Airport World editor, Joe Bates, reflects on airport profitability, changing business models in the US and finding the funds to pay for future airport development.
They may not be quite so loud or as vociferous as they used to be a few years ago, but, in general, airlines don’t need much encouragement to complain about high airport charges.
In fact, hardly a month goes by without some airline bleating about overly high fees or warning that they may have to scale back services or axe routes altogether if an airport doesn’t reduce its charges.
Indeed, airlines in the UK recently criticised the Civil Aviation Authority after it effectively proposed real-term CUTS to the amount Heathrow can charge them for using its facilities.
To put this into context, the CAA has proposed that airline charges at Heathrow for the period 2014 to 2019 should be capped at the Retail Prices Index (RPI) rate of inflation minus 1.3% – down from current charges of RPI plus 7.5% for the period 2009 to 2014.
And there was ‘good’ news of sorts for airlines at Gatwick, too, where the CAA proposed a price cap of RPI plus 1% for the five years to April 2019 from a current average charge of RPI plus 2%. While at Stansted, where passenger numbers have fallen, the CAA chose to monitor charges rather than impose a cap.
Yet the response from the airlines has been somewhat hysterical, IAG’s Willie Walsh claiming that the proposed rise at Heathrow fails to address the hub being “over-priced, over-rewarded and inefficient”.
The fact that airport charges account for just over 5% of airline operating costs somehow seems to have been forgotten.
Maybe they can be forgiven for thinking that airports are a licence to print money because of the headlines airports such as Incheon, Dubai and Heathrow make for their commercial success – the first two make over $1.6 billion per annum in duty free sales, while the latter is often referred to as a shopping mall with runways.
However, the economic reality is somewhat different for most other airports, with 70% of the world’s gateways actually losing money.
In this ‘economics and finance’ focused issue we crush the myth that airports are money-making machines, and try and find out why so few make a profit.
We also have a special report on US airport ownership and look at airport development in China and the planned privatisation of Greece’s regional airports.
I once made an American airport manager so mad at an ACI-NA lunch for daring to suggest that the US should do more to embrace airport privatisation, that he walked away in disgust before his main course arrived! I’d be interested to know his thoughts now that San Juan’s Luis Muñoz Marin International Airport has been privatised.
Still on the subject of money, we discover why New Orleans has finally decided to invest in its airport; turn the spotlight on a global airport investor; review the benefits of energy efficient terminals and highlight F&B innovation in Australia.
Making money, after all, is important as it often funds crucial new infrastructure and can help keep airline costs down!
Other issues under the microscope in this bumper issue include social media; airport leadership; rewards & recognition programmes; IT innovation and airport sustainability.
I hope you enjoy it!
In this issue:
Joe Bates looks back at some of the highlights from the recent ACI Asia-Pacific Regional Assembly, Conference and Exhibition in Phuket.
Africa learnt more about the airport city phenomenon at the recent Airport Cities World Conference and Exhibition (ACE) in Ekurhuleni, writes Steven Thompson.
View from the top
ACI director general, Angela Gittens, reflects on the importance of putting passengers first and the need to do more to promote a more positive public perception of airports.
Passage to India
Oliver Clark talks to GVK Power and Infrastructure Limited chairman, Sanjay Reddy, about his company’s plans to modernise its airports in India and further afield.
An airline merger and a $6.5 billion capital improvement programme promise to breathe new life into Philadelphia International Airport, writes Nicole Nelson.
Despite the sizeable commercial profits of some of the world’s biggest gateways, the majority of airports lose money. Graham Newton asks why and if anything can be done to reverse the trend.
Is the airport industry going to be the next big beneficiary of Islamic financing? Umar Moghul considers its merits and appeal for gateways looking to fund key construction projects.
Peter Morris and Joanna Lu report on the financial challenges facing China’s airports as the country bids to upgrade its infrastructure to cope with future growth.
With Puerto Rico’s main gateway successfully privatised and an increasing number of airports adopting new business models, are times finally changing in the US for airport ownership? Joe Bates investigates.
LeighFisher’s Annie Lindseth and Zoe Haseman and Albuquerque’s Felix Vivian reflect on several projects that reduce Albuquerque International Sunport’s costs by making it more energy efficient.
Susan Gray takes a closer look at F&B innovation in Australia as airports bid to boost revenues and raise customer satisfaction levels.
The time is now
Joe Bates reports on Louis Armstrong New Orleans International Airport’s plans to transform its image, facilities and operational capabilities with a new state-of-the-art terminal.
Hans-Dieter Janecke talks us through the latest developments regarding the government’s plans to privatise Greece’s regional airports.
Samsung C&T Corporation’s vice president, head of strategic development, Kwan Young Chung, talks to Airport World about Incheon International Airport and his company’s aviation investment strategy.
More than just results
Dr Richard Plenty and Terri Morrissey reflect on key skills and competencies required by today’s airport leaders.
Making the right connections
Using social media to communicate with today’s new breed of connected traveller can enhance an airport’s image, performance and boost revenues, write David McMullen and Shubhodeep Pal.
The people business
Recognising and rewarding good work and holding an annual Awards of Excellence programme is part and parcel of enhancing engagement and being an employer of choice, writes Christiane Beaulieu.
The way forward
The evolution of airport IT systems and collaborative decision making will transform operations at the world’s gateways in the years ahead, writes John Jarrell.
Ajay Jain takes a closer look at the latest identity management solutions airports are using to monitor, manage and control staff access to restricted areas.
Prince Mohammad Bin Abdulaziz International Airport.
Project watch extra
Joe Bates and Steven Thompson turn the spotlight on airport development projects in Indonesia, the Philippines and Kazakhstan.
ACI’s World Business Partners
The last word
Airport World talks to Dag Inge Rasmussen, chairman and CEO of Lagardère Services.
ACI traffic trends