Leaders’ Forum: Addressing the global challenge of meeting booming demand for air services

David Whitely by David Whitely | Apr 15, 2019

Airport passenger traffic has been growing at an average rate of 4.5% during the last decade despite a series of macroeconomic shocks and an increasingly hostile geopolitical climate.

Considering robust traffic growth, many airports are near, at, or even exceeding their design capacities, risking congestion, higher costs, lower levels of service and retarding the ability to meet growing demand.

It is becoming crystal clear that existing airport infrastructure cannot handle this growth. This is what the industry refers to as capacity crunch.

The first panel session of the conference component of the 29th ACI Asia-Pacific/World Annual General Assembly, Congress & Exhibition held in Hong Kong, China, 2 to 4 April, hosted by Hong Kong International Airport brought together aviation leaders from across the world to discuss the theme of “It’s all about capacity” to explore this crucial industry concern.

Moderator James Cole, Head of Aviation Transactions and Forecasting, Mott MacDonald navigated the session to learn how airport operators are planning to address the need for new and improved infrastructure in order to continue accommodating traffic in the most effective way possible.

The high profile panel comprised:

  • Sheikh Aimen bin Ahmed Al Hosni, CEO, Oman Airports Management Company
  • Dick Benschop, President and Chief Executive Officer, Royal Schiphol Group
  • Martin Eurnekian, President, Aeropuertos Argentina 2000, CEO, Corporación América Airports and Chair, ACI World
  • Deborah Flint, CEO, Los Angeles World Airports
  • Rupert Hogg, CEO, Cathay Pacific Airways Limited
  • Elena Mayoral, Managing Director of AS Madrid-Barajas Airport, AENA Aeropuertos S.A.
  • Emmanuel Menanteau, Co-CEO, Kansai Airports and Director, Asia, Vinci Airports

A ‘global challenge’

Cole took the panel through the issues of financing of additional airport capacity, pricing mechanisms for scarce infrastructure and optimization in the allocation of slots and set the scene by stating that aviation demand will double driven by emerging markets in  Asia, the Middle East and Latin America.

“Worldwide there are 200 slot controlled airports, half of those in Europe, but this is also an issue in emerging markets,” Cole said. “There is a big global challenge to meet demand.”

In preparing to meet this demand, Emmanuel Menanteau said that Kansai is mindful to operate with a long term view, looking ahead 40 years, to provide a way to plan for the future.

Dick Beschop agreed and highlighted the limitations on the ground and in air traffic control that could hamper growth.

“We need to see improvements in air traffic control,” he said. “Our growth gives us an agenda for investment to meet this capacity challenge. To provide new facilities and better passenger services.

“The name of the game is innovation and we need to provide a seamless passenger flow. Creating a seamless digital airport to create a seamless flow in partnership with airlines and air traffic control.”

Sustainability is the key

Dick Benschop introduced the issue of climate change, the environment and sustainability as key for the industry.

“We have capacity constraints and environmental constraints,” he said. “Noise and ultra fine particles, emissions, climate change and sustainability are concerns and we have not been proactive enough on this and must get on the front foot again on this issue.

“We must be transparent and engaging with communities on environment as we are under scrutiny on climate change.

“We must work with airlines in investment in their fleets and support innovation in quieter and cleaner aircraft and in development of bio-fuels – we have to do that.”

Benschop also said there must be better alignment between the proposals in the Paris Climate Agreement and the work done by the International Civil Aviation Organization.

“We must work with our local community and address how we can continue to grow,” he said. “We must look beyond our own operations. and be a catalyst for airlines and for local authorities.”

Menanteau agreed, saying it was a subject that must be addressed ‘every day’ citing when Typhoon Jebi severely flooded Terminal-1 and Runway A, as well as the electric substation at Kansai, causing the airport to close for 10 days.

Martin Eurnekian said stakeholders have strong views on this important issue and airports must embrace it and address it.

“Climate change is here and we must put it in the agenda so we can continue to grow sustainably,” he said.

Deborah Flint said that the industry must treat climate change as the existential threat that it is.

“We must recognize al the tools available so airports can remain good stewards of the environment,” she said. “We have to prioritize making a difference today, not wait for a grand solution.”

Models of investment

Menanteau said that there is a growing trend in governments pursuing Public Private Partnerships in developing capacity

“In developing countries, the model has proven that skills of knowledge of private companies has provided a solution to governments,” he said. And, in developed countries, private investment has helped governments to reduce deficits.

All speakers agreed that it was important for governments to define the model they want to pursue.

“Governments should set strong KPIs but give us the flexibility to meet them,” Al Honsi said. “Set the rules but then let us fly.”

Eurnekian said every country has different priorities but it is important that each government has the right priorities and flexibility to accommodate future changes in the industry. We need flexible contracts with rigid execution.

Elena Mayoral agreed.

“Our ownership is 51% public and the rest private investment and we have a five year plan for all our airports,” she said. “It ensures that we do not spend money on things we do not need – it focuses us on capacity and we have challenging KPIs for customer processing.”

Putting the passenger first

As the issues of investment and infrastructure were discussed, it was clear that a focus on the passenger – on service and experience – was also crucial to success.

“You need to get to know your passenger and tailor your product to meet the needs of those passengers,” Al Honsi said.

Deborah Flint said that passenger experience did not begin at the front door at Los Angeles International Airport, it begin out on the approaches.

“I often hear that is a test of my love if I am asked to pick up someone at the airport,” she said. “Traffic is such a challenge – even once you arrive at LAX it can take a long time to then circle our terminals and exit the airport.

“We must address this traffic congestion and as well as improving our own processes as transport and mobility is crucial to the city of Los Angeles – the improvement of mobility and the future proofing of our airport is crucial to us.

“We must future proof our airports so that they are safe and efficient.

The airline perspective

Rupert Hogg provided the sole airline voice on the panel but echoed the concerns and thoughts put forward by his airport partners.

“If you look at those numbers and the growth that has been forecast then the crux of the matter is that we need to build new infrastructure,” he said. “From our point of view, we need to be able to handle growth and we need to be able to do it in a balanced way.”

As regards the financing of infrastructure, Hogg said there needed to be alignment in government policy, regulation policy and airport policy and then close working with airlines.

“To address this, government involvement, government policy and government oversight is needed and we need a level playing field on airport charges,” he said.

“People need to look at the bigger picture and recognize that we are both – airlines and airports – investing for the long term. Everyone needs to understand that one party cannot benefit at the expense of the other – this is not sustainable.”

He went on to say that, across the industry, innovation is key.

“Airlines have to invest so we can grow as well and it is a symbiotic relationships for airlines to invest in future fleet and airports investing in infrastructure,” he said.

“The opportunity is also the challenge with the massive investment in infrastructure needed.”

A bright future

With growing demand, it is clear that, if the industry can grow sustainably, then aviation has a bright future in greater growth and greater connection.

Martin Eurnekain summed up the challenge by saying that with that comes the challenge of meeting growth.

“As leaders of the industry we must have a leadership piston political issues – trade tensions, populism and protectionism are all threats and we must have a view in this,” he said.

“This is something as industry leaders we must engage with governments to communicate our vision so we can continue to grow.”

David Whitely

David Whitely

Director, Communications, ACI World
David Whitely has more than 20 years’ experience in journalism, corporate, media, and public relations in the UK, Canada and Australia. He has held in roles with HSBC, the UK’s financial regulator (at the height of the Global Financial Crisis), and with the Western Australian Government where he played a central role in the 2013 election campaign. Before joining ACI World, David was part of London Gatwick Airport’s Senior Leadership Team.
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