The official publication of ACI Asia-Pacific www.aci-asiapac.aero
Investing in airports In the spotlight: Investing in airports
Issue 1, 2015
Airports: Amman & Bahrain
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Special report: Retail & Duty Free Plus: 2014 ASQ winners
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ASIA-PACIFIC AIRPORTS MAGAZINE
CONTENTS
Asia-Pacific Airports Issue 1, 2015
6 View from the top Regional director, Patti Chau, looks forward to a milestone year for the region.
8 Friendly and efficient
Asia-Pacific airports once again lead the way in ACI’s annual Airport Service Quality (ASQ) customer satisfaction survey, writes Joe Bates.
12 ACI Asia-Pacific news Vivian Fung reports on the latest news, views and events from across the Asia-Pacific region.
14 Build and grow
Airport International Group CEO, Kjeld Binger, talks to Joe Bates about the ongoing transformation of Amman’s Queen Alia International Airport.
18 Back on the radar Joe Bates discovers more about the
ambitions and growth plans of arguably the Gulf state’s first gateway to make a global impression on the world – Bahrain International Airport.
22 Boom time!
Air traffic in Indonesia is growing at such a pace that the nation’s airports are struggling to cope, writes Justin Burns.
27 Common goal
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New common-use technology will help enhance the operational efficiency of 13 Indonesian gateways, writes Anthony Phillips.
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ASIA-PACIFIC AIRPORTS MAGAZINE
CONTENTS 28 The buying game
40 The real deal
Joe Bates takes a closer look at the growing airport portfolios of a handful of the region’s biggest airport operators.
A host of new contracts and record sales figures for 2014 make these exciting times for travel retail and duty free operators, writes Joe Bates.
35 Design & build
46 World Business Partners
Newcastle Airport.
All the latest news from the region’s WBPs.
37 Better buys
Are you making the most of your travel retail opportunities? Rosemary Chegwyn considers some of the retail dilemmas faced by Asia-Pacific’s gateways.
Asia-Pacific Airports (APA) www.aci-apa.com Editor Joe Bates +44 (0) 20 8831 7507 joe@aci-apa.com Design, Layout & Production Mark Draper mark@aci-apa.com
APA Issue 1, 2015
Production Assistant Erica Cooper Website & Online José Cuenca Published by Aviation Business Media Ltd 91-93 Windmill Road, Sunbury-on-Thames TW16 7EF, UK Managing Director Jonathan Lee
Advertising Manager Kalpesh Vadher +44 (0) 20 8831 7510 kalpesh@aci-apa.com Andrew Hazell +44 (0) 20 8831 7518 andrewh@aci-apa.com Subscriptions subscriptions@ aviationmedia.aero Printed in the UK by Magazine Printing Co
Asia-Pacific Airports (APA) is published four times a year for the members of ACI Asia-Pacific. The opinions and views expressed in APA are those of the authors and do not necessarily reflect an ACI policy or position.
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ASIA-PACIFIC AIRPORTS MAGAZINE
VIEWPOINT
VIEW FROM THE TOP
Regional director, Patti Chau, looks forward to a milestone year for the region, which includes celebrating ACI Asia-Pacific’s 10th anniversary at the Regional Assembly, Conference & Exhibition in Jordan.
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elcome to the first 2015 issue of Asia-Pacific Airports (APA) magazine in what promises to be an eventful, exciting and milestone year for the region as we celebrate the 10th anniversary of the unification of the Asia and Pacific regions. I am confident that our upcoming Regional Assembly, Conference & Exhibition at the unique setting of the Dead Sea in Jordan will be one to remember for a whole host of good reasons. They include the chance to learn more about the opportunities and challenges facing our airports, reflect on and celebrate ACI Asia-Pacific’s 10th anniversary and experience the 2014 Airport Service Quality (ASQ) Awards Ceremony.
CUSTOMER SERVICE
The latter is the opportunity for the airport community to honour and celebrate the outstanding customer service achievements of the world’s airports. I would like to take this opportunity to congratulate the top performing airports APA Issue 1, 2015
in the 2014 ASQ survey, in particular those from the Asia-Pacific and Middle East regions, although all the participants should be proud for they have demonstrated a solid commitment in delivering excellent customer service and exceeding passengers’ expectations.
ACI ASIA-PACIFIC’S 10TH ANNIVERSARY
I hope you will be able to join me in Jordan to celebrate this milestone event for ACI’s largest geographical region, which today serves 580 airports across 47 countries and territories and some of the fastest growing aviation markets on the planet from Australasia to the Middle East. Indeed, under the supportive leadership of presidents, Max Moore-Wilton, Tan Sri Bashir and now Dennis Chant, our region has grown tremendously in terms of recognition, membership and the variety of services we offer. We are thrilled that a number of our founding members will be among the delegates in Jordan helping us celebrate this landmark, which we will also commemorate with a special edition issue of APA later this year.
ASIA-PACIFIC AIRPORTS MAGAZINE
Another highlight of the Annual Assembly will be the award ceremony for our Young Executive of the Year, a research paper competition we first introduced in 2009. My congratulations go to this year’s winner, Ruzliana Fazila Kamarudin of Malaysia Airports Holdings Berhad for her excellent submission. It makes me proud to know that we have so many talented young people in our region. My congratulations also go to all the other participants for sharing their great ideas on how our industry can help meet the challenges ahead.
THANKS TO OUR HOSTS
I would like to end my Annual Assembly preview by expressing my heartfelt thanks to the host, Airport International Group (AIG), for their enormous support in helping organise and make this important ACI Asia-Pacific event. As you can imagine, during the preparation for the conference we encountered many challenges as a result of unforeseen events elsewhere, but our host was unwavering in its support and determination for the event to take place.
ACI’S GLOBAL INFLUENCE
Enhancing the global reputation, recognition and influence of ACI AsiaPacific remains at the top of our agenda. In line with this strategy, last November ACI Asia-Pacific participated in the annual ICAO Asia-Pacific Directors General of Civil Aviation Conference – hosted by the Civil Aviation Department of Hong Kong – for the first time. The event was an excellent opportunity for us to raise the awareness of projects such as ACI’s safety review programme, APEX in Safety, our carbon accreditation programme, the economics of airports and Smart Security – a joint programme with IATA – to an audience of more than 30 states and international aviation organisations.
In February, we once again partnered with ACI World and ACI Europe in delivering one of the industry’s most important industry events, the Airport Economics & Finance Conference in London. The first ACI-World Bank Annual Aviation Symposium preceded this year’s conference, which was a rewarding event with a great turnout! Most recently, I attended the first International Operational Readiness and Airport Transfer Conference in Muscat, an event hosted by one of our longstanding members, Oman Airports. It was an honour for me to tell delegates more about ACI’s work and how we are working with our stakeholders to ensure efficiency and a better passenger experience at the world’s airports.
NEW ECONOMICS COMMITTEE
In order to better facilitate our members’ needs in airport economic related policies and best practices, I am pleased to announce that we have established an ACI Asia-Pacific Regional Economics Committee, which will hold its first meeting alongside our Regional Assembly in Jordan. I look forward to sharing more details with you about the committee’s progress in the future.
AND FINALLY...
Lastly, I would like to invite you to join us at two events that will be held in the Asia-Pacific region later this year – The Trinity Forum in Hong Kong (September 16-18) and the Small and Emerging Airports Seminar in Macau (November 25-27). The theme for arguably the world’s leading airport commercial revenues conference – jointly hosted by The Moodie Report, ACI World and ACI Asia-Pacific – is ‘Putting the Consumer at the Heart of the Trinity’. I look forward to seeing you at both key APA events later in the year. www.aci-apa.com
VIEWPOINT
YOUNG EXECUTIVE OF THE YEAR
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ASQ AWARDS
Friendly and efficient Asia-Pacific airports once again lead the way in ACI’s annual Airport Service Quality (ASQ) customer satisfaction survey, writes Joe Bates.
Q
ueen Alia International Airport in Jordan (Best in Middle East) and Delhi’s Indira Gandhi International Airport (Best in the 25-40mppa category) were a few of the new Asia-Pacific based gateways to be honoured in this year’s Airport Service Quality (ASQ) customer satisfaction survey. Their addition once again made it a hugely successful year for the region’s airports, which continued their dominance of ACI’s annual customer service awards by winning all but one of the five global best by size categories up for grabs. Customer service king Incheon International Airport, which was named best airport in the world for seven successive years before ACI decided to discontinue the category in 2012, won the Best in the Over 40mppa category and retained its Best in Asia-Pacific title for the tenth year running. Singapore Changi, Beijing Capital, Shanghai Pudong and Hong Kong completed a clean top five sweep of
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Asia-Pacific airports in the over 40 million passenger per annum category. Other airports to remain top of the pile in their own respective by size categories included Haikou (5-15mppa) and Seoul Gimpo (15-25mppa) – the former being joined in the top five by China’s Sanya Phoenix, Tianjin Binhai and Changchun Longjia airports, while India’s Hyderabad–Rajiv Gandhi International Airport took third spot. In other Asia-Pacific categories, both Kolkata (Best Improvement) and Langkawi (Fewer than 2mppa) retained their awards while Amman’s Queen Alia also won the Best Improvement award for the Middle East. Congratulating the winners, ACI World’s director general, Angela Gittens, said: “I see many airports on the 2014 top performers list that have made the cut year in and year out. “It’s particularly satisfying to know that the benefits of the ASQ programme are long-term and far-reaching. Likewise, there are a number of new faces, effectively proving that ASQ has
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ASQ AWARDS
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something to offer every airport, whether well-versed in passenger %(67 %< 5(*,21 satisfaction or just beginning the journey 1. Amman toward customer service excellence.” 2. Abu president Dhabi and CEO, Park Incheon’s Wan-su, heaped 3. Tel Avivpraise on the airport’s staff following the gateway’s latest ASQ success. He said: “Incheon started small as an %(67 ,03529(0(17 airport in Northeast Asia that no one took Amman much notice of, but not anymore as we have achieved some notable successes that include the almost miraculous record of being named the world’s leading airport for customer service for 10 years in a row. “I am humbled and thankful for the efforts and contribution of the 40,000 Incheon Airport employees. “I can also promise you that Incheon Airport’s staff will continue their qualitative and quantitative development, backed by the support of the government and the public, in the years ahead. Our aim remains to be the world’s best airport in all sectors of our operations.” Delhi–Indira Gandhi International Airport operator, DIAL, called the capturing of the ASQ award for the world’s best airport in the 25-40mppa category an historic day for Indian aviation. Its 2014 success is based on an all-time high ASQ score of 4.90, which is a remarkable achievement considering its 3.02 rating as recently as 2007.
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DIAL CEO, I Prabhakara Rao, has no doubt about stating that the customer service transformation has occurred since the GMR led consortium took over responsibility for operating the airport. Talking about its 2014 ASQ success, Rao said: “It’s an unprecedented achievement and a historic day for Indian aviation. “The award represents GMR’s commitment to providing passengers with the best customer experience and is a clear testimony of how the DNA of service centricity has been absorbed in Indira Gandhi International Airport’s culture.” He added: “The journey was never easy, especially after holding the number two mark for last three years. We can now justifiably claim to be world’s best. “Our hard work and dedication has taken us from being one of the world’s worst airports for customer service to the very best.” In what has now become a bit of a tradition for ASQ winners, DIAL noted its thanks and congratulations to all airport staff for playing a part in the gateway’s success. It specifically praised the airport’s customs, immigration and security officers and recognised “the immense efforts put in by our partner airlines, concessionaires, housekeeping and other support staff.” DIAL notes that its key stakeholders – Airports Authority of India, Malaysian Airport Holdings Berhad and Fraport AG – had been “steady pillars of support through this entire journey”. Although not a winner this time, Hyderabad’s Rajiv Gandhi International www.aci-apa.com
ASIA-PACIFIC AIRPORTS MAGAZINE
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ASQ AWARDS
Airport could not hide its delight at being ranked among the top three gateways in the world in 5-15mppa category for the sixth consecutive year. The airport, operated and managed by GMR Hyderabad International Airport Ltd (GHIAL), recording an impressive score of 4.82 for 2014. GHIAL claimed that the accomplishment reflected its “unflinching endeavour to constantly strive to deliver service excellence and offer the best to travellers from all across the globe.” CEO, SGK Kishore, said: “We are honoured that Rajiv Gandhi International Airport continues to be ranked among the top three airports in its category for the sixth consecutive year. “Last year we were one of a handful of airports to be awarded the ACI Director General’s Roll of Excellence for consistently being in the top three rankings in the world in its category for five successive years. Winning this again for the sixth time reflects our commitment for delivering a high quality passenger experience on a consistent basis.” He added: “Make no mistake about it, an ASQ award is a major achievement for an airport and its community and the credit
for this goes to our stakeholders, partners, concessionaires and employees who have consistently delivered a memorable and delightful experience to our customers.” Based on passenger feedback from check-in to the departure gate at more than 300 airports worldwide, the ASQ survey is recognised as being the industry’s most comprehensive passenger service benchmarking tool. “Airports are more than simply points of departure and arrival,” said ACI World’s Gittens. “They are complex businesses in their own right. As such, a focus on serving the passenger has become increasingly important to ensuring success. “In the fast-changing landscape of worldwide aviation, ASQ is the key to understanding how to increase passenger satisfaction and improve business performance. “At the end of the day, good business acumen comes down to a simple equation: better service, improved traffic and a healthier bottom line.” The ASQ Awards ceremony will take place on April 28, during the ACI AsiaPacific Regional Assembly, Conference APA and Exhibition in Jordan. www.aci-apa.com
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ACI ASIA-PACIFC NEWS
Regional update Vivian Fung reports on the latest news, views and events from across the Asia-Pacific region.
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t’s been a busy start to 2015 for ACI Asia-Pacific, which has released the region’s preliminary traffic results for 2014, announced the winner of its Young Executive of the Year Award and co-hosted the annual Airport Economics & Finance Conference in London. Outlining the opportunities and challenges facing AsiaPacific’s airports at the Airport Economics & Finance Conference in London, regional director Patti Chau, remarked: “The biggest challenge faced by airports in our region is coping with growth.” She cited the growth of Low-Cost Carriers (LCCs) across the region as a significant factor in the continued annual rise in passengers as they had helped make air travel more accessible to millions. However, she also noted that their growth – LCCs today account for 25% of the market compared to just 5% a decade ago and provide 60% of all aircraft seats in South East Asia – had created a series of operational, infrastructure and capacity challenges for airports. And she announced that she expects the LCCs to continue to set the pace for the foreseeable future, particularly as the Chinese government recently changed its policy to become more supportive of LCC development. Chau concluded by noting that private sector influence on APA Issue 1, 2015
airport development continues to grow across the Asia-Pacific region through airport concessions, BOT projects and PPP transactions, delivering significant economic benefit to cities and regions. She predicted that up to 49 new airports could be privatised or benefit from private sector funding to upgrade their facilities in the next five years, citing countries such as India and the Philippines as nations open to third party investors. The preliminary traffic results for 2014 reveal that both the region’s Asia-Pacific (+5.9%) and Middle East (+9.4%) located airports experienced a healthy upturn in passenger numbers. Indeed, the majority of the leading airports in the region reported positive results with Beijing Capital (PEK) – the busiest airport in the region – handling 86 million passengers (+2.9%) and Dubai (DXB), now
the world’s busiest international airport, reporting a 6.1% increase in passenger traffic despite a temporary runway closure in mid-2014. We are pleased to announce that Ruzliana Fazila Kamarudin of Malaysia Airports Holdings Berhad is the ACI Asia-Pacific Young Executive of the Year for 2015. Introduced in 2009, the award is a research paper competition designed to encourage and promote innovative ideas and solutions to challenges facing the aviation industry. Kamarudin’s paper on ‘managing customer expectations for passenger services at airports’ won widespread praise from the judging panel chaired by Kerrie Mather, CEO of Sydney Airport and second vice president of ACI Asia-Pacific.
ASIA-PACIFIC AIRPORTS MAGAZINE
April 27-29 ACI Asia-Pacific Regional Assembly, Conference & Exhibition Dead Sea, Jordan
2015
September 16-18 The Trinity Forum Hong Kong, China
2015
October 7-9 ACI Asia-Pacific HR Best Practice Seminar Tokyo, Japan
2015
November 25-27 ACI Asia-Pacific Small and Emerging Airports Seminar Macau
ACI ASIA-PACIFIC BOARD
PRESIDENT
Dennis Chant* (Queensland Airports Limited, Australia)
FIRST VICE PRESIDENT
Seow Hiang Lee* (Changi Airport Group Pte Ltd, Singapore)
SECOND VICE PRESIDENTS Kerrie Mather* (Sydney Airport Corporation Limited, Australia) PS Nair* (Delhi International Airport Limited, India)
SECRETARY-TREASURER Emmanuel Menanteau* (Cambodia Airports, Cambodia)
IMMEDIATE PAST PRESIDENT
Tan Sri Bashir Ahmad Abdul Majid** (Malaysia Airports Holdings Berhad, Malaysia)
REGIONAL BOARD DIRECTORS
Saud AR Hashem* (General Authority Of Civil Aviation, Saudi Arabia)
Mark Young (Adelaide Airport Limited, Australia)
Seok Ki Kim (Korean Airports Corporation, Korea)
Waleed Youssef (Tibah Airports Operation Co Ltd, Saudi Arabia
Derun Li (Shanghai Airport Authority, China)
Sulaiman Zainul Abidin (Pioneer Aerodrome Service Co Ltd, Myanmar)
Xue Song Liu** (Beijing Capital International Airport Co Ltd, China)
HE Ali Salim Al Midfa (Sharjah Airport Authority, UAE)
Laurensius Manurung (PT Angkasa Pura II, Indonesia)
Keiichi Ando (New Kansai International Airport Co Ltd, Japan)
Pedro Roy Martinez (AB Won Pat International Airport Authority, Guam)
Kjeld Binger* (Airport International Group, Jordan)
ACK Nair (Cochin International Airport Limited, India)
David Fei (Taoyuan International Airport Corporation, Taiwan)
Sasisubha Sukontasap (Airports of Thailand, Thailand)
Kenichi Fukaya* (Narita International Airport Corporation, Japan)
REGIONAL BOARD DIRECTOR (WBP) Andrew Ford (DFS Group Limited, Hong Kong)
SPECIAL ADVISORS
Datuk Badlisham Bin Ghazali (Malaysia Airports Holdings Berhad, Malaysia) Fred Lam (Airport Authority Hong Kong, Hong Kong) Wan-su Park (Incheon International Airport Corporation, Korea)
* WGB member **Regional Advisor on WGB
The ACI Asia-Pacific region represents 99 members operating 580 airports in 47 countries and territories. www.aci-apa.com
ACI ASIA-PACIFC NEWS
EVENTS 2015
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AIRPORT REPORT: AMMAN
Build and grow Airport International Group CEO, Kjeld Binger, talks to Joe Bates about the ongoing transformation of Amman’s Queen Alia International Airport.
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hen Kjeld Binger looked out of the windows of his airport office earlier this year he could be forgiven for thinking he was back in his native Denmark, as on ground outside was something that he probably never dreamt that he’d see in Amman – snow! A freak weather front led to the recent powerful storm ‘Jana’ dumping up to 7.6 centimetres (three inches) of snow on Jordan’s capital city and its gateway to the world, Queen Alia International Airport (QAIA). While nothing by Danish standards where during winter months it often snows from December until early March, for a country like Jordan, which is 92% desert, three severe snowstorms in the space of a week and sub-zero temperatures in Amman are almost unheard of. Indeed, plummeting temperatures to a chilly 5°C in the days before the storm, and news of the impending arrival of snow, led to some people stocking up on food and fuel in anticipation of the possible shutdown of Amman’s main roads and highways. The airport, for its part, was more than ready for what lay ahead, readying its small fleet of snow clearance vehicles and anti-icing equipment and warning passengers to get to QAIA early in anticipation of possible weather caused delays. So how did the airport fare? Binger, CEO of Queen Alia operator, Airport International Group (AIG), believes that they did pretty well, although he notes that an “extraordinary three hours of continuous snow” one morning did cause the diversion of three flights. APA Issue 1, 2015
The biggest headache for airlines and passengers during the first snowstorm (Huda), admits Binger, was the difficulty in getting to and from the airport due to the icy road conditions, particularly on a hill top access road some 1,200-metres above sea level, which was also covered in half-a-metre of snow! Binger is actually underplaying the efficiency in which AIG dealt with the situation as despite the atrocious conditions Queen Alia handled total of 80,000 passengers and 1,025 aircraft movements during the worst of weather between January 6th and the 11th. Although not part of its emergency snow plan or its responsibility, AIG also provided complimentary meals for around 250 passengers stuck at Queen Alia overnight due to ‘Huda’ and transported another 200 to the nearby airport hotel in airport shuttle buses when other forms of transport were unavailable. “People, including myself before I came here in November 2011, don’t normally associate Jordan with snow, but we do get it on occasion, and therefore have to be prepared for it,” he says. “Compared to my old airport in Copenhagen, we don’t have many snow clearance vehicles and can only call upon a small team of people to help out if we do get snow, but they are no less dedicated and, as we saw recently, will do all that they can to get things done when called upon. “For our part, we kept two shifts of maintenance, passenger service and duty management teams active at the airport when the storm first hit on Tuesday until the following Monday morning to ensure smooth operations throughout the worst weather conditions.”
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AIRPORT REPORT: AMMAN
CUSTOMER SERVICE
With such dedication it should come as no surprise to learn that Queen Alia International Airport is fast gaining a reputation for delivering quality customer service to match the best in the business. Indeed, QAIA’s customer-focused philosophy – which Binger believes together with the airport’s “fast and efficient transfer process” help set it apart from other gateways – have been recognised by passengers which rated it the Best in the Middle East and Best Improvement in the Middle East in ACI’s 2014 Airport Service Quality (ASQ) customer satisfaction survey. Binger proudly reveals that QAIA was the top Middle Eastern airport in all 36 different categories measured in the 2014 ASQ programme, a magnificent achievement he attributes to AIG’s customer service focused philosophy.
“Our focus is on the provision of high quality facilities and services and this is reflected in our mission statement which is for Queen Alia to contribute towards the prosperity and pride of Jordan and our stakeholders by being among the world’s top 20 airports in each ASQ category,” he says. “Ongoing training programmes, wellness sessions, always looking to make improvements by analysing the survey results, and having quality on the agenda of everything we do has created a passenger-focused corporate culture across the airport.” He is particularly proud of the AIG’s efforts to make the security process more customer friendly, which started by simply persuading army staff on security duty to ditch their military uniforms for less intimidating blazers and trousers. Binger is among the first to admit that QAIA’s impressive new 100,000sqm terminal www.aci-apa.com
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AIRPORT REPORT: AMMAN
– phase one opened in 2013 – has played a major part in the airport’s ASQ success. A host of new retail and F&B outlets, which have included a number of local brands and concepts to help create a sense of place, and a huge duty free walkthrough store operated by World Duty Free have also helped contribute towards its popularity. Retail and F&B operations currently account for 20% of the airport’s nonaeronautical revenues. “Passenger satisfaction levels have soared since the new terminal opened,” enthuses Binger. “All I really need to say is that before it opened the old terminal ranked 186 in the world in ACI’s ASQ survey. Today it ranks 34 in the world and this needs to be seen in context as we currently bus 40% of our departing passengers to aircraft parked at remote gates. Its impact has been truly remarkable.”
AIRPORT EXPANSION
When AIG was awarded a 25-year concession to operate QAIA it pledged to build the new terminal to better equip the gateway to handle rising demand, and it has been as good as its word. However, the need to continue to use the old terminal while the new one was being built meant that it had to be constructed in phases with the main terminal building – opened in 2013 – initially being followed by two piers built on the site of the old terminal. With the old terminal now demolished, work is underway on the new $200 million pier extensions that will effectively complete the first phase of the new terminal and equip QAIA to handle 12mppa. When they open in 2016, the 46,500sqm piers will boast 13 fixed link bridges – four of which will be capable of simultaneously accommodating either two narrowbody or one widebody aircraft and, if required, both arriving and departing flights at the same time – and 17 contact gates. The additional gates will also ensure that AIG no longer has to bus 40% of QAIA’s departing passengers to aircraft parked at remote gates. APA Issue 1, 2015
“We are currently gate constrained because we only have the capacity to serve around 60% of our departing passengers from contact gates. We don’t like this as it is a challenge and it is not the best customer service,” remarks Binger. “Thankfully, it will be a thing of the past from 2016 and, when it is and we are able to provide all our passengers with top quality services from the moment they step inside the building until the moment they leave, I expect our terminal to be ranked as one of the best in the world in the ASQ survey.” Completion of the expansion programme will take AIG’s investment in Queen Alia past the $1 billion mark since it took over responsibility for operating the gateway on January 1, 2008. And the forward thinking airport already has further expansion programmes on the drawing board to raise its capacity to between 16mppa and 20mppa by 2032. AIG has also been boosted by the news that the Jordanian government will rehabilitate the airport’s north runway this year, making it available for commercial operations for the first time since it took over responsibility for managing the airport. Binger reveals that this will be a significant development for the airport, which is currently only able to use one of its two 3,600m parallel runways and is therefore more vulnerable to the impacts of bad weather.
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AIRPORT REPORT: AMMAN
AIG will manage the project on behalf of the government, which under the terms of the 25-year concession is responsible for providing two certified, parallel runways. “We expect to re-open the north runway later this year, which will allow us to carry out maintenance on the south runway before becoming a two runway airport again for the first time in nearly a decade,” he tells Asia-Pacific Airports. “Our aim is to continue to enhance our passenger capacity and service levels to help Queen Alia reach its full potential as a regional transfer hub. “It might sound ambitious, but the new terminal already ensures that we offer some of the fastest and most convenient transfer times in the world, and there is no reason to believe that we cannot build on this as we develop our route network.” The goal is in line with the Kingdom’s national tourism strategy of not trying to compete with the neighbouring major hubs of Dubai, Doha, Abu Dhabi and Istanbul. “Our aim is to create our own niche so we compliment instead of compete against the big hubs on our doorstep, as there is no way we could win that battle,” admits Binger. “We have the best transfer product in the region. It is so easy to transfer through Queen Alia because of the short walking distances involved and efficient process of transferring
between one flight and another. This is our unique selling point and therefore our opportunity to develop into a niche hub in the market.” With a record 7.1 million passengers (+9%) passing through QAIA in 2014 there is no denying that the new terminal and piers, when they open, will be needed to help AIG meet rising demand.
ROYAL JORDANIAN AIRLINES
Royal Jordanian is the biggest airline at QAIA, currently accounting for around 44% of the market. Other big players in Amman include Emirates, Qatar and Saudi Arabian Airlines while low-cost carriers such as flydubai, flynas and Air Arabia are beginning to make an impact. Binger is more than aware that for QAIA to succeed in its ambition to be a leading transfer hub it needs a strong Royal Jordanian, and he feels that the recent addition of the Boeing 787 Dreamliner to its fleet is a step in the right direction. “Royal Jordanian has an important role to play and I am confident that its investment in the Dreamliner will give it the operational flexibility to develop its network out of Amman, particularly to the fast growing Asian market and Africa,” he muses. You get the feeling that the unveiling of its new piers and re-opening of its second runway in 2016 will be just the start of good times for APA Queen Alia International Airport. www.aci-apa.com
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AIRPORT REPORT: BAHRAIN
Back on the radar
Joe Bates discovers more about the ambitions and growth plans of arguably the Gulf state’s first gateway to make a global impression on the world – Bahrain International Airport.
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ohamed Yousif Al-Binfalah, CEO of Bahrain Airport Company (BAC), has no doubts about the impact the planned new terminal will make to Bahrain International Airport. “Our new terminal won’t be the biggest in the region and our strategy does not revolve around being the biggest airport, but I can assure you that it will allow us to provide an exceptional passenger experience in terms of efficiency and technology,” he enthuses. His words demonstrate the confidence and new ambitions of the airport, which arguably up until the late 1980s was the most famous Gulf state gateway due to the dominance and success of hub carrier, Gulf Air. Back then, of course, Gulf Air was jointly owned by the Emirate of Abu Dhabi and the states of Bahrain, Oman and Qatar, and it operated almost without a rival across the region until the birth of Emirates in Dubai in 1985. As a result, the airport – located on the outskirts of the capital, Manama – was the region’s busiest gateway. However, it wasn’t to last as the growth of Emirates and Dubai (DXB) and the change in ownership of Gulf Air, and the subsequent creation of new competition for the airline and airport – Qatar withdrew in 2002 and formed Qatar Airways operating out of Doha, the Emirate of Abu Dhabi pulled out in 2005 and APA Issue 1, 2015
established Etihad and, in 2007, Oman opted out and founded Oman Air based in Muscat – meant that suddenly Bahrain was no longer the focus of people’s attention in the Gulf. Al-Binfalah, who succeeded Edinburghbound Gordon Dewar as CEO in September 2012, would be the first to admit that Bahrain has had some tough times in recent years as Gulf Air has restructured on more than one occasion in a bid to adapt to the new super competitive environment. The good news is that the airline is now in a good place again after its latest restructure, and with the diverse Bahraini economy booming, passenger traffic is on the rise, soaring by 10% last year to 8.1 million. In fact, Al-Binfalah refers to 2014 as “a remarkable year” due to the healthy upturn in traffic driven by new routes launched by Gulf Air and others. And with the airport predicting that passenger numbers will rise by around 5% to 10% per annum for at least the next three years, BAC has taken the huge decision to invest $1 billion on upgrading the airport to ensure that it is more than capable of meeting future demand. As a result, its soon to be completed new master plan will include a modernisation programme that includes plans for a new state-of-the-art passenger terminal to help fulfil the Kingdom’s vision to become a regional hub for financial, cultural and aviation services.
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NEW TERMINAL
The new terminal will raise Bahrain’s capacity to 14mppa, although it will initially be equipped to accommodate up to 12mppa when opens in late 2018. Also on the agenda are plans to enhance the airfield and add new facilities ranging from a maintenance, repair and overhaul (MRO) base, fuel farm, fire rescue station and two multi-storey car parks to a central utilities centre and new power sub-stations and water treatment plant. Indeed, such is the size of the project that BAC is effectively building a new gateway on the existing airport site and Al-Binfalah expects that it will transform the airport and people’s perceptions of it. He says: “I promise you that the new terminal building will be very special and position the airport to be at the forefront of providing an exceptional passenger experience. “We are creating a boutique airport in the sense that passengers will feel the difference when they arrive here and experience our facilities as compared to others. Walking distances will be short, processing times quick and easy, and customer service standards high.” Construction of the new Aéroports de Paris Ingénierie (ADPi) designed terminal
is expected to start in September and take 36 months to complete ahead of a 2018 opening. At 201,000sqm it will be nearly four times the size of the existing 1970s built terminal it will replace and boast a 4,600sqm Departures Hall, centrally located 9,000sqm retail, duty free and F&B zone area, five E-gates for arriving passengers and a host of new airline lounges as well as unique facilities such as a national museum and art gallery. Both the retail and F&B outlets will also feature a number of local brands to provide a sense of place for visitors, especially the 60% of transfer passengers that never leave the airport. Al-Binfalah says BAC wants the onekilometre long building to be Leadership in Energy & Environmental Design (LEED) Gold certified by the US Green Building Council. It will have 12 gates and be located next to today’s distinctive ATC tower and air traffic control building. ADPi won the international tender to design the terminal and supervise its construction. Hill International is the programme manager. BAC is overseeing the project on behalf of Bahrain’s Ministry of Transportation and Telecommunications. www.aci-apa.com
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AIRPORT REPORT: BAHRAIN
He notes that BAC is currently considering what to do with the existing terminal building, part of which has to be demolished for the new one, with one potential option being to use it as a dedicated Low-Cost Carrier (LCC) facility. All add up to a sizeable investment in the airport, but Al-Binfalah is quick to point out that Bahrain is not alone in its commitment to upgrading its aviation infrastructure, noting that regional investment in airports is taking place “from Kuwait in the north all the way to Oman in the south and throughout the Kingdom of Saudi Arabia”.
TRAFFIC GROWTH
Upon completion of the first eight-gate phase of the new terminal in 2018, the airport will be equipped to handle up to 12 million passengers per annum, the total rising to 14mppa upon the completion of an additional four gates a year later. It will certainly be needed for although the airport is not expected to beat the record 9mppa it handled in 2010 until 2016, the 8.7 million passengers that are set to pass through its facilities this year will be close to its design capacity. Al-Binfalah cites the national flag carrier’s resurgence as the key reason for the upturn, although he admits that 2013 was a negative year for the airport due to a number of factors that included the collapse of LCC, Bahrain Air, and the downsizing of Gulf Air after it reduced its fleet to 26 aircraft and axed a number of routes. Today, Gulf Air boasts a fleet of 28 aircraft and operates services to 42 destinations in 23 countries across a network concentrated on Africa, Asia and Europe. Its fleet and route network ensure that it is the biggest operator at Bahrain International Airport by some considerable margin, accounting for some 60% of all passengers. According to Al-Binfalah, Bahrain’s prominent location in the middle of the Gulf region ensures that its airlines primarily serve destinations in the northern Gulf APA Issue 1, 2015
and Saudi Arabia, whose border is just 25 kilometres from the airport. However, he is keen to get more routes to expand the airport’s appeal and tells Asia-Pacific Airports that he would like to see more new services to Asia and the Far East, in particular China and India. In fact, the week after this interview, BAC led a trade delegation to China to talk to at least three major Chinese airlines about the possible launch of new services to Bahrain. Destinations in Kuwait, Oman, Qatar, Saudi Arabia and the UAE – all of which are Gulf Cooperation Council (GCC) members along with Bahrain – are currently the top routes by volume served from Bahrain. Next by region is the Indian subcontinent, followed by the wider Middle East and Africa regions, Europe and South East Asia. Al-Binfalah says that Bahrain has a “strong business case” for launching new routes to Asia, which he concedes is presently underserved at the moment.
LONG-TERM FUTURE
With the airport surrounded by the city and little room to expand further, Al-Binfalah knows that it is effectively living on borrowed time before it is replaced by a new off-shore gateway, expected to be sometime around 2030. Indeed, the site for the new airport has been identified and construction of it will be triggered when passenger traffic hits a certain as yet to be revealed annual figure. Al-Binfalah, however, insists that BAC will refuse to use this as an excuse to simply run down the clock with the no further improvements to the airport’s infrastructure after the completion of the $1 billion development programme. “We know what is planned and what we have to do until the new airport is built,” he says. “We currently handle less than 130,000 aircraft movements per annum but I believe we can handle up to 170,000. There is still room to grow on this site APA that’s for sure.”
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INVESTING IN AIRPORTS
Boom time! Image courtesy of Woodhead.
Air traffic in Indonesia is growing at such a pace that the nation’s airports are struggling to cope, writes Justin Burns.
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ccording to IATA, Indonesia will be among the top five fastest growing aviation markets over the next 20 years. Already the world’s fourth most populated country with more than 238 million people, Indonesia is set for huge passenger growth over the coming years. Indeed, IATA forecasts that close to 300 million passengers will use the country’s airports in 2034 – an incredible 180 million more than today. Aware of the need to boost capacity in order to meet future demand, the Indonesian government has revealed plans to build 62 new airports over the next five years. The new additions will effectively give the country 300 commercial gateways spread across 17,508 islands straddling South East Asia and Oceania. Plans are in hand to develop public-private partnership (PPP) schemes for 10 airports, with expressions of interest elicited for the three deemed the most attractive to private investment – Bandar Lampung Radin Inten II, Labuan Bajo Komodo and Palu Mutiara. The other seven on the government’s list are Bengkulu Fatmawati Soekarno, Jayapura APA Issue 1, 2015
Sentani, Matahora, Palangkaraya Tjilik Riwut, Tanjung Harapan, Tarakan Juwata International and Ternate Sultan Babullah.
EAST INDONESIA
PT Angkasa Pura I operates 13 airports in Eastern Indonesia, and has allocated more than $590 million for the expansion of the five airports it runs – Denpasar Bali, Balikpapan, Semarang, Surabaya and Makassar – all of which are operating above their designed capacity. A key development will take place at Surabaya Juanda, planned for implementation over the next two to three years. The gateway in East Java handled 17.6 million passengers in 2013, well above its 12 million capacity. It still needs urgent attention despite Terminal 2 being opened in 2014, where national carrier Garuda Indonesia is based. To meet future traffic demand at the airport, which is expected to be around 40 million by 2018, the operator is considering an additional three runways as well as developing passenger facilities. Meanwhile, expansion was completed in June 2014 at one of the country’s most
ASIA-PACIFIC AIRPORTS MAGAZINE
Rank
City/Airport [IATA/ICAO code]
Province
Passengers
Growth
Banten
59.7 million
+3.3%
East Java
17.68 million
+7.5%
Bali
15.63 million
+10.2%
1
Jakarta Seokarno-Hatta
2
Surabaya Juanda
3
Denpasar Ngurah Rai
4
Makassar Sultan Hasanuddin
South Sulawesi
9.63 million
+12.3%
5
Medan Kualanamu
North Sumatra
8.3 million
+3.9%
6
Batam Hang Nadim
Riau Islands
7.53 million
N/A
7
Balikpapan Sultan Aji
East Kalimantan
7.19 million
+8.7%
8
Yogyakarta Adisucipto
Yogyakarta SR
5.77 million
+15.6%
9
Banjarmasin Syamsuddin Noor
South Kalimantan
3.88 million
+6.5%
Central Java
3.29 million
+9.6%
10
Semarang Achmad Yani
important gateways Denpasar Bali, where the bulk of the traffic is tourists. The development raised the capacity to 25 million, and included increasing the size of the terminals and extending the apron to handle more widebody aircraft. Plans are also afoot to build a hotel on the site. Semarang in Central Java, which handled 3.2 million passengers in 2013, will also be upgraded and the green light has been given to a $93 million development to double the capacity to 10 million. Also in need of a revamp is capacitystretched Makassar, which welcomed 9.6 million travellers in 2013 despite only having room for seven million. It is expected to see 13 million visitors within the next five years, so a fund of $79 million has been allocated for development to allow it to handle increased demand. Yogyakarta Adisucipto Airport has also reached saturation point after strong growth. PT Angkasa Pura I and its partner, India’s GVK Power & Infrastructure, have applied to the regulator to build a new hub for the Indonesian city. Also under consideration is the new Bululeng Airport in Kubutambahan, north of Bali. An expression of interest has been received from local company PT Pembangunan Bali Mandiri, and Canada-
based Kinesis Consulting, and feasibility studies have been prepared. At Balikpapan, which handled 7.1 million passengers in 2013, and where a new terminal was opened in March 2014, plans have already been outlined to extend the runway to 3,250m to handle widebody aircraft, and to build a hotel on the site.
WEST INDONESIA
In the west of the sprawling archipelago, the state organisation PT Angkasa Pura II operates and manages 13 airports, which between them handled a total of 86.3 million passengers in 2013. They include both airports in the capital Jakarta, and Medan Kualanamu, in the busy city of Medan in northern Sumatra. The country’s busiest gateway, Jakarta’s Seokarno-Hatta International Airport, handled some 60 million passengers last year and demand continues to increase, and despite constant upgrades, it is operating above capacity. Expansion is ongoing and the new Terminal 3 will be fully operational by the end of 2015, and be able to handle 18 million passengers per annum (mppa). Terminal 2 will also be transformed and once ready, able to accommodate 19mppa. Development work is set to continue and the government’s transportation ministry has set www.aci-apa.com
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INDONESIA’S BUSIEST AIRPORTS IN 2013
Passengers in millions (percentage growth or decline over 2012)
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INVESTING IN AIRPORTS aside funds for a third runway, along with a Terminal 4. Construction could start as early as 2016. This will raise the capacity to 62 million, bringing the expected total cost of the expansion to around $985 million. However, further revamps are likely to be needed. Elsewhere, a new gateway is set to be built in West Java, to ease the pressure on Jakarta Soekarno-Hatta. Karawang International Airport will be built 50km east of Jakarta and will be funded in a publicprivate partnership (PPP) format.
DEALING WITH DEMAND
Air traffic demand in Indonesia continues to grow at a rapid pace. More low-cost airlines are entering the market, tourism figures are on the rise and the country’s middle-class continues to increase in size. Though a raft of airport infrastructure projects are in development or awaiting approval, it seems a lot more government capital investment programmes, and PPPs will be needed to cope with the forecasted traffic numbers.
IATA’S RALLYING CALL
IATA has called on Indonesia’s stakeholders to partner in the development of an aviation master plan based on global standards to ensure that the country is served by an aviation industry performing at its best. It has identified three potential elements to be addressed in the master plan: improving safety, ensuring capacity and a smart regulation framework. APA Issue 1, 2015
IATA’s director general and CEO, Tony Tyler, commended the Indonesian government for its plans to expand the nation’s airport infrastructure, but warns the even more needs to be done if future demand is to be met. “Indonesia needs a hub. The most efficient solution is to maximise the potential of one airport – Soekarno Hatta – where significant investment has already been made,” suggests Tyler. According to the IATA chief, SoekarnoHatta has the possibility to grow. There is plenty of land and the basic runway structure is relatively efficient. But he believes that the terminal areas will need a major re-development. “The vision would be something like the super-terminals that we see in Beijing, Hong Kong or Incheon,” he says. “By starting from scratch and working in close consultation with the airlines I am confident that we would achieve a world-class facility designed around key new technological innovations such as those in the IATA Fast Travel programme or the new risk-based process innovations that Smart Security APA is developing.”
ABOUT THE AUTHOR More information about Indonesia’s airport development projects can be found in the Brooks Market Intelligence report, Airports in South-East and
East Asia, Capital Investment Programmes – 2014. Copies can be ordered at www.brooksreports.com
ASIA-PACIFIC AIRPORTS MAGAZINE
New common-use technology will help enhance the operational efficiency of 13 Indonesian gateways, writes Anthony Phillips.
T
he ongoing upgrade of Indonesia’s airports by PT Angkasa Pura 1 (Persero) has included the installation of SITA’s common-use passenger technology (AirportConnect Open) at its 13 airports in central and eastern Indonesia. The new technology ensures that the airports offer passenger-processing facilities that are aligned with global industry standards and consistent with airport operations worldwide – making the gateways more appealing to both passengers and airlines. The implementation, which is in line with Indonesia’s desire to upgrade its airports to accommodate huge predicted traffic growth over the next decade, has allowed the airport operator to expand its range of services to manage growth while controlling costs. The new services include being able to provide passengers with agent-assisted and self-service check-in technologies that are more commonplace at major airports globally. In addition to offering both domestic and international airlines a more efficient passenger processing system and improved productivity, passengers will in turn benefit from reduced wait times and high availability of check-in and departure counters, improving their experience at Indonesian airports. The new technology provided by SITA is perfectly aligned with the ASEAN Open Skies,
which is expected to lead to a big surge in passenger numbers at Indonesia airports. Indeed, according to IATA, Indonesia is expected to be the sixth largest market for air travel by 2034, with some 270 million passengers expected to fly to, from and within the country. That’s three times the size of today’s market. IATA has also called for stakeholders to partner in the development of an aviation master plan to address three key elements: improving safety, ensuring capacity and a smart regulation framework. With more than 68 million passengers in 2013, Indonesia is already the biggest aviation market in South East Asia. Ilya Gutlin, SITA’s president for Asia Pacific, says: “The technology put in place for Indonesia airports will be the foundation to support the growth and modernisation of the country’s airports enabling its gateways to operate to international standards and efficiently manage capacity demands. “The common use platform also allows for expansion of technology and passenger services such as agent-assisted check-in via tablets, and self-service check-in via kiosks and automated bag drop. “We have already helped many of our airport customers implement these to further improve operations and enhance passenger APA service standards.” www.aci-apa.com
INVESTING IN AIRPORTS
Common goal
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The buying game Joe Bates takes a closer look at the growing airport portfolios of a handful of the region’s biggest airport operators.
T
he Asia-Pacific region arguably boasts some of the best and most successful airport operators on the planet, and an increasing number of them are now looking overseas to expand their portfolios. While the list of Asia-Pacific-based airport operators with equity stakes in airports outside of their country’s borders may still be quite small compared to Europe and even North America, it contains some of the biggest names in the region and is growing year-on-year. They include Singapore Changi subsidiary, Changi Airports International (CAI); Malaysia Airports Holdings (MAHB); Incheon International Airport; and Indian airport operators GMR and GVK.
WINNING FEELING
GMR is the most recent winner of a new concession, only assuming responsibility for operating Mactan-Cebu International Airport in the Philippines, in partnership with local company Megawide Construction, on November 1 last year. The GMR/Megawide Construction Corporation’s winning bid of $365 million for the 25-year concession was around 3% higher than the second highest tender and, as part of the terms of the deal, it has pledged to upgrade the gateway to allow it to accommodate up to 30mppa. The first phase of this involves the construction of a new Terminal 2 that will APA Issue 1, 2015
allow the existing terminal to be renovated and used purely as a domestic terminal. The new operators also plan developing other facilities across the Mactan-Cebu site taking its expected capital expenditure to around $740 million during the course of the concession. GMR Infrastructure’s president and CFO, Sidharath Kapur, however, believes that this will be money well spent as GMR predicts passenger growth to rise from around 7mppa today to 28mppa over the next quarter of a century. “The airport has great potential, particularly when it comes to opportunities to increase its non-aeronautical revenues as today’s lack of facilities simply don’t encourage passengers to spend money,” says Kapur. “When you see how many big-spending passengers travel to the Maldives from Korea, China and Japan, there is so much that can be done to change this.” As part of the terms of the concession, GMR cannot sell its assets in Mactan-Cebu for seven years, but Kapur insists that this is not an issue as the company is looking upon the deal as a long-term investment. “We are looking at things from a country perspective and there are six more airports coming up for privatisation in the Philippines and all are smaller than Cebu. We now have a wonderful base to grow further in the country.” GMR has a 40% stake in the joint venture with Megawide Construction Corporation (60%), although the constructions costs
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associated with modernising the airport will be split equally between the two. Kapur accepts that there is a risk to any airport investment and admits that some advised the company against bidding in the tender for Mactan-Cebu, but says the chance to operate the airport was just too good an opportunity to turn down. “Cebu is an interesting airport for us as it handles a good mix of tourism and business traffic and Cebu is a large base for call centres in the Philippines,” he notes. “The Philippine economy is growing, indeed its GDP is increasing by an average of 5% per annum and shows no sign of slowing down. Traffic is growing and tourism, largely driven by the low-cost carriers, is on the rise in Cebu soaring by 20% in 2013 to 1.6 million passengers per annum. The airport has a lot going for it.” GMR is also one of the bidders in the ongoing tender for Japan’s Kansai and Osaka-Itami airports and is keeping tabs on the planned privatisation of a further six airports in the Philippines. On home turf in India, GMR operates the gateways of Hyderabad and Delhi, courtesy of 63% and 54% shareholdings respectively in operators GMR Hyderabad International Airport (GHIAL) and Delhi International Airport Ltd (DIAL). It counts MAHB (11%), the government of Andhra Pradesh (13%) and Airports Authority of India (13%) as its partners at Hyderabad’s
Rajiv Gandhi International Airport and the Authority of India (26%), Fraport (10%) and MAHB (10%) at Indira Gandhi International Airport in Delhi. As APA went to press it was in the process of acquiring MAHB’s 10% stake in DIAL. If ratified, the deal will raise its interests in Delhi’s gateway to 64%.
EXPANDING ITS WINGS
Secunderabad-based GVK has a majority 50.5% stake in the consortium responsible for operating Mumbai’s Chhatrapati Shivaji International Airport and a 43% interest in Bengaluru’s Kempegowda International Airport. Outside of India, GVK manages the commercial operation at Bali’s Denpasar International Airport and elsewhere in Indonesia subsidiary, GVKPIL, has signed a memorandum of understanding (MoU) with state-owned Angkasa Pura Airports to develop a new greenfield gateway at Yogyakarta in central Java. A relative newcomer to the aviation industry having only entered the market in 2006 when the Indian government decided to privatise Mumbai’s Chhatrapati Shivaji International Airport, and it remains keen to develop this side of the business. Indeed it says that it is always ‘scouring’ the international environment for good opportunities. www.aci-apa.com
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INVESTING IN AIRPORTS BUSY TIMES FOR MAHB
Malaysia Airports acquisition of GMR’s 40% stake in Istanbul–Sabiha Gökçen means that it now 100% owns and operates the Turkish gateway in addition to its interests in Hyderabad–Rajiv Gandhi and Delhi–Indira Gandhi airports courtesy of 11% and 10% stakes respectively in operating companies GHIAL and DIAL. It has, however, recently agreed to offload its 10% stake in DIAL to GMR because under Indian law it will never be able to obtain a majority shareholding in the gateway. Talking about the Istanbul deal last year, MAHB’s managing director, Datuk Badlisham Ghazali, noted: “The successful acquisition is a significant milestone for MAHB. “This acquisition gives us access to an attractive offshore asset and will enhance MAHB’s presence in Turkey. Furthermore, it is testament to our confidence in the continued great performance of our Turkish management team in Sabiha Gökçen and our commitment to this strategic investment.” And he has indicated that it is ready to look for “meaningful” new investment opportunities overseas. Officially MAHB says that it will continue to monitor all of its existing investments overseas and explore new opportunities that revolve around airport concessions and privatisation projects both inside and outside Malaysia. In terms of non-equity investments, MAHB continues to expand its airport management expertise outside of Malaysia, most recently providing Basic Airport Operations Training to the staff of Nay Pyi Taw International Airport in Myanmar. APA Issue 1, 2015
At home in Malaysia, MAHB owns and operates Kuala Lumpur International Airport and 38 other gateways that include the international airports of Langkawi, Kota Kinabalu, Kuching and Penang.
GLOBAL EXPANSION
Changi Airports International (CAI) – the international investment arm of the Changi Airport Group (CAG) – entered a new phase of its development in August 2014 when its consortium took over responsibility for operating, maintaining and developing Rio de Janeiro’s Tom Jobim International Airport for the next 25 years. The new airport operator is in effect a special purpose company whose stakeholders are an CAI-Odebrecht TransPort consortium (51%) and state-owned Infraero (49%). CAI also has a 30% stake in the Basel Aero, which is trusted to develop the airports of Krasnodar, Sochi, Anapa and Gelendzhik in Krasnodar Krai in south Russia. Fellow stakeholders in the joint venture include Russia’s Basic Element group and the OJSC Sberbank of Russia. And it has a 32% shareholding in Bengal Aerotropolis Project Ltd, which is developing a greenfield airport and township in Durgapur in West Bengal, India. CAI is one of 20 investors to be shortlisted for the concession to operate Kansai and Itami airports in Osaka, Japan. It recently signed a contract with the Maldives Airports Company Limited to provide consultancy services to support the development of Male’s Ibrahim Nasir
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International Airport and extended its management contract for King Fahd International Airport in Dammam, Saudi Arabia, until June 2015. And together with consortium partners Yongnam Holdings and Japan’s JGC Corporation, CAI through subsidiary Changi Airport Planners and Engineers (CAPE) has been named as the winning bidder by Myanmar’s Department of Civil Aviation for the design, construction, operation and maintenance of Hanthawaddy International Airport and its facilities on the basis of a public-private partnership agreement for a 30-year concession period. In terms of non-equity investments, CAI continues to advise the Brunei Economic Development Board on plans to upgrade and develop Brunei International Airport. So, what criteria airports need to meet to be of interest to CAI? “Besides the opportunity for growth, the regulatory regime and political stability, we look at airports where we could make a difference in terms of creating or enhancing their investment value,” says Jose Pantangco, CAI’s managing director for consultancy and business development. Pantangco notes that CAI takes a medium to long-term view of its investments. “We are a single-class asset investor – we only invest in airports and do this because we understand airports and their dynamics within the aviation systems well,” he explains. CAI sold its 8% stake in Gemina SPA, the holding company of Aeroporti di Roma (AdR) in May 2013, which at the time was in merger talks with Atlantia.
“We decided to divest our interests in Gemina as CAI’s stake in the merged entity would have been substantially diluted,” says Pantangco. “In addition, Atlantia had a diverse range of business activities such as toll road operations which, as a single class asset investor in airports, were not of interest to CAI. The merger took effect in December 2013.”
NEW KID ON THE BLOCK
Incheon International Airport Corporation has a 10% stake in Khabarovsk Novy Airport in eastern Russia and a series of management and consultancy contracts at gateways across the world including Erbil and Dohuk in Iraq, Manila and Puerto Princesa in The Philippines and Juanda in Indonesia, the latter through subsidiary PT Mitra Incheon Indonesia. And it has previously expressed an interest in acquiring shares in “two or three international airports” in the AsiaPacific region. Subsidiary, PT Mitra Incheon Indonesia, currently provides consultancy services to Indonesian airport operators PT Angkasa Pura I and II for the development of new commercial facilities at Juanda Airport’s existing terminals and the expansion of the existing terminal at Jakarta’s Soekarno-Hatta International Airport. Its decision to invest in Khabarovsk Novy has coincided with the one of the most successful periods in the Russian gateway’s history in terms of awards, investment in new APA facilities and passenger growth. www.aci-apa.com
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Newcastle Airport.
I
n September 2013, Newcastle Airport received long-awaited news – its application to the New South Wales (NSW) government for an A$11.1 million grant to fund the expansion of its terminal had been successful. Fast-forward 14 months and construction of the 2,600sqm extension is well underway as part of a A$14.5 million project that will also involve a complete refurbishment of the existing facilities. Located in Australia’s Hunter Region around a two-hour drive north of Sydney, Newcastle Airport (NTL) serves a catchment of 1.1 million people in an area that is best known for its local wineries and beaches. Newcastle also has a busy port, in fact more coal is exported through it than any other in the world. And, according to David Nye, the airport’s manager for aviation business development, NTL serves as the gateway to a diverse tourism offering that includes “world-class beaches, the largest lake in the southern hemisphere and the internationally renowned Hunter Valley Wine region”. The region’s appeal ensures that it handles around 1.2 million passengers annually and currently boasts domestic services to Sydney, Melbourne and the Australian Eastern Seaboard cities/destinations of Brisbane, the Gold Coast, Ballina/Byron Bay and Taree. According to Nye, the expanded terminal will continue to facilitate the needs of NTL’s low-cost carriers, principally Jetstar and Virgin Australia, which are the two biggest airlines in Newcastle in terms of market share.
KEY FACTS LOCATION:
Newcastle, Australia
PROJECT:
Terminal expansion
DELIVERY DATE: Mid-2015 CONTRACTORS: Hansen Yuncken Construction,
Point Project Management,
Schreiber Hamilton Architects
Added in the first phase of a two-phase development programme, the 2,600sqm extension to the terminal will become the airport’s new Arrivals Hall and house permanent customs, immigration and quarantine facilities. Once the extension is complete, the airport will start work on refurbishing the existing terminal, a project that will include transforming the current Arrivals Hall into a new-look departure lounge, which will incorporate more than twice the number of retail outlets as today. “For a regional airport, this is a significant investment into our facilities, but we do so with confidence because in the past decade people across our region have shown their desire to travel and take advantage of the services being offered at their local airport,” says Nye. “Our end goal is to ensure that we build a facility that provides us with flexibility and will allow us to grow both domestic and international services. “By the end of 2015, I am confident that passengers will consider our facilities and services amongst the best in Australia. I am also confident that by this time next year we will have, or be very close to having, scheduled international services operating APA from our region.” www.aci-apa.com
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DESIGN & BUILD
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RETAIL
Better buys Are you making the most of your travel retail opportunities? Rosemary Chegwyn considers some of the retail dilemmas faced by Asia-Pacific’s gateways.
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n age old question is what do people do to pass the time while waiting at the airport to board their flight? The answer depends on many different things, of course, perhaps most notably who you are travelling with, if anyone, and the reason for the journey – work, pleasure or something else. While some might curl up and sleep, others might read a good book, play on their laptop or make phone calls, once airside the vast majority of people will stretch their legs by browsing through the airport’s shops and maybe visiting a bar or F&B outlet. And with over 118 million domestic and international passengers travelling through the 11 largest airports in Australia each year alone, there’s a real opportunity for brands to reach and effectively engage with this captive audience. But making the most of this retail opportunity and persuading passengers who are effectively a captive audience, is not as easy as it sounds!
There are, for example, many differences between the travel retail environment and the domestic retail landscape. In travel retail, for instance, brands only have a small window of opportunity to attract and engage customers and convert sales, all the while competing side by side with a wider range of other brands and products on offer. Consumer shopping habits also change in the travel retail market, as customers are more inclined to browse through the full range of brands on offer. Therefore, brands need to be aware of these differences to make the most of this environment and capture customer’s attention. With these factors in mind, it’s important for point of sale solutions (POS) to be particularly effective in travel retail as they will stimulate and, hopefully, capture the customer’s attention and drive sales. When airport retailers allow for personalisation of the POS units, it’s an opportunity for brands to create a fully branded, engaging experience. Indeed, POS should be an integral part of any marketing strategy, as it acts as the permanent face of the brand to consumers. www.aci-apa.com
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By complementing the airport sales staff, the POS unit should act as the ‘silent sales person’ conveying exactly what a sales person would do for a customer if they were at a department store. So why is the execution of POS so crucial to the success of brands in the travel retail space? Here are some strategies for marketers to create effective POS solutions in the travel retail environment.
UNDERSTANDING THE TRAVELLING CONSUMER
It’s important to understand the shopping patterns of the travelling consumer to create an engaging POS unit. This can be achieved through research and by gaining information from the airport retailers. There is a plethora of research into travel retail available such as MarketResearch.com’s Everyday beauty brands travel retail research and Euromonitor International’s Travel Retail in Australia report.
UNDERSTAND THE AIRPORT ENVIRONMENT
The layout of most airports are structured in a way that takes into consideration passenger flow patterns through the airport. This structure is designed so that travellers physically pass and browse past brands and categories as they make their way to their flight gate. In a typical perfume and cosmetic travel retail environment there is less space available per brand when compared to the domestic retail environment, so brands need to make the most of what they have. Brands may have to use gondolas (freestanding units) to display products and further facilitate customer browsing. It’s then the role of the POS unit to grab the customer’s attention and provide a reason to stay longer with the particular brand. For example, at the Perth International Airport’s Arrivals and Departures Hall, Coty Travel Retail Asia Pacific and EDA had to incorporate two brands onto the one gondola while still staying true to the character of each brand. APA Issue 1, 2015
They did this by using different branding and logos as well as using different materials for each brand. Gold and marble, for instance, was used on the Balenciaga side of the unit, while back-sprayed glass was used for Marc Jacobs.
ATTRACT AND ENGAGE CUSTOMERS
One way to attract customers to the POS unit is through the use of large brand names as well as impactful visuals to inspire shoppers to explore the brand. Strategic lighting can also be used to highlight each product and encourage customers to pick it up. Consistency is also important when designing a POS unit to ensure it has clearly recognisable branding and customers can find the brand no matter what location the unit is in (domestic or travel retail). Point of sale is integral in shaping brand identity and brand recognition for consumers. POS units need to display the brand’s latest products and trends, requiring the units to be kept up to date and constantly evolving with the brand. Many brands are also starting to experiment with adding a digital element to their POS units to engage customers. For example, the OPI unit at the Perth International Airport incorporated an iPad to allow customers to use the OPI app to create their own look with the brand’s suite of nail polishes. Digital elements such as this can help attract customers to the unit and engage them in a new way to explore the brand. Travel retail is an environment where brands are continually experimenting with new ways to engage customers and often set trends before being rolled out to the domestic retail environment. Creating cutting edge POS solutions is essential for brands to attract and engage customers in the travel retail environment and APA grow company sales.
ABOUT THE AUTHOR Rosemary Chegwyn is head of sales and marketing for EDA Australasia.
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The real deal A host of new contracts and record sales figures for 2014 make these exciting times for travel retail and duty free operators, writes Joe Bates. DUO TO TRANSFORM AUCKLAND DUTY FREE OFFERING
Auckland Airport has announced that its duty free offering will be provided by LS travel retail Pacific and Aer Rianta International from July, 2015. The airport’s general manager, retail and commercial, Richard Barker, believes that having “two of the world’s most innovative duty free operators” onboard for at least the next seven years will help transform Auckland’s duty offering. He says: “Both operators have proven themselves to be driven and innovative in achieving strong, customer-focused, growth in airport duty free retail. “They will provide our passengers with shopping experiences unrivalled anywhere else in the country. There will be many new duty free brands and retail concepts, including a number of world firsts.” Barker says that travellers will start to see the positive impact of the two new operators from July this year, although admits that the biggest changes will come when the airport opens its new international departure area. APA Issue 1, 2015
The new concessionaires are also expected to act as a catalyst for a significant expansion of Auckland Airport’s online retail channel, including ‘click and collect’ which provides passengers with the option of buying online and collecting their tax-free and duty free purchases when next travelling internationally. “Auckland Airport is focused on strategically growing its duty free and retail business and providing travellers with a great shopping and travelling experience,” admits Barker. “As a result of the duty free tender, and other changes in specialty stores, we expect our earnings before interest, tax and depreciation in the 2016 financial year to increase by an additional NZ$5 million.” Matthieu Mercier, LS travel retail Pacific’s chief executive officer, says: “We will boost the airport’s duty free offer with innovative ideas, and we will leverage our extensive vendor relationships and global experience by offering a wide range of big name brands in Perfume & Cosmetics, local wine and liquor to name a few. “Our goal now is to make it happen and to create a fantastic duty free experience that
ASIA-PACIFIC AIRPORTS MAGAZINE
HEINEMANN TO SPEARHEAD SYDNEY DUTY FREE REVAMP
Across the Tasman Sea in Australia, Sydney Airport claims that its international passengers will start enjoying a new duty free retail experience following the appointment of new concessionaire, Heinemann Duty Free. According to the airport, Heinemann is set to the reinvigorate the duty free experience over the next 12 months by creating a new, unique shopping experience with an extensive selection of brands at attractive prices and two dining concepts, headed by celebrity chef, Luke Mangan.
“Heinemann is the world’s third largest travel retailer and we selected them for the exclusive brands and value they will provide to more than 13 million passengers who travel internationally from Sydney Airport each year,” enthuses Sydney Airport’s managing director and chief executive officer, Kerrie Mather. “We are looking forward to working with Heinemann over the next year to transform the airport’s duty free offering and create a retail experience that’s uniquely Sydney.” Heinemann Asia-Pacific chief executive officer, Max Heinemann, claims that travellers at Sydney Airport would make significant savings on duty free items. “We’re going to give passengers a fantastic retail experience with outstanding service and exclusive international brands at attractive prices,” he pledges. Heinemann’s Sydney operations will employ a workforce of over 550 staff, with the company set to invest more than A$60 million (€40 million) in its new location. It promises to offer travellers an extensive selection of perfumes and cosmetics, wines and spirits, confectionery, tobacco products and accessories across six shops at Sydney Airport’s T1 terminal. Work will commence immediately on a refit of the duty free stores, with work to be staged over the next 11 months to minimise disruption to travellers. Three stores in departures and two stores in arrivals will be completed in January 2016, with a final arrivals store to be open by mid-2016. www.aci-apa.com
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exceed passenger expectations, and I believe that our vision for Auckland Airport will achieve this and more.” Jack MacGowan, Air Rianta International’s chief executive, notes: “This is a wonderful opportunity for Air Rianta to enter a new partnership with an ambitious, forwardlooking airport that is seeking to collaborate with a global duty free operator to enhance the retail experience of international passengers at Auckland Airport. “From the moment we held our initial conversations with the team at Auckland, we recognised a shared vision about placing the passenger at the heart of the airport retail experience and about enhancing that experience with an exciting retail offer. We will bring to Auckland our global experience of successful airport retail operations and airport partnerships.”
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RETAIL: DUTY FREE SPECIAL The new stores are being designed by Gebr Heinemann’s in-house design team in collaboration with the renowned Australian architectural firms Geyer and Lava. As with all Heinemann duty free shops, the design will incorporate a sense of place and in this instance, will be inspired Sydney’s beautiful harbour, beaches and laid-back sophistication.
MILESTONE YEAR FOR ABU DHABI DUTY FREE
Abu Dhabi Duty Free (ADDF) exceeded sales of $272 million for the first time in 2014, a rise of 10.5% on the previous year. A number of new retail stores opened in 2014, including two new multi-category outlets, a new 253sqm Fragrance Boutique in Terminal 3, a handful of refurbished core duty free stores on the Terminal 1 Upper Level, and several initiatives including a new Wellness Spa and Minimart outlet. Beauty & Fragrance emerged as the biggest selling category in 2014 with a 31% share of ADDF’s turnover. Indian, Chinese and Emirati passengers continued to account for the highest share of sales at the airport (36%). Abu Dhabi Airport Company’s chairman, His Excellency, Ali Majed Al Mansoori says: “This significant milestone confirms that we APA Issue 1, 2015
are providing passengers with the diverse services and offerings they expect at a major international airport and reflects the incredible growth in passengers which is largely driven by the success of the national airline, Etihad Airways”. The growth was across all categories with Perfume and Cosmetics (+9.7%), Rolex (+36.6%), Watches (+15.5%), Cigars (+13.2%) and Food and Confectionery (+8.4%) among the best performers. Other facts and figures for 2014 include the fact that ADDF sold over 40,000 litres of fragrance, 200 tonnes of powdered milk and 188 tonnes of chocolate – including 25 million single M&M candy sweets. And things will get even better for ADDF when the airport’s new Midfield Terminal Building, which will have a capacity of 30mppa, opens for business in 2017. The self-proclaimed goal of Abu Dhabi Duty Free is to “create the world’s best commercial offer at an airport” at the Midfield Terminal and “provide customers with a sensational experience and exclusive innovative offers, supported by high levels of service and traditional Emirati hospitality”.
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DUBAI DUTY FREE SALES SOAR TO NEW HEIGHTS
Dubai Duty Free (DDF) ushered in the New Year by announcing record-breaking sales of $1.917 billion for 2014, representing a 7.36% increase over the previous year. The sign that a remarkable year was coming to an end was evident in December 2014 when it set a new monthly sales record of $205 million – an incredible $192 million (+7%) more than in the same month in 2013. The December high was fuelled by DDF’s 31st anniversary celebrations when it offered a 25% discount across a wide range of merchandise from the 18th-20th December, which resulted in a shopping spree by passengers of $51.74 million during the 72-hour period. Over the anniversary weekend, the cash registers recorded a total of 405,407 sales transactions with 205,485 of them alone on the anniversary day itself, 20th December. Reflecting on another memorable year at DDF, Colm McLoughlin, executive vice chairman said: “We are thrilled to announce such a positive year during which the operation went from strength to strength.” The operation recorded a staggering 26.9 million sales transactions in 2014, which is an average of 73,960 sales transactions per day across both Dubai International and at Al Maktoum International, Dubai World Central. With sales of $314 million, Perfume – which now contributes 17% of Dubai Duty Free’s total sales – retained its APA Issue 1, 2015
position as the best-selling category. Liquor and Gold followed, with sales of $286 million and $163.6 million respectively. Cigarettes and Tobacco came in fourth place with sales amounting to $160 million followed by Confectionery with $147.7 million. Other major increases were seen in Cosmetics, which rose by 19% to $146.5 million and accounting for almost 8% of annual sales. Watches rose by 9% to $137 million. Looking ahead, Dubai Duty Free will continue to enhance its retail operation with the ongoing refurbishment of Concourse C and the opening of a 7,000sqm retail space in Concourse D while maintaining a busy events and promotional calendar.
GOOD TIMES FOR BAHRAIN DUTY FREE
Bahrain Duty Free recorded the highest profits in the company’s history in 2014 when it posted a net profit of $22.7 million for 2014 – 32.7% up on the previous year’s earnings of $17.1 million. Chairman of the board, Farouk Almoayyed, believes that the variety and quality of goods on offer and a renewed focus on marketing campaigns and customer service had a hugely positive impact on sales, which increased by 7.8% to $74.5 million in 2014. A 10.4% increase in passenger traffic at Bahrain International Airport and a number of shop refurbishments, which included the Arrivals shop in addition to the opening a new fashion shop, also contributed toward APA the record sales figures.
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IN THE SPOTLIGHT WBP PROFILES
GROWING PLACES Plaza Premium Lounge has opened its upgraded lounge at Vancouver International Airport (YVR). The lounge, one of four Plaza Premium Lounge spaces at YVR, is located in the airport’s new A-B Connector on Level 3 Departures of the Domestic Terminal. According to the company, the 6,390-square foot space continues its commitment to offering all travellers a first class experience regardless of airline or class of travel. Founder and CEO, Song Hoi-see, says: “Vancouver is a very important market for us, and this new lounge is the next step in our plan to grow the Plaza Premium Lounge brand throughout North America.”
EASY COME, EASY GO! Passengers travelling to the United States can now pre-clear US Customs and Immigration at Abu Dhabi International Airport using new automated passport control (APC) kiosks. The SITA supplied selfservice kiosks use advanced biometric technology to streamline border control procedures and process passengers securely in less than 60 seconds. Hani El-Assaad, president, SITA Middle East, India and Africa, said: “Our APC kiosks APA Issue 1, 2015
use the latest biometrics to facilitate fast, accurate and secure passenger processing at the border. “This ensures that airports, airlines and governments can provide a warm welcome, while still providing a high level of border security. For airports like Abu Dhabi which are experiencing strong passenger growth, these kinds of automated solutions are becoming increasingly important to help manage greater volumes of passengers securely and efficiently.”
Aeon Associates Loction: Jakarta, Indonesia Contact: Brendan Martin, managing partner Email: brendan.martin@aeonassociates.com Website: www.aeon-associates.com Aeon Associates is a leading provider of innovative, independent aviation consulting and advisory services. We are committed to delivering timely and relevant client outcomes across a broad spectrum of operational, technical and commercial disciplines. Headquartered in Singapore with representation in key regional growth centers, we are uniquely positioned to provide the expert local insight and knowledge necessary to realize successful outcomes in a globally integrated industry. Kent Ridge Consulting Co Ltd Location: Xiamen, China Contact: Lilian Yan, overseas market development manager Email: yanll@krgroup.com.cn Website: www.krc.com.cn/en/ Kent Ridge Consulting Co Ltd (KRC) is a consulting firm founded in NUS (the National University of Singapore). The Aviation Research Center of Kent Ridge consistently studies the developmental strategy of the aviation industry on a global scale while serving local clients. It provides a comprehensive range of consulting services including strategy, human resource management, terminal planning and business development, and air city planning.