The vast potential of the Chinese market is perhaps best summed up by the fact that Xi’an Xianyang International Airport considers last year’s 17.8% increase in passenger traffic as normal.
The honest assessment comes despite only four of China’s 20 busiest gateways – Ürümqi Diwopu, Zhengzhou Xinzheng and Shanghai’s Pudong and Hongqiao – reporting bigger increases in passenger numbers.
The reason the airport isn’t doing cartwheels is the fact that it enjoyed a record 28.6% upturn in passenger throughput in 2009 and expects to register an annual rise in numbers of a least 10% to 20% for the next decade and beyond.
Indeed, such is the level of anticipated growth at Xi’an Xianyang that the airport plans to start work on an extension to the new Terminal 3 within weeks of its March 2012 opening.
The airport’s chief operations officer and board member, Wolfgang Weil, notes: “I would say that 2010 was a good year for Xi’an Xianyang, but not a great one, based purely on passenger throughput.
“I know that many of my colleagues in Europe and North America would love to report a 17.8% rise in passenger numbers for 2010, but this is China, and nowhere on Earth is quite like this country for growth potential and the will and the way to make it happen.”
He points out that China will have to increase the capacity of its airport system by some 300 million passengers in the next four to five years if it is to keep up with demand.
And with new terminals taking around 18 to 36 months to build, he notes that the future reality for many Chinese airports will be “one to two years to grow, before two to three years of construction”.
“The huge traffic growth across the whole of China effectively means that if you build something at an airport, it will be used, there is absolutely no doubt about that at all,” remarks Weil.
“The challenge for airports is to get the timing of new facilities right. On the one hand you want to avoid becoming a permanent construction site, but on the other, we can’t afford over capacity. In my opinion, smart, modular development and expansion plans will be key to success.”
Last year’s traffic rise at Xi’an meant that 18 million passengers used the airport in 2010, and the figure is expected to jump to 20.4 million this year based on “conservative” estimates of a 13% increase.
If it does, it will mean that throughput at Shaanxi Province’s capital city gateway will have soared by 70% since 2008 when 12 million passengers passed through its facilities and an incredible 400% since it handled 4mppa in 2000.
The reality for 2011 could to be a whole lot higher, however, as passenger traffic at Xi’an increased by nearly 20% in the first five months of the year.
“I expect that our prediction could be a little on the low side, but I have no desire to be the world champion in forecasting. I would prefer to be conservative now and successful in reality at the end of the year,” observes Weil.
He is also honest enough to admit that if he did predict a much higher increase – possibly necessitating further equity investments to ensure that the airport was best equipped to handle the growth – and the actual 2011 figures fall short of his forecast, he would not be the most popular man in Xi’an!
Whatever the future levels of growth, there is no denying that the double-digit traffic increases of the last few years has put a lot of strain on Xi’an Xianyang’s existing infrastructure, despite the airport being one of the most modern airports in China having only opened in 1991.
In fact if the airport handles over 20 million passengers this year it will be almost double its design capacity of 11mppa, which is why Weil and his colleagues are eagerly awaiting the opening of Xi’an Xianyang’s new “showpiece” Terminal 3.
The 230,000sqm terminal will be equipped to handle up to 22 million passengers per annum, meaning that the airport could easily accommodate in excess of 33mppa – triple its theoretical design capacity today.
Built at a 90-degree angle to the existing terminals, the impressive new Terminal 3 is expected to become home to China Eastern and China Southern airlines and their partners.
It will also boast a range of customer-friendly facilities that Weil hopes will include “the best commercial area at a Chinese airport”.
The terminal’s central commercial zone – designed as an airside departure lounge concept – will initially be equipped with 30 shops and restaurants, for example, which he believes will make quite an impression on passengers.
“The new retail and food and beverage outlets will make a big difference to the airport as these kind of developments are not common in China,” enthuses Weil.
Another 30 outlets will join them when a planned extension to the central commercial zone, expected to start within a month of T3 opening, is completed.
Weil openly admits that he isn’t a fan of giant, energy-draining passenger terminals, claiming that it appeared as if some designers spent more time on creating a ‘monument’ rather than a practical, working building.
So, how does Xi’an Xianyang’s Terminal 3 shape up, because its design looks pretty impressive to me?
“Our new terminal is visually impressive, especially the check-in hall, but it is not overly big and will be very efficient to operate,” says Weil.
He explains that the airport actually ditched plans for a ‘multi-level’ roof for a more practical ‘wave-style’ design because it ensured that the terminal would be more energy-efficient in terms of its air conditioning, lighting and heating requirements.
“The old roof design looked a little more Asian, but it was very impractical to build and maintain, quite honestly, and although it looked great from the outside, the view from the inside wasn’t so impressive.
“When it comes to terminal design, I am not a fan of the bird’s eye view as we are not birds and rarely see things from the air unless we are lucky enough to be one of the few sitting by the window on a plane. I am more interested in how things look from the ground, as this will be the first view of the airport for our passengers.”
The terminal will be joined by a new 3,800-metre long runway that will effectively double the gateway’s airfield capacity overnight when it opens next March.
Xi’an will also get a new integrated ground transportation centre, cargo terminal, maintenance facilities, car parks, access roads and ATC complex as part of its ongoing €1 billion development programme.
Weil claims that the opening of the new ground transportation centre will be another “major milestone” for Xi’an Xianyang as it will become only the second airport in China, and first in the central and western provinces to open such a facility.
The complex will be located in front of the terminals and have underground car parks and a central lounge on the ‘arrivals level’ with retail and F&B outlets and dedicated areas for taxis and city and long-distance buses.
Provisions are also being made for the facility to accommodate the anticipated introduction of a high-speed train link to Xi’an City’s rapid railway station and beyond.
The new rail link is already part of both the regional and national government’s next five-year development plans, meaning that it could become reality by 2015.
“The opening of Terminal 3, new ground transportation centre and rail link will prove to be landmark developments for the transformation of this airport,” says Weil.
The ground transportation centre is currently under construction and is also expected to open next year.
Xi’an Xianyang International Airport Co Ltd – a sino-European joint venture that counts German airport operator Fraport as a major stakeholder – is directly investing more than €400 million on upgrading the gateway.
Typically for China, the price tag also includes the cost of converting the compulsory purchased land necessary for expansion to go ahead, for commercial use.
A combination of local, provincial and national government funds and private investors will meet the remaining cost of modernising the airport.
Weil is quick to point out that the airport has managed to overcome its existing design capacity limitations by extending Xi’an Xianyang’s operating hours, making more efficient use of facilities and streamlining procedures to increase passenger flows.
“Handling such crazy traffic growth is a nice problem to have, especially from a commercial point of view as it shows that our strategies are working, but it has not been easy with our existing facilities and we will all breathe a huge sigh of relief when T3 opens,” says Weil.
Weil refers to some of the capacity issues of recent years caused by Xi’an’s rapidly rising passenger numbers as his “little headaches”, and he is more than aware that another one might be right around the corner with annual demand likely to exceed the airport’s new 33mppa capacity by as early as 2017.
As a result, Xi’an already has plans in place to add an 8mppa capacity enhancing pier to Terminal 3 “as soon as feasible”.
Between them the China Eastern (34.1%), Hainan Airlines (24.6%) and China Southern (21.3%) airline groups currently account for 80% of the market at Xi’an Xianyang.
The other big airline groups in Xi’an are Air China (11.3%) and Shenzhen Airlines (7.6%), the domination of home carriers ensuring that like most Chinese airports, Xi’an is very much a domestic O&D gateway, with international traffic accounting for just 3% of all passengers.
Although the airport would like more international flights, it is not overly worried because of the size of the Chinese domestic market and ever growing demand.
Xi’an is also lucky that it is one of the most popular cities for weekend breaks in China, the home of the Terracotta Army traditionally battling with the bright lights of Beijing and Shanghai for the attention of Chinese holidaymakers.
As a result of the demand from within China, the airport’s route network today is almost exclusively domestic with the exception of services to Japan, Korea, Thailand, Singapore and Malaysia and regional flights to Hong Kong and Taiwan.
All ‘international’ routes are currently served from a dedicated swing-gate area in Terminal 2, and the situation is likely to remain the same for the foreseeable future, as there is capacity to spare.
Weil believes that Xi’an’s central China location and fast expanding domestic route network mean that the gateway can ultimately become a leading hub for central and western China.
He also believes that Xian’s closer proximity to Europe than Beijing and Shanghai means that the airport has the potential to become a “very good alternative airport for flights to Europe”.
So are there any downsides to the Xi’an success story? Not really, although China’s airports potentially face future punctuality problems because of restrictions on the use of China’s airspace for commercial operations.
Today, only 25% of Chinese airspace is open to commercial aviation, the rest being limited to military use, and there is a growing feeling within the country that this will have to change to avoid China’s aviation system becoming a victim of its own success.
And with general aviation increasing at an almost unprecedented rate as rising numbers of rich and influential Chinese want to travel in their own private jets across the country, the call to change the legislation and free up some air space currently restricted to military use is likely to grow.
Ever the diplomat, Weil remarks that he is “pretty confident that China will find a solution as it won’t wish to limit its aviation growth”.
He is also quick to dispel the myth that Chinese bureaucracy often hinders, slows down and even stops key infrastructure projects from getting off the ground.
“How long does it take to get approval for a new runway in Europe or the US?” asks Weil. “Ten years is not uncommon. It is completely different in China where the approval process is often very quick and various compensation mechanisms are put in place to ensure that construction can begin as soon as possible.
“When China moves on something, it moves quickly, and when it comes to building new world-class infrastructure, it is quite a pioneer.”
This feature appeared in Airport World 2011 - Issue 3