and one of Brisbane Airport’s largest underserved markets, so AirAsia’s quality low fare flight options direct into the heart of Bangkok is sure to be very popular with travellers.”

BNE will also be celebrating the return of Royal Brunei Airlines in June when it returns to Queensland with the launch of four weekly flights between Brisbane and Brunei capital, Bandar Seri Begawan.

Greek Odyssey Norwegian will launch a new non-stop B787 Dreamlliner service from Athens to New York-JFK on July 1 – its first long-haul route in Greece.

Greek Minister of Tourism, Elena Kountoura, said: “This news is a response to our call for enhancing air connectivity between Greece and the United States and we thank Norwegian for answering the demand. We welcome Norwegian to Greece and expect this new route to contribute in the growing numbers of tourists to our country.”

French connection Nice Côte d’Azur will become the first French airport outside of Paris to have a direct flight to Kuwait when Kuwait Airways launches a new twice-weekly B777-300 service from June 3 to September 12.

Outbound services from Terminal 1 will be non-stop, but inbound flights will operate via Paris CDG where Nice bound passengers will remain onboard the aircraft.

“This new international connection to and from Kuwait strengthens our dynamic and unique offer for long-haul flights,” enthuses Dominique Thillaud, chairman of the Board of Aéroports de la Côte d’Azur.

“It is a great opportunity for local economic development, with high-potential tourist passengers. It also actively boosts the global appeal of the Riviera.”

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WBP NEWS

The punctuality league OAG senior analyst, John Grant, explains why the on-time performance of airlines matters to airports.

Being punctual means different things in different cultures. In some, being 15 minutes late is perfectly acceptable and isn’t something to be punished for. Whilst in others, being late for a meeting is the height of bad manners and a real cultural mistake.

Fortunately, across the aviation industry, our cultural measurement has always been within 15 minutes, regardless of nationality or indeed sector length. This in some cases appears to be a slight inconsistency.

For airports, punctuality is part of the DNA. It can create positive consumer perceptions or equally damage reputations that have been worked on for years.

Over the last five years, OAG’s On-Time Performance report has possibly become the most eagerly-awaited piece of analysis in the first week of January.

With over 58 million individual flight status records captured each year and global coverage of airport on-time performance from the very smallest through to the mega airports, on-time performance is increasingly something that commands attention both within the industry and travellers. It’s no wonder the Punctuality League is the most downloaded OAG report all year round!

Ultimately, an airport’s perception in terms of punctuality is in many cases an extension of the reputation that operating airlines have, and to that end, it’s no great surprise when an airline such as COPA achieves top spot and that Panama Airport also ranks highly in OAG’s analysis.

Tokyo Haneda achieves an OTP of 85.6% while both All Nippon Airways and Japan Airlines are in the global Top 20 airlines.

The combination of airport and airline punctuality creates considerable confidence, especially when that airport and airline has a high dependency on connecting traffic.

For someone travelling from Montréal to Santiago via Panama City, for example, knowing that you have a 64-minute connection takes away a lot of doubt and travel stress.

Furthermore, knowing your planned arrival time when travelling on business to let’s say, Tokyo Haneda, allows for those important cultural elements of doing business in countries like Japan to be one less worry.

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For airports, particularly those where capacity is limited, ensuring that their airline customers can deliver award-winning levels of on-time performance is in their best interest.

Maximising asset use is something every business wants to achieve, and airports are no different. It may be a “cause or effect” element, but we have seen some great examples of detailed operational analysis and change as OAG’s data has become increasingly used around the globe.

Thinking outside of the box, some airports have sought advice from other industries, including one airport looking closely at Formula One pit-stops, whilst others have completely changed their boarding processes and invested in biometric technology to improve their performance.

All of which is either coincidental or just in time for IATA’s New Distribution Capability (NDC) initiative and the increasingly selfconnected passenger!

The concept of NDC allows airlines to offer more than just a seat through the development and sale of both ancillary inflight products and other travel-related products.

Travellers will benefit from having a clearer understanding of what they have purchased before they travel, and consideration of on-time performance will undoubtedly form part of that selection process.

And with online travel agencies now publishing data on the punctuality of airlines and even specific flight numbers, the self-connecting traveller has even more information from which to make their choice.

Consequently, this highlights that monitoring on-time performance has become a key area for airports and airlines in their competitive measurements and positioning to the market, with the trend set to continue.

Clients are already developing on-time performance dashboards using OAG data and are sharing that information across both airport groups and other key stakeholders and suppliers, which of course means that the whole area of OTP has become a key part of the industries DNA. Now that really is cultural!

Visit https://bit.ly/2GPL1Ht to download a free copy of OAG’s Punctuality League 2019.

RUNNING WBP NEWS HEAD

The latest news from ACI’s World Business Partners

MIA embraces facial recognition boarding technology

Lufthansa passengers flying out of Miami International Airport are now able to board their flight with the quick click of a camera instead of a boarding pass and passport, thanks to the airport’s launch of biometric exit technology.

The initiative is the result of a partnership between MIA, Lufthansa, US Customs and Border Protection (CBP) and global air transport IT provider SITA, and is already proving popular with passengers, as the verification process takes less than two seconds and enjoys a 99% matching rate.

SITA and MIA have partnered on a number of innovative travel experience solutions, including Mobile Passport Control and MIA Airport Official, the airport’s mobile app.

“This is another great success at MIA where we have teamed up to improve the passenger experience through innovation,” said Diana Einterz, SITA’s president for the Americas. “We have worked closely with the US CBP, airlines and airports to design a seamless biometric exit solution that meets the needs of all parties. SITA Smart Path is based on industrystandard common-use gates so it can be used by any other airline at MIA.”

Next step for ADB SAFEGATE

ADB SAFEGATE has completed its acquisition of Ultra Airport Systems the global provider of airport IT systems and data analytics solutions, effectively creating the foundation for a Total Airport Management (TAM) solution provider.

According to ADB SAFEGATE, the acquisition will allow it further apply integration and automation technologies, advanced data analytics and deep airport operations expertise to offer TAM. It is confident that the move will mean greater operational efficiency, sustainability and safety for airports and airlines through integrating systems across the entire airport.

Operating under the name ADB SAFEGATE Airport Systems, the former Ultra Airport Systems team will gain the support of ADB SAFEGATE aviation specialist resources to help it better serve its existing airport and airline customers and accelerate its growth.

The new business unit will also expand its portfolio of operational performance, flight information display, billing, baggage management and situational awareness solutions by adopting and helping to further develop ADB SAFEGATE’s software and advanced analytics products and services.

It notes that advanced analytics provide airports with increasingly powerful ways to optimise operational efficiency and improve their traffic handling capacity.

ADB SAFEGATE’s CEO, Christian Onselaere, says: “As airports everywhere strive to meet growing demand, our newly combined solutions, expertise and reach will help them, and airlines, adopt emerging digital technologies.”

CHS Engineering Services Limited Location: Chelmsford, UK Contact: Susan Crane, business development executive E: suzie_crane@chsservices.com W: www.chsservices.com CHS deliver quality services, products and solutions utilising expertise and knowledge gathered from years of wide-ranging experience. CHS operates a flexible, reliable collaborative approach with the ability to offer cost saving solutions and a focus on return on investment. The remote monitoring product, Foundations Connect, has been proven in reducing downtime and unplanned outages by predicting early warning signs of failure of critical assets such as screening machines, reclaim carousels and server rooms. CHS has developed a range of test baggage specially selected and equipped to sustain the technical and physical demands of the most intensive baggage system and security test programmes.

CGH Technologies Inc Location: Washington DC, USA Contact: Cindy Troutman E: ctroutman@cghtech.com W: www.cghtech.com CGH Technologies is an information engineering and management support company headquartered in Washington, DC, with satellite offices in VA, NC, FL and a workforce spanning 50 states. We have over 25 years of experience with federal and international government agencies as well as commercial and private sector organisations.

Elenium Automation Location: Tullamarine, Victoria, Australia Contact: Rico Barandun, head of strategy E: rico.barandun@elenium.com W: www.elenium.com Elenium is focused on developing and producing the world’s most efficient and effective automation systems for airports and airlines. Our suite of check-in kiosks, automated bag drop and self boarding gates have been designed to significantly increase the flow of passengers through the airport. Our bag drop can process a passenger’s luggage in as little as three seconds. Our goal is to make the airline passenger experience seamless using technologies such as cloud, artificial intelligence, computer vision and natural human interfacing while providing products that are simple to use and understand. Elenium products are currently used in seven major airports that collectively handle over 207 million passengers annually and are tailored to each customer.

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HUMAN RESOURCES

PEOPLE

matters

Invest in yourself Richard Plenty and Terri Morrissey provide their thoughts on self-development.

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arlier in our careers, we often came across organisation leaders who believed that people didn’t need to learn anything new once they had graduated from college and that any subsequent training and development was a waste of time.

In their opinion, a career should be spent putting into practice what had already been learnt at school and university. Investing in development was pointless. Learning was for the young.

These ideas are now seen as typical of leadership’s Generation ‘D’ – the Dinosaurs. Mainstream thinking has moved on considerably. In the 1990s, Peter Senge, in his book The Fifth Discipline, talked about the importance of developing a learning organisation as a primary source of competitive advantage – one that is open to new ideas, innovation and encouraging learning.

It’s an approach which has been embraced enthusiastically by many of the world’s top organisations. It implies encouraging a development ethos and ‘growth mindset’ throughout an organisation.

Formal training is a part of this.

Those who take part in training courses are usually there because their organisation values them sufficiently to support their learning and invest in their development. So far, so good. But is it the whole story?

It’s a question we ask every year to the dozens of people we take through the ACI World ‘Airport Human Resources’ programme. We’ve run courses in locations as diverse as Bucharest, Abu Dhabi, Johannesburg and Kuala Lumpur. Participants say formal training broadens their perspective and gives

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them new skills. Yet when we talk deeply with them about how they actually learn, change and develop in practice, it turns out that training, while important, is just one part of a bigger picture.

Our participants report they learn through a wide variety of routes in addition to formal education and training. For example, work experience in different roles; involvement in projects; having to face up to unexpected change and crises at work and outside; dealing with personal challenges; voluntary work, sports, hobbies and pastimes; managing difficult family situations; watching films, TV, theatre; interacting on social media; observing others; and from reflecting and learning from experience and their own successes and mistakes.

This fits with current research on neuropsychology that shows how the brain has the ability to form new connections and pathways, and hence learn new things, throughout adulthood.

There are always learning opportunities and we are never too old to learn. We just need to keep our brains exercised.

How can we best do this?

• Have a ‘growth mindset’ – an attitude of ‘Yes, I can’ and ‘You’re never too old’ • Try new things. As we get older, we can become so worried about making mistakes and looking foolish that we restrict our opportunities to learn • Make time for it. A few minutes each day reflecting on what went well and what might have been done differently is time well spent.

Organisations should invest in their people, and people should invest in themselves.

AIRPORT WORLD/ISSUE 1, 2019

Anna Strömwall is the new director of Göteborg Landvetter Airport in Sweden. She moves from Swedavia’s consultancy subsidiary, Swedavia Consult, and has many years of management experience in the transport and logistics sector including a previous role as head of security screening at Stockholm Arlanda.

Chad Newton has been confirmed as the new CEO of Wayne County Airport Authority (WCAA), operator of Detroit Metropolitan and Willow Run airports. The WCAA board voted to appoint him CEO last November and his appointment was approved in mid-January.

London Luton Airport (LLA) has promoted planning and investment director, Alberto Martin, to the position of CEO. Before joining LLA, he gained 20 years’ experience in airports, holding a variety of executive roles across Europe, including 10 years as managing director of Gran Canaria and Fuerteventura airports.

His LLA predecessor, Nick Barton is the new chief executive of Birmingham Airport. Speaking about his decision to join the midlands gateway, Barton commented: “Birmingham Airport is on the threshold of a very exciting chapter in its development and I am delighted to have been given the responsibility to lead and shape the future of the airport.”

Canberra Airport’s new aviation director is Michael Thomson.

He is best known in Australia for being the man that helped ACT Brumbles out of its financial doldrums.

Renato ‘Ren’ Camacho is the new president and CEO of Akron-Canton Airport, succeeding the retiring Rick McQueen who enjoyed a 36-year association with the Ohio gateway. Camacho moves from Cleveland’s Department of Port Control where he was chief of planning and engineering.

New Zealand’s Queenstown Airport Corporation (QAC) has welcomed experienced finance executive Andrew Williamson as its new chief financial officer and company secretary.

Bangor International Airport has appointed Brian Veneziano as its new assistant director. The joint civil-military public airport is located in Maine, USA, and is currently served by Allegiant, American, Delta and United.

Bristol Airport in the UK has named Dave Lees as its new CEO, although he won’t take up the post until August 1. He is currently managing director of Southampton Airport.

About the authors Dr Richard Plenty is managing director of This Is… and runs the ACI World Airport Human Resources programme. Terri Morrissey is chairperson of This Is… and CEO of the Psychological Society of Ireland.

Contact them through info@thisis.eu

AW

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