Airport World, Issue 3, 2017

Focus on: Global airport operators Airport report: Charlotte Douglas Special report: Investing in LaGuardia Plus: IT innovation, security & people matters

In the spotlight: Global airport operators June-July 2017 Volume 22 Issue 3 www.aci.aero

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

Airport World Editor Joe Bates +44 (0)1276 476582 joe@airport-world.com Design, Layout & Production Mark Draper +44 (0)208 707 2743 mark@airport-world.com Sales Director Jonathan Lee +44 (0)208 707 2743 jonathan@airport-world.com Sales Manager Ellis Owen +44 (0)208 274 1540 ellis@airport-world.com Advertising Manager Andrew Hazell +44 (0)208 384 0206 andrewh@airport-world.com Subscriptions subscriptions@aviationmedia.aero Managing Director Jonathan Lee +44 (0)208 707 2743 jonathan@aviationmedia.aero Published by Aviation Media Ltd PO BOX 448, Feltham, TW13 9EA, UK

Website www.airport-world.com

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

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

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

Big business Airport World editor, Joe Bates, reflects on how airports continue to attract investors from around the world.

A

nyone in any doubt about the global appeal of aviation and the world’s airports just needs to turn to the ‘A-Z of global airport operators’ feature in this issue to realise that the desire to own, operate or have shares in airports has never been stronger.

Indeed, our comprehensive listing of companies that either own, operate or have stakes in airports outside of their own countries has never been bigger or more global.

It comprises 24 global airport operators from 20 different countries that include traditional airport operators that have exported their expertise internationally, such as Frankfurt and Groupe ADP, specialist investors like MIRA, and companies specifically set up to own and operate airports, such as VINCI Airports.

New additions to the list since our last ‘A-Z of global airport operators’ featured in early 2015 include Mexico’s Grupo Aeroportuario del Sureste (ASUR), Aeroporti di Roma’s majority shareholder, Atlantia, Brazil’s CCR Group and Edeis, which has acquired the airport assets of SNC-Lavalin.

For what it’s worth, our research shows that the highest number of truly global airport operators have their headquarters in France (Edeis, Egis, Groupe ADP and VINCI Airports) and Germany (AviAlliance and Fraport).

The big deals of 2017 to date have included Fraport AG being awarded concessions to operate Fortaleza and Porto Alegre airports in Brazil; Groupe ADP increasing its shareholding in TAV Airports to 46.12%; ASUR taking a controlling stake in San Juan–Luis Muñoz Marín International Airport in Puerto Rico; Zurich Airport being awarded the concession to operate and expand Hercílio Luz International Airport in the city of Florianópolis in southern Brazil; and a Changi Airports International (CAI) led consortium being named as the winning bidder for the 20-year concession to operate Jeddah’s King Abdulaziz International Airport in Saudi Arabia.

There is, of course, no one size fits all solution for airports in terms of ownership

models, as ACI World director general, Angela Gittens, reminds us in her ‘View from the top’ article on page 11 of this ‘global airport operators’ themed issue.

ACI is also quick to point out that it doesn’t favour one particular form of ownership model over another, as what works for one airport, region or country might not work in another.

Its research reveals that some 614 airports globally have some form of private sector participation today. Trailblazers, in this regard, are Europe and the Latin America-Caribbean region where 75% and 60% of passengers respectively travel through airports with private stakeholders.

In the publication, The Ownership of Europe’s Airports 2016, ACI Europe’s director general, Olivier Jankovec, states: “Today, over 40% of European airports have at least some private shareholders – and these airports handle the lion’s share of air traffic.

“This continued business transformation of airports is at its most intense within the EU-28 Member States – and with a number of privatisations in the pipeline, it is only a matter of time before fully publically owned airports become a minority in the EU.” He also notes that there would probably always be some degree of ‘public involvement’, and not only at the smallest airports, which act as a lifeline for their regional communities and are often structurally unprofitable, but also at the largest gateways that are strategically essential assets for national economies.

Charlotte Douglas International Airport is the featured airport in this issue. We also turn the spotlight on LaGuardia Gateway Partners; the global importance of tourism; commercial land development around airports; IT innovation; and security. Who said nothing AW happened during the summer months?

AIRPORT WORLD/JUNE-JULY 2017

3

CONTENTS

In this issue Issue 3 Volume 22 3 Opinion Airport World editor, Joe Bates, reflects on how airports continue to attract investors from around the world.

8 ACI news Sabrina Guerrieri reports on the release of the latest edition of ACI’s Airport Economics Report and a new Employee Survey for Customer Experience (ECE) and provides an update on 2017’s ASQ Forums and strengthening links with ICAO.

11 View from the top ACI World director general, Angela Gittens, reflects on trends in airport ownership.

12 Destination CLT With a new runway and 9-gate concourse expansion on the way and plans to upgrade the existing terminal and commercially develop its surrounding land, these are exciting times for Charlotte Douglas International Airport, writes Joe Bates.

18 The A-Z of global airport operators Which operators have a portfolio of airports across the globe? Joe Bates investigates and talks to some of the key players involved.

35 Going off campus It might not be an equity investor in airports on the global stage, but Flughafen München GmbH (FMG) is arguably one of the most experienced providers of consulting, management and training services to gateways across the world, writes Vicky Donovan.

AIRPORT WORLD/JUNE-JULY 2017

5

CONTENTS

Director General Angela Gittens Chair Declan Collier (London, UK) Vice Chair Bongani Maseko (Johannesburg, South Africa) Immediate Past Chair Fredrick J Piccolo (Sarasota, USA) Treasurer Arnaud Feist (Brussels, Belgium) ACI WORLD GOVERNING BOARD DIRECTORS Africa (2) Saleh Dunoma (Lagos, Nigeria) Bongani Maseko (Johannesburg, South Africa)

36 Taxes, tourism and connectivity ACI World’s senior manager for economics and statistics, Patrick Lucas, reflects on the global importance of tourism and some of the key challenges facing aviation’s role in its future development.

39 Making history LaGuardia Gateway Partners CEO, Stewart Steeves, discusses the biggest PPP project for new transportation infrastructure in US history at New York’s LaGuardia Airport.

43 The SMART decision Airport areas are leveraging multi-modal connectivity to become ‘Innovation hubs’ for today’s smartest initiatives, writes Chris LeTourneur, president and CEO of MXD Development Strategists.

45 Spotlight on security Cameron Mann, Smith Detection’s global marketing director for aviation, talks to Airport World about some of key security challenges and opportunities facing airports today.

47 The new reality?

Airport World takes a closer look at the new HoloLens technology unveiled at the recent Air Transport IT Summit in Brussels.

49 ACI’s World Business Partners The latest news from ACI’s World Business Partners.

50 People matters Terri Morrissey and Dr Richard Plenty reflect on the pros and cons of working in small organisations.

Asia-Pacific (9) Aimen Al-Hosni (Muscat, Oman) Kjeld Binger (Amman, Jordan) Kenichi Fukaya (Tokyo, Japan) Fred Lam (Hong Kong) Seow Hiang Lee (Singapore) Xue Song Liu, (Beijing, China) Kerrie Mather (Sydney, Australia) Emmanuel Menanteau (Osaka, Japan) PS Nair (Delhi, India) Europe (7) Daniel Burkard (Moscow, Russia) Declan Collier (London, UK) Elena Mayoral Corcuera (Madrid, Spain) Arnaud Feist (Brussels, Belgium) Jos Nijhuis (Amsterdam, The Netherlands) Augustin de Romanet (Paris, France) Sani Şener (Istanbul, Turkey) Latin America & Caribbean (3) Ezequiel Barrenechea (Lima, Peru) Martin Eurnekian (Buenos Aires, Argentina) Andrew O’Brian (Quito, Ecuador) North America (7) Lew Bleiweis (Asheville, USA) Joyce Carter (Halifax, Canda) Howard Eng (Toronto, Canada) Deborah Flint (Los Angeles, USA) Joe Lopano (Tampa, USA) Tom Ruth (Edmonton, Canada) William Vanecek (Buffalo, USA) Regional Advisers to the World Governing Board (9) Zouhair Mohamed El Aoufir (Rabat, Morocco) Pascal Komla (Lomé, Togo) Tan Sri Bashir Ahmad Abdul Majid (Kuala Lumpur, Malaysia) Candace McGraw (Cincinnati, USA) Joseph Napoli (Miami, USA) Hector Navarrete Muñoz (Merida, Mexico) Augustin de Romanet (Paris, France) Brian Ryks (Minneapolis-St Paul, USA) Stefan Schulte (Frankfurt, Germany) World Business Partner Observer Tunde Oyekola (El-Mansur Atelier Group) Correct as of June 2017

6

AIRPORT WORLD/JUNE-JULY 2017

1-6 OCTOBER 2017. CANNES

THE DUTY FREE & TRAVEL RETAIL GLOBAL SUMMIT 1111111111111111111111111111111111111111111111111111

ACI WORLDHEAD NEWS RUNNING

World in motion Sabrina Guerrieri reports on the release of the latest edition of ACI’s Airport Economics Report and a new Employee Survey for Customer Experience (ECE) and provides an update on 2017’s ASQ Forums and strengthening links with ICAO.

T

he latest edition of the ACI’s Airport Economics Report confirms that the financial health of the airport industry has remained intact despite the persistence of economic woes and geopolitical risks across global markets.

Revenues, costs and the resultant financial performance reflect a degree of stability over a number of years.

The ACI Airport Economics Report provides a wide variety of indicators on the economic and financial performance of the world’s airports and is essential reading for airport managers, analysts, investors and other aviation stakeholders.

As in previous years, the report consists of summaries of and commentary on industry revenues (aeronautical and non-aeronautical) by source, cost (operating and capital), and evolution over time.

In addition, the publication has statistical annexes of all the key performance indicators.

Please visit www.aci.aero/Publications to learn more about it and how to order your copy.

Every year, the programme delivers some 600,000 individual surveys in 41 languages in 84 countries. It measures passengers’ views on 34 key performance indicators, including airport access, check-in, security screening, restrooms, stores and restaurants.

The first ASQ Forum of 2017 took place in Haikou, Hainan, China (April 26–28) and was generously hosted by Haikou Meilan International Airport (HAK). More than 230 delegates from airports, airlines, civil aviation authorities and other stakeholders gathered under the umbrella of ‘Cultivating a customer experience airport community’.

The 2017 ASQ Forum theme recognises that putting the passenger first is a shared priority among all aviation stakeholders and ACI will give focus to the role of all members of the airport community in cultivating a culture of customer service excellence.

The second and third ASQ Forums of 2017 will be hosted in Prague, the Czech Republic, on September 13-15 and in Detroit, Michigan, USA, on October 2-4.

New customer experience survey for staff

Strengthening links with ICAO

Building on its services and guidance material offered to member airports and the aviation community, ACI has also launched the Employee Survey for Customer Experience (ECE), an annual internal diagnostic and benchmarking tool that can be used for all staff working at an airport.

By measuring employee engagement through a structured questionnaire, the survey helps airports determine their readiness in providing customer experience excellence.

The ECE is designed to: • Understand whether there might be a need to increase the commitment of airport staff to achieve the common goal of improving the customer experience; • Provide a global index which is structured around 3 determinants, 10 components and 73 questions; • Assess whether airport stakeholders collectively have the desire, ability and determination to deliver an outstanding customer experience; • Help airports prioritise areas of improvement and to support development of an action plan toward the enhancement of the overall customer experience; and, • Allow airports to benchmark their customer experience initiatives and share best practice with other participating airports.

Please visit http://www.aci.aero/ECE to find out more about this new initiative.

The second quarter of 2017 saw ACI further strengthen its relationship with the International Civil Aviation Organization (ICAO) through the signing of a Memorandum of Understanding (MoU) to work together on a wide range of aerodrome training services to benefit the 1,940 ACI Member Airports worldwide, and to support the 191 ICAO Member States.

The MoU will see ACI and ICAO work together to develop new joint aerodrome training programmes and courses in: general airport management; airport economics; environmental protection; operational safety; security procedures; and other subjects as they are identified.

Airport Service Quality (ASQ) The ECE is the ideal complementary tool for existing Airport Service Quality (ASQ) member airports. The ASQ programme is the only worldwide programme to survey passengers at the airport on their day of travel.

8

AIRPORT WORLD/JUNE-JULY 2017

Ready for WAGA? Last but not least, registration is now open for the 27th ACI Africa/ World Annual General Assembly, Conference & Exhibition, taking place in Port Louis, Mauritius, on October 16–18.

Industry leaders from around the world will convene to explore solutions to a wide range of challenges under the theme ‘Bold leadership in a time of change’.

“The conference has been developed from the ground up to give delegates the chance to deliberate on issues of particular interest to airports,” said Angela Gittens, ACI World’s director general.

“In an industry where change is constant, the theme of this year’s conference recognises that airports play a crucial role in the economic and social health of communities, countries, regions and the world at large, and they must craft a strategy for their sustainable development to continue providing those benefits.” Register or learn more about the conference at www.aci-waga2017.com

ACI WORLD NEWS

ACI events

2017

2017

2017

2017

2017

September 17-20

November 7-9

October 3-4

October 14-18

November 1-3

ACI-NA Annual Conference & Exhibition Fort Worth, USA

ACI-LAC Annual Assembly, Conference & Exhibition San Jose, Costa Rica

Global Sustainable Aviation Summit Geneva, Switzerland

ACI Africa/ACI World Annual General Assembly, Conference & Exhibition Port Louis, Mauritius

Trinity Forum Bangkok, Thailand

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

ACI Fund for Developing Nations’ Airports Angela Gittens Managing Director Tel: + 1 514 373 1200 Fax: +1 514 373 1201 acifund@aci.aero

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

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

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

ACI 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

Airports Council International (ACI), the trade association of the world’s airports, was founded in 1991 with the objective of fostering cooperation among its member airports and other partners in world aviation, including the International Civil Aviation Organization, the International Air Transport Association and the Civil Air Navigation Services Organisation. In representing the best interests of airports during key phases of policy development, ACI makes a significant contribution toward ensuring a global air transport system that is safe, secure, efficient and environmentally sustainable.

As of January 2017, ACI serves 623 members operating 1,940 airports in 176 countries.

AIRPORT WORLD/JUNE-JULY 2017

AW

9

View from the top

ACI VIEWPOINT

ACI World director general, Angela Gittens, reflects on trends in airport ownership.

A

s we have long told the world, airports no longer operate as a homogeneous group of public utilities as there are now a variety of ownership structures ranging from government-owned and operated to partially or fully privatised.

Airports compete to gain air service for their regions and, for some, to be the gateways to cities, regions and even entire continents.

The ACI inventory of privatised airports in 2016 revealed that 614 commercial service airports had private sector participation.

Europe continues to be the region with the highest number of privatised airports at 266, followed by Asia-Pacific with 162 and Latin America-Caribbean with 153 privatised airports.

The prevailing motive for airport privatisations or Private Public Partnerships (PPPs) is to bring capital investment to an economic engine that States are not able or willing to finance from the public purse. States also seek to bring commercially-driven management and the flexibility to adapt to a dynamic environment for which governmental processes are not usually well suited.

Of course privatisation is a broad term with many meanings in a variety of circumstances. For the purpose of the ACI Inventory, we have defined privatisation as, “participation of the private sector in the management, financing and/or ownership of airport infrastructure.”

This may include freeholds; listed companies; concessions or leases; management contracts; and government-owned, but commercially operated companies. The most common model for privatisation is concessions and lease contracts (41%), followed by freeholds (24%), listed airports (23%), and management contracts (8%).

Government-owned operators or airports that are exclusively managed by public authorities continue to make up the majority of airports across the globe. Indeed, of the estimated 4,300 airports with scheduled traffic, 86% are public, in that they are owned and operated by a government.

However, if we narrow the sample to the world’s 100 busiest airports for passenger throughput, almost half have private sector participation.

Private investment flows to airports with high throughput or potential for high throughput. Market size matters for private investment. Taking into account both fully privatised airports and those operated under PPPs, as much as 41% of global airport traffic is held by airports that are managed and/or financed by private stakeholders.

As shown, there are regional differences in ownership models and financing of airports.

While there may be a number of long-standing institutional reasons for this, existing financing schemes may have shaped this arrangement.

For instance, local governments that own and operate North American airports can make wide use of debt instruments through a well-established municipal bond market that offers a tax advantage for individual and institutional purchasers. Since this remains a major source of financing, private equity has played only a small role in terms of overall airport finance for the region to this day.

As well, this region has successfully implemented a ‘corporatisation’ model where the airport asset remains in government or a not-for-profit’s hands but operates on a commercial or quasi-commercial basis.

ACI does not prescribe any specific type of ownership model, but advocates that airports should be permitted to operate under a range of ownership models.

Types of ownership and participation of private capital vary from airport to airport depending on local circumstance, but each model should guarantee flexibility to airport operators in developing their businesses to achieve a reasonable return on investment.

ACI has developed a Policy Brief on Airport ownership, economic regulation and financial performance, which is accessible at www.aci.aero/Publications.

AW

AIRPORT WORLD/JUNE-JULY 2017

11

AIRPORT REPORT: CHARLOTTE DOUGLAS

Destination CLT With a new runway and 9-gate concourse expansion on the way and plans to upgrade the existing terminal and commercially develop its surrounding land, these are exciting times for Charlotte Douglas International Airport, writes Joe Bates.

T

o many outside of the US, arguably Charlotte Douglas International Airport (CLT) is the surprise package of the nation’s busiest passenger gateways as few expect it to be in the top 10.

Yet it held that lofty status in 2015 when it was the ninth busiest airport in the country, and its current 11th ranking still places it ahead of names such as Miami International Airport, Orlando International Airport, Houston’s George Bush Intercontinental Airport and Newark-Liberty.

Driving its growth is the booming local economy and, of course, hub carrier American Airlines, which together with American Eagle operate more than 660 daily flights out of CLT to 150 destinations in the US and 25 countries across the globe.

In fact such has been the speed of CLT’s growth over the last 10 years, during which time it has jumped from the 18th busiest airport in the US handling 29.7 million passengers annually in

12

AIRPORT WORLD/JUNE-JULY 2017

2006 to the eleventh biggest welcoming 44.4 million in 2016, that it has started work on a $2.5 billion capital development programme to ensure that it has the capacity to handle future growth.

Haley Gentry, CLT’s deputy aviation director/chief business and innovation officer, says: “Our existing facilities are quite capacity constrained. We are already out of gates, and with conservative estimates predicting that passenger numbers will rise by an average of 2% to 3% annually over the next five to ten years, we need more capacity.”

New infrastructure Called Destination CLT, the airport’s blueprint for the future outlines plans for the addition of a fourth parallel runway, new 9-gate concourse expansion, new elevated roadway, the expansion of the terminal kerb and the renovation of its existing terminal building.

CLT has just begun the process of gaining a federally required Environmental Impact Study for the new 12,000ft runway, which would

AIRPORT REPORT: CHARLOTTE DOUGLAS

become its fifth and longest runway, and effectively alleviate airfield congestion during peak hours, should it become reality.

If all goes to plan, CLT hopes to start construction of the new runway in 2020 ahead of a 2022 opening.

The new 9-gate concourse expansion, set to open in Spring 2018, is an extension to the existing Concourse A and will boast a mixture of narrow and wide-body gates that provide more operational flexibility for CLT’s non-hub airlines to accommodate future growth.

The new elevated roadway is a major project in its own right that will widen the existing four-lane approach road to the terminal to 16 lanes (eight lower, baggage claim level, and eight upper, kerbside level) by the summer of 2018, to create more badly needed space for vehicle drop offs and pick ups.

The renovation of the existing terminal includes an East Terminal Expansion project that Gentry reveals is designed to improve passenger flows between the international concourse and regional gates and will allow for the addition of a new food court.

CLT expects the East Terminal Expansion project to be completed by 2019, by which time many of the original public spaces in the 1982 built terminal will have been modernised and revamped.

The upgrades will include new floors, ceilings, lighting, public address systems and facades in each pier, starting with Concourse B this year.

“Although they have been improved, there are parts of the airport that are not what we want them to be or passengers would expect from a leading US airport,” admits Gentry.

“The modernisation of the terminal will create a very different look and feel and a much improved airport experience for our passengers.

We are very excited about what’s coming.”

All the development projects are part of the 10-year first phase of Destination CLT, which in the longer term includes plans for more gates and another parallel runway.

Charlotte Douglas currently boasts one terminal with five concourses (A-E) that between them cover 1.8 million square feet and offer 97 gates.

Project AMP An equally, if not more ambitious project is CLT’s Area Master Plan (AMP) for the land surrounding the airport, which it wants to drive and shape the development of to create new economic zones that specialise in ‘manufacturing and distribution’, ‘services’, and ‘amenities’.

Under the umbrella of Project AMP, it lists aviation, aerospace and defence; logistics and distribution; advanced manufacturing; perishables, food and agribusiness; and specialised materials as the key components of the planned ‘Manufacturing and Distribution’ cluster.

Professional and scientific; technical and R&D; health and bio life science; finance and insurance; and IDT and big data are stated as the type of industries it wants to attract to the ‘services’ area.

While tourism and hospitality; exhibition and conference; retail and dining; attractions and entertainment; and education and skills training are earmarked for the ‘amenities’ zone.

All of the land chosen for the huge project is within a 25-mile radius of CLT, much of which is owned by the airport. If everything comes to fruition, it is projected that in 20 years time, Project AMP could be responsible for nearly 30,000 new jobs, have a real estate value of $2.6 billion and earn the airport an extra $110 million per year in ground lease revenue.

Gentry enthuses: “Our strategic plan includes the commitment to raising our non-aeronautical revenues to help maintain our financial self-sufficiency and, like most airports, these efforts have traditionally focused on inside the perimeter fence.

“We have, however, recently started to look beyond the fence and we are now also focused on the compatible development of the land envelope around the airport. We are very excited about it and believe that it is going to provide some excellent opportunities to boost our revenues.”

The airport is already a huge economic generator for the city of Charlotte and surrounding region, pumping in excess of $16 billion into the local economy, being responsible for some 225,0000 jobs and a payroll of $11.5 billion.

AIRPORT WORLD/JUNE-JULY 2017

13

AIRPORT REPORT: CHARLOTTE DOUGLAS

Airline agreements Gentry describes 2016 as a good year for Charlotte Douglas because of a significant increase in local and international traffic (see traffic mix below), the continued upward trend in cargo volumes and the “milestone” renegotiation of its lease agreement with the airlines.

She notes that the new lease agreement provides more “favourable terms” for the airport in terms of airline fees for the usage of its facilities, and paves the way for future expansion without jeopardising CLT’s status of providing the lowest cost per enplaned passenger (CPE) at a major US hub.

“The new agreement with our signatory airlines replaces a master lease agreement that was 35 years old and, in reality, created for a market and cost base that no longer exists,” she comments.

Gentry points out that many of the airline alliances that we know today didn’t exist back then, nor did some of their affiliate carriers or agencies like the Transportation Security Administration (TSA).

“The new deal is better for everyone as it has allowed us to take the principles from the old agreement and modify and modernise the terms to meet today’s business environment,” she explains.

“The methodology for calculating our rates and charges is now much clearer and we are recovering more of our costs.”

Cargo on the rise She adds that it was also a good year for cargo, the airport experiencing a significant 14% rise in volumes as it handled 154,477 tons of freight during 2016.

The upturn was driven by CLT’s integrated carriers FedEx and UPS as well as the entrance into the Charlotte market of all-cargo carrier, ABX Air. And the upturn has continued into the first half of 2017 with volumes soaring by 22% over the same period a year ago.

“We are glad to see this market grow as we had a very strong cargo market in the 1990s, so it is very satisfying to see the volumes coming back,” says Gentry.

14

AIRPORT WORLD/JUNE-JULY 2017

Making a difference Arora Engineers is currently involved in several key projects at Charlotte Douglas International Airport (CLT) that will have a significant impact on the gateway’s operational efficiency.

“The Terminal Lobby Expansion project will have a huge impact in terms of passenger access and processing,” says Wilson Rayfield of Gresham, Smith and Partners, which along with DAS Architecture is the prime design consultant for this part of Destination CLT. The project is designed to reduce and consolidate the number of security checkpoints to create more space for self-service areas to ensure speedier and more efficient check-in for passengers and their baggage. More self-service technology should also free up airport staff to move around the terminal and engage with passengers.

In addition, Arora is implementing new technologies to monitor and notify passengers about wait times; providing analytics on how many passengers use the ticketing area at different times during the day; and will utilise digital signage to improve the passenger experience.

Arora will also streamline the management of the digital content of the signs from a single software platform and integrate it with the CLT website and mobile app. This, it says, will allow for much easier and quicker content updates and create consistency across several different information platforms.

David Grigg, Arora’s vice president and Geospatial Practice lead says: “Our efforts with these projects will help CLT build a solid foundation of data, information and procedures that enhance its situational awareness of important airport issues and make its daily operations more efficient.”

AIRPORT REPORT: CHARLOTTE DOUGLAS

CLT’s cargo facilities include a 570,000 square feet Air Cargo Center and a 200-acre intermodal complex operated by Norfolk Southern that offers rail and truck operations to east coast seaports.

It is also home to Foreign Trade Zone #57 and is the region’s permanent magnet Foreign Trade Zone #17 site.

Traffic mix and route development Although 2016 was actually a static year for passenger growth at Charlotte Douglas due to a slight dip in airline load factors, the airport believes that a 10% rise in international traffic and 7% increase in travellers beginning their journey at CLT show that the market is healthy and growing.

New services also mean than CLT now offers more than 700 daily departures and non-stop international flights to 34 destinations across the globe that include Frankfurt, Havana, Munich, Montréal and London, which in 2016 was boosted by a second American Airlines flight to Heathrow.

“This is all positive news for the airport,” enthuses aviation director, Brent Cagle. “It shows more people are choosing the Charlotte region to call home, which in turn creates additional local demand for service.

“The airport has always believed that a key to our success lies in our ability to retain connecting service while growing local traffic. Our growth in local traffic will ultimately work to promote competition in the market and help attract additional international destinations.”

New York, Washington DC, Chicago, Boston and Los Angeles are the top O&D markets served from Charlotte Douglas, which principally

serves as a transfer hub due to the presence of American Airlines.

Indeed, connecting flights currently account for 72% of CLT’s traffic and American Airlines is responsible for bulk of it.

Cost efficiency Charlotte Douglas is the second largest hub for American Airlines after Dallas/Fort Worth (DFW) and, without doubt, its presence is key to the success of the North Carolina gateway.

In addition to its route network out of CLT, it employs 10,800 staff locally with a payroll of $913 million and, in the words of Gentry, “American Airlines is very important to the economic vitality of our community”.

Why has it stuck with Charlotte Douglas when other former US hubs haven’t been so lucky?

“Because Charlotte is unique from the standpoint that it is extremely cost efficient,” enthuses Gentry. “Cost efficiency is, and always has been, a main priority for us and we have a way of producing one of the lowest costs per enplaned passenger in the business.

“Let’s be honest, American Airlines isn’t here because they like us, they are here because of costs and they make good revenue. It has been able to grow and sustain its development in Charlotte over many years and I don’t think that it could have achieved this success at many other airports.”

Sounds like CLT and American have been a good match for each other, and with so many new facilities on the way, there is no end in sight for this success story.

AIRPORT WORLD/JUNE-JULY 2017

AW

17

SPECIAL REPORT: GLOBAL AIRPORT OPERATORS

The A-Z of global airport operators Which operators have a portfolio of airports across the globe? Joe Bates investigates and talks to some of the key players involved.

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.

ACSA also has a contract to provide advisory and technical services on all airport-related matters to the Ghana Airports Company Limited for Kotoka International Airport in Accra.

Plans to expand/reduce portfolio: It continues to seek profitable opportunities, particularly within Africa and other developing markets.

News: ACSA has expanded locally over the past year by securing management contracts for Mthatha and Wonderboom airports.

18

AIRPORT WORLD/JUNE-JULY 2017

Quote: “International business is a major element of our business plan, not only from a revenue perspective, but also in terms of being a gateway to further engagements around the world,” says ACSA CEO, Bongani Maseko.

“While the South Africa side of the business currently contributes the majority of the revenue of Airports Company South Africa, the potential to utilise our skills and expertise globally remains promising over the long-term.

“We continue to obtain income through airport-related technical advisory, management services and training provided to non-company airports in Brazil, India and Ghana. These opportunities provide a source of income with high networking and relationship building potential.

“In Brazil, we have doubled our interest in the special purpose entity from 10% to 20%. This advancement increased our equity in Guarulhos International Airport from 5.1% to 10.2% and demonstrates our confidence in the long-term viability of this airport concession. While the economy of Brazil is currently under strain, it is our view that this remains an opportunity that will ultimately deliver solid returns through to the end of the concession in 2032.”

SPECIAL REPORT: GLOBAL AIRPORT OPERATORS

Aena 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 has interests in 16 airports in 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 operates 12 Mexican gateways that include Guadalajara, Tijuana, Puerto Vallarta, Los Cabos, La Paz and Manzanillo on behalf of Grupo Aeroportuario del Pacífico (GAP).

Elsewhere, AMP has a 17.5% shareholding in GAP, which has a 74.5% stake in MBJ Airports Limited, which operates Sangster International Airport in Montego Bay, Jamaica.

Plans to expand/reduce portfolio: Aena continues to consider new business opportunities worldwide.

News: Subsidiary, Aena Internacional, is expected to be involved in the Operational Readiness and Airport Transfer (ORAT) project for the new Midfield Terminal Complex at Abu Dhabi International Airport.

Airports Worldwide (AWW) Head office: Sanford, Florida, USA Airports 100% owned and operated: Belfast International Airport in Northern Ireland.

Others: Airports Worldwide (formerly ADC&HAS Airports Worldwide) manages, operates and develops commercial service and terminals at Florida’s Orlando–Sanford International Airport courtesy of capital investment and a management concession that runs until January 2039.

In Sweden, it has a controlling 90.1% interest in Stockholm Skavsta, while in Central America, AWW has 48.75% and 45% stakes respectively in the operators of Costa Rica’s San José–Juan Santamaria International Airport (AERIS Holding Costa Rica) and Liberia–Daniel Oduber Quirós International Airport (Coriport).

In the US, through its 100% ownership of TBI Airport Management, AWW manages the International terminal complex (including concourses E and F) at Hartsfield-Jackson Atlanta International Airport and also manages four other gateways – Atlantic City International Airport (New Jersey), Hollywood Burbank Airport (California) and Middle Georgia Regional and Macon Downtown airports in Georgia. In addition, it performs common resource management and ramp control at Raleigh Durham International Airport’s Terminal 2 in North Carolina.

Plans to expand/reduce portfolio: AWW is seeking to expand its business, both in terms of equity placement and new management contracts.

News: Airports Worldwide’s major shareholder today is the Ontario Municipal Employees Retirement System (OMERS) via Borealis Infrastructure, which is a large global infrastructure investor focused on acquiring large-scale projects across a range of sub-sectors.

Quotes: AWW’s president, Larry Gouldthorpe, says: “Typically, AWW’s investment strategy is dictated by the criteria within Borealis/OMERS, which lean towards larger equity projects in excess of $400 million.

However, smaller investments will be considered based on the overall fit and strategic value to the portfolio.

“Stable returns and predictable cash flows are essential elements along with strong market position and growth potential.”

Talking specifically about the US market, Gouldthorpe says: “I think we will definitely see an increased interest in privatisation and PPP projects in the future. There is already an increased interest in privatisations in the US that appears to be gaining enough traction to result in real opportunities.”

Atlantia World Headquarters: Rome, Italy Airports 100% owned and operated: None.

Others: Rome’s Fiumicino (FCO) and Ciampino (CIA) airports courtesy of its 96.7% ownership of Aeroporti di Roma (ADR). In France, it has a 60% stake in Aéroports de la Côte d’Azur (ACA), the operator of Nice Côte d’Azur, Cannes-Mandelieu and Saint Tropez airports.

Plans to expand/reduce portfolio: Actively looking for more international assets.

News: Best known for operating 5,000km of toll motorways in Italy, Brazil, Chile, India and Poland and for its controlling stake in Aeroporti di Roma (ADR), Atlantia is a new entrant on the global airport stage following the completion of its €1.2 billion acquisition of a 60% stake in Aéroports de la Côte d’Azur (ACA), the operator of Nice Côte d’Azur, Cannes-Mandelieu and Saint Tropez airports, in November 2016.

Its investment partner in the deal is EDF Invest, which targets three asset classes: infrastructure, real estate and private equity.

Talking about the ACA deal, Atlantia’s CEO, Giovanni Castellucci, said: “The transaction marks another major step towards delivering on Atlantia’s internationalisation strategy and is a perfect fit with our plan to grow our involvement in airports with a global reach.

“Our partner, EDF Invest, will play a major role in making the acquisition a success, with its extensive experience as a long-term infrastructure investor.”

A listed company, with a market capitalisation of €18.4 billion at the end of 2016, Atlantia registered a turnover of €5.5 billion, EBITDA of €3.4 billion and cash flow of €2,400 million in 2016.

AviAlliance World Headquarters: Düsseldorf, Germany Airports 100% owned and operated: None.

Others: AviAlliance (formerly HOCHTIEF AirPort) holds a controlling 55.44% stake in the consortium responsible for operating Hungary’s Budapest Franz Liszt Airport. Elsewhere in Europe, it has shares in Athens International Airport (40%), Düsseldorf Airport (30%) and Hamburg Airport (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 seek out new opportunities.

News: AviAlliance recently acquired a 40% stake in Puerto Rico’s Luis Muñoz Marín International Airport, courtesy of owner PSP Investments, which bought the shares from Oaktree Capital Management.

AIRPORT WORLD/JUNE-JULY 2017

19

SPECIAL REPORT: GLOBAL AIRPORT OPERATORS AviAlliance’s managing director, Holger Linkweiler, enthuses: “Our goal is to strengthen the operational quality and service level of the San Juan airport, further supporting the continued economic development and potential of the San Juan area.”

AviAlliance’s interest in Tirana’s Mother Teresa International Airport came to an end in October 2016 when a joint venture led by Hong Kong-based investment and asset management firm, China Everbright Limited (CEL), took over the concession for the Albanian gateway.

CEL, which counts Friedmann Pacific Asset Management as its business partner, is believed to have paid AviAlliance and consortium partners DEG – part of the German development bank KfW – and the Albanian-American Enterprise Fund (AAEF) around $90 million for the concession, which has been extended by two years to 2027.

CCR Group Head office: Saõ Paulo, Brazil Airports 100% owned and operated: None Others: CCR 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 48.75% 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.

Plans to expand/reduce portfolio: CCR is actively pursuing airport P3 opportunities in North America through its US-based subsidiary, CCR USA. News: In addition to equity stakes in airports, in North America, CCR owns 70% of Total Airport Services, a leading airport services company at major US gateway airports.

Although a growing force in the airport market, CCR’s huge network of toll roads and other interests in railways and ports means that airports still account for less than 10% of its gross revenues.

Changi Airports International (CAI) World Headquarters: Singapore Airports 100% owned and operated: None.

Others: The wholly-owned subsidiary of Singapore Changi operator, Changi Airport Group (CAG), CAI has a 40% 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, Anapa and Gelendzhik in Krasnodar Krai. The other stakeholders in the joint venture are Russia’s Basic Element group and OJSC Sberbank.

Also in Russia, CAI has a 33.3% stake in the consortium responsible for operating Vladivostok International Airport. Investment partners Basic Element and the Russia Direct Investment Fund (RDIF) also have a 33.3% shareholding in the gateway.

Elsewhere, CAI has a 36.7% holding in Bengal Aerotropolis Project Ltd, which is developing a greenfield airport and township in Durgapur in West Bengal, India, and in Saudi Arabia it spearheads the consortium responsible for operating and managing Jeddah’s King Abdulaziz

20

AIRPORT WORLD/JUNE-JULY 2017

International Airport and has managed King Fahd International Airport since 2008.

CAI is also a key partner in a consortium that has signed a Framework Agreement with Myanmar’s Department of Civil Aviation designed to pave the way for the concession for Yangon’s new Hanthawaddy International Airport. The consortium comprises CAI (20%), JGC Corporation (55%) and Yongnam Holdings Limited (25%).

Plans to expand/reduce portfolio: CAI claims that it is always looking for expansion opportunities.

News: On 1 May this year, Saudi Arabia’s General Authority of Civil Aviation (GACA) named a CAI-led consortium as the winning bidder for the 20-year concession to operate Jeddah’s King Abdulaziz International Airport. CAI has also recently signed a commercial joint venture agreement with China’s Chongqing Airport Group (CAGC).

The agreement – which is part of the Chongqing Connectivity Initiative (CCI) between Singapore and Chongqing – will see both companies collaborating to enhance the retail/F&B offerings at Chongqing Jiangbei International Airport.

Corporación América World Headquarters: Montevideo, Uruguay.

Airports 100% owned and operated: None.

Others: Corporación América, which briefly changed its name to America Corporation International (ACI) before reverting back to its original designation, has an 85% stake in Aeropuertos Argentina 2000 (AA2000), which operates Buenos Aires’s Ezeiza and Aeroparque Jorge Newbery airports and 31 other gateways across Argentina.

Also in Argentina, Corporacíon América operates and has 85% and 80% stakes respectively in the Patagonian airports of Bahia Blanca and Neuquen, which are not part of AA2000 group of airports.

In Uruguay, Corporacíon América manages Montevideo–Carrasco and Laguna del Sauce-Punta del Este airports in Uruguay courtesy of its controlling stake in the Puerta del Sur (formerly CerealSur) consortium.

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 a 100% interest in Natal’s São Gonçalo do Amarante–Governador Aluízio Alves International Airport, where it has a 25-year concession.

In Ecuador, Corporacíon América 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 Airport in the Galapagos Islands.

Corporacíon América also has interests in five gateways in southern Peru (Arequipa, Juliaca, Puerto Maldonado, Tacna and Ayacucho) due to its joint ownership of Aeropuertos Andinos del Peru with Andino Investment Holding. Both companies also make-up the Kuntur Wasi consortium, which will build and operate Cuzco’s new Chincheros Airport.

Further afield, Corporacíon América manages Zvartnots Airport in Yerevan, Armenia, and through subsidiary, Corporacíon America Italia, has a controlling 51.3% stake in Toscana Aeroporti, the operator of Pisa–Galileo Galilei and Florence–Amerigo Vespucci airports in Tuscany, Italy. It also has a small shareholding in Airgest, operator of Sicily’s Vincenzo Florio Trapani–Birgi Airport.

Plans to expand/reduce portfolio: Corporacíon América continues to show an interest in expanding its airport network in Latin America.

SPECIAL REPORT: GLOBAL AIRPORT OPERATORS

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.

Plans to expand/reduce portfolio: No equity investments are planned.

News: In Saudi Arabia, overseas investment arm, daa international, has signed a five-year contract to manage the new Terminal 5 at Riyadh’s King Khaled International Airport. Wholly-owned ARI remains one of the world’s biggest duty free operators with operations in 11 countries that include Bahrain, Canada, China and India.

Edeis World Headquarters: Ivry-sur-Seine, France Airports owned and operated: None Others: Edeis has acquired the former airport assets of SNC-Lavalin and subsequently has an extensive portfolio of 15 gateways in mainland France that include the business/general aviation airports of Vannes (Brittany); Chalon-sur-Saône in Burgundy; Rouen, Le Havre and Cherbourg in Normandy; Troyes and Reims in Champagne; AngoulêmeCognac (South-West of France); Annecy Mont Blanc in the French Alps; Bourges (Central France); and Francazal (Toulouse GA airport). It also manages the regional airports of Tours (Chateaux de la Loire), Lourdes (Tarbes-Lourdes-Pyrenees) and Nimes, where scheduled and charter services are operated all year around.

22

AIRPORT WORLD/JUNE-JULY 2017

Elsewhere, it 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.

Plans to expand/reduce portfolio: On the look out for new business.

News: Edeis was created in December 2016 when CIPIM, a partnership of French investment funds Ciclad and Impact Holding, bought SNC-Lavalin’s airport business.

Quote: “Edeis is always looking for new opportunities and is currently working on several projects in France and in Europe,” says Edeis general manager, Youssef Sabeh.

Talking about the criteria required by an airport to be of interest to Edeis, he adds: “We look at every opportunity. There is no minimum airport size for it to be considered attractive. For Edeis, as an airport operator and manager, the most important thing is to understand and share the strategy of the owner of the airport.”

Egis World Headquarters: Guyancourt, France Airports 100% owned and operated: None Others: In South America, it has a 5% stake in the consortium responsible for operating São Paulo’s Viracopos International Airport.

In Europe it holds concessions to operate Antwerp and Ostend-Bruges airports in Belgium; and has a 20% stake in Hermes Airports, which operates Larnaca and Paphos airports in Cyprus. At home in France, it has a 24.5% shareholding in Pau-Pyrénées Airport concessionaire Air’Py; and a 5% interest in the company managing Brest and Quimper airports.

In French Polynesia, Egis has a 19% stake in ADT, which holds the concession for Tahiti’s Fa’a’ã International Airport and has a five-year renewable year contract to manage Bora Bora, Raiatea and Rangiroa airports.

SPECIAL REPORT: GLOBAL AIRPORT OPERATORS Greek and Brazilian additions for Fraport So successful are Fraport AG’s international assets that they now account for more than 20% of the group’s annual revenues and around a third of its net profit.

And those figures could grow even bigger in the future following the start of its Greek regional airport concession and the Brazilian government’s decision to award a Fraport-led consortium the concession to operate and develop Fortaleza and Porto Alegre airports.

Fraport Greece – owned by Fraport AG (73.4%) and Greece’s Copelouzos Group (26.6%) – paid the state-owned Hellenic Republic Asset Development Fund (HRADF) an upfront fee of €1.23 billion for the 40-year concession for the 14 Greek airports.

As part of the deal, the Greek State also receives an annual fee of €22.9 million and a variable yearly sum based on 28.5% of the company’s annual EBITDA. Under the concession agreement, Fraport Greece will invest about €400 million on refurbishing, expanding and building new facilities at the airports, including five new passenger terminals, during the first 48 months of the concession.

Meanwhile in Latin America, Fraport AG is in the process of establishing Fraport Brazil to take over the operations of Fortaleza and Porto Alegre airports after placing the highest bid in public auctions for the respective concessions.

The double win saw Fraport bid €446.81 million for the 30-year concession to operate Fortaleza and around €114 million for the 25-year concession for Porto Alegre. Along with the concession price, Fraport will pay a fixed fee amounting to 5% of the airport’s annual revenue. It will hold a 100% stake in the operating company of each gateway and therefore will be the sole owner and participant in the concessions.

Despite its huge financial commitments, Fraport’s executive director, Dr Stefan Schulte, is quick to point out that his company has a lot of contracts around the world, and not all involve an equity investment.

“We have a lot of consultancy contacts, for example, ranging from preparation for the inauguration of new terminals [ORAT projects] to special development studies into difference processes and procedures such as ground handling and cargo,” says Schulte.

“Consultancy or management contracts are always shorter and for a defined period of time, after which it is usually up to governments to decide whether they want to renew them or not. This is fine, and how we want it actually, as we don’t want to be in a management contract forever.

“Sometimes you may start with a management contract and the next step is to tender for the airport concession. Each situation is different, however, and must be taken on a country by country and airport by airport.”

In Africa, it has a 29.5% stake in the consortium awarded the 25-year concession to operate, develop and expand Brazzaville, Pointe Noire and Ollombo airports in the Republic of the Congo; a 17.5% interest in the concessionaire for Libreville Airport in Gabon; and a 35% shareholding in the company responsible for operating Abidjan Félix Houphouët-Boigny International Airport in the Ivory Coast.

Plans to expand/reduce portfolio: Egis, which is 75% owned by France’s Caisse des Dépôts Group, continues to look for expansion opportunities at mid-size airports in secondary markets.

News: With the recent addition of Pau-Pyrénées, Brest-Bretagne and Quimper-Cornouaille airports in France, Egis’s airport portfolio now extends to 17 airports in eight countries.

In Latin America, Fraport has a controlling 70.1% interest in Lima Airport Partners (LAP), which manages and develops Jorge Chavez International Airport in Lima, Peru, and recently won the public auctions for Fortaleza and Porto Alegre Airports 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 formed to operate and develop Delhi’s Indira Gandhi International Airport in India.

Other international assets include 100% ownership of Fraport USA, which manages the Airmall concessions at Boston Logan, Cleveland, Pittsburgh and Baltimore/Washington airports and has won and signed the contract to manage the retail and F&B areas of JetBlue’s Terminal 5 at New York-JFK. 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: Always looking for new opportunities where it can add value and make a profit.

News: In the first half of 2017, Fraport expanded its portfolio by winning the auction for Fortaleza and Porto Alegre airports in Brazil and commencing its mega-concession for the 14 Greek airports of Aktion (PVK), Chania/Crete (CHQ), Kavala (KVA), Kefalonia (EFL), Kerkyra/Corfu (CFU), Kos (KGS), Mykonos (JMK), Mytilene/Lesvos (MJT), Rhodes (RHO), Samos (KGS), Santorini (JTR), Skiathos (JSI), Thessaloniki (SKG) and Zakynthos (ZTH).

During 2016, Fraport AG disposed of 10.5% of its shares in St Petersburg-Pulkovo Airport, selling the stake to the Qatar Investment Authority for around €40 million.

Quote: “Our broadly diversified international portfolio enables us to counterbalance downturns in individual markets by positive growth in other regions. We will continue to pursue this successful risk-diversification strategy,” says Fraport CEO, Dr Stefan Schulte.

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; a 30% share in Hanover Airport in northern Germany; and owns 51% of Antalya Airport concessionaire, ICF Airports, in Turkey.

AIRPORT WORLD/JUNE-JULY 2017

23

SPECIAL REPORT: GLOBAL AIRPORT OPERATORS

GMR Airports Limited (GAL) World Headquarters: Bengaluru, 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 is actively looking to expand its global airport portfolio.

News: The award of the concession to build, 100% own and operate Goa’s new Mopa International Airport in India is a major development for GMR. Wholly owned subsidiary, GMR Goa International Airport Limited (GGIAL), has signed a 40-year concession agreement for the new airport, the first phase of which is expected to open in 2019/2020. The deal includes the possibility for a 20-year extension to the concession.

In Europe, GAL has joined forces with the GEK-Terna Group to submit the winning €530 milion bid for the concession to build and operate the new Kastelli Airport in Crete, Greece. The deal is awaiting approval from the Greek parliament, which is expected before the end of the year.

The gateway will replace Heraklion’s Nikos Kazantzakis International Airport and is believed to have the potential to become Greece’s second busiest airport.

Quote: GAL’s president for finance and business development, Sidharath Kapur, says: “Goa, the location of Mopa International Airport, is the most prominent tourist destination in India. Traffic in Goa reached 7mppa in 2016 and is growing at over 30% per annum, while current traffic in Crete, where we will build the new Kastelli Airport, is around 7mppa, and growing steadily. Both airports are primarily tourist airports, which present an attractive avenue to maximise non-aero revenues. Mopa will further consolidate our position as the largest airport developer in India while Crete marks the first foray of GMR Group in to the European market.”

24

AIRPORT WORLD/JUNE-JULY 2017

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 manages a portfolio of 23 airports worldwide.

Through its 46.12% stake in TAV Airports, Groupe ADP has interests in Istanbul Atatürk, Ankara Esenboga, Izmir, Milas Bodrum and Gazipasa in Turkey and 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.

Groupe ADP has an 8% stake in the Schiphol Group and in Europe, wholly owned subsidiary, ADP Management, has interests in Liege Airport (25.6%) in Belgium and Zagreb’s Franjo Tuñman Airport (20.8%) in Croatia. 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 Ivato (Antananarivo) and Fascene (Nosy Be) airports in Madagascar.

In the Middle East, ADP Management has a 9.5% 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.

Elsewhere, it has a 10% stake in ATOL, the operator of Sir Seewoosagur Ramgoolam International Airport in Mauritius.

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. The philosophy is in line with the stated goal of chairman and CEO, Augustin de Romanet, for the company to “Optimise, attract and expand” during the 2016 to 2020 timeframe.

News: Groupe ADP recently invested $160 million on increasing its shareholding in TAV Airports by 8.12% to 46.12%.

SPECIAL REPORT: GLOBAL AIRPORT OPERATORS New name, set-up and business strategy for Groupe ADP The name might be new to the list but there is nothing new or inexperienced at all about the rebranded version of the Aéroports de Paris (ADP) Group, which remains one of the world’s top global airport operators with 23 airports in 14 countries.

Indeed, Groupe ADP is very much an elder statesman in terms of being a global airport operator and remains as ambitious as ever to develop its existing assets and add to its portfolio.

Talking about the importance if its international business, Groupe ADP’s chief international officer, Antonin Beurrier, told Airport World: “The international expansion of Groupe ADP is crucial to consolidate our position in the market and capture future traffic growth in emerging markets.

“We consider our international activities to be an important growth driver for Groupe ADP, although this is not currently reflected in financial terms as they account for only a small part of our consolidated revenues, in part due to the fact that we mostly hold minority stakes in airports.

“According to the strategic plan Connect 2020, we aim to make our international activities the third main business of the group. To achieve this goal, we must capitalise on our assets as we are one of the few airports operators worldwide to offer expertise across the entire value chain, from investment to design and operations, so we are now pushing for an integrated approach.”

He goes on: “Our aim is to strengthen our geographical footprint where we already operate in the Middle East and Latin America and to develop in the regions and countries offering strong opportunities, such as Asia, Africa and North America.

Grupo Aeroportuario del Sureste (ASUR) World Headquarters: Mexico City, Mexico Airports 100% owned and operated: None.

Others: ASUR holds the concession to operate, maintain and develop Cancún, Cozumel, Huatulco, Mérida, Minatitlán, 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 San Jan’s Luis Muñoz Marín International Airport; and has agreed to acquire controlling interests in Colombian airport operators Airplan SA (Airplan) and Aeropuertos de Oriente SAS (Oriente), which between them operate 12 domestic airports.

Airplan’s network covers airports in the cities of Medellín, Montería, Carepa, Quibdó and Corozal and Oriente has concessions to operate gateways in Santa Marta, Riohacha, Valledupar, Cúcuta, Bucaramanga and Barrancabermeja.

Plans to expand/reduce portfolio: ASUR states that it remains focused on selectively expanding its airport network.

News: On May 30, 2017, ASUR and PSP Investments – one of Canada’s largest pension investment managers – collectively acquired a 50% equity stake in Aerostar Airport Holdings, operator of Luis Muñoz Marín International Airport in San Juan, Puerto Rico. As a result, ASUR increased its ownership interest from 50% to 60% and PSP Investments acquired a 40% interest.

“We look forward to working closely with AviAlliance to provide further enhancements to operations and customer service, to benefit Puerto Rico for the long-term, says ASUR CEO, Adolfo Castro Rivas.”

26

AIRPORT WORLD/JUNE-JULY 2017

“During the last twelve months, we have strengthened our international teams by hiring highly qualified and talented people and introduced a new organisational structure. The challenge for us is to go even further and implement a strong culture of excellence, innovation and market intelligence.

“As there are so many opportunities worldwide, we have to focus on the most attractive markets and partners to be successful, while remaining highly disciplined in return expectations.”

Beurrier believes that low interest rates and readily available cash mean that today’s market favours buyers, although he is quick to point out that no two projects are the same and each has to be carefully looked at on an individual basis.

He reveals that Groupe ADP is reorganising its international activities into three large businesses – investment, operations and engineering – which will be come under the umbrella of new subsidiary, ADP International.

It will shortly open new offices in the Americas, Asia and Middle East to be closer to its customers, says Beurrier.

“We are always looking for airports where we can bring added-value and have a strong voice in their corporate governance,” states Beurrier.

To support Groupe ADP’s international goals, another subsidiary, ADP Ingénierie, has also developed a new strategy, which he claims is based on recent market trends, new client needs and the opportunities provided by new technologies.

“So this business, which has historically focused on the Middle East region, is now more homogeneously spread across the five continents as ADP Ingénierie is strengthening its position in Asia, Africa and the Americas,” he says.

On April 10, 2017, ASUR agreed to acquire the controlling interest in Airplan, SA (Airplan) and Aeropuertos de Oriente SAS (Oriente), which between them operate 12 airports in Colombia.

On conclusion of the deals, estimated to be worth $262 million, it will own 92.42% of Airplan and 97.26% of Oriente. The length of each concession depends on revenue generation and contains minimum and maximum terms. The agreement means that Airplan’s concession will last until at least 2032 and could run to 2048 and Oriente will run to 2033 and possibly to 2049.

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 5% stake in Khabarovsk Novy Airport in eastern Russia.

Plans to expand/reduce portfolio: It has revealed that it intends selling its shares in Khabarovosk Novy Airport later this year.

News: Incheon exports its expertise globally through a series of management and consultancy contracts. These include acting as an operations consultant to IGA Havalimani İşletmesi AS for the €10.2 billion Istanbul New Airport; developing a national aviation master plan for Paraguay; and acting as an advisor for commercial operations in Terminal 3 at Jakarta Soekarno-Hatta International Airport in Indonesia.

SPECIAL REPORT: GLOBAL AIRPORT OPERATORS

Malaysia Airports Holdings Berhad (MAHB) World Headquarters: Kuala Lumpur 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 (ISGIA) 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: Increasing its international footprint is a key element of MAHB’s Runway to Success 2020 (RtS2020) business plan.

News: Although MAHB hasn’t added to its global airport portfolio since increasing its shareholding in ISGIA in 2014 and disposing of its 10% stake in Delhi-Indira Gandhi International Airport in India, it remains on the lookout for new investment opportunities.

Its RtS2020 business plan states: “Our international expansion efforts will be focused on making strategic long-term investments in airport assets. We will use a strategic approach to invest in selected international assets.

“These investments will allow us to benefit from a continuous revenue stream and contribute to group-level accretion. It will also have the added advantage of increasing our international footprint and export our core airport capabilities. We will export our consultancy capabilities and leverage our airport operator capabilities to improve newly-acquired asset efficiency and uplift profitability.”

Macquarie Infrastructure and Real Assets (MIRA) World Headquarters: London, UK Airports 100% owned and operated: Aberdeen, Glasgow and Southampton airports in the UK through AGS Airports, a joint venture between a MIRA-managed fund and Ferrovial Aeropuertos.

Others: MIRA-managed infrastructure funds and its investment partners, which include the Ontario Teachers’ Pension Plan (OTPP), have 57.7% and 39% shareholdings respectively in Copenhagen and Brussels airports in Europe.

28

AIRPORT WORLD/JUNE-JULY 2017

In Australia it has a controlling 50.1% stake in the Tasmanian Gateway Consortium, which owns Hobart International Airport operator, HIAPL. HIAPL’s only other shareholder is the state-owned Retirement Benefits Fund (RBF).

In India, MIRA has an interest in India’s Delhi-Indira Gandhi and Hyderabad-Rajiv Gandhi airports through a $200 million investment in convertible investment shares in the GMR Group.

Plans to expand/reduce portfolio: MIRA does not speculate on possible acquisitions/sales.

News: MIRA notes that it remains a long-term investor in airports, pointing to Europe where investments made through its flagship European funds typically run for 10-12 years.

Royal Schiphol Group World Headquarters: Amsterdam, the Netherlands Airports 100% owned and operated: Amsterdam Schiphol, Lelystad and Rotterdam The Hague in Holland.

Others: It has a majority 51% stake in Eindhoven Airport, owns 8% of Groupe ADP and through Schiphol Australia has an 18.72% interest in Brisbane Airport.

In North America, through its 100% owned subsidiary Schiphol USA, it holds a 51% stake in JFKIT, which operates Terminal 4 at New York’s JFK International Airport. It also acts as a strategic partner to Beatrix International Airport in Aruba in the Caribbean.

Plans to expand/reduce portfolio: Its stated ambition is to maintain and expand its global airport network.

News: Planned investments include a new pier (2019) and terminal (2023) at Amsterdam Schiphol. The process of upgrading Lelystad Airport to a full commercial airport for leisure traffic is set to be completed in April 2019.

The Royal Schiphol Group itself is owned by the Dutch government (66.7%), the municipalities of Amsterdam (20.3%) and Rotterdam (2.2%) and Groupe ADP (8%).

Quote: Talking about its international investment strategy, RSG’s head of group strategy and international development, Gerben Broekema, says: “Our focus is on airports that are strategically relevant to our Mainport development. Amongst others this means that we focus on medium to larger sized airports that are important for Schiphol’s network of destinations and frequencies.

SPECIAL REPORT: GLOBAL AIRPORT OPERATORS “Our most successful international activity to date is our participation in Brisbane Airport, Australia. Over the course of 20 years this airport has shown tremendous improvement in its quality of services, network and expansion. This has greatly benefitted the Queensland community, while it has brought Schiphol Group attractive financial returns. The same applies to Terminal 4, JFK, in New York.”

What has experience taught him about the perils, pitfalls and successes of the global airport investment market?

Broekema, says: “Privatisation of airports, in our view, should be done from the perspective of what is needed for the airport to maximise facilitation and drive economic and social growth. Aligning interests of the community with the airport operator is of crucial importance and a precondition for stability and the license to grow.

“Today, unfortunately, the focus of government shareholders is probably too focused on maximising the financial return from airport privatisations whereas the true value creation to a country lies in an airport that optimally supports the economic and social development of that community/region.”

TAV Airports Holding World headquarters: Istanbul, Turkey Airports 100% owned and operated: Istanbul Atatürk, Ankara Esenboğa, Izmir Adnan Menderes, Milas-Bodrum and Antalya– Gazipasa in Turkey, and Skopje Alexander the Great and Ohrid St Paul the Apostle airports in Macedonia.

Others: It has a controlling stake in the companies responsible for operating Tbilisi (80%) and Batumi (76%) airports in Georgia and holds a majority 67% shareholding in both Monastir Habib Bourgiba and Enfidha-Hammamet airports in Tunisia.

In Saudi Arabia the TAV-led Tibah Airports consortium (TAV, Saudi Oger and Al Rajhi Holding Group each hold a 33.3% stake) has a 25-year concession to operate Medina’s Prince Mohammad bin Abdulaziz International Airport. Elsewhere in the Kingdom, TAV has signed a 30-year concession to operate and develop Qassim and Ha’il airports in partnership with Al Rajhi Holding Group; and Yanbu Prince Abdul Mohsin Bin Abdulaziz International Airport, again with the Al Rajhi Group, through another 30-year contract.

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.

Its consortium partners in Zagreb include ADP Management, Bouygues Bâtiment International (BBI), Croatian construction company, Viadukt, Marguerite Fund and the IFC. Elsewhere, TAV operates commercial spaces in Riga, Latvia.

Plans to expand/reduce portfolio: The addition of more airports is almost a certainty.

News: Ha’il Regional Airport and Qassim’s Prince Nayef bin Abdulaziz Airport are the latest additions to TAV’s ever-growing portfolio, the company signing a 30-year concession agreement with the Saudi General Authority of Civil Aviation (GACA) in April 2017.

Quote: “TAV has become one of the world’s highly-preferred brands thanks to the know-how acquired in airport construction and operation business,” says TAV Airports president and CEO, Sani Şener. “Our success in the Medinah Airport project, which was the first airport privatisation project in Saudi Arabia, opened new doors in this country.”

Growing the business through international expansion By its own admission, TAV Airports continues to actively look for new international opportunities to expand its airport portfolio and further diversify its business to make it less dependent on any one country or region.

And that includes Turkey, its home base, where TAV’s concession for Istanbul Atatürk is coming to an end, as the airport will close when Istanbul New Airport becomes the city’s new hub.

This effectively means that TAV will lose revenues from around 18 million international passengers per annum from its airport business. However, its continued global expansion means that it has already compensated for the loss of around 50% of the traffic through its new airport concessions.

Talking about the international market, TAV Airports’ president and CEO, Sani Şener, says: “International operations are key for our company.

We currently manage 17 airports in seven countries worldwide and the number of airports where we have an involvement rises to 76 airports in 17 countries if you include shareholdings and other activities.

“Our international experience has provided the company with the knowledge of how to be successful in different regions. This includes the ability to expand and create new revenue channels when and where it is necessary, and the know-how to carry out PPP projects in emerging markets where experience has taught us how to find solutions to possible challenges and problems.” Şener feels that the airport investor market is more competitive today than ever before, but believes that TAV will have plenty of opportunities to expand its international business in the future due to the need to build new capacity-enhancing infrastructure to meet rising passenger demand driven by global economic growth.

“The advantages of public-private partnerships are increasingly being seen by governments and the privatisation of airports is becoming more widespread across the world,” notes Şener.

“This open demand in the market creates high competition. Once, only airport operators showed an interest in airport investment projects, but this has all changed due to the long-term opportunities they provide. Now we face competition from infrastructure banks along with private/public equity funds and others.

“For our part, we will continue to follow new opportunities that create value for our company, shareholders and business partners.”

AIRPORT WORLD/JUNE-JULY 2017

29

SPECIAL REPORT: GLOBAL AIRPORT OPERATORS International assets are everything Nicolas Notebaert, CEO of VINCI Concessions and chairman of VINCI Airports, leaves you in little doubt about the importance of its international airport assets to the company.

He says: “Our international business is not only important to VINCI Airports, it is at the core of the whole VINCI Group strategy.

Today, we operate 35 airports in six countries on three continents, with over 80% of our activity outside of France.”

He notes that a mixture of budget pressure on developed nations to decease their debts and the need for new infrastructure in emerging economies has provided VINCI with a considerable source of international development opportunities over the last two years.

“VINCI Airports’ development strategy in this context is very opportunistic. We focus on opening new doors within dynamic geographic areas or on high potential assets,” he reveals.

“We don’t target any particular region of the world. Instead we analyse opportunities on a case-by-case basis and compete

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 the LaGuardia Gateway Partners (LGP) consortium that is leading the $4 billion redevelopment of New York-LaGuardia’s Central Terminal B. It is also part of the Midway Partnership – a new joint venture between Vantage, SSP America and the Hudson Group – that recently took over management of the concessions programme at Chicago’s Midway International Airport (MDW) under an agreement with the Chicago Department of Aviation.

Plans to expand/reduce portfolio: Vantage has a global network of 11 airports in five countries, and continually assesses its network profile and emerging opportunities.

News: Vantage has established a foothold in the US with two land mark projects. It led the LGP consortium to financial close and lease commencement of the $4 billion project to redevelop LaGuardia’s Central Terminal B. Vantage, which holds an equity stake in LGP, is overseeing all aspects of the $4 billion construction project and also manages LGP’s operational responsibilities at the terminal under a 35-year lease agreement with the Port Authority of New York and New Jersey.

More recently, Vantage closed a deal to redevelop and manage the concessions at Chicago’s Midway International Airport courtesy of its membership of Midway Partnership. Vantage will lead the $75 million

30

AIRPORT WORLD/JUNE-JULY 2017

when we think we can bring enough value and the quality of the concession contract is attractive.

“We are also open to partial privatisations as long as the concession contract allows for co-control, in order to allow us to make full use of our expertise as global airport operators.”

Asked to explain to a sceptic why they should put the fate of their airport in the hands of private investors either through an operating concession or PPP project to build new infrastructure, Notebaert says: “The airports operated by VINCI Airports clearly reflect the positive impact of public-private partnerships for airport users and, more broadly, on the economic growth and development of regions.

“In Cambodia, for example, we have invested more than $100 million on doubling the capacity of Siem Reap and Phnom Penh airports over the last 20 years. This has taken the country’s airport infrastructure to the next level and played a significant role in Cambodia’s economic growth.” renovation and manage the retail/food and beverage programme through 2032, introducing an entirely new model for concessions management in the US. Elsewhere, Vantage provides technical expertise and advisory services to Leonard M Thompson International Airport in Marsh Harbour, the Bahamas.

Quote: In response to whether the investor market is fiercer today than ever before, George Casey, chair and CEO of Vantage Airport Group, says: “With the right deal, investor competition is always fierce. The bonds for the LaGuardia Central Terminal B Redevelopment project were more than 10 times oversubscribed, attracting interest from more than 150 investors and shattering records for absolute yields and credit spreads for a BBB credit. This tells us the market is strong, and the P3 model for financing airport redevelopment projects is appealing to investors.”

Vienna Airport Group/Flughafen Wien Gruppe 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 Airport.

Plans to expand/reduce portfolio: None.

News: Vienna Airport Group increased its stake in Malta International Airport shareholder, MMLC, by paying SNC-Lavalin around €64 million for its 38.75% interest in the consortium in early 2016. MMLC in turn has a 40% stake in operator, Malta International Airport plc, which has a 65-year concession agreement.

In its 2016 annual report, FWAG notes: “Flughafen Wien AG’s fully consolidated investment in Malta Airport amounts to around 48% in total. FWAG indirectly holds a 66% stake in Košice Airport through a holding company. The strategy of the Flughafen Wien Group is concentrated on these two existing investments. There are no plans to acquire shares in further airports.”

SPECIAL REPORT: GLOBAL AIRPORT OPERATORS Big year for Zurich Airport On March 16 this year Zurich Airport was awarded the concession to operate and expand Hercílio Luz International Airport in the city of Florianópolis in southern Brazil. It becomes its second Brazilian gateway after Belo Horizonte, only this time it will 100% own and operate the airport under concession until 2047.

A statement issued at the time of the deal stated: “Flughafen Zürich AG will expand and improve the airport’s infrastructure to achieve its maximum growth potential by utilising the best practices developed in Switzerland while preserving the local Brazilian values.

Our mission will be to offer best quality services to passengers, airlines and other stakeholders.

“We are pleased to be adding Florianópolis to our Brazilian airport portfolio in one of the world’s most dynamic aviation markets with strong long-term fundamental growth prospects.”

The Brazilian addition to its airport portfolio coincided with Flughafen Zürich AG’s decision to end its 16-year association with Bengaluru’s Kempegowda International Airport by selling its remaining 5% stake in operator, Bangalore International Airport Ltd (BIAL), to a Fairfax India Holdings Corporation subsidiary for $48.9 million. It had been a shareholder in BIAL since its inception, although a year after the airport’s 2008 opening offloaded 12% of its shareholding to GVK Power & Infrastructure Ltd.

VINCI Airports World Headquarters: Rueil-Malmaison, France Airports 100% owned and operated: None.

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

In Asia, VINCI operates Osaka’s Kansai and Osaka (formerly Itami) airports in Japan courtesy of its 40% stake in Kansai Airports, and in Cambodia it owns 70% of the shares in Cambodia Airports, which operates Cambodia’s three international airports of Phnom Penh, Siem Reap and Sihanoukville.

In Latin America, it has a 40% stake in the Nuevo Pudahuel consortium responsible for operating Santiago’s Comodoro Arturo Merino Benítez International Airport in Chile; holds the concession for Deputado Luís Eduardo Magalhães International Airport in Salvador da Bahia, Brazil; and 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.

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

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

News: VINCI Airports has been one of the busiest companies in the market over the last two years, sealing deals for Japan’s Kansai and Osaka airports;

Talking about the recent BIAL sale, it states: “Zurich Airport remains committed to the Indian aviation market and will actively consider new investment opportunities where our local experience and recognised international airport operator expertise can generate a significant impact. India remains one of Zurich Airport’s selected strategic investment markets.”

Zurich Airport’s chief financial officer, Lukas Brosi, notes that the company currently makes a “moderate” profit from its international business, but the goal is for it to eventually account for around 10% of its net profits.

He says: “So far Flughafen Zürich AG has been successful in its international business activities as a minority shareholder and operator of airports globally. However, our intention is to increase our managerial responsibilities by becoming a majority shareholder in privatised airports.

“Our role is not that of the financial investor, but that of the airport operator, combined with an equity investment.”

Talking about the appeal of the emerging Brazilian and Indian markets, he says: “We believe that these two markets offer great potential for growth. In both regions, a very strong domestic market is developing and their growing economic strength will attract more international and intercontinental traffic.” spearheading the consortium that acquired a 60% stake in Aéroports de Lyon (ADL); buying Advent International’s 100% stake in Dominican airport operator, AERODOM, for an undisclosed fee; winning the 30-year concession to operate Deputado Luís Eduardo Magalhães International Airport in Salvador de Bahia, Brazil; and signing an MoU to develop Mashhad and Isfahan airports in Iran.

Zurich Airport/Flughafen Zürich AG World Heaquarters: Zurich, Switzerland Airports 100% owned and operated: Zurich Airport in Switzerland.

Others: In Brazil, it 100% holds the 30-year concession for Hercílio Luz International Airport in Florianópolis and has 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.

In Chile its 100%-owned subsidiary, Aport Chile SA, has the concessions to develop and operate Andrés Sabella Airport in Antofagasta and Diego Aracena Airport in Iquique; and in the Caribbean, Zurich Airport has a 7.5% shareholding in Curaçao Airport Partners NV (CAP), which operates Curaçao International Airport.

Elsewhere, the operating arm of Zurich Airport in Latin America, Aport Operaciones SA (Santiago, Chile) has operations and management contracts with the concessionaire of Bogota’s El Dorado International Airport and CAP, and operates Antofagasta and Iquique on behalf of Aport.

Plans to expand/reduce portfolio: Zurich Airport remains open to further investment opportunities, showing a particular interest in Latin America and Asia, despite the recent sale of its assets in Bengaluru.

News: Zurich Airport has been busy this year, being awarded the concession to operate and expand Hercílio Luz International Airport in Brazil and extending its contract at Iquique’s Diego Aracena Airport for another 25 years courtesy of Aport Chile SA. AW

AIRPORT WORLD/JUNE-JULY 2017

33

Going off campus

SPECIAL REPORT: GLOBAL AIRPORT OPERATORS

It might not be an equity investor in airports on the global stage, but Flughafen München GmbH (FMG) is arguably one of the most experienced providers of consulting, management and training services to gateways across the world, writes Vicky Donovan.

M

unich Airport is one of the busiest gateways in Europe, regularly winning customer service and operational efficiency awards as it handles around 42 million passengers per annum.

The airport recently celebrated its 25th anniversary and arguably is the architect of its own success as the business model of operator, Flughafen München GmbH (FMG), is to do pretty much everything itself through in-house departments and specialist subsidiaries.

Indeed, FMG carrries out aviation, IT, technical, facility management, aviation security, ground handling and training services, and its range of non-aeronautical related commercial activities in Munich covers everything from real estate management and car parking operations to the retail and F&B concessions.

And it is using this knowledge to good effect internationally because while FMG may not yet be an equity investor in other airports across the globe like a Fraport or Groupe ADP, it has become a popular partner for management, consulting and training services.

In fact, Munich Airport‘s International Business Division has successfully supported more than 40 airports worldwide with tailor-made solutions over the last 25 years.

Its customers include airports, airlines, construction companies and other consulting companies and the projects it has been involved in have spanned all geographies and cultures.

FMG is, for example, currently providing Operational Readiness and Airport Transfer (ORAT) services for Muscat and Salalah airports in Oman and Changi Airport (Terminal 4) in Singapore.

It is also working at Jeddah’s King Abdulaziz International Airport in Saudi Arabia (ICT infrastructure planning and operational systems integration); Palmerola Airport in Honduras (development, management and operation of the new gateway); Cairo Airport in Egypt (ORAT, terminal operations and management of terminal 2); and Riyadh-King Khalid

International Airport in Saudi Arabia (health check and management support for airside and terminal operations).

Elsewhere in Saudi Arabia, a Saudi-led consortium has won the concession to develop the new Ta’if International Airport and, as a result, FMG will manage and operate the existing airport and be involved in the start up and operation of the new one.

The growth and development of this side of the business recently led FMG to create a dedicated international business subsidiary – Munich Airport International GmbH (MAI) – in a bid to take things to the next level.

MAI’s scope of services include planning and design; operational planning and start-up of new facilities (ORAT); commercial revenue optimisation; airport privatisation; training services; and airport management.

To keep up with global airport developments across the globe – the core of which is taking place outside of Europe – it has announced plans to set up new offices in Asia and the Americas.

“We continuously strive to widen our product portfolio, improve our support services and strengthen our global footprint,” says MAI’s managing director, Dr Ralf Gaffal.

“We will, for example, soon open regional offices in the Americas, Middle East and Asia that will allows us to respond quicker and more effectively to customer requests and local market requirements, in addition to reducing travel time and costs.

“As well as the new offices, we are also interested in co-operating with local consulting firms as strategic partners. This will allow us to break into new markets quicker, and benefit from existing networks and market insight.”

FMG is confident that establishing a subsidiary solely for its international, off-campus business, adds another string to its bow and make it less dependent on any one airport or market.

AW

AIRPORT WORLD/JUNE-JULY 2017

35

TOURISM DEVELOPMENT

Taxes, tourism and connectivity ACI World’s senior manager for economics and statistics, Patrick Lucas, reflects on the global importance of tourism and some of the key challenges facing aviation’s role in its future development.

A

ccording to the United Nations World Tourism Organization (UNWTO), tourism accounts for 10% of global Gross Domestic Product (GDP) and one in ten jobs are linked to tourism.

It is hugely important to the social and economic welfare of millions of people across the planet and despite many challenges on the geopolitical front in 2016, demand for international tourism remained relatively strong.

Indeed, international tourist arrivals grew by 3.9% last year to just over 1,235 million, according to the latest UNWTO World Tourism Barometer.

Yet in this new era of inward-looking policies and protectionist rhetoric, particularly from several western countries, it almost feels like we have temporarily forgotten about the vital contribution tourism makes to economies around the globe.

It is therefore important to remind ourselves that aviation – a vital link in tourism’s value chain – is also the lifeblood of tourism in many respects. In short, an attack on the liberalisation of air transport, hurts tourism.

Tourism and liberalisation The liberalisation of air transport is part and parcel of tourism and economic development. Despite the economic woes, uncertain geopolitical landscape and acts of terror that have permeated many markets in 2016 and 2017, air travel has remained unperturbed over the short run.

36

AIRPORT WORLD/JUNE-JULY 2017

This is largely due to increased competition among suppliers of air transport, rising per-capita income in key markets and lower fares faced by passengers, all of which have helped foster an environment of sustained growth in air travel.

Thus, irrespective of the downside risk, there has been an overall positive net gain in traffic growth and the air transport value chain.

Research studies have shown that traffic growth typically averaged between 12% and 35% subsequent to liberalisation of air services agreements between countries. This growth was significantly greater than the years preceding liberalisation.

With as much as 54% of international tourists travelling by air, according to the latest figures from UNWTO, there is a positive relationship between liberalisation, international passenger traffic growth and tourism.

Air transport also continues to play a major role in the shipment of value added goods across the globe. While trade by air encompasses only 0.5% of global volumes, it represents as much as 35% of their value. Thus, there is a general consensus across many stakeholders in the aviation value chain that the liberalisation of air transport generates a number of opportunities with direct and indirect impacts across the economic landscape.

Connectivity, capacity and liberalisation Airports continuously try to enhance their connectivity through air service development. In an effort to attract new traffic, either as a gateway to tourist

TOURISM DEVELOPMENT Taxes, trade and tourism

destinations in their home countries or as a point of connection for a seamless onward journey, airports have been propelled into an environment where they must compete for new markets and retain existing ones.

At the same time, the necessary infrastructure capacity within the air transport value chain is required. That includes not only airport infrastructure but also intermodal transport and hotel accommodation for leisure and business travellers to name a few. Airports now have to compete with one another to retain and attract the traffic they need.

A fundamental prerequisite for achieving connectivity is formalised market access. This is obtained by ratifying bilateral agreements that remove restrictions on air transport among countries.

The most immediate impact of air transport liberalisation is on the end user; the conventional wisdom suggests that liberalisation leads to innovation and choice, which results in greater traffic growth.

The link implies that traffic growth leads to economic growth by bringing consumers (passengers) from one market to another. Thus, the combined purchasing power of consumers and businesses has a multiplier effect across the value chain and leads to job creation. This, in turn, has a feedback loop over and over again through wealth creation.

Nevertheless, challenges to air transport liberalisation persist in many parts of the world where rigid bilateral air transport agreements and regulations take centre stage and hinder the prospect of economic development.

The wider economic benefit is realised through increased connectivity between cities and the flow of people, which has enabled the proliferation of markets for goods, services, capital and technology.

According to IATA, the number of unique city-pair connections by air has doubled from what it was twenty years ago, reaching more than 17,000 in 2016.

While the risk of retraction in air transport liberalisation lurks on the horizon, aviation stakeholders must also be cognisant of other challenges that hinder industry growth and progress. One of these challenges has to do with excessive taxes in the aviation sector.

‘Taxes are the price of civilisation’. First coined by the American jurist, Oliver Wendell Holmes, Jr, there is considerable truth in this statement since tax revenues are vital to finance social and economic programmes administered by the state.

A tax is a legitimate right by any government since it is a source of financing for schools, hospitals and other types of social infrastructure, irrespective of the jurisdiction and governance model. However, in spite of its necessity, by its very nature, a tax that is levied on individual consumers or firms represents a market distortion.

Market distortions may result in inefficiencies and disincentivise certain forms of economic behaviour. There are jurisdictions where providers and users of aviation infrastructure face a significant tax burden. This, in turn, may lead to a loss in competitiveness and opportunities in air service development aimed at enhancing connectivity and trade.

ICAO defines a tax as “a levy that is designed to raise national or local government revenues which are generally not applied to civil aviation in their entirety or on a cost-specific basis”.

In many parts of the world, users of aviation services face excessive taxation and this hampers the revenue available to those in the aviation value chain, especially air carriers and airport operators.

More importantly, a high tax that is imposed on passengers tends to curb air transport demand, which has an impact not only within the aviation sector but also on the economies that are served in those jurisdictions.

In compliance with ICAO’s Policies on Charges and Taxation, taxes on international air transport should only be levied in a justifiable, equitable and non-discriminatory manner.

ACI Africa/World Annual General Assembly The United Nations 70th General Assembly has designated 2017 as the International Year of Sustainable Tourism for Development to highlight its contribution to economic and social progress.

In this context, tourism has been identified as having specific role in five key areas: 1. Inclusive and sustainable economic growth 2. Social inclusiveness, employment and poverty reduction 3. Resource efficiency, environmental protection and climate change 4. Cultural values, diversity and heritage 5. Mutual understanding, peace and security.

It is time to take stock of the role that tourism plays, not only for the economic and social benefits that it extends by the sector, but also to identify innovative strategies and policies to ensure the long-term growth of the industry in tandem with the air transport value chain, especially in emerging markets.

Join us in Mauritius on October 16-18, 2017, for the ACI Africa/ World Annual General Assembly, Conference and Exhibition and participate in the session ‘Taxes, connectivity and sustainable tourism: Barriers and opportunities to grow’.

This session will present a variety of viewpoints and practices from government, the tourism sector and airports on tourism growth impediments and enablers.

AW

AIRPORT WORLD/JUNE-JULY 2017

37

INVESTING IN AIRPORTS

Making history LaGuardia Gateway Partners CEO, Stewart Steeves, discusses the biggest PPP project for new transportation infrastructure in US history at New York’s LaGuardia Airport.

What was the appeal of the new Central Terminal B project at LaGuardia Airport?

LaGuardia Airport’s Central Terminal B was long overdue for redevelopment and we felt this was an incredible opportunity to develop a true best-in-class terminal. Our plan for the terminal brings industry-leading advancements such as an accelerated construction schedule, first-of-their-kind dual pedestrian bridges and a passengeroriented terminal design that will benefit passengers, airlines and other stakeholders.

What is the timescale for the development of the new Central Terminal B and how do you minimise disruption to airport operations during the construction phase?

The entire project is expected to be finished in the summer of 2022 and we’re committed to delivering it on time and on budget with minimal disruptions to the terminal’s current operations.

We will achieve that through our phased-approach that includes key milestones, such as opening the new parking garage in early 2018, followed by the first concourse – Concourse B – in the summer of the same year. In 2020, we will open the headhouse, the main part of the terminal.

To ensure the least amount of passenger disruption during construction, we intentionally developed a plan so that the existing terminal would not be closed during any portion of the redevelopment. In my mind, we are essentially building a new

state-of-the-art terminal alongside and on top of an existing, fully operational one. When the new terminal building is complete, we will close the current building at night and open the new building in one phase the next morning.

How big a coup for Vantage Airport Group/LaGuardia Gateway Partners (LGP) was winning the project?

LaGuardia Gateway Partners was thrilled to be selected to lead this massive project. Our team brought innovative ideas that were focused on improving the passenger experience and tailored for New York. In addition, the Central Terminal B project provided Vantage with an opportunity to leverage its global experience and capabilities in the United States. Keeping the facility fully operational during all phases of construction was a true differentiator for us.

How much work has been carried out to date?

Though we received the keys to Central Terminal B less than a year ago, our first major milestone, the demolition of the P2 parking garage, was completed in December 2016. By spring 2017, we had the steel erections for Concourse B and the headhouse both underway. But we are not just standing by while we wait for the new terminal to come online. In fact, we are investing $5 million on carrying out much needed maintenance and improvements to the existing terminal. The work includes roof repairs, improving lighting and adding new furniture at the food court, all of which will enhance the passenger experience.

AIRPORT WORLD/JUNE-JULY 2017

39

INVESTING IN AIRPORTS

How and why has LGP put the passenger experience at the heart of the terminal’s design and planning and what does this mean in reality for the passenger?

We are building a best-in-class terminal that puts the passenger at the core of everything that we do, from an accelerated construction timeline to a modern terminal design that underscores efficiency, comfort and choice. Relaxed passengers are happy passengers that enjoy the amenities and spend more time and money at the airport.

Our concept and design inside the new terminal showcases our customer-centric approach. For example, we are adding more check-in stations and security checkpoints to allow for a streamlined passenger experience from kerb to gate. We are investing in new food, retail and beverage options that reflect regional and national tastes. Additionally, there will be airy and comfortable waiting areas with charging stations and children’s play areas flooded with natural light.

While we build the new terminal, I’ve mentioned some immediate improvements to overall structure above, but we’re also looking to keep our passengers engaged. We’ve brought in the LaGuardia B Fun Squad – a group of improv artists – to entertain passengers during peak travel times.

Will the new terminal embrace self-service technology and other state-of-the-art IT systems?

We are including the latest technology in our redevelopment of Central Terminal B with a focus on our mobile-minded and busy customers.

For example, we have been testing beacon technology for the new terminal, which will provide passengers with information such as wait times for security and taxi queues.

them – providing increased flow for aircraft. And meanwhile, passengers will be able to view the aircraft moving underneath the bridges as well as see the iconic NYC skyline.

With ACI-NA revealing that over $100 billion needs to be spent on US airport infrastructure over the next five years, do you believe that the LaGuardia project could prove the catalyst for more PPP deals?

Yes, I whole-heartedly believe that Central Terminal B could be a great case study of what public-private partnerships (P3s) can do for infrastructure projects around the US. Despite their success in Asia, Canada and Europe, P3s are not as common as they could be in the United States. As one of the largest P3s in the country, we hope the successful completion of Central Terminal B will prove their value.

Can the US fund the $100 billion bill without some form of private investment?

The ACI-NA report certainly highlights the need for investment in airports.

Airports are busier today and there are more people flying than ever before. P3s can be a smart solution as the US looks to modernise its airports efficiently to keep up with the pace of today’s reality.

Can you tell our readers more about LGP and why you are the right company to spearhead this transformational project for the airport?

As it relates to more flights, the airport is slot controlled so we will not be able to bring in more flights to the terminal once it’s online. But as the new terminal – including the gates – will be common use, our airline partners will have a lot more flexibility to utilise larger and more efficient aircraft types.

LGP is a company comprised of leading organisations in the industry, including Vantage Airport Group, Skanska and Meridiam. Vantage has more than 20 years of experience developing and operating airports, and collectively the LGP partners have worked on more than 350 aviation and transportation projects globally. As each partner has a unique expertise, we draw on their experience to provide the best solutions to our customers – both airlines and passengers.

What are you personally looking forward to with the new terminal?

What’s next for Vantage Airport Group as a global airport investor?

I am very excited for the terminal’s dual pedestrian bridges, which span the aircraft taxi lanes. The bridges will connect the headhouse to the concourses and be elevated so that airplanes can move underneath

Vantage Airport Group is always looking at new and exciting opportunities both here in the US and around the world to leverage its experience and capability.

What is LGP’s plan to develop the terminal and increase traffic at LaGuardia when Terminal B opens in 2022?

40

AIRPORT WORLD/JUNE-JULY 2017

AW

SMART AIRPORTS

The SMART decision Airport areas are leveraging multi-modal connectivity to become ‘Innovation hubs’ for today’s smartest initiatives, writes Chris LeTourneur, president and CEO of MXD Development Strategists.

I

ncreasingly, airports and local government are recognising the benefits of crafting land use policies that respond to industry requirements to facilitate innovation and the flexibility to accommodate many different uses.

This value-added innovation is occurring at international and regional gateways and usually within a 10-minute drive of the airport, as illustrated by the following examples.

Amazon Prime air hub – Cincinnati/Kentucky International Airport (CVG) Amazon Prime is to construct its North American Air Logistics Hub on a 900-acre plot at CVG leased from the airport for 50 years.

Amazon is set to invest up to $1.5 billion on this new facility, which will include a three million square foot Logistics building, 350,000 square foot Loading wing, and 100+ aircraft loading positions capable of handling 200 daily aircraft movements.

Amazon Prime forecasts that this CVG Hub facility will directly create 600 new jobs, which will grow to 2,700 over time.

Composite and specialised materials – Sealed Air, Charlotte, NC, USA Sealed Air recently built their new headquarters adjacent to Charlotte Douglas International Airport to benefit from the ability to incorporate their various business sectors in one location, accommodating a variety of functions (including office, manufacturing, skills training, R&D and distribution) that did not fit into traditional zoning categories.

A leader in plastics, food safety and specialised packaging, Sealed Air is known for inventing Bubble Wrap and Cryovac. It calls the new complex its ‘Innovation Center’, which is based on a collaborative workspace configuration to recognise the changing nature of employment and employees. The Sealed Air campus will be built on 34 acres of land and feature three buildings covering 380,000 square feet that will be home to more than 1,400 staff.

Future aerospace – Winnipeg Richardson International Airport (YWG) The Canadian airport is an established ‘aerospace innovation hub’ for the manufacturing of specialised air frame components and assemblies and engine testing. Major aerospace companies located either on the airport campus or next to it include Boeing, Magellan Aerospace and GE/Standard Aero.

Magellan Aerospace implements an education programme with the nearby Red River College that places students in its manufacturing facilities, leading to job placement. To grow its status as an innovation hub, the airport has embraced the concept of being ‘Ready to Go’ to attract talent, businesses and investment to the airport campus.

Future mobility – Uber Autonomous Vehicle testing, Pittsburgh, PA, USA In Pittsburgh, ride sharing leader, Uber, is testing its Autonomous Vehicle (AV) programme in collaboration with the Carnegie Mellon University Robotics Lab, Ford and Volvo, and the famed Uber AVs can frequently be seen moving about the urban streets of the city as part of a living laboratory.

Uber has suggested its next steps for AV testing involve seeking a high-speed testing facility that could consider the tracts of land at, and around airports, potentially cohabitating with other unmanned ground, air and military robotic vehicle testing facilities. Ride sharing and AVs will have profound effect the future design of airport terminals and parking facilities.

Advanced manufacturing – GE Brilliance Factory, Pittsburgh, PA, USA As part of its global network of research and development ‘Brilliance’ facilities, GE recently opened its Center for 3-D Additive Technology Advancement R&D facility in direct proximity to Pittsburgh International Airport (PIT).

Using advanced robotic 3D printing machines, this facility is manufacturing and testing proto-type aerospace engine components, particularly manufactured from specialised composites and metals.

Outlook As these new technologies affecting manufacturing, distribution, commerce and mobility flourish, there will be significant opportunities for airports to leverage their connectivity and become leaders for facilitating innovation.

The connectivity of people, products and technology driven by airports provides a strong platform for attracting talent, technology and investment, stimulating innovation and economic development.

AIRPORT WORLD/JUNE-JULY 2017

AW

43

SECURITY

Spotlight on security Cameron Mann, Smith Detection’s global marketing director for aviation, talks to Airport World about some of key security challenges and opportunities facing airports today.

Will banning laptops and mobile devices from aircraft cabins make flights safer?

This electronics ban dealt with a specific threat – that of the use of large electronic devices to conceal a range of potential explosive devices – by avoiding related risk. But there have now been concerns raised by safety and other authorities about the increased fire risk from electronic devices stored in the hold. We are anticipating risk assessments by a range of safety and other authorities to determine the future of the electronics ban – and whether a technical screening solution is more appropriate.

How close are we to adopting technology that finally means that there is no longer any need to remove LAGs from your hand luggage?

Very close! Passengers will be able to leave liquids, aerosols and gels (LAGs) in cabin baggage when it has been screened with EDS CB C3 certified equipment. Two Smiths Detection machines have already achieved C2 certification (for automated solid and liquid explosives detection) and we are confident that we will secure C3 certification by the end of the year.

To achieve this level of automated detection, conventional X-ray equipment will be completely replaced by a new generation of systems that marry cutting edge X-ray technology with computer tomography (CT). For airports, compliant equipment will improve detection rates and save time and money by reducing the number of required secondary checks.

The improvements in screening efficiency will also mean that fewer staff will be needed to cope with growing passenger numbers.

This will increase staff productivity and lower screening cost per head. Control of this process can be even further improved through system networking, effective connectivity and remote screening.

For passengers this will be the start of a smoother journey than they have experienced for many years.

What will the security checkpoint of tomorrow look like?

The security checkpoint of tomorrow will be fluid and unobtrusive.

It will marry minimum disruption to passengers on their journey through the airport while maintaining the required level of security.

This will require sensitive and specific detection technologies with low false alarm rates to enable the screening of passengers while they are moving.

It is likely that screening will make more use of passenger data, including biometrics, to support a dynamic risk-based approach to the security screening process for passengers, their bags and staff in the airport. This will be part of an integrated approach to how information is utilised across the different security layers and could also be used to add a personalised dimension to their journey.

What lessons have we learnt from the terrorist attacks on Brussels and Istanbul Atatürk airports?

That there is more work to be done to support the development of security plans to deal with heightened threats to landside operations.

These solutions are not about creating a fortress. Instead it should be about building multi-dimensional layers of security that leverages on people, processes and technology. No single element addresses all the risks and it is only when these elements are considered in an integrated approach will the benefits be realised.

Can security screening ever be passenger friendly?

Yes, absolutely! This is our business. This can be achieved through a combination of class-leading technology and high levels of training for security teams. Well-designed checkpoints, staffed by well-trained and motivated teams, rapidly reduce queues; this ensures a good passenger experience. Operational improvements also boost staff productivity, reducing the screening cost per passenger head.

Happy passengers bring a wealth of benefits to airport operators, including a 1% rise in customer service levels, which typically delivers a 1.5% boost to airport revenue.

AW

AIRPORT WORLD/JUNE-JULY 2017

45

IT INNOVATION

The new reality?

Airport World takes a closer look at the new HoloLens technology unveiled at the recent Air Transport IT Summit in Brussels.

F

irst there was ‘virtual reality’, then we were introduced to ‘augmented reality’ and now we could potentially have ‘mixed reality’ at airports, if new HoloLens technology currently being trialled by SITA comes to the market.

Initial trials of the HoloLens at Helsinki Airport apparently went well and, according to SITA, a new world is beginning to emerge where operators can use the technology to analyse and manage airport operations in a mixed reality environment.

Explaining the new technology, Jim Peters, SITA’s chief technology officer and head of SITA Lab, enthused: “Mixed Reality hits a sweet spot of having an experience that is fully immersive for the user, but unlike virtual reality also keeps that person in the real world.

“The user can interact with both and avoids the disorientation or discomfort of fully immersive virtual reality. There are benefits to having multiple people using the headset and simultaneously interacting with the same virtual display. This could be a really useful for scenario planning exercises.”

In effect, HoloLens is the world’s first self-contained holographic computer that enables users to engage with digital content and interact with holograms in the world around them.

It runs Windows 10, and enables the blending of the physical and digital worlds in ways that were previously impossible.

SITA worked with Helsinki Airport to use HoloLens to reproduce the Airport Operational Control Centre (AOCC) in this mixed reality environment.

For this project SITA Lab used a feed from SITA’s Day of Operations technology, which is used by Helsinki Airport, and presented a new way to visualise and interact with the airport’s operational data including aircraft movements, passenger flows and retail analytics.

Wearing the HoloLens, users had a set of screens meshed into a 3D view of the airport allowing them to correlate events from the data dashboards with an immersive real-time model of the airport.

SITA believes that this new way of looking at the world can provide new insights into how the airport is functioning.

And HoloLens also opens the possibility of being able to access the AOCC environment from any location, on or offsite, allowing experts to provide input to situations remotely.

Peters added: “Mixed reality, which combines augmented and virtual reality, is more than a new interface, it is a new way of looking at the world and allows things to be done in a new way.

“It enables digital and physical data to exist together. Our early research shows that there are potential uses for airlines and airports for operations, maintenance and training.

“We need to learn how to interact in this new environment. In the same way that we moved from computers to smartphones and voice recognition, now we can go beyond the screen.”

Greg Jones, Microsoft’s managing director of Worldwide hospitality and travel, said: “HoloLens is now being used across various enterprises from healthcare to engineering. SITA’s work is an example of how to extend HoloLens capabilities to manage the complexity of data and decision-making in an airport environment.

“It shows how this new technology can be harnessed for the air transport industry and add value in areas from training to complex operational management.”

The SITA Lab project interfaced into multiple data sources at Helsinki Airport to create the unique view of the ever-changing operations throughout the day. This included passenger real-time location and historic density data; aircraft position data; gate information; flight status information; security wait times and retail dwell times, segmented by passenger.

SITA Lab’s early research results show that unlike virtual reality, the mixed reality experience tends not to make people feel disorientated or nauseous. The HoloLens device itself has proven easy to learn and has a good battery life and doesn’t suffer from over-heating issues.

While the technology shows potential, SITA Lab points out it is early days and before enterprise use at airports issues of weight, size and durability will need to be addressed. Users must also learn how to interact in this new environment to maximise its benefits.

AIRPORT WORLD/JUNE-JULY 2017

AW

47

RUNNING WBP NEWS HEAD

The latest news from ACI’s World Business Partners

SDI PRESENCE LLC

Upgrade for Aruba’s Queen Beatrix International Airport Aruba Airport Authority (AAA) has awarded NACO a design consultancy contract in connection with the planned redevelopment and expansion of Queen Beatrix International Airport.

AAA’s Gateway 2030 master plan is designed to address the airport’s capacity constraints, customer experience and sustainability to pave the way for its future growth over the coming decades.

The centrepiece of the redevelopment project will be the creation of new and expanded check-in facilities, installation of a new baggage system and upgrading the screening process to the full explosive detection systems (EDS) standards required by the TSA standards for US bound passengers.

The new baggage system will also include a full sortation capability allowing non-US bound flights to check-in with US bound flights, a move which is expected to significantly improve the airport’s operational efficiency.

Also on the agenda as part of Gateway 2030 are three additional contact gates and two bus gates; a broader selection of retail and F&B outlets; and improved amenities and passenger circulation space.

AAA’s determination to minimise the airport’s footprint on the environment means that the $300 million upgrade will include the installation of new solar panels to provide ‘green’ energy and the introduction of an automated building management system for lighting and cooling based on the occupancy. It is hoped that this will earn the project LEED Silver accreditation.

“We are confident that NACO’s expertise will ensure a greener and more user-friendly expanded airport,” said AAA’s CEO, James Fazio.

Istanbul New Airport to boast intelligent airfield ADB SAFEGATE is to provide 35,000 intelligent LED airfield runway and taxiway lights and a host of visual aids for Istanbul New Airport, which is set to open in late 2018 and is expected to eventually become the world’s biggest gateway handling in excess of 200 million passengers yearly.

In addition to the world’s biggest installation of airfield ground lighting (AGL), ADB SAFEGATE will also supply and commission all visual aids including transistor regulators, transformers, approach solutions (flashers, PAPI, approach lighting), energy efficient power solutions and mounting equipment.

Its solution will equip the taxiway system with full switching ability and the addition of a single and double channel Individual Light Control and Monitoring System (ILCMS).

With intelligence built into each light fixture, the ILCMS will control the lights individually or by defined segments, rather than selected circuits, providing large gains in power savings and making maintenance easier and more cost effective.

The state-of-the-art intelligent lighting will also allow increased flexibility in guidance and routing.

The contract, with airport operator IGA, was signed in September 2016 and will lead to deliveries throughout this year and into 2018.

“Innovation, efficiency and safety are imperative to ensure that the airport is congestion-free and traffic flows smoothly, even in adverse conditions,” said Yusuf Akçayoğlu, CEO, İGA Airports Construction.

“With ADB SAFEGATE working closely with us right from the design review to implementation, we know that together we can truly deliver seamless and future-proof operations.”

Location: Chicago, IL, USA Contact: Dawn Nash Pfeiffer, chief marketing officer E: dpfeiffer@sdipresence.com W: www.sdipresence.com Mission-critical systems integrator SDI delivers intelligent technology solutions to ensure client operational performance, security and revenue generation. With a 20-year corporate resume, SDI addresses the higher IT demands of critical environments to deliver high-availability systems, enhanced security and risk mitigation strategies. SDI is a certified Minority Business Enterprise (MBE) with a portfolio of clients that includes some of the US’s largest airports, commercial real estate portfolios, and national banks and financial services organisations. SDI delivers deep technical expertise with an agile delivery model focused on complete customer satisfaction.

LYNGSOE SYSTEMS A/S Location: Aars, Denmark Contact: Michael Saunders, director of business development aviation, data capture E: airlines@lyngsoesystems.com W: www.lyngsoesystems.com Lyngsoe Systems has long-running experience within radio frequency identification (RFID) solutions within the aviation industry. Being a world leader in electronic logistics control for over 40 years, we support the entire end-toend baggage journey with cutting-edge intelligent RFID products to improve baggage quality and increase passenger satisfaction.

KENNEDY/JENKS CONSULANTS, INC Location: Norfolk, VA, USA Contact: Heather Wood, ports market sector leader E: heatherwood@kennedyjenks.com W: www.KenndyJenks.com Kennedy/Jenks Consultants provides engineering and scientific solutions for water, environmental, energy and innovative projects to public agencies and private utilities, industry and business, federal programmes and transportation clients. We are employee owned, with offices throughout the United States.

AIRPORT WORLD/JUNE-JULY 2017

AW

49

HUMAN RESOURCES

PEOPLE

matters Is small beautiful?

Terri Morrissey and Dr Richard Plenty reflect on the pros and cons of working in small organisations.

A

mbitious young people often ask us whether it’s better to work for a small organisation or to join a larger one. “Which would give me the best opportunities?” is probably the most asked question, quickly followed by “Which would give me the better prospects for growth and help develop my future career?”

As with most teasers, the answer is, ‘it depends’. Not very satisfactory for someone wanting a definitive answer, but there are advantages and disadvantages associated with either option.

Large organisations, simply by being large, can offer many advantages.

They are likely to offer more structured jobs and career development. You can switch roles to gain more experience in a variety of work areas without having to leave the organisation.

The downside is that the jobs you are given may be very specialised.

And change can be so slow. For those with ambition, it can be frustrating and difficult to leave a mark or legacy when you feel you are being treated like a ‘number’ and people don’t have the time to listen to you.

By contrast, smaller organisations provide the opportunity to make an immediate impact as one’s success is easily visible. Small organisations are more agile and flexible; they require people to take more ownership and real accountability.

Sometimes people find they can be asked to take on an enormous breadth of responsibilities with potential for personal

50

growth that they simply wouldn’t have in a larger company. Longer term though, opportunities for promotion and development can be scarce and pay and benefits packages may be worse. And, of course, while success is more clearly visible, so is failure!

The ideal solution, of course, is to get the best of both worlds and gain experience in each type of organisation. This is becoming more of a realistic option in the airport sector as larger airport groups take over independent airports providing wider development opportunities.

And technology means small organisations are increasingly ‘connected’ to the outside world and open to learning. At ACI Europe’s recent Regional Airports Conference and Exhibition (RACE) in Cork, we chaired a session on people engagement, and were struck by the standard of work being done by small airports such as Bristol in the UK. When it comes to ‘large or small’, consider all the factors, including your life style and values before making your decision. A wise choice can pay off. Niall McCarthy took the opportunity to move from Dublin Airport to gain experience.

He is now the managing director of Cork Airport, the winner of ACI Europe’s Small Airports Award for 2017.

And as we are sure Niall himself would agree, not only does he have a challenging and rewarding role, but also he and his family now live in an attractive part of the Irish country. Small can indeed be beautiful!

AIRPORT WORLD/JUNE-JULY 2017

Robert Sinclair is to succeed Declan Collier as the CEO of London City Airport. Sinclair is currently the CEO of Bristol Airport but has decided to leave the position he has held since 2008 for the challenge of running London City Airport (LCY).

He is expected to take up the role at the gateway on October 30.

Fernando Echegaray is the new director of international operations for Groupe ADP. Spanish born Echegaray, who joins from AENA, will manage and develop Groupe ADP’s network of 23 airports in France and around the world, reporting directly to executive director in charge of international affairs for Groupe ADP, Antonin Beurrier.

Birmingham Airport in the UK is looking for a new chief executive after Paul Kehoe’s decision to step down from the top job on July 12. Kehoe, a familiar face at aviation industry events across the globe, feels that it is time for “the next generation to take the business forward” after nine years at the helm.

Leeds Bradford Airport has appointed former airport fireman, David Laws, as its new chief executive. He succeeds John Parkin who is retiring, having substantially developed the UK airport during the last 10 years. “My passion is for airport development and ensuring that the customer journey is a truly great experience,” says Laws.

Kevin Toland is to step down as chief executive of Irish airport operator, daa, later this year to take over the hot seat at the publicly quoted food group, ARYZTA AG. Toland, who became daa chief executive in January 2013, will join ARYZTA following a six-month notice period, or earlier, if agreed.

About the authors Terri Morrissey is Chairperson of This Is… and CEO of the Psychological Society of Ireland. Dr Richard Plenty is managing director of This Is…and delivers ‘Airport Human Resources Training’ for ACI. Contact them through info@thisis.eu

AW