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AIRPORT PROFILES Last modified on April 2, 2010

Miles better

President and CEO, James Cherry, talks to Joe Bates about his development plans for Canada’s third largest gateway and operator, Aéroports de Montréal.

For the best part of the last two years, Aéroports de Montréal (ADM) president and CEO, James Cherry, has been a man on the move – quite literally – as his role as chairman of ACI took him to all four corners of the world.

Indeed, his dedication to the role meant that he became the first chairman in the history of ACI not to miss a regional conference, attending events in Cairns (Australia), Accra (Ghana), Kuala Lumpur (Malaysia) and Salvador de Bahia (Brazil), among others.

So, after all that travelling, what’s it like to go back to the day job and the task of running Montréal’s airport system?

“I was only ever moonlighting as chairman of ACI as my main job has always been in Montréal, and there have been plenty of big things going on here as well over the last two years,” laughs Cherry.

“Even though I was travelling a lot, I was always in touch with issues back home and, although at times it meant taking telephone calls and sending emails in the middle of the night, I was always around to make decisions when they had to be made.”

ADM is responsible for operating both Montréal–Pierre Elliot Trudeau International Airport (Montréal–Trudeau) and Montréal– Mirabel International Airport, although the latter ceased handling passenger traffic in October 2004 and nowadays functions as a cargo gateway and fast-growing manufacturing base for the aeronautical industry.

The 2009 opening of a new US check-in facility and 275-room Marriott hotel at Montréal–Trudeau as part of the gateway’s C$1.4 billion capital development programme shows that Cherry, and ADM, have indeed been busy.

The new US check-in facility, which better equips the gateway to handle trans-border traffic that accounts for around 30% of Trudeau’s passengers, is effectively the last major component of its 10-year long expansion programme.

The other major projects included the construction of a 17-gate trans-border jetty, a state-of-the-art baggage handling system and a host of new IT systems designed to ensure that Montréal–Trudeau has “sufficient capacity for years to come”.

It’s been growth by stealth really as the surface area of the terminal has more than doubled in size over the last decade as the new-look Montréal–Trudeau emerged.

The delivery of the new infrastructure ensures that Cherry considers 2009 to have been a “very good year” for Trudeau from an operational point of view, although he concedes that it was a “disappointing” year for traffic with passenger numbers down 4.8% to 12.2 million.

The decrease means that Trudeau effectively hasn’t experienced an annual increase in passenger traffic since 2007, when a record 12.8mppa passed through the gateway.

However, when you consider that 2009 was one of the worst ever years in the history of aviation and that passenger numbers slipped by less than 1% in 2008, the figures could actually be considered quite good.

Not surprisingly, the dip in traffic has led to a decline in revenues, although Cherry is not too concerned at the C$9 million deficit last year as ADM enjoyed an earnings before interest, taxes, depreciation and amortisation (EBITDA) of C$150 million.

He also points out that the gateway had a higher cost base in 2009 due to bringing the new facilities on-line. The loss compares to a C$15 million profit in 2008.

ADM remains “cautiously optimistic” that 2010 will be a better year for Montréal–Trudeau, with passenger numbers rising by a modest 1% to 12.3mppa before possibly getting close to record levels again in 2011.

Trudeau has traditionally enjoyed average traffic growth rates of 3% to 4% per annum and ADM expects these figures to return in the medium to long-term.

In terms of cutting its cloth to compensate for the drop in revenues caused by the traffic decline, ADM did reduce staffing levels across a couple of departments last year and implemented a hiring freeze for much of 2009.

It also reduced its capital budget by deferring a handful of less essential projects and slowed down the opening of the new US check-in facility to avoid paying unnecessary operational costs.

Among the projects to be put on hold for up to three years is the planned conversion of the former US check-in facility into a check-in area for international flights.

In addition, ADM has endeavoured to trim Montréal–Trudeau’s annual maintenance and repair bill of between C$50 million to C$70 million in a bid to reduce expenditure.

“We have been prudent, but I can assure passengers that we have not scrimped on safety, customer service standards or operational efficiency,” notes Cherry.

Montréal–Trudeau enjoys a healthy mix of domestic (39%), trans-border (24%) and international (37%) traffic, with the latter category growing 2% last year despite the overall downturn in passengers.

International traffic is certainly on the rise as it accounted for only 30% of the throughput five years ago, Cherry believing the catalyst for its growth has been the airport’s capital development programme, which he says has “actively encouraged” airlines to launch a significant number of new international services.

Whereas London, Paris and Frankfurt pretty much made up the airport’s list of international services back in 2003, it now also boasts Athens, Brussels, Geneva, Toulouse, Bordeaux, Barcelona and Rome in Europe alone and, according to Cherry, has added a significant number of new destinations in Latin America and the Caribbean.

Air Canada and its subsidiary Jazz are, not surprisingly, the dominant players at Montréal–Trudeau, handling more than three million passengers per annum between them.

A few years ago, ADM acquired a minor stake in French all-cargo airport, Paris-Vatry, and with Trudeau’s capital development programme close to completion, Cherry admits that the company may now be ready to expand this side of the business.

“Is ADM going to take its place in the international forum in some form or another? The answer is a resounding yes! How we do it though is still to be determined,” reveals Cherry. “It might involve joint ventures with a financial commitment to developing airports or simply involve the provision of support and services.”

Clearly we will have to watch this space for further developments as ADM has yet to finalise its business strategy on this front.

On the day I spoke to ‘Jim’, he had just emerged from a press conference announcing the planned launch of a new express bus service between Trudeau and downtown Montréal.

Funded by the Canadian government and the municipality of Montréal, the ‘747 Express’ service is designed to appeal to both airport staff and passengers by providing a 20 hours-a-day service between Trudeau and nine downtown stops that include the city’s main train, bus and subway stations.

It might not sound like a major news story to some, but Cherry admits that the difficulty and cost of travelling between Trudeau and downtown Montréal because of the current lack of options, has made it hard for airport companies to recruit staff.

For although Trudeau is located just 20 kilometres from downtown Montréal, it doesn’t have a commuter rail link and severe road congestion can mean that a journey to the gateway from heart of the city takes 90 minutes.

Says Cherry: “For airport companies which have a hard time recruiting staff due to the difficulty or high cost of access to the airport, this is great news as the bus service will significantly expand the recruitment pool.

“The need to improve access to the airport is a really big issue as the area between Trudeau and downtown is one of the heaviest used commuter corridors in the region and possibly all of Canada. As a result, a journey that should take 15 to 20 minutes if there was absolutely no traffic at all, takes an hour, even during reasonable weather. When you add snow, ice and even rain to the equation, it is almost impossible to predict your travel time.

This is not ideal for staff, but it is even worse for passengers with flights to catch.”

ADM is confident that the new bus service is major step forward in terms of improving access to Montréal–Trudeau and reducing road congestion, with obvious benefits for the environment.

However, the airport authority has made no secret of its desire to have a commuter rail link to downtown Montréal and feels that the time is fast approaching when its ambitions will be shared by the Canadian government and other local, national and regional agencies.

The fact that Vancouver International Airport (YVR) got its own rapid rail service last year and there is renewed talk of doing something similar at Toronto Pearson has only served to make Cherry more determined than ever to get the much needed rail service.

In the case of YVR, its new Canada Line SkyTrain has halved journey times to downtown Vancouver to 25 minutes and the system is expected to handle 100,000 daily passengers in 2010.

“We need to get vehicles off the road to reduce congestion and have always felt that a rail service would be able to attract a good portion of the traffic destined for Trudeau if it is frequent, reliable, convenient and non-stop,” comments Cherry.

He cites the Arlanda Express in Stockholm and London’s Heathrow Express – which takes just 15 minutes to travel between the world’s busiest international gateway and Paddington Station, as examples of what ADM would like to emulate.

“A rail service will also be good for the environment as it will help reduce emissions and greenhouse gases, issues that the Canadian government is becoming quite sensitive to as we learn more about the damage being down to our planet,” says Cherry. “In that sense, the timing of the proposed rail link could not be better.”

He certainly believes that finding a private operator to run the service would not be a problem, confidently predicting that ADM could “get someone tomorrow” if it held an RFP.

Montréal–Trudeau is actually surrounded by railroads. In fact, one line runs in front of ADM’s headquarters building and stops just 700 metres short of the passenger terminal.

So why hasn’t the rail link happened yet? The short answer is because the existing track is congested with freight trains and it is estimated that it will cost in excess of C$500 million to construct a new, dedicated, passenger line.

“We have rail lines here, however, unlike in Europe and other parts of the world where railroads are primarily used to move people, in North America they are mainly owned and used by freight operators to move cargo,” explains Cherry.

“When a freight train goes by here, it typically travels at 50 to 60 kilometres per hour and might have 120 or 150 wagons behind it, and you simply cannot run an efficient commuter or shuttle rail system when you have to share a track with these types of trains.”

The good news for Montréal–Trudeau, however, is that there is sufficient room around the airport for additional track if an investor can be found to co-fund the huge development in conjunction with ADM.

Cherry has no qualms about admitting that it would be impossible for ADM to finance the project on its own, and the size of the investment involved ensures that the airport authority would not put pen to paper on any deal unless it receives a guarantee that the line is 100% dedicated to passenger services.

ADM is currently one of the ever-increasing ‘voices’ in Canada trying to convince the government to build more track to improve the country’s domestic transportation links.

Says Cherry: “We’re prepared to take on the risks of putting a new train service in place as we believe that there are people out there that will help us do that, but we need help from government to build the new track as it is a big project. No private rail company would pay for 100% of the infrastructure, as there is always some form of government subsidy. All we are asking for is the same kind of treatment.

“I like to use a highway analogy to try and get my point across. I’ll buy my own car and even build my own driveway from my house to the road, but don’t expect me to build the road from my house to downtown.”

He estimates that it will take three to four years to build the infrastructure necessary to realise the rail link once the decision is made to go-ahead with the project.

Ground transportation to Trudeau is also being enhanced with the construction of new roadways to replace the existing Dorval Interchange by 2012. Funding for the project is being provided by a combination of the Quebec and Canadian governments, city of Montréal and ADM.

When it comes to making investments, James Cherry and ADM have shown that they are prepared to do what is necessary to enhance Montréal-Trudeau’s infrastructure to ensure that it capable of meeting future demand.

Now it is time for the Canadian government and possibly the municipal government of Montréal and the provincial government of Quebec to step to the plate and match this commitment by helping subsidise the construction of the rail line that will complete its transformation.

ACI memories

If pushed to identify the highlight of his two-year tenure as chairman of ACI, James Cherry says that he is most proud of the “fantastic new level of co-operation, collaboration and co-ordination that now exist between the regions”.

He insists that the new way of operating is almost entirely down to the drive and leadership of ACI director general, Angela Gittens, and that it has also been reflected in the organisation’s improved relationship with other industry bodies such as CANSO, ICAO and even IATA.

“Thanks to frequent communication, there is a very clear sharing of responsibility and best practices and a great deal of mutual co-operation that I don’t think existed before, certainly not to the extent that it does today anyway,” he enthuses.

As a result of the new spirit of co-operation, Cherry believes that he leaves behind a “better and stronger organisation” that the one he was appointed chairman at the end of 2007.

Adds Cherry: “Am I suffering withdrawal symptoms from the job? Yes, I am actually, as I thoroughly enjoyed my participation with ACI and meeting and working with so many people from different airports around the world. One of things I have always been keen on is the exchange of ideas, information and knowledge and the role gave me great exposure to other airports and the way they do business.”












Airport World 2010 - Issue 2


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