In the spotlight: Economics & Finance Special report: A-Z of Global Airport Operators Customer service king: San Antonio Plus: Flood prevention, IT & People matters
In the spotlight: Economics & Finance Volume 25 – Issue 1, 2020 www.aci.aero
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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
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Welcome to the new decade Airport World editor, Joe Bates, reflects on the susceptibility of aviation to outside events and the ‘economics and finance’ theme of this issue.
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he new decade has certainly got off to an eventful start with political events in Europe (Brexit) and the US (the impeachment victory of Donald Trump), Australia’s devastating bush fires and now the Coronavirus dominating the global headlines. The latter, of course, recently forced ACI to postpone March’s planned Airport Economics & Finance Conference and Exhibition in Kuala Lumpur until later in the year. While the delay is disappointing, it was no doubt necessary because of the potential health threat to delegates, and to me anyway, to quote the lyrics from a 1990s Shirley Bassey hit, it feels like ‘just little bits of history repeating’ after the 2002 cancellation of ACI Pacific’s Annual Conference in San Francisco (SARS) and joint ACI Africa/ACI World Annual General Assembly in Egypt in 2011 (Arab Spring). I also remember having my temperature taken to see if I had Avian Influenza (bird flu) shortly after getting off the plane in Kuala Lumpur for the joint ACI Asia-Pacific/ACI World Assembly in 2009, but luckily that event went ahead as scheduled. Events such as pandemics inevitably have a negative impact on traffic figures across the planet, but history tells us that aviation’s resiliency to events beyond its control means that it will be only a matter of time before things change and passenger numbers pick up again. Indeed, I’m sure that aviation’s ability to bounce back from adversity is a major reason behind the enduring appeal of airports to global investors, with almost every potential transaction attracting a host of interested parties ranging from traditional airport operators to investment banks, construction companies and pension funds. This, despite the fact that ACI World regularly reminds us that the majority of the world’s airports don’t earn enough revenue from aviation activity to cover their operational costs.
Today’s airport investors are, thankfully, much more switched on than some of the “get rich quick” type investors of the past, recognising that in order to succeed in such a highly competitive business they will need both short and long-term strategies and shareholders that are committed to improving the operational efficiency, capacity and non-commercial revenues of their airports. You can find out all about the world’s biggest and most prolific airport investors in our comprehensive ‘A-Z of global airport operators’ feature in the ‘economics and finance’ themed section of this issue. The section also includes an airport city/ aerotropolis update from Dr John Kasarda; our annual ‘Buying game’ feature on the airport transactions of 2019 and possible deals of 2020; and articles about ‘the economics of route development’ and an airport city vision for Newark Liberty International Airport. Elsewhere in the issue, you can discover more about San Antonio’s customer service success story; the threat of rising water levels to airports; and consider how IT will help airports improve their operational efficiency and the passenger experience. We also round up the latest retail/F&B news from across the globe; hear from ACI World director general, Angela Gittens, who provides her thoughts on some of the economic challenges and opportunities facing airports; cover human resources in our regular ‘People matters’ column; and discover the latest industry news on our World Business Partner pages. Finally, I would like to say a very warm welcome to the new director general of ACI Asia-Pacific, Stefano Baronci, and new regional director of ACI Latin AmericaCaribbean, Rafael Echevarne, who need no introduction to the ACI family having both previously served as the economics director of AW ACI World in Montréal.
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CONTENTS
ISSUE 1 Volume 25
In this issue 3 Opinion Airport World editor, Joe Bates, reflects on the susceptibility of aviation to outside events and the ‘economics and finance’ theme of this issue.
8 World in motion ACI World’s communications manager, Sabrina Guerrieri, reports on the update of the airport networks policy brief and the launch of two new reports on autonomous vehicles and systems.
11 View from the top ACI World director general, Angela Gittens, provides her thoughts on some of the economic, operational and infrastructural challenges and opportunities facing airports.
13 The buying game Simon Morris, vice president at ICF International, reviews some of the major airport transactions of last year and speculates what deals could be in store for 2020.
16 The A-Z of global airport operators Joe Bates find out more about the ambitions, business philosophies and development plans of 28 operators with a global portfolio of airports.
34 Fantastic journey! AviaDev Europe’s managing director, Juraj Toth, discusses the economics of route development and the global value of aviation.
36 Aerotropolis business magnets How are the world’s airport city/aerotropolis developments faring? Some hugely ambitious projects in the Asia-Pacific region come under the microscope in the first of a two-part global review by Dr John Kasarda.
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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 Africa (3) Zouhair El Aoufir (Rabat, Morocco) Emanuel Chavez (Maputo, Mozambique) 1 Vacancy
41 Big plans for Newark Liberty HOK’s Carl Galioto and William Kenworthey outline the vision to transform Newark Liberty into an airport city connected to rail, commerce and community.
42 Fly easier Rich Stinson tells us more about San Antonio International Airport’s multi-layered approach to customer service and how it is using technology to enhance the visitor experience.
45 Flood warning! NACO’s Vivek Sindhamani and Peter Vorage discuss the growing threat of flooding to airports and how some major hubs are planning ahead to increase their resilience to rising water levels.
49 Time to evolve? Honeywell’s growth sales leader for airports, Gert Taeymans, explains how adopting an operating expenditure (OPEX) business model and new technology can help airports optimise operational efficiency.
50 Eating out! Dubai’s new food court of the future, Australia’s first working brewery inside an airport and Irish food and drink taking centre stage at Dublin Airport are on the menu in our global retail/F&B round-up.
52 WBP News The latest global news from ACI’s World Business Partners.
54 People matters Richard Plenty and Terri Morrissey provide their thoughts on performance benchmarking.
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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) 1 Vacancy Europe (7) Daniel Burkard (Moscow, Russia) David Ciceo (Cluj-Napoca, Romania) Elena Mayoral Corcuera (Madrid, Spain) Jost Lammers (Munich, Germany) Yiannis Paraschis (Athens, Greece) Stefan Schulte (Frankfurt, Germany) Nazareno Ventola (Bologna, Italy) Latin America & Caribbean (3) Ezequiel Barrenechea (Lima, Peru) Martin Eurnekián (Buenos Aires, Argentina) Andrew O’Brian (Quito, Ecuador) North America (6) Lew Bleiweis (Asheville, USA) Joyce Carter (Halifax, Canda) Deborah Flint (Toronto, Canada) Joseph Lopano (Tampa, USA) Candace McGraw (Cincinnati, USA) Sam Samaddar (Kelowna, Canada) Regional Advisers to the World Governing Board (10) Diego Arrosa (Montevideo, Uruguay) Chellie Cameron (Philadelphia, USA) 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) 2 Vacancies WBP Advisory Board Thomas Duffy (ADB SAFEGATE) Tunde Oyekola (El-Mansur Atelier Group) Correct as of March 2020
ACI WORLDHEAD NEWS RUNNING
World in motion ACI World’s communications manager, Sabrina Guerrieri, reports on the update of the airport networks policy brief and the launch of two new reports on autonomous vehicles and systems.
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CI World has published an updated policy brief – Airport Networks and the Sustainability of Small Airports – which measures the significance of this management model at world level and identifies the main benefits to communities, airlines and the travelling public. Notably, 55% of the world’s airports belong to airport networks and they handle an overall annual traffic volume of 3.7 billion passengers, which is 42% of global passenger traffic. Airport networks support the operation of smaller airports which benefit airlines, passengers, and the communities they serve. This is important because 94% of loss-making airports around the world handle fewer than one million passengers – half of all small airports are operated by airport networks. A network approach also facilitates the sharing of best practices in customer experience among the network-member airports. ACI World director general, Angela Gittens, notes: “To support connectivity and the communities served by small airports, network operators should be given the flexibility to determine the most appropriate charging system to recover costs, generate appropriate returns for shareholders, and ensure sustainable operation of the smaller airports in the networks.” The policy brief – available in Chinese and English – notes that airport owners can consider a wide range of management models to serve their specific business needs and local circumstances, including single-airport, airport systems, airport networks and airport groups. Adding to ACI’s repertoire of guidance material, ACI World has also launched two Reports on autonomous vehicles and systems. First,
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The Autonomous Vehicles and Systems at Airports Report, that helps airports assess key opportunities for the application of autonomous vehicles at airports. Several airports around the world have already facilitated testing of autonomous machines and vehicles in their operations. The report brings together information from these first attempts at integrating this new technology and uses it to gain a better understanding of the likely impact on aviation in the medium to long term. ACI expects the report will prompt airport operators to engage with autonomous machine and vehicle manufacturers to see if they can benefit from early adoption of this technology and become fertile testing grounds for trials. Autonomous vehicles and systems are a key technology being considered under the joint ACI and IATA New Experience Travel Technologies (NEXTT) initiative. NEXTT is creating a common vision for the future of air transport, using technology to increase airport efficiency and provide another level of personalisation to the passenger experience. The second is the The Autonomous Systems at Airports, Assessing Potential Security Threats and Risks Report, jointly developed with Arup. The report examines concerns related to the rise of autonomous vehicle technology. Specifically, the intent of the report is to explore the emerging security vulnerabilities and potential security risks associated with the deployment of autonomous vehicles, systems and drones by airports. It considers how airports, designers and other members of the aviation community can introduce these technologies in a more informed manner with regard to potential security impacts. “While the report presents possible threats and risks, it does not, at this stage, propose in detail how these might be mitigated,” notes Gittens. “Security measures to manage the risk from autonomous vehicles should be discussed in co-operation between an airport and its local government and regulatory partners when considering their deployment. Discussion should also happen at an international level, where sharing of lessons learned, and best practices will be useful.” The Arup Threat Vulnerability and Risk Assessment (TVRA) approach is used to identify scenarios for an airport, depending on their intended and actual deployment of such driverless vehicles on the ground and/or in the air. And lastly, ACI World has also launched a new implementation guide for Computed Tomography – or CT – screening technology that can help airports improve efficiency and the passenger experience at security checkpoints. The Advanced Cabin Baggage Screening / Computed Tomography (CT) Implementation Guide was developed with ACI’s Smart Security Management Group, which is comprised of some of the world’s most innovative airports, regulators and airlines. It highlights the key benefits of CT technology for the cabin baggage screening process. The guide provides a comprehensive summary of best practices and suggested actions, from procurement to installation and operation, that airports should consider taking before and during the implementation of this new technology into their existing operations. ACI World’s Smart Security programme identifies improvements that can be made to the screening process through a combination of existing and emerging technologies. All publications can be found on ACI World’s website: https://aci.aero/
ACI WORLD NEWS
ACI events
2020
2020
2020
2020
2020
June 16-18
Sept 13-15
November 9-11
October 17-23
September 7-10
ACI Europe General Assembly, Congress and Exhibition Geneva, Switzerland
ACI-NA Annual Assembly, Conference & Exhibition Grand Rapids, USA
ACI-LAC/World Annual General Assembly, Conference & Exhibition Buenos Aires, Argentina
ACI Africa Annual Assembly, Conference & Exhibition Marrakesh, Morocco
ACI-NA Customer Experience Global Summit Krakow, Poland
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 Stefano Baronci Director General 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 Rafael Echevarne 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 2020, ACI serves 668 members, operating 1,979 airports in 176 countries. ACI is a non-profit organisation whose prime purpose is to advance the interests of airports and to promote professional excellence in airport management and operations. According to ACI’s 2019 Annual World Airport Traffic Report, in 2018 airports worldwide welcomed 8.8 billion arriving and departing passengers and handled 122.7 million metric tonnes of cargo and 99.9 million aircraft movements.
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AW
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ACI VIEWPOINT
View from the top ACI World director general, Angela Gittens, provides her thoughts on some of the economic, operational and infrastructural challenges and opportunities facing airports.
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ccording to the January 2020 edition of the World Economic Outlook, the International Monetary Fund (IMF) projects a global growth rise from an estimate 2.9% in 2019 to 3.3% in 2020. Market sentiment has been boosted by tentative signs that manufacturing activity and global trade are bottoming out, a broad-based shift toward accommodative monetary policy, intermittent favourable news on US-China trade negotiations, and diminished fears of a no-deal Brexit. Downside risks, however, remain prominent, including rising geopolitical tensions, notably between the US and Iran, intensifying social unrest, further worsening of relations between the US and its trading partners, and deepening economic frictions between other countries. Against a global economic backdrop that remains quite challenging, worldwide passenger numbers enjoyed moderate growth in 2019 and freight traffic experienced a difficult year, with global volumes decreasing, according to ACI World’s preliminary data. While remaining resilient in the face of global uncertainties besetting many economies, the air transport sector is also facing pressing issues, such as infrastructure development, amidst major capacity constraints. Today, just over half of the world’s air routes operate at slotcoordinated airports (IATA Level 3). Level 3 specifically refers to airports where the demand for infrastructure significantly exceeds an airport’s capacity during a relevant period or season. Based on data from ACI’s World Airport Traffic Report released this past fall, as much as 48% of passengers globally use one of the 204 Level 3 slot-coordinated airports on at least one end of their flight. A significant proportion of Europe’s (71%) and Asia-Pacific’s (61%) passenger traffic passes through Level 3 airports, highlighting the issue of capacity bottlenecks. The strategic governance structure review of the Worldwide Airport Slot Guidelines promises a transformative effect of the management of existing infrastructure. Nonetheless, capacity constraints at many of the world’s airports are made more urgent when considering the projected growth that’s in store for air service demand. The rapid growth of population and urbanisation, rise in the standards of living, and the decreasing cost of air transport, are all ingredients that will continue to stimulate air transport demand and the propensity to travel by air. ACI is working closely with governments and other stakeholders to find creative solutions to close the infrastructure gap in an environmentally sustainable manner. There is a global need to finance new airport infrastructure to meet future demand and, if government spending cannot be relied
upon as it has been in the past, then there is ample evidence of the value created by private investment in airports around the world. It has been applied globally in important aviation markets, including the mature aviation market of Europe, but also some of the fastest growing markets including, Brazil, China and India. Airport privatisation has become an important investment vehicle for the development of infrastructure to accommodate air service demand; to contribute to community and national economic vitality; and to enhance the customer passenger experience. That stated, ACI has a neutral position on airport ownership. There is no-one size fits-all to the ownership model of airports given the large variety of social and economic circumstances, needs and objectives across the globe, but positive lessons can be learned from existing privatisation processes, especially where they have been subject to stable, consistent and proportionate economic oversight. Securing the overall viability and sustainability of a private project requires that governments set appropriate parameters from the very start of the process. This requires a thorough analysis of the market into which airports are being privatised and the evolution of the airport industry as businesses in an increasingly competitive environment. Individual governments are better placed to set the appropriate strategic objectives and to understand where the private sector is likely to add the most value for their airports. Any economic oversight should consider the level of the investment and the need to generate a reasonable return proportionate to the level of risk taken by the private investor. ACI remains committed to our advocacy work with ICAO, multilateral organisations and governments to encourage the economic sustainability of the world’s airports and to developing a suite of programmes and services to help our members get the financing needed to ensure that airports evolve in step with the AW demand for air transport service.
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The buying game
SPECIAL REPORT: ECONOMICS & FINANCE
Simon Morris, vice president at ICF International, reviews some of the major airport transactions of last year and speculates what deals could be in store for 2020.
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ast year confounded the airport transaction pessimists with a high volume of good quality assets sold at healthy prices. And, although secondary sales predominated, there were nonetheless some high profile primary transactions. In common with other sectors, buyers by far outnumbered sellers, and capital continued to flow into infrastructure funds. More than $33 billion had been raised by European infrastructure funds by October 2019, for example. Individual fund targets were broken by a number of institutions. Additionally, strategic players and private equity joined the search for equity investments. Airports continue to be sought after assets based on a combination of strong infrastructure characteristics together with the growth profile associated with air transport. In the context of this wall of money chasing assets, each buying proposition, including more problematic opportunities attracted many interested bidders. The latter half of 2019 saw a slow-down in airport performance indicators – noticeably in traffic growth. Indeed, by November 2019, year-on-year passenger growth at European airports had slowed to 1.7%, while cargo registered its 13th consecutive monthly decline. However, to date, the trend has done little to dampen the appetites of potential investors.
Transaction hot spots Although there was activity in the Americas and the Far East in 2019, the bulk of transactions occurred in Europe and India, as discussed on the following pages.
In Europe, Macquarie funds sold 36% of its stake in Brussels Airport to a consortium of QIC and APG following a keen competition attracting high quality consortia mixing local and international interests. A repeated theme in the due diligence process was the future of Brussels Airlines, given its parent Lufthansa’s announcements about its future role. Further south, a majority stake in Toulouse-Blagnac Airport was sold by Chinese interests to French concession company Eiffage. Completion of this transaction was delayed by a court case challenging the original basis of the primary privatisation, but that issue has now been resolved. A court case has also threatened completion of the sale of Sofia Airport to a consortium including Meridiam, Munich and Strabag, although this is expected to be resolved in early 2020. Meanwhile, a consequence of GIP’s 2018 sale of 50.01% of Gatwick to VINCI Airports was the sale of the remaining 49.99% to a continuity fund. Lastly in Europe, an eye-catching transaction was Macquarie’s purchase of Farnborough Airport from TAG. Farnborough is a business aviation airport and clearly benefits from capacity constraints in the London system currently squeezing business aviation from other London airports Elsewhere, the civil enclave at Paine Field in Seattle was sold by private sector interests to GIP Cascade. Hobart Airport was sold by Macquarie funds to QIC/Schiphol, while in Japan a consortium of DBJ, Mitsubish and Tokyu became the preferred bidder for the Hokkaido group of airports.
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SPECIAL REPORT: ECONOMICS & FINANCE
India continued to be a country of significant focus. A consortium of ADIA/NIIF and PSP became preferred bidders for a majority stake in GVK, owners of Mumbai and Bengaluru-Kempegowda airports. Clearly, GVK’s success in becoming the concessionaire for Navi Mumbai played a role in the appraisal of that stake. Meanwhile, Adani became preferred bidder for a group of six Indian airports of which the largest is Ahmedabad’s Sardar Vallabhbhai International Airport. Lastly, late in the year, Zurich Airport became the preferred bidder to develop a greenfield airport in Jewar, which will become a secondary airport for Delhi. It is difficult to pick out a common theme from the 2019 transactions. A very diverse group of investors seized scarce opportunities among secondary sales, greenfield airports and one-off situations such as Paine Field. Each opportunity was highly competed and, as is usual, the commentariat worried about unsustainable prices. For example, the price paid for Jewar, an unbuilt airport at a geographical and market disadvantage to the existing Delhi-Indira Gandhi International Airport appeared high in absolute terms, and also relative to Adani’s price paid for regional airports earlier in the year. But the growth of air travel in India appears inexorable and provides a basis for increasing valuations. So, what of 2020? Our expectation is for a mixed bag of transactions with several expected deals failing to complete as is invariably the way. Interesting deals could happen in Barbados, Italy, Japan, Brazil and the Philippines, but for our money the likely highlights are:
Athens International Airport Following the original privatisation, the Greek government has, through its agency the Hellenic Republic Asset Development Fund, retained a 30% stake, intending to sell it once the original concession has been extended. Now that the extension has been achieved, a sale process is underway. The responders to the Request for Qualification (RFQ) typify the range of current investors in airports: AviAlliance, First State Investments, VINCI Airports, Groupe ADP, Ferrovial Airports, Ardian, GIP, APG, KKK/Egis Airport Operation and a Macquarie led consortium that includes CIC and Raffles Infrastructure Holdings. The airport’s success in growing traffic is likely to trigger relatively significant capital expenditure requirements over the coming years – and the pattern of recovery of these costs under Athens’ unique dual till return on equity approach will be a key due diligence point.
Nantes Atlantique Airport This concession has arisen from the cancellation of the project to develop a new gateway for Nantes, Notre-Dame-des-Landes Airport. As a result of the decision, it has been decided to redevelop the existing
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airport (Atlantique) under a new concession with a requirement to invest €450 million on airside and landside improvements over the next five years. VINCI Airports holds the concession to operate Atlantique and the smart money must be on their winning the revised concession, however, a competitive process is expected.
Beirut Rafic Hariri International Airport The Lebanese government, working with IFC, are nearing the launch of a PPP for Beirut’s Rafic Hariri International Airport. This will entail the development of the airport, including a significant expansion to the current terminal. Given Lebanon’s strong political links with France, it is expected that the very vigorous French concession sector (Bouygues, Egis, VINCI, Groupe ADP) will consider becoming involved, but the opportunity is likely to be attractive more generally.
Not on the radar in 2020 One airport that that definitely won’t be on the market this year despite expectations that it would be 2020’s marquee transaction is St Louis Lambert International Airport, after St Louis Mayor, Lyda Krewson, abruptly cancelled the privatisation process in December 2019. Her unexpected decision looks to have finally signalled the end of a long journey for the airport which was mentioned as a hot prospect by myself in the 2010 version of Airport World’s annual ‘Buying game’ feature. We understand that unlike in previous privatisation attempts, this time round the airlines had reached a pre-agreement over user charges with the city, potentially clearing a major obstacle to the concession. However, that did not appear to be enough to provide the process with momentum.
Transaction trends Interestingly, each of these highlights (and also the other airports we see in the pipeline) are primary privatisations – in other words, transfers of equity from governments to the private sector. This reverses a trend of recent years where new privatisations have been few and far between and the main activity has consisted of the churn of existing stakes. Our feeling is that, as we observe from the deals reported above, to acquire an airport stake is extremely hard work and funds are reluctant to churn them. This is even the case with closed end funds. Therefore, it could be that secondary sales are becoming collectors’ items. In contrast, governments have promoted all of the deals itemised above on the basis of relatively imminent investment needs and, in our view, this is likely to influence the profile of the winners of the 2020 processes – successful bidders will need strong construction and development skills AW whereas access to upfront equity is likely to be less significant.
SPECIAL REPORT: ECONOMICS ACI 25TH ANNIVERSARY & FINANCE
The A-Z of global airport operators Joe Bates find out more about the ambitions, business philosophies and development plans of 28 operators with a global portfolio of airports.
Airports Company South Africa (ACSA) World Headquarters: Johannesburg, South Africa. Airports 100% owned and operated: Johannesburg-OR Tambo, Cape Town, Durban–King Shaka, Upington, East London, George, Kimberley, Port Elizabeth and Bram Fischer (Bloemfontein) airports in South Africa. Others: ACSA has a 10% stake in the GVK-led MIAL consortium, which operates Mumbai–Chhatrapati Shivaji International Airport in India, and manages São Paulo’s Guarulhos International Airport courtesy of its 20% interest in the concessionaire responsible for operating the Brazilian gateway until 2032. Elsewhere in Africa, ACSA provides technical, advisory and consultancy services to airports in Ghana (Accra–Kotoka), Rwanda (Kigali–Bugesera) and Zambia (Lusaka–Kenneth Kuanda). Plans to expand/reduce portfolio: It continues to seek business opportunities in both the domestic and international markets. News: Investing at home appears to be ACSA’s main priority for 2020 with a number of development projects expected to advance this year.
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They include the addition of a new runway and expanding the domestic arrivals and international facilities at Cape Town International Airport; Increasing the size of the arrivals area in Terminal A and raising the aircraft parking capacity at Johannesburg’s OR Tambo International Airport; and adding aircraft parking facilities and expanding the Bravo taxiway at Durban’s King Shaka International Airport.
Aena/Aena Internacional World Headquarters: Madrid, Spain. Airports 100% owned and operated: Aena operates 46 airports and two heliports in Spain including Adolfo Suárez Madrid-Barajas and Barcelona El Prat airports. Others: Aena Internacional has interests in 23 airports in Brazil, Colombia, Jamaica, Mexico and the UK. It has a controlling 51% shareholding in London Luton Airport in the UK; 37.89% and 50% stakes respectively in Colombia’s Cartagena de Indias (SACSA) and Cali Alfonso Bonilla Aragón (Aerocali) airports; and a 33.3% interest in Aeropuertos Mexicanos del Pacífico (AMP), which
SPECIAL SPECIALREPORT: REPORT:ACI ECONOMICS 25TH ANNIVERSARY & FINANCE operates 12 Mexican gateways that include Tijuana, Guadalajara, Hermosillo, La Paz, San José de Cabo and Puerto Vallarta on behalf of Grupo Aeroportuario del Pacífico (GAP). In Jamaica, through AMP’s 17.4% stake in GAP, it has a controlling 74.5% interest in MBJ Airports Limited, which operates Sangster International Airport in Montego Bay, and holds a 25 year concession agreement for Kingston’s Norman Manley International Airport through GAP. Elsewhere, through Aena Desarrollo Internacional, Aena Internacional holds a 30 year concession to operate and develop the airports of Recife, Maceió, Aracajú, Campina Grande, João Pessoa and Juazeiro do Norte airports in north east Brazil. Plans to expand/reduce portfolio: Aena continues to consider new business opportunities worldwide. News: Aena has been busy in the market, adding six Brazilian airports and Jamaica’s capital city gateway to its global portfolio within the last year. In March 2019, through subsidiary Aena Desarrollo Internacional, it successfully bid €437.5 million for the contract to operate Recife, Maceió, Aracajú, Campina Grande, João Pessoa and Juazeiro do Norte airports in north east Brazil. The 30 year concession, with the possible option of a five year extension, is due to commence in early 2020. Recife is Brazil’s eighth biggest airport by passenger numbers and fifth biggest for international passenger traffic. It added Kingston’s Norman Manley International Airport in October 2019 when GAP officially took over responsibility for operating the gateway.
Atlantia World Headquarters: Rome, Italy. Airports 100% owned and operated: None. Others: Rome’s Fiumicino (FCO) and Ciampino (CIA) airports courtesy of its 99.38% ownership of Aeroporti di Roma (ADR). In France, it holds 60.4% of the shares in Azzurra Aeroporti, which has
a 64% stake in Aéroports de la Côte d’Azur (ACA), the operator of Nice Côte d’Azur, Cannes-Mandelieu and Saint Tropez airports. Elsewhere in Italy, Atlantia has a 29.38% shareholding in Bologne Airport operator, Aeroporto Guglielmo Marconi SpA, while separately ADR has a 15% stake in Genoa Airport. Plans to expand/reduce portfolio: Not known at this stage. News: If press reports are to be believed Atlantia, which is 30% owned by the Benetton family, is considering the sale of a 49% stake in ADR. Atlantia entered the international airport arena in November 2016 with its acquisition of ACA, the operator of Nice Côte d’Azur, CannesMandelieu and Saint Tropez airports in France. Both its Rome and Côte d’Azur concessions have a 2044 expiry date.
AviAlliance World Headquarters: Düsseldorf, Germany. Airports 100% owned and operated: None. Others: AviAlliance holds a controlling 55.44% stake in the consortium responsible for operating Hungary’s Budapest Airport. The company also has shares in the European airports of Athens (40%), Düsseldorf (30%) and Hamburg (49%). In Puerto Rico, AviAlliance has a 40% stake in Aerostar Airport Holdings, operator of San Juan’s Luis Muñoz Marín International Airport. Plans to expand/reduce portfolio: Continues to monitor the market for good investment opportunities. News: AviAlliance has expressed an interest in boosting its stake in Athens International Airport by acquiring an additional 30% of its shares currently held by the Greek government. In Latin America, its Northeast Region Consortium – formed with Brazilian company Pátria Investments – narrowly lost out to Aena Desarrollo Internacional in the recent tender for the concession to operate Recife, Maceió, Aracajú, Campina Grande, João Pessoa and Juazeiro do Norte airports in north east Brazil.
AviAlliance keen to grow airport portfolio With traffic on the rise across its airport network, including San Juan in Puerto Rico which continues to recover from the infrastructure destroying impact of a 2017 hurricane, it is safe to say that 2019 did nothing to dull AviAlliance’s appetite for growth and expansion in the global arena. Passenger numbers across its five airports has soared by more than 25% over the past five years and, in 2019, they handled 94 million passengers (+5.8%) between them. “Rising demand is why we are investing in every aspect of the airports in our portfolio to improve passenger comfort and services,” says AviAlliance managing director, Gerhard Schroeder. “In the past five years our airports have invested a total of €1.4 billion on expansion and development projects. Recent examples of this are Pier B at Budapest Airport, which we opened in 2018, and the revamping of the satellite terminal building at Athens International Airport. We have also started planning for new terminals at both airports.” In addition to the ongoing development of its existing assets, the company is keen to grow its airport portfolio, and fellow managing director, Holger Linkweiler, admits that AviAlliance always has one eye on the market. “We continuously seek new opportunities to expand our portfolio,” he says. “Our aim is to develop in the regions and
countries we view as offering the most promising growth opportunities, such as Asia and South America. “As one of the few airport operators and investors worldwide that offers expertise along the entire value chain, AviAlliance is looking for airports where we can add value.” He notes that in order to attract AviAlliance, any new additions to its airport portfolio must be located in countries with good regulatory frameworks and political stability. “We focus on airports where we can make an active contribution to creating or increasing the value of our investments by bringing in our broad expertise,” states Linkweiler. He adds that today’s airport investment market is much tougher than it was 20 years ago. “The market for airport investments is currently tougher and more competitive than before. Long-term investments in airports have become increasingly attractive to investors and competition is therefore much stronger than in the past. And this increased competition, which has been observed for a few years now, has led to significantly higher prices,” says Linkweiler. “Having said that, new regions and markets continue to open up for airport investment. It is therefore likely that the sector will remain interesting and attractive for a long time.”
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Bouygues Construction Airport Concessions Head office: Saint-Quentin-en-Yvelines, France. Airports 100% owned and operated: None. Others: The Bouygues Group has a 22% stake in Hermes Airports, operator of Larnaca and Paphos airports in Cyprus; a 20.77% shareholding in ZAIC-A Ltd, which holds the concession for ZagrebFranjo Tuñman Airport in Croatia until 2043; and, together with sister company, Colas, has a 20% interest in Ravinala Airports, operator of Ivato (Antananarivo) and Facesne (Nosy Bé) airports in Madagascar, and a 15% interest in Iqaluit Airport in Canada. Plans to expand/reduce portfolio: It continues to concentrate on its niche market of greenfield airport concession projects based on the strategy of developing new capacity and commercial enhancing infrastructure that equips its assets for growth, while having at the same time a positive impact on local economies and minimising their carbon footprint. News: Agreeing to upgrade the facilities at Ivato and Fascene airports in Madagascar was key to Ravinala Airports winning the 28-year concession. A new 17,500sqm international terminal with the country’s first airbridges is expected to open at Ivato Airport in early 2020. The new terminal will be Excellence in Design for Green Efficiency (EDGE) certified by IFC, a member of the World Bank Group.
CCR Aeroportos Head office: Saõ Paulo, Brazil. Airports 100% owned and operated: None Others: CCR Aeroportos, 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 97.15% 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 nine US airports that include
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Hartsfield-Jackson Atlanta (ATL), Chicago O’Hare (ORD), Los Angeles (LAX), San Francisco (SFO) and Houston (IAH). Plans to expand/reduce portfolio: CCR Aeroportos maintains that it is potentially interested in any project that meets the company’s investment criteria and commitment to infrastructure development, primarily in the US and Latin America. News: CCR has not been active in the market since purchasing Airports Worldwide Holding BV’s shares in AERIS Costa Rica in May 2018 to take a controlling 97.15% interest in the company responsible for operating Costa Rica’s capital city gateway.
Changi Airports International (CAI) World Headquarters: Singapore. Airports 100% owned and operated: None. Others: CAI, the wholly-owned subsidiary of Singapore Changi operator, Changi Airport Group (CAG), has a global presence. In Asia-Pacific, CAI has a stake in Fukuoka International Airport Co (FIAC), which operates Fukuoka Airport in Japan under a 30-year concession agreement; and a 15% interest in Luzon International Premiere Airport Development (LIPAD) Corporation, the operator of Clark International Airport in the Philippines. In Brazil, CAI has a 51% share in the consortium responsible for operating Rio de Janeiro’s Tom Jobim International Airport (Galeão). In Russia, CAI has a 30% stake in Basel Aero, the management company trusted to develop the airports of Krasnodar, Sochi and Anapa in Krasnodar Krai, and a one-third stake in Vladivostok International Airport. In India, CAI has a 30.2% holding in Bengal Aerotropolis Project Ltd, which owns a greenfield airport and is developing a township in Durgapur in West Bengal. Elsewhere, in China, CAI holds a 49% stake in a commercial joint venture with Chongqing Airport Group, which develops the non-aeronautical business of Chongqing Jiangbei International Airport. Plans to expand/reduce portfolio: As a global airport investor, manager and consultant, CAI says that it continuously evaluates opportunities and looks for projects where it can add value and where there is a strong fit with its global strategy. News: In December 2019, CAI and its partner, PT Cardig Aero Services Tbk (CAS), won the 25-year concession for Labuan Bajo’s Komodo International Airport, a public-private project awarded by the Government of Indonesia. Last year also saw the addition of Fukuoka Airport in Kyushu prefecture in western Japan to CAI’s airport network.
SPECIAL REPORT: ECONOMICS ACI 25TH ANNIVERSARY & FINANCE CAI counts Mitsubishi, Kyushu Electric Power and Nishi-Nippon Railroad as its partners in the concession. In the Philippines, work is underway on a new 110,000sqm passenger terminal at Clark International Airport. CAI and its partners won the 25-year concession to operate and develop the gateway in December 2018.
Corporación América Airports (CAAP) World Headquarters: Luxembourg. Airports 100% owned and operated: None. Others: Corporación América Airports (CAAP) has an 81.3% stake in Aeropuertos Argentina (AA2000), which operates 35 airports across the country, including Ministro Pistarini International (Ezeiza) and Aeroparque-Jorge Newbery in Buenos Aires. Elsewhere in Argentina, CAAP operates and has 81.1% and 74.1% stakes respectively in the Patagonian airports of Bahía Blanca and Neuquén, which are not part of AA2000 group of airports. In Uruguay, CAAP manages Montevideo–Carrasco and Laguna del Sauce-Punta del Este airports courtesy of its 100% ownership of operator, Puerta del Sur. In Brazil, through sister company Inframérica, it has a controlling 51% stake in Brasilia’s Presidente Juscelino Kubitschek International Airport (where state owned Infraero is the only other shareholder) and through ICASGA a 100% interest in Natal’s São Gonçalo do Amarante– Governador Aluízio Alves International Airport in Rio Grande do Norte state, where it has a 25-year concession. In Ecuador CAAP operates Guayaquil’s José Joaquín de Olmedo International Airport because of its 50% stake in the TAGSA consortium and through 100% owned subsidiary, ECOGAL, runs Seymour/Baltra Airport in the Galapagos Islands. Corporacíon América Airports also has an interest in six gateways in southern Peru (Arequipa, Juliaca, Puerto Maldonado, Tacna and Ayacucho) due to its joint ownership (50/50) of Aeropuertos Andinos del Peru with Andino Investment Holding. Further afield, In Italy, through subsidiary Corporacíon América Italia, it has a controlling 51.1% stake in Toscana Aeroporti SpA, the operator of Pisa–Galileo Galilei and Florence–Amerigo Vespucci airports in Tuscany. Through subsidiary, Armenia International Airports CJSC, CAAP also manages Zvartnots Airport in Yerevan and Shirak Airport in Gyumri. Plans to expand/reduce portfolio: CAAP is always on the lookout for further investment opportunities in the airport industry. News: Corporación América Airports – formerly known as Corporacíon América SA (CASA) – successfully completed an Initial Public Offering (IPO) in 2018 and is now a listed company on the New York Stock Exchange. A 14 year extension to the concession for Punta del Este Airport in Uruguay, which was due to run out at the end of 2019, means that CAAP continues to have an interest in 52 airports across Latin America, Europe and the Caucasus. In exchange for the extending the deal to 2033, the concessionaire has pledged to invest an extra $35 million on upgrading the airport’s infrastructure. In 2018, CAAP extended its Guayaquil Airport concession by five years to 2029 and agreed to invest a further $32.2 million on capital improvements at the Ecuadorian gateway. CAAP and the Investment Corporation of Dubai (ICD) – which in 2018 acquired a 25% stake in Corporación América Italia – have signed
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a Memorandum of Understanding (MoU) to jointly pursue new opportunities in the airport sector in Italy, Eastern Europe (excluding Russia) and the Middle East. The MoU aims to build upon CAAP’s management capabilities and deep knowledge of the airport industry as well as ICD’s unique access to financing and the capital markets. Quote: CAAP CEO, Martin Eurnekian, states: “We remain focused on executing our long-term strategy and our investment plans to better position the company for future growth, as macro conditions in our key markets improve.”
DAA World Headquarters: Dublin, Ireland. Airports 100% owned and operated: Dublin and Cork in the Republic of Ireland. Others: Retail subsidiary, Aer Rianta International (ARI), has a 20% stake in Germany’s Düsseldorf International Airport and an 11% interest in Hermes Airports Ltd, operator of Larnaca and Paphos airports in Cyprus. In Saudi Arabia, overseas investment arm, daa international, has a five-year concession to manage the new Terminal 5 at Riyadh’s King Khaled International Airport. Plans to expand/reduce portfolio: No equity investments are planned. News: Wholly-owned ARI remains one of the world’s biggest duty free operators with annual revenues in excess of $1 billion through international operations in 11 countries across Europe, the Middle East, Asia-Pacific, North America and the Caribbean.
Edeis World Headquarters: Ivry-sur-Seine, France. Airports owned and operated: None. Others: Edeis operates Mayotte’s Dzaoudzi-Pamandzi Airport (Comoros islands in the Indian Ocean); Saint-Martin’s Grand Case Airport (Leeward Islands, Caribbean); and Castellón–Costa Azahar Airport in Spain, one of the country’s new, privately owned gateways, where it has a 20-year concession. Its extensive network of 19 airports in mainland France include Angers-Loire Airport in Marcé in the west of the country and the business/general aviation airports of Vannes-Golfe du Morbihan (Brittany); Auxerre-Branches, Chalon Champforgeuil, Chalon-sur-Saône and Dijon-Bourgogne in Burgundy; Rouen, Le Havre-Octeville and Cherbourg-Maupertus in Normandy; Troyes-Barberey and Reims in Champagne; Angoulême-Cognac (South-West of France); Annecy Meythet in the French Alps; Bourges (Central France); and Toulouse Francazal and Aix les Milles (Aix-en-Provence). It also manages the regional airports of Tours Loire Valley (Chateaux de la Loire), TarbesLourdes-Pyrenees (Hautes-Pyrénées) and Nîmes-Alès-CamargueCévennes (Occitanie), where scheduled and charter services are operated all year around. Plans to expand/reduce portfolio: Edeis maintains that it is always seeking new business opportunities. News: Officially added to its portfolio on January 1, 2020, Dôle Jura Airport in the Bourgogne-Franche-Comté region of eastern France is the most recent addition to Edeis’ airport network, which will handle more
SPECIAL REPORT: ECONOMICS ACI 25TH ANNIVERSARY & FINANCE
than 1.6 million passengers in 2020. A relative newcomer to the game, Edeis inherited a sizeable aviation portfolio when it took over all of SNC-Lavalin’s airport assets in France in late 2016.
Egis Airport Operation World Headquarters: Guyancourt, France. Airports 100% owned and operated: None. Others: In South America, Egis Airport Operation – part of the Egis Group – has a 5.1% stake in the consortium responsible for operating São Paulo’s Viracopos International Airport. In Europe, Egis holds 25 year operating concessions for Antwerp and Ostend-Bruges airports in Belgium, and through subsidiary, Egis Projects, has a 20% stake in Hermes Airports, which operates Larnaca and Paphos airports in Cyprus. In French Polynesia, Egis has a 30-year concession to operate Tahiti Faa’a Airport and has a five renewable year contract to manage Bora Bora, Raiatea and Rangiroa airports. In Africa, Egis has a 29.5% stake in the consortium awarded a 25-year concession to operate, develop and expand Brazzaville, Pointe Noire and Ollombo airports in the Democratic Republic of Congo; and a 41% shareholding in the company responsible for operating Abidjan Félix Houphouët-Boigny International Airport in the Ivory Coast. At home in France, Egis has a 24.5% shareholding in Air’Py, which holds the concession to operate and develop Pau-Pyrénées, Brest Bretagne and Quimper–Bretagne (formerly Bretage-Cornouaille) airports; and a 45% equity stake in the consortium responsible for managing Bergerac Dordogne Périgord Airport for the next 12 years. Plans to expand/reduce portfolio: Egis, which is 75% owned by France’s Caisse des Dépôts Group, continues to look for expansion opportunities for tenders that meet its criteria and offer the potential to grow. News: In November 2019, members of the Syndicat Mixte Air Dordogne (SMAD) approved a deal to award the operation and management of Bergerac Dordogne Périgord Airport to a consortium comprising Egis
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(45%) and the Dordogne Chamber of Commerce and Industry (55%). The airport, billed as the gateway to the Dordogne, had been operated by the latter’s 100%-owned subsidiary, Société d’Exploitation de l’Aéroport de Bergerac Dordogne Périgord (SABDP) since April 2013. It handled close to 300,000 passengers in 2019. Its addition means that in 2020, Egis will boast an airport portfolio of 17 airports in seven countries on four continents.
Ferrovial Airports World Headquarters: Madrid, Spain. 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: The City of Denver’s August 2019 decision to bring a premature end to its P3 concession for the Great Hall at Denver International Airport means that the contract will unilaterally terminate in April 2020. The move is a blow to Ferrovial Airports, which notes that it is actively looking to identify new opportunities in the global market, placing a particular focus on the US. News: Bloomberg reports that Ferrovial Airports is one of three companies to have submitted a non-binding bid for the concession to run Dalaman Airport in Turkey. The airport, located on the country’s Mediterranean coast, is currently operated by the YDA Group. Quote: Ferrovial Airports CEO, Jorge Gil Villen, says: “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 opened our US office in Austin that will allow us to be closer to key airport industry stakeholders.”
SPECIAL REPORT: ECONOMICS & FINANCE
Fraport AG/Frankfurt Airport Services Worldwide World Headquarters: Frankfurt, Germany. 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 Kerkyra/ Corfu, Chania/Crete, Kefalonia, Kos, Mykonos, Rhodes and Santorini. 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 AD consortium responsible for running Bulgaria’s Black Sea gateways of Burgas and Varna; and owns 51% of Fraport TAV Antalya, the terminal operator at Antalya Airport in Turkey. In Latin America, Fraport has a controlling 80.1% interest in Lima Airport Partners (LAP), which operates and develops Jorge Chavez International Airport in Lima, Peru, and holds long-term concessions to manage and develop Fortaleza (25 years) and Porto Alegre airports (30 years) in Brazil. While 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 that runs Delhi’s Indira Gandhi International Airport in India. Other international assets include 100% ownership of Fraport USA, which manages the former Airmall concessions at Cleveland, Pittsburgh and Baltimore/Washington airports; and manages the concessions space at Nashville; New York-JFK (Terminal 5); and Newark-Liberty (Terminal B). 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. Plans to expand/reduce portfolio: Fraport continues to look for opportunities to grow its global airport network while driving organic growth of its existing portfolio through major infrastructure developments in progress at its airports in Greece, Slovenia, Brazil and Peru. News: Fraport expanded its interest in Lima Airport Partners (LAP) in the second quarter of 2019 by acquiring an additional 10% stake in the
operator of Peru’s Jorge Chavez International Airport. The acquisition, from AC Capitales’ Infrastructure Fund, raised Fraport’s majority ownership in LAP to 80.01%. Wholly-owned subsidiary, Fraport USA, assumed responsibility for managing the retail space in Newark Liberty International Airport’s Terminal B on February 1 after being awarded a five year contract by the Port Authority of New York and New Jersey in late 2019.
GMR Airports Limited (GAL) World Headquarters: Delhi, India. Airports 100% owned and operated: None. Others: In partnership with local company Megawide Construction Corporation, GMR has a 25-year operating concession for Mactan-Cebu International Airport in The Philippines. On home turf in India, GMR Airports Limited (GAL) operates the gateways of Hyderabad–Rajiv Gandhi and Delhi-Indira Gandhi, courtesy of 63% and 64% shareholdings respectively in operators GMR Hyderabad International Airport (GHIAL) and Delhi International Airport Ltd (DIAL). Plans to expand/reduce portfolio: GMR Airports Ltd says that it will continue its strategy of becoming a “compelling and comprehensive airport company with strengths in developing, operating and managing airports in India and across the globe”. News: GMR Infrastructure Limited has agreed to sell a 49% stake in GMR Airports Limited (GAL) to Groupe ADP for €1.36 billion. GAL states that the deal will “combine unmatched strengths in airport development and operations, offering the highest levels of passenger experience”. It adds that it will also open up new opportunities for route development, enhanced expertise in operations, retail, IT, innovation, engineering and other areas. Between them, GAL and Groupe ADP’s airports handled 336.5 million passengers in 2019. GMR Group chairman, GM Rao, noted: “The partnership with Groupe ADP is in line with GMR’s business direction to become a global airport developer and operator.”
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SPECIAL REPORT: ECONOMICS ACI 25TH ANNIVERSARY & FINANCE Once the deal is done, GAL will be jointly owned by GMR Infrastructure (51%) and Groupe ADP (49%). Elsewhere, construction work has started on Crete’s new €850 million Kastelli Airport, which is being financed and built by the Ariadne Airport Group – a joint venture between GAL and Greek firm GEK-Terna – in exchange for a 35 year operating contract. Slated to open in 2024/25, it will replace Heraklion’s Nikos Kazantzakis International Airport. And wholly-owned subsidiary, GMR Goa International Airport Limited (GGIAL), has signed a 40-year concession agreement to build and operate Goa’s new Mopa International Airport, the first phase of which is expected to open in 2022.
Groupe ADP World Headquarters: Roissy, France. Airports 100% owned and operated: Groupe ADP owns and operates Paris CDG, Paris-Orly and Le Bourget airports. Others: Groupe ADP directly manages a portfolio of 24 airports worldwide. Through its 46.12% stake in TAV Airports, Groupe ADP has interests in Ankara Esenboga, Izmir, Milas Bodrum and Gazipasa in Turkey; Medina (Saudi Arabia); Monastir and Enfidah (Tunisia); Tbilisi and Batumi (Georgia) and Skopje and Ohrid (Macedonia). In South America, Groupe ADP has a 45% stake in the Nuevo Pudahuel consortium, which has a 20-year concession to operate and develop Santiago’s Comodoro Arturo Merino Benítez International Airport in Chile. VINCI Airports (40%) and Astaldi (15%) are the other major partners in the consortium. In the Middle East, ADP International has a controlling 51% shareholding in AIG, operator of Jordan’s Queen Alia International Airport, and a 5% interest in MATAR, which operates and mantains the Hajj Terminal at King Abdulaziz International Airport in Jeddah, Saudi Arabia. In Africa, ADP Management owns 29% of Conakry International Airport operator, SOGEAC, in Guinea; and a 35% stake in Ravinala Airports, which holds the concession for Antananarivo and Nosy Be airports in Madagascar. It also has a 10% stake in ATOL, the operator of Sir Seewoosagur Ramgoolam International Airport in Mauritius. Groupe ADP has an 8% stake in the Schiphol Group and in Europe has interests in Liege Airport (25.6%) in Belgium and Zagreb’s Franjo Tuñman Airport (20.8%) in Croatia. In the United States, its Future Stewart Partners joint venture with AvPorts is responsible for operating
and maintaining New York Stewart International Airport’s terminal, landside and airfield. Plans to expand/reduce portfolio: Groupe ADP is actively looking to expand its global airport portfolio both in terms of equity and non-equity investments. News: Groupe ADP has signed a €1.36 billion deal to acquire a 49% stake in India’s GMR Airports Limited (GAL). The deal will be completed in two phases, with a 24.9% interest in GAL expected to be completed in late February (as Airport World went to press), followed by a second transaction for another 24.01% stake at a later date, subject to certain regulatory conditions. ADP’s chairman and CEO, Augustin de Romanet said: “The acquisition of a 49% stake in GMR Airports fits within Groupe ADP’s strategy. It sets a robust industrial partnership and enables Groupe ADP to build, only two years after taking control of TAV Airports, a unique worldwide network of airports with a solid industrial expertise and strong development capacities. “This acquisition will constitute a growth driver in the medium term, and also a transforming position for the group in one of Asia’s and the world’s most dynamic and promising countries.”
Grupo Aeroportuario de Pacifico (GAP) World Headquarters: Guadalajara, Mexico. Airports 100% owned and operated: None. Others: At home in Mexico, GAP has concessions to operate the 12 Pacific region airports of Aguascalientes, Guadalajara, Hermosillo, La Paz, Guanajuato, Los Cabos, Los Mochis, Manzanillo, Mexicali, Morelia, Puerto Vallarta and Tijuana. In Jamaica, GAP has a controlling 74.5% interest in MBJ Airports Limited, which operates Sangster International Airport in Montego Bay, and has a 25 year concession agreement to operate and develop Kingston’s Norman Manley International Airport. Plans to expand/reduce portfolio: It continues to seek new investment opportunities with Latin America remaining a key focus area. News: GAP officially added Kingston’s Norman Manley International Airport to its international airport portfolio in October 20, 2019, when it assumed responsibility for operating the gateway a year after being awarded the 25 year concession by the Jamaican government.
Groupe ADP reveals global ambitions Groupe ADP has gone on record as stating that its ambition is to operate a global network of airports that handles around 450 million passengers annually and contributes 35% to 40% of its earnings before interest and tax (EBIT) by 2025. In 2018, its airports welcomed 281.4 million passengers and accounted for 27.5% of Groupe ADP’s EBIT. Fernando Echegaray, Groupe ADP’s executive officer for operations, says: “At each airport we manage under concession or management contract our goal is to create value for all the stakeholders by developing traffic and new routes, by increasing aeronautical and non-aeronautical revenues [retail, real estate, etc] by promoting innovative solutions for airlines and passengers to ensure their sustainable environmental development.
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“Our vision is based on the creation of people friendly airports and our strength lies in our ability to provide holistic solutions and draw on the network of airports already managed in Paris and abroad, by sharing the best practices.” The company’s executive officer for development, Xavier Hürstel, notes: “Air traffic is expected to double over the next 20 years and the privatisation of airports continues at a pace. However, with only 14% of airports currently being managed by private entities, we expect to see a lot of opportunities for new greenfield and brownfield concessions in the future. “Thanks to engineering subsidiaries like ADP Ingénierie or Merchant Aviation and the service companies of TAV Airports, Groupe ADP has solid credentials in the Americas, Asia, Africa and Middle-East and could easily enter new markets or new countries.”
SPECIAL REPORT: ECONOMICS ACI 25TH ANNIVERSARY & FINANCE
As part of the deal, it has pledged to invest $100 million on modernising an expanding the airport terminal over the next five years. GAP is currently interested in the privatisation of Grantley Adams International Airport in Barbados where the request for proposals is expected to be released in the first quarter of 2020.
Grupo Aeroportuario del Sureste (ASUR) World Headquarters: Mexico City, Mexico. Airports 100% owned and operated: None. Others: ASUR has a concession to operate, maintain and develop Cancún, Cozumel, Huatulco, Mérida, Minatitlan, Oaxaca, Tapachula, Veracruz and Villahermosa airports in south east Mexico. Elsewhere in Central and South America it has a 60% stake in Aerostar Airport Holdings, operator of Luis Muñoz Marín International Airport in San Juan, Puerto Rico; and 100% owns Airplan, which operates six Colombian gateways – Rionegro’s José María Córdova International Airport and the domestic airports of Medellín, Montería, Carepa, Quibdó and Corozal. Plans to expand/reduce portfolio: ASUR states that it remains focused on selectively expanding its airport network. News: More than 55 million passengers passed through ASUR’s airports in 2019. The total was boosted by a record 9.5 million passengers (+13%) in San Juan in Puerto Rico and over 12 million people passing through its Colombian gateways. ASUR plans to invest over $100 million on enhancement projects at Cancún International Airport in 2020, which include the expansion of terminals 4, 3 and 2.
Incheon International Airport Corporation (IIAC) World Headquarters: Incheon, South Korea. Airports 100% owned and operated: Incheon International Airport in South Korea. Others: It has a five-year concession to manage and operate Terminal 4 at Kuwait International Airport. Plans to expand/reduce portfolio: IIAC refuses to speculate on potential targets. News: IIAC is reported to be one of the parties competing to win the concession to operate Podgorica and Tivat airports in Montenegro. It has also expressed an interest in operating Kuwait Airport’s new Terminal 2, which is due to open in 2023.
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Limak Group World Headquarters: Ankara, Turkey. Airports 100% owned and operated: None. Others: Limak has a 20% stake in IGA, the company responsible for financing, building and operating Istanbul’s new €10.2 billion airport for the next 25 years. In Africa, it spearheads LAS (Limak-Aibd-Summa), which has a 25-year contract to operate Blaise-Diagne International in Dakar on behalf of the government of Senegal; and in Europe has a concession to operate and grow Pristina-Adam Yasari International Airport in Kosovo. Plans to expand/reduce portfolio: Not known at this stage. News: With its background in construction, it should come as no surprise to learn that Limak continues to be involved in airport development projects across the globe. It is currently helping construct Kuwait Airport’s new $4.2 billion Terminal 2 and through subsidiary, Limak Insaat Kuwait, is bidding to win the contract for the next phase of construction at the airport.
Macquarie Infrastructure and Real Assets (MIRA) World Headquarters: London, UK. Airports 100% owned and operated: Aberdeen, Glasgow, Southampton (through AGS Airports, a joint venture between a MIRA-managed fund and Ferrovial Aeropuertos) and Farnborough airports in the UK. Others: Macquarie has interests in seven Australian airports on behalf of investors. Gold Coast, Townsville, Mount Isa and Longreach courtesy of a 40% stake in Queensland Airports Limited; Cairns and Mackay through a 27% stake in North Queensland Airports; and a 7% stake in Perth Airport. Plans to expand/reduce portfolio: MIRA does not speculate on possible acquisitions/sales. News: A Macquarie-managed fund recently acquired Farnborough Airport in the UK from a consortium of private investors. The airport handles approximately 30,000 air traffic movements per annum and is home to the Farnborough International Airshow. Talking about the deal, Leigh Harrison, Head of MIRA EMEA, said: “In addition to holding an important place in UK aviation
SPECIAL SPECIALREPORT: REPORT:ACI ECONOMICS 25TH ANNIVERSARY & FINANCE history, the airport is known for its high-quality offering to customers. Drawing on our extensive experience managing airport infrastructure around the world, we look forward to partnering with Farnborough Airport to ensure it remains an important contributor to the local economy and a business aviation gateway to London and the South East.” In 2019, Macquarie completed a number of divestments across its airport portfolio. In the Asia-Pacific region, Macquarie-managed funds sold their controlling 50.1% stake in Hobart International Airport and the majority of their interest in GMR Airports – owner of India’s Delhi-Indira Gandhi and Hyderabad-Rajiv Gandhi airports. In Europe, Macquarie successfully finalised the sale of a 36% interest in Brussels Airport. This divestment followed Macquarie’s 2017 decision to sell its remaining stake in Copenhagen Airport following 12 years of involvement in the business.
Meridiam
Malaysia Airports Holdings Berhad (MAHB)
World Headquarters: Paris, France. Airports 100% owned and operated: None. Others: Meridiam has a 45% stake in Madagascan airport operator Ravinala Airports (Ivato and Facesne); a 32% interest in Airport International Group (AIG), operator of Queen Alia International Airport in Amman, Jordan; and is a member of LaGuardia Gateway Partners (LGP) which is building the new Terminal B at LaGuardia Airport in New York. Plans to expand/reduce portfolio: In expansion phase. News: Sofia International Airport (SOF) will join its airport portfolio later this year following the Bulgarian government’s decision to award the SoF Connect consortium the concession to operate and develop the gateway. The consortium – a 50/50 joint venture between Meridiam and Munich Airport International (MAI) – will run SOF for 35 years and have pledged to invest €600 million on upgrading the airport’s facilities. Top of the agenda for SOF in terms of new facilities is a third passenger terminal, which the consortium has agreed to build within 10 years, while the existing terminals need modernising.
World Headquarters: Kuala Lumpur, Malaysia. Airports 100% owned and operated: Kuala Lumpur International Airport and 38 other Malaysian gateways that include the international airports of Langkawi, Kota Kinabalu, Kuching and Penang; and Istanbul-Sabiha Gökçen International Airport in Turkey. Others: Malaysia Airports has an 11% stake in GHIAL, the GMR-led operator of Hyderabad–Rajiv Gandhi International Airport in India. Plans to expand/reduce portfolio: No information given. News: The foundation for a second terminal at Istanbul-Sabiha Gökçen is expected to be laid in the first quarter of 2020. When complete it will raise the airport’s capacity to 66mppa. Elsewhere, MAHB has a management contract for the IT operations at Hamad International Airport in Doha, Qatar.
World Headquarters: Amsterdam, the Netherlands. Airports 100% owned and operated: Amsterdam Schiphol, Lelystad and Rotterdam The Hague in Holland. Others: The Royal Schiphol Group has a majority 51% stake in Eindhoven Airport; owns 8% of Groupe ADP; and in Australia has a 19.61% interest in Brisbane Airport and a 35% stake in Hobart Airport. Through its 100% owned subsidiary Schiphol USA, Royal Schiphol Group holds a 51% stake in JFKIT, which operates Terminal 4 at New York’s JFK International Airport. In the Caribbean it acts as a strategic partner to Reina Beatrix Aruba Airport and is supporting the redevelopment of St Maarten’s Princess Juliana International Airport.
Royal Schiphol Group
Royal Schiphol Group – investing and growing Active in the global market for over two decades, the Royal Schiphol Group has upped its activity in the last 18 months acquiring a controlling stake in Hobart Airport in Australia and throwing its hat into the ring for the concession to operate St Louis Lambert International Airport in the US before the city pulled the plug on the project. Royal Schiphol Group has also arguably served notice of its growing ambitions outside of the Netherlands by appointing Kjell Kloosterziel as the director of a newly created international division, Schiphol International. So, are we about to see a new period of investment in the international arena for the Royal Schiphol Group and does it have any focus areas in terms of expanding its airport portfolio? Kloosterziel, as you might expect, is not giving much away. “What is our strategy for developing our international business?” he muses. “We look at all opportunities on an individual basis and take a global view when it comes to developing our international portfolio. “The reason for this is twofold: on the one hand, it strengthens the financial position and expertise of the Group. On the other, it strengthens our position as an airport operator by providing
opportunities for knowledge exchange, innovation sharing, and opportunities for employees of airports in the Schiphol Group to gain experience at other airports. “The focus is on strategic assets that strengthen our overall Group portfolio and where the knowledge available within the Group can unlock additional value in a sustainable manner.” He notes that all of the Royal Schiphol Group’s international assets performed well in 2019, in the process making “an important contribution” to the company’s overall results. Talking about the key challenges for the Group’s airports in 2020, Kloosterziel says: “Many of our airports are undergoing major capital expansion projects to raise their capacity and enhance their service offerings to better equip them to meet current and future demand. “Completing these projects in an operational environment, safely, on time and with minimal inconvenience to our guests, is a key challenge for 2020 and beyond. Fortunately, we have extensive experience and knowledge of carrying out these types of projects within the Group and this will be key to dealing with this challenge.”
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SPECIAL REPORT: ECONOMICS ACI 25TH ANNIVERSARY & FINANCE Plans to expand/reduce portfolio: Maintaining and expanding its global airport network is a key strategy. News: In October 2019, the Royal Schiphol Group and Queensland Investment Corporation (QIC) between them acquired a controlling 70% stake in Hobart Airport in Australia by buying 50.1% of its shares from Macquarie Infrastructure and Real Assets (MIRA) and a further 19.9% from superannuation fund, Tasplan Super. Hobart is the ninth busiest airport in Australia handling around 2.7mppa. Elsewhere in Australia, the Schiphol group acquired an additional 0.89% stake in Brisbane Airport in June 2019 and showed a glimpse of even greater ambitions when it expressed an interest in the potential privatisation of the US’s St Louis Lambert International Airport before the process was abandoned by the city’s mayor just before Christmas.
TAV Airports Holding World headquarters: Istanbul, Turkey. Airports 100% owned and operated: None. Others: At home in Turkey, TAV Airports has a 49% shareholding in Antalya Airport with equal voting rights and holds the concession to operate and develop Ankara Esenboğa (2023), Izmir Adnan Menderes (2032), Milas-Bodrum (2034) and Gazipasa–Alanya (2032) airports. In North Macedonia, it has a contract to operate Skopje Alexander the Great and Ohrid St Paul the Apostle airports until 2030. Elsewhere in the region, it has controlling 80% and 76% stakes respectively in the companies responsible for operating Tbilisi and Batumi airports in Georgia.
In Tunisia, TAV holds a majority 67% shareholding in both Monastir Habib Bourgiba and Enfidha-Hammamet airports in Tunisia; and in Saudi Arabia the TAV-led Tibah Airports consortium (TAV, Saudi Oger and Al Rajhi Holding Group each with 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 that has a 30-year concession to operate and develop Zagreb Airport in Croatia. In addition, TAV operates commercial spaces at Riga International Airport in Latvia. Plans to expand/reduce portfolio: The addition of more airports is almost a certainty as TAV Airports looks to expand its international portfolio following the end of its Istanbul Atatürk concession. News: A joint venture between TAV Airports and VPE Capital is in advanced discussions with the owner of Almaty International Airport in Kazakhstan regarding the potential acquisition of the asset in 2020. TAV, in partnership with Groupe ADP, is reported to be one of the parties interested in winning the concession to operate Podgorica and Tivat airports in Montenegro. In December 2019, TAV Airports was awarded €389 million in compensation by the Turkish National Airports Authority (DHMI) for the loss of profits caused by the closure of Istanbul Atatürk Airport to commercial passenger flights before the end of its concession, which was due to run until January 2, 2021.
TAV Airports set for expand The planned addition of Almaty International Airport in Kazakhstan and impressive 2019 traffic figures across its global airport network shows that TAV Airports remains one of the industry’s big players despite the loss of Turkey’s former hub, Istanbul Atatürk, which closed to passenger traffic last year following the opening of the new Istanbul Airport. Talking about the appeal of Almaty International Airport, TAV Airports president and CEO, Sani Şener, says: “Kazakhstan is becoming a key transit hub between Asia and Europe. The country, with its location and ambitious development goals and infrastructure investments, is in a strategic position to benefit from China’s ‘Belt and Road Initiative’, which is in effect the New Silk Road establishing trade routes between Asia, Europe and Africa. “We are hoping to finalise this acquisition very soon and invest further to develop the passenger and cargo traffic in Almaty to allow the airport to fulfil its potential. It will be our first airport operation in Asia, and we all know that the aviation business will continue to grow in Asia.” He reveals that TAV Airports had been planning for life after Atatürk since 2014 and the forward-thinking strategy ensured that the company wasn’t left with a huge void to fill when the airport handled its last passenger flight on April 6, 2019. “After walking away from the new Istanbul Airport tender in 2014, we revised our strategy and decided to grow our service companies, expand our airport portfolio and continue organic growth in our existing airports,” says Şener.
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“This strategy has certainly paid off as it has served to release the untapped potential of our service companies. As a result, today, our global footprint stretches to 100 airports in 30 countries.” He adds: “The addition of Antalya to our airport network and steady traffic growth across our portfolio has recovered almost two thirds of the passengers we lost with the end of the Istanbul Atatürk concession. The expected additions of new airports will fully cover this loss by 2021. “Make no mistake about it, TAV will continue its growth trajectory as part of the largest airport management platforms in the world with Groupe ADP.” Last year was undoubtedly a good one for traffic growth across its network with a 14% rise in tourists to Turkey leading to international passenger numbers soaring at Antalya (+19%), Bodrum (2 5%) and Izmir (22%), while throughput at its airports in Tunisia and North Macedonia increased by 22% and 14% respectively. When it comes to increasing the size of its airport portfolio, TAV Airports has expansion in mind and no intention of selling any of its existing assets. “Global air traffic is on track to double in the next 20 years with growth expected to be highest in Asia and Africa. We will be focusing on these developing regions,” says Şener. “As a listed company, we always pursue smart growth –projects aligned with our financial abilities and operational capabilities. As of today, we are content with our existing portfolio and looking to expand further. We have enough firepower for more smart growth.”
SPECIAL REPORT: ECONOMICS & FINANCE
Vantage Airport Group World Headquarters: Vancouver, Canada. Airports 100% owned and operated: John C Hamilton International Airport in Canada. Others: In the Caribbean, Vantage holds a 25.5% stake in MBJ Airports Ltd, the private operator of Sangster International Airport in Montego Bay, Jamaica, and operates Nassau’s Lynden Pindling International Airport on behalf of the Government of The Bahamas. In Europe it has an 11% stake in Hermes Airports Ltd, which operates Larnaca and Paphos airports in Cyprus under a 25-year concession. In Canada, in addition to Hamilton, Vantage operates Greater Moncton Roméo LeBlanc International Airport in New Brunswick, and Kamloops and North Peace Regional airports in British Columbia. In the US, Vantage is part of LaGuardia Gateway Partners, the consortium selected by the Port Authority of New York
and New Jersey (PANYNJ) to lead the $5.1 billion redevelopment and management of New York-LaGuardia’s Terminal B. In Chicago, Vantage is part of Midway Partnership, the consortium responsible for the $75 million concessions redevelopment programme at Midway International Airport (MDW) under an agreement with the City of Chicago. Vantage is also JetBlue Airways’ preferred development partner for the international terminal redevelopment project at New York’s John F Kennedy International Airport. Plans to expand/reduce portfolio: Vantage continually assesses its network profile and evaluates emerging airport and related infrastructure development and management projects for opportunities to apply its award-winning focus on people, place and performance. News: Vantage’s global network of airports served more than 60 million passengers in 2019.
Busy times for Vantage Airport Group For 25 years, Vantage Airport Group has invested in, developed and managed airports across the world making them more efficient, more profitable, more sustainable and better connected in the process. And chair and CEO, George Casey, has no doubt that its winning formula will continue to be successful over the next decade. “We’re always looking for opportunities to undertake partnerships that add value to an airport, create benefits for the communities served by the airport and solve complex challenges,” enthuses Casey. “We believe in the potential of the private sector to help airports meet their objectives for growth, investment, cost-effective facility development, and customer service, particularly in the US, where airports are estimated to need some $128 billion in infrastructure upgrades by 2023. “Another area of focus for us is commercial concession development. At Chicago’s Midway Airport, for example, we have partnered with the City of Chicago to deliver a transformational redevelopment of the airport’s entire commercial concession programme.” Talking of the US, he notes that the redevelopment of LaGuardia Terminal B is “progressing very well”. He tells Airport World: “As the largest transportation publicprivate project in US history, the scale and complexity of this
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$5.1 billion project is unmatched. In addition to an equity role in LaGuardia Gateway Partners, the consortium selected by the Port Authority to lead the redevelopment, Vantage’s work involves overseeing the construction and managing the existing and new terminal now through 2050. “Once complete in 2022, the new 35-gate Terminal B will offer an entirely transformed guest experience that celebrates the best of New York and help fulfill Governor Andrew Cuomo’s vision for a new LaGuardia.” What does he see as the key challenges for Vantage’s airports in 2020? Casey replies: “This is an incredibly dynamic time for air travel, airports and related transportation infrastructure. The market is changing and growing increasingly competitive. “Over the next five years, technology innovation will drive a faster pace of change than we’ve seen in the past two decades, along with data analysis, integration and performance metrics. And at the same time, the expectations of the travelling public and our airline partners are growing. “Our challenges will be how best to position our award-winning network of airports for further opportunities, and to seek out new partnerships where we can apply our approach that focuses on people, place and performance for shared success.”
SPECIAL REPORT: ECONOMICS & FINANCE
Vienna Airport Group World Headquarters: Vienna, Austria. Airports 100% owned and operated: Vienna International Airport. Others: It has a 48.44% stake in Malta International Airport courtesy of its 95.85% controlling interest in the Malta Mediterranean Link Consortium (MMLC), which has a 40% shareholding in the gateway, and a separate 10.1% stake held by wholly-owned subsidiary, VIE Malta Ltd. Elsewhere it is a member of the KSC Holding, which holds 66% of the shares in Slovakia’s Košice International Airport. Plans to expand/reduce portfolio: None. News: Vienna Airport Group’s strategy is to concentrate its efforts on its existing assets in Vienna and Malta and Slovakia ensuring that the company has no plans to seek further equity investments elsewhere.
VINCI Airports World Headquarters: Rueil-Malmaison, France. Airports 100% owned and operated: Belfast International Airport in the UK. 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. Elsewhere in Europe, it holds a controlling 50.01% stake in London Gatwick; a 90.1% interest in Stockholm Skavsta; a 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 retail outlets across VINCI’s 10 Portuguese gateways.
In Asia-Pacific, VINCI Airports has a 40% stake in Kansai Airports, which operates Kansai, Osaka Itami and Kobe airports in Japan; and a 70% interest 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, the operator of Costa Rica’s Guanacaste International Airport (formerly 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 Salvador Bahia 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 airports in the Auvergne-Rhône-Alpes region. It also manages the French gateways of Clermont-Ferrand Auvergne, Chambéry Savoie Mont Blanc, Grenoble Alpes Isère, Toulon Hyères 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. In North America, through wholly-owned subsidiary, Airports Worldwide (AWW), VINCI Airports has an interest in eight airports. It operates Orlando–Sanford in Florida courtesy of a concession contract that runs until January 2039; holds full management or facility management contracts at Atlantic City International Airport in New Jersey; Hollywood Burbank Airport in California;
Success story goes on for VINCI Airports VINCI Airports celebrated a major milestone in 2019 when the addition of Gatwick meant that it became the world’s second largest airport operator for passengers handled across its network. Indeed, it continues to go from strength to strength, with in excess of 255 million passengers passing through its expanding airport portfolio in 2019. And Nicolas Notebaert, president of VINCI Airports and CEO of VINCI Concessions, sees no reason for the company’s expansion phase to slowdown or stop this decade. He is also quick to point out that VINCI Airports has no interest in selling any its assets to balance the books or pave the way for further investments. “VINCI Airports is a long-term investor and we are always looking for new opportunities,” says Notebaert, noting that the company made two of the largest acquisitions of last decade with ANA Airports of Portugal in 2012 and London Gatwick in 2019. “We have confidence in our business model and will keep following the strategy that has brought us our success – prudent decision-making, buying assets at the right price, and a shared vision with governments and other key stakeholders to develop the potential of airports and make territories grow.” He considers the sustainable development of airports to be the biggest challenge facing VINCI Airports and the entire airport industry in 2020 and beyond.
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“In 2020, we will keep advancing our sustainability agenda, and will move forward with ambitious infrastructure development programmes at several of our airports,” reveals Notebaert. “Sustainability is an essential factor for airport development. In 2014, we launched the airport industry’s first integrated environmental strategy and, as a result, we start 2020 with three carbon-neutral airports in our network and a significantly reduced carbon footprint. “We are actively pursuing an ambitious strategy to further reduce the gross emissions of the airports we manage by 50% by 2030. New solar farms will be installed in France, Brazil, Portugal, Dominican Republic and Cambodia in the coming months. “This year will also see us continue to develop our network to make the airports we manage ever more accessible, economical and efficient. On our agenda is the extension-renovation of Belgrade Airport and Terminal 1 at Kansai International Airport and the upgrade of Santiago Airport in Chile. “We will also continue to work with the Portuguese government on the modernisation of Lisbon’s Humberto Delgado Airport and the conversion of Montijo Air Force base into a commercial airport for Lisbon.”
SPECIAL REPORT: ECONOMICS & FINANCE and Macon Downtown Airport and Middle Georgia Regional Airport in Georgia; and partial management contracts at Ontario International Airport in California; Raleigh Durham International Airport in North Carolina; and Hartsfield-Jackson Atlanta International Airport, where it manages part of the international terminal through subsidiary TBI AM. Plans to expand/reduce portfolio: Always looking for new opportunities. News: The addition of London Gatwick in May 2019 for a fee of £2.9 billion means that VINCI Airports now boasts a global network of 45 airports in 12 countries across the globe. It continues to be true to its promise to invest in enhancing the facilities and services offered by its airports, in 2019 alone launching a five year project to upgrade Kansai International Airport’s Terminal 1; announcing an ambitious capital investment programme for London Gatwick; unveiling plans to refurbish the airfield at Toulon Hyères Airport; and celebrating the completion of a €160 million modernisation and expansion programme at Salvador Bahia Airport in Brazil.
Zurich Airport/Flughafen Zürich AG World Heaquarters: Zurich, Switzerland. Airports 100% owned and operated: Zurich Airport in Switzerland. Others: In Brazil, Flughafen Zürich AG 100% holds 30-year concessions for Hercílio Luz International Airport in Florianópolis and Vitória and Macaé in the south-east of the country as well as a 25% 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.
In Chile its 100%-owned subsidiary, APORT Chile SA, holds the concessions for Andrés Sabella Airport in Antofagasta and Diego Aracena Airport in Iquique; and in the Caribbean, Zurich Airport has a 9.69% shareholding in Curaçao Airport Partners NV (CAP), which operates Curaçao International Airport. Elsewhere in Latin America, APORT Operaciones SA provides Bogota’s El Dorado International Airport with operational and technical support under the terms of a Technical Services Agreement (TSA). Plans to expand/reduce portfolio: Latin America, especially Brazil and Chile, along with India, Indonesia and the Philippines are key focus areas for Zurich Airport which states that it is open to further investment opportunities. News: In late November 2019, Flughafen Zürich AG was announced as the preferred bidder for the concession to design, develop and operate India’s new Noida International Airport. Zurich Airport, which with other partners helped build and develop Bengaluru’s Kempegowda International Airport before exiting the project in 2017, has agreed a 40 year concession to operate the new gateway, which is slated to open between 2023 and 2027. Quote: “Our young portfolio of international concessions is expected to generate around CHF20 million [$20.6 million] in EBITDA in 2020, which I count as an extremely positive contribution for the company,” says Zurich Airport’s chief financial officer, Lukas Brosi. “Besides the new acquisition in India, we enjoyed several milestones in Brazil last year. In early 2019 we were awarded two new 30-year concessions for the operation of the airports in Vitória and Macaé in south-eastern Brazil. Additionally, in October 2019, we were able to commission the complete new terminal at the Florianópolis airport in Brazil ahead of schedule and on budget.”
AW
Zurich Airport’s global reach continues to grow Zurich Airport/Flughafen Zürich AG continues to seek opportunities to expand its international assets, paying particular attention to the growing markets of Brazil, Chile, India, Indonesia and the Philippines. Flughafen Zürich AG was named as the preferred bidder for the concession to design, develop and operate India’s new Noida International Airport in late 2019 and is currently working on the formation of a Special Purpose Vehicle (SPV) to carry out the project. The new greenfield airport will be located around 80 kilometres south of Delhi in Jewar in the state of Uttar Pradesh and is slated to open between 2023 and 2027. Zurich Airport has agreed a 40 year concession to operate the gateway, the first phase of which is expected to cost around $670 million. It will initially be equipped to handle 12 million passengers per annum, but an ambitious development plan includes proposals to raise its capacity to 30mppa by 2032 and 50mppa by 2037. Talking about the appeal of the new Indian airport, Flughafen Zürich AG’s chief financial officer, Lukas Brosi, enthuses: “Noida International Airport will be strategically located between Delhi and Agra, close to the fast-developing Noida and Greater Noida area. If we look at large metropolitan areas worldwide,
we find that second airports become viable once the primary airport reaches a certain hurdle in terms of passengers. “We believe that Noida International Airport will complement and work in harmony with Delhi’s Indira Gandhi International Airport and look forward to close collaboration with it in the future.” He notes that Zurich Airport’s previous experience in India, where it was part of the consortium that successfully built and operated Bengaluru’s own greenfield airport before selling its stake in 2017, proves that it is more than qualified to take on the challenge of Noida International Airport. Will Zurich Airport be seeking business partners for the project? “In view of our overall strategy to operate a portfolio of airports in Asia, we are not ruling out a partnership with a strategic investor in Noida,” states Brosi. He tells Airport World that the company’s focus on the Indian, Indonesian and the Philippine markets was 100% a business decision. “We believe that India, in particular, along with Indonesia and the Philippines will benefit from a significant headwind in the years to come in terms of air travel due to their favourable demographics, expected population growth and rise in the middle classes, which will enable more people to travel than ever before,” reveals Brosi.
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Fantastic journey! AviaDev Europe’s managing director, Juraj Toth, discusses the economics of route development and the global value of aviation.
I
n the past few months, the aviation industry has become an easy target in the global fight against climate change. People all around the world, but especially in Europe, have been pointing fingers at air transport as a source of evil that just damages the planet, without acknowledging the immeasurable benefits that aviation has delivered, and continues to deliver for humankind. IATA CEO, Alexandre de Juniac, always says that with flying, we are in the business of freedom and peace. And he is right! Countries that have direct air links with each other cannot be at war. Global travel which, by and large is facilitated by aviation, has been bringing nations, cultures, economies and families together for over a century, and this is something that must not be forgotten. At the same time, all the industry players are well aware of the carbon footprint of flying with aviation estimated to account for 2.1% of global CO2 emissions, and there have been extensive measures and strategies implemented to reduce this footprint. But we won’t talk about that in this article. Today, we’ll take a closer look at the more tangible part of the equation. We will illustrate how massive aviation’s contribution is to the global economy, by using a couple of real examples. As ICAO states in their Aviation Benefits Report, the aviation industry supports more than 65 million jobs around the world, and it covers 3.6 % of global GDP. The economic impact generated by the industry is calculated to $2.7 trillion (that is 12 zeros). Let’s narrow it down a little bit using IATA’s materials published in June 2019 referring to the importance of air transport to individual countries. And let’s take Croatia as an example.
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A relatively small state with a population of four million, it is famous for its beautiful Adriatic Sea coast, numerous natural reserves and fantastic cuisine. Naturally, it depends very much on tourism, which has rapidly developed over the last two decades and currently accounts for up to 20% of Croatian GDP. Aviation plays a vital role in the success story of Croatia. According to IATA’s paper it supports 35,000 jobs and the gross value added contribution to GDP is calculated to be $1.4 billion. Passengers-wise most of the traffic comes from Europe (4.3 million), followed by North America (230,000) and the Asia-Pacific (188,000). National flag carrier, Croatia Airlines, definitely plays its part in supporting the national economy. However, it’s been struggling with profitability for some time now and currently is also looking for investors. Therefore, most of the growth has been recently delivered by the low cost carriers, including the largest European airline, Ryanair. In December 2019, Ryanair announced eleven new routes to Zadar Airport to be operated in summer 2020. One of them is to Liverpool in the UK, so let’s take this route as an example. It will be operated on a twice weekly basis with an Airbus A320 with 180 seats (as Summer 2020 schedule will be operated by a new Lauda base). Both Ryanair and Lauda reported 95% load factors and in total 50 flights will be operated next summer. That accounts for 8,550 arriving guests to Zadar. According to the findings of the 2017 survey by the Zagreb based Institute of Tourism, British tourists spend on average €140 a day in Croatia. Their average length of stay according to the Croatian bureau of statistics was 5.1 nights.
SPECIAL REPORT: ECONOMICS & FINANCE To sum it up, after putting all the numbers together: The air service between Liverpool and Zadar operated by Lauda just twice per week for 25 weeks of this summer in total will add €6.1 million to the Croatian economy. And that’s just one route! In summer 2020, Lauda will operate 31 routes in total to Zadar, expecting to bring 336,000 tourists to the Dalmatian Coast city. According to the survey already mentioned, average spend of all tourists in Croatia in 2017 was €79 per day. Average length of stay was the same 5.1 days as for British tourists, so, in total, Lauda’s 2020 summer schedule at Zadar Airport will very likely bring more than €135 million to the Croatian economy! And that’s just for the regional airport of Zadar, which is the fourth busiest airport in Croatia, the three other major ones being Zagreb, Split and Dubrovnik. Let’s fly to Kenya for another interesting example of how aviation, almost literally, puts bread on the table. In Kenya, more than 100,000 jobs depend on the cut flower industry, which impacts on over million livelihoods. The cut flower industry supports approximately 1.06% of the national economy, generating around $700 million in foreign exchange each year. Flower exports have grown significantly from 10,946 tons in 1988 and 86,480 tons in 2006 to 159,961 tons in 2017. Over 90 % of fresh horticultural products are transported by air freight. An estimated 70% of the flowers are grown at the rim of Lake Naivasha, northwest of Nairobi. There are good road network connections between the Lake Naivasha growing area and Nairobi’s Jomo Kenyatta International Airport, a distance of about 80 to 100 kilometres. Flowers picked in the morning reach markets in Amsterdam by evening. The Netherlands is the leading destination for Kenyan flowers, commanding 48% of the export volume, followed by the United Kingdom at 16%. About 38% of all cut flower imports into the European Union come from Kenya. At AviaDev Europe we are focused on creating opportunities for European regional airports to meet airlines together with their tourism partners in a joint effort to increase the connectivity of their destinations. Our first two events took place in Valencia. In September 2019, SAS announced 14 new routes for summer 2020 and one of them will be connecting Valencia with Oslo. The discussions regarding the route viability were accelerated during the one-to-one meeting sessions at the AviaDev Europe event in Valencia in December 2018 where SAS network planners had the chance to understand the dynamics of this fabulous destination. In summer 2020 they plan to operate just 12 flights, with Boeing 737-700 with capacity of 141 seats. Average load factor of SAS in 2019 was 75.2% so that would bring 1,272 Norwegian tourists to Valencia. According to the National Institute for Statistics in Spain, Scandinavian tourists on average spend €1,264 per stay. To sum things up, this tiny little short summer route is expected to bring more than €1.6 million. Not bad, is it? Aviation is not just a beautiful and very addictive industry to work in, it is also the key enabler for globalisation, freedom and peace. Since its inception, it has been driving, spreading and facilitating economic development all around the world. It is through aviation that even people living in the poorest countries on the planet can have a fighting chance for a better life. Let’s not forget that.
About the author Juraj Toth is the managing director at AviaDev Europe, a networking event that brings together the community of regional airports, airlines, suppliers and tourism authorities and creates opportunities for the industry decision makers to discuss route development for their markets.
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Aerotropolis business magnets How are the world’s airport city/aerotropolis developments faring? Some hugely ambitious projects in the Asia-Pacific region come under the microscope in the first of a two-part global review by Dr John Kasarda.
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oday’s airports are powerful business magnets and metropolitan region economic accelerators. Functioning much like central train stations of our urban past, they increasingly attract and catalyse business activity, employment and commercial development around and outward from them. But their impact is far greater and more spatially and functionally pervasive. Airports themselves frequently contain thousands of acres of commercial real estate ranging from terminal retail and leisure services (sometimes exceeding billions of US dollars in annual sales) to office buildings, hotels, and convention and exhibition centres to bonded and free trade zones complete with high-tech assembly and value-added logistics along with biomedical product, perishables, and e-commerce distribution. Such commercial development has become instrumental in non-aeronautical revenues exceeding aeronautical revenues for a growing number of airports. As major airports take on most functions of metropolitan centres, including cultural attractions and leisure destinations – epitomised by Singapore Changi’s Jewel – they have become urban realms (airport cities) in their own right. And as the concrete interfaces where the global meets the local in physical flows of time-sensitive, high-value products and people — from fresh lobsters and vaccines to investment bankers and multi-national firm lawyers — air gateways are rapidly drawing modern aviation-oriented businesses and industries to their outlying areas.
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These businesses and industries (and associated residential developments) feed off each other and their accessibility to the airport, giving rise to an extended aerotropolis of which the airport city serves as the multi-modal, multi-functional commercial and logistics core (see www.aerotropolis.com).
Trendsetting China Asia leads the way in airport city and aerotropolis development and China is the region’s most enthusiastic adopter of the aerotropolis model, with more than 100 of its airports and their surrounding areas incorporating its principles. Among the most prominent are Beijing Capital (PEK), Shanghai Hongqiao (SHA), Guangzhou Baiyun (CAN) and Zhengzhou Xinzheng (CGO). Beijing Capital International Airport — Asia’s busiest, serving approximately 100 million passengers in 2019 — is corner-stoned by its airport city logistics park (ACLP). The $900 million ACLP consists of air cargo and air express centres, import/export warehouses, an integrated support service area with related office complexes, and bonded product exhibition. From 2018 to 2020, new enterprises in biomedicine, smart electronics, and cross-border e-commerce located in the airport city logistics park. The ACLP is now part of the 178-square-kilometre Beijing Airport Core Economy Zone (BACEZ) spreading into Beijing’s Shunyi District. The BACEZ contains more than 3,000 enterprises, including operations of over fifty Fortune 500 firms. The Shunyi portion of the zone is continuing its transition from more-traditional industries (automobile production, for example) to
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high-tech assembly and knowledge-based business services more oriented to air transport. Meanwhile in Shanghai, the seamless fusion of the airport with subway, regional and high-speed rail drives an impressive airport city adjacent to Shanghai Hongqiao. Some of Shanghai’s more distinctive office buildings make up this airport edge city. By 2020, over 300 high-end structures had been built, comprising approximately 5.6 million square metres of floor space at a total investment of exceeding $100 billion. This includes the massive two-million-square-metre national exhibition arena (the largest in the world) along with office buildings housing international and domestic corporate headquarters, knowledge workers in advanced business and professional services, financial and trading enterprises, economic organisations, and upscale retail. Between 2018 and 2020, prestigious international schools, a Medical Zone containing hospitals providing nearly 2,000 beds, and four five-star hotels were added. About 650,000 people currently work in Hongqiao Airport City, also known as the Hongqiao CBD (Central Business District). The sprawling Pearl River port city of Guangzhou has a major advantage in terms of its aerotropolis development as Baiyun International Airport serves as the hub for China Southern Airlines (China’s largest in fleet size, revenue, and passengers carried) as well as the Asia-Pacific hub for FedEx. Yet a Guangzhou Aerotropolis had been slow to materialise, due in part to the inability to align local jurisdictions and other key stakeholders for co-ordinated actions. The establishment of the 116-square-kilometre cross-jurisdictional Guangzhou Aerotropolis Development District (GADD) in September 2015 reconciled this problem. Catalysed by an expanded bonded zone and the airport’s magnificent new passenger terminal, Guangzhou Aerotropolis investment accelerated between 2017 and 2020 in logistics and cross-border e-commerce, trade and exhibition, and hospitality as well as office building complexes. Among the biggest are the 67-hectare China–Australia–New Zealand–South Korea Free Trade Business Park ($602 million) and the
$1.3 billion Greenland Group/Guangdong Province Airport Authority joint venture on 33 hectares. Both developments are just three kilometres from CAN, with the former focusing on trade, and the latter mostly on aviation-industry headquarters, financial institutions, government administrative offices and hotels. Centred around Zhengzhou Xinzheng International Airport (CGO), the 415-square-kilometer Zhengzhou Airport Economy Zone (ZAEZ) has grown so remarkably since its formal inception in March 2013, that in April 2019 the People’s Daily crowned it ‘China’s Aerotropolis’. Over 200 million smartphones were assembled in the ZAEZ last year, generating $44.2 billion in electronic information industry output. Smartphone assembly parks are complemented by rapidly developing biomedicine parks, silicon wafer manufacturing facilities, hotels and office buildings as well as construction of one of China’s largest trade and exhibition complexes. In 2019 alone, 22 major projects settled in the ZAEZ accounting for a combined investment of $11.9 billion. With its 29 international air cargo routes, CGO has been China’s fastest growing in air cargo volumes during four of the last five years. Future China aerotropolises in planning include those around the spectacular Beijing Daxing International Airport that opened in September 2019 and in Ezhou in central China’s Hubei Province, where the provincial government is teaming with SF Express (China’s primary air logistics provider) to develop a $6 billion air cargo airport that they ambitiously envision will be the largest in Asia with a scalable capacity of 7.6 million tonnes of cargo annually.
Elsewhere in Asia-Pacific Airport city and aerotropolis development has been highly active in numerous Asian locations beyond China. Incheon International Airport (ICN), with 71.2 million passengers and 2.5 million tonnes of cargo in 2019, anchors the most comprehensive airport city and aerotropolis in the Asia-Pacific region. ICN’s two terminals lead the world in duty-free sales (over $2.4 billion in 2019). There is also substantial commercial real estate development on its vast property, including (among others) office building complexes, five-star hotels, integrated gaming resorts, water parks, and major logistics zones. Maglev rail connects key sections of airport property. Outside ICN’s fence, the 209-square-kilometre Incheon Free Economic Zone is fostering development of the greater aerotropolis. The Zone attracted over $40 billion in investment in modern goods handling and business services sectors between 2010 and 2020. Arguably, the most impressive cluster is the Songdo IBD (International Business District), a $35 billion smart city being built from scratch on 6.1 square kilometres of reclaimed land. Approximately 80% complete, progress at the Songdo IBD slowed in the past three years due to a fall out between its two developers – New York’s Gale International and South Korea’s POSCO E&C, the nation’s top steel producer. Hong Kong International Airport (HKIA) and its outlying areas have likewise fully embraced airport city and aerotropolis development. In addition to extensive terminal retail and leisure services, the airport hosts major hotels and boasts an international conference and exhibition centre in AsiaWorld-Expo, a multi-purpose World Trade Centre, and the world’s busiest air cargo facilities. Tung Chung New Town lies just 500 metres from the airport boundary, where high-rise residential towers, shopping centres, and cultural venues continue to expand.
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Also, the nearby Hong Kong Disneyland Resort welcomed nearly seven million visitors in 2019. Two new themed areas were under construction in 2020 — Arendelle: The World of Frozen and Stark Expo Hong Kong. The opening of the 55-kilometre Hong Kong–Zhuhai–Macau bridge in October 2018 was pivotal in integrating China’s Pearl River Delta (the ‘Workshop of the World’) with HKIA. Together with fast-ferry services to Delta coastal cities and an efficient airport express train, this bridge has made HKIA’s airport city the quadrimodal CBD of an extended aerotropolis populated by approximately 40 million. In Singapore, Singapore Changi’s extensive array of terminal retail venues along with leisure offerings — including exotic gardens, hospitality services, movie theatres and swimming pools — are instrumental in the airport’s frequent rating as the world’s best for passenger amenities. The opening of Jewel Changi Airport in October 2019 on 3.5 hectares of land next to Terminal 1 topped all airport city developments. Jewel’s distinctive glass-and-steel façade, rising ten stories with 134,000sqm of floor area, represents an amazing leisure destination of gardens, hiking trails, 300 retail and dining outlets, a hotel and a 40-metre-high rain vortex at its centre, among other attractions. Extending outward from the airport are clusters of logistics and business parks, conference centres, university campuses, and integrated resorts. In India, the GMR Group, which operates Hyderabad’s Rajiv Gandhi International Airport, is executing a theme-based airport city master plan consisting of six major commercial clusters: aerospace, business services, education, entertainment, health, and logistics. Each cluster is being developed with unique design features reflecting its land-use functions. Its 1,500 acre airport city includes a multi-product special economic zone consisting of temperature controlled and fast-cycle distribution facilities, MROs, aircraft engine parts manufacturing, and other aviation-oriented businesses. Stretching 10 to 20km outward from the airport, a greater Hyderabad Aerotropolis is dominated by IT and other high-tech, aviation-oriented sectors. India’s IT giants, Infosys and Wipro, have substantial campuses, as do US-based Microsoft and aerospace firms, such as Sikorsky. In Malaysia, Kuala Lumpur International Airport (KLIA) aims to become a major platform for commercial development and international trade under the name KLIA Aeropolis. Aeropolis is expansive, covering 10,000 hectares, of which 3,000 hectares are geared to commercial, industrial, institutional, and leisure uses. While Aeropolis has achieved several significant commercial goals to date, including having its own Formula 1 racetrack (pictured above) and excellent terminal retail and passenger leisure services along with five-star hotels, its full promise has yet to be attained.
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As of 2020, Malaysia Airports Holding Berhad, which operates both the airport and Aeropolis, remained focused on implementing plans for extensive airport city and aerotropolis development. Elsewhere, in Chinese Taipei, protests over farmland expropriation has slowed the development of the 4,500-hectare Taoyuan Aerotropolis adjacent to Taoyuan International Airport. Conflicts with farmers and other landowners as well as environmental issues were being addressed in 2020 by Taoyuan County officials and central government bodies in efforts to jump start the national government’s flagship aerotropolis project, originally expected to attract $16 billion in investment. While in Australia, in 2019 plans were completed for a Western Sydney Aerotropolis around Sydney’s second international airport to be constructed about 55km west of Sydney’s CBD. The aerotropolis is being backed by huge financial commitments by the central government for connecting rail and highway infrastructure with significant private sector investment already committed by a number of international firms. The target date for airport and aerotropolis operation is 2026. Finally, considerable investment in airport cities and extended aerotropolises is also proceeding on and outward from U-Tapao Airport on Thailand’s Eastern Economic Corridor and Clark Airport in the Philippines. While both are former US air bases, Clark envisions itself as Manila’s second international airport and U-Tapao Bangkok’s third, the latter to be connected by high-speed rail to the city’s downtown in under an hour. San Miguel Corporation, the Philippine beer giant, has proposed to construct a new international airport following the aerotropolis model in Bulacan, 11 kilometres north of Manila, but environmental issues concerning the adjacent estuary as well as protests by local fishermen, who would be impacted, have impeded progress. The projects described above represent some of the largest, but by no means only airport city and aerotropolis initiatives in Asia and the Pacific. Many others are moving forward that should solidify this global region’s leadership position in airport-linked commercial and industrial development for decades to come. In the next issue of Airport World, I will provide updates on key airport city and aerotropolis projects in the Africa, the Americas, Europe and the Middle East. AW
About the author Dr John Kasarda is president of the Aerotropolis Institute China and a professor at the University of North Carolina’s Kenan-Flagler Business School. He can be reached via Kasarda@ aerotropolisbusinessconcepts.aero.
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Big plans for Newark Liberty HOK’s Carl Galioto and William Kenworthey outline the vision to transform Newark Liberty into an airport city connected to rail, commerce and community.
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OK recently collaborated with the New York Building Congress on a report outlining ambitious enhancements to transform Newark Liberty International Airport (EWR) into an airport city. Recognising the potential for airports to offer the speed, accessibility and mobility critical to today’s globalised economy, cities across the globe have begun actively pursuing large-scale, mixed-use developments directly adjacent to airports. A key component of these airport-centred urban economic regions or “airport cities” is their direct connection to the central business district through regional rail. Successful examples of airport cities around the globe include Singapore Changi, Amsterdam Schiphol and Frankfurt and Munich airports in Germany. In almost all cases, airport cities benefit from the unique and powerful confluence of transportation modes and the shifting global mindset of businesses. Metropolitan New York City has no such airport. None of the city’s three main airports have direct connections to regional rail, nor do they enjoy the benefits of a true airport city. A recent report by HOK and the New York Building Congress outlines a way to remedy that. The HOK-NYBC proposal imagines a new headhouse for Newark Liberty located just east of the airport. This new headhouse would attach directly to the Northeast Corridor (NEC) rail line, the nation’s most heavily used rail system. Airline passengers would shuttle between the headhouse and the terminals via an automated people mover. More importantly, the relocated headhouse would offer passengers the only true one-seat ride from Manhattan to one of the city’s three airports. Connecting the headhouse to the rail line would help spur the development of an airport city – home to corporations, technology companies and service industries that require convenient multimodal travel and hospitality amenities.
Newark Liberty has nearly 480 acres of contiguous vacant, industrial and low-rise commercial properties located within half a mile that could provide the backbone for a new EWR City. EWR City would be a destination in and of itself with a conference centre, offices, commercial spaces and hotels. It also could provide much-needed economic opportunities for the people of Newark, where the unemployment rate is more than twice the national average. Throughout EWR City, there would be opportunities to increase regional green space, including a sloping landscape on the headhouse roof and courtyards between buildings. A physical connection to NEC also offers travellers the option of taking Amtrak Acela trains to Boston, Philadelphia and Washington DC, which would free up New York City’s notoriously congested airspace. Airlines could benefit, too, by replacing these short trips with more lucrative long-distance flights. EWR City and a combined air and rail hub at Newark Liberty speak to the future of transportation and economic development. Best of all, the components are all in place to make this vision a reality. There’s the existing rail line. The international airport. The nearby business and industry. All that is needed now is the willingness to bring them together as one.
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HOK’s team behind the report Carl Galioto, president and managing principal of HOK’s New York studio and William Kenworthey, regional leader of planning in the firm’s New York office, led the Newark Liberty report with analysis and visualisation support from HOK urban designer, Jose Gerardo Ponte Neto.
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CUSTOMER SERVICE
Fly easier Rich Stinson tells us more about San Antonio International Airport’s multi-layered approach to customer service and how it is using technology to enhance the visitor experience.
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ike many airports throughout the world, San Antonio International Airport (SAT) wanted to provide a sense of place for passengers when travelling to or from San Antonio. To accomplish this, Karen Ellis, SAT’s chief customer experience officer, has built a team that consisted of a marketing section, customer experience section and an arts, music and culture section, all working together to replicate the sights, sounds, flavours, smells and rich culture of a city that is more than 300 years old. Whether a passenger is arriving in San Antonio for the very first time or returning to their lifelong home, the airport is a warm and immediate reminder that you have arrived deep in the heart of Texas and the state’s most historic city. The results of Ellis’ efforts were fruitful – earning SAT the 2018 Best Airport Award for Customer Service from ACI-NA. But the genius in the application was the incorporation of technology at every step, to help maximise the reach of the airports’ efforts to the greatest number of passengers. One such example was the roll-out of the airport’s Park Assist feature. Passengers are able to access the airport’s webpage, and in
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real time, see the number of vacant parking spaces in each of its various parking structures – Economy, Long Term and Short Term. Through the use of a mobile application, real time updates could be monitored while passengers were in transit to the airport. Once passengers arrived, hundreds of cameras placed throughout the parking structures would illuminate parking spaces – indicating if they were vacant or occupied. If the lights were red – the space was occupied. If green – it was vacant, and if blue, it was an available ADA parking space. “Passengers no longer wasted time driving up and down rows, only to be frustrated by finding a smaller car parked in what appeared to be an open space,” said Clay White, SAT’s customer experience manager. “They simply followed the coloured lights directly to an open and available parking space. Passengers loved the convenience.” The technology has saved passengers precious time searching for a parking space. Data shows that the average time a passenger spends searching for a parking space is now less than five minutes. In addition to saving time, it lowers the stress and anxiety of flying – making the flying experience easier.
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An area Ellis placed special emphasis upon was the customer experience for passengers requiring easier accessibility. Applying a technological solution, SAT partnered with AIRA – a service that helps visually impaired individuals live independently. SAT purchased the AIRA service within a geo-fenced area encompassing the entire airport and offers it as a free service to all of its visually impaired passengers. Passengers requiring the service simply access it through their mobile device and are quickly connected to a live operator through the application and their cell phone. The trained operator has the ability to view a map of the entire airport, while also determining exactly where the passenger is located. If a passenger states they need help finding their gate, by accessing the camera on the passenger’s phone, while also synchronising their location with the map of the terminal, the operator can speak to the passenger and guide them to exactly where they need to be – all while avoiding the suitcases, wet floor signs and other items that can make navigating a busy terminal seem like manoeuvring through an obstacle course. Specially trained operators serve as visual interpreters and navigators for the visually blind or impaired, allowing them to independently navigate the airport through the use of technology.
Local resident and frequent air traveller, Michael Guajardo, is one of the many to endorse the new service. Guajardo, who has retinitis pigmentosa, which caused him to lose most of his vision when he was in his early-twenties, said: “There are a lot of obstacles that I need to avoid at the airport, and the service from SAT and the app just make it a lot easier. They are able to guide me directly to where I need to go.” Not all technological investments for customer enhancements are geared toward expediting a passenger’s movement through the terminals. Inevitably, there will be some wait time while travelling – be it at the gate prior to boarding or at baggage claim after arrival. Knowing this, SAT has installed a series of interactive Augmented Reality (AR) stations that have proven to be a huge hit with travellers of all ages. Enforcing the sense of place the airport provides, children are both entertained and educated, as they take ‘selfies’ with heroes from the Alamo while learning about San Antonio’s significant historical figures. Located at various locations, passengers can take a ‘virtual’ tour of the Alamo battlegrounds while learning interesting facts and seeing virtual images of historical maps and artefacts. The Alamo AR exhibits, created in partnership with QuantumERA, are identified with barcodes that passengers scan with their mobile devices. It then connects to a virtual video of a genuine historical figure, sharing their story from a first-person perspective, with a little Texas flair that only San Antonio can provide. “I liked seeing Davy Crockett,” said Erin Stinson, a nine-year-old third grade student from San Antonio. “I have been to the Alamo and I felt like I met Davy Crockett at the airport.” Ellis and her team are just getting started, and have a number of other technology-based enhancements planned to continue to provide the highest quality passenger experience and truly make flying easier at SAT. Application-based technology will soon allow passengers to purchase food, drinks or retail items from any of the concessions within the airport – and have them delivered to their location. No more travelling the terminals to find your favourite restaurant or convenience item, then losing your seat or missing an announcement about a gate-change. Passengers will simply place their order via a mobile app and their items are delivered to their location. And this summer, Ellis’ team will launch a brand-new, state of the art airport website that will include all of the current webbased best-practices and technologies. The all-inclusive site will provide everything from real-time flight updates, to parking, wayfinding and more. If passengers do not have the time to take in the current art exhibit displayed at SAT – they can view it virtually through the new website. Collectively, all of the efforts of Ellis and her Customer Experience Division support her recently launched airport brand campaign, ‘Fly Easier – Fly SAT’. “Our customer experience at SAT is designed to make everything associated with air travel easier,” said Ellis. “Technology is rapidly changing and evolving – and we are continuously looking at ways to incorporate technology into aspects of our customer service to AW make flying easier at SAT.”
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SUSTAINABILITY
Flood warning!
NACO’s Vivek Sindhamani and Peter Vorage discuss the growing threat of flooding to airports and how some major hubs are planning ahead to increase their resilience to rising water levels.
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uring the past five years, over twenty major, and many more small-island airports, have flooded due to extreme rainfall events or storm surges in combination with a rise in sea levels. The list includes Chennai International Airport in India in 2015; Japan’s Kansai International Airport as a result of Typhoon Jebi in 2018; Cochin Airport in India which was left partly submerged after severe rainfall in Kerala in 2019; and Grand Bahama International Airport in the Bahamas, closed in the wake of Hurricane Dorian the same year. These events are just the tip of the (melting) iceberg as the United Nations Intergovernmental Panel on Climate Change (IPCC) has predicted a continued increase in sea levels and occurrences of erratic rainfall events. Many ACI member-airports were constructed in coastal or river floodplain areas since these were the only large, flat surfaces available for safe aircraft operations. This situation has become increasingly critical due to increased urbanisation in these airports’ surrounding areas. This in turn has reduced natural water buffering putting airport flood resilience under further pressure. As a result, airports are now uniquely vulnerable to the increasing effects of climate change, and to flooding in particular.
Disruption to airport operations In 2011, extreme rainfall caused Bangkok’s main river to flood a large part of the city, including Don Mueang International Airport (pictured above). The resulting effects were so severe that it took a year to carry out the extensive repair work required and replace damaged electrical and IT systems. During this period, all flights had to be diverted to Bangkok Suvarnabhumi. This is a prime example of what the finance and insurance sector term the physical risk of climate change.
Other examples may be found following the aftermath of hurricanes such as Katrina in New Orleans and Sandy in New York in 2012, where flooding at regional airports meant that disaster relief teams had to use alternative airports and travel by road to reach disaster-hit areas. You might think that the enormous potential cost and operational disruption would lead authorities to ensure their airports are well defended. Sadly, in our experience, this is not the case. Today, the average airport is built on legacy infrastructure with gradual expansion cycles. In most cases, drainage systems were not designed to cope with the increase in extreme rainfall intensities that have occurred and are expected to continue, so the threat of extreme weather events poses a very real concern. The United Arab Emirates, for instance, has swiftly refocused its attention on the potential of flooding after the downpour and floods of 2019. The situation becomes more acute when the airport is located in a heavily urbanised area, floodplain or reclaimed land.
Societal disruption The closure of any airport can have a considerable economic, operational and, indeed, reputational impact on the city, region and even country it serves as when an international airport is inaccessible, the country it is located in along with its services are similarly affected. While a storm may pass within a few hours, it can take several weeks, months or longer to rebuild damaged infrastructure and resume normal operations. And in cases like these, it is not just reputations that are at risk, but business itself. Talking to The Guardian newspaper in October 2019, former Bank of England governor, Mark Carney, noted that “Firms ignoring climate
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crisis will go bankrupt,” either because their insurers will refuse to cover their asset(s) if they are clearly at risk, or through being punished by investors for not moving towards zero‐carbon emissions and thus ending up going bankrupt; so called ‘transitional risk’. The insurance sector is no less vocal about this. The International Association of Insurance Supervisors (IAIS) published a 2018 Issues Paper on Climate Change Risks to the Insurance Sector and AXA Insurance’s CEO, Thomas Buberl, has even warned that more than four degrees Celsius of warming this century would make the world “uninsurable”. The closure of airports, of course, has a wider societal impact than the loss of a single business. For example, when Fiji’s main airport was closed due to flooding in 2012 following Cyclone Evan, it sent shockwaves through the country’s tourism industry and precipitated a major review of the airport’s business continuity plans. During floods, airports can be a necessary lifeline for evacuations and the supply of relief goods; a key link in the chain of disaster response for cities and islands. So, being able to operate during extreme weather events is not only important, it is essential. Worth noting here is the fact that often it is not the extreme climate event itself that hurts the tourism industry, but an evident lack of preparedness to deal with such an occurrence. This, in turn, can hurt the reliable image some countries require to be seen as a major tourism destination.
Business continuity Several airport hubs have recognised the need for action and are now taking important steps to plan ahead and increase their resilience to this threat. In recent years, NACO has worked closely with clients and their stakeholders at Amsterdam Schiphol in the Netherlands, Singapore Changi in Singapore and Kansai International Airport in Japan to identify in detail how climate change could impact on their respective assets and operations by carrying out scenariobased risk assessments and mapping potential vulnerabilities. We have been actively involved in capturing the learnings from these projects in several papers and reports outlining how airports can take key steps towards resilience.
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Water world: Don Mueang Airport pictured during the 2011 Bangkok floods.
These have included ‘Preparing Singapore Changi Airport for the effects of climate change’ in the Journal of Airport Management; and The Water Vision Schiphol 2030, developed by Nanco Dolman, which was recognised and included in the United Nations Framework Convention on Climate Change (UNFCCC) Private Sector Initiative data-base of adaptation actions. Similarly, our client, Sebastien Lacoin, wrote about the learnings from the Kansai Airport flood in his article ‘Climate Change Resilience Strategy – Redefining Flood Protection At Kansai International Airport’, published in ICAO’s Environmental Report of 2019. In other areas, Hong Kong International Airport is also leading the way in terms of involving financial and insurance stakeholders in the airport resilience debate, led by the Task Force on Climate Funding Disclosure (TFCD). The International Civil Aviation Organization (ICAO) and Airport Council International (ACI) both play vital roles here. While ICAO sets the standards for future airport sustainability and resilience, ACI facilitates the process of changing and developing new standards using the types of valuable experience gained by member airports’ as described previously. One of the drivers behind the recent activity by airports may be that they have come to realise that the potential cost of inaction is currently estimated to be four times the cost of action. Being proactive and thinking ahead might also help ensure the sustainable future of their airports.
About the authors Vivek Sindhamani and Peter Vorage have extensive experience of the potential impact of climate change on airport infrastructure and operations. NACO is owned by Royal HaskoningDHV, which have worked on more than 700 airport projects over the last 71 years.
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Time to evolve?
INFORMATION TECHNOLOGY
Honeywell’s growth sales leader for airports, Gert Taeymans, explains how adopting an operating expenditure (OPEX) business model and new technology can help airports optimise operational efficiency.
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oday’s airports face a number of new business dilemmas, one of which is to improve the airport experience for passengers at the same time as handling more traffic than ever before. It is quite a challenge and the risks of getting it wrong are high, as failing to efficiently handle the continued upward trajectory in traffic will inevitably lead to delays and customer dissatisfaction. And with many airports already at capacity, and major infrastructural upgrades not always an option, often the only solution is finding new ways to improve operational efficiency.
Creating more capacity To address the capacity issues within existing physical constraints, airports need to conduct a complete reappraisal of the operational models they already have in place. Unfortunately, many airports today tend to take a siloed approach to operations, addressing specific problems on a case by case basis without looking at the big picture. Developing a holistic view of the operations is essential and requires an audit of all existing processes and systems.
Finding opportunities for optimisation Typically, the biggest inefficiencies exist at the intersections between different processes and systems. Many airports, for example, could do a lot more to improve the integration of airside and terminal operations. By breaking down those silos, and enhancing integration, it is possible to create the kind of seamless operation that promotes operational efficiency. While optimising structure and processes should be the priority, emerging technologies are increasingly at the heart of efforts to drive performance. Greater use of Internet of Things (IoT) enabled tracking has provided visibility of the overall passenger journey. The insights generated by this visibility are helping to improve flow and the overall experience, so
much so that queues are shortened despite introduction of more stringent security requirements. Numerous airlines have begun trials of automated boarding gates in the last couple of years. Crucially, organisations are finding that when automation technology is utilised, customer satisfaction tends to be higher.
The OPEX model evolution With sophisticated digital technologies becoming more prevalent, airports are increasingly looking to external experts for help overseeing their modernisation initiatives, partnering with external managed service providers to both assess existing processes and stay in front of the latest innovations. Traditionally, it’s been the norm for organisations to manage this in-house, but faster technology lifecycles are driving up capital expenditure (CAPEX), making this approach unsustainable. Shifting to the operational expenditure (OPEX) model that managed service providers offer helps ensure airports are at the optimal point of the evolution cycle, while also drawing on the expertise of technology specialists. Moreover, this support helps ensure effective integration with legacy infrastructure. This is important as new technologies are central to driving greater capacity, but optimal return on investment depends on an implementation strategy that maximises the value of systems already in place. While a root and branch review of processes and systems might not be required for every airport today, doing so makes good business sense. Most smaller airports, for instance, will not be operating anywhere near maximum capacity, but would still derive significant benefits, including greater profit margins, by increasing the integration of their operations. Technology is central to achieving this, and by adopting a service agreement approach, airports of all sizes can stay at the forefront of innovation. AW
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F&B INNOVATION
Eating out! Dubai’s new food court of the future, Australia’s first working brewery inside an airport and Irish food and drink taking centre stage at Dublin Airport are on the menu in our global retail/F&B round-up.
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MSHost International claims to have opened the food court of the future with the unveiling of its 170sqm Food Village at Dubai International Airport (DXB). According to HMSHost, DXB’s Food Village has combined the best of design, brands and engagement to create a “truly future-focused food court experience for passengers”. It adds: “From an eclectic dining setting reminiscent of a Middle Eastern sense of place, and intelligent lighting design to direct passenger flow, through to live cooking elements and the first truly mobile food cart, Food Village can take passengers around the world in ten plates.” Combining franchise brands with home grown heroes, HMSHost believes that the new concept is an expression of its ability to select the best performers from across the globe and bring them together in a cohesive setting. The new location at DXB’s Concourse C (Terminal 3) features strong international brands like KFC, McDonalds and American Chinese Restaurant, Panda, along with a host of other concepts designed to appeal to both local and international travellers. Eugene Barry, Dubai Airports’ executive vice president, commercial, commented: “We have enjoyed a successful partnership with HMSHost for a number of years, and our partnership has evolved as customer expectations and travel behaviour has developed. “The addition of these 14 new food concepts supports our strategy to not only be the world’s busiest international airport, but also the world’s best for customer experience.”
New brewery and beer hall opens at Melbourne Airport Stomping Ground Brewing Co has opened a new brewery and beer hall at Melbourne Airport – the first working brewery inside an airport in Australia, and only the fourth in the world. Located in Terminal 3 at Melbourne Airport where Delaware North has operated food and beverage services since 1990, Stomping Ground will have 30 taps pouring a wide range of beers brewed on site and at the company’s main brewery in Collingwood. Each year up to 30 different beers will be brewed on-site, so frequent travellers can experience new flavours every time they travel. “Delaware North is thrilled to be partnering with Stomping Ground Brewing Co on their exciting new brewery and beer hall in Melbourne Airport,” said Gary Brown, Delaware North’s managing director for Australia and New Zealand.
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“This fantastic concept further enhances the excellent range of authentically-Melbourne dining and drinking options already available to passengers at Melbourne Airport, and provides travellers with a unique taste of the city’s outstanding food and craft beer scene.” Stomping Ground joins a number of other Delaware North-operated concepts, including Pickett’s Deli from celebrated Melbourne restaurateur Scott Pickett, as well as EARL Canteen, Cobb Lane and Proud Mary. “We’re incredibly excited to be representing Melbourne’s thriving independent brewing scene, and joining some of the city’s best food and drink operators at our own airport,” enthuses Stomping Ground co-founder Justin Joiner. “We’ll be tapping new beers most weeks, so there could well be a new beer added between when you depart and arrive home.”
Irish F&B brands to take centre stage at Dublin Airport Irish food and drink brands will be showcased at Dublin Airport under a new 10-year contract that the airport has signed with international food operator SSP. SSP will operate 24 separate F&B outlets at the airport and will work with Irish brands such as Bretzel Bakery, Camile Thai, Cloud Picker Coffee, Handsome Burger, Offbeat Donuts and 3fe coffee. Sustainability will be a key feature of SSP’s new contract at Dublin Airport, with a focus on a removal of single-use plastic at its outlets. Local and certified ingredients will also be used in the dishes served at the new units. “Ireland has a thriving food and drink scene and with this new partnership with SSP, Dublin Airport will be able to offer some really exciting Irish concepts to the travelling public,” said Dublin Airport’s managing director, Vincent Harrison. “Almost 100,000 passengers use Dublin Airport every day and we want to ensure that our customers have a quality dining experience, with a sense of connectedness to Ireland using fresh and local quality produce.” Under the new agreement, SSP will open 24 units at the airport in both landside and airside locations. It took over the operations of existing suppliers in February and will rebrand them over time to incorporate a mix of Irish and international brands, and new concepts. SSP has also created several specific concepts tailored to Dublin Airport, some of which will reflect the passenger mix at each terminal. At Terminal 2, for example SSP will open several outlets that will celebrate the close links between Ireland and North America to appeal to transatlantic passengers.
F&B INNOVATION
It has, for instance, partnered with Teeling Whiskey to create Whiskey Bread, a new all-day Irish bar and kitchen which will pay homage to the culinary history between America and Ireland dating back to the 1600s. The new outlets will incorporate the latest technology, including mobile ‘order at table’ services to provide a smoother and quicker customer experience. SSP already employs 300 people at Dublin Airport and the new contract means that about 200 existing staff will transfer to the company. Richard Lewis, CEO of SSP UK & Ireland, noted: “We are confident that our bespoke line-up will meet the diverse needs of all our customers, providing a true Irish experience to the international traveller as well as those looking to enjoy a real taste of home.”
A big Texas welcome for new F&B outlets Vino Volo and Paradies Lagardère recently celebrated the grand opening of two new Texas-themed wine bars, Vino Volo High Plains and Vino Volo Hill Country, as well as a handful of new retail and dining concepts at Austin-Bergstrom International Airport. The Vino Volo Hill Country concept was inspired by a variety of Texas wineries including Pedernales Cellars, Duchman Winery and William Chris Vineyards, and the geography of Fredericksburg Texas – home of Hill Country. Travellers are greeted by an extensive wine selection that guests can purchase by the glass, flight or bottle to take with them. The restaurant can also ship bottles for customers. “Vino Volo has been a long-term partner with Austin-Bergstrom International Airport, and we’re excited to showcase local Texas wines at our new locations,” says senior vice president, Mark Sill. “Travellers at AUS will find a variety of superior quality wines, local blends made right here in Texas, and wine flights and retail bottles for sale, as we’re the only airport wine bar to offer this. We offer unique experiences that allow guests to taste, learn and enjoy.” While Paradies Lagardère president and CEO, Gregg Paradies, enthuses: “We are thrilled when these packages were awarded to us, and we’ve been happy with the end results and think our customers are too! “We’ve introduced powerhouse brands and locally-influenced concepts that enhance the customer and traveller experience at the airport and has made the airport a destination in itself.”
OTG and Starbucks announce new partnership OTG and Starbucks have announced a new partnership with a focus on “new experiential concepts and innovative technology” to better serve travellers at airports across the US. OTG is known for its innovative, often IT embracing approach to dining and retail in airports that include Newark-Liberty, LaGuardia, New York JFK, Philadelphia and George Bush Intercontinental Airport. In addition to being one of the most familiar brands in the world, coffee giant Starbucks is also known for its signature customer experience. As a direct result of the new tie-up, OTG and Starbucks say that they will “introduce a variety of traditional and experiential locations, while exploring new technology to better serve customers anywhere in the terminal”. Locations, they note, will be thoughtfully placed and move throughout the airport depending on time of day, providing travellers with a “Starbucks experience” at their gate upon departure or arrival. OTG CEO, Rick Blatstein, says: “Our mission is simple: deliver our guests what they want in the most efficient, frictionless way possible. This collaboration will allow us to introduce a fully re-imagined Starbucks customer experience, ensuring guests access to their preferred cup anywhere in the airport.”
Bigger and better The F&B offerings at Mactan Cebu International Airport in the Philippines just got a little bigger and better with the opening of eight new outlets. Among the new facilities is a food court called Food Avenue, which boasts 426 square metres of space and includes five bespoke food and beverage brands – The Bakery, Filipino Delights, Taipei Tea, Lolo Pinoy Lechon de Cebu and Nippon Ramen. F&B master concessionaire, SSP Asia-Pacific, announced plans to open 27 new F&B outlets at the airport upon winning the contract in 2018. The new additions means that it has now opened 15 new facilities. Mark Angela, CEO of SSP Asia-Pacific, said: “Our first units opened in Cebu have traded well since launch and continue to perform above expectations. The quality of the offer has also been recognised, with our Cabin Bar at Cebu being named Airport Bar of the Year for Asia-Pacific at the 2019 FAB Awards. “Our latest F&B outlets offer something for everyone, with popular regional dishes that are close to the heart of local travellers and top global brands that are instantly recognisable among international passengers. We’re now looking forward to working on the next step of our F&B development, which will give customers even greater choice at the airport.” AW
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WBP NEWS
The latest news from ACI’s World Business Partners
Heinemann extends Sydney concession
Heinemann Australia has celebrated five years at Sydney Airport by extending its duty free concession at the gateway until 2029. The news is a major coup for the company, which has operated a Heinemann Tax & Duty Free store at the airport since 2015. “I’m delighted that we have attained this agreement extension, as it not only highlights our partner’s trust in us, but it also reflects the success of our company, as well as our brand at Sydney Airport,” says Marvin von Plato, CEO of Heinemann Asia-Pacific. “The new agreement is based on a collective shared vision concerning an evolution and optimisation of the current space,” says Richard Goodman, managing director at Heinemann Australia. “These include renovations of the Perfume & Cosmetics area and multiple new zones for customers to shop and dwell. “In this respect, we will start converting our Heinemann Tax & Duty Free stores accordingly in 2020. The new retail spaces will set a benchmark for modern duty free shops with an upgraded design and with the newest brands to offer our passengers the very best of airport retail.” At the heart of the company’s plans to elevate the shopping experience at Sydney Airport even further is the introduction of new zones to create an even more seamless customer experience. These areas include generational spaces featuring on trend and new brands targeting brand-driven passengers giving them access to new luxury products.
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Billund to become home to remote tower complex
Danish air navigation service provider, Naviair, has selected an integrated remote tower and approach system from Frequentis DFS Aerosense to help it manage rising traffic demand at Denmark’s regional airports and ease the workload on its air traffic controllers. “Naviair will initially establish a remote tower centre at Billund Airport to manage surrounding air traffic, with the intention of providing central air traffic control services to other regional airports, instead of locally from individual airports,” reveals Navair CEO, Carsten Fich. He insists that locating all air traffic control operators in the same facility will create a better and more flexible working environment for ATC staff, noting that Navair is “looking forward to working with Frequentis DFS Aerosense on this project.” The integrated tower and approach centre is a combination of a remote digital tower (RDT) and an approach automation solution (PRISMA APP). This is the first time that both a digital tower and approach services have been combined as one integrated system. Expected to be operational at Billund in 2022, the centre will be multi-remote tower ready, meaning further airports wanting to obtain the benefits of RDT can be added in the future. Frequentis DFS Aerosense was formed in 2018 after Frequentis and DFS Aviation Services successfully worked together on a remote tower project for Saarbrucken Airport in Germany, whose traffic is now digitally controlled from a facility 450 kilometres away in Leipzig.
WBP NEWS RS&H Region: North America Type of business: Consulting and Management Contact: Donald Andrews E: don.andrews@rsandh.com W: www.rsandh.com Reynolds, Smith and Hills, Inc. (RS&H) is an industry leading architectural, engineering, planning and environmental services firm which has provided services to airports worldwide. RS&H provides services for planning and environmental, terminals and other buildings, and airfields.
Ricondo
MRO Blockchain Alliance
SITA is to play a key role in the newly formed MRO Blockchain Alliance, aviation’s first industry-wide investigation into the use of blockchain technology to track, trace and record aircraft parts. The new alliance comprises leading organisations covering every aspect of the Maintenance, Repair and Overhaul (MRO) chain, from part manufacture and repairs to logistics and smart contracts. The alliance believes that the use of blockchain will simplify and speed up parts tracking while enabling the secure sharing of information between industry stakeholders. While PwC estimates that the use of blockchain could increase aerospace industry revenue by as much as 4% or $40 billion, while cutting MRO costs globally by around 5% or $3.5 billion. SITA’s role as the air transport community’s IT provider is to manage governance for the global alliance, support the working groups and deliver all required blockchain technology components compliant with SPEC2000 and SPEC42 standards. Matthys Serfontein, SITA’s president of air travel solutions, comments: “This initiative is part of SITA’s ongoing exploration of blockchain, a technology that we believe promises tremendous opportunity for streamlining the sharing and recording of information across the air transport industry.”
Malta Airport expansion plan ready for take-off
Region: North America, Europe Type of business: Consulting and Management Contact: James Jarvis E: jjarvis@ricondo.com W: www.ricondo.com Ricondo & Associates, Inc is a full-service aviation consulting company specialising in airport consulting in support of airport owners and operators, airlines, and federal and state agencies. Since its inception in 1989, R&A has been dedicated to solving the challenging problems facing the airport and airline industries. The company is owned and operated by its senior officers and has no other business interest except airport and aviation consulting.
ICTS Europe Systems Ltd
The Design Solution is to play a key role in what has been described as the most radical programme of development and innovation in the history of Malta International Airport. Planned to address the airport’s continuing traffic growth, the transformational plan for the terminal includes a major expansion of floorspace from 18,000sqm to 31,200sqm, particularly in the check-in hall, security area and departure including a significant increase in check-in capacity. Complementing the operational expansion, the development plan also places great emphasis on enhancing the passenger experience and the sharing of a distinct ‘sense of place’. According to the airport, the terminal planning elements incorporate a more natural and effective passenger journey through the terminal, thereby enhancing passenger flow and exposure to the retail and food and beverage offers. Outlining the architectural plan, Graeme Johns, director of The Design Solution, notes: “The plan incorporates three main areas of expansion to the terminal, collectively enabling us to implement a change of image to the exterior appearance of the building that, carefully co-ordinated with our planning input, will help deliver a smarter flow and a new experience for the passenger. “The axial nature of the original building was used to deliver an order to the main architectural elements, thus maintaining the airport’s twin wish to retain the architectural symmetry and design aesthetic of the building.”
Region: Europe, North America Type of business: Security Contact: Efrat Thomas E: efrat_uk@icts.co.uk W: www.ictseurope.com ICTS Europe is a leading provider of aviation security services with a presence at over 80 locations worldwide, with a workforce of over 10,000 employees and a customer base of over 200 clients that includes airlines, railways, cargo companies and governments. With 25 years of experience, ICTS Europe is unique in its unrivalled depth of operational know-how, management expertise as well as innovative in its product and solutions developments.
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HUMAN RESOURCES
PEOPLE
matters Rethinking performance Richard Plenty and Terri Morrissey provide their thoughts on performance benchmarking.
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rguably the world’s greatest sporting event, the Olympic Games, is due to take place again this summer when Japan hosts Tokyo 2020. The Games are a wonderful experience for spectators and participants alike. It is now almost eight years since we had the opportunity to see them in London in 2012 and enjoy the athletics, cycling, yachting and beach volleyball while marvelling at the dedication, persistence and grit of the competitors. Thinking about London 2012 also made us wonder if there was anything we could learn about organisation and human performance from events like the Olympics. This might sound strange as obviously all the participants at the Olympics are elite committed performers at a world-class standard. However, it was the nature of the overall programme that struck us. There are clear winners and losers. Results and feedback are immediate. There is direct competition in the context of agreed formats and rules: the fastest runner, the highest jumper, the quickest time. This is, of course, very different to much of life where many situations are not so clear cut and it can be difficult to know with certainty how well we are doing. Yet, knowing where we stand compared with others, gives us the opportunity to improve our performance and keeps us sharp. How can we ensure high performance and best practice in the world of people performance at airports? In the absence of an ‘Airport Olympics’, to do this fully would mean putting into place an objective and transparent system comparing ‘like with like’ airports. This would need to consider: • The games they play. Airports differ greatly in their size, location, geography
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and climate as well as the range of services they provide and the type of traffic they deal with. They may have different strategic objectives and definitions of success. • The rules they follow. Airports may be public or privately owned, with different views on how closely to follow regulations or acceptable standards of service. They may keep all their services in-house or outsource. • The measures they adopt. For example, there are few standardised measures for assessing people and organisation performance. It is no surprise then, that, in practice, ‘external benchmarking’ and measuring productivity at the airport level can seem so daunting that many airports give up and focus inwardly on their own performance over time. This is unfortunate. While trend analysis provides some level of performance tracking it does not allow for meaningful benchmarking, league tables or comparisons between airports to be made. Focusing on specific areas and understanding, in depth, the details of how performance is measured elsewhere can provide a better starting point and a practical route to improvement. Mutually agreed shared criteria can be developed to make comparisons more meaningful. Having said all this, people are more than numbers and generate value through a combination of intellectual contribution, skills, relationships, attitudes and behaviours. Qualitative as well as quantitative measures can enrich the exchange through conversations, visits, case studies and exchanges. Time for a rethink!
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Jesus Saenz Jr is the new director of San Antonio International Airport replacing Russ Hardy who announced his decision to step down in 2019 to move closer to his family on the US East Coast. Saenz, who left his post as chief operating officer of Houston Airport Systems to take up his new role, will also be responsible for Stinson Municipal Airport. Chief operating officer, Dato’ Mohd Shukrie Mohd Salleh, has been appointed acting CEO of Malaysia Airports Holdings Berhad (MAHB) as it looks for a permanent replacement for Raja Azmi Raja Zanuddin who resigned in December after less than a year in the hot seat. Announcing the decision, MAHB said that Zanuddin had left to “pursue other opportunities”. Amman’s Queen Alia International Airport has a new boss following Nicolas Claude’s appointment as CEO of operator, Airport International Group (AIG). Claude, AIG’s former chief operations officer, succeeds Kjeld Binger, who will continue to act as a senior advisor to the Board. Nompumelelo (Mpumi) Mpofu is the new CEO of Airports Company South Africa (ACSA). ACSA says that the highly experienced Mpofu – the former director general of South Africa’s Department of Planning, Monitoring and Evaluation in the Presidency – joins the company at a time when it is “charting a fresh course for the future”. Tatiana Starostina is the new chief financial officer of Los Angeles World Airports (LAWA) replacing Ryan Yakubik who left LAWA in late 2019 for a position in the private sector. Airport Authority Hong Kong (AAHK) has appointed Ricky Leung as its new executive director for engineering and technology. He succeeds the retiring Alex Kwan. Reporting to the AAHK CEO, Fred Lam, Leung will be a key member of the senior management team.
About the authors Dr Richard Plenty and Terri Morrissey are directors of This Is… and run the ACI World Airport Human Resources Programme. They are authors of ‘Uncertainty Rules? Making uncertainty work for you’ to be released April 6, 2020. Contact them through info@thisis.eu
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