Airport World, Issue 3, 2021

Theme: Route development Airport report: Bahrain Special report: The modernisation of LAX Plus: IT innovation, WBP news & People matters

Route development: Connecting the world Volume 26 – Issue 3, 2021 www.aci.aero

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

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

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Routes and destinations Editor, Joe Bates, considers the current difficulties faced with international travel and restoring air connectivity in this ‘route development’ themed issue.

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ith countries, regions and different parts of the world at differing stages in their COVID-19 recovery process, for most of us the chances of unrestricted international travel shows no sign of being back on the agenda any time soon.

An example of the current pitfalls of international travel occurred on June 3 when the UK government suddenly, and without warning, decided to move Portugal from its ‘green’ for go list to ‘amber’, which requires everyone flying to England from mainland Portugal or any of its islands to self-isolate for 10 days upon arrival.

At the time of the annoucement there were 112,000 Britons in Portugal with many only deciding to travel there because of the country’s ‘green’ status issued by the UK government just three weeks earlier. The news meant that many of them faced either a race to get home to beat the quarantine requirement, which came into force a few days later, or spend 10 days in isolation on their return.

While understanding the government’s motives for the move, the decision was universally condemned by the UK’s beleagured airports, airlines and wider travel industry.

Heathrow boss, John Holland-Kaye, for example, blasted: “Ministers spent last month [May] hailing the restart of international travel, only to close it down three weeks later, all but guaranteeing another lost summer for the travel sector.”

And Airport Operators Association (AOA) chief executive, Karen Dee, warned: “The government’s overly cautious approach to reopening travel has real-world consequences for the 1.6 million jobs in the UK aviation and tourism industries that rely on aviation having a meaningful restart.”

We take an in-depth look at the pandemic’s impact on airport connectivity in

the route development section of this issue.

And to show that it’s not all doom and gloom, we celebrate Miami International Airport’s air service successes and the launch or return of a number of new domestic and international routes across the globe.

Elsewhere in the issue, ACI World director general, Luis Felipe de Oliveira, explains why giving airports more flexibility when it comes to setting charges will aid aviation’s recovery from COVID-19.

In the first of a series of articles looking at the pandemic’s impact on different regions, ACI Europe director general, Olivier Jankovec, updates us on how the continent’s airports are faring and the challenges that lie ahead.

Our main feature is on Bahain International Airport, where airport CEO, Mohamed Al-Binfalah, tells us more about his gateway’s impressive new state-of-theart terminal and future ambitions.

We also turn the spotlight on Los Angeles International Airport (LAX) and its ongoing $14.5 billion modernisation programme and learn about how Los Angeles World Airports (LAWA) is ensuring that it embraces diversity when it comes to selecting the teams to carry out the work.

Still on the topic of capital development programmes in the US and California, we report on how San Francisco International Airport is using technology to transform infrastructure data management, operations and the passenger experience.

We round out the June/July edition with an article about some of the IT integration challenges and opportunities facing airports, our regular People Matters column and the latest news, views and opinions from ACI’s World Business Partners (WBPs). A sizzling hot summer issue, AW I hope you’ll agree!

AIRPORT WORLD/ISSUE 3, 2021

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CONTENTS

Theme: Route development Airport report: Bahrain Special report: The modernisation of LAX Plus: IT innovation, WBP news & People matters

ISSUE 3 Volume 26

In this issue 3 Opinion

Route development: Connecting the world Volume 26 – Issue 3, 2021 www.aci.aero

Editor, Joe Bates, considers the current difficulties faced with international travel and restoring air connectivity in this ‘route development’ themed issue.

9 View from the top As aviation recovers, airports need flexibility in setting airport charges, writes ACI World director general, Luis Felipe de Oliveira.

10 Ready to grow Bahrain International Airport’s new terminal gives it the potential to grow and become a firm favourite with passengers over the coming decades, writes Joe Bates.

14 Predicting the unpredictable ASM Global Route Development’s senior vice president for consulting and product developoment, Nigel Mayes, considers the impact COVID-19 has had on route development.

19 Global effort With international travel still very much on hold because of COVID-19, restoring route networks and global connectivity is going to take the effort of all stakeholders that benefit from aviation, writes York Aviation’s James Brass.

22 Sunny delight!

Miami International Airport’s route network continues to grow with Emirates launching services to Dubai and Southwest and JetBlue joining the gateway’s low-cost carriers, writes MIA’s communications director, Greg Chin.

24 Changing dynamics Domestic routes, traditionally the undervalued siblings of more lucrative international services, are leading aviation’s fight back from COVID. But how long is this likely to last?

OAG’s senior analyst, John Grant, investigates.

30 Back on the radar Airport World reports on a number of new route announcements and the return of some key international services for airports in Europe, the US and Asia-Pacific.

AIRPORT WORLD/ISSUE 3, 2021

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CONTENTS

Director General Luis Felipe de Oliveira (Montréal, Canada) Chair Martin Eurnekián (Buenos Aires, Argentina) Vice Chair Aimen Al-Hosni (Muscat, Oman) Immediate Past Chair Fredrick J Piccolo (Sarasota, USA) Treasurer Candace McGraw (Cincinnati, USA) ACI WORLD GOVERNING BOARD DIRECTORS Africa (3) Emanuel Chaves (Maputo, Mozambique) Dewananda Chellen (Plaine Magnien, Mauritius) Capt Rabiu Hamisu Yadudu (Lagos, Nigeria)

32 Challenging times How are Europe’s airports faring one year and counting on from the outbreak of COVID-19? ACI EUROPE’s director general, Olivier Jankovec, provides a progress report.

34 Transforming LAX Chief development officer, Bernardo Gogna, provides an update on Los Angeles International Airport’s $14.5 billion Capital Improvement Program and the recent opening of two key new facilities.

37 Team effort Los Angeles World Airports (LAWA) establishes a new model for hiring local, diverse teams to work on the upgrade of LAX and Van Nuys airports, write Chris Robert, Jon Philips and Anne Fletcher.

40 Flying start SFO’s multi-billion dollar capital improvement programme will use technology to transform infrastructure data management, operations and the traveller experience, writes Esri’s global transportation industry director, Terry Bills.

42 Time for a new approach?

Iyad Hindiyeh, Amadeus Airport IT’s senior vice president for strategy and marketing, considers some of the integration challenges and opportunities facing airports today.

44 WBP news The latest news from ACI’s World Business Partners.

46 People matters Terri Morrissey and Dr Richard Plenty outline the challenges facing employees and employers in the post COVID workplace.

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Asia-Pacific (9) Aimen Al-Hosni (Muscat, Oman) Mohamed Yousif Al-Binfalah (Bahrain) Geoff Culbert (Sydney, Australia) SGK Kishore (Hyderabad, India) Fred Lam (Hong Kong) Seow Hiang Lee (Singapore) Xue Song Liu, (Beijing, China) Nitinai Sirismatthakarn (Bangkok, Thailand) Akihiko Tamura (Tokyo, Japan) Europe (7) Daniel Burkard (Moscow, Russia) David Ciceo (Cluj-Napoca, Romania) Elena Mayoral Corcuera (Madrid, Spain) Jost Lammers (Munich, Germany) Yiannis Paraschis (Athens, Greece) Stefan Schulte (Frankfurt, Germany) Nazareno Ventola (Bologna, Italy) Latin America & Caribbean (3) Ezequiel Barrenechea (Guayaquil, Ecuador) Martin Eurnekián (Buenos Aires, Argentina) Andrew O’Brian (Quito, Ecuador) North America (6) Lew Bleiweis (Asheville, USA) Joyce Carter (Halifax, Canda) Deborah Flint (Toronto, Canada) Joseph Lopano (Tampa, USA) Candace McGraw (Cincinnati, USA) Sam Samaddar (Kelowna, Canada) Regional Advisers to the World Governing Board (10) Diego Arrosa (Montevideo, Uruguay) Chellie Cameron (Philadelphia, USA) Arnaud Feist (Brussels, Belgium) Pascal Komla (Lomé, Togo) Bashir Ahmad Abdul Majid (Delhi, India) Hector Navarrete Muñoz (Merida, Mexico) Augustin de Romanet (Paris, France) Brian Ryks (Minneapolis-St Paul, USA) 2 Vacancies WBP Advisory Board Thomas Duffy (ADB SAFEGATE) Tunde Oyekola (El-Mansur Atelier Group) Correct as of June 2021

ACI VIEWPOINT

View from the top As aviation recovers, airports need flexibility in setting airport charges, writes ACI World director general, Luis Felipe de Oliveira.

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ith traffic still down on pre-COVID levels and passenger numbers not expected to recover before 2024, airport operators are likely to face significant financial challenges during aviation’s recovery period.

Taking stock of the fact that airports worldwide are engaged in a battle to keep their essential operations afloat and preserve jobs, the ICAO Council Aviation Recovery Task Force (CART) recommended that States support stakeholders across the civil aviation sector, including with extraordinary emergency measures to support their financial viability.

In the case of airport charges, the relevant ICAO policies recommend that caution be exercised when attempting to compensate for shortfalls in revenue and account be taken of the effects of increased charges on aircraft operators and end-users.

Increased co-operation between airports and airlines is encouraged to ensure that economic challenges and risks are reasonably shared.

Since the beginning of the COVID-19 crisis, ACI World has joined forces with its industry partners, most notably IATA, to call for government support to protect essential operations and to safeguard the livelihoods of millions of aviation workers.

Those calls were successful in garnering support for the airline industry. However, with a few notable exceptions, the airport industry has not received a similar level of government support despite 60% of direct aviation jobs being at the world’s airports.

We continue to emphasise that no measure or relief package should disproportionately benefit one stakeholder over another, and for aviation to pursue an even and balanced recovery, all participants in the aviation ecosystem need support.

In this context, airport operators and those authorities that oversee them, should chart a new path to enable an economically sustainable recovery of airports beyond COVID-19.

ACI and the airport community are advocating for five key best practices and responsive approaches of economic oversight to foster the recovery of air transport in a sustainable manner, with a win-win outcome for the whole aviation community, and with positive outcomes for the passengers.

First, airports should be free to tailor the structure and level of airport charges to their specific circumstances and develop targeted pricing strategies that meet their specific market situations.

Second, airport charges should be set by airport operators at a level allowing them to cover operating expenditures and capital costs and for revenue gaps to be addressed to mitigate the financial risk, the people risk, and the infrastructure development risk resulting from the pandemic.

Third, the most responsive approach to set airport charges does not lie in the imposition of heavy-handed regulatory outcomes which are at odds with the market situation of airports.

Fourth, as airports should develop pricing strategies and tailor airport charges to their specific circumstances, ACI suggests policymakers abandon the mandatory practice of the single till in the jurisdictions that impose such an approach.

And fifth, there should be equal engagement from airports and airlines in an active and constructive airport charges consultation process.

ACI and the global airport community are committed to maintaining direct and constructive dialogue with international, regional, and national policymakers on reforming models of setting airport charges. This ongoing dialogue is critical because, despite the principles outlined above being globally applicable, there is no single model of regulation that can simply be adopted in every jurisdiction.

Each airport, each country, and each region of the world will require solutions specific to local conditions, aligned with industry stakeholders and regulators, so that an approach that works best for all parties can be established.

A flexible, agile, and responsive approach will provide benefits for the whole airport community and, in the end, for passengers, which is crucial as the aviation industry works together to re-establish the long-term sustainable growth trajectory.

These plans must also include climate action which will be key to supporting the ‘build back better’ concept and to rebuilding public trust and confidence in air travel.

At the end of the day, the objective is to create an economic framework that fosters a pathway back to sustainable growth, improves existing infrastructure, as well as helps airports to develop new ones, which will generate better quality of service for passengers and reduce investment needs for peak hours, and help airports to meet their climate change goals.

This is a global effort – climate change remains the greatest challenge facing the world – and we are proud to play our part.

AW

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AIRPORT REPORT: BAHRAIN

Ready to grow

Bahrain International Airport’s new terminal gives it the potential to grow and become a firm favourite with passengers over the coming decades, writes Joe Bates.

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ahrain International Airport’s new state-of-the-art terminal is the crowning jewel of a $1.1 billion infrastructure development programme designed to transform it into a world-class boutique airport and a key driver of national economic growth.

When it opened earlier this year, His Excellency, the Minister of Transportation and Telecommunications and chairman of Bahrain Airport Company (BAC), Kamal bin Ahmed Mohamed, stated that its impressive new facilities and services would help sustain the growth of Bahrain’s aviation sector for decades to come.

“This, in turn, will help drive investment into the Kingdom and stimulate national economic growth in line with Bahrain’s Vision 2030,” he noted.

These sentiments are certainly shared by BAC CEO, Mohamed Al-Binfalah, who believes that the new terminal – the key project of the gateway’s Airport Modernization Program (AMP) – will allow the airport to take a giant step forward in terms of operational efficiency and customer service, helping reinforce Bahrain’s position as a regional aviation hub.

“The first thing that I want to say is that our beautiful new terminal was built in a relatively short space of time and, most importantly, within a well-managed budget,” he enthuses.

“I am also happy to report that the opening went almost unnoticed, which meant that it happened without incident, and this pays testament to the success of our ORAT [Operational Readiness Activation and Transition] programme. As we all know, this hasn’t necessarily been the case with terminal openings elsewhere.

“This was no vanity project – we really needed a new terminal. The old one served us well, but it was last upgraded in 1994, when its stated design capacity was four million passengers per annum. We handled around 9.6 million in 2019, so we simply didn’t have the

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capacity or the facilities to provide the levels of quality and service we wanted to offer passengers and our airline customers.

“That has all changed now as the new terminal has provided us with quality infrastructure that will serve our needs for years to come. Its addition is in line with the Kingdom’s vision to improve our key infrastructure and it finally gives us the opportunity to excel and showcase the very best of Bahrain.”

Al-Binfalah describes the new terminal as a “right-sized” building that, from day one, was designed with the passenger journey in mind.

He says: “Many airport buildings are large, confusing and even a little overwhelming with few features to distinguish one from another. We think our terminal is different. We went for quality rather than size, so it is very easy to navigate, hassle-free and to a large extent, very relaxing to use.

“Elements of our rich local heritage are found throughout the building, which makes fantastic use of natural light. It also has outdoor open air terraces and technology that offers passengers a very personal experience and journey.”

Passengers will also notice a big difference in the number and variety of retail/F&B offerings in the new terminal. They include Bahrain’s first Jamie’s Deli and Pizzeria from celebrity chef, Jamie Oliver, which is one of 21 F&B outlets operated at the gateway by food concessionaire SSP.

Basic facilities Spread across 210,000sqm, the new facility is four times larger than the airport’s old terminal and will increase the capacity of Bahrain International Airport (BIA) to 14 million passengers per annum.

Its facilities include a 6,600sqm Arrivals Hall and a 4,780sqm Departures Hall; 104 check-in desks; 36 passport control offices; 22 e-gates designed to ensure the rapid processing of passengers; eight

AIRPORT REPORT: BAHRAIN

baggage reclaim belts; and 10,002sqm of retail space which incorporates a duty free area that is three times larger than in the old terminal.

The terminal also has its own hotel and spa for transit passengers and an airport clinic where a dedicated team of healthcare professionals are on hand around-the-clock to provide medical services to visitors.

IT innovation The AMP broke ground in 2016, and although it has taken a little longer than expected to come to fruition, not helped by the COVID-19 pandemic, it was always the plan that it would boast some of the most advanced technology on the planet.

As a result, the new passenger terminal contains a host of new technologies designed to ensure the fast and efficient handling of passengers and give travellers more control of their journeys.

These technologies include SITA’s biometrically enabled Smart Path kiosks and Flex cloud-based passenger processing solution, and 22 e-gates supplied by Vision-Box that utilise facial, iris and fingerprint recognition to confirm passengers’ identities.

Traffic trends The combination of new passenger friendly facilities, extra capacity and advanced technology deployed in the terminal makes Al-Binfalah confident that BIA is now equipped to expand its route network and grow as a hub.

He believes the new facilities will provide the Kingdom’s national flag carrier, Gulf Air, with the platform to build its regional route network and help persuade new foreign airlines to launch services to Bahrain when the pandemic is over.

Any new services will, of course, be good for Bahrain and maybe allow it to close the traffic gap slightly on the super hubs on its doorstep. However, Al-Binfalah is quick to note that BIA isn’t competing against them as its future development is very much focused on supporting Bahrain’s strategic position in the Gulf and the growth and success of Gulf Air’s regional and international network.

“I don’t think we have ever competed with any of the regional hubs, and we’ve certainly no intention of changing that strategy now as I truly believe that we complement each other by providing different options across the region,” says Al-Binfalah.

“Becoming a major hub was never on the drawing board for us.

They do what they do, and they do it well. We are a strong regional hub and can now do this job even better.

“Our aim for the AMP was very simple. We wanted to create a high quality, boutique airport that provides facilities and services that are on a par with anything found around the world today, and I’m confident that we’ve achieved this with the opening of the new terminal.”

Like almost every other gateways on the planet, Bahrain International Airport has experienced somewhat of a rollercoaster ride in the last two years in terms of its passenger traffic, going from an all-time high of 9.6 million in 2019 to a COVID-19 impacted low of 2.3 million (-76%) in 2020.

Al-Binfalah is hoping that the airport will fare better than 2020 this year and, in the best-case scenario, be back to 2019’s traffic levels by 2023/24.

Airlines In normal times, the Kingdom’s national flag carrier, Gulf Air, accounts for around 60% of all passengers at Bahrain International Airport courtesy of its network of non-stop flights to 46 destinations in 25 different countries.

The airline celebrated its 70th anniversary in 2020 and recently launched a new slogan, ‘A class of our own’, which it believes reflects its individuality and ambition to provide best in class products and services.

Gulf Air’s acting CEO, Captain Waleed Al Alawi, notes: “After a challenging 2020, we’ve had an exciting and ambitious first quarter of

AIRPORT WORLD/ISSUE 3, 2021

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AIRPORT REPORT: BAHRAIN

2021, which included the unveiling of the new Bahrain International Airport passenger terminal building and our own brand new Falcon Gold lounge.

“Arabian hospitality is at the core of our business and with our boutique strategy being applied along every step of our passengers’ journeys, we will always be in a class of our own.”

Gulf Air is one of several carriers in the region to sign up to trial IATA Travel Pass, the association’s own digital passport, in a bid to hasten it and Bahrain’s recovery from the pandemic and help pave the way for the re-establishment of global connectivity while managing the risks of Covid-19.

The airlines with the next biggest share of the market at BIA in 2019 were Emirates (6%), Flydubai (4%), Air Arabia (3%) and Etihad (2%) and therefore it is not surprising to learn that Abu Dhabi, Dubai, Jeddah, Kuwait and Riyadh are among its most popular routes.

In addition to the big regional carriers, other international airlines operating non-stop flights to Bahrain have traditionally included Air India, British Airways, KLM, Lufthansa, SriLankan Airlines and Egypt Air. On the cargo side, airlines such as Cargolux, Texel Air and Emirates Sky Cargo operate freighter flights to Bahrain. BIA is also the growing regional hub of express delivery giant, DHL. All contributed towards the airport handling 300,205 tonnes of cargo last year, and Al-Binfalah believes that there is much more to come in terms of growth, describing it as the gateway’s next frontier in terms of building the facilities needed to attract more cargo operators to Bahrain and boost freight volumes.

Economic importance of BIA to Bahrain On the importance of BIA to the Kingdom of Bahrain, Al-Binfalah simply states: “BIA is the only international airport in Bahrain, and as we are an island nation, it is more than just a connecting point, it is our gateway to the rest of the world.

“It is a vital economic and social asset for the country and must be capable of meeting the Kingdom’s present and future needs.”

He states that the airport’s importance to Bahrain was clear for all to see in 2020 through the key role it played in enabling and facilitating

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the import of PPE and urgent medical supplies and helping repatriate stranded Bahrani nationals.

And BIA has, of course, continued to play a leading role in Bahrain’s fight against COVID-19 this year by accommodating flights that have brought and continue to bring potentially life-saving vaccines to the Gulf state.

Changing fortunes Al-Binfalah believes that BIA has been on an upward trajectory since BAC took over responsibility for operating the gateway in 2010.

He says that BAC transformed the way the airport was managed and provided the impetus needed to finally move BIA forward in terms of working more closely with the government to formulate a strategic plan for its future growth and development.

In addition to the new terminal, the Airport Modernization Program has also led to the opening of a new Rescue and Firefighting Station, a 2,700 vehicle capacity multi-storey car park, a Central Utilities Building, fuel farm and Super Gate (security entrance) for staff and goods.

And he feels that BAC’s management team are well equipped to oversee the next step of BIA’s development post COVID-19, which will see the construction of a new Express Cargo complex as part of plans to enhance the airport’s cargo facilities, and a new Maintenance Repair and Overhaul (MRO) hangar.

In the meantime, BIA plans to rehabilitate all of the aircraft stands in front of the old terminal and adding some underground fuel hydrants before eventually demolishing the now effectively mothballed complex.

It may still only have one runway, but Al-Binfalah has no doubt that BIA is now more than well equipped to cope with demand for at least the next 20 years, before it is eventually replaced by a new off-shore airport.

“We have seen the capacity airports such as London Gatwick can get from a single runway, and we are nowhere near those kind of levels, so I believe that the new terminal has effectively extended the life of BIA until at least 2040 and probably beyond,” he notes.

“This is great because it gives us time to consider the next steps for the long-term growth of Bahrain’s aviation sector and passengers have the chance to come and experience our fantastic new terminal for themselves.” AW

SPECIAL REPORT: ROUTE DEVELOPMENT

Predicting the unpredictable

ASM Global Route Development’s senior vice president for consulting and product developoment, Nigel Mayes, considers the impact COVID-19 has had on route development.

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he impact of COVID-19 on aviation is clear to see from the pictures of parked aircraft and empty airport terminals to the vacant beaches and closed hotels. But what has been the impact on airline and airport networks?

What is recovery going to look like? And have we got any insights on the long-term impact of COVID-19? I shall attempt to address these issues in this article by offering some insight into the possible scenarios for the industry as we move forward.

Impact on airline-airport networks In 2020, global seat capacity fell to its lowest point in May when the number of seats available accounted for just 20% of 2019’s levels and, despite a number of false dawns, the trend is becoming one of a slow build-up of capacity, characterised by fluctuations caused by new outbreaks and borders closing and reopening.

Currently global capacity is around 60% of what is was in June 2019, but there are regional variations that reflect where there are larger domestic markets, as well as differing border opening policies depending on transmission rates or vaccination rates.

The Americas, for example, are showing a quicker return of capacity because of strong domestic markets, with the US in particular recovering in well in the last few months.

Global seat capacity by region The resilience of the airlines during the pandemic has been phenomenal. In the pursuit of conserving cash and finding some pockets of revenues, carriers have learnt to become more dynamic in their planning, making short-term decisions and experimenting with new markets.

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Since the start of the pandemic, globally, airlines launched more than 2,128 routes (ASM route database, 1st March 2020 to 28th February 2021). A significant proportion of these routes were launched

by LCCs, with some carriers being more creative than others. Hungarian ULCC Wizz Air, for example, launched 252 services and accounted for 12% of the new routes.

Carriers have focused on visiting friends and relatives (VFR) traffic and, sometimes, new country markets. TUIFly, for instance, launched services to Romania (Brussels to Suceavea), while Condor announced flights from Düsseldorf to Beirut and Sulaimaniyya, both targeting passenger flows that are still travelling for family reasons. This market will remain strong as people will want to connect to families quickly after the pandemic.

Although full service carriers have launched fewer new routes, many have still been reactive by switching capacity to leisure markets and slashing frequency on business services. Lufthansa, for instance, launched a number of new leisure services to short-haul destinations in Greece, Spain, Tunisia, Egypt and Cyprus. While a number of US carriers have also started to operate to smaller, thinner markets targeting new leisure flows. In fact, American Airlines (AA) has launched over 150 new routes for Summer 2021 and many of these are aimed at smaller leisure market sectors.

The return of business traffic is one of the biggest uncertainties, given its importance to airline revenues. ARC data from the USA shows business travel bookings are currently 72% down, while leisure bookings are down by 49%.

According to CAPA, although business traffic may only account for 12% of airline passengers, it represents 20-30% of their revenues and sometimes higher. Lufthansa, for example, stated that corporate bookings accounted for 45% of its group revenue pre-pandemic.

SPECIAL REPORT: ROUTE DEVELOPMENT

There are many push and pull factors working with networks. While some hub carriers have launched non-hub services serving leisure markets – like United serving St Louis – Hilton Head and Myrtle Beach – the greater gravitation has been for carriers to retrench back to their core bases and hubs.

London Gatwick has only recovered 54% of its capacity for the peak month of August, while Heathrow is back to 74%. It is a similar story in other European cities. Düsseldorf Airport’s August capacity is at 61%, for example, while Frankfurt Airport’s is 67%.

Although the hubs may have a greater volume of business traffic, the need for airlines to drive operational efficiencies will no doubt see the main hubs hold onto their primary airport status.

Rise of cargo’s importance Somewhat surprising, perhaps, is the fact that cargo has proved to be one of the biggest reasons behind airlines returning to some markets.

The new trend was probably best summed up by Emirates Airlines president, Tim Clark, who last November stated: “There is huge demand for cargo, with the wopening of 70-80 routes being driven by the need for cargo space, which is helping to reduce cash depletion significantly.”

While passenger revenue kilometres fell 69.7% for calendar year 2020, cargo tonne-kilometres were only down 10.6%, despite the dramatic loss of hold capacity.

Worldwide air freight volumes have held up as the global economy has remained relatively strong, boosted by e-commerce and growing perishable goods and pharmaceutical markets.

Global air freight rates have also risen and, at times, been three times higher than pre-pandemic levels. IATA states that “cargo revenues are forecast to rise to $152 billion per annum from $140bn, representing one-third of industry revenues.

Pre-crisis, cargo represented only 10-15% of the typical airline business”.

Qatar Airways has been aggressive in maintaining capacity during the pandemic and, as the world’s second largest cargo carrier, has achieved this because of the strength of its cargo product and Hamad International Airport home base.

With some trade flows, more than half of the cargo capacity is provided by bellyhold space on passenger flights, such as the North Atlantic market.

Airlines have therefore launched new dedicated cargo flights to try and meet demand or taken more extreme measures, such as using passenger cabins to carry freight. Such flights have been christened ‘preighters’.

Of the three regional trade routes, the North Pacific is the only one to have grown, with the dedicated freighters and preighters filling the void (see below).

Every airline is now paying greater attention to cargo; even leisure carrier Tui operated more 500 preighters during 2020!

As hold capacity returns, yields will soften and the preighters will disappear, but the greater integration of cargo evaluation into airline network decision making is unlikely to go away.

AIRPORT WORLD/ISSUE 3, 2021

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SPECIAL REPORT: ROUTE DEVELOPMENT

What will the recovery look like?

History tells us that traffic will return to 2019 levels at some point in the future as whatever global shock comes along, people’s desire and ability to travel continues.

IATA remains confident that traffic levels will recover by 2024, although the organisation caveats that with a large variance.

However, it seems certain that the recovery will be patchy, both in geography and in time. What is difficult to predict is what the future networks look like. Predicting the future is impossible, but the clues for recovery are always in the current trends.

Domestic travel is returning faster than international travel but, while the appetite for long-haul flying may be suppressed, it is not so simple to say all short-haul markets will respond quicker than long-haul.

The UK-US transatlantic market is expected to return quicker than some short-haul markets, given a largely successful vaccine role out both sides of the pond. Demand responds to borders opening and carriers react by adding new capacity.

Some leisure markets will quickly regain capacity when restrictions are lifted. Portugal and Gibraltar, for instance, enjoyed a marked recovery after the UK government placed them on its green travel list, which does not require passengers to quarantine on their return to the UK.

Seat capacity recovery Conversely, seat capacity on business routes will not quickly grow to 80-100% of previous levels and will be far slower than leisure travel.

It is not only a question of border restrictions, but there are other factors such as an employer’s duty of care, travel insurance, travel budget planning, the rising costs and complexity of travel, technology substitutes and employee hesitancy as well as a greater emphasis on sustainability (the ‘Greta effect’).

The speed and shape of recovery will also depend on the appetite for countries to open borders. We estimated that in April 2021 only 3% of global borders were completely open.

Of those that are, some countries have taken a more aggressive approach to encouraging traffic back. Greece, for example, is welcoming visitors from a wide number of countries as long as they can demonstrate a negative PCR test and proof of vaccination.

They are even offering sampling antigen tests, and any passenger with a positive test will quarantine for 10 days (cost covered). And its vaccination efforts have focused on its island destinations, offering jabs to staff working in the travel sector.

This approach has not been missed by the airlines. One commented that the Minister of Tourism had been proactive and visited them in person to provide confidence to return to Greece – and the early signs show that US capacity is holding up better to Greece that other European countries.

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Indeed, only Greece and Turkey show a growth in capacity for the second half of the year, with seat capacity up 33% from the US (June to December 2021 v 2019). There have also been some significant new route announcements, such as United offering a new non-stop between Washington Dulles and Athens, starting in July.

What will the long-term COVID-19 effects be?

It will be many years before we understand the true impact of COVID-19 on the aviation industry and the levels of debt taken on by airlines will impact on future investment and ultimately some airline’s ability to survive.

For those that perform better, it will be their opportunity to capture market share and lucrative slots at constrained airports, a tactic employed by Wizz Air in its expansion of services at London Gatwick and Milan Linate.

We are likely to see smaller aircraft at the larger constrained hubs, too, not only from down gauging but from smaller aircraft being use to protect slots as IATA rules start to return.

Another driver to releasing slots will be the pressure from governments to shift short journeys from air to train, as is the case of the French government.

In the new world, there will be new entrants, which believe they can take advantage of the debt levels of their competitors. At the last count there were over 40 new start up carriers globally, and although it is unlikely that many will develop into significant market forces in the future, there are some that will be worth watching.

They include Breeze and Avelo in the US and Play (Iceland) and Flyr (Norway), both European new boys positioning themselves to fill gaps left by Wow and Norwegian respectively.

The new airlines will bring a fresh approach and more opportunities and challenges for the airports as they aim to build their networks.

The airport–airline relationship is set to evolve as deals become more focused on the short-term and more stakeholders are getting involved as the airlines seek to de-risk their costs and look to new ways to reach their audiences.

Indeed, it is already great to see more dialogue than ever before between airports and the airlines as the aviation industry looks to kick-start its recovery.

Finally, one of the most significant long-term shifts will be the greater focus on the environmental impact of air travel, whether that is new fuels, new technology or the acceleration of the electrification of flight.

Predicting the unpredictable changes is difficult, but whatever the long-term implications of COVID-19 the industry will thrive again, as people’s desire to travel, connect and do business around the world will not go away.

AW

SPECIAL REPORT: ROUTE DEVELOPMENT

Global effort With international travel still very much on hold because of COVID-19, restoring route networks and global connectivity is going to take the effort of all stakeholders that benefit from aviation, writes York Aviation’s James Brass.

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he last 18 months have been profoundly strange for the air transport industry. After years of growth and expanding route networks, government-imposed travel restrictions as a result of COVID-19 have reduced passenger numbers to a trickle and decimated route networks.

The impact on the air transport industry and the employment and prosperity it supports has been profound, with hundreds of thousands of job losses worldwide and unparalleled financial losses. However, this is very much only a part of the story.

The air connectivity that underpins the functioning of the global economy in terms of trade, investment, knowledge and labour flows, is currently only there in skeleton form. In Summer 2020, the number of route pairs served by the world’s airports had dropped by 53% compared to Summer 2019, and, while Summer 2021 looks better, with route pairs only down around 26% compared to 2019, there is still a very long way to go.

Recovery is also uneven globally, with some regions suffering less and recovering faster (see graph on page 20). For instance, Asia and North America, with their large domestic markets, dipped less and are coming back more strongly than Europe, where there has been significant second and third waves of COVID-19 in recent months, and the market is more reliant on international travel.

The economic recovery of cities, regions and countries around the world is dependent on building back this air connectivity. The Air Transport Action Group (ATAG) has estimated that aviation supported $3.5 trillion in GDP and 87.7 million jobs globally in 2018.

This estimate included aviation’s role in supporting tourism, which accounted for around $1 trillion of the total, but excluded aviation’s role in supporting trade and in driving productivity through investment and knowledge flows. If these effects were included the sector’s impact would have been significantly higher.

Separately, IATA has recently estimated that a 10% increase in aviation connectivity can increase labour productivity, which directly links to GDP, by 0.7%. The impact of individual routes can vary considerably, but previous research for the Chicago Department of Aviation estimated the impact of a typical wide-body service at around $200 million each year, while research for Sydney Airport has estimated individual route benefits of around A$122 million each year.

This highlights, at a more micro scale, the economic benefits that can be realised through route network growth. These figures help to articulate the ‘prize’ that is associated with a true and effective recovery of aviation.

How governments and other stakeholders can support this recovery is a multifaceted question and the answers are not ultimately easy.

Different airlines and airports are going to need different things, and needs are going to change over time as the industry builds back.

However, there are some fundamental things that governments and other stakeholders can do to help the industry come back.

At global and national level, bringing COVID-19 under control, vaccinating populations as quickly as possible and developing effective treatments are clearly essential. Travel is restarting, but there are many restrictions still in place. It is only with COVID-19 under control and with

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SPECIAL REPORT: ROUTE DEVELOPMENT Route Pairs by World Region (2019 = 100)

the necessary mitigation measures in place that travel restrictions will begin to lift and eventually disappear.

This needs to be linked to restoring passenger confidence in travel.

Governments have a job to do in communicating that it is safe to travel and that people can make plans in the knowledge that they will be able to travel.

Just as importantly, governments and others also need to continue to support the industry financially as it recovers, providing liquidity and labour market support, so that airlines and airports are able to service the pent-up demand that will be released as restrictions are lifted.

These measures are, however, largely self-evident. It is at the city and region level that much of the work around building back connectivity needs to be done.

Local and regional governments, economic development agencies, tourism bodies and other stakeholders have a major role to play in rebuilding connectivity and they need to be acting now.

The situation is improving, and recovery is starting. However, the damage across economies has been massive. There is an economic imperative facing cities and regions to stimulate economic growth and re-connecting to the world is a key part of that.

For many cities and regions, key air connections will have gone or be operating at significantly reduced capacity. It is time to start developing joint strategies with their airports to bring connections back.

Cities and regions also need to recognise that they have entered a period of intense competition around connectivity. A period when winners and losers in the race for economic recovery will be defined.

Connectivity has always been a dynamic element underpinning economic growth. The level of connectivity available to businesses in a region or the connections to inbound tourism markets have always needed to keep pace with that available to competitor cities and regions.

This has not been changed by the pandemic. The starting point has simply been reset and cities and regions are working from a lower base. The only difference now is that the supply has been reduced, is more risk averse and the economic imperative on competitor regions is stronger than ever.

Places where the local stakeholders work together effectively and recognise the importance of rebuilding air connectivity will have an advantage as recovery begins in earnest.

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This is not a matter of simply throwing money at the problem, not least because money is not necessarily something that is in abundant supply at the moment.

Stakeholders need to be making interventions that will add value and make a difference to their cities and regions. They need to ask the key questions: • What has been lost and what has been lost that matters?

• What is under threat and what is under threat that matters?

• What connectivity do we need back or do we need to protect in the short, medium and long-term?

• How do we work with our airports to deliver a strategy that works for all and provides value for money?

• Which airlines can deliver that for us?

• What sort of support is needed and what can we, as stakeholders, deliver?

• How do we ensure value for money?

Stakeholders may also need to rethink their strategies for supporting airports and airlines to reflect the scale of the challenge of building back from the pandemic.

They may need to consider whether the traditional focus on business and inbound tourism routes is appropriate in the short run and whether supporting any route is, in fact, an effective way of helping their airports and to get demand moving again.

With route networks so shrunken, gaining back breadth of connectivity will be important. This suggests that restoring hub connectivity may be an important focus for stakeholders in the immediate term.

Stakeholders may also need to look at the means of intervention, with perhaps a greater focus on sharing risk, enabling airlines to access support for packages of routes rather individual routes, and on securing aircraft basing.

Ultimately, aviation will recover. Connectivity will be restored and the industry will restore its status as a core economic driver for cities and regions globally.

Local and regional stakeholders have an essential role to play in this. However, conversely, it is also vital for these stakeholders to get involved in the process of recovery to support the economic recovery of their cities and regions.

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SPECIAL REPORT: ROUTE DEVELOPMENT

Sunny delight!

Miami International Airport’s route network continues to grow with Emirates launching services to Dubai and Southwest and JetBlue joining the gateway’s low-cost carriers, writes MIA’s communications director, Greg Chin.

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atar, Emirates, Turkish Airlines, EL AL Israel Airlines and American Airlines will offer non-stop flights to the Middle East from Miami International Airport (MIA) this summer after the June 4 inaguration of American’s service to Tel Aviv and the launch of Emirates’ four-times weekly service between Miami and Dubai on July 22.

The new international services represent signficant route development success for MIA, which in the last year has also added both Southwest Airlines and JetBlue to our growing list of low-cost carriers (LCCs).

The addition of Southwest and JetBlue, as well as the recent increased expansion by Frontier Airlines, are the culmination of recruitment efforts by the Miami-Dade Aviation Department (MDAD) that date back from as recently as two years ago to as long ago as 15 years.

MDAD’s air service development efforts, in conjunction with air service consultants at InterVISTAS, have consistently targeted these carriers over the previously mentioned range of time.

There are numerous and varying reasons why their expansion and entry occurred within the last year, but there was always belief that eventually their growth strategies would encompass MIA as well.

In the case of all three LCCs, incentives did not play a major role in their recruitment. It is our belief that our persistence, ongoing analyses and growth of specific markets, MIA’s ability to keep its costs level and under control, combined with each carrier’s long-term expansion plans, all culminated in their ultimate and respective decisions to choose MIA. After launching its first Miami flights last November by serving both Baltimore and Houston Hobby with four daily flights and Chicago

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Midway with a daily flight, Southwest expanded its route network from MIA in March 2021 by adding daily service to four more destinations: Atlanta; Dallas; Denver; and Nashville. The new routes increased Southwest’s presence at MIA to a current total of 16 daily flights.

Southwest’s twice-daily flights to Atlanta, Denver and Nashville provides Miami passengers with another travel option to those cities, while its daily service to Dallas Love Field Airport establishes a new route from MIA. Southwest entered the Miami market last November. Its weekly flight schedule is already projected to generate an economic impact of more than $853 million in local business revenue and 6,788 jobs within the local economy annually.

On February 11 – JetBlue’s 21st birthday – the airline began its first Miami flights with service to four US cities: Boston (up to four times daily); Los Angeles (up to twice daily); New York-JFK (up to four times daily); and Newark (up to four times daily).

One month later, JetBlue announced plans to add daily Hartford service to its Miami network on June 24. The new service will bring JetBlue’s daily flights at MIA to a total of 15. MIA estimates that JetBlue’s full schedule of flights will generate more than 1.4 million passengers, nearly $915 million in business revenue and 7,300 jobs into the local economy annually.

Frontier first entered the Miami market in 2014 with service to Denver, New York-LaGuardia, Philadelphia and Chicago O’Hare. Since then, it has gradually expanded its Miami network to 29 current cities.

Most recently, it began three weekly flights to Santo Domingo in December 2020, followed by service launches to three new cities before

SPECIAL REPORT: ROUTE DEVELOPMENT

the busy 2021 spring travel season: Cancun, Mexico, (four times a week); Punta Cana, Dominican Republic (twice weekly); and St Thomas, US Virgin Islands (twice weekly).

In April, Frontier added three more new routes: weekly flights to Guatemala City, four weekly flights to San Salvador, and four weekly flights to Ontario, California.

And on May 28, the airline began three weekly flights to Montego Bay, Jamaica, which will soon be followed by four more routes from MIA this summer: Myrtle Beach, South Carolina (5x weekly) on June 10; Nassau, Bahamas (4x weekly) on June 24; San Jose, Costa Rica (2x weekly) on July 2; and St Maarten in the Netherlands Antilles (1x weekly) on July 10.

The launch of these four additional routes will bring Frontier’s network at MIA to a total of 33 destinations – its highest number ever.

As of May 2021, Frontier is MIA’s third-busiest passenger airline in seat capacity at 5.5%, behind hub carrier American Airlines at 65% and Delta Air Lines at 7.1%. Not far behind Frontier are newcomers Southwest at 4% and JetBlue 3.7%, followed by United Airlines at 3.5%.

On the long-haul international scene, MDAD’s aviation director and CEO, Lester Sola, described attracting Emirates to Florida’s second largest city as one of the proudest moments in MIA’s history.

He noted: “Adding Dubai to our growing list of top destinations around the world further solidifies MIA as a leading global gateway and Florida’s busiest airport for international passengers.”

Talking about the upcoming launch of the service, Emirates’ chairman and chief executive, His Highness Sheikh Ahmed bin Saeed Al Maktoum, stated: “Launching a non-stop service to Miami at this time signals our confidence in the recovery of air travel as countries progress on their vaccination programmes and implement protocols for the safe resumption of flight and travel activity, particularly in the United States and the UAE.

“It also underscores our strong commitment to the US market, which Emirates now serves with over 70 weekly flights across 12 gateways.

“There is a clear demand for this service from both leisure and business travellers and we anticipate that our new route will be warmly received across our global network, as well as by travellers in Southern Florida, South America and the Caribbean who can conveniently access Dubai and our wider network via Miami’s many air service connections.

“We look forward to facilitating even more tourism and commerce opportunities to and from Florida with this new route, and to providing our customers with the award-winning Emirates experience.”

While speaking at the inauguration of American’s new service to Tel Aviv, MDAD chairman, Jose Diaz, said: “It is incredible where we are today when you consider that when I walked down this corridor a few months ago it was basically empty. Today, it is full, and we are celebrating the launch of direct flights to Tel Aviv, which is very special for all of us.”

Sola said he expected good things from the new route and noted the importance of the airline to MIA and Miami Dade County, especially in terms of bringing jobs to the local community.

“We are certainly glad that American Airlines is not just our home town airline, but a premier home town airine. We live because American chooses to fly in and out of this airport. American never stopped flying throughout the pandemic and continued to provide employment for over 10,000 staff that live and work here, and for that we need to take a monent and thank them,” he remarked.

The addition and expansion of the three LCCs noted above and new long-haul international routes coupled with the sustained strong presence of our other leading carriers, helped MIA’s passenger traffic exceed its daily May 2019 levels on a few occasions during the month.

The forecast for summer travel at MIA: bright and sunny.

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Changing dynamics Domestic routes, traditionally the undervalued siblings of more lucrative international services, are leading aviation’s fight back from COVID. But how long is this likely to last?

OAG’s senior analyst, John Grant, investigates.

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he last eighteen months have been the most challenging in the history of commercial aviation, balance sheets have been wrecked, demand shattered, and perfectly good aircraft broken up for scrap.

Jobs have been lost, years of experience and knowledge leaving the industry for ever and talk of another pilot shortage looming very quickly.

And yet there is a near record number of new airline start-ups planned this year, experimental routes being tested and a boom in both cargo demand and operators.

The speed with which our industry has moved is staggering; changes in networks, fleets, refinancing, constant schedule changes and creative revenue generation has underpinned many airlines still operating services today.

But one part of the survival story has gained little analysis and press coverage. It might be functional rather than exciting, but domestic markets have been central to both airline survivals and the financial strength of some carriers.

It is no coincidence that many of the airlines that are struggling to recover, global brands such as Singapore Airlines, Cathay Pacific, KLM and the Middle East’s ‘Big Three’, would have loved large domestic markets in the last eighteen months; the fact that they haven’t, explains some of the challenges they now face.

The key question is, of course, is the ‘domestic flip’ a long-term change or a short-term solution before normal services are resumed.

Domestic capacity has always dominated Intuitively we all know it, domestic capacity has always been larger than international; it’s just hard to get excited about a new service between two cities in the US Midwest or France when you can talk about a London – Perth non-stop.

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In the good times before COVID-19, domestic capacity accounted for around 60% of all global capacity with around 280 million seats a month. Today, that capacity share hovers at around 80%, although in absolute numbers is down around 260 million seats a month.

By means of contrast, international capacity currently sits at around 90 million seats a month; less than half of the pre-pandemic levels and with a sluggish recovery curve still expected may linger below the 100 million mark for the remainder of the summer season.

In the majority of regional markets, the balance between legacy and low-cost airline capacity has become well established, and any adjustments in capacity have been marginal.

A notable exception in the last few months has been in the US market where the low-cost share of capacity has increased by just under three percentage points as carriers such as Frontier, Allegiant and Spirit continue to develop their presence and challenge the legacy carriers.

That position may change back to the more normal levels of share once legacy carriers have access to international markets and rebuild connecting traffic, but for the moment it is a growing position for those carriers and one that they claim is profitable.

Big Is beautiful One of the early insights from the pandemic was that those countries with large domestic markets were likely to be more resilient from a capacity perspective, although in some cases demand proved to be a very different story (see Table 1).

Large geographic distances, poor alternate or time evasive competing travel options and a historic reliance on flying resulted in some of those countries such as China, The United States, India and, perhaps surprisingly, Japan, absorbing the impact of COVID-19 better than many.

SPECIAL REPORT: ROUTE DEVELOPMENT

In some cases, airlines rapidly adjusted their networks and focused on their domestic markets, especially in the United States and Vietnam.

In others, some ‘directional’ changes were suggested by the authorities, China being a case in point. And some airlines just continued to operate as best as they could through a national lockdown, Chapter 11 filings and some interstate restrictions such as those witnessed in Australia.

By means of comparison, the range of selected countries in Table 2 highlight just how badly some major markets that historically had more than one million seats a month, remain impacted by travel restrictions and spikes in infection rates.

Both Hong Kong and Singapore remain at less than one fifth of their normal levels making it virtually impossible for the locally based carriers to operate profitable services. Having access to historic large domestic markets has clearly helped some airlines but resulted in some very different approaches being taken.

China directs, the US CARES and Australia isolates It’s a broad comment, but no two countries have handled the pandemic in the same way and no two countries have supported or guided their airline industries in the same way.

First into COVID-19, China restricted and continues to restrict international services, very quickly instructing airlines to turn towards

more domestic services and as part of the national economic recovery.

Travellers were encouraged back to flying with some very attractive local fares; in some cases, described as ‘cabbage fares’ because of the low cost. Domestic capacity returned to near normal levels within six months of the first capacity cuts and now stands at 75 million seats a month, some 10 million more than January 2020, an impressive if perhaps profitless 19% growth in eighteen months.

Recently load factors have been above 65% on a regular basis and a few airlines have reported operating profits, but that in truth may disguise some previously excessive international and loss-making capacity growth.

Central Government intervention has certainly worked in China during the pandemic and not just from an aviation policy perspective.

Increased personal duty free limits for purchased goods has resulted in a 30% increase in domestic capacity to Sanya on Hainan Island, and a feeding frenzy of tourist with an average spend at the tax free airport of nearly $900 per traveller!

The CARES act in the United States received mixed reviews; it was certainly well funded, a clear message of support and, ironically at the end, large parts of the fund went unclaimed. But some requirements around continued operation of scheduled services made no commercial or environmental sense to the airlines or taxpayers, despite the ability to appeal such requirements.

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US airlines have been particularly creative in their network designs during the pandemic. Legacy carriers have introduced ‘hub by-pass’ services, low-cost carriers employing a spirit of adventure have broken into new frontiers, and small airports are seeing dramatic growth in air service. Will it last? Probably not, but certainly some will stick.

In Australia, the almost zealot like closure of international services save for a bubble across the Tasman, may have resulted in relatively little COVID-19 impact but is proving a very hard jail to break out of.

Complete closures of international capacity in the early stages of the pandemic may have been very sensible, but the subsequent re-opening of international services is proving to be very difficult, especially for an Island or continent so distanced from most other parts of the world.

One interesting part of the domestic market phenomena has been the number of new airport pairs created; there seems to be weekly stories of new routes being launched; particularly in the United States.

However, as the data below shows, across three of the largest domestic country markets, whilst the number of airport pairs operated in China and the United States have increased in the last 18 months, Australia has lost some airport pairs. This difference is based around Australia’s domestic carriers having struggled through Chapter 11 and other reorganisation processes resulting in some major network adjustments.

luxury side trips, all of which made the job a dream position. Domestic tourism involving a pop-up stand in some regional city on a wet weekend in a two-star hotel didn’t attract the same enthusiasm… until COVID! In nearly every country with a domestic market, domestic tourism has become central to the recovery of both their airlines and airports.

From travel vouchers to air fare rebates, extended leave, special events, added value vouchers and even tax breaks governments, regional authorities and trade associations have creatively stimulated domestic tourism. ‘Staycations’ have become fashionable and particularly in those large countries there has been enough take up to suggest that as a short-term recovery strategy domestic tourism can help fill aircraft, rebuild traveller confidence and generate some revenues, so all of that has been good.

However, domestic travellers tend to be lower yielding for airlines, airports and every part of the holiday purchasing chain than international visitors, and ultimately, for airlines, airports and hotels; yield per passenger will at some point become an important metric once again. And that is perhaps the key questions around the rapid growth in domestic capacity, is it sustainable and profitable for a long-term future or is it merely a short-term survival strategy?

Revenue at the expense of yield

Domestic tourism has become crucial Traditionally in any destination marketing organisation, the plum jobs pre-pandemic involved glamorous trips overseas, huge travel fairs and

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Domestic yields are typically lower than international for a number of reasons. A smaller proportion of premium traffic is obvious, higher levels of frequent traveller redemption and competition all impact yields as demonstrated in the tables on page 28, which compare yields for the US majors by international and domestic networks.

Taking data from the US DOT, the tables show the average yields for a range of major carriers operating both domestic and international services throughout last year. Unfortunately, we await the latest data release for more insights from the DOT.

SPECIAL REPORT: ROUTE DEVELOPMENT

Not surprisingly, average fares fell for all carriers during 2020 as COVID-19 impacted demand in both the international and domestic markets, although Spirit Airlines international yields held stronger than many others; perhaps a result of a changing network structure.

Domestic average yields fell by as much as 30% in the case of American Airlines from Q1 to Q4 whilst for the yields for both JetBlue and Spirit remained virtually unchanged.

It would be no shock to anyone to know that domestic operations are not as profitable as international services and for some airlines domestic and short-haul services are a necessary evil that feed the long-haul operations.

Indeed, at least one major European airline philosophically accepts a negative margin on their short-haul network as long as sufficient connecting traffic is generated for the long-haul services. Unfortunately, that piece of philosophy falls down in a pandemic when connecting traffic is virtually zero.

An abundance of caution frustrates recovery The last year has seen many new words and phrases, COVID-19 never existed two years ago, the use of unprecedented has well, become unprecedented, no one or company was pivoting and an abundance of caution sounded like something only a bank manager would say!

Eighteen months on and these phrases are holding the whole airline industry to ransom and frustrating any signs of a recovery.

In recent weeks many countries, particularly in Asia have been positioning themselves for a ‘zero based COVID-19 existence’, an enviable if somewhat impossible position in a global economy where trade has to take place between countries.

That desire for a zero-based position may be based around a low uptake or availability of vaccines as seems the case in Australia and New Zealand or more of a political message, either way it is unsustainable in the medium to short-term.

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And while in the short-term domestic tourism can be incentivised to fill the gaps, it is neither as profitable – or more importantly – sustainable. After all, if you have seen one big red rock, a big wall or a mountain in a national park, at some point product wear out occurs and travellers will crave for international destinations.

And demand for international capacity will recover As sure as we are that there will be further COVID outbreaks, international demand will recover, although the rate of recovery will be variable in different markets and consumer confidence in no further lockdowns will be crucial.

Travellers will want to visit friends and family, bucket list holidays will be ticked off, premium class demand may be stronger and eventually business travel will return. It is only a matter of time.

So, what does that mean for domestic travel?

Well, for one thing, there will be more routes, ‘spoke to spoke’ services will continue, some of which will be operated by new airlines, and competition will increase at least in the short-term.

Domestic demand will remain strong as staycations continue to be popular amongst certain market segments and, very importantly, connecting services will be supplied to those recovering international routes.

We must, however, remember that the current strength of the domestic market is relative to the near meltdown of international capacity. Even today, domestic capacity is still some 20% below its normal levels, it’s just a lot better than international capacity.

As the recovery of international capacity accelerates, the balance between domestic and international capacity will revert back to previous levels of around 60% of global capacity. And when that point is reached some people may once again see that market as the little brother of international travel, but will equally recognise that it is a very important little brother.

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SPECIAL REPORT: ROUTE DEVELOPMENT

Back on the radar

Airport World reports on a number of new route announcements and the return of some key international services for airports in Europe, the US and Asia-Pacific.

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t would be easy to think that route development was off the agenda in today’s COVID impacted world, but despite everything, airlines continue to inaugurate or announce the planned launch of new services at airports across the world.

Granted, the announcements and traditional water cannon welcomes for new flight arrivals maybe fewer than before the pandemic, but the good news is that they are beginning to happen again in what has to be one of the greatest possible shows of faith in aviation’s ability to bounce back from the current crisis.

And with an ever-increasing number of existing routes returning in the past couple of months – including the return of international Trans-Tasman services between Australia and New Zealand – there is now real hope that airports will begin to see a noticeable upturn in traffic levels during the second half of 2021.

Below is a snapshot of some of the most high-profile route development news to be announced in the second quarter of 2021.

JetBlue to launch transatlantic services to London JetBlue has announced that it will make its highly anticipated entrance into the transatlantic market with the launch of a non-stop service between New York-JFK and London Heathrow this summer.

And the news gets even better for London’s gateways as the US carrier will follow the August 11 inauguration of flights to Heathrow with the start of services between JFK and Gatwick from September 29, with services from Boston earmarked to start in the summer of 2022.

“The pandemic has opened doors to London’s two busiest airports, and we look forward to bringing customers low fares and great service at both Heathrow and Gatwick,” said JetBlue CEO, Robin Hayes.

“JFK-LHR, the single largest international air travel market from the US, has suffered from outrageously high fares for far too long,

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especially in premium cabins. We’re ready to change that with a price point and experience that will impress even the most discerning transatlantic flyers.

“We’ve always said that JetBlue would serve multiple London airports, and we’re pleased to have secured a path at Heathrow and for long-term growth at Gatwick, which offers speed, low costs, and convenient accessibility into Central London.”

Flights on both routes will operate daily on JetBlue’s new Airbus A321 Long Range (LR) aircraft with 24 redesigned Mint suites, 117 core seats and the sleek and spacious Airspace cabin interior.

From Russia with love Japan Airlines (JAL) has revived services between Moscow Sheremetyevo and Tokyo Haneda, a route it initially launched in 1967.

Speaking at the resumption of Boeing 787 Dreamliner flights to Moscow in April, Sheremetyevo’s first deputy director general for production, Andrei Nikulin, said: “We are proud that the leading Japanese national carrier, a recipient of five stars from Skytrax, has chosen Moscow Sheremetyevo for further development of air traffic between Japan and Russia.

“Sheremetyevo is a recognised leader in Europe in quality of services and the most powerful international hub in Russia in terms of terminal infrastructure and the capacity of the airfield complex. I am confident that Japanese Airlines passengers will be able to take advantage of the route network of Sheremetyevo Airport for onward flights across Russia and Europe.”

JAL’s vice president and regional manager for Russia and the CIS, Takeshi Kodama, noted: “We are happy to open a new page in the history of air traffic between Moscow and Tokyo by re-launching the route between Sheremetyevo and Haneda airports.

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“We are deeply grateful to our passengers, aviation authorities and Sheremetyevo Airport for their unlimited support during the difficult period of coronavirus restrictions.”

Southwest returns to Houston-George Bush after 16 year absence An old friend has returned to Houston’s George Bush Intercontinental Airport (IAH) – Southwest Airlines, which is back at the Texas gateway after a 16-year absence.

Its return widens the carrier’s footprint in Houston and will provide greater convenience for business and leisure travellers throughout the region, notes Houston Airports.

“Airline expansions like this are important to global air service hubs like Houston,” said Houston Airports director, Mario Diaz.

“As we recover from the pandemic, the safety of our passengers will remain our top priority. Partners like Southwest will ensure that as we rebuild and recover, we are building forward better.”

Southwest Airlines has a long history with Bush Airport. The gateway was one of three airports served by Southwest when it launched operations back on June 18, 1971.

The carrier moved to Hobby Airport shortly thereafter, though it operated services from both airports between 1980 and 2005.

Southwest remains a key employer in the City of Houston, providing nearly 4,000 jobs.

“With Southwest’s expanded Houston service, we’re looking forward to bringing more options for local travellers,” enthused the airline’s vice president of business, Dave Harvey.

“Whether travelling for leisure or business, Southwest customers can now fly from the Houston airport most convenient to them and experience the flexible polices and world-class hospitality that’s made Southwest a part of Houston’s community for 50 years.”

Bergamo boost as route network grows Milan Bergamo Airport in Italy has welcomed easyJet’s announcement that it will follow the launch of a new service to Sardinia with the inauguration of flights to Amsterdam Schiphol, London Gatwick and Paris CDG later this year.

Indeed the Italian gateway says that it is “witnessing the hugely positive resumption of many routes” this summer, with Ryanair in particular ramping up operations on eight domestic routes.

“We are looking forward to the coming months and the revival of our route network here at Milan Bergamo,” enthuses Giacomo Cattaneo, airport operator SACBO’s director of commercial aviation.

“With the commitment of our airline partners, we already have a wide variety of connectivity to offer our passengers and we will continue to add to these over the coming months as Luke Air (by Blue Panorama), Albastar, and Neos also return to our runway.”

Trans-Tasman Travel Bubble In April, airports in Australia and New Zealand celebrated the reopening of quarantine free Trans-Tasman travel for Australian and New Zealand nationals for the first time in 12 months.

And such has been the success of the move to date that at the time of going to press, New Zealand’s Prime Minister, Jacinda Ardern, was set to meet Australian Prime Minister, Scott Morrison, to discuss the possibility of allowing vaccinated international travellers from around the world to board these flights.

The launch of the Trans-Tasman travel bubble on April 19 was pretty much met with widespread delight in Australia and New Zealand.

Brisbane Airport (BNE) opened 16 ‘Green Lane’ services to accommodate Air New Zealand and Qantas flights between Brisbane and Auckland, Wellington and Christchurch.

The airport reported that all eight arrivals and eight departures operated at around 80% capacity with more than 1,600 seats being sold.

Brisbane Airport Corporation CEO, Gert-Jan de Graaff, called the travel bubble between the two countries “vitally important for the thousands of businesses in Brisbane, the regions, and across Queensland who rely on tourism”.

In 2019, around 1.5 million passengers flew between BNE and New Zealand, with more than 100 flights each week and five airlines operating services to five New Zealand cities (Auckland, Christchurch, Wellington, Dunedin, and Queenstown).

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LEADERSHIP

Challenging times

How are Europe’s airports faring one year and counting on from the outbreak of COVID-19?

ACI EUROPE’s director general, Olivier Jankovec, provides a progress report.

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lthough far from alone in suffering from the impact of COVID-19, the past 17 months has been a period like no other for Europe’s airports, which have faced a near total collapse of air traffic and connectivity, bringing with it very harsh economic consequences.

In fact, Europe is the world region where the passenger traffic decrease has been the harshest, and where the recovery, to date, has also been the slowest.

This is down to the combination of extremely restrictive travel policies enacted by our governments in a totally uncoordinated manner, and the fact that domestic markets – which have been more resilient – are comparatively smaller in Europe compared to North America and Asia for instance.

With the epidemiological situation now firmly improving across our continent thanks to vaccination programmes, we can finally see light at the end of the tunnel.

EU States in particular are easing travel restrictions and implementing common and interoperable digital health certificates, which should effectively allow vaccinated people and those having recovered from COVID-19 to travel without hindrance.

The UK, however, is lagging behind, maintaining restrictions which are no longer risk-based nor warranted by where the country itself and the rest of Europe now stand in terms of their epidemiological situation.

At the same time, the medium to longer-term impacts of the COVID-19 pandemic on our industry are becoming clearer. While we are all talking about and longing for the recovery, it is actually a word that does not fit with what lies ahead.

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Recovering means going to back to the status quo ante. This is not what will happen with this crisis.

We will, of course, go back to pre-pandemic passenger traffic levels at some point – 2025 based on our latest forecast for Europe’s airports.

But for the rest, the aviation market that will emerge from the pandemic will be structurally very different, and airports – along with the rest of the aviation sector – will be facing renewed challenges.

Looking at our European aviation market first, the damage caused by the pandemic is unprecedented. But what is making this even more difficult to overcome for airports is the way in which governments have reacted.

By and large, European governments have chosen to focus their financial support on their national airlines, leaving airports and the rest of the aviation ecosystem in a precarious situation.

Simply put, Europe’s airlines have so far received more than €34 billion in direct financial support, while Europe’s airports only got €2 billion. This is creating massive imbalances in our largely integrated European aviation market.

The generous aid granted to airlines has not trickled down to airports, which now find themselves in a situation of systemic financial weakness.

The situation has led to the debt load of Europe’s airports increasing by a massive €20 billion in just a year, and this is effectively what is allowing most of them to keep going and finance current operations.

At the same time, the recovery will not instantly improve their financial standing – as it will initially be cash intensive (scaling up facilities and resources to accommodate traffic peaks) and revenue weak.

As a result, Europe’s airports are now facing an investment crunch – with AlixPartners estimating that revenues will remain insufficient to

LEADERSHIP

meet capital expenditure until at least 2032. This threatens not just our ability to deliver on our NET ZERO 2050 pledge, but also our digitalisation agenda and the development of future capacity and connectivity.

The impact will thus be felt across the aviation system – down to consumers and our communities.

At ACI EUROPE’s Airport Economics Symposium in June, we raised the alarm. It is high time European governments took care of their airports, and come to terms with the fact that aviation is an ecosystem, and that its positive externalities can only be secured if all components of that ecosystem are financially sustainable.

The EU and the European Commission in particular have a crucial role to play in this regard – not least because in 2022 it is bound to review the EU Regulations on airport charges and slots.

Absent public financing, airport investment will essentially depend on the ability of airports to keep recovering their cost and recoup at least part of their massive losses. Slot rules are also very much relevant – as the current regime comes with cost inefficiencies for airports and results in airlines alone benefitting from considerable scarcity rents.

But beyond our financial standing, the COVID-19 pandemic is putting the spotlight on the sustainability challenge – especially climate change. In fact, the pandemic has given us a foretaste for what life with uncontrolled climate change would be like.

This is increasingly resonating with European citizens and across our societies. This means that ‘Building Back Better’ to control climate change has now become not just a scientific imperative, but also a societal and political imperative. As a consequence, there is no escaping that this must be a business imperative for all sectors.

The EU is currently marshalling an ambitious political and regulatory agenda, all focused on making Europe the first climate neutral continent. By mid-July, legislative proposals will be tabled to boost the

use of sustainable aviation fuels; get airports to provide electricity for stationary aircraft; set more stringent rules when it comes to the inclusion of aviation in the EU Emissions Trading System; and most certainly a tax on kerosene.

Together with the trade associations of Europe’s airlines, ANSPs and OEMs, ACI EUROPE has launched DESTINATION 2050 – a roadmap for the decarbonisation of European aviation.

Accordingly, the entire European aviation sector is now firmly and jointly committed to Net Zero CO2 emissions by 2050.

But delivering on this will be no easy feat. A major revamp of business models across the aviation ecosystem is unavoidable – and securing truly supportive regulatory and financial frameworks will be crucial. This is far from being guaranteed.

The risk of punitive regulations towards aviation to reduce demand has never been higher in Europe.

As airports, we therefore find ourselves with a double challenge: securing our financial recovery at the same time as earning societal acceptability – in effect, our license to operate and grow. The first, very much shapes our ability to address the second, but it also creates tensions with airlines.

Yet, the scale and almost existential nature of the environmental sustainability challenge aviation faces means that we must find ways to resolve these tensions and work together. This will require bold transformative industry leadership – from all parties.

“No flying machine will ever fly from New York to Paris… because no known motor can run at the requisite speed for four days without stopping.” These words, pronounced by Wilbur Wright in 1909, are a crucial reminder that aviation is about making the impossible happen.

First came distance, then speed – next is net zero CO2 emissions.

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DESIGN & BUILD

Transforming LAX

Chief development officer, Bernardo Gogna, provides an update on Los Angeles International Airport’s $14.5 billion Capital Improvement Program and the recent opening of two key new facilities.

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s Los Angeles gears up to welcome the world over the course of the next seven years as the host city for Super Bowl LVI and the 2028 Olympic and Paralympic Games, Los Angeles International Airport (LAX) is focused on transforming into a world-class destination with state-of-the-art facilities.

Despite the global pandemic, LAX has made significant gains on its $14.5 billion Capital Improvement Program (CIP), progressing several monumental projects from planning to construction and grand openings.

From airfield improvements to terminal modernisations and the $5.5 Landside Access Modernization Program (LAMP), LAX’s CIP is comprised of numerous critical infrastructure projects that will create a fully connected airport, both within the Central Terminal Area (CTA) and outside.

After breaking ground on four major projects in 2019, LAX will celebrate four grand openings in 2021. Two of those openings took place in May and June, as LAX delivered the first two elements of a re-imagined, world-class airport – the $1.73 billion West Gates at Tom Bradley International Terminal and the $477.5 billion new extension to Terminal 1.

West Gates at Tom Bradley International Terminal The West Gates at Tom Bradley International Terminal is a 15-gate extension of Tom Bradley International Terminal providing a modern guest experience with cutting-edge technology, a beautifully designed interior featuring extensive use of natural light, and a state-of-the-art baggage handling system with early bag storage.

The facility, which services both international and domestic flights, offers numerous comfortable seating options with thousands of places to plug in while accessing next-generation wireless services.

The interior design draws upon a neighbourhood concept with the centre of the building considered the downtown area due to the

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high ceilings and elevator towers. Colourful mosaic tiles pay homage to the mid-century modern design of LAX and start the transition to other neighbourhoods throughout the facility, ranging from the desert to the ocean.

Additional passenger amenities include concessions, retail outlets and 30 restrooms, along with automated boarding gates, children’s play areas, nursing rooms, a quiet room and a service-animal relief area.

At the recent unveiling of the new facilities, LAWA CEO, Justin Erbacci, noted that mega-projects such as the West Gates would help redefine the LAX experience for travellers.

Terminal 1 extension The extension of Terminal 1 provides increased passenger processing with an expanded shared-use ticketing lobby, security screening areas and baggage claim hall for Southwest, Allegiant, Frontier, Sun Country and Viva Aerobus airlines.

Designed to achieve LEED Silver status for its sustainability features, the extension received a Civic Award by the US Green Building Council of Los Angeles, which recognises exceptional efforts in sustainable buildings within city or county governments.

The building’s exterior façade features a mid-century modern design that aligns with the look and feel of the entire LAX Central Terminal Area. A bus depot to support operations at the West Gates at Tom Bradley International Terminal is located on the ramp level.

The facility also features a Terminal Vertical Core, which will provide access to the future pedestrian bridge that will connect to the Automated People Mover’s Center Central Terminal Area station in 2023.

Later this year, the facility will also provide connection between Terminals 1 and 2 in the post-security area.

DESIGN & BUILD

Landside Access Modernization Program The Landside Access Modernization Program (LAMP) is the jewel of the Capital Improvement Program and at $5.5 billion is one of the largest infrastructure investments in Los Angeles’ history.

With a completion date of 2023, the centrepiece of the LAMP is the Automated People Mover (APM) train system, which will connect travellers to new off-site parking options, a Consolidated Rent-A-Car (ConRAC) facility and the regional transportation system.

The LAMP has been in the midst of heavy construction for the better part of a year and significant progress has been made on this monumental umbrella of projects.

This summer, the first component will be completed and opened to the public as the Intermodal Transportation Facility-West (ITF-West), an approximately 4,300 stall parking structure, will debut in August.

Featuring both short and long-term parking options and the latest in smart parking technology, the facility will offer an economy option for those parking at the airport.

An interim shuttle bus operation will transport travellers to and from the LAX CTA until the APM is online in 2023.

The ConRAC facility will become the largest rental car facility in the world once open, capable of holding 18,000 rental cars. Included in the approximately 6.3-million-square-foot facility is a Quick Turn Around building, which will provide light maintenance such as fuelling, washing and oil changes for the rental car vehicle fleets.

The project will top off in July, pouring the last of 267,000 cubic yards of concrete, followed by tenant move-in in 2022. This facility will allow all rental car shuttles to be removed from the LAX CTA as travellers will take the APM to and from the ConRAC. This will result in the removal of 3,200 daily shuttle trips to and from the CTA and on the city streets (pre-pandemic).

The 2.25-mile APM train system, which will have six stations in total – three inside the CTA and three outside – will revolutionise how travellers access LAX. The train guideway is nearing the 50% completion mark as all concrete guideway support columns have been placed.

Station construction has commenced at the ITF-West station, along with the East CTA station, while segmental construction to connect the two sides of the guideway over the main thoroughfare into LAX – Century Boulevard – will take place this summer.

Ongoing modernisations and Terminal Vertical Core construction LAX found more efficient ways to build a better airport during the global pandemic. Early on, Terminal 3 was closed to the public, allowing it to be demolished without any impact to travellers.

With this closure, the $1.86 billion project, which will include a new head house for Delta Air Lines and the eventual connection of Terminal 3 to Tom Bradley International Terminal, had its project timeline accelerated by 18 months, and is now targeted to complete in 2023 as opposed to 2024.

Terminal Vertical Core construction at Tom Bradley International, between Terminals 4 and 5 and between Terminals 5 and 6 is ongoing, as each of these cores eventually will connect to pedestrian bridges that provide access to the Automated People Mover stations.

The first elevated pedestrian bridge was installed in June, with remaining bridges to be placed over the next year.

In just a few years, passengers will be able to access any terminal without going through security, which is currently only available in the south terminals, as connectors will be built between Terminals 1, 2, 3 and Tom Bradley International Terminal.

Future projects While currently under the federal and California environmental review processes, the Airfield and Terminal Modernization Project (ATMP) would include a Concourse 0 and Terminal 9, along with airfield improvements and an elevated roadway system that will separate airport traffic from local traffic.

No definitive timeline is in place, but the goal would be to complete the ATMP prior to the 2028 Olympic Games.

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DIVERSITY

Team effort

Los Angeles World Airports (LAWA) establishes a new model for hiring local, diverse teams to work on the upgrade of LAX and Van Nuys airports, write Chris Robert, Jon Philips and Anne Fletcher.

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s the aviation industry begins to awaken after a tumultuous year, we can come back stronger than we were before, particularly when it comes to diversity and inclusion.

In Los Angeles, the city’s travel infrastructure will face its next big challenge as the host city for the 2028 Summer Olympics, with an anticipated influx of people from around the world.

The 2016 Summer Olympics drew over 10,000 athletes and 500,000 attendees to Rio, and the event brings unparalleled economic activity to each region that ripples across the travel and local business community.

To prepare for this major event, Los Angeles World Airports (LAWA), the owner and operator of Los Angeles International Airport (LAX) and Van Nuys Airport (VNY), has created a new solution to streamline the capital investments required over the next seven years to build up capacity.

This solution provides an equitable process that includes an array of companies and small, local, disabled veterans’ and other diverse firms to tap into this significant economic opportunity in a number of ways.

At the core of the solution, LAWA created a single, consolidated on-call vehicle with the most progressive inclusion minimums in their history. HOK and Arup now serve as Principal Architect and Principal Engineer to implement a variety of large and small projects for LAWA over the next three years.

The larger HOK+Arup Joint Venture (JV) team comprises 47 partners, 30 of which are small, local and minority-owned businesses (MWBEs) in the Los Angeles area, who will work on the design and planning of

projects that directly shape the future for both the region and their communities for the 2028 Olympics and beyond.

The approach that Arup+HOK took not only presents a way for LAWA to modernise and improve its airports for travellers and employees, but also as a way to engage more directly and thoughtfully with small, local, disabled veterans’ and other diverse firms.

Currently, there is an opportunity for further inclusion of diverse and local businesses in the aviation planning space, and the process conducted

by Arup+HOK has the potential to serve as a model and fill those gaps.

It can be adapted in airports around the country to expand the diversity of their collaborations, which benefits a region’s key infrastructure and greater community through employment opportunities, building regional capacity and retention of capital in local and regional economies.

To achieve such a diverse group of companies, the JV partnered with Chris Robert, president and founder of The Robert Group, to develop a deliberate outreach plan to target as many local companies as possible.

Working with Chris, HOK+Arup sought a minimum of six core companies with specialties, a minimum of six integrated local and small business partners and dozens of specialty consultants.

These specialty consultants hail from a variety of industries such as public health and industry advising, baggage handling systems, cost estimating, signage and wayfinding, simulations and modelling, sustainability and commercial development.

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DIVERSITY

This includes core disciplines like building systems engineers, traffic engineers, architects, airfield & civil engineers, specialty consultants, airport planners and technology & innovation experts.

With a determined team structure in place, our team held an online information session for small, local, disabled veterans’ and other diverse firms in the area. The biggest challenges during outreach was having no central list or directory of certified local businesses from which to pull and, due to the pandemic, no in-person events.

In October 2020, we announced a 90-minute virtual information session to discuss how firms could join one of Los Angeles’ most important infrastructure projects over the next decade.

Promotion began through email blasts and social media posts, particularly on LinkedIn, to find business organisations who could circulate the opportunity.

A wide net of business groups included LA Area Chamber, Latino Chambers, National Association of Women Business Owners, Los Angeles Business Council, BizFed, Greater Los Angeles African American Chamber, Culver City Chamber, Inglewood Chamber, El Segundo Chamber and LAX Coastal Chamber to identify an array of local businesses and diverse voices.

We identified 1,621 relevant companies in Los Angeles, which resulted in 396 people registering and 294 joining the 90-minute Webex event. Following the event, attendees were sent an exit poll offering a 15-minute one-on-one meeting with either Arup or HOK, which 211 requested.

The meetings consisted of a guided discussion and questions for the JV team to assess for LAWA projects. Nearly 127 meetings were completed

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by December 1, 2020, augmenting information from local databases with our own outreach and engagement to certified local businesses in the area for the team to keep on file for future collaborations.

Our efforts aided in the eventual gaining of 47 partners including 30 small, local and minority businesses to work on projects across LAX and VNY. The strategic event, and the preparation in the lead up to it, were necessary to expand the search for MWBEs and can serve as a model for how airports across the United States can enhance the diversity of their consultants, vendors and partners.

Additionally, to further elevate the priority of small, local, disabled veterans’ and other diverse firms in the on-call’s various contracts, Chris Robert was appointed as a key participant at the leadership level of the team.

Both LAWA and the HOK+Arup JV have demonstrated how a commitment to expanding the pool of qualified small, local, disabled veterans’ and other diverse firms and engaging them in substantial roles can serve as a catalyst to overcoming established barriers.

Now is the time for airport operators to put in the effort required to enhance local and minority owned businesses for infrastructure projects that build up the surrounding community.

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About the authors Chris Roberts is president and founder of The Roberts Group.

Jon Phillips is a principal in Arup’s Los Angeles office. Anne Fletcher is the managing principal of HOK’s Los Angeles/ Southern California practice.

NEW TECHNOLOGY

Flying start

SFO’s multi-billion dollar capital improvement programme will use technology to transform infrastructure data management, operations and the traveller experience, writes Esri’s global transportation industry director, Terry Bills.

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an Francisco International Airport (SFO) has embarked on a multi-billion capital improvement programme which, when complete, will transform operations and the travel experience at San Francisco International Airport.

At the same time, the way that spatial data used to support those improvements and the redesigned airport is being created and managed, will similarly set a new standard for airports in the future.

The upgrade encompasses over 100 individual projects that include the new Harvey Milk Terminal 1, a flagship Grand Hyatt Hotel, changes to long-term parking facilities and two new SFO AirTrain stations.

A keystone of the data side of that programme, however, is getting everything absolutely right from the outset, and having that philosophy endure throughout the entire building and infrastructure lifecycle.

To make this happen, SFO’s Infrastructure Information Management, which includes the Geographic Information System (GIS) team is pioneering work to ally geospatial and Computer-Aided Design (CAD) data with Building Information Modelling (BIM) data across the whole airport’s built environment.

The new capital improvements are part of a much larger existing set of facilities and assets which make up the entire airport landscape of over 5,000 acres and eight square miles.

Data and information at an airport is central to both efficiency as well as safety. A challenge is the multiplicity of data environments which can exist — not just the languages and protocols but also the numerous independent repositories that grow over time across a large organisation.

SFO’s GIS team has set itself the goal of unifying infrastructurerelated data right across its substantial campus and many stakeholders and is using Esri-supplied GIS to provide an outward-facing window to all of the various spatial data types, and which will facilitate easy access and updates to that data.

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Common goals “This is a multi-billion-dollar capital project with numerous different project teams. We want those teams to follow common data standards which will allow us to bring all that information together in one easily accessible place,” says Josephine Pofsky, SFO’s director of infrastructure information management.

“Our story is about securing that process. This will be true data covering the entire campus, from airspace to ground space to underground. It means that, from Day One, facilities, maintenance and other stakeholders such as the emergency services will be able to go in and find attributes, data and locations; at the same time, some of that initial data will still be used a decade and more up the road.

“It’s not just about the money or time savings. We believe that our approach and model can conquer the scope, cost and schedule of the project all in one.

“Some people are still looking at those dimensions individually, but our message is that by the time the build is finished, using GIS and BIM together will be the working model which carries the resilience and sustainability of our facilities for 40-50 years.”

On-screen and on-trend SFO is on trend, moving to an enterprise-shared environment which allows greater transparency and information-sharing between departments. Where detailed structural information was previously only readily accessible to a small number of engineers, GIS, through the series of tools provided by Esri, is enabling a large and growing number of people to access, use and update data.

Field engineers, for example, can take an iPad to a remote point on the campus, locate and click on an asset, and be provided with all kinds of relevant, related information with very little GIS training or knowledge.

NEW TECHNOLOGY

Between them, GIS and portable devices are enabling the SFO team to address the high volume and pace of information requests from many different stakeholders, and for tasks that range from a day or two in duration up to several months.

Sizeable matters GIS provides a natural fit for what SFO is trying to do, explains GIS analyst, Guy Michael. “Around here, all data is spatial,” he says.

“Tradespeople are being tasked and dispatched all over the airport campus and we want to enable them with spatial information and capture updates to the infrastructure in near real-time. GIS allows us to do that in ways we simply couldn’t before.”

“Now that we’re in an enterprise environment, we can provide dashboards that cover the whole campus, and even some departments which don’t see their data as spatial are buying in. HR, for instance, can provide maps when onboarding new people to a very complex campus.

“It can take years for people to ramp up in terms of locational knowledge in a place as big as an airport. There are one-way doors, secure area access and so on. There’s also a lot of ‘revolving door’ knowledge — the police and fire services rotate staff between SFO and other stations quite regularly and all of them need to know how to get to places quickly.

“HR can even make use of off-campus spatial data. For instance, during the wildfire season, they need to know which staff may be affected by an evacuation order or warning so they can reach out and provide appropriate resources.”

SFO’s 3D Airport Viewer A challenge is magnitude. “We have 15,000+ rooms, 15+ million square feet and 11,000+ doors mapped in GIS, and with readily available location information, it benefits airport staff whether they are new or have worked at the airport for decades,” notes Michael.

“Now, they can tap a room or door number into an iPad and go find it. Tradespeople can now use the GIS to help plan their route to complete tasks – to not be zig-zagging across the site, to not have to constantly pass in and out of secure areas.

“That’s useful for someone who, say, has to change the locks on 10 different doors which are spread across the campus. Internal wayfinding is proving to be a great success.”

The Airport Pavement Condition and Repair Viewer Airfield-side, similar successes are being exploited. An example, says GIS analyst, Agie Gilmore, is airfield operations tracking pavement condition and repairs to aid with FAA Part 139 certification.

“SFO civil engineers are able to attach image information and document a whole range of other distress conditions in the field,” says Gilmore. “Concrete pavement for aircraft parking is laid in 20x20ft slabs and we can see if some slabs are having to be repaired uncommonly often and prioritise trouble areas.

“Using GIS, we can stand on-site, take a look at what’s underneath us and see if we have to do something different to stop a problem recurring.

Wider influences The wayfinding solutions which currently benefit the maintenance workers can also benefit the individual traveller.

The complexity and time-criticality of air travel can make navigation from drop-off point to gate an emotionally fraught experience, especially in an age where travellers are very much used to the availability of Street View and other real-time mapping products.

3D Design Data Displayed in GIS GIS benefits both service user and provider. From the user perspective, there is the ability to navigate quickly through a complex indoor environment while taking account of directional flows, current social distancing restrictions, security choke points, food or retail concessions and, ultimately, time at gate.

The provider, meanwhile, can gauge ahead of time staffing requirements, mundane-but-essential issues such as whether refuse removal needs to take place, if terrestrial transportation provision is adequate, and so on.

As Michael emphasised “We really do think GIS is going to be critical to improving the passenger experience at SFO.” Even more widely, SFO’s work, and the profound levels of detail it encompasses, is already influencing data efforts and methods of working at other aviation facilities around the world.

They have demonstrated how effective infrastructure data management can establish the foundation to help the airport run smoothly and safely for a very long time.

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IT INNOVATION

Time for a new approach?

Iyad Hindiyeh, Amadeus Airport IT’s senior vice president for strategy and marketing, considers some of the integration challenges and opportunities facing airports today.

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irports are extremely complex operational environments with many different applications that need to share information in order to deliver a safe and efficient service, therefore the integration of the IT systems governing those complex processes has always been important.

The trouble is, airports have often inherited large numbers of different systems from different vendors, without clear responsibility from any one vendor for the functioning of the entire system. This has meant airports have evolved to become system integrators, stitching these systems together in order to achieve the outcomes they need.

But airports aren’t IT companies, rather they provide the infrastructure that makes moving people from A to B possible.

With the number of one-to-one technical integrations between these disparate systems increasing year after year and the expectations travellers have for a smooth airport experience also sharpening, the burden placed on airport IT teams is becoming immense.

Perhaps worse still, a complex patchwork of manual integration can never be perfect, leading to outdated data populating the systems that co-ordinate the actions of different airport stakeholders, ultimately limiting the effectiveness of operations.

Connecting to airlines is a case in point. It’s the airline Departure Control System that acts as a single source of the truth for passenger information and supports the provision of services at the airport.

For too long legacy approaches to technology have overcomplicated this situation, with each airline being asked to maintain network connections to each airport it serves.

In fact, for an airline to propose a simple update to its departure control system at the airport requires a lengthy certification process to ensure the change works for all airlines and hardware providers involved in the common use set-up.

Waiting three months for a simple software update is holding the industry back. There are several reasons airports need a new approach:

The problem has been that shifting an airline’s passenger handling infrastructure from terminal A, to terminal B, is far slower than it should be. Legacy networks take in the region of three to six months to provision and this needs to be organised with each airline the airport wishes to relocate.

The same problem occurs again if the airport needs to scale back up to handle more passengers. Throughout the COVID-19 fluctuations many airports have lacked agility.

Slow innovation The historic model has slowed the pace of innovation across the industry, with an on-site approach to IT that requires airports and airlines to focus on ‘keeping the IT lights on’. If an IT team is focused on managing on-site applications and provisioning legacy network connections to airlines, then they aren’t free to innovate with technology.

We know from conversations with our customers that most airport CIOs are keen to shift the balance from ‘maintenance’ to ‘innovation’ by trying new technologies like Artificial Intelligence and the Internet of Things. The trouble is that maintaining and working with a patchwork of legacy systems saps time and hampers the deployment of emerging technologies.

New passenger services Airlines are keen to roll out new passenger services at the airport so that check-in and self-service infrastructure can do more than simply administer the basics. One such example is being able to accept a wide variety of payment methods at check-in and bag drop, which caters to passenger needs and helps airlines drive ancillary revenues.

Biometrics are coming Reduced agility COVID-19 has highlighted how slow the traditional approach to IT can be for airports. If traffic volumes fall significantly then it’s logical to consolidate airline operations into a single terminal to reduce costs.

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It is likely that the use of biometrics will gradually expand across every passenger touchpoint from kerb-to-gate. This means hundreds or possibly thousands of cameras embedded at check-in desks, kiosks, auto bag drop units, security, e-gates, lounges and boarding gates.

IT INNOVATION

These cameras all need to be connected to the Identity Management Platforms (IMP) that use algorithms to match the image captured at the airport to the traveller’s identity, typically held by the airline.

Now consider that there are likely to be many different ‘Identity Providers’, such as the Star Alliance or Amadeus’ own Traveler ID programme that offer travellers a permanent digital identity, which can be re-used at different airports.

These systems will all need to be integrated to the IMPs and airport hardware too, so permanent digital identities that travellers choose to store can be matched.

For a single airline deployment, it might be feasible to manage this spaghetti of links, but the promise of biometrics is a common shared infrastructure that works for multiple airlines. So, each carrier needs to be integrated to each Identity Management Platform, each Identity Provider and ultimately to all the hardware at the terminal.

That’s a lot of systems integration for airports and airlines and in our experience, it will be a major barrier to success.

Bringing airlines and airports together with the cloud Of course, there is another way for airports to organise and structure their IT. Like most other industries, airports have a tremendous opportunity to move forward to a new generation of cloud technology that removes the day-to-day complexity from technology, speeds up innovation and allows the airport to focus on delivering new services and growing revenues.

Moving to a cloud model means all the various applications an airport needs are hosted on the same flexible infrastructure so data can flow more easily between them. Integrating these applications becomes standardised, much less time consuming and is a task that sits with the specialist cloud provider, rather than the airport.

This set-up frees airports from running a core room, monitoring application performance and other routine IT functions whilst enabling a much smoother passenger experience.

At first glance this may not seem like a major change, after all it’s still IT, just in another place, right? Well actually it’s more fundamental

than that. With the cloud, new applications like biometrics can be rolled-out far more quickly and cost effectively.

Terminals can be mothballed or restarted quickly because airlines and ground handlers can begin offering passenger services from any location on or off-airport, simply by opening a mobile device and connecting to the cloud.

By moving away from lots of core rooms containing servers and workstations that compute locally, airports also have a chance to reduce carbon emissions. A specialist cloud provider has the skills to deliver energy efficient IT by using the latest generation of hardware, optimising usage of that hardware and the cooling of the data centres.

The cloud provides a foundation upon which many innovations in biometrics, information exchange, and high-performance computing rely.

It is evident that information needs to be shared more widely across stakeholders, and that a more standardised approach to biometrics, identification, and health and immunity passports is needed.

It is a priority that technology deployment be accelerated, scaled up, and adapted quickly to changing circumstances.

Legacy and proprietary systems hold back progress in each of these areas. Whether it is airlines building more personalised retailing platforms; airports rolling out biometric check-in, boarding and immigration; or hotels implementing modern property management systems, the cloud offers potential for faster and more dynamic implementation.

Cloud milestone In March 2021 we launched Amadeus Flow, the industry’s only fully integrated digital cloud platform for passenger servicing and datadriven airport operations.

This pre-packaged integration means airport systems are interoperable as standard, that data flows more reliably to where it is needed and that airports no longer face the cost and complexity of being a systems integrator. Airports and airlines should be free to focus on serving passengers.

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WBP NEWS

Open for business The latest news from ACI’s World Business Partners.

Unisys wins Australian baggage reconciliation contract An international airline consortium operating to and from Australia has agreed to a six-year engagement with Unisys to provide an advanced Baggage Reconciliation System (BRS) at seven international airports at Sydney, Melbourne, Brisbane, Cairns, Perth, Adelaide and the Gold Coast.

Acting on behalf of the airlines, the Board of Airline Representatives Australia (BARA) notes that the Unisys Baggage Reconciliation System will allow airlines to track bags throughout their journey, in line with IATA’s Resolution 753 on baggage tracking.

It is believed that such knowledge will help reduce the mishandling of baggage from BARA members, which prior to the COVID-19 outbreak were processing around 14 million bags annually on flights departing Australia.

Andrew Whelan, vice president of client management for Unisys Asia Pacific, said: “Efficient, safe, and secure processes and systems are key to a positive experience for travellers to and from Australia.

“The COVID-19 situation helped us to take a step back and further invest in optimising our digital offerings for airlines and ground handlers to enhance the baggage reconciliation and tracking process.

New Heathrow contract for Rohde & Schwarz Rohde & Schwarz is to supply its QPS201 Quick Personnel Security (QPS) scanners to Heathrow Airport as the gateway looks to reduce wait times for passengers and enhance its security checkpoints.

R&S QPS201 scanners will be rolled out across the airport, ensuring that all passengers, staff and contractors accessing airside locations are scanned on entry. The installation enables the airport to achieve its vision of a secure and safe environment whilst at the same time providing a positive passenger experience by making their journey through the airport as fast and efficient as possible.

“Heathrow Airport is the latest leading international airport to adopt the R&S QPS201, reinforcing our position as the go-to solution for airports around the world,” said Frank Mackel, the company’s vice president sales for Europe.

“This scanner addresses the three key airport requirements: high accuracy of threat detection, low frequency of false alarms to minimise time consuming manual pat-downs, and fast throughput to reduce passenger wait times even at busy periods.”

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“We are delighted to continue our relationship with BARA to provide an affordable solution that combines business efficiencies, secured systems, industry compliance and an improved passenger experience.”

RUNNING WBP NEWS HEAD Gallagher Aerospace Membership Region: Latin America & Caribbean Contact: Eduardo Dueri E: Eduardo_dueri@ajg.com W: www.ajg.com/uk Gallagher is headquartered in Illinois, United States, and has more than 90 years of experience, serving 150 countries with 900 offices around the world. In the aerospace industry, Gallagher Aerospace is the leading broker in the airline and airport sectors, as it represents more than 45% of the airlines worldwide, and in excess of 500 airport and aviation service providers to the industry at large. It also offers risk management services and space insurance.

Modalis Infrastructure Partners

LCY begins using remote ATC tower London City Airport (LCY) has become the first major international airport in the world to be fully controlled by a remote digital air traffic control tower, following intensive testing and live trials of the revolutionary technology during lockdown.

All flights on the summer schedule are being guided to land or take off from the heart of the London Docklands business district by air traffic controllers based 115km away at NATS’ air traffic control centre in Swanwick, Hampshire, using an ‘enhanced reality’ view supplied by a state-of-the-art 50m digital control tower.

LCY’s chief operating officer, Alison FitzGerald, said: “The technology was pioneered by Saab Digital Air Traffic Solutions, which has successfully tried and tested the system at Örnsköldsvik and Sundsvall airports in Sweden.”

Magnus Lewis-Olsson, chairman and president of Saab UK, commented: “This is an important milestone for Saab in the implementation of remote air traffic solutions at major civil aerospace hubs with dense traffic in a complex airspace.”

New baggage handling system for EuroAirport Basel-Mulhouse-Freiburg Airport Alstef has successfully commissioned the third and last Standard 3 check-in machine for hold baggage at EuroAirport Basel-Mulhouse-Freiburg Airport ensuring that the gateway is now compliant with the latest European regulations.

The work was phased and carried out while maintaining operational operations, considered to be one of the major challenges for the airport.

In other news, Alstef Group has agreed to the sale of its healthcare subsidiary to “accelerate its growth in the airport and intra-logistics markets”.

Alstef Group CEO, Nicolas Breton, said: “We have ambitious development plans for our airport and intralogistics activities, both in the launch of new solutions for our clients and in the acceleration of our internationalisation.”

Membership Region: North America Contact: Curtis Grad E: cgrad@modalis.ca W: www.modalis.ca Modalis is a strategic investment advisory and professional services company specialising in international transport infrastructure privatisation, investment, development, operations, talent acquisition, and business intelligence. It offers a comprehensive 360-degree view of individual airport projects and assets, providing insight from various and often competing perspectives (investor, sponsor, owner, contractor, operator and financier, etc).

WH Smith Travel Retail Membership Region: Europe Type of business: Retail & Commercial W: www.whsmith.co.uk WHSmith Travel Retail is part of WH Smith PLC. With 129 UK airport, rail and motorway service station outlets selling a unique range of newspapers, magazines, books and confectionery products.

With origins tracing back to 1792, this is a business with a strong legacy. Focusing on the specialist travel retail sector.

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HUMAN RESOURCES

PEOPLE

matters Routes back to the workplace Terri Morrissey and Dr Richard Plenty outline the challenges facing employees and employers in the post COVID workplace.

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or many people, the most challenging journey they will face in the next few months will not be their first international flight – but their return to the physical workplace.

For some, it will come as quite a shock. Employees all over the world have tasted newfound freedoms in not having to commute, in being able to have more autonomy over their workplace and location and in many cases being more productive in the process.

There is a movement for more flexibility around the timing and place of work with many who have spent the past year working from home wishing to continue to do so.

San Diego Professor of Psychology, Jean Twerge, reported that 90% of Gen Z and Millennials do not want to return to the old way of working.

They expect a company culture that not only provides them with financial rewards for performance but also respects values of autonomy, innovation, and strong visible leadership. Indeed, many stated that they would be prepared to leave their jobs and look for employment elsewhere if these expectations were not met.

Some employers are responding to these demands as they see that they will need to offer different types of enticements to attract and retain this new generation of talent. So, are we seeing a new battle emerging, with the power balance between the employer and the employee changing?

Possibly – but there is a more fundamental shift going on. EY in its report ‘Physical Return to Work Re-imagined Study’ (August 2020), confirms the move towards greater flexibility and

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found three favourable tailwinds: it is better for employees; it is better for employers; it is good for the environment.

Costs and environmental impact can be reduced.

COVID has accelerated the need for sustainability, reduced carbon emissions and reduced traffic congestion.

The office provider, Regus, predicts that workplaces will be located closer to where people live; that they will feature more eco-friendly designs; have more green design and be more conducive to innovation.

They point to companies such as HSBC (reducing office space by 40%), Lloyds (by 20%) and KPMG and Spotify as already moving in this direction.

So, what are these trends saying for the airport of the future? What conditions can employees expect and what should employers offer to retain and continue to attract and retain people?

It may well be that, for many, the return to the workplace will be a welcome change from the forced isolation of the past year, the endless zoom calls, and the lack of gossip! But if there is too much rigidity, others may vote with their feet and seek employment where there is more flexibility, choice and immediate career opportunity.

Hybrid working seems to be the way forward. EY believe that this will build better loyalty, productivity, and work-life balance for employees.

From the employer’s perspective it will increase the pool of talent (can work from anywhere) and they will be seen as a more attractive employer.

The real challenge will be in airports’ ability to offer people the choice; to have enabling technology to work

remotely as well as in a centralised space; to allow for the creation of camaraderie and innovation by bringing people together to work on projects and to foster teamwork.

Some roles will not allow for as much flexibility as others, so it will be important to demonstrate equity and a culture of fairness in job roles.

One thing is sure: the balance of power between employers and employees is shifting, and best be prepared for it!

Luke Bugeja is the new CEO of Ferrovial Airports. Bugeja – whose 30 years of experience in the aviation industry has included holding senior positions at Changi Airports International (CAI) in Singapore and London City, Brussels and Bristol airports – succeeds Jorge Gil who had held the position since December 2012.

Ramon Miró has become the new president and CEO of Corporacíon Quiport, operator of Ecuador’s Quito International Airport, succeeding Andrew O’Brian, who has decided to take up the position of CEO at Reach Airports – a joint venture between the Carlyle Group and Munich Airport International – in Washington DC. Airport World is saddened to hear about the death of former London City Airport CEO and aviation veteran, Richard Gooding, OBE. The airport paid this tribute: “From infrastructure investments, to creating job opportunities for local residents and putting London City on the Docklands Light Railway network, his contribution to the airport was immense. He will be fondly remembered by all that worked with him both at LCY and across the aviation industry.”

About the authors Terri Morrissey and Dr Richard Plenty are directors of This Is…, authors of the book Uncertainty Rules? Making Uncertainty Work for You, and deliver ACI World’s Airport Human Resources training. You can contact them at info@thisis.eu

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