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In the spotlight: Airport facilitation Airport report: Quito Special report: Panama highlights Plus: Investing in airports & security

Facilitation: easy come, easy go October – November 2015 Volume 20 Issue 5 www.aci.aero


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OPINION ;OLTHNHaPULVM[OL(PYWVY[Z*V\UJPS0U[LYUH[PVUHS

Airport World Editor Joe Bates +44 (0)1276 476582 joe@airport-world.com Design, Layout & Production Mark Draper +44 (0)208 230 7867 mark@airport-world.com Sales Director Jonathan Lee +44 (0)208 707 2743 jonathan@airport-world.com Advertising Manager Andrew Hazell +44 (0)20 8384 0206 andrewh@airport-world.com Subscriptions Beth Owen +44 (0)208 707 2743 subscriptions@airport-world.com Managing Director Jonathan Lee +44 (0)208 707 2743 jonathan@aviationmedia.aero

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Airport World is published six times a year for the members of ACI. The opinions and views expressed in Airport World are those of the authors and do not necessarily reflect an ACI policy or position. ISSN: 1360-4341 The content of this publication is copyright of Aviation Media Ltd and should not be copied or stored without the express permission of the publisher.

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Who cares wins

Airport World editor, Joe Bates, reflects on the importance of smooth and hassle free facilitation at airports and how other stakeholders all have a part to play in ensuring a good journey.

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or many of us, getting to Panama for the recent ACI Latin America-Caribbean/ACI World Annual General Assembly, Conference & Exhibition involved a long journey. Arguably, the Malaysia Airports Holdings Berhad (MAHB) team had one of the longest journeys, their route to Central America involving flights from Kuala Lumpur to Europe and then on to Panama City, which took over 24 hours. I cannot compete with that in terms of an endurance test, but my journey from London via Madrid to Panama City certainly wasn’t short, which is why I was eagerly looking forward to a good airport experience followed by an enjoyable flight. Strangely, I took the airline part of my journey for granted in terms of the type of quality of service I would receive. As a frequent flyer I would be welcomed, thanked for my loyalty in using the airline again, and be able to catch up on the films I wanted to watch during the journey. Bizarrely, I wasn’t so sure about what I could expect at the airports (London Heathrow and Adolfo Suárez Madrid-Barajas) as we all know that service levels can be a bit sketchy at major hubs during busy peak periods, and my connection times in Madrid were tight on both my outbound and inbound journeys. Well, I couldn’t have been more wrong in my presumptions because the treatment I received at both airports was exemplary, from a friendly welcome at check-in, breezing through security and being served a coffee and a snack with a smile to boarding the plane. The service levels of Iberia, however, were another matter, the airline actually succeeding in making what should have been a pleasant journey into a difficult and uncomfortable one.

I will not bore you now by going into intimate details of how Iberia let me, British Airways and all of its oneworld partners down, but suffice to say no personal inflight entertainment (IFE) system on a 10 hour plus flight, only attempting to turn it on after three and a half hours and then having to reboot it three times before it would work, did not endear me to them. Indeed, Iberia was so bad on the journey out that it made me apprehensive about flying back with them. The upshot of this being that I arrived at Tocumen Airport in almost an agitated state and, although this meant that I was in no mood to go shopping, I did enjoy a nice meal and once again the level of customer service at the airport was excellent. Sadly, the Iberia flight to Madrid was as bad as I had dreaded and this was compounded by the fact that airline staff in Barajas sent me to the wrong gate for my connection to London and I subsequently missed the flight! Why should airports care about the levels of service and facilitation provided by their airline customers? Well, I will never fly with Iberia again and, rather harshly on Madrid-Barajas, I will probably never choose to connect through the airport again. Madrid-Barajas is entirely blameless, of course, but the situation shows the impact other stakeholders have on our journeys and arguably demonstrates just how important it is for airports to do all that they can to get passenger facilitation right. You can read about the facilitation efforts of airports and learn more about some of the key opportunities and challenges facing the industry in this ‘facilitation’ themed issue AW of Airport World.

AIRPORT WORLD/OCTOBER-NOVEMBER 2015

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CONTENTS

Issue 5 Volume 20

In this issue 3 Opinion Airport World editor, Joe Bates, reflects on the importance of smooth and hassle free facilitation at airports and how other stakeholders all have a part to play in ensuring a good journey.

8 Heady days The recent ACI Latin America-Caribbean/World Annual General Assembly, Conference & Exhibition more than lived up to expectations, writes Joe Bates.

14 ACI news Ryan White reports on the success of September’s ASQ Forum in Tianjin and the search for candidates for the Young Aviation Professionals Programme.

17 View from the top ACI World director general, Angela Gittens, discusses building capacity and ensuring that airports continue to function as engines of local and regional economies.

18 Lofty ambitions How is Quito’s Mariscal Sucre International Airport faring two-and-half years after opening? Joe Bates met up with Quiport president and CEO, Andrew O’Brian, to find out more.

24 Back to the future InterVISTAS Solomon Wong considers the potential impact of US Preclearance changes and argues that the new vision is rooted in an old concept.

26 Balancing act Terry Hartmann, Unisys’ vice president global transportation, North America, argues that IT holds the key to harmonising the facilitation and security processes at the world’s airports.

AIRPORT WORLD/OCTOBER-NOVEMBER 2015

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CONTENTS

Director General Angela Gittens Chair Fredrick J Piccolo (Sarasota, USA) Vice Chair Declan Collier (London, UK) Immediate Past Chair Yiannis Paraschis (Athens, Greece)

29 Getting graphics Taking an holistic approach to wayfinding can create positive passenger experiences and boost passenger spending at airports, writes GS&P’s Jim Harding.

33 State of independence Joe Bates reports on the growing trend of third party operators opening independent lounges at airports.

35 The way forward? Stephen Bennett and William Gibbs of consultants, Swanson Rink, look at the business case for the introduction of Individual Carrier Systems for baggage handling at US airports.

40 The buying game LeighFisher’s Andy Carlisle takes a look at the airport transaction market and predicts some of the possible deals of 2016.

43 Safe and secure Skanska USA’s Dwight Pullen offers his thoughts on how airports can maintain security during the construction of major new facilities.

47 Going green 49 ACI’s World Business Partners 50 People matters Terri Morrissey and Dr Richard Plenty provide their thoughts on: Cutting bureaucracy by empowering people.

Treasurer Stefan Schulte (Frankfurt, Germany) ACI WORLD GOVERNING BOARD DIRECTORS Africa (3) Pascal Komla (Lomé, Togo) Bongani Maseko (Johannesburg, South Africa) Robinson Misitala (Livingstone, Zambia) Asia-Pacific (8) Kjeld Binger (Amman, Jordan) Dennis Chant (Gold Coast, Australia) Kenichi Fukaya (Tokyo, Japan) Seow Hiang Lee (Singapore) Kerrie Mather (Sydney, Australia) Emmanuel Menanteau (Phnom Penh, Cambodia) PS Nair (Delhi, India) 1 vacancy Europe (7) Declan Collier (London, UK) Arnaud Feist (Brussels, Belgium) Michael Kerkloh (Munich, Germany) Augustin de Romanet (Paris, France) Stefan Schulte (Frankfurt, Germany) Sani Sener (Istanbul, Turkey) José-Manuel Vargas (Madrid, Spain) Latin America & Caribbean (3) Fernando Bosque (Guadalajara, México) Martin Eurnekian (Buenos Aires, Argentina) Héctor Navarrete Muñoz (Merida, Mexico) North America (7) Thella Bowens (San Diego, USA) James Cherry (Montréal, Canada) Fredrick J Piccolo (Sarasota, USA) Mark Reis (Seattle, USA) Maureen Riley (Salt Lake City, USA) Tom Ruth (Edmonton, Canada) William Vanecek (Buffalo, USA) Regional Advisers to the World Governing Board (8) Aaron Adderley (Hamilton, Bermuda) Howard Eng (Toronto, Canada) Deborah Ale Flint (Oakland, USA) Xue Song Liu (Beijing, China) Tan Sri Bashir Ahmad Abdul Majid (Kuala Lumpur, Malaysia) Andrew O’Brian (Quito, Ecuador) Zouhair Mohamed El Oufir (Rabat, Morocco) 1 vacancy Observer World Business Partner Board Chairperson Greg Fordham (Airbiz) Correct as of September 22, 2015

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CELEBRATING 20 YEARS OF AIRPORT WORLD


EVENTS: WAGA

Heady days The recent ACI Latin America-Caribbean/ World Annual General Assembly, Conference & Exhibition more than lived up to expectations, writes Joe Bates.

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he election of a new chair and vice chair, the passing of key resolutions and three days of passionate debate about the challenges and opportunities facing the airport industry ensured that the ACI Latin America/World Annual General Assembly (WAGA), Conference & Exhibition in Panama was a lively affair. In line with the recent tradition of promoting the existing vice chair to the position of chairman of the ACI World Governing Board, members unanimously agreed that Declan Collier, chief executive of London City Airport, will succeed Fredrick Piccolo in the hot-seat from January 1, 2016. Collier, who has previously served as chair of ACI Europe, promised members that he looked forward to the challenge and carrying on the good work of Piccolo. He said: “I am very honoured and privileged to be given this opportunity. We, as an industry, face many challenges and opportunities in the years ahead and I look forward to playing my part in helping ACI take advantage of some of these opportunities for not only the next five years but for the decades to come.” ACI World’s director general, Angela Gittens, joined Collier in praising outgoing chair Fredrick Piccolo for his commitment to the organisation and his leadership over the last two years. For his part, Piccolo commended Gittens for raising ACI’s profile as a trusted partner, especially through increased collaboration with ICAO and other industry stakeholders, and noted that Collier’s tenure would usher in a new era of accelerated progress for the organisation given his years of experience in the airport industry. Bongani Maseko, CEO of Airports Company South Africa, was elected vice-chair of the World Governing Board. “Both Declan and Bongani are gifted, passionate leaders and their elections mark the beginning of what I am sure will be an era of new

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CELEBRATING 20 YEARS OF AIRPORT WORLD

accomplishments for ACI as we continue to work on behalf of the world’s airports to make sure their voices are heard throughout the aviation industry,” said Gittens. Further on the topic of ACI’s future trajectory, members approved a number of resolutions related to airport rates and charges; supporting ICAO’s ‘No Country Left Behind’ campaign; support of airport initiatives to increase efficiency; enhancing the passenger experience; using safety data for aerodrome design; and continued airport support of the goal of carbon-neutral growth by 2020. The exotic sounding Moshoeshoe 1 International Airport in Lesotho and Canada’s Prince Rupert Airport are among 26 new airports/airport operators welcomed as members by ACI over the last year. Other new members included Saint Lucia Air & Sea Ports Authority (SLASPA); Papua New Guinea’s National Airport Corporation; and Belo Horizonte International Airport in Brazil. An impressive 620 delegates and 45 exhibitors attended this year’s event – a record for a joint ACI World/ACI Latin America-Caribbean conference – which was hosted by Tocumen International Airport. “The ‘Airports: Shaping our future’ theme of this conference accurately describes ACI’s important role in helping making the world’s airports safe, secure, efficient, economically viable and sustainable,” Gittens told members during the World Assembly. As part of this role, she said, ACI worked with stakeholders and decision-makers both inside and outside the industry to ensure that airports had a strong role in shaping the future of our industry. And she stressed that this role would become even more important in the future with passenger traffic set to double over the next 15 years. Indeed, traffic growth remains robust, growing by 5.7% in 2014, although she noted that the growth story of emerging markets and


EVENTS: WAGA

developing economies had begun to slow down while growth had returned in the more mature markets. However, she repeated the economic reality that despite the traffic growth and an overall industry net profit margin of 16%, some 69% of the world’s airports lose money and that 80% of airports handling less than 1mppa operated at a loss. Airports handing in excess of 40mppa made the most money, while another financial “sweet spot” was for airports accommodating between 15mppa and 25mppa, said Gittens, noting once again that “size matters”. Day one of the conference began with the official opening where attendees heard from Juan Carlos Varela Rodriguez, President of the Republic of Panama; Tocumen’s general manager, Joseph Fidanque III; Hector Navarrete, president of ACI Latin America-Caribbean; and ACI World chair, Piccolo, speak about the significant contribution of airports to their local economies; Panama’s important place in the world as the hub of the Americas; Tocumen International Airport’s impressive new Terminal 2; and the importance of planning now for future challenges and opportunities. Piccolo outlined the importance of aviation to ACI’s Latin AmericaCaribbean (LAC) region and urged collaboration among all industry stakeholders to ensure the continued success and growth of the region going forward. He said: “The ACI-LAC region has been a leader in the emerging markets in terms of passenger traffic for some years now, and despite on-going weaknesses in some countries, the latest numbers for the first half of 2015 show a 6.6% growth in volumes. What’s more, traffic is expected to rise for the next decade and a half by an average of 5.2% per year.

“In 2031 we expect just over one billon passengers across the region, which is truly impressive as just four short years ago total passenger traffic across the region was less than 440 million. “The region’s airports are also key drivers of local and regional economics. Statistics from the Air Transport Action Group indicate that aviation directly generated 840,000 jobs in the Latin AmericaCaribbean region in 2012. Airports generated 62% of these jobs, which serves to highlight the vital role aviation plays.” Piccolo noted that if the indirect impact of aviation was taken into account the figure soared to 4.9 million jobs in the ACI-LAC region and $153 billion in GDP contributions. The GDP figure, he said, was expected to rise to $389 billion by 2032. He told delegates that the upward trajectory of aviation meant that aviation globally was expected to be responsible for $5.8 trillion in economic activity by 2032. “Put simply, the stakes are too high to leave our future to chance,” remarked Piccolo. “ACI understands that in order to fully seize the opportunity that we have before us we must overcome any number of challenges. “This means continually working to maintain and improve our safety record, enhancing the security processes, ramping up our environmental activities, serving more passengers better and improving co-operation and collaboration between stakeholders. “Our actions today will create a reality for tomorrow. Let’s work together to make sure it is a safe, secure, sustainable, economically viable future full of possibilities.” A keynote address by Jorge Quijano, CEO of the Panama Canal Authority, left nobody in any doubt about the continued importance of the 101-year old canal to Panama’s economy. The conference opening was followed by two sessions: ‘A day in the life of an airport CEO in 2025’, wherein panellists provided insights on the future of airports, including their strategic visions, challenges and opportunities, and ‘Waves of the future’, which featured presentations focusing on the ways in which airports can cater to an emerging group of air travellers – the generation of passengers that will be travelling for the next three to four decades. Another highlight of the first day was the Airport Management Professional Accreditation Programme (AMPAP) ceremony for those who have successfully graduated over the last year. Gittens, who calls the AMPAP ceremony her favourite part of WAGA, remarked: “In line with the theme of this year’s conference, ACI, along with ICAO, its partner in the AMPAP initiative, is committed to ensuring that the airport industry has a deep talent pool from which to draw in

AIRPORT WORLD/OCTOBER-NOVEMBER 2015

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EVENTS: WAGA

the coming years. This year’s AMPAP graduates are proof positive that our future is in good hands.” Sessions on ‘Can we get smart about security’; ‘Doing it right when things go wrong’; and ‘Best practice in customer experience: Here’s what’s happening’, took centre stage on Day 2. Indeed, the first two sessions arguably contained the most powerful presentations of the conference with Mark Hatfield Jr, deputy administrator of the TSA, showing video footage of the potential impact of various explosive devices and San Francisco International Airport’s chief press officer, Doug Yakel, talking about and showing live footage of Asiana flight 214, which crash landed at SFO in 2013. For those of us that had not seen video footage of the crash before, the way the aircraft slammed into the ground after the pilots misjudged the landing was truly shocking and the fact that only three people died in the incident was almost unbelievable and testimony to the rapid response of the airport’s emergency rescue teams. Yakel’s presentation was actually about the recovery processes involved in returning the airport to normal operations after a major incident, in its case the immediate closure of the airfield in the aftermath of the crash. Remarkably, two of SFO’s four runways were able to re-open within four hours of the incident, a third runway the following day and Runway 28L just six days later despite being the scene of the accident and literally covered in debris that had to be gone through with a fine-tooth comb like at a crime scene. It was originally estimated that it could take three to four weeks to re-open the runway. He revealed that one of the most powerful things the airport did in order to shrink the three to four week timeline down to six days was the

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CELEBRATING 20 YEARS OF AIRPORT WORLD

holding of a series of co-ordination meetings for all involved in the recovery process, a process that didn’t previously exist in SFO’s emergency procedures or business continuity plans. “The concept of co-ordination meetings developed organically and were led and chaired by our chief operating officer and held every single day, sometimes twice daily, bringing together all the stakeholders involved in the process of re-opening the runway,” said Yakel. “We learned a lot of lessons. There were things that went well and others that did not go so well, but one thing that definitely worked was the process of getting everyone who had a stake in the recovery of the airport, together, in one room. “Doing this created a set of unified goals that everyone could focus on and strive to achieve. It also added peer pressures as no organisation wanted to be the one that failed to deliver and let everybody else down.” The event itself began with a series of pre-conference forums/ workshops on safety, the environment, human resources and maximising commercial revenues. The ACI World HR Forum was centred on the importance of airports engaging their workforce and attracting future talent. It featured a panel dedicated to exploring the challenges related to engaging employees and two workshops on attracting talent and ensuring a good work-life balance. Setting the scene for the debate, moderator Thella Bowens, president and CEO of San Diego County Regional Airport Authority, pointed out that a recent Harvard Business Review article stated that although most CEOs claim that human resources are an important component in their company’s strategy for success, a global survey by McKinsey & Company found that they rated HR as only the eighth or ninth most important function in their company.


EVENTS: WAGA

Bowens, who described staff as an airport’s greatest asset, said that her company’s philosophy was to be totally transparent with its employees for better or worse as keeping them fully informed is the best way of ensuring they are engaged. “We actively encourage staff to not only hear what the problems are but to be a part of the solution,” said Bowens. “Communication is the key. When employees don’t know what is going on it is easy to start imagining things and become fearful about the unknown. So we decided to give them the facts so they don’t have to imagine the worst as they will actually know it! “We call this our ‘facts versus folklore’ strategy and we use every resource in our toolbox to keep our employees informed as we work through these challenging times.” In her presentation about ‘The challenges of employee engagement’, Munich Airport’s Theresa Fleidl revealed that a study carried out by Corporate Spirit for ACI Europe revealed that only 33% of airport staff in Europe were ‘highly engaged’ and that very few “were prepared to go that extra mile”. The study also revealed that 23% of staff were ‘disengaged’ and as such harboured negative thoughts about management, leadership and changes, which they felt had been poorly implemented while a further 44% were labelled ‘efficiency critics’ because of the critical views of their leaders and their decision-making. Fleidl, Munich’s vice president for professional training policy and HR marketing, said: “Our definition of employee engagement means the willingness and commitment to go that extra mile when required and not just be satisfied with what you’ve got. “The results showed that about one third of airport staff are highly engaged and that two-thirds are either disengaged or somewhere in

between. This was somewhat surprising and shows that there is a lot of work to be done.” Taking place at the same time as the World HR Forum was the Environment Forum, which focused on how airports can secure permission to grow. Attendees explored topics such as environmental constraints, tackling emissions management and engaging communities, in addition to learning about the latest developments from ACI’s Airport Carbon Accreditation programme, which has gone global with 128 participating airports. The afternoon’s Safety Symposium was dedicated to exploring emerging safety priorities and risk mitigation; ICAO’s safety priorities for Latin America-Caribbean; FAA initiatives in the region; and ACI’s popular Airport Excellence (APEX) in Safety programme. Taking place concurrently was the Commercial Forum. Maximising commercial revenues continues to be a key management objective at airports worldwide, despite airport size or ownership model, and attendees had occasion to evaluate the latest airport commercial trends worldwide with a particular emphasis on developments in the Latin America-Caribbean region. ACI World’s Gittens said: “There is no better way to begin a conference dedicated to shaping the future of airports than by concentrating on four ACI priorities: safety, environmental stewardship, our people and economic sustainability.” Well, after years of planning and months of looking forward to it, another WAGA has come and gone. Roll on next year when the beautiful city of Montréal and ACI World’s home town hosts the joint ACI-NA/World Annual General Assembly, Conference & Exhibition on September 25-28, 2016. See you there!

AIRPORT WORLD/OCTOBER-NOVEMBER 2015

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ACI WORLD NEWS

World in motion Ryan White reports on the success of September’s ASQ Forum in Tianjin and the search for candidates for the Young Aviation Professionals Programme.

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e are pleased to announce that the latest Airport Service Quality (ASQ) Forum in Tianjin, organised by ACI World and hosted by Tianjin Binhai International Airport, was a great success. Over 180 delegates attended the event, which shared best practices in customer service and heard key findings from the ASQ Survey. Attendees also learnt about how airport cleanliness is important to the passenger experience; enhancing the journey for low-cost and charter passengers; the link between service quality and airports’ economic performance; and a host of other issues. Speaking at the event, ACI World’s director, IT & facilitation, Antoine Rostworowski, enthused: “Airports have evolved from being places that largely deal with airline and aircraft-related activities to complex businesses in their own right. “Each day in airports around the world, innumerable service providers and government agencies – some customer-facing and some behind the scenes –have an indelible effect on the passenger experience. More than ever, airports require in-depth, actionable intelligence on satisfaction levels across the multiple touchpoints of a traveller’s journey.” ACI’s ASQ Survey measures passengers’ appraisal of 34 key performance indicators on the day they travel, allowing airports to get an accurate and timely picture of traveller sentiment. Indeed, ASQ has been designed for airports seeking to measure their passenger service performance and to benchmark it against other airports with the overarching objective of offering more effective, efficient and profitable ways to serve the flying public, while providing a systematic approach to continuously improving customer service. It is the leading customer satisfaction benchmarking programme in the airport industry today, and ASQ research takes place in airports that serve more than half the world’s 6.7 billion passengers. From benchmarking and the sharing of best practices to marketing tools that help airports communicate their achievements and services that are customisable to each airport’s unique needs, ASQ is the key to understanding how to increase passenger satisfaction and improve business performance in the fast-changing landscape of worldwide aviation. “ACI’s commitment to representing our members’ best interests underscores everything we do, and the ASQ programme is an excellent example,” said ACI World’s director general, Angela Gittens. “More than ever, this is a programme designed with the passenger in mind, and ACI is delighted to share its latest customer service insights with ASQ Forum Tianjin attendees.

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CELEBRATING 20 YEARS OF AIRPORT WORLD

Dubai International Airport has its own army of volunteers dedicated to helping passengers on their journey.

“In keeping with the ASQ programme, these are learnings that they can take back to their home airports to make a real and immediate improvement in the quality of their passengers’ journeys.” The Tianjin forum is the second of three ASQ Forum events scheduled for 2015, with the first held in Montréal (September 9-11) and the next to take place in Madrid, Spain (October 21–23).

Young Aviation Professionals Programme ACI in co-operation with ICAO and IATA is inviting applications for the third round of the Young Aviation Professionals Programme. Through this collaborative programme, the selected Young Aviation Professionals will be offered exciting career development opportunities in Montréal. The programme aims to attract young, talented professionals who have advanced university qualifications supplemented with a minimum of two years’ professional working experience in aviation-related regulatory activities and/or in the aviation industry. “The sustainability of the industry depends to a large extent on ensuring that we have a strong pool of future professionals running the world’s airports, and these Young Aviation Professionals will be solid proponents of the community of airports and the importance of forging industry partnerships,” says ACI World’s director general, Angela Gittens. “This programme aligns with our suite of Global Training courses, offered both in classrooms and online, and especially the Airport Management Professional Accreditation Programme (AMPAP), another successful collaboration between ACI and ICAO.” The selected candidates will be expected to contribute to each organisation’s work programmes related to aviation safety, air navigation capacity and efficiency, air transport economics or aero-political issues, with attention to inter-relationships among ACI, ICAO and IATA. Each Young Aviation Professional will be guided throughout the programme by a subject-matter expert from each of the organisations. The target for the commencement of the programme and the reporting of the selected candidates to Montréal is the end of February 2016.


ACI WORLD NEWS

ACI events

2015

2015

2015

2015

2016

October 4-7

October 20-22

October 26-28

December 8-10

March 7-9

ACI-NA Annual Conference & Exhibition Long Beach, USA

ACI Africa Assembly, Conference & Exhibition Hammamet, Tunisia

AVSEC World Conference Dublin, Ireland

Airport Exchange Istanbul, Turkey

Airport Economics & Finance Conference & Exhibition London, United Kingdom

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

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

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

ACI Latin America & Caribbean Javier Martinez Botacio Director General Panama City, Panama Tel: +507 238 2691 jmartinez@aci-lac.aero www.aci-lac.aero

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

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

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

As of January 2015, ACI accounts for 590 regular members operating 1,850 airports in 173 countries. In 2014, airports worldwide welcomed 6.7 billion passengers and handled 102 million metric tonnes of cargo and 83 million aircraft movements. ACI is a non-profit organisation whose prime purpose is to advance the interests of airports and to promote professional excellence in airport management and operations.

AIRPORT WORLD/OCTOBER-NOVEMBER 2015

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View from the top

ACI VIEWPOINT

ACI World director general, Angela Gittens, discusses building capacity and ensuring that airports continue to function as engines of local and regional economies.

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he International Civil Aviation Organization’s (ICAO) first ever World Aviation Forum, organised under the theme of ‘Aviation partnerships for sustainable development’, will take place on November 23–25 in Montréal, just across the street from ACI World’s offices at ICAO headquarters. ACI will be there participating in the discussions, but just as importantly, we are working daily in the field to ensure that airports, and by extension their local communities, prosper. In line with ICAO’s ‘No Country Left Behind’ credo, ACI leaves no airport behind in its goal of helping members invest in their future. And with global passenger numbers set to nearly double over the next 15 years, these investments often take the form of muchneeded capacity building initiatives. When we think of capacity building, new airport infrastructure is often the first thing that comes to mind, but the reality is that most of the world’s airports cannot afford to spend the millions or even billions needed for new terminals or runways. Although the industry has a net profit margin of 16% and an average return on invested capital of 6.3%, fully 69% of airports lose money, and most of these loss-making airports service fewer than a million passengers per year. In fact, these airports report a 12% loss margin and a 3.4% negative return on invested capital. Pouring concrete isn’t the only way to build capacity, and in many cases it isn’t the best way. Most airports can benefit just as much by investing in efficiency, employee training and safety. ACI helps airports of all sizes meet these needs through its Airport Service Quality (ASQ), Global Training and Airport Excellence (APEX) in Safety programmes. Our ASQ Survey measures passengers’ appraisal of 34 key performance indicators on the day they travel, allowing airports to get an accurate and timely picture of traveller sentiment. Indeed, ASQ has been designed for airports seeking to measure their passenger service performance and to benchmark to other airports or to their own performance over time in order to offer service improvements important to its passenger population.

Programme offshoots such as ASQ Unique and ASQ Regional ensure that any airport, large or small, from anywhere in the world, can benefit from an ASQ Survey tailored to its needs. ACI’s Global Training programme provides airports with affordable means of better serving the travelling public across essentially every aspect of an airport’s operation. Last year saw the launch of four new classroom courses in security, airport law, European Aviation Safety Agency (EASA) aerodrome regulations, and capacity enhancement and aerodrome planning, along with three new online courses in airside safety, runway safety management and wildlife hazard management to meet a range of training needs for airports large and small. Further in keeping with the ‘No airport left behind’ philosophy, we have increased our language capabilities, including the translation of the Airport Operations Diploma Programme into Spanish, and we now offer courses in four languages. Finally, ACI’s APEX in Safety programme goes from strength to strength, having attracted the attention of regulators, with the US’s FAA participating in peer reviews as a welcome adjunct to the participation of ICAO, which has supported the programme from the very beginning. This year, the World Bank funded an APEX in Safety review in conjunction with an airport development project and will fund follow-up activities and a review in a second airport. Importantly when it comes to the topic of investing in our future, other multilateral institutions are making APEX a condition in project funding. The bottom line is that safe, efficient and customer-centric airports attract the attention of investors and the loyalty of the travelling public. I’m looking forward to discussing the above and more in November at the ICAO World Aviation Forum as we meet to find further solutions to ensure sustainable prosperity for communities around the globe. AW

AIRPORT WORLD/OCTOBER-NOVEMBER 2015

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AIRPORT REPORT: QUITO

Lofty ambitions

How is Quito’s Mariscal Sucre International Airport faring two-and-half years after opening? Joe Bates met up with Quiport president and CEO, Andrew O’Brian, to find out more.

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he opening of a 10,500 square metre terminal extension earlier this year effectively completed the initial development phase of Quito’s Mariscal Sucre International Airport. For the $22 million extension has allowed operator, Corporación Quiport SA (Quiport), to effectively raise the airport’s capacity from 5.5 million to in excess of 7.5mppa, meaning that it can now comfortably cope with demand. Significantly, the expansion includes two additional boarding bridges, which ensure that 75% of domestic flights (arrivals and departures) now use jetways as opposed to just 40% when the airport opened. It has also allowed the number of international services using boarding bridges to rise from 90% to 95% and paved the way for a new Domestic VIP Lounge, 870 more seats and the addition of a host of new customer service-enhancing and revenue generating retail and F&B outlets, the latter operated by Cancún-based concessionaire Mera Corporation. And most importantly, according to Quiport’s president and CEO, Andrew O’Brian, it has given the airport the opportunity to make the airport experience more comfortable and enjoyable for all passengers.

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“We are now able to offer a fantastic facility with the type of high quality levels of service everybody wants and expects of a major airport,” he says. Indeed, O’Brian is quick to point out that both passengers and airlines love the newly expanded terminal and believes that this has been reflected in the fact that Mariscal Sucre is in the running to retain the prize of ‘South America’s Leading Airport’ in the World Travel Awards for 2015. So why didn’t the airport just build a bigger terminal in the first place? The answer is effectively down to a number of factors that caused a delay in the airport’s construction. “What I like to say to people is that the T-shirt was a little tight when we opened. In airport language that means that we were at capacity, in particular in our domestic holdrooms during peak hours when we face weather issues or maintenance delays,” says O’Brian. The situation meant that work on the terminal expansion project began not long after the airport’s opening with Quiport working closely with US based TransSolutions to ensure that it made optimum use of the added space.


AIRPORT REPORT: QUITO O’Brian explains: “We have a fabulous new airport that has transformed flying to Ecuador. Everything about it is better than before from the parking lot to the runway. And because the airport was built on a greenfield site everything was new and purpose built and so much more customer focused. “Our master planner Landrum & Brown with input from Houston Airport Systems Development Corporation (HASDC), our engineering contractor, Mott MacDonald, and a host of other experts did a great job and it ticks all the right boxes, but we always knew that more would be needed almost immediately as the delay in the construction process meant that the terminal design was based on 2003 traffic forecasts. “The operating environment and subsequently the traffic forecasts back in 2003 were very different than today. Back then domestic traffic was dominant and growing significantly while there was very little growth in international traffic. Almost the exact opposite is true today.” He adds: “With the expanded terminal we are able to provide more space for our passengers and subsequently provide them with better levels of service.”

The biggest airlines serving Quito today are local carrier TAME, LAN Ecuador, Avianca and Copa. Iberia, American Airlines, KLM, Delta, Aeromexico and United are among the international carriers serving Mariscal Sucre.

Next on the agenda There is no denying that Quiport has invested big time in the airport to date, O’Brian revealing that it has spent around $950 million so far on the new gateway. It is, however, far from finished, with O’Brian remarking that he expects the airport’s new master plan, currently being drawn up in conjunction with Landrum & Brown, to be announced within a matter of weeks. What is it likely to contain? O’Brian is a little hesitant to say too much other than state the fact that the next stage of the airport’s development will be called Phase 2B and be implemented according to demand. His hesitancy to reveal more, he explains, is due to the fact that IATA is currently conducting a level of service review at the airport – as required under the conditions of the concession – and its yet to be announced findings could have a direct bearing on what is planned.

Impact on route development Quiport’s likeable Canadian-born boss is also quick to point out that the new-look terminal has hugely increased the Ecuadorian gateway’s appeal to potential new carriers. Today, 11 airlines operate 195 non-stop services out of Quito to 14 destinations across the world that include Madrid, New York, Fort Lauderdale, São Paulo, Buenos Aires, Mexico City and Lima. Not bad by any stretch of the imagination, but O’Brian is eager for more and remains confident that the new, better equipped airport’s facilities ensure that it is now on the radar of more airlines than ever before. And O’Brian, who takes a personal interest in route development and ensures that he is part of Quito’s small route development team, is optimistic of adding a number of new services over the next year to the ones that they have already added since the move to the new airport site in 2013. “In terms of air service development, the new airport was like the field of dreams, you build it and they will come,” he says. “Airlines that always wanted to fly to Quito but couldn’t because of the infrastructure of the old airport and flying restrictions [it was only possible to fly for four to five hours with a full payload before having to stop and refuel] now can. “As a result we’ve welcomed a handful of new passenger and cargo airlines that have included Aeromexico and VivaColombia, while our existing carriers have upped frequencies or added new routes. He notes that the airport’s route development strategy is based on identifying city pairs and targeting specific airlines and signing sister airport deals where both gateways involved in the potential new route join forces to incentivise the airline to launch services. A soon to launch five-times weekly American Airlines A320 service between Quito and Dallas/Fort Worth (DFW) is one such example of the sister airport approach. Quiport, supported by the Ministry of Tourism in Ecuador, has also signed sister agreements with Houston’s airport operator and the City of Chicago. According to O’Brian another “significant” new route for Quito on the horizon is the JetBlue service to Fort Lauderdale, with flights between Ecuador’s capital city gateway and Florida set to launch in February 2016.

Investor challenges In many ways Quito’s Mariscal Sucre International Airport is the perfect example of how a public-private partnership (PPP) project can transform an airport’s fortunes for the better. Indeed, the opening of the new $750 million greenfield airport on February 20, 2013, signalled the dawn of a new era for air travel to Quito and Ecuador, which for too long had been dependent on its out-dated, capacity constrained, downtown predecessor. The new gateway, located on a 1,500 hectare site around 20 kilometres from downtown Quito, is incomparable to the old Mariscal Sucre International Airport other than the fact it is also high up in the Andes – 2,411 metres above sea level to be precise. In terms of facilities it boasts a single, state-of-the-art terminal and a 4,098 metre long runway capable of accommodating non-stop flights to Europe and the North East coast of the US with full-payloads, something its predecessor could not achieve, which is why so many long-haul international services used to operate via Guayaquil. The airport’s retail and F&B offering include more than 20 shops and restaurants upon opening and more than 1,000sqm of duty free stores – operated by Attenza Duty Free, the commercial entity of Motta Internacional SA – so its commercial offering is outstanding compared to the handful of outlets at the old gateway. To think it has all been a breeze would be a huge mistake, however, as not all has gone to plan since 2002 when Quiport and its consortium partners were awarded the 35-year concession to operate Quito’s old airport and build its replacement. When Mariscal Sucre opened, the access roads were not completed, which meant that for the first 18 months of the airport’s life passengers had to use existing local roads and navigate across a small, temporary bridge to get between it and Quito and the surrounding area. Thankfully this is now all in the past since the opening of the new six-lane Ruta Viva highway to downtown Quito, which means that journeys to and from the airport and the city centre now take around 40 minutes compared to up to an hour and a half before. “The new highway has completely eliminated any ground transportation problems we had and made life much easier for

AIRPORT WORLD/OCTOBER-NOVEMBER 2015

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AIRPORT REPORT: QUITO

everyone,” says O’Brian, who not so fondly recollects the fact that the journey previously involved passing through 22 sets of traffic lights. “Another new government funded highway providing access between the airport and northern Quito opened six months earlier, so we now have wonderful access and the roads are no longer an issue,” he adds.

Commercial developments O’Brian openly admits that the airport is looking to boost its commercial revenues from aviation and non-aeronautical related activities across its 1,500 hectare site. A new 150-room Wyndham Gran Condor Hotel is currently being built on a 22,000sqm plot to the west of the airfield and O’Brian has ideas for other projects that he’d like to see developed at Mariscal Sucre as part of its own ‘airport city’. The airport has already established a Special Economic Zone on a 200-hectare site to the east side of the airfield and O’Brian believes that the airport has the potential to become home to MRO facilities for Airbus and Boeing to the north of the airport. Like the developments at other airport cities across the world and its own $17 million hotel, O’Brian envisages that Quito’s projects would be a mixture of third party investment and Quiport funded or co-funded facilities. “We see endless possibilities to build this airport city,” enthuses O’Brian, who is well acquainted with Quito and Ecuador’s potential having joined Quiport from Dominican Republic airport operator, Aerodom, three-and-a-half years ago.

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CELEBRATING 20 YEARS OF AIRPORT WORLD

Boosting commercial revenue Concessionaire Analyzer+ (CA+) is to supply the airport with software that will allow it to better manage its concessionaires and increase its non-aeronautical revenues. Its solution automatically captures the sales data from concessionaires and correlates this with flight data and other airport operational information. Airports can then analyse this using the CA+ business intelligence and reporting platform, enabling them to obtain better insights into their sales patterns in order to boost revenues and performance. In addition, CA+ also manages concession contracts and automates billing, leaving commercial teams to focus their efforts on increasing non-aeronautical revenues – a growing trend in airport management worldwide. Its billing module will integrate with Quiport’s JD Edwards ERP system while also integrating with the Ultra Flight Information System. Ikusi, the global airport OT specialist and the official CA+ distributor for the Latin American region, will provide localised services and support to Quito airport as they deploy CA+. Concessionaire Analyzer+ CEO, John de Giorgio, said “This win further reinforces the importance that airports worldwide are placing on the improvement of non-aeronautical revenues in order to remain profitable.”


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AIRPORT REPORT: QUITO

The airport has introduced a number of initiatives under the umbrella of its ‘Shared Value’ programme that have helped financially support local communities Shareholders Corporación Quiport’s shareholders are currently Aecon (45.5%), Houston Airport Systems Development Corporation (3%), Airport Development Corporation (7%) and Brazilian transportation and concession company CCR – Companhia de Concessões Rodoviárias – (44.5%). However, this is about to change, as subject to approval Aecon and ADC have agreed to sell their entire shareholdings to Colombia’s Grupo Odinsa for $232.6 million. The deal means that Odinsa and CCR will effectively own Quiport between them with HASDC continuing as a minor shareholder and key technical partner. Odinsa is a major shareholder in Opain, which operates Bogota’s El Dorado International Airport, and has been looking to expand its interests in airports in other South American countries. Construction and infrastructure development company Aecon built the airport as part of a 50/50 joint venture engineer/procure/construct contract with Brazil construction firm, Andrade Gutierrez Constructores SA, so its decision to bail out now is not a complete surprise. O’Brian says the new owners will bring the collective expertise of operating nine airports across the Latin America-Caribbean region that between handle about 70 million passengers and close to 750 thousand tons of cargo per annum.

First year review He describes 2014, the first full year of operations at the new Mariscal Sucre International Airport as “a year of growth and consolidation” based on a 12% rise in passenger numbers and a solid operational performance. The upturn in passengers, driven by a 15% rise in international traffic, meant that more than six million passengers passed through

the airport last year and he expects that figure to rise by at least 4% this year. He attributes the rise in throughput to the latent demand for new services that the gateway has been able to accommodate due to its enhanced operational capabilities compared to Quito’s former gateway to the world. O’Brian also believes that last year marked the company’s unofficial transformation from a construction company to a more customer/passenger focused airport concessionaire.

Community spirit He is particularly proud of the airport’s close relationship with the local communities living within a few kilometres of the airport, many of which helped build the gateway and currently account for around 40% of its 7,000 strong workforce. The airport has introduced a number of initiatives under the umbrella of its ‘Shared Value’ programme that have helped financially support the local communities. The programme, which is being developed in association with the Washington DC-based Inter-America Development Bank (IDB), has led to the identification and creation of new business opportunities at the airport for people living in its surrounding towns and villages. To date these have included local farmers selling produce to airport staff and the planned creation of a new jointly owned company to manage, collect and recycle airport garbage. A new state-of-the-art airport and a hugely ambitious operator that is dedicated to developing its prize asset for the long-term at the same time as helping the local community. Sounds like a win-win-win scenario to me.

AIRPORT WORLD/OCTOBER-NOVEMBER 2015

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SPECIAL REPORT: FACILITATION

Back to the future InterVISTAS Solomon Wong considers the potential impact of US Preclearance changes and argues that the new vision is rooted in an old concept.

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omething different happened upon landing the day this American Airlines flight touched down in New York, and it had nothing to do with the unseasonably warm winter temperatures. To the amazement of many, passengers aboard the international flight from Toronto proceeded directly to pick up their bags and leave the terminal, bypassing a 40-minute wait to be processed through immigration and customs formalities. Just over an hour earlier, US officials pre-cleared passengers before departure in order to avoid the need for processing on arrivals. The date was January 14, 1952, and US Preclearance had become a reality for passengers onboard the Toronto-New York LaGuardia flight. Its introduction followed years of discussions about the concept of pre-clearance dating back to the 1944 ICAO Chicago Conference and the advocacy efforts of the aviation industry on Capitol Hill. More than sixty years later the US has the largest presence in pre-clearance facilities on foreign soil with some 600 officers stationed at 15 airports in Canada, the Caribbean, Middle East and Ireland. The list of 15 airports equates to about three new airports a decade joining the programme, the latest being Abu Dhabi, Halifax and the conversion of the operations at Dublin and Shannon to full customs/ immigration preclearance. Without doubt the take-up rate has been slow, but all this is set to change over the new few years as the US plans a major expansion of the programme between 2017-2024. Indeed, in late 2014, the US Department of Homeland Security – still fresh from a large amount of controversy about the 15th US Preclearance site (Abu Dhabi) – signalled the intent to raise the number of pre-cleared international passengers to the United States from 18% today to 33% by 2024. If successful, some 45-50 million passengers a year could be pre-cleared into the United States, roughly three times today’s volumes.

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US Department of Homeland Security received 24 expressions of interest for new sites, with an initial 10 airports publicised as potential sites for negotiation in May 2015. Negotiations are reportedly underway for nine countries to establish a formal ‘Preclearance Agreement’ with the United States, including Belgium, the Dominican Republic, Japan, Netherlands, Norway, Spain, Sweden, Turkey and the United Kingdom. Pending an appropriate pre-clearance bilateral agreement, airport infrastructure, funding and other implementation considerations, the first two sites could be introduced as early as 2017/18.

Benefits and market strategy under evaluation While direct domestic market access to the United States is a basic benefit offered by US Preclearance, airports are also actively reviewing market implications. Will US Preclearance create new flights/passenger volumes, or could there be a potential loss of passengers due to network realignment? The business case for pre-clearance historically was driven by a sound case for traffic development. Prior to Abu Dhabi, the growth of preclearance for markets such as Halifax, Ottawa, Shannon and Dublin was geared around the ability for passengers to arrive and transfer directly in the domestic US system. Its also made access possible to airports that don’t have a US Customs and Border Protection presence, such as New York-La Guardia. In the case of Canadian airports, growth of US Preclearance combined with improvements in Open Skies led to substantial growth in trans-border traffic to the US since Ottawa obtained pre-clearance in 1997 and Halifax in 2006. CAPA analyses on the Irish to US market indicates Dublin Airport increased its trans-Atlantic passenger numbers by 42% between 2010 and 2014, with a 2014 increase of 37% for transfer passengers.


SPECIAL REPORT: FACILITATION

Further network analysis will be needed to model the network benefits for large hubs such as London Heathrow and Amsterdam Schiphol, as well as ensuring that security screening processes do not inhibit connect times.

New facility costs and constraints The US programme continues a model that fundamentally is no different than the way pre-clearance evolved from the 1970s. From the 1950s to 1970s, there were no technical design standards used for preclearance facilities. As a result, a US officer simply stood next to airline check-in to conduct the clearance – usually in the next counter over. In the 1970s, as widebody aircraft grew, pre-clearance evolved to include strict requirements for Primary and Secondary processing areas. Airports grew to assume the costs of facilities and segregation of operations away from other flights. The expanded US Preclearance programme will have the majority of operating costs assumed by a foreign entity/airport, in addition to the need to build new facilities to meet US Customs and Border Protection standards. While there is a lot of work being advanced to the impact of technical design standards on pre-clearance facilities, the impacts may be greater for airports in the United States. Upwards of 300 widebody aircraft daily will need to be gated at domestic concourses across the US, for example, if the US is to achieve its target of pre-clearing 33% of international arrivals by 2024. Many also believe that the increase in visitors that the expanded programme will bring might lead to a boom in domestic traffic, which ultimately may mean the introduction of the A380 on routes between US cities. Most facilities in the United States are not built to accommodate significant amount of domestic widebody aircraft. Significant changes to allow for flexible facilities, such as swinggates for arrivals will be needed to ensure that the ability for joint-use domestic/international arrivals is a possibility.

of advance passenger processing and other mechanisms to conduct pre-departure risk assessments. Examples of this include the changes Australia made in the 1990s to introduce Advance Passenger Processing (APP) and tools for the ‘electronic’ authorisation of travel that the US, Canada and other countries have emulated. Paperless documents such as Turkey’s e-visa have also allowed passengers to use a website to receive permission for entry. There may also be additional opportunities to derive inspiration from the past origins of Pre-clearance. CR Smith, the head of American Airlines (1934-68) and Stuart Tipton, general counsel for the Air Transport Association (pre-cursor to Airlines for America) were instrumental to the advocacy campaign to station US border officials in Toronto. In 1951, Tipton called for carriers to be allowed to make informal entry on behalf of their consignees. “Pre-clearance at cities outside of the United States of aircraft destined for points in this country would greatly expedite the Customs procedure,” he argued. A modern-day application of these principles is found in the launch of ‘Happy Flow’ at Aruba Airport in 2015 – the use of biometric gates combined with processes with KLM-Air France and Amsterdam Schiphol to pre-clear passengers. Other carriers are actively working towards sharing of electronic information, such as X-ray images of bags, to help with other potential border threats. As the term ‘pre-clearance’ evolves, it will be important to establish the platform that can balance the physical requirements, opportunities with new technologies, and a back-to-basics approach that enables airports, airlines and governments to work collaboratively for pre-departure risk management.

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The future: not just ‘physical’ preclearance The concept of pre-clearance today is often misunderstood, primarily due to the positioning and requirements of the US-specific programme that is based on stationing officers in a foreign country. Electronic pre-clearance, for instance, has seen major development over the past twenty years through the introduction

About the author Solomon Wong is executive vice-president of InterVISTAS and has worked on US Preclearance sites throughout the world. He can be contacted at Solomon.Wong@InterVISTAS.com

AIRPORT WORLD/OCTOBER-NOVEMBER 2015

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Balancing act Terry Hartmann, Unisys’ vice president global transportation, North America, argues that IT holds the key to harmonising the facilitation and security processes at the world’s airports.

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eeting the needs of the travelling public while keeping up to date with the latest security requirements has never been easy, and arguably it is going to be even more difficult in the future as airports strive to improve the passenger experience as they handle more traffic than ever before. Like everything else, of course, air travel can be frustrating and it doesn’t take much to make or break the airport experience. A confluence of events adding delays and frustration to what should be an otherwise standard trip, for example, can result in a “nightmare” time at the airport while a smooth and hassle free trip can lead to a “best ever airport” experience. Our desire for a moan means that we get to hear about the bad experiences much more than we do the good ones, and in today’s social media mad/ever connected world, this appears to be almost every day now. What isn’t being discussed with that same frequency, however, is the willingness of airlines and airports to create and deploy the necessary solutions to alleviate passengers’ woes. According to IATA, more than eight million passengers fly on a daily basis. In 2013, for the first time ever, over three billion passengers passed through an airport for travel purposes and in 2016, that number is estimated to hit 3.6 billion. And for many of these travellers, the growing presence of technology – particularly the airline and airport eco-systems – is vastly overlooked, but can no longer be ignored. In discussing the standards that once were and ones that now exist, you can see the delicate balance between the passenger journey and efforts to secure that journey. Past events have caused us to flip from one side to the other, but today’s solutions can allow us to achieve equilibrium between the ability to integrate new technology and still maintain effective levels

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of security. This balance is crucial, not only for the passenger experience, but for the safety of us all.

All things security – the 9/11 response Many of us remember the days when air travel was viewed as glamorous. Indeed, in this halcyon era for aviation the airport experience was quick and easy for most passengers who could pass through terminals with little or no hassle. This, of course, all changed in one day 14 years ago. The terrorist attacks of September 11, 2001, prompted the US government and most others across the world to enact new legislation aimed at improving passenger safety. In the US, the Aviation and Transportation Security Act (ATSA) – signed in November that year – ushered in the federalisation of passenger security. Actions taken were primarily in the form of screening practices, many of which were conducted by the newly formed Transportation Security Administration (TSA). As a result of the establishment of the TSA, for the first time ever airlines began instructing passengers to schedule their arrival at least two hours prior to their flight, and even more so for international travel. Screening measures like hand searches through carry-on luggage were implemented, as were additional measures in the form of shoe removal, laptop removal, the restriction of liquids, and even selective screenings. A commonality is they all serve as impediments to efficient facilitation processes. Over time, these standards have been begrudgingly ingrained into the minds of travellers. It has, in turn, become commonplace to expect these types of issues from check-in to take-off and arrival. It seemed that years of increased, intensive security birthed a new era of non-facilitation.


A step in the right direction? The new, more passenger-friendly central screening facility at Amsterdam Schiphol.

Today, borders can be identified both physically and digitally. Facilitating passengers in a physical space (and between countries) can be challenging enough, but with the rise of technology, even just in the last decade, securing and monitoring their safety has become an added challenge. Ultimately, this should be seen as an opportunity to influence and establish appropriate practices and procedures, all aimed at efficiently and securely assisting passengers to their destination. The added hope being that passengers will remain loyal, choosing to travel through the airport with the airline that gave them a great experience they wish to repeat on future journeys.

The potential to improve To ask how facilitation and security can come together on a new level is to recognise the emerging technologies assisting travellers today. Let’s begin with intelligence. Intelligence is a growing concept in the technology industry. Once deemed as science fiction, intelligent applications and visual solutions are a growing reality in a number of airports. Whether built with real-time analytics, digital mobility or big data capabilities, solutions today are providing the transportation industry with the ability to deliver personalised services. These personalised services are disrupting what since 9/11 has become considered to be the new norm in travel, giving passengers an increasing sense of autonomy and the ability to facilitate themselves, such as using their mobile phone to navigate their way through the airport. We at Unisys are very familiar with the passenger journey that starts as soon as the traveller has booked their flight and ends when they leave the airport at their destination (with their bags). Providing travellers with solutions that offer more freedom and flexibility, and that are accessible throughout the airport, is critical for success. Such solutions we see increasingly coming to life include: Biometrics – This technology is quickly bringing identity management to the forefront. Solutions involving the art and science of uniquely identifying passengers, be it via facial

SPECIAL REPORT: FACILITATION recognition, fingerprint, or the scanning of the eye, is going a long way towards ensuring airlines, airports and immigration officials can maintain close watch on inbound and outbound passengers from a security perspective, whilst processing them faster from a facilitation perspective. Customer insights – Data analytics and mobile device use is giving the industry the ability to track the patterns of repeat passengers, including preferred amenities so that the next time a passenger visits the same airport, customised services can be immediately presented to them. Big data is allowing the industry to infer all sorts of knowledge about retail spending habits, shopping demographics and the like. Automated passenger recognition – Through scanning a standard boarding pass (and enhancing that with a secondary ID check), entitled passengers seeking lounge access can enter and exit swiftly and with ease, with airlines not having to worry about unauthorised entry. Home-printed bag tags – In an effort to increase passenger self-service, the ability to print one’s own bag tag at home allows for quicker passenger processes, aimed at increasing passenger satisfaction by shortening queue times. Similarly, self-bag drop and common-bag drop services are also starting to be utilised when you arrive at the airport. One might think that security and passenger facilitation stops at the airport edge. Think again, because governments, airports and the airline industry today, more than ever before, are also concerned with effective border control. A consistent enjoyable travel experience is key to the future of air travel. New technologies such as Automated Border Control (ABC) using kiosks, electronic gates, passports and biometrics; and completion of arrival documents via mobile device are all being implemented around the world today. Through a harmonised and interconnected approach by these stakeholders, all utilising common international standards, both nations and airlines hosting the travelling public will benefit greatly. The more fun (and the more efficient) it is to fly, the more people will travel by plane.

Revisiting tomorrow: A call to action There is a great deal of emphasis being placed on the future of travel, including how to build the infrastructure necessary, and how to ensure the safety and security of passengers. At a time when budgets are slim and infrastructure is aging, airports must reinvent their business model, not only to manage increasing passenger volumes but also passengers’ expectations. Public awareness of technology and its capabilities in our airports needs to change, as does the modern technology these facilities deliver. After all, it is for today’s travellers that we are working to develop the solutions and standards for the next generation. Normal operations in travel will ultimately take on a new definition as technology continues to mature and evolve, and enhance the passenger experience. The sooner airlines, airports and passengers realise this and take action, the sooner the standards of travel – and hence the airport experience – will AW improve for all.

AIRPORT WORLD/OCTOBER-NOVEMBER 2015

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SPECIAL REPORT: FACILITATION

Getting graphics Taking an holistic approach to wayfinding can create positive passenger experiences and boost passenger spending at airports, writes GS&P’s Jim Harding.

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t’s no secret that many of the world’s airports face ever-increasing pressure to make more revenue, so the need to create positive passenger experiences continues to grow in importance. After all, a satisfied customer is more likely to return to the airport than a dissatisfied one and as we all know happy travellers open up their wallets for concessions and other purchases during their visit. And while operations and service are certainly integral to the formula for success, environmental graphic design is a lesser-discussed component that has tremendous potential to influence the customer experience. Environmental graphic design (EGD) supports the built environment most commonly through branding and wayfinding. It is more than just signs; it requires a holistic approach based on reinforcing a brand and communicating information that helps people make the best decisions to reach their destination. Wayfinding can be very subjective (there are lots of opinions). Therefore to ensure the best possible outcome, GS&P has developed an objective process where research is the key. Research, we find, helps us identify where problems lie for passengers so that we can make refinements based on reliable data. Airports such as Changi in Singapore, which is consistently ranked among the best airports in the world for customer service, are committed to excellence through a research-based approach to improvements.

GS&P recently performed a review and analysis of Changi’s wayfinding system, with a goal of identifying new ways to further enhance their airport experience. Using proven research methods, our team analysed opportunities for facility-wide improvements. Research is also the foundation of the ‘3Vs’ of wayfinding – visual, verbal and virtual – which are the most basic elements of communicating information. Each of these types of communication has its own unique value, and they combine to create a fully functioning, comprehensive system. As an EGD practitioner, it’s part of my job to define what success looks like, and these are some of the fundamentals my team applies to our process:

Visual wayfinding The most basic and straightforward navigational tool, encompasses all static signage. It’s the workhorse of the wayfinding world; it does the heavy lifting. And it’s also the biggest struggle for many airports, which have grown and added facilities over time, ending up with a disjointed system that lacks clarity and cohesion. The success of visual wayfinding is tied strongly to intuitive architecture. Research has shown time and time again that good wayfinding begins with thoughtful architectural design; spaces that people can ‘read’, understanding where they are, where to go and how to get there.

AIRPORT WORLD/OCTOBER-NOVEMBER 2015

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SPECIAL REPORT: FACILITATION Visual wayfinding is also the most effective method of presenting and reinforcing a client’s brand with clear and cohesive visual elements. Additionally, clear signage instills navigational confidence in passengers, equalling less stress and more time for shopping and dining, which affects both passenger satisfaction and airport revenue. Navigational confusion means, forget the bagel, coffee and newspaper; I’m lost and I don’t want to miss my flight! Good wayfinding creates a win/win situation for both passengers and airports.

Verbal wayfinding Verbal wayfinding is another piece of the puzzle. For users who need further instruction on how to reach their destination or those who may not speak the language displayed on signage, an information desk offering verbal assistance is important. Almost every airport has one, of course, but not all are easy to find! A good example of one we like can be found in the GS&P-designed main terminal at Tampa International Airport. While visual wayfinding can be successful for around 90% of users, the verbal component is key in assisting the remaining 10%, which may not sound like much, but at an airport with 10 million passengers this translates into about a million passengers per year. These kinds of numbers underscore the importance of having desk attendants that are able to present information in an educated and objective manner that is consistent with all other forms of information, so users are less likely to become confused when listening to directions. And it’s helpful to make these resources available on both the airside and landside at multiple touchpoints.

Virtual wayfinding Virtual wayfinding encompasses dynamic, non-static navigational tools. In essence, digital tools: computerised displays with directional information, interactive directories with foreign language assistance, ‘smart garage’ signage with real-time parking-spot counts, and plenty of other technology. Virtual wayfinding offerings are constantly improving and they will continue to be a crucial component of a comprehensive wayfinding system into the future. And the capabilities of technology can be stretched even farther: at Philadelphia International Airport, for example, the information gathered during GS&P’s initial sign inventory was entered into a geographic information systems (GIS) database that was used to help develop a PHL wayfinding app. Apps and other digital pre-trip planning technology are becoming increasingly popular with passengers. In fact, prior to a recent connecting flight into Heathrow Airport in London, I was able to enter my flight information on their website and then immediately learn the time it would take for me to transfer from my arrival gate to my departure gate. Had I not known this information before my trip and been able to prepare, I would have been really stressed about missing my connecting flight when I realised how far apart my gates were.

Processing information Each of the 3Vs provide and reinforce the same information; it’s just presented and accessed in different ways since people process information differently. Where visual signage might be insufficient for one user, verbal wayfinding can fill in the gaps; where virtual information

30

CELEBRATING 20 YEARS OF AIRPORT WORLD

isn’t enough for another user, architectural cues guide him; and so forth. By communicating with each other and ensuring there are no contradictions or missing puzzle pieces, the various types of wayfinding are able to consistently present information across all three platforms. Happy, loyal customers are typically the result when the 3Vs are applied effectively throughout an airport. The 3Cs of consistency, continuity and connectivity support the 3Vs and are essential so that there are no information gaps where people lose their direction or their sense of place, beginning with the very first impression and lasting until the airplane lifts off.

Remember roadways Airport roadways can often be an overlooked component of wayfinding success. During a drive to an unfamiliar airport, many people aren’t even sure how to get there, so they need reassurance that they’re on the correct route. Along the roads approaching the Pensacola International Airport (PNS) campus, GS&P created eye-catching modern signs that immediately instill the PNS brand and also give passengers confidence that they have not missed their turn, which had previously been a problem. Moving past airport entrances and travelling along airport roadway systems, wayfinding can often become complex and many people are unsure how to find their specific terminal. Most airports are ‘legacy carrier airports’ that were built long ago but have since added new terminals, parking facilities, roadways and access points to support increased passenger numbers. Some travellers are headed to ‘Arrivals’, some to ‘Departures’, some to long-term or short-term self-parking, some to rental car facilities or transit stations. The paths to reach each of these destinations can be non-intuitive (left-handed exits in the US are one example) and, unlike interstate driving, travellers only have a few seconds to make necessary decisions while navigating their route. To address the all-important safety factor and help alleviate this confusion, GS&P designed a roadway wayfinding solution based on proven federal highway standards for Dallas/Fort Worth International Airport (DFW) which is large, easy-to-read and free of visual distractions. Its signs are also far enough apart that drivers can digest the information before encountering the next sign.

Last but not least Airports also need to consider three very important, but often-overlooked groups of customers – the unfamiliar traveller (who has never or rarely travelled through a particular airport), older adults or persons with disabilities and international passengers (who often struggle to understand local signage). It is worth noting that American adults with disabilities alone spend $17.3 billion annually on travel and leisure, according to a recently released study conducted by the Chicago-based Open Doors Organization. Our work begins with listening to and understanding the needs of airport customers, then thinking through existing conditions, identifying obstacles and establishing objectives before arriving at the solution. In summary, applying a holistic approach enables airports to reach the greatest percentage of their customer base, which means that more users can quickly and easily find their destination and understand your airport’s brand. The result is a positive experience and happier passengers, repeat business, more shopping and dining expenditures, and improved financial performance by the airport. AW


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SPECIAL REPORT: FACILITATION

State of independence Joe Bates reports on the growing trend of third party operators opening independent lounges at airports.

T

urn the clock back 30 years and the airport lounge was strictly the preserve of the world’s airlines and the haunt of their business or first class passengers. For those travelling economy, the nearest you got to sampling that little bit of luxury was when you walked past the facility on your way to the gate. Times have changed, of course, and although the airline lounge still dominates, today a new breed of independent operator is on the scene meaning passengers have more choice than ever before. And nowhere is this more evident that at London Heathrow where in the last 10 months in addition to a new £2.5 million Virgin ‘Clubhouse’ in Terminal 2 and Delta Arrivals Lounge in Terminal 3, three independent lounges have been opened by Swissport/Airport Lounge Development (ALD) and the Plaza Premium Group. The newest addition to Heathrow’s facilities is Aspire, the Lounge and Spa, which is the first independently operated lounge in Terminal 5. Open to all Priority Pass members and everyone else for a fee, the 4,000sqft lounge space is dominated by soaring windows on two sides giving guests dramatic runway views. A highlight of the Swissport/ALD operated lounge – ALD is the operating arm of the Collinson Group – is the ‘Bliss Spa at Aspire’, which is the award-winning beauty company’s first location in an airport. It also features special ‘rest pods’, which come with a fully reclining lie flat chair, personal television, space to stow a bag, a small desk and a privacy curtain. While travellers wishing to work have access to connected work spaces with complimentary high speed Wi-Fi, charging posts and designated quiet zones to make the most productive use of their time. Errol McGlothan, general manager EMEA, Collinson Group, said: “Aspire, the Lounge and Spa at LHR T5 has been designed to meet the exacting needs of the millions of travellers who travel through the terminal every year. “Using insights gained from frequent travellers, we are confident that we’ve delivered the most compelling destination lounge where travellers can relax and refresh ahead of their next journey.”

Elsewhere at Heathrow the Plaza Premium Group recently opened a new lounge in T4, which it believes offers something for everybody. Indeed, it describes it as a “light, airy and spacious” place that makes for a relaxing place to rest or work. Highlights, it says, include a centrally located black and white tiled kitchen area with live cooking station and buffet that offers a selection of Asian and European inspired dishes. Its facility is the only lounge in the terminal that offers halal prepared food. Its Terminal 4 lounge also has ‘productivity pods’ for those looking for peace and quiet to work, Skype family and friends or watch a film on their tablet. A separate bar area, elegantly designed with hues of yellow and grey, acts as the lounge’s social hub. Other facilities and services include four shower rooms and a VIP area with a separate entrance to the lounge and three private resting suites. The lounge’s opening follows the December unveiling of its ‘Arrivals’ lounge in T2 and a ‘Departures’ Lounge in the same terminal in August 2014. Song Hoi-see, founder and CEO of the Plaza Premium Group, says: “We can see rapid growth in London Heathrow, passengers are not only travelling more, but also travelling smarter, seeking out facilities like ours to make the most out of their travel experience. “We are very excited by our continued expansion at London Heathrow. Our presence here is key to our international growth strategy and in particular, our plans to expand into Europe.” Plaza Premium now operates lounges in more than 120 locations at 35 international airports throughout the world that include a newly opened 7,000sqft lounge in the Departure Transit Hall at Singapore Changi’s T1. According to Skytrax, the world’s best independent airport lounges are currently the dnata Lounge in Singapore Changi’s T3, the Plaza Premium Lounge at Heathrow’s T2, the Centurion Lounge at DFW, the SATS Premier Lounge at Changi T1 and Plaza Premium’s Vancouver facility. Make no mistake about it independent lounges will grow in number and popularity in the years ahead as traffic numbers rise and people seek that little bit of extra comfort at the airport far from the madding crowd. AW

AIRPORT WORLD/OCTOBER-NOVEMBER 2015

33


SPECIAL REPORT: FACILITATION

The way forward? Stephen Bennett and William Gibbs of consultants, Swanson Rink, look at the business case for the introduction of Individual Carrier Systems for baggage handling at US airports.

T

here are a number of advanced baggage handling system (BHS) technologies that have been implemented in Europe and other parts of the world, but have yet to be embraced in the United States. One of the more intriguing technologies is the Individual Carrier System or ICS. European airports that have successfully used ICS include Munich, Heathrow, Barcelona, Oslo and Helsinki. We have heard arguments that the ICS is too expensive and the benefits don’t justify the added cost; so we decided to find out for ourselves. Swanson Rink sought to determine if there is a business case for ICS in the United States. We started with a BHS project that is to be built in the US in the near future; a project of moderate size and complexity, with typical domestic loads similar to those at many major US airports. Our study made a comprehensive comparison of ICS technology and traditional conveyor technology, applied to a typical airport baggage handling system.

The main differences An ICS baggage handling system differs from a conventional conveyor system because it uses individual tubs or carts to convey baggage, instead of conveyor belts. Though there are hurdles for utilisation in the United States, a strong argument can be made for ICS and we believe that it deserves a closer look. We found that the ICS delivers improved baggage delivery both to and from aircraft. In addition to reduced travel time and reliable delivery energy usage, there are fewer tug train incursions on the apron,

there is a smaller carbon footprint, and operating costs overall are reduced significantly. In the ICS model, the travel time from aircraft to baggage claim, as well as check-in to make-up, is more direct and has the potential to minimise ramp traffic. On inbound, tug trains travel a much shorter distance from aircraft to load pier which can be located near the aircraft rather than back at the terminal. Bags are loaded on containers and transported via ICS back to baggage claim, thus avoiding the drive back to the main terminal in the traditional approach. Tug traffic in the vicinity of active gates is minimised and the risk of fallen and damaged bags is reduced. The advantages of ICS can be further increased if a common-use business model is employed for baggage handling. ICS requires fewer tugs and carts, thus the number of bag handlers can also be reduced. Costs can be substantially less where resources and related expenses can be shared. Another benefit of ICS is the convenient application of Early Bag Storage. Since ICS uses RFID labelling on all tubs, vertical storage is practical, and Just-In-Time Delivery to outbound sort carousels can be accomplished. Make-up is easier and less risky since only bags for the particular flight need to be delivered to the make-up carousel or pier; there are fewer lost bags by virtue of limited manual intervention for sortation. Early bag storage can also improve the efficiency of baggage screening operations when applied as a load levelling facility upstream of the baggage screening matrix.

AIRPORT WORLD/OCTOBER-NOVEMBER 2015

35


SPECIAL REPORT: FACILITATION TSA operating costs Cost Centre

Traditional BHS

ICS

$947,000

$1,295,000

$3,733,000

$3,344,000

BHS Utilities (electric power)

$132,000

$176,000

Tug Maintenance (parts, labour)

$776,000

$400,000

$14,648,000

$10,571,000

Tug Power

$158,000

$54,000

EDS Maintenance

$420,000

$420,000

$13,800,000

$10,200,000

$13,000

$13,000

BHS Maintenance (spare parts) BHS Maintenance Staffing

Bagroom Staffing

TSA Staffing EDS Utilities (electric power) Cost centres The next step of the analysis was identification of the major cost centres associated with ownership of a baggage handling system. Cost (and by extension, benefit) centres were assigned to stakeholders as they are traditionally found at most US airports. The ‘airport’ was deemed responsible for procurement, construction and basic operation and maintenance of the baggage handing system’s physical plant. In our models, the ‘airlines’ are responsible for outbound and inbound bag room operations. The airlines may operate autonomously, or may form a consortium, which provides operational and maintenance services for the airlines collectively. Activities such as staffing for the bag rooms, and ownership and maintenance of the baggage handling tug and cart fleet (which transports baggage to and from the aircraft) flow to the airlines. Baggage screening is the responsibility of the TSA. TSA provides the screening equipment, which is a major portion of the baggage handling system, and they are responsible for staffing the screening matrix.

BHS models Detailed system models were created for each system. The design concept was based on a peak flow rate of 2,750 bags per hour (BPH) outbound and 3,500 BPH inbound, with 12 load points including ticket counter positions, kerbside drops and remote check-in, and 18 inbound load piers (This is an arrangement common to many mid-size airports and large airports with multiple terminals). Surges, jams and component failures were also addressed. Performance models assume a maximum of 23 concurrent outbound flights and 16 concurrent inbound flights. There are two major operational differences between ICS baggage handling technology and traditional conveyor technology. The first difference is that the ICS system is a loop rather than a one-way delivery system. Tubs are circulated around the loop and returned to the baggage load points as necessary for baggage transport. The loop design offers a natural path for inbound baggage transport to

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CELEBRATING 20 YEARS OF AIRPORT WORLD

claim devices, eliminating the need for a substantial amount of tug traffic on the apron. The second difference is that an ICS uses containers to separate and transport bags. ICS containers (tubs or totes) are consistent in size, and are larger than ordinary baggage. Larger tub size (48” versus 30” for the bag alone) reduce the processing capacity of the EDS scanner by approximately 25% compared to a traditional BHS. This reduction in capacity can be partially offset by the improved processing accuracy of the ICS system. The model for the traditional BHS was developed following normal industry-accepted design practices. BHS sub-systems include airline-dedicated baggage loading points, baggage transportation to common mainline conveyors, integrated inline baggage screening, checked baggage reconciliation, outbound sortation delivering baggage to airline-dedicated sort carousels, and airline-dedicated inbound baggage handling and baggage claim. Passenger ticketing and outbound baggage loading is accomplished on the departures level at dedicated airline ticket counter positions. Unscreened baggage is collected onto two delivery mainline conveyors and transported to the checked baggage inspection system (CBIS) screening matrix located on the ramp level at the junction of the terminal and concourse. The CBIS contains five active (plus one standby) EDS scanners and their complement of Level 3 baggage screening stations. Screened baggage is transported via two mainline conveyors past two manual encode stations to outbound bag rooms located at the ramp level. Inbound baggage is collected from arriving aircraft and transported via airline dedicated tugs and carts to specific inbound load piers located on the ramp level. Inbound delivery conveyors transport baggage to their respective claim units located on the arrivals level. The model for the ICS-based BHS was developed following manufacturers’ recommendations and industry best practices as they apply to an ICS design. As with the traditional conveyor belt system, passenger ticketing and outbound baggage loading is accomplished on the departures level of the terminal.


SPECIAL REPORT: FACILITATION

For ICS however, unscreened baggage is loaded directly into individual containers (tubs) at the ticket counter load points, collected onto delivery mainline conveyors and transported to a pre-CBIS bag storage/screening load levelling facility. The number of scanners and screening stations is the same, in part due to the pre-CBIS bag storage.

Operations and maintenance costs Operational costs for the baggage handling systems considered the number of staff per shift, spare and replacement parts, original equipment manufacturer (OEM) maintenance contract costs, and electrical power consumption by the respective systems. Costs associated with operation of the inbound and outbound bag rooms are similar and include the costs for tug power consumption, maintenance, and staffing to load transport and unload baggage. TSA operational costs include screening matrix staffing and OEM maintenance contracts. Operations and maintenance costs on an annual basis are listed in the table on the previous page.

Passenger experience Ticketing and baggage claim have been identified as areas where innovative baggage handling system design and operation could improve the passenger experience. Innovations such as self-check-in and bag tagging can be applied to either BHS technology. ICS technology offers the opportunity for performance improvement in delivery of inbound bags to the claim devices. Passengers expect their bags to be present when they reach the claim unit at their destination, and ICS is very effective on inbound baggage delivery. We performed dynamic simulations on traditional and ICS designs, which considered the time to unload the aircraft to carts, drive to the stripping belts and unload the carts to the carousels. For the traditional design, the first bag arrives at the claim device 22 minutes after flight arrival, 50% of bags are delivered within 40 minutes, and 95% are delivered within 77 minutes. For the ICS design, the first bag arrives 20 minutes after flight arrival, 50% of bags are delivered within 36 minutes and 95% of bags within 50 minutes. In the ICS option, the tug trains travel from aircraft to load pier(s) located along the concourse, avoiding the majority (if not all) of the aircraft parked at or approaching/departing the gates. For a traditional design, tug traffic travels on the ramp from the aircraft to the inbound load piers located in the terminal. Tug traffic in the vicinity of active gates must stop and wait for arriving or departing aircraft to pull in or push back from the gate before proceeding to the terminal. These delays are random and add approximately five minutes to the baggage delivery time.

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CELEBRATING 20 YEARS OF AIRPORT WORLD

Accountability and transparency Traditionally baggage is tracked using ‘photo-eye’ sensors and belt speed to determine its location. Barcode tags may be tracked, but that technology is expensive and most reliable when their laser heads are clean. Common performance of barcode reader arrays is 85% accuracy, unless the laser heads are kept meticulously clean. Hand-held barcode readers have better performance, but often require excessive lengths of time to achieve a successful tag read. ICS containers are fitted with a permanent RFID tag, which uniquely identifies the tub, and tracks the bags through the system. The result is the tracking accuracy rises to 99% with ICS, and possibly higher depending on the complexity of the system. However, to assure this level of accuracy the bag must remain in the tub for as long as possible from bag drop at check-in to the aircraft. The BHS control system can accurately report bag location at many more locations within the BHS, making the system operator accountable and making it possible to inform passengers where their bags are, and when they made it onto the aircraft.

Total cost of ownership Initial construction costs for an ICS based BHS is higher than for a traditional design, but the total cost of ownership is significantly lower over time. We estimate the extra construction costs to be around $22,383,000, but this is recouped with total savings of $59,387,000 and an annual ROI of 6.75% over the 15-year period.

Conclusion This study shows that ICS technology has obvious benefits, including the more reliable delivery of bags, fewer ramp incursions and savings due to the overall reduced cost of ownership. Most of the advantages of ICS can be best realised only if there are changes in the way bag-rooms are managed. Traditionally, BHS operations are handled by each airline separately. ICS works best in a common use environment where resource costs can be shared for baggage handling, check-in and operations and maintenance of the system.

Swanson Rink would like to give special thanks to Vanderlande Industries and Beumer Group, two of the leading global providers of ICS technology, for providing technical support for its study.

AW


INVESTING IN AIRPORTS

The buying game LeighFisher’s Andy Carlisle takes a look at the airport transaction market and predicts some of the possible deals of 2016.

T

he airport transaction market has slowed in 2015 and deals have consistently taken a long time to come to market and reach financial close. However, the airport industry’s growing need for capital, pressures on government finances, and infrastructure investors seeking higher yield investments are likely to continue to drive new deals across the market in 2016.

A tripartite market Airport transaction activity is increasingly global in nature, and this has created greater diversity in the deals conducted. Generally, transactions are of three types: • Privatisations • Public-private partnerships (PPP) • Secondary market transactions

Privatisation – public capital raising Airport privatisation dates back to the original sale of BAA in the late 1980s, which drove the original wave of transactions. It is usually defined as the government sale of a state-owned asset on a freehold or concession basis to raise funds. This can be for a minority or majority shareholding and the valuation of the asset is the prime consideration of the deal. Europe has been at the forefront of airport privatisation activity, as many airports in the UK, and some in Italy, Belgium and Denmark have been sold or partly privatised in the past 25 years. Economic difficulties have prompted recent airport privatisation activity in France, Greece, Italy, Slovenia, Portugal, and Spain. Conversely, we have also seen a number of regional airports returning to public ownership or being closed. This raises intriguing questions about the commercial resilience of the business models of airports that have a weak local catchment area and/or operate in a highly competitive market. Looking ahead, the most significant airport transactions are expected to be further French regional airport privatisations with Nice Côte d’Azur and Lyon-Saint Exupéry expected to come to the market by 2016. The privatisation of Osaka’s Kansai and Itami international airports in Japan was delayed and only one bidder was shortlisted. There was a lot of international interest, however, and it may still prove a catalyst for more privatisation in the region and lessons learned may improve future competition.

40

CELEBRATING 20 YEARS OF AIRPORT WORLD

Elsewhere, the Serbian government is expected to privatise Belgrade Nikola Tesla Airport and the Greek government’s remaining 55% shareholding in Athens International Airport is likely to come to the market in 2016. Given the obvious concerns for many investors from investing in Greece, a deal with the incumbent shareholder cannot be discounted. What is common to many of these deals is a government motivation to raise funds, often driven by sovereign debt issues, or to fund new investment. In these cases, privatisation still appears to be a preferred model. In the assessment of bids, once the requirement for a minimum threshold of airport management or operational experience has been satisfied, the sale price is the main deciding factor.

PPP – facilitating new investment, expertise and growth A PPP is a concession to operate all or part of an airport, placing a stronger emphasis on partnership compared to privatisation, and the PPP selection process is typically motivated by different factors. Usually this is due to the need for significant new investment in facilities – and often operational expertise, too – which the public sector is not able to provide. However, rather than sell the airport to raise funds, a government seeks to bring in private capital and expertise to achieve a specific purpose, such as construction of a new terminal or greenfield airport, and defines a very specific set of design, operational and passenger service criteria the successful concessionaire must meet. In India, the development of the new Navi Mumbai Airport could be one of the major deals in 2016, while we also expect concessions to be awarded for a new airport at Mopa in Goa and management contracts at four brownfield airports. The Brazilian government has initiated round three of its airport privatisation programme and is likely to conclude early in 2016, while concession processes are expected or ongoing in Saint Lucia, Jamaica and Ecuador. There is also the prospect of a second airport in Sydney being agreed, although the owner of Sydney Airport has the first right of refusal to develop and invest in the project, so a competitive process is unlikely to be launched.


INVESTING IN AIRPORTS

What is striking about PPPs in the airport industry is that they are used mostly in emerging economies, typically in transactions where there is high forecast traffic growth and hence a need for new or expanded facilities. This circles back to the main purpose of PPPs, which is to attract new investment and operational expertise to enhance and develop new infrastructure. As a result, bidding groups typically possess a combination of operational, construction, and financial expertise and experience. The deals can be very complex, taking months or even years to close. The winning bidder must then satisfy all the defined criteria or face financial penalties or sanctions.

Secondary market – the art of the deal Finally, one cannot discount continued activity in the secondary market. As in any industry, there is a steady stream of potential deals from many sources: owners leaving the aviation sector (for example, Abertis and Hochtief in 2013), shareholders wishing to raise new capital, debt for equity swaps, closed-end infrastructure funds needing to sell, and owners seeking to create value by deploying capital elsewhere. With this type of transaction, it is difficult to predict future market activity, but there is speculation on a number of potential deals in Europe, including London City – which owners GIP have put up for sale and believe to value at around €2 billion – and London Gatwick. The driving force for these deals is almost entirely financial. As a result, they typically attract infrastructure, sovereign wealth, and pension funds, which will invest in majority or minority stakes. That said, if a controlling stake is available, then shareholder value is sometimes best realised by such fund managers partnering with an airport operator.

Final thoughts The privatisation market has matured significantly in recent years and is now truly global, with different transaction types emerging. There are different motivations for each type of transaction; consequently, each type of transaction attracts a different type of investor.

The higher risks of financing greenfield airports or owning assets in emerging economies are not for everyone. Some investors consider a whole investment portfolio approach across infrastructure: while they recognise that airport investments carry traffic-related risk, they may offer higher returns from multiple revenue streams and can thus be effective within a portfolio, counter-balancing lower-yield, lower-risk assets in other infrastructure classes. The need for mutual agreement on sharing risk and reward to enable conclusion of a deal on sustainable terms is common to each type. Transactions can always be concluded, but as shown by some recent airport nationalisations, it is not in the public or private interest for airports to fail commercially some years later, perhaps stemming from over-ambitious bid assumptions leading to an inflated initial purchase price. It is a sign of the maturity of the airport transaction market that a number of different structures have emerged to cater for different investment needs. All of the above highlight the unique nature of airports as an infrastructure asset class. Whatever the terms of the transaction or concession there are significant commercial and operational risks, and market players are increasingly recognising this may be best managed by partnering capital sources with technical expertise. This type of investment approach is typically adopted for other infrastructure assets. As economies recover, governments seek to pay down debt and the usual churn of private sector investments continues the airport industry’s growing need for new investment will drive deals in 2016 and beyond. Provided the economic outlook remains positive, increased competition for a limited supply of quality assets is likely to mean that sellers are in an increasingly strong position and valuations may continue to rise. That said, weaker assets or non-commercial concession structures can still lead to negotiated deals or failure of the deal. AW

AIRPORT WORLD/OCTOBER-NOVEMBER 2015

41


SECURITY

Safe and secure Skanska USA’s Dwight Pullen offers his thoughts on how airports can maintain security during the construction of major new facilities.

T

he number of airports around the world undergoing renovations and expansions is growing as airports look to upgrade the passenger experience, maximise efficiency and improve operations and, without doubt, safety is a major factor shaping these upgrades. Indeed, security at airports is a key consideration that contractors face when undertaking new airport construction projects. This means that thinking about airport security must begin before stepping foot on the construction site, as parties look to address security concerns during pre-construction. Those security issues include the use of technology, including for paperless job sites that digitise collaboration. Below are some of the ways to maintain the secure environment that airports and their stakeholders expect.

Engage stakeholders during pre-construction Contractors on aviation construction projects should communicate with stakeholders from day one. On projects in the US, this means that both the Transportation Security Administration (TSA) and the Department of Homeland Security (DHS) are brought into the conversation from the beginning to ensure regulatory compliance. Following these protocols will prevent project delays. Since each airport also has its own specific sensitivities, contractors should work to put together contingency plans and create emergency response procedures they can refer to for the duration of the project. These planning documents are essential to maintaining security as they provide a plan of action to address security issues both small and large, from dealing with fire to the role of police officers and TSA agents in the airport to how to address an unexpected threat to security such as an act of terrorism.

Even the smallest incident would mean locking down the construction site – including situations that have nothing to do with construction. Getting the TSA and DHS involved early on will facilitate a smoother, more collaborative approach to security that helps maintain a safe environment. Contingency plans are also important for preventing vulnerabilities on the job site, putting contractors in a position to be part of a preventative solution to any security issues that may arise day to day in the airport. These plans set forth guidelines around deliveries and access while ensuring that staff and sub-contractors are badged according to secure standards. Learning the specific sensitivities around an airport is part of the job because – beyond security concerns – engineers, designers and project managers are working together to ensure that construction will not disrupt revenue streams or negatively impact the passenger experience. Skanska USA was part of the collaborative effort to erect a new bridge structure at Philadelphia International Airport (PHL) where the team spent six months planning and coordinating in advance of the erection of a 91,000-pound, 100ft long pre-assembled baggage conveyor bridge over the main airport departure road. This included a plan for any repairs needed due to temperature changes and flexing caused by the lifting as we undertook the project overnight. Contingency plans were vital due to the complicated nature of the project, which included a temporary blacktop road for emergency response vehicles to use since the construction required closing the departures road. The temporary blacktop allowed airport officials an option if an airport emergency occurred. Ultimately, the project went smoothly and took our team less than eight hours to complete.

AIRPORT WORLD/OCTOBER-NOVEMBER 2015

43


SECURITY

An effective contingency plan manages the concerns of all stakeholders during pre-construction and keeps the project on track, under budget and above all, safe and secure.

revenue streams remain uninterrupted. Contractors are in a position to maintain operability while effectively securing the environment.

Looking to technology Keeping operability on track Concern for the safety of travellers informs how we take on these plans at the project level, because contractors are tasked with maintaining a secure environment without detracting from an airport’s operability. Upgrades and renovations are generally intended to improve the passenger experience, which extends to the way the construction site is run and operated. Skanska’s work on the main terminal and airport concession redevelopment programme at Tampa International Airport (TPA), for example, will ultimately expand the terminal’s floor plate and improve ticket and baggage claim wayfinding. The programme involves renovating all of the airport’s existing concessions space. Part of our work involves ensuring that shops and restaurants continue to function despite this ongoing work, so we have developed a very elaborate and intricate phasing plan. Our plan is sensitive to the importance of the overall passenger experience and will only shut down a venue if a suitable alternative is up-and-running. For instance, before we temporarily close down Carrabba’s and TGI Friday’s, PF Chang’s and the Hard Rock Café will have opened for business. Successful aviation construction projects look at operability early on, bringing in the contractor as a key team member along with architects and engineers while conducting threat and constructability assessments. A design-build method is particularly helpful in maintaining operability, as having design and construction work in co-ordination helps streamline the process and aligns the stakeholders. One of our goals in the renovations at TPA is to ensure operability while maintaining security. The $131 million project will result in the expansion and redevelopment of the Main Terminal and Airsides A, C, E and F. On the transfer level, the 50,000-square-foot expansion includes relocation to the shuttle car lobbies, while the 200,000-square-foot renovations of the Main Terminal and Airside buildings will improve ticket and baggage claim wayfinding and seating, along with the redevelopment of airport concessions and other functional improvements. Since the improvements to TPA will involve construction in highly travelled areas for passengers, operability and security are inherently connected to the steps taken by our team working to redevelop and improve the airport. We use steps like these in order to find a balance between maintaining security while ensuring operability and facilitating an environment where

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CELEBRATING 20 YEARS OF AIRPORT WORLD

Construction sites have historically been places where huge amounts of documents are created, which has always been done with lots of paper. The rise of technology on the job site allows us to cut down on this paper, sharing plans and blueprints digitally and therefore more efficiently. However, technology can bring some risk, and there is a tremendous need for security in cyberspace. Also, we must consider protecting the plans for baggage handling and explosive detection systems to ensure that the documents cannot be accessed by outside parties. While under construction, these documents will be shared with multiple stakeholders as drafts are revised and approved. Teams must use management systems for content and documents that take steps to secure sensitive information like these documents, providing secure documentation to owners and other parties. A secure system is now often a necessity as projects get underway and this requirement might even be as early as the proposal process for locations where security risks are heightened. Security in airports can encompass many different angles, but how you secure information and records is one of the most basic ways teams can create a secure environment and prevent plans from becoming accessible beyond the people on the project team.

Minimising risk and enabling a secure environment The need for renovations in airports will not be slowing down any time soon, which means maintaining a secure environment will continue to be an important consideration for project teams. Construction simply must not create vulnerabilities in an airport’s security system. Rather, contractors have to partner with owners to plan effectively, co-ordinating with the TSA, airport operations and other stakeholders to maintain operability and be secure on all fronts, starting with the technology we use on the job site. Creating and sticking to contingency plans during pre-construction will keep travellers, airport employees and the construction crew safe from day one so that everyone can enjoy a more secure airport.

About the author Dwight Pullen is Skanska USA’s senior vice president and national director of aviation.

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ENVIRONMENT NEWS

Going green MIA’s green mission

Miami International Airport (MIA) has undertaken one of the largest energy-saving programmes ever in the state of Florida and in the eastern US in a bid to reduce its greenhouse gas emissions and carbon footprint. The initiative, introduced in conjunction with FPL Services (FPLS), is also expected to dramatically lower the airport’s energy expenses by ensuring that it uses less electricity and water to cool the terminals down during South Florida’s steamy summer months. Over the next two years under the umbrella of the new Sustainability Project, MIA will install $32 million worth of air conditioning and ventilation upgrades, water conservation retrofits, energy-efficient lighting, and other green initiatives that will save it more than $40 million in utility costs over the 14-year agreement with FPLS. In terms of environmental conservation, the project will reduce annual carbon emissions at MIA by the equivalent of 5,110 cars and water consumption equal to 28 million gallons of water (or 43 Olympic-size swimming pools). In addition to achieving massive energy savings, the project will create more than 300 new jobs during installation. “As one of the largest energy consumers in Miami-Dade County, we are implementing measures like the Sustainability Project to be its most efficient consumer as well,” says Miami-Dade’s aviation director, Emilio González. “In addition to protecting our environment, being an energy-smart airport is smart business. The $40 million in savings will help us to decrease our operating costs and lessen the financial burden passed on to current and prospective airlines, which in turn supports our growth and our local economy.”

Sydney takes it to another level Sydney Airport has achieved Level Two status in ACI’s Airport Carbon Accreditation programme. “Sydney Airport is committed to operating sustainably as well as efficiently, including working to minimise our impact on the environment and meeting voluntary global commitments for reducing our carbon emissions,” says managing director and CEO, Kerrie Mather. “We’ll continue to work to reduce our carbon footprint, delivering beneficial environmental outcomes and increasing efficiency across the airport.” In addition to achieving Level Two Airport Carbon Accreditation, Sydney Airport has implemented a range of environmental initiatives, which include publishing a five-year Environment Strategy as part of its approved Master Plan 2033. It also became the first Australian airport to release a Sustainability Report this year.

Our friends electric

Portland International Airport has completed the largest installation of commercial electric vehicle chargers at a US airport. The Oregon gateway now has 42 electric vehicle (EV) charging stations supplied by Telefonix Inc, a technology design and manufacturing company that creates product solutions for highly regulated industries. “We are excited to support our travellers and employees with these new EV charging stations,” says Vince Granato, Port of Portland’s chief operations officer. “The installation of EV charging stations is one of our many environmental initiatives, which are central to how we do business and serve as good community stewards.” Telefonix EVSE Division’s business development manager, Bill Williams, claims that the airport has made a “huge statement” with the installations. “The electric vehicle movement is gaining steam and will continue to do so,” he says. “Facilities like PDX are acknowledging this growing community and sending a signal that they support those who are embracing electric vehicles by installing stations for both airport employees and travellers.”

Hactl’s green credentials

Hong Kong Air Cargo Terminals Ltd (Hactl) – the largest cargo handler at Hong Kong International Airport – has received a Carbon Reduction Certificate from the Environmental Campaign Committee (ECC). The certificate is awarded under the Hong Kong Awards for Environmental Excellence scheme in recognition of Hactl’s success in reducing its carbon footprint and is valid for three years. The ECC recognises organisations that achieve the target of reducing their annual carbon emissions by at least 3%. According to the independent assessment conducted by the British Standards Institution (BSI) Pacific Limited in 2014, Hactl reduced its carbon footprint by 12% during the twelve months of the survey. Hactl says its impressive results are the product of a number of feasibility studies, gap analyses and meetings with eco-pioneers, which have led to a numerous of pioneering initiatives. They include the use of electric vehicles; energy saving through improvements to air conditioning, refrigeration, lighting, and forklift battery charging systems; and increased use of biodiesel. Hactl’s manager for quality assurance, Benny Siu, notes: “We are a committed AW supporter of environmental initiatives.”

AIRPORT WORLD/OCTOBER-NOVEMBER 2015

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WBP NEWS

The latest news from ACI’s World Business Partners

Toronto’s culinary creations

Morpho Detection has announced a contract with Denmark’s Copenhagen Airport for 30 desktop Itemiser 4DX explosives trace detectors (ETD). The machines meet the requirements of new EU legislation for the enhanced explosives screening of passengers. The next-generation of its family of desktop ETD, the 4DX quickly detects and identifies trace amounts of explosives on skin, clothing, carried items, bags, vehicles and other surfaces. “We are thrilled Copenhagen Airport selected Itemiser 4DX for their first deployment of ETD technology,” says Morpho Detection’s president and CEO, Karen Bomba. Currently approved for passenger and cargo screening throughout European Civil Aviation Conference’s (ECAC) 44 member nations, more than 800 Itemiser 4DX ETD have been shipped to airports across Europe.

Location: Renton, WA, USA Contact: Tommi Robison, strategic development manager Email: tommi.robison@ aronsonsecurity.com Website: www.AronsonSecurity.com ASG is one of the premier, independent providers of risk, resilience and security solutions. Through a global security network of partners, ASG delivers end-to-end security programme services that drive value and mitigate risk. For over 50 years, ASG has been providing engineering excellence, world-class service and security expertise to premier regional, national and global organisations.

Woods Bagot

Internationally acclaimed master chef Susur Lee’s culinary creations are taking flight, literally, with the opening of Lee Kitchen at Toronto Pearson International Airport. Chef Lee, in partnership with global restaurateur HMSHost, has opened Lee Kitchen in Terminal 1, where guests can now get a taste of his imaginative Asian-fusion fare, and even take a dim sum box on board their flight. The famous chef is frequently in transit himself, overseeing his three popular restaurants in Toronto – Lee, Bent and Luckee – as well as a restaurant in Singapore, and juggling catering gigs and TV appearances around the world. “I am truly excited about having a restaurant in the airport of my home city, and to be able to cater to international travellers,” he says.

Screen test

Aronson Security Group

Antalya upgrades safety systems

Bosch Security Systems has completed the installation of integrated fire detection and voice evacuation systems in both the domestic and the international terminals at Antalya Airport in southern Turkey. Across the terminals, Bosch’s local partner Ateksis installed 3,500 automatic fire detectors 420 Series, which are connected to six networked Modular Fire Panels 5000 Series. These can be configured and operated via two remote keypads. The fire detection system is interfaced with the fully digital PRAESIDEO Public Address and Emergency Sound System. With more than 1,800 horns and ceiling loudspeakers as well as 300 sound projectors, this system covers multiple independent zones within the terminal buildings to allow for precise and targeted evacuation instructions in case of an emergency. The PRAESIDEO system comprises two network controllers, 48 distributed power amplifiers and 25 call stations. It also has an automatic volume control that automatically increases the sound level when the building is getting crowded. Fire detection and voice evacuation systems are integrated via the Bosch Building Integration System (BIS) allowing for central control and operations.

Location: San Francisco, USA Contact: Richard Spencer, design director – aviation Email: richard.spencer@ woodsbagot.com Website: www.woodsbagot.com Woods Bagot is a global studio of over 1,000 people collaborating across boundaries, markets and disciplines to impact the way people, organisations and communities experience and use space. Specialising in five key sectors – Aviation and Transport; Education, Science and Health; Lifestyle; Sport; and Workplace – Woods Bagot’s diverse portfolio spans more than 140 years.

TH Airport Consulting Location: Hamburg, Germany Contact: Torsten Hentschel, managing director Email: t.hentschel@th-airport.com Website: www.th-airport.com TH Airport Consulting offers consulting services for planning and optimisation of airports with a focus on terminal planning, airport processes and the co-ordination of complex airport projects. It combines practical experience in operation, planning, construction and start-up of airport terminals with scientific approaches for analysis and optimisation of airport processes.

AIRPORT WORLD/OCTOBER-NOVEMBER 2015

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HUMAN RESOURCES

PEOPLE

matters All together now Terri Morrissey and Dr Richard Plenty provide their thoughts on: Cutting bureaucracy by empowering people.

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n international airport can be an exciting place to work with lots of variety and the knowledge that connecting people and places is a ‘grand endeavour’ and one to be proud of. Why is it then that the results of ACI Europe’s AirPeople employee survey show that airport staff rate their working environment a little less favourably than those in other sectors? Bureaucracy is the major cause of their frustration and concern. Airport staff are generally very positive about their industry and their employers but dislike the slow convoluted decision-making and inefficient work organisation that they experience. Perhaps this should not surprise us. Many airports are, or have recently been, state owned entities which are rarely stellar examples of efficiency and effectiveness. The industry is also heavily regulated with a strong safety culture, which means that formal procedures are rightly required in many safety-critical areas. Bureaucracy is not the same as necessary procedures. Many bureaucratic procedures develop over time from well-intentioned efforts to standardise and simplify highly complex processes. Quite often these “grow legs”, get added to and outgrow their usefulness. Steps are continually added to try to cater for all eventualities. These are rarely updated or dropped as time and technology move on. Unnecessary meetings and slow decision-making result. People can hide behind the rules and a bureaucratic mindset can set in.

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Commonly heard phrases such as “I can’t do that unless it’s in writing”, “I’ll have to wait to ask my manager”, and “that’s not my job”, are used to avoid taking responsibility. This does little to help customer focus, innovation, effectiveness, or speedy response. ‘Good intentions’ should not be an excuse for burdening those parts of the business, which need agility, flexibility and the ability to respond rapidly to changing circumstances. Encouraging and developing a mindset of initiative taking and proactivity can lead to better results, lower costs and help build a more entrepreneurial organisation. Allowing people to think for themselves and have the courage to take decisions can bring about a more engaged and committed workforce. This can be helped along by: • Ensuring that people understand the overall vision and direction of the company and the role they play • Freeing people up to do their jobs so they have the authority, responsibility and skills, without the necessity for constant supervision and control • Encouraging people to work together and across boundaries to continuously simplify and improve processes and get rid of redundant practices People who feel that they have some control over their work are more likely to be positive about their organisations, express higher levels of engagement and perform to higher standards.

CELEBRATING 20 YEARS OF AIRPORT WORLD

IATA is looking for a new director general and CEO following Tony Tyler’s announcement that he will retire in June 2016 after serving five years in the position. He says: “I believe it will be time for me to retire and leave the organisation. It is a great privilege and responsibility to lead IATA, and I am proud of what the IATA team is achieving during my term of office. I remain fully committed until my successor is appointed in June next year.” Before joining IATA, Tyler was chief executive of Cathay Pacific Airways in Hong Kong. Stobart Aviation – which operates London Southend Airport and also Carlisle Lake District Airport – has appointed two aviation industry specialists to spearhead its operations. Former Luton Airport managing director, Glyn Jones, is its new CEO and ex-Cardiff Airport boss, Jon Horne, its chief operating officer. Darryn Holder has joined HOK’s Aviation & Transportation practice as senior vice president and regional leader in London. A recognised industry leader, Holder brings 27 years of international planning and design experience to HOK’s A+T clients. He will focus on project opportunities in Europe, the Middle East and Africa. Warren Jones is the new director of TIACA. He is based at TIACA’s Miami headquarters and reports directly to secretary general, Doug Brittin. Jones brings over 18 years’ air cargo experience to his new post, including senior roles at IATA, Hartsfield-Jackson Atlanta International Airport and Chapman Freeborn.

About the authors Terri Morrissey and Dr Richard Plenty are organisers of ACI’s annual Leadership and Change Summit, which this year will be part of Airport Exchange in Istanbul, December 8-10. They can be contacted at info@thisis.eu

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Airport World, Issue 5, 2015