Asia-Pacific Airports - Issue 2, 2016

The official publication of ACI Asia-Pacific www.aci-asiapac.aero

What next for the country’s airports?

In the spotlight: India’s airport system Highlights of the Regional Assembly, Conference & Exhibition

Issue 2, 2016 www.aci-apa.com

Winning feeling: The ASQ awards ceremony Plus: Zhengzhou’s aerotropolis & South East Asia’s LCCs

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ASIA-PACIFIC AIRPORTS MAGAZINE

VIEWPOINT

NEVER ENDING CHALLENGES Asia-Pacific Airports editor, Joe Bates, reflects on the strength of the aviation industry to overcome adversity and previews this India focused issue.

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he horrific events at Istanbul Atatürk Airport on the night of June 28 this year, a terrorist attack I avoided by just a few hours courtesy of taking an earlier flight home to London, just goes to show how vulnerable aviation remains to events outside of its control.

The attack, which claimed the lives of 45 people and injured another 239, happened shortly after 10pm when three suicide bombers started shooting as they approached a security checkpoint at the entrance to the international terminal before exchanging fire with police and then detonating their devices.

ACI Asia-Pacific was quick to condemn the attacks and announce its support for Istanbul Atatürk operator, TAV Airports, and the people of Turkey.

Its simple statement proclaimed: “We are saddened and shocked by the attack. The aviation industry is a close knit community and together we stand firm and united in bringing people together and ensuring the safety and security of the travelling public.”

In truth, aviation is an easy target for such atrocities and there is absolutely nothing the airport could have done to prevent the attack, which with international tourism already 90% down in Istanbul and significantly elsewhere across Turkey, will inevitably make this year one of the hardest on record for everyone involved in the Turkish travel and tourism industries.

However, as recent history and events such as SARS, 9/11 and the global financial crisis of

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2007 and 2008 have taught us, aviation is nothing but resilient and, although it may not be a quick process, it is only a matter of time before things start to get better for Turkey.

And when it does, of course, passengers can look forward to the 2018 opening of Istanbul’s new airport, which due to the phenomenal growth of Turkish Airlines, could eventually become one of the world’s biggest gateways.

In marked contrast to Turkey’s misfortunes, our featured country in this issue, India, continues to enjoy an amazing period of growth and prosperity, boosted by record passenger numbers across its huge airport system.

Our India focus includes a brief look at the nation’s top five airports; a spotlight on Indian IT innovation; a national overview from the Airports Authority of India; and the latest news round up from Momberger.

Elsewhere in this issue we look back at ACI Asia-Pacific’s Regional Assembly, Conference and Exhibition in the Gold Coast; hail the 2015 Airport Service Quality (ASQ) winners one last time; and have a special report from aerotropolis guru, John Kasarda, about plans to develop an exciting economic zone around Zhengzhou Xinzheng International Airport.

If that is not enough we also bring you news of the region’s World Business Partners; and report on some of the latest global IT initiatives, challenges and opportunities and speculate about what may lie ahead for the world’s airports in the not too distant future.

APA Enjoy the issue. www.aci-apa.com

ASIA-PACIFIC AIRPORTS MAGAZINE

CONTENTS

Asia-Pacific Airports Issue 2, 2016

3 Never ending challenges

Asia-Pacific Airports editor, Joe Bates, reflects on the strength of the aviation industry to overcome adversity and previews this India focused issue.

18 Five of the best

Joe Bates takes a closer look at the latest headline news being created

by India’s five busiest passenger gateways in Delhi, Mumbai, Bengaluru, Chennai and Kolkata.

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22 Planning for the future

A snapshot of some of the biggest stories from across the region.

10 Going for gold

With a host of hot topics on the agenda and the spectacular Gold Coast as the backdrop, this year’s Regional Assembly, Conference & Exhibition didn’t disappoint, writes Sonia Caeiro.

16 ACI News

Vivian Fung provides an update on ACI’s Airport Carbon Accreditation programme, which is now so popular in Asia-Pacific that a quarter of all passengers pass through a certified gateway.

Airports Authority of India’s member of planning, Sudhir Raheja, tells Asia-Pacific Airports more about the country’s sizeable airport network and reveals some ambitious development projects for the nation’s gateways.

26 Time for technology

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Leveraging technology will help India’s airports overcome today’s operational challenges and usher in the next generation of air travel in India, writes Andrew Seow.

www.aci-apa.com

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ASIA-PACIFIC AIRPORTS MAGAZINE

CONTENTS 28 Making headlines

Asia-Pacific Airports reviews the latest news and developments across India courtesy of Momberger Airport Information.

30 Everyone’s a winner!

Australia’s spectacular Gold Coast was the venue for this year’s Airport Service Quality (ASQ) awards ceremony for the world’s most customer friendly airports.

34 Zhengzhou takes off

John Kasarda tells us more about the exciting plans to create a dynamic economic zone around Zhengzhou Xinzheng International Airport in China’s Henan Province.

Asia-Pacific Airports (APA) www.aci-apa.com Editor Joe Bates joe@aci-apa.com +44 (0)1276 476582 Design, Layout & Production Mark Draper mark@aci-apa.com +44 (0)7495 611207

APA Issue 2, 2016

Published by Aviation Media Ltd PO BOX 448, Feltham, TW13 9EA, UK Managing Director Jonathan Lee jonathan@aci-apa.com +44 (0)208 707 2743 Advertising Manager Ellis Owen ellis@aci-apa.com +44 (0)208 274 1540

38 Living in a digital world

Blockchain technology, getting smart about identity management in aviation and cyber security were all on the agenda at this year’s Air Transport IT Summit, writes Joe Bates.

42 Fast and the furious

CAPA’s analysis team report on the growth of low-cost carriers in South East Asia and consider how their business model continues to evolve.

46 World Business Partners News, views and reviews from the region’s WBPs.

Subscriptions Beth Owen subscriptions@ aviationmedia.aero +44 (0)208 707 2743

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.

The content of this publication is copyright of Aviation Media Ltd and should not be copied or stored without the express permission of the publisher.

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ASIA-PACIFIC AIRPORTS MAGAZINE

NEWS

MALDIVES MILESTONE The construction contract for the new $800 million terminal at Ibrahim Nasir International Airport in the Maldives has been awarded to the Saudi Binladin Group (SBG).

Adil Moosa, managing director of the Maldives Airports Company Ltd (MACL), believes the new 7.5 million passenger capacity terminal will be a “modern landmark” for the gateway.

While SBG’s Abdul Azeez B Bin Ladin states that his company’s vast variety of expertise and knowledge in airport development made him confident that it will deliver a “magnificent terminal building at INIA”.

The nation’s Minister of Economic Development, Mohamed Saeed, notes that the government has made a bold decision in developing the airport.

The new 78,000sqm terminal will be three times the size of the existing facility allowing for a host of new shops and F&B outlets as well as new infrastructure such as six aerobridges and a state-of-the-art baggage handling system.

Funding for the project is being sought from the China EXIM Bank, the Kuwait Fund, Abu Dhabi Fund, and the Saudi Fund for Development, the Maldives government said in a statement.

NEIGHBOURHOOD WATCH This incredible satellite photo of Dubai International Airport (DXB) just goes to show why the world’s busiest international gateway knows that the long-term future of aviation in the Emirate lies 37 kilometres away at Dubai World Central–Al Maktoum International Airport in Jebel Ali. For the image, courtesy of Mohammed Bin Rashid Space Centre (MBRSC), clearly shows that the airport has little room to grow further after the opening of its new $1.2 billion Concourse D in February.

The new concourse has boosted DXB’s capacity to 90mppa and operator, Dubai Airports, believes that enhanced service through “the design and APA Issue 2, 2016

implementation of customer-centric processes and smart technology” can raise the gateway’s capacity to 118mppa by 2023 without the need for anymore infrastructure.

DWC will be capable of handling 120mppa after completion of the second phase of its development and ultimately up to 240 million passengers yearly.

And the huge capacity might be needed as Dubai Airports forecasts that passenger demand could exceed 190mppa by 2030 and climb to 260 mppa by 2040 and 309 million by 2050, meaning that it will need both DXB and DWC to keep pace with traffic growth.

ASIA-PACIFIC AIRPORTS MAGAZINE

KEEPING IT CASUAL Sydney Airport has begun the next phase of the revamp of the casual dining precinct in Terminal 2, which it claims will enhance the airport experience for passengers, visitors and staff.

“These improvement works will deliver a comfortable dining area where passengers can relax and enjoy a wide range of tasty and healthy food options catering to all tastes and budgets, while taking advantage of the free Wi-Fi and enjoying enhanced views of the airfield.” enthuses the airport’s managing director and CEO, Kerrie Mather.

Six new F&B kiosks will be positioned throughout the new casual dining precinct and include two new brands to Australia, YO! Sushi and Joe & The Juice.

MONEY MATTERS Northern Territory Airports Pty Ltd (NTA), owners and operators of Darwin and Alice Springs airports, has successfully established A$577 million in new term and capital expenditure debt facilities.

A first for Northern Territory Airports, the company has placed $150 million in the US institutional debt market with varying terms of 10 and 12 years.

The company has also introduced Canadian Imperial Bank of Commerce (CIBC) to the existing banking group, which currently comprises the Australia and New Zealand Banking Group Ltd, Commonwealth Bank of Australia, National Australia Bank Ltd and Westpac Banking Corporation.

Chief financial officer, Tom Ganley, says: “With the new debt facilities, we will be able to enhance the airport facilities to serve the nearly three million passengers who pass through the airports each year.”

Hong Kong International Airport handled a record 69.7 million passengers and 410,000 flights in its 2015/16 financial year.

The totals represent year-on-year increases of 7.8% and 3.6% respectively.

Cargo throughput softened 1.4% to 4.3 million tonnes during the year, according to operator Airport Authority Hong Kong (AAHK).

The figures ensure that HKIA remained the world’s third busiest international passenger airport, while on the cargo front, Hong Kong continued to be the world’s busiest cargo airport for the sixth consecutive year.

AAHK chairman, Jack So Chak-kwong, notes: “We had a great year in terms of airport development, but in order to meet long-term demand, HKIA must expand into a 3RS. We are grateful for the Executive Council’s approval and will start construction as soon as possible, striving to make sure that the project is completed on time and within budget.”

SAMOAN AIRFIELD UPGRADE Airways New Zealand has been awarded a major World Bank funded contract by the Samoa Airport Authority to assist with the upgrade of air traffic management systems and infrastructure at Faleolo International Airport.

The World Bank is funding a $25 million package of upgrades at the airfield under its Pacific Aviation Investment Program (PAIP).

The regional project will increase aviation safety and security across the Pacific by developing key airport infrastructure and operations. Under the deal, Airways will consult on the design and procurement of air navigation aids, air traffic control equipment and airfield ground lighting systems for the airport, which is the main gateway to Samoa and its surrounding islands.

The New Zealand state-owned enterprise will also project-manage the installation of the new systems.

“Our vision for the Pacific is to enable the same standard of infrastructure, service and safety we provide in New Zealand. To do this we need to ensure modern infrastructure is in place,” says Airways chief operating officer, Pauline Lamb.

A significant element of Airways’ involvement with the Pacific is its joint agreement with Tonga, Samoa, Niue and the Cook Islands to manage the states’ upper airspace. www.aci-apa.com

NEWS

HONG KONG ENJOYS ‘GREAT YEAR’

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EVENTS: REGIONAL CONFERENCE, ASSEMBLY & EXHIBITION

Going for gold With a host of hot topics on the agenda and the spectacular Gold Coast as the backdrop, this year’s Regional Assembly, Conference & Exhibition didn’t disappoint, writes Sonia Caeiro.

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gility and collaboration were predominant themes at the 11th ACI Asia-Pacific Regional Assembly, Conference & Exhibition held on Australia’s sun-drenched Gold Coast, with panels around technology, passenger experience, security and sustainability emerging as major topics.

The prevailing themes were robustly discussed in three days of presentations and panels to 610 delegates from 52 countries and vividly demonstrated by the 34 exhibitors, focusing on shaping the future of an industry, described by ACI World’s director general, Angela Gittens, as “at its core, about keeping the world connected”.

This connectedness is a crucial element in Australia’s long aviation history. The inherent need to cross the great, brown land and endure its vast distances from the rest of the world quickly bred a market leading industry.

In more recent times it has maintained that market leadership in safety and sustainability and has also been a privatised market for two decades, enjoying a unique ownership model with significant innovation and opportunity.

In his welcoming remarks, president of ACI Asia-Pacific, Dennis Chant, talked of this historic dependence and of the country being a “pioneer through necessity”.

While in his keynote address, Australia’s Secretary of the Department of Infrastructure APA Issue 2, 2016

and Regional Development, Mike Mrdak, referred to the industry’s critical link to Australia’s sustained economic growth.

The first of the two noteworthy handovers bookending the antipodean event was the election of incoming ACI Asia-Pacific president, Kerrie Mather. The CEO of Sydney Airport taking the reins from Dennis Chant, who is retiring after a 45 year career in the aviation and maritime industries.

Mather, who said the appointment was a privilege, pledged: “I will continue to work closely with the Regional Board and the Regional Office in promoting professional excellence in all airport management and operations.”

She was a member of the first panel discussion on Leaders Shaping Aviation’s Future, moderated by Greg Fordham, managing director of Airbiz. Fellow panelists included Aimen Al-Hosni from Oman Airports; Declan Collier from London City Airport; Maureen Riley from Salt Lake City Airport; and James Cherry, from Aéroports de Montréal.

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Given such events and the enormous global growth of passenger movements generally, the need for airports to be seen to be environmentally friendly has arguably never been more important.

ACI Asia-Pacific’s regional director, Patti Chau, was therefore delighted to present Airport Carbon Accreditation certificates to 16 newly certified airports at a special awards ceremony, which also marked the fifth anniversary of the region joining the global scheme to reduce carbon emissions, “We are very proud to have 31 Asia-Pacific airports accredited at various levels of the programme, representing 26% of passenger traffic in the region,” she noted.

“I would encourage more members to join the 155 airports worldwide, become accredited and demonstrate the dedication of our region’s airports to sustainable growth.”

The sustainability of carbon accreditation and other environmental measures were www.aci-apa.com

EVENTS: REGIONAL CONFERENCE, ASSEMBLY & EXHIBITION

The CEOs shared their insights on future proofing the airport business and discussed global growth, agility, long-term vision and ownership models around the world.

A highlight in the final question to the panel was brought about in the pinning down of one great idea that would improve the passenger experience. Collier, who is also the current chairman of ACI World, nailed the sentiment behind much more complex strategies with his succinct value proposition of simply giving passengers “an hour of their life back”.

In Preparing and Facilitating World Events, the panel brought home the extreme intensity of such events and the long-haul preparations required.

Nigel Chamier, chairman of the Gold Coast 2018 Commonwealth Games Corporation, aptly summed up their magnitude in relation to economic development, employment and global exposure, saying simply: “Global sports events change cities forever.”

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EVENTS: REGIONAL CONFERENCE, ASSEMBLY & EXHIBITION further explored on day three. The dedicated technical sessions underpinned the lightyear pace of technological innovation, IT evolution, safety and environmental sustainability with particular emphasis on the inherent business case in each area.

The premise of the morning panel on security in the State of the Industry; the Asia-Pacific Perspective, explored recent events and future strategies.

The afternoon presented a critical issue in aviation today – that of Best Practice Sharing – a prevalent need in security, technology, operations and the massive amounts of data in question.

Sharing their expertise and reflections on their own best practice environments the panel discussed anti-terrorism, perimeter protection and quality assurance of security screening.

APA Issue 2, 2016

Airport Technology – Innovation and Transformation became one of the most compelling panels of the conference with speakers presenting robotics and smart technology in situ, such as the automation efficiency at Hong Kong and maintenance robotisation at Japan’s Haneda Airport.

Straight talking moderator, vice president of SITA, Catherine Mayer, spoke with rapid-fire delivery of technology being “at the forefront of all services” and in no uncertain terms stated that the industry must recognise this.

“Bots are the new Apps,” she said. “This is what the future generation are looking to do.

This is what we need to do to respond.”

User generated content and the Internet of Things (IOT) were broadly and passionately raised as well as robotics, drones and various realities, of both the augmented and virtual variety.

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ASIA-PACIFIC AIRPORTS MAGAZINE

EVENTS: REGIONAL CONFERENCE, ASSEMBLY & EXHIBITION

VIEW FROM THE TOP In between conference sessions, Sonia Caeiro caught up with ACI World’s director general, Angela Gittens, for her thoughts on some key issues.

What do you perceive to be the singular, most pressing concern in the aeronautical environment today?

Part of the airport is a public place and there are security issues in any public place. Aviation security, the protection of passengers and crew on an airplane and the avoidance of using the plane as a weapon, is different from the physical security of the place itself. It all gets mixed in.

The security of the physical place is no different to the security of a stadium, train station or other public places that can be targets.

A crowd is a target and so now more than ever, we want to avoid crowds. We don’t want to have people winding up en masse and be trapped going through a process. That is where we need to focus in trying to ensure more security for the physical place of the airport.

“The technology is coming,” enthused Mayer. “It’s not expensive but we must not be scared of embracing this. It is the only way we can transform the industry for the millennials who are coming.”

Sydney Airport’s Sally Fielke spoke of “taking a holistic view”, the need for a consistent, rigorous “review of all digital touch points” and of the “fail fast” approach to technology adoption, urging airports to assess, decide and to swiftly “move on” when the technology does not deliver.

“It’s very exciting and there are many innovations to come with all the stakeholders involved having one centralised point – the customer,” she told delegates.

The final environment sessions began with Shaping Airports for Permission to Grow and examined strategic preparation for corporate responsibility, noise reduction and climate change.

The second panel drilled further down into the nuts and bolts of Making the APA Issue 2, 2016

What are your thoughts on the Australian market, its insularity and litmus test facility for the industry?

It’s a classic aviation market, as a very large country with cities everywhere and a lot of remote areas, so aviation is necessary at a very basic level. Every demographic group flies as a basic component of daily life and business.

As it’s also very far away from everything else, it poses some challenges and opportunities.

You notice that things being done in Australia have been done for a long time.

Commercial aviation started very early in Australia, they have a very mature system.

Things like privatisation, federal and state government interaction and protecting airports for the future are very far along – maybe the furthest along of any country I know of.

Business Case to CEOs for environmental initiatives with senior environment and sustainability managers from Australia, Hong Kong and Germany.

Ken Conway of Airbiz presented the latest qualitative and quantitative benchmarking with great alacrity, while Hamburg Airport’s Udo Bradersen unpacked the cost/benefit relationship of various sustainability measures.

Sydney and Brisbane Airports were both represented in the panel and shared a mutual mantra, in the case of an initiative unable to initially make its case in a dollar context.

Sydney Airport’s head of environment, Julia Phillips, said it was simply about not giving up. “When a project doesn’t meet IRR, we wait,” she said. “We wait, we keep a watching brief and walk towards the right time – when the technology is more advanced, or when the numbers can stack up. Never give up.”

It was perhaps the mantra for the entire conference as a whole which

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EVENTS: REGIONAL CONFERENCE, ASSEMBLY & EXHIBITION

at its essence is jam packed with indefatigable individuals, all working to shape the industry and sustain it.

Three days and nights of challenging ideas, articulate and informative speakers and generous, informed discussions on resilience, sustainability,

integration, fluidity and efficiency came to an end with a handover ceremony to Hamad International Airport, which will host next year’s conference in Doha, Qatar, on April 10-12, 2017. It already knows that it has a tough APA act to follow. www.aci-apa.com

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ACI ASIA-PACIFC NEWS

Regional update Vivian Fung provides an update on ACI’s Airport Carbon Accreditation programme, which is now so popular in Asia-Pacific that a quarter of all passengers pass through a certified gateway.

T

he figures speak for themselves, ACI’s Airport Carbon Accreditation (ACA) programme is a global success story with a total of 157 airports worldwide currently certified at one of the four levels of accreditation.

They include 21 carbon neutral certified gateways – Izmir Adnan Menderes in Turkey is the latest to join the elite club – and 31 airports from the Asia-Pacific region, which continues to embrace the initiative in growing numbers.

Gimpo international Airport is the region’s 10th airport to reach Level 3 Optimisation. In parallel, Hong Kong International Airport became the first gateway in the region to successfully renew its certification for three years.

Trendsetting Hong Kong was the first in the region to be certified at Level 3 Optimisation back in 2014, having successfully reduced its own CO2 emissions and engaged 45 companies on the airport site to do the same.

At the recent ACI Asia-Pacific Regional Assembly, Conference & Exhibition in Gold Coast, Australia, Sharjah International Airport received recognition for its successful move from Level 1 Mapping to Level 2 Reduction, while Queen Alia International Airport (Amman) also achieved an upgrade in its status in the programme, moving up to Level 3 Optimisation.

ACI Asia-Pacific’s regional director, Patti Chau, comments: “Five years ago, Airport Carbon Accreditation was extended to the Asia-Pacific region.

APA Issue 2, 2016

Since then, we have embarked on the journey towards carbon neutrality with our members.

“Today, we are proud to have 31 Asia-Pacific airports accredited at various levels of the programme, representing more than 26% of passenger traffic in the region. I encourage more members to become Airport Carbon Accredited and demonstrate our airports’ dedication to sustainable growth.”

Recent new entrants include Taoyuan International Airport at Level 2 Reduction.

Meanwhile, VINCI Airport’s three gateways in Cambodia – Phnom Penh, Siem Reap and Sihanoukville – and Doha’s Hamad International Airport all recently started their journey to active carbon management, becoming accredited at Level 1 Mapping.

ACI World’s director general, Angela Gittens, notes: “An impressive two billion air passengers now travel through airports certified at one of the 4 levels of the programme, which is equivalent to 33% of global air passenger traffic.

“With over 100 airports now engaged in Airport Carbon Accreditation, Europe is in the lead on carbon management, but other parts of the world are ramping up their efforts as can be seen from the strong momentum in Asia-Pacific and North America and growing interest in Latin America & Caribbean and Africa.

“Airport Carbon Accreditation is clearly empowering airports across the world to address their impact on climate change.”

September 12-14 Trinity Forum Mumbai, India

April 10-12 ACI Asia-Pacific Regional Assembly, Conference & Exhibition Doha, Qatar

2016

November 15-17 ACI Airport Exchange Istanbul, Turkey

2016

December 6-8 Investing in Airports Goa, India

2016

October 24-26 ACI Asia-Pacific Small and Emerging Airports Seminar Siem Reap, Cambodia

ACI ASIA-PACIFIC BOARD PRESIDENT

Kerrie Mather* (Sydney Airport, Australia)

FIRST VICE PRESIDENT

Seow Hiang Lee* (Changi Airport Group Pte Ltd, Singapore)

SECOND VICE PRESIDENTS

Fred Lam* (Airport Authority Hong Kong, Hong Kong) PS Nair* (Delhi International Airport Limited, India)

SECRETARY-TREASURER Emmanuel Menanteau* (Kansai Airports, Japan)

IMMEDIATE PAST PRESIDENT

Tan Sri Bashir Ahmad Abdul Majid** (Malaysia Airports Holdings Berhad, Malaysia)

REGIONAL BOARD DIRECTORS

Sulaiman Zainul Abidin (Pioneer Aerodrome Service Co Ltd, Myanmar) Tariq Al-Abduljabbar (General Authority Of Civil Aviation, Saudi Arabia) Aimen bin Ahmed Al Hosni (Oman Airports Management Company, Oman) HE Ali Salim Al Midfa (Sharjah Airport Authority, UAE) Kjeld Binger* (Airport International Group, Jordan)

Correct as of July, 2016.

Il-Young Chung (Incheon International Airport Corporation, Korea)

Sasisubha Sukontasap (Airports of Thailand, Thailand)

Kenichi Fukaya* (Narita International Airport Corporation, Japan)

Il-Hwan Sung (Korea Airports Corporation, Korea)

Datuk Badlisham Bin Ghazali (Malaysia Airports Holdings Berhad, Malaysia)

Dr Dar-jen Tseng Taoyuan International Airport Corporation (Chinese Taipei)

Derun Li (Shanghai Airport Authority, China)

Mark Young (Adelaide Airport Limited, Australia)

Xue Song Liu** (Beijing Capital International Airport Co Ltd, China)

REGIONAL BOARD DIRECTOR (WBP)

Pedro Roy Martinez (AB Won Pat International Airport Authority, Guam)

Vikas Gupta (GrayMatter Software Services, India)

ACK Nair (Cochin International Airport Limited, India) * WGB member **Regional Advisor on WGB

The ACI Asia-Pacific region represents 103 members operating 578 airports in 48 countries and territories. www.aci-apa.com

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ACI ASIA-PACIFC NEWS

EVENTS 2016 2017

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SPECIAL REPORT: INDIA

Five of the best

Joe Bates takes a closer look at the latest headline news being created

by India’s five busiest passenger gateways in Delhi, Mumbai, Bengaluru, Chennai and Kolkata.

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ndia is one of the world’s fastest growing aviation markets and its five busiest airports spread across the length and breadth of the country account for more than half of the 220 million plus passengers that pass through the nation’s gateways each year.

Delhi’s Indira Gandhi International Airport continues to be India’s busiest gateway handling close to 50 million passengers annually after recording at 15.7% upturn in traffic in 2016.

The airport, which has undergone a transformation in terms of its facilities and services since the GMR-led Delhi International Airport Limited (DIAL) took over the concession to operate it in 2006, accommodated a record 48.4 million passengers in its 2015/16 financial year.

Among the new facilities added in the last decade have been Terminal 3, which opened in 2010 and is believed to be the eighth largest passenger terminal in the world, a new domestic departures terminal (T1D), and a new runway.

And as you can read later on in this issue, customer service levels at the airport have soared in recent years, leading to Delhi-Indira Gandhi winning two major awards in ACI’s 2015 Airport Service Quality (ASQ) awards.

The airport has also become one of the ‘greenest’ in Asia courtesy of awards such as its Level 3 Optimisation certification in ACI’s APA Issue 2, 2016

Delhi–Indira Gandhi International Airport.

Airport Carbon Accreditation programme and Leadership Energy and Environment Design (LEED) ‘Gold’ rating.

It also recently became the first airport in the world to have its on-site solar power plant certified by the United Nations under new climate change regulations.

The plant, which is now capable of generating 7.84MW of ‘green power’, has been registered under the Clean Development Mechanism of the United Nations Framework Convention on Climate Change (UNFCCC).

Commenting on the development, DIAL’s CEO, I Prabhakara Rao, enthused: “At Delhi Airport we strongly believe that the collaborative approach is the key strategic element for combating climate change.

“As part of our extensive sustainability strategy, we have taken various efficiency measures. These include green infrastructure such as LEED-NC Gold Certification, Solar Power Generation, successful registration on energy efficiency with UNFCCC, Clean Development Mechanism, Water and Waste Management initiatives.

“The successful execution and expansion of the solar power plant would not have been possible without the support of our concessionaires and stakeholders.”

DIAL is a joint venture between the GMR Group (64%), Airports Authority of India

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(26%), and Fraport (10%). GMR is the lead member of the consortium and Fraport AG is the airport operator.

Mumbai’s Chhatrapati Shivaji International Airport is India’s busiest cargo gateway and second busiest for passengers courtesy of the 41.6 million that passed through it facilities in the 2015/16 financial year.

Operated by Mumbai International Airport Limited (MIAL) – a joint venture between GVK Industries Ltd and the Airports Authority of India – it, too, boasts a new state-of-the-art terminal in the shape of T2, which opened in 2014.

Indeed, such was its importance to Indian aviation and Mumbai that the then Prime Minister was on hand to inaugurate the new $2 billion facility, which is equipped to handle 40mppa.

Designed by Skidmore, Owings & Merrill (SOM) its key features include a uniquely sculpted roof supported by 30 ‘mushrooming’ columns and impressive ‘sense of place’ fixtures such as a Bollywood mural, which forms part of India’s largest public arts programme.

It has actually been labelled an “iconic mega-structure” by MIAL and it was clearly needed as passenger numbers through the airport soared by 25.2% in 2016.

The terminal’s Leadership in Energy and Environmental Design (LEED) Gold certification also means that it is one of India’s

ACI has welcomed India’s new National Civil Aviation Policy as a significant step forward in assuring that the country takes its rightful place in aviation as a driver of economic and social development.

It is particularly pleased with the proposed introduction of the hybrid till system, which it believes will result in increased private investment in airports and enable the airport sector to play its role in facilitating growth in air travel.

ACI World’s director of economics, Stefano Baronci, says: “There are innumerable examples of governments all over the world which realise that a partnership between private and public players can trigger investment in airports when suitable regulation is in place, including the provision of a dual till or a hybrid till system, “In fact, considering the top 100 busiest airports in the world, half operate either under a dual till or a hybrid till system.

While the airports under these till regimes are found all over the globe, there is a higher prevalence in Asia-Pacific, Europe and Latin America-Caribbean.

These markets also have a higher propensity for private sector participation.

“Over and above attracting investment, a dual till or a balanced hybrid approach creates incentives for airports to develop their commercial activities independently of their aeronautical activities, with the former being a vital resource to drive the much needed modernisation of airport infrastructure and the improvement of the quality of service to the passengers.” most environmentally friendly terminals. The airport has been awarded ISO certification for its carbons emissions accounting by Bureau Vertias and MIAL itself recently received a prestigious ‘Gold’ certificate at the GreenCo Summit in Hyderabad.

The award recognises its efforts in attaining an industry benchmark for exemplary work in the areas of www.aci-apa.com

SPECIAL REPORT: INDIA

GREEN LIGHT FOR HYBRID TILL SYSTEM

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SPECIAL REPORT: INDIA

TOP 10 INDIAN AIRPORTS RANKING IN TOTAL PASSENGERS 2015-16 (APRIL-MARCH) Rank Airport 1

Delhi (DIAL)

Total Passengers 48,424,165

2

Mumbai (MIAL)

41,670,351

3

Bangalore (BIAL)

18,971,149

4

Chennai

15,218,017

5

Kolkata

12,421,244 12,388,159

6

Hyderabad (GHIAL)

7

Cochin (CIAL)

7,749,901

8

Ahmedabad

6,480,111

9

Pune

5,417,167

10

Goa

5,375,555

environmental management (water conservation, waste management, and greenhouse gases emission), energy management (efficiency and renewable energy), green supply chain, material conservation, recycling, and other green initiatives undertaken by the company.

Its considerable customer service efforts have also been rewarded by its joint top ranking in the global 25-40mppa category in ACI’s 2015 ASQ customer satisfaction awards.

Bengaluru’s Kempegowda International Airport is India’s third busiest gateway based on the 18.9 million passengers handled in year ending March 31, 2016.

Opened in May 2008, the greenfield gateway is owned and operated by Bangalore International Airport Limited (BIAL), a public private consortium which now counts Canada’s Fairfax Group (33%) as its largest shareholder after it agreed to pay GVK more than $322 million for the stake earlier this year.

Other shareholders in BIAL, which has a 30-year concession for the gateway with an option to extend for another 30 years, are Siemens Project Ventures (26%), GVK (10%), Zurich Airport (5%), and the Airports Authority of India (26%).

In line with its status as South India’s busiest airport and gateway to India’s Silicon Valley, Kempegowda is one of the nation’s most high-tech hubs and in 2015 signed a APA Issue 2, 2016

seven-year contract with SITA to utilise its passenger processing technology.

At the time, BIAL’s president for airport operations, Hari Marar, said: “Kempegowda Airport, being the gateway to a city which is one of the top technology innovation hubs in the world, continues to adopt next generation technology to enhance the overall passenger experience.”

Earlier this year the airport greeted its 100 millionth passenger and also became the first Indian gateway to be awarded a GreenCo Platinum rating by the Confederation of Indian Industry’s Green Business Centre.

In fourth spot is Chennai International Airport, which handled 15.2 million passengers in FY2015/16 and continues to expand its route network by adding new services and adding frequencies to existing destinations.

The airport was upgraded and modernised

by AAI in 2013 and it plans to invest another $311 million on expanding the existing terminal in the next five years.

Holding on to fifth spot by a whisker ahead of Hyderabad’s Rajiv Gandhi International Airport is Kolkata’s Netaji Subhash Chandra Bose International Airport, which in FY2015/16 welcomed 12.4 million passengers.

Located in Dum Dum approximately five killometres from the region’s newly developing industrial IT hub and 17km from downtown Kolkata, the airport is the largest in eastern India and the only international airport operating in West Bengal.

Its impressive new 180,000sqm integrated passenger terminal opened in 2013 at a cost of $450 million and ensures that it is capable of accommodating up to 20 million passengers per annum.

Chennai and Kolkata were previously slated for privatisation and Request For Quotations (RFQs) for the airports were launched in late December 2014, however, the process has since stalled and with AAI planning airfield enhancement and other development projects at both, the likelihood of this process being reignited APA for now seems remote.

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SPECIAL REPORT: INDIA

Planning for the future Airports Authority of India’s member of planning, Sudhir Raheja, tells Asia-Pacific Airports more about the country’s sizeable airport network and reveals some ambitious development projects for the nation’s gateways.

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irports Authority of India (AAI) has been responsible for developing the nation’s gateways from its inception and our goal, as it was from day one, remains to create a world-class airport network.

With this come the simple, and clear objectives of promoting air traffic; improving direct connectivity between cities for the convenience and comfort of the travelling public; and contributing towards the overall economic development of the country.

Today, we own and manage more than 125 airports across the country, which include 21 international Airports, 81 domestic airports and three ‘civil enclaves’ and 26 ‘defence enclaves’ at military airfields. However, out of this total, only 94 airports are operational.

TRAFFIC FIGURES

In terms of facts and figures, during the 2015-16 financial year a record 223.61 million passengers passed through India’s airports, a rise of 17.6% on the previous year.

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The upturn was fuelled by a 21.2% rise in domestic throughput, which increased to 168.89 million passengers, and a healthy 7.7% rise in international traffic, which hit an all-time high of 54.72 million passengers.

Cargo volumes are also faring well, a total of 2.7 million tons of freight passed through India’s airports in FY2015-16, just over one million tons on domestic services (+6.4%) and 1.65 million (+7.5%) on international flights.

And the future looks bright as AAI forecasts that domestic and international passenger numbers are expected to grow by an average of 9.2% and 7.5% per annum respectively over the next five years and exceed 471.8 million passengers and 4.6 million tons of cargo annually by 2025/26.

These figures might sound ambitious, but they are in line with the government’s recently unveiled National Civil Aviation Policy, at the heart of which is the goal of making flying affordable to the masses.

Indeed, the government’s stated target

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INVESTMENT PROGRAMME

In response to the growth projections, AAI has drawn up a huge infrastructure development plan that involves a capital expenditure (CAPEX) of $2.2 billion for the five years ending 2020/21 in a bid to ensure that the country is equipped to handle the expected rise in demand.

For its part, the government is planning to invest around $120 billion on the development of the aviation sector, which includes airports, the airlines and air navigation services over the next decade.

TERMINAL VELOCITY

Key projects include new terminal buildings at Agartala, Guwahati, Vijayawada, Leh, Gorakhpur, Patna and Imphal airports to raise their capacities and ensure that they are better equipped to handle the anticipated rise in passengers.

Prime Minister, Narendra Modi, has announced a special $400 million package for Bihar state in East India that includes the development of Gaya, Raxaul and Purnea airports and the construction of a new greenfield airport in Patna.

There are also plans to raise the capacities of Chennai, Trichy, Srinagar, Pune, Lucknow, Coimbatore, Mangalore,

Dehradun and Jaipur airports by expanding their existing terminal buildings.

Elsewhere, new terminals are close to completion and are expected to open later this year at Vadodara, Jammu, Kishangarh airports and another seven airport terminals are under construction or will be commissioned in the next two years at Belgaum, Hubli, Vijayawada, Tezu, Calicut, Jharsuguda and Port Blair.

AAI is also constructing a greenfield airport in Pakyong (Sikkim), which is expected to open for business in September 2017.

In addition new passenger facilities are planned at a handful of military airfields (Agra, Allahabad, Kanpur, Bagdogra and Jammu) that already accommodate commercial airline operations and new ones will be built at others (Bareilly, Adampur and Purnea) that currently don’t.

CARGO FACILITIES

The opening of so many new facilities will create an opportunity to convert the old terminal buildings at 24 airports into new cargo complexes for domestic freight consignments.

With modification, the new terminals will be capable of accommodating cargo from all over the country including perishable goods, medicines and other high value and express delivery shipments as e-commerce continues to grow and develop.

AIRFIELD ENHANCEMENTS

AAI has also not forgotten about the need for airfield enhancements and, as a result, is committed to runway extension or rehabilitation projects at eight airports – Kolkata, Chennai, Surat, Trivandrum, Calicut, Ahmedabad, Dibrugarh and Amritsar.

The projects, which are scheduled for completion by the end of 2017, follow the recent completion of similar programmes at Jaipur and Vadodara.

Next on the list for a runway upgrade are Raipur, Jammu, Rajahmundry, Vijayawada, Tirupati, Kadappah and Jabalpur, which if all goes according to plan, should be completed in the next three to four years. www.aci-apa.com

SPECIAL REPORT: INDIA

is to make it possible for up to 300 million Indians to travel domestically by air by 2022 and 500 million by 2027, and with increased airline penetration to India’s small cities, better connectivity to the north-eastern part of the country and a growing middle class willing to travel, this is absolutely achievable.

To help achieve this the government has changed the law to allow 100% Foreign Direct Investment (FDI) in airlines, which is expected to result in a cash injection for India’s domestic airlines.

And to boost overseas interest and investment in airports, which by their very nature are capital intensive assets, it has done the same for airports by raising the FDI limit from 74% to 100%.

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SPECIAL REPORT: INDIA

PASSENGER FACILITATION

We take passenger facilitation very seriously at AAI so in addition to making our terminals as customer friendly as possible we are also looking at ways of improving the overall airport experience through the possible introduction of facilities and services such as new car parks, multi-modal transit options, hotels and recreational zones.

Today’s air travellers expect these amenities at competitive prices so it is important that the ‘city side’ development of our airports is given top priority so as to subsidise traffic revenue with additional sources of non-aeronautical income.

For this reason, AAI has appointed consultants to prepare Detailed Project Reports (DPRs) for possible developments at eight airports – Lucknow, Raipur, Tirupati, Kolkata, Varanasi, Bhubaneswar, Jaipur and Amritsar.

If this proves successful, city side development projects are expected to follow at a further 11 airports across the country.

AIR NAVIGATION SERVICE INFRASTRUCTURE

AAI has also upgraded and modernised air navigation services across India through the introduction of state-of-the-art navigational aids and technologies.

Air navigation service infrastructure currently under construction includes ATC towers and associated facilities at Ranchi and Shillong airports; a radar complex at Guwahati’s gateway; and a Centre for Air Traffic Flow Management (CATFM) at Vasant Kunj, New Delhi.

They will be followed by new ATC towers at Kolkata, Ahmedabad, Vadodara, Raipur, Varanasi, Jabalpur, Bhopal, Trichy, Khajuraho, Guwahati, Bhubaneswar and Gaya airports while Air Traffic Service (ATS) complexes are planned for Mumbai–Chhatrapati Shivaji and Ahmedabad airports.

SUSTAINABLE GROWTH

AAI’s commitment to sustainable growth ensures that a focus on renewable energy is a key goal and, in recent years, has led to a number solar panel installations.

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Indeed, solar panels have already been installed on the roof of buildings at 12 airports and projects at 13 others are currently underway and are likely to be commissioned by the end of this summer.

Elsewhere, solar farms are being installed on land at Kolkata, Jaipur and Chandigarh airports, the largest of which is a 15MWP facility on a 60-acre site at Kolkata’s Netaji Subhas Chandra Bose International Airport.

The 13 airports next in line to receive ground based photovoltaic systems are Bhubaneswar, Varanasi, Lucknow, Madurai, Hubli, Belgaum, Aurangabad, Mysore, Vijayawada, Gaya, Agartala, Dibrugarh and Kadapa.

GREENFIELD PROJECTS

The success of the greenfield projects in Bengaluru (Kempegowda International Airport) and Hyderabad (Rajiv Gandhi International Airport), both opened in 2008, has convinced AAI that this winning formula could be repeated in other Indian cities.

As a result, AAI is in various stages of consultation with state governments to develop new greenfield gateways at Shirdi, Deoghar and Kushinaga using the JVC model.

AAI also plans building and operating another greenfield airport at Itanagar and has made a request to the state government for permission to acquire the land to make it happen.

APA

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SPECIAL REPORT: INDIA

Time for technology Leveraging technology will help India’s airports overcome today’s operational challenges and usher in the next generation of air travel in India, writes Andrew Seow.

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he Indian aerospace industry has witnessed impressive growth during the past few years, with major contributions from the civil aviation segment.

This translated to faster domestic air passenger growth than both China and the United Stated in 2015, according to the International Air Transport Association (IATA), and it predicts that India is likely to become the third largest aviation market in the world by 2026.

Driven by factors such as low-cost carriers (LCCs), Foreign Direct Investment (FDI) in domestic airlines and a growing emphasis on regional connectivity, civil aviation in India is entering a new phase of development after experiencing both stagnation and explosive growth over the past 20 years.

However, in order to accommodate and sustain the growth, there is a need to upgrade airport infrastructure and address associated challenges such as airport congestions and security.

Local airports face the pressure of improving operational efficiency and passenger processing procedures to deliver a better overall passenger experience, while taking the pressure off its staff.

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ADDRESSING THE CHALLENGES

According to IATA, India is expected to have 275 million new passengers by 2034. This kind of growth cannot take place unless there is infrastructure in place to support it.

As such, local airport operators are seeing the value in technology investments to help them address capacity challenges.

Delhi’s Indira Gandhi International Airport, for example, is the first airport in India to launch a fully common-use mobile check-in platform to ease the pressure off the counters and speed up passenger check-in processes.

The busiest airport in South Asia saw the deployment of the cutting-edge technology, which enables passengers to check-in from anywhere in the airport using a tablet-based application.

The airport has also made an investment to install 90 hand-held scanners for the automated baggage reconciliation system (BRS) that will handle 12,800 pieces of baggage per hour.

While check-in counters have been equipped with Common Use Passenger Processing Systems, another first for India.

Indeed, next-generation technologies such as common-use kiosks and mobile check-in systems are being introduced across India as airport operators and airlines bid to ensure a seamless air travel experience for their passengers.

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SPECIAL REPORT: INDIA

And aviation isn’t the only transport mode investing in new passenger enabling technology as the Airport Metro rail station in New Delhi offers check-in facilities for domestic and international travellers.

The system is similar to the one used in Hong Kong where experience has shown that being able to check-in luggage well in advance of arrival at the airport invariably ensures a more enjoyable and hassle free travel experience for passengers.

The technologies also ensure compliance with IATA’s FAST travel initiative that aims to provide self-service options for various steps in the passenger journey such as check-in, document check, boarding and baggage recovery.

IATA claims that around 75% of passengers worldwide want more selfservice options and the figure could be even higher than that if the findings of a number of different airline and airport IT surveys are to be believed.

What cannot be disputed is the fact that solutions such as these reduce waiting time for passengers and allow them greater control of their travel journey.

An added benefit for the industry is that these processes should reduce the reliance on ground handling staff to move passengers through the airport.

In addition to the above, investments in technology represent significant cost savings for industry players.

ROAD AHEAD

While there has been a sizeable increase in the market, India’s aviation industry is still largely untapped with huge growth opportunities that can be capitalised on.

Availability of skilled manpower along with a favourable business environment will position India as one of the most attractive investment destinations in the coming years.

As such, industry stakeholders should engage and collaborate with policymakers to implement efficient and effective systems that will boost India’s aviation industry.

As Tony Tyler, director general and CEO of IATA said: “The world is focused on Indian aviation – from manufacturers, tourism boards, airlines and global businesses to individual travellers, shippers and businessmen.

“If we can find common purpose among all stakeholders in Indian aviation, a bright future is at hand.”

With the right investments and a relentless focus on quality, cost and passenger interest, India will be well placed to become a regional aviation hub and one of the largest aviation markets globally. APA

ABOUT THE AUTHOR

Andrew Seow, is Rockwell Collins’ regional director for global airports, Asia Pacific Information Management Services. www.aci-apa.com

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SPECIAL REPORT: INDIA

Making headlines Asia-Pacific Airports reviews the latest news and developments across India courtesy of Momberger Airport Information.

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ndia’s President, Pranab Mukherjee, believes that the signs are good that the aviation sector will continue to flourish and grow in the years ahead.

In fact he is confident that the sector is poised for fast and sustainable growth as India develops 100 smart cities, new economic corridors, opens new airports and upgrades and expands existing ones.

“Deeper air penetration to smaller cities; better connectivity to the north-eastern part of India; and higher disposable incomes of the middle classes are expected to further propel the growth of Indian civil aviation industry,” he predicts.

Mukherjee noted that India registered a growth of 14% in the civil aviation sector during the last decade.

He also notes that Foreign Direct Investment (FDI) in air transport over the last 15 years has topped $570 million, which he claims shows that India is a favourite destination for foreign investors in the civil aviation sector.

NAVI MUMBAI INTERNATIONAL AIRPORT

Only three bidders – GMR Group, the GVK-led Mumbai International Airport Limited (MIAL) and the Tata Realty-MIA Infrastructure consortium – will now compete for the Navi Mumbai International Airport contract as India’s government has rejected the security clearance of the fourth shortlisted group, the Zurich AirportHiranandani Developers consortium.

The state government and Maharashtra’s City and Industrial Development Corporation (CIDCO) hope to award the contract this summer so that an airport with an initial APA Issue 2, 2016

capacity of 10 million passengers per annum gets commissioned by December 2019.

Phase 2 of the new airport’s development will be triggered by demand and raise its capacity to 25 million passengers per annum.

Meanwhile, the Ministry of Civil Aviation has asked the Airports Authority of India (AAI) to become a part of the Navi Mumbai airport project along with CIDCO. The Ministry has given AAI five years to buy a 5% stake from CIDCO in the special purpose vehicle that will be formed for the project with the new investment partner.

CHENNAI INTERNATIONAL AIRPORT

The international and domestic terminals at Chennai International Airport are to be integrated by 2019 under the second phase of the airport’s modernisation programme.

According to the airport’s director, Deepak Shastri, the $300 million project will ensure the hassle-free movement of passengers between the international and domestic terminals.

He says: “Now there will be one single terminal, the one half being international and the other half domestic. This would increase the capacity of the airport to 30 million passengers a year.”

Shastri reveals that a consultant will be appointed before the next financial year to draw up an integration plan. “Once the consultant is appointed, it will take three years to complete,” he adds.

THE CHANGI EXPERIENCE

Singapore Cooperation Enterprise (SCE) and AAI have signed an MoU with Indian Prime Minister, Narendra Modi, that will result in

ASIA-PACIFIC AIRPORTS MAGAZINE

NAGPUR–DR BABASAHEB AMBEDKAR INTERNATIONAL AIRPORT

Tenders are invited for the pre-qualification of applicants wishing to bid for the concession to operate and develop Dr Babasaheb Ambedkar International Airport in Nagpur in Maharashtra state for the next 30 years.

According to the terms of the tender document, the modernisation of the airport is expected to cost $30 million and take place in four phases on a public private partnership (PPP) basis.

The ambitious first phase includes the construction of a new runway, new ATC tower, new passenger terminal and cargo complex and is expected to be completed inside four years.

The next three phases will be added according to passenger demand and involve expanding the terminal; the construction of new parallel taxiways and additional cargo facilities; a final extension to the terminal and new multi-level car park.

Ultimately the airport will be equipped to handle 6.93 million passengers per annum

with its capacity raised to 2.4mppa upon completion of the first phase.

Announcing the decision in the Legislative Council, Chief Minister, Devendra Fadnavis, said that the request for qualification (RFQ) document was on the lines of that for Navi Mumbai Airport.

Airport operator, Mihan India Ltd (MIL), is looking for a private partner willing to invest in the gateway and help it turnaround its fortunes as the company has failed to make a profit in the seven years it has managed the airport.

MIL is a joint venture between the state government’s Maharashtra Airport Development Company (MADC) and the Airports Authority of India (AAI).

GMR TO SELL SHARES IN HYDERABAD?

Global airport operator, GMR, is reported to be considering selling a stake in Hyderabad– Rajiv Gandhi International Airport.

The company has initiated discussions with a handful of global investors that include Apollo Global Management, KKR, PSP Investments and the Abu Dhabi Investment Authority (ADIA).

Aéroports de Paris (ADP) and Singapore Changi’s international investment arm, Changi Airports International (CAI), are also seen as potential bidders for part of its 63% interest in operating company, GMR Hyderabad International Airport Limited (GHIAL).

The potential move could mirror GVK’s recent divestment of a 33% stake in Bengaluru International Airport to Fairfax APA Holdings as part of a debt-retiring plan.

MOMBERGER AIRPORT INFORMATION

Information for this article was taken from samples of the Momberger Airport Information newsletter, which has been published bi-weekly since 1973.

For more information and to order an annual subscription, please visit www.mombergerairport.info www.aci-apa.com

SPECIAL REPORT: INDIA

Changi Airport Group (CAG) being involved in the design, planning, commercial development, operations and management of Ahmedabad and Jaipur airports.

This marks the first instance of a government-to-government agreement to develop airports in India for which Singapore Changi would be paid a management fee.

The agreement is set to run for at least 10 years and if this experiment is successful, the Indian government may try this option with other airports.

Of India’s six metro airports, four (New Delhi, Mumbai, Hyderabad, and Bengaluru) are currently run by private operators.

The previous United Progressive Alliance (UPA) government wanted more airports to be privatised, despite resistance from airlines, which claimed that they would inevitably become more expensive to use because of the money invested in upgrading their facilities.

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ASQ WINNERS

Everyone’s a winner!

Australia’s spectacular Gold Coast was the venue for this year’s Airport Service Quality (ASQ) awards ceremony for the world’s most customer friendly airports.

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CI’s Airport Service Quality (ASQ) customer satisfaction benchmarking programme is 10 years old this year and it marked the occasion with a record number of awards.

Indeed, it was a case of smiles all round, the occasional fist pump and lots of people striking poses as dozens of airports received their ASQ awards at a glittering ceremony held during the Gala Dinner at the recent ACI Asia-Pacific Regional Conference & Exhibition in Australia.

And it was fitting that the awards ceremony was held in the region as ACI Asia-Pacific airports completed a clean sweep in all of the global sections in the annual survey that involves over 550,000 passenger interviews at more than 300 airports in 80 countries across the planet.

In total, a record-breaking 62 airports won awards in the 2015 ASQ survey due to the introduction of new categories and the results in others being too tight to call.

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In the global Best by Size categories, customer service king, Incheon International Airport, finished top in the Over 40mppa section although this time it had to share the honour with Singapore Changi as the two super hubs couldn’t be separated on the score cards.

The duo finished ahead of an all Chinese cast on the runner’s up podium with Beijing Capital and Shanghai Pudong tied in second place and Guangzhou Baiyun finishing third.

ACI also found it impossible to separate India’s Mumbai–Chhatrapati Shivaji and Delhi–Indira Gandhi airports for top spot in the Best Airport by Size category for gateways handling between 25 and 40 million passengers per annum.

Seoul Gimpo retained its crown in the 15-25mppa category for the fifth successive year while Sanya Phoenix won the 5-15mppa and Jaipur, a new name in the winner’s enclosure, took the honours in the 2-5mppa category.

In the Best by Region categories, it was a case of as you like it for both Amman-Queen

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ASQ WINNERS

Alia (Middle East) and Incheon (Asia-Pacific), although for the first time in 11 years the Seoul gateway had to share the spoils with Singapore Changi in joint first place.

The new category of Best by Size and Region gave a number of gateways the chance to shine in ACI’s ASQ survey for the first time. They included India’s Jaipur International Airport, which triumphed in the 2-5mppa category for Asia-Pacific.

Others first time winners were Denpasar and Dammam, which both won Most Improved Airport accolades for the AsiaPacific and Middle East regions respectively.

Worthy of note is that Jaipur, Sanya Phoenix, Seoul Gimpo and Delhi-Indira Gandhi airports were double winners after repeating their global success with first place rankings in the Best Airport by Size and Region categories for Asia-Pacific.

While Incheon, the most successful ASQ airport of all time, was a triple winner after finishing top outright in the Over 40mppa section in the Best by Size and Region category for Asia-Pacific.

Commenting on his airport’s success, Incheon’s CEO, Chung Il-young, says: “We continuously strive to do better and this now includes improving the old facilities and operational systems of Terminal 1 and completing the construction of the second terminal by 2017.”

Singapore Changi’s senior vice president for corporate and marketing communications, Ivan Tan, says: “At Changi Airport, we believe in delivering a passenger experience that is

personalised, stress-free and positively surprising. We call this the Changi Experience and we can only deliver it with the strong and steadfast commitment of our frontline personnel including our dedicated and hardworking Changi Experience Agents (CEAs).

“The CEAs are our roving service ambassadors who comb our terminals armed with tablets. Rather than have our passengers walk to information counters, our on-the-go CEAs spot passengers in need and provide assistance such as giving flight details and directions.

“All the information they need is in their tablet. Together, our CEAs can speak close to 20 languages to cater to our international audience”.

Seokki Kim, president and CEO of Korean Airports Corporation (KAC), believes SeoulGimpo’s continued success demonstrates just how good its customer service levels are as he admits that the gateway is currently utilising “outdated facilities”.

He says: “Gimpo’s achievement of ranking the first in the world in airport services for the fifth consecutive time, despite its outdated facilities, is the result of the combined efforts of all airport employees who share the mutual goal of providing the best airport services and strive to achieve it.

“We will do our best to continue to innovate and make improvements to remain a customer-friendly and businessoriented airport.”

Reflecting on Queen Alia holding on to its title of Best Airport in the Middle East, CEO, www.aci-apa.com

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ASQ WINNERS Kjeld Binger, says: “The fact that we have been recognised once again by our passengers through such a prestigious global organisation is further testament to our consistent track record of achievements and our efforts toward sustaining our standing as one of the top 20 airports, which serves five to 15 million passengers.

“Looking back at how far we have come since the new terminal was inaugurated in 2013, it is clear that our competitive advantage lies in our conveniently smaller size, which makes for shorter transit processes and walking distances, not to mention Jordan’s stability and strategic proximity to Europe and Africa, making QAIA an ideal gateway for business and leisure passengers.”

Delhi-Indira Gandhi International Airport scooped two first places in the 2015 ASQ survey and was ranked joint-second best gateway in the entire Asia-Pacific region.

The opening of its state-of-the-art Terminal 3 in 2010 certainly helped as operator, Delhi International Airport Limited (DIAL), proved good on its pledge to enhance service standards across the airport.

DIAL CEO, I Prabhakara Rao, notes: “The airport’s partners and employees have relentlessly delivered a distinct and enjoyable APA Issue 2, 2016

experience to our passengers enabling us to achieve three coveted ASQ awards.

“These achievements reiterate our commitment towards fulfilling our Honourable Prime Minister’s ‘Make in India’ mission and also act as a catalyst for the creation of a new paradigm for the passenger experience.

“In the fast-changing landscape of worldwide aviation, ACI-ASQ benchmarking programme is the key to understanding how to enhance passenger satisfaction and improve business performance.”

Paying tribute to the winners, ACI World’s director general, Angela Gittens, remarked that the ever increasing efforts of airports to concentrate on “ensuring a stellar passenger experience” appeared to be part of a larger trend.

“Airports have evolved into complex, customer-focused businesses in their own right that in many cases are in competition for passenger traffic,” she notes.

“From duty free and restaurants, to ambience, cleanliness, courtesy of staff, amenities, efficiency and more, air travellers are expecting big things from the airports through which they travel.

“More than anything, ASQ is a way for participants to measure the extent to which APA they deliver on these expectations.”

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ZHENGZHOU AEROTROPOLIS

Zhengzhou takes off John Kasarda tells us more about the exciting plans to create a dynamic economic zone around Zhengzhou Xinzheng International Airport in China’s Henan Province.

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hina’s mushrooming air traffic has led to an airport construction boom that in the last five years alone has led to more than $43 billion being invested in modernising and expanding existing airports and building new ones.

More than $12 billion is being expended in 2016 and this annual amount is expected to grow. Indeed, the Civil Aviation Administration of China (CAAC) reports that 66 new airports will come on line by 2021, including major ones in Beijing, Chengdu, Dalian, Qingdao and Xiamen.

CAAC also reports that 52 of the mainland’s 206 current commercial airports will receive significant upgrades.

It would be a mistake, however, to assume that such huge investments are being made solely to meet the nation’s expanding aviation capacity needs as China’s leaders view their airports much more broadly than as air transit infrastructure to move growing volumes of passengers and cargo.

They also consider them to be industrial magnets and strategic infrastructure to capture 21st century global business. As a

APA Issue 2, 2016

result, the nation has fully embraced what it calls the ‘Airport Economy’ model with over 90 airports presently containing or planning some form of airport economic zone.

ZHENGZHOU’S DYNAMIC ZONE

The largest and arguably most ambitious of these is the 415 square kilometre Zhengzhou Airport Economy Zone (ZAEZ) being developed on and around Zhengzhou Xinzheng International Airport (CGO), about an hour’s flight from Beijing and Shanghai.

The ZAEZ represents a pioneering collaborative effort between China’s central government, Henan Province (105 million residents) and Zhengzhou city (9 million residents) to generate economic transformation, global integration, and greater prosperity for the province and its capital city.

These objectives are being accomplished by establishing an international air logistics hub at CGO, modernising and expanding its passenger and air cargo facilities, and developing surrounding clusters of high-end manufacturing and advanced business service industries.

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kilometre cool-chain logistics park that hosts a meat port, fresh flower port and a pharmaceutical/biomedical port.

The Airport District has attracted German IAS Aircraft Interiors, Mooney Aircraft Manufacturing, and Sino-France General Aviation Aircraft Manufacturing while China Post, DHL, Prologis, TNT-Sinotrans, UPS and SF-Express are among the 50 express carriers, freight forwarders and 3PLs that operate in this district.

Also present are e-commerce firms such as Suning E-Commerce and the Henan cross-border electronic business platform.

The B2B Zhoushi International Supply Chain Management Company fills an average of 200,000 orders daily with up to 500,000 orders on peak days.

South of the Airport District is the 155 square kilometre High-End Manufacturing District primarily geared to biomedicine, precision and advanced manufacturing, IT and ICT equipment, R&D and the production of new aerospace equipment materials such as carbon-fibre composites, polymers and ceramics.

A 100 square kilometre Urban Services District, located north of the Airport District, is targeted for modern business services such as aircraft leasing and finance; scientific and knowledge-intensive functions such as software engineering; cultural and leisure facilities; and mixedused commercial/residential areas with urban amenities for executives, professionals and knowledge-workers.

Facilities in the latter include an international K-12 academy that opened in the autumn of 2015 with a university-like campus, English-language teachers, and curricula based on Silicon Valley schools.

ZAEZ’S ENGINE

Powering the ZAEZ is Zhengzhou Xinzheng International Airport (CGO), designated as one of eight national Category 1 airports in China.

Today, CGO serves as the Asia hub for Cargolux Airlines as well as a focus airport for China Southern and Shenzhen Airlines. Its www.aci-apa.com

ZHENGZHOU AEROTROPOLIS

Together with integrated surface transportation infrastructure, Western-style education institutions, and new urban centres, an aerotropolis (airport-centred urban economic region) is being created to become a dynamic growth pole for central China’s economic advancement.

In less than six years since being established as a bonded zone and airport city, the ZAEZ has experienced remarkable growth in industrial investment, economic output and trade volumes.

Leading this growth is Foxconn, the contract manufacturer for Apple’s iPhones.

Some 250,000 workers at Foxconn’s immense ZAEZ factory complex produced over 100 million iPhones last year accounting for nearly 80% of all iPhones sold globally.

Another 16 smartphone manufacturers operating in the zone brought total output in 2015 to nearly 150 million units, making it the world’s largest single site for smartphone production.

Numerous other high-end manufacturers in electronics, information and communications technology, biomedicine, and business services sectors have invested in the ZAEZ. In fact since 2013, over 50 industrial projects have been completed, bringing total fixed investment to more than $20 billion in 2016. Value added by large scale industries reached $5.2 billion in 2015 with the zone’s GDP growing at an annual compound rate of 49% during the past five years.

Combined ZAEZ imports and exports reached $7 billion in 2015, which ranked it second in trade among China’s bonded and free trade zones.

The vast majority of economic activity to date has been concentrated in a 160 square kilometres Airport District that includes 48 square kilometres of land either at or immediately around the gateway.

The Airport District contains ZAEZ’s bonded zone where Foxconn and other smart phone assemblers are located along with aviation-oriented sectors such as time-critical manufacturing and distribution, aircraft components production and a 1.2 square

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ZHENGZHOU AEROTROPOLIS

strategic location at the geographic centre of China’s population provides airlines with the shortest average flight times to major domestic markets, 60% of which can be reached in less than 90 minutes.

More than 50 airlines currently serve 97 cities from the gateway, the total including 17 international passenger destinations and 27 all-cargo routes.

Both air cargo and passenger growth have been phenomenal in recent years, freight volumes soaring from 85,800 to 403,000 tonnes per annum between 2010 and 2015 while passenger numbers increased from 8.7 million to 17.3 million over the same period.

The figures represent staggering average annual growth rates of 36% for cargo and 15% for passenger traffic.

Indeed, CGO has been China’s fastestgrowing cargo airport percentage-wise for each of the last four years and became the nation’s fastest growing passenger airport (percent growth) in 2014.

The rapid rise of CGO’s cargo and passenger volumes stimulated a $2.7 billion airport infrastructure and facilities expansion programme that began in December 2012 and now is nearing completion.

It has added a new 360,000sqm Terminal 2, second runway and 500,000 square feet of cargo facilities. The new terminal, opened in December 2015, boasts 71 passenger aircraft parking bays and nine dedicated freighter bays.

These additions bring Zhengzhou Xinzheng International Airport’s annual passenger capacity to 29 million and its cargo capacity to 600,000 tonnes.

APA Issue 2, 2016

The upgrade also involves the addition of a new 283,000sqm multi-modal ground transportation centre integrated with T2.

Set to open later this year, it will have transit and parking areas for buses and taxis and underground halls for subways and high-speed intercity trains converging on CGO. The arrival of the latter is expected to significantly extend the airport’s catchment area.

The long-term airport master plan (through 2040) shows CGO with five runways, one of which will be dedicated to air cargo, four passenger terminals and additional cargo facilities. This will expand the airport’s passenger capacity to 70 million annually and cargo to over three million metric tons annually.

A modernising and expanding CGO powering the ZAEZ provides concrete testimony that well-designed and wellsupported airports can drive remarkable economic development.

But such outcomes require more than a ‘build it and they will come’ approach.

Development as represented by the ZAEZ also requires systematic integration of airport planning, surface transportation planning, business site planning, and urban planning reinforced by strong and enduring commitments by all levels of government.

APA

ABOUT THE AUTHOR

John Kasarda, PhD, directs the Center for Air Commerce at the University of North Carolina’s Kenan-Flagler Business School and is chief adviser to the Zhengzhou Airport Economy Zone.

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IT INNOVATION

Living in a digital world

Blockchain technology, getting smart about identity management in aviation and cyber security were all on the agenda at this year’s Air Transport IT Summit, writes Joe Bates.

N

ew blockchain technology and its potential to allow passengers to use a single token to travel through airports and across borders was the hot topic at this year’s Air Transport IT Summit.

It is believed that the revolutionary technology could allow secure biometric authentication of passengers throughout their journey and eliminate the need for multiple travel documents without passengers having to share their personal data.

SITA’s technology research team, SITA Lab, is currently researching how using virtual or digital passports in the form of a single secure token on mobile and wearable devices could reduce complexity, cost and liability around document checks during the passenger journey.

“Our vision is for seamless secure travel, but the underlying design of today’s computer systems means that there are multiple exchanges of data between various agencies and multiple verification steps, which reduces the ability to have a single global system,” said SITA’s chief technology officer, Jim Peters.

“Now blockchain technology offers us the potential to provide a new way of using biometrics. It could enable biometrics to be used across borders, and at all airports, without the passenger’s details being stored by the various authorities.”

APA Issue 2, 2016

And according to its backers, all this can be done without government agencies ever controlling or storing your biometric details as the required data is encrypted and stored on the mobile device of the traveller and never leaves their phone.

“When you read headlines like 60 million user IDs stolen from Sony, and others about different companies getting hacked and all their customer information and credit card details being stolen, the way forward clearly isn’t to create a big database with everyone’s biometric details on it that becomes a honeypot for hackers to go after,” notes Peters.

“So, what you are using the blockchain for is to verify that the data on your phone has not been changed and that it has been certified.

You control the data and whenever you want to use it your phone interacts with and acts as a key for infrastructure such as a bag drop station, boarding gate or immigration gate.

“We are not there yet, and the big issue will be to how we get all this infrastructure to communicate with so many different devices as it doesn’t happen today.”

He is, however, convinced that technology like blockchain will become reality and, as a result, mean that in 20 years’ time it might be possible to walk straight from the kerb to the gate without stopping to queue at any airport checkpoint.

Explaining the single travel token concept, Sean Farrell, SITA’s head of

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IT INNOVATION

portfolio management, government solutions, said: “The single token travel concept and Smart Path, which is basically our product portfolio, essentially involves enrolling the passenger’s information as soon as you can in the travel process.

“This means capturing their travel documents and validating it. Checking their identity by confirming their biometrics in their travel documents and also validating their right to be onboard the aircraft in the form of their barcoded boarding pass, and then attaching the information to the live biometric that has been captured and letting the passenger use that biometric as they go through the airport to verify themselves.

“So, such a system, has both security and facilitation benefits in terms of conducting higher standard security checks that we have today and improving the end to end process for passengers by enabling self-service, and allowing the different stakeholders in the airport to work together to streamline procedures to the point where some of the steps can be eliminated.

“Outbound Immigration checks would no longer necessary, for example, and it would allow the security screening process to become more risk based, where people whose identity has been checked by biometrics can be given an expedited process.

“For the industry to get to this point, there are a number of challenges to overcome.

Obviously they include technology issues, as

the industry doesn’t have a lot of technology at the airport today to validate a passenger’s identity, even to the point where checks carried out on travel documents are very basic.

“There is also the issue of getting all the different stakeholders to work together, as collaboration is the key to unlocking all of these benefits. And we have to remember that every airport is different so we have to find a way of making sure the technology fits in with the environment in which it is being implemented.

“We have, for example, worked with some airports where the majority of passengers are in transit and the first time that you see them is when they show up at the boarding gate, having simply walked from the gate that they arrived at either minutes or hours earlier.

“Governments have a clear interest in this as well as it is in their interests that the people getting on aeroplanes are who they say they are.”

Explaining a little more about security aspect of blockchain technology, Armin Armin Ebrahimi, founder and CEO of ShoCard, says: “It is significantly different to traditional databases in that you don’t have a single owner of an IT infrastructure who maintains it and ensures that its integrity is in place.

“The second important difference is that you can put data inside the blockchain, but once you have done so and it has been confirmed, it cannot be deleted or updated. www.aci-apa.com

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IT INNOVATION

This is not the case with traditional databases where data can be accessed and altered by different parties.

“A blockchain is in essence a public ledger, but because you cannot modify what’s there, security is significantly higher.”

IDENTITY MANAGEMENT

Arguably the most interesting session of the event was a debate about identity management in aviation where moderator, Augmentiq’s managing director, Matthew Finn, set the scene by revealing that travel documents have effectively been talked about for 500 years and that the big new challenge today was identity fraud rather than counterfeiting.

He revealed that in a recent conversation with a government official from a European country he was told that of the six million travel documents it issued last year, it estimated that up to 10% could have been issued to people with false identities.

“Just think about it, that’s 650,000 people in one country alone who have genuine travel documents issued to people who don’t exist, and remember frontline staff at airports are only tasked with determining whether documents are genuine or not,” warned Finn.

Finn said that these type of passports are known as fraudulently obtained travel documents (FOTDs) and revealed that they were becoming more common today than the use of counterfeit passports. This, he said, posed a whole new challenge for aviation based on identity fraud.

CYBER SECURITY

Talking about the challenges of protecting airports from cyber attacks, the former chief information officer at Los Angeles World Airports (LAWA), Dominic Nessi, stated that the bottom line was that most airports don’t think it can happen to them.

“Think again,” warned Nessi, noting that as emerging economies continue to grow in the years ahead, passenger traffic soars and the number of internet users hits 12.5 billion by 2025, the cyber security threat will only increase in the future.

APA Issue 2, 2016

“Airports have already been attacked and more will be in the future and anyone who says that this won’t happen is completely wrong,” he stated.

“We will rely more and more on technology in the future to be able to cope with rising demand and this in turn increases the risk for airports. Cyber security threats are already growing faster than cyber security mitigation measures and, as a result, the bigger airports across the world are actively working to combat the threat. But what about the smaller airports in developing countries?

“Baggage systems, utilities, credentialling systems, ground radar, airport business systems, we have so many potential areas that can be hacked at an airport and it can be done in so many ways, including new ‘ransomware’ software, which denies you access to systems until a ransom payment is made to unlock it.

“This is why sharing critical data on cyber security is important as we really don’t know how many airports have been attacked or how much money we’ve lost as an industry.”

He revealed that under the umbrella of ACI World, the airport industry has formed a special taskforce to work on ways airports can combat the threat of cyber security.

This, he said, included setting benchmarks that airports can follow and assess where they stand, and creating an essential 10-point progamme of action for airports that covers everything from recognising the risks and realising that cyber security isn’t just an IT issue to being prepared to work with government.

“A cyber attack is a completely different animal to a physical terrorist attack, which airports prepare for and know how to respond to as it is immediate,” concluded Nessi. “In comparison it takes an average of 240 days to discover a cyber attack and even then I doubt if anyone would know who to call in the IT department.”

WE ARE THE ROBOTS

The summit also gave most delegates their fist chance to see Leo, an innovative baggage robot, which is being trialled outside Geneva Airport’s Terminal 1.

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EMBRACING IT

Leo is a fully autonomous, self-propelling baggage robot that has the capacity to check in, print bag tags and transport up to two suitcases with a maximum weight of 32kg.

It also has an obstacle avoidance capability and can navigate in a high-traffic environment such as an airport.

Using robotics and artificial intelligence, bags will be collected, checked in, transported and loaded onto the correct flight without ever having to enter the terminal building or be directly handled by anyone other than the passengers themselves.

Leo – named after the Italian Renaissance inventor and engineer Leonardo da Vinci who built what is now recognised as the world’s first robot – comes to the assistance of passengers as they approach the terminal building.

Ilya Gutlin, SITA’s president for Asia-Pacific, singled out airports such as Singapore Changi and Hamad in Doha, Qatar, as an example of the number of hubs across the region embracing pioneering new technology.

In fact he noted that many gateways had introduced a variety of self-service options to help them accommodate double-digit growth over the last decade, although adoption rates differed widely across the vast region.

“Airports and airlines are certainly looking at self-service a lot differently today than five years ago as most have realised that it doesn’t mean less service it means better service,” he said.

“There is also more consistency, you are able to offer the service in the language that the passenger wants.”

He cited Virgin Australia’s installation of hybrid bag drop stations at Perth International Airport, which are specifically designed to cater for demand from the high number of business passengers that use the gateway, but can be converted to traditional check-in desks at other times to accommodate holiday and charter traffic.

As a example of changing trends, Gutlin revealed that an airport that got rid of all of its 25 self-service kiosks just four years ago is now building a new terminal that will be centred around self service.

APA www.aci-apa.com

IT INNOVATION

Touching Leo’s Scan&Fly bag drop interface opens the baggage compartment doors to allow passengers to place their bags inside. After they have scanned their boarding passes, the tags are printed and can be attached to the bag.

With the bags loaded and tagged, the compartment door closes and Leo displays the boarding gate and departure time. It then takes the bags directly to the baggage handling area where they are sorted and connected to the correct flight.

The doors of the Bluebotics built robot for SITA can only be reopened by the operator unloading the baggage in the airport.

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AIRLINE REPORT: SOUTH EAST ASIA’S LCCS

Fast and the furious CAPA’s analysis team report on the growth of low-cost carriers in South East Asia and consider how their business model continues to evolve.

S

outh East Asia’s low-cost carrier (LCC) sector is entering a new phase, after experiencing explosive growth over the last decade.

The rate of capacity growth in the short-haul segment has slowed, leading to small declines in the LCC penetration rate within the region.

Profitability has also remained a concern, with over half the region’s LCCs unprofitable during 2015, despite extremely favourable conditions in most markets.

However, growth is accelerating in the less penetrated medium-haul segment.

Partnership activity is increasing as LCCs seek new growth opportunities outside the point-to-point model, notably culminating in the world’s second, but most extensive, LCC alliance – the Value Alliance – with membership across the region and a joint sales platform.

Partnerships are particularly important for LCCs outside the AirAsia and Lion groups. AirAsia and Lion each account for 30% of South East Asia’s LCC market and have a massive order book, with commitments for nearly 900 aircraft.

APA Issue 2, 2016

MODEST FLEET GROWTH

There are currently 21 LCCs in South East Asia, operating close to 600 aircraft. The combined fleet has expanded by over 50% since the beginning of 2013. However, the rate of growth has slowed and is projected by CAPA to grow by a relatively modest 10% in 2016.

The widebody segment is now growing at a much faster rate than the narrowbody fleet, but on a relatively small base. Today, for example, there are 55 widebody aircraft operated by seven South East Asian LCCs compared to 38 operated by five airlines at the beginning of 2014.

SOUTH EAST ASIA CAPACITY GROWTH SLOWS

Full service carrier (FSC) seat capacity within South East Asia was up by 14% in 2015, outpacing LCC growth for the first time since the region’s first LCCs launched operations 15 years ago.

As a result, the LCC penetration rate within South East Asia dipped for the first time in 15 years in 2015 and has further declined in the first five months of this year, although LCC seat capacity to other regions continued to grow faster that the FSC capacity, but on a much lower base.

ASIA-PACIFIC AIRPORTS MAGAZINE

Rank

Airline

Country

1

Malaysia AirAsia

Malaysia

+405

+261

2

Cebu Pacific/Cebgo

Philippines

+213

+97

3

Thai AirAsia

Thailand

+82

+9

4

Scoot

Singapore

+20

-52

5

Citilink

Indonesia

+11

-14

6

Tigerair

Singapore

+10

-16

7

Malaysia AirAsia X

Malaysia

-6

-54

8

Thai AirAsia X

Thailand

-10

-43

9

Nok Air

Thailand

-13

-13

10

NokScoot

Thailand

-36

N/A

11

Philippines AirAsia

Philippines

-46

-117

12

Indonesia AirAsia

Indonesia

-53

N/A

13

Indonesia AirAsia

Indonesia

-66

-48

Currently LCCs account for approximately 56% of seat capacity within South East Asia and 21% of seat capacity between it and other regions.

There are still huge opportunities for South East Asian LCCs to expand their market share in North Asia – as well as to grow with the overall South East Asia-North Asia market where they currently only account for 25% of the seat capacity.

Opportunities for market share gains within South East Asia are obviously more limited as the region already has a significantly higher short-haul LCC penetration rate than both Europe and North America.

OVER HALF THE REGION’S LCCS UNPROFITABLE IN 2015

Several of South East Asia’s short-haul LCCs have slowed their growth over the last couple of years by deferring orders and selling or sub-leasing aircraft.

Slower growth was nevertheless inevitable after the huge surge in capacity in prior years, which pressured yields and profitability.

Overcapacity was particularly a problem in 2014 as market conditions became

2015 operating result 2014 operating result

relatively unfavourable due to weaker economies or political instability in some of South East Asia’s key markets.

Indeed, only four of South East Asia’s LCCs reported operating profits in 2014, while seven incurred losses (financial information is not available on the region’s other LCCs).

Profitability improved significantly in 2015, boosted by lower fuel prices and more favourable conditions in some markets.

However, overcapacity and irrational competition continue to be a problem in some markets, limiting profitability.

Nevertheless, over half of South East Asia’s LCCs were still unprofitable in 2015 (see table above), a year when most airlines globally were able to make money. The findings are based on the profit/loss figures provided by 13 of the region’s 21 LCCs, where only six of them generated a profit.

The South East Asian LCC sector remains extremely competitive. Significant consolidation is unlikely as several of the region’s LCCs are already members of large groups.

AirAsia and Lion each currently account for approximately one third of LCC seat www.aci-apa.com

AIRLINE REPORT: SOUTH EAST ASIA’S LCCS

SOUTH EAST ASIAN AIRLINE SECTOR OPERATING PROFIT/LOSS (IN USD MILLION): 2015 VS 2014

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AIRLINE REPORT: SOUTH EAST ASIA’S LCCS

capacity in South East Asia. They also provide more than 60% of the region’s LCC fleet and more than 80% of the order book.

There are now seven airlines under the AirAsia/AirAsia X groups, including five crossborder joint ventures. Lion consists of three LCCs and two FSCs, including two cross-border joint ventures. Of the 10 other LCCs in South East Asia – five are subsidiaries of FSC groups.

The LCC model continues to evolve with the establishment of two ‘alliances’ in six months – Value Alliance and U-FLY – though both are very loose representations of the term.

U-FLY is a collection of HNA Group’s respective LCC holdings while Value Alliance’s proposition to the consumer is single-ticket connections; there are no immediate plans for closer co-operation in strategy or procurement for example.

Launched in May-2016, Value Alliance consists of nine LCCs as its initial members, including six from South East Asia – Cebu Pacific, Cebgo, Nok, NokScoot, Scoot and Tigerair – covering more than 160 destinations.

Some of South East Asia’s other remaining independent LCCs could potentially join at a later stage.

At the time of its inception, Value Alliance accounted for 20% of LCC seat capacity in South East Asia. AirAsia and Lion will still be bigger but the gap could be closed if Citilink and VietJet choose to join.

The Jetstar Goup, which has approximately a 6% share of LCC capacity in the region, is APA Issue 2, 2016

unlikely to join as it is focused more on partnering with full service airlines and has more alignment with its affiliates in the region.

The Value Alliance members are hoping that the new tie-up will boost their profile (and hence sales) outside their home markets by generating new interline traffic.

In its own respective markets, the AirAsia Group transfer traffic has grown to comprise of 49% of its passengers – 33% using its ancillary ‘Fly-Thru’ product while the remaining 16% self-connect.

Value Alliance members are undoubtedly hoping to unlock the same amount of growth for their businesses.

The combined group has a fleet of 162 aircraft, the largest single operator being Cebu Pacific at 49 aircraft followed by Nok at 29, Jeju Air at 24 and Tigerair at 23. The total is less than the combined AirAsia Group, which stands at 187 aircraft.

CROSS-BORDER JVS CONTINUE TO DOMINATE

A vital part of the subsidiary/cross-border/JV equation is the way it undermines foreign ownership constraints on operations in multiple jurisdictions.

The concept in this region was pioneered by independently owned AirAsia, in turn paving the way for full service airlines to use their separate brands to establish in a similar way.

Qantas was an early mover, with Singaporebased Jetstar Asia. The timing of these moves

ASIA-PACIFIC AIRPORTS MAGAZINE

Technically, the JV airline is a local carrier for bilateral agreement purposes; it is 50%+ owned by local interests, so that it can be seen to be “substantially owned” by nationals of the designating state, even though the local interests are usually sleeping partners – and hence the “effective control” requirement in most bilaterals is rarely observed.

This status is not entirely satisfactory, as sometimes the sleeping partner awakes – as happened with Jetstar in Singapore – but the importance of the JV approach is that it is evolutionary, progressively undermining the archaic bilateral controls.

This is in contrast with global alliances, which merely work within the constraints of the system, only simulating JVs.

SOUTH EAST ASIAN LCC SECTOR OUTLOOK IS BRIGHT

AirAsia, Jetstar and Lion are also looking to grow transit traffic, although with AirAsia and Lion so far the focus has been within their groups.

All of South East Asia’s LCCs need to attract more transit passengers and reduce their reliance on point-to-point traffic. Evolution of their business models can unlock a new era of growth and improve profitability.

However, most of the region’s LCC market will remain point-to-point and the airlines need to be careful not to add too much cost or complexity.

Despite the current challenges there are still huge opportunities for growth regionally within South East Asia.

South East Asia’s economy continues to grow rapidly and the region’s middle class population is booming. LCCs are generally well placed to benefit from middle class growth because their APA low fares are able to stimulate demand.

ABOUT CAPA

Established in 1990, CAPA - Centre for Aviation is a leading provider of independent aviation market intelligence, analysis, reports and data services, covering worldwide developments on a daily basis.

Visit www.centreforaviation.com for more information. www.aci-apa.com

AIRLINE REPORT: SOUTH EAST ASIA’S LCCS

has – as is always the case with innovation – been crucial. Five years earlier it is unlikely the cross-border JVs would have been permitted.

The AirAsia Group is confident that restrictions on foreign ownership in ASEAN will soon be lifted, though similar predications have been forthcoming for several years.

CEO, Tony Fernandes, said he is expecting “to make some announcements” shortly about the progress of his goal of a single corporate entity, having held “good meetings” with government officials in Thailand, Indonesia, Malaysia and Singapore.

AirAsia now has five active airlines – one in its home Malaysia and the others in Indonesia, Thailand, India and the Philippines. This is alongside its three international airlines, AirAsia X in Malaysia, Thai AirAsia X and Indonesia AirAsia X. AirAsia Japan will commence operations in 2016.

AirAsia has been ambitious, not always with success, but it provides the best example of the cross-border model in action.

The Jetstar Group has deployed its model similarly, with four active airlines – one in Australia (and New Zealand which share a common aviation market), Singapore, Vietnam and Japan.

An adventure into Hong Kong ultimately fizzled in 2015 after enduring a lengthy battle of semantics over compliance with an esoteric and highly subjective definition of the words ‘principal place of business’.

As tourism and trade are seen to benefit from liberal access, government policies are being steadily relaxed and building a much more receptive environment for the progressive and more formal deregulation of the ASEAN multi-lateral agreement.

When compared with the internal market created within the European Union, the ASEAN ‘Open Skies’ agreement still falls short. This is, however, where Asia’s proliferation of crossborder joint ventures offer an alternative.

Little more than a device to circumvent the bilateral proscription against the right of establishment, these JVs have become almost automatically acceptable to the receiving governments in Asia.

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WBP NEWS

WORLD BUSINESS PARTNERS

IN THE SPOTLIGHT WBP PROFILES

CHOCOLATE, ANYONE? LINDT has opened a shop-in-shop concept at Hong Kong International Airport in partnership with the DFS Group. The store features the latest LINDT pick and mix in Asia, which for the first time has taken the form of an eye-catching wall feature.

The outlet also features a bespoke space created for the LINDT Master Chocolatiers where live demonstrations will showcase the LINDT tradition of craftsmanship, artistry and innovation in the later part of 2016.

Commenting on the partnership, DFS Group’s senior vice president for food and gifts, Thierry Canivet, says: “We continuously strive to create shopping experiences that surprise and delight our customers and we are proud to partner with LINDT to do just that with the new shop-in-shop at DFS, Hong Kong International Airport.

“This engaging approach to the food and gifts segment will provide travellers with a lasting memory of their travels and we look forward to what we are confident will be a successful new take on this exciting category.”

BIGGER AND BETTER ADB Group and Safegate Group have united to form ADB Safegate, providing advanced airport operations systems from approach to departure.

With over 900 employees in more than 20 countries, ADB Safegate integrates complementary products, solutions and services for the gate, tower and airfield at key airports worldwide.

It believes that these capabilities enable it to offer airports new ways to address their growing challenges, which include rising traffic density, growing passenger demand for a better airport experience, and the need to become fully sustainable.

“We are creating a true world leader in advanced solutions for aircraft guidance on the ground, with unmatched capabilities to help our customers face the challenges of the future,” says Christian Onselaere, CEO, ADB Safegate.

APA Issue 2, 2016

BRÜEL & KJÆR Location: Melbourne, Australia Contacts: Christopher Middleton; senior solutions specialist; Matthew Barry, airport product manager E: chris.middleton@bksv.com; matthew.barry@bksv.com W: www.bksv.com Brüel & Kjær is a leading supplier of noise and flight track monitoring and community engagement tools and services for airports. Our systems and services help to expand environmental capacity; the constraints put on an airport, not by infrastructure, but by the local community. We partner with airports to conceive, implement and evolve individual noise management programmes.

BRADFORD AVIATION ACADEMY Location: Bengaluru, India Contacts: K. Sudhimon, director; Bejoy Kurian, head operations.

E: sudhimon@bradfordaviation. com; bejoy@bradfordaviation.com W: www.bradfordaviation.com Bradford Aviation Academy, a specialised and experienced team teaching customised curriculumfocused on issues of interest to airports today, aims to elevate the overall quality and efficiency of airports through the development of comprehensive training solutions. BAA organises customised development programmes aimed at improving the overall competency of aviation industry employees.

APA