Building a new dialogue between airports and their territory by Ignasi Ragàs

BUILDING A NEW DIALOGUE BETWEEN AIRPORTS THEIR TERRITORY Paper for the “5th Biennial of towns and town planners in Europe” Barcelona, April 2003

1. Introduction While air transport is becoming a more global industry, its effects on the territory are increasingly greater and airports are more active players at a regional level. Airports have developed in the past focusing on the airside operations and often neglected to build a good neighbourhood relationship with the authorities representing the territory they are located in. On the other hand, many local authorities have traditionally seen their airports more as a liability than an asset or, at best, have not articulated a real airport policy at all. Nowadays these trends are changing: many airports and regional/local authorities are building links and looking for partnership in order to find win-win options for airport development, economic impact, accessibility and public transport, intermodality, fostering employment opportunities, environment protection, etc.

2. The issue of ownership Despite a trend towards privatisation, most airports in the developed World are owned totally or partially by regional or local public authorities. This is the case in most airports in the USA. In Canada airports are owned by non-profit organisations with strong links to their host regions. In Europe there is a mixture of situations with fully privatised airports such as BAA (London and Scottish Airports) or Rome at one extreme, and national networks of airports fully owned by the national government at the other extreme (Spain, Sweden, Finland, Norway, Greece). Table 1 shows the different level of involvement in airport ownership by regional/local governments in Europe.

Table 1. Regional involvement in airport ownership and management in Europe (2002) National network or airports under a centralised management and no Regional/local participation Spain Portugal (1) Paris Airports

Greece (2) Ireland (3)

Norway Sweden Finland

1) Except Madeira with a minority share by Madeira Regional Government. Also private nvestment is expected for the construction of a new airport in Lisbon 2) The new Athens Airport in Spata is a public private partnership by the Greek Government (55%) and a German-led consortium (45%). 3) The Irish airports operator, Aer Rianta, although it is still a public company owned by the Irish Republic and operates as a monopoly in its home country, it has been very active as a private partner in the ownership of other European airports such as Düsseldorf or Birmingham. A similar situation happens with the Spanish operator (AENA) in Latin America.

Publicly-owned airports with some participation by local–regional governments Manchester Milan Bologna Palermo

Amsterdam Rotterdam Geneva

Cologne-Bonn Munich French provincial airports (4)

(4) French provincial airports are owned by the French State but managed by the local Chambers of Commerce with a wide level of autonomy

Public Private Partnerships with regional-local participation Vienna Frankfurt Naples London Luton

Zurich Birmingham Venice Liege

Düsseldorf Frankfurt-Hahn Hamburg Turin

Public Private Partnerships with no regional-local participation Copenhagen

Brussels

Athens (See note 2)

Fully private airports BAA (Heathrow, Gatwick, Stansted, Glasgow, Rome Edinburgh and other lesser airports) East Midlands (5) Malta (6) (5) East Midlands airport was a local initiative that was bought by a private operator and later sold to Manchester Airport plc which is a fully public company controlled by Manchester metropolitan councils. (6) The main shareholder in Malta Airports is a Vienna Airport Group, which is itself a PPP.

Airport management has changed dramatically in the last 15 years from being managed basically as public utilities operating as natural monopolies to being run at present as a commercial business. It has become widely assumed that the natural end to this process is airport privatisation and that privatised airports are more efficient that publicly owned ones. Nevertheless there is not clear evidence that the second part of the assumption is necessarily right (GRAHAM, 2001). On the other hand it has become a common feature that fully publicly owned airport companies bid for lease or management contracts for airports in other countries. Notable examples (see table 1) are Aer Rianta, AENA, ADP or Manchester Airport plc. Finally it should be noted that the enthusiasm for privatisation appears at a time when major airports have shown to be profitable business. A deeper consideration of public interests and the comparison with other transport infrastructures such as harbours and railway stations would probably be needed. Evidence among Europe shows that there is now a colder approach to fully privatisation among many local and regional authorities that have shares or participations in airport companies. In many privatisation cases, the public sector has kept a controlling share: Copenhagen, Vienna, Frankfurt, Hamburg, etc. In other cases, regional and local authorities have shown to be reluctant to lose all influence when discussion about privatisation has been brought up (Amsterdam, Munich, Milan). It could hardly be arguable that the main reason for this reluctancy lies in the profits from the airport company that are distributed to their public shareholders, since a good allocation of the revenues from privatisation would possibly be more remunerative and safer. It seems more possible that many regional and local governments have begun to see their airports as crucial actors in their regional development strategies and so they want to keep a presence in the airportâ&#x20AC;&#x2122;s higher bodies of decision. This is a rather new trend. Until very recently it was very difficult to find in most regional or local authorities with airport interests a single department, person or document involved in airport policies. Sometimes different departments in a single authority (Environment, Planning, Economic Development) have conflicting policies concerning the airport. From the point of view of the airport operators (even in cases where governments were major shareholders) it was common to see local /regional authorities more as nuisances than as strategic partners. This vision has changed in most cases but a great level of suspicion still exists.

ÂŠ Ignasi RagĂ s 2003

3. Areas of co-operation between regions and airports The classical roles of public authorities have been described as regulation, authority and the provision of public services. Recently a new role is emerging in some regional or local authorities. Some regions and cities are now becoming promoters or catalysts of development strategies, involving strategic planning and building partnerships with other institutions and local actors to mobilise all efforts to some commonly agreed objectives. (ARC 1999) Airports have an increasing importance for airport regions for a number of reasons: Accessibility to the regions, the economic and employment impact, an increasing territorial impact with the development of airport-city concepts, as intermodal exchange nodes for transport, the environmental impact, public safety and quality or image reasons. These fields show some of the areas where airportregion co-operation has been established:

3.1. Accessibility to the regions Some regions are eager to develop airport promotion policies, sometimes even investing important resources to increase the number of connections. This situation happens more often in remote areas, in regions where air transport is vital for the regional economy or in places where the concurrent effects of a stronger airport somewhere else are felt. The Canary or Balearic Islands could be an example of the first and second reason (although regional governments there have no formal power in relation to their airports). Airports such as Manchester or Charleroi are the subjects of strong regional or local policies as are perceived as important gateways for Northern England or the French speaking Walloon region in Belgium. Both have also been supported by their regional authorities so as to counter the pre-eminence of London and Brussels’s airports. In the latter case it has to be pointed out that the European Commission is currently investigating whether the subsidies offered by regional authorities to attract Ryannair’s operations there are against EU legislation. The EU has recently (Jan. 2003) published the justification for the investigation it launched last month into the nature of advantages Ryanair was granted when it set up operations at Brussels Charleroi in 2001. In the document, the EC lists a number of specific advantages granted to the Irish carrier by the Walloon Region and management company Brussels South Charleroi Airport that might constitute state aid: Eur250,000 in hotel charges for Ryanair crew, Eur1.92 million to support the opening of new routes, Eur768,000 for recruitment and training and Eur4,000 for offices. Ryanair said it welcomed publication of the formal notice of the investigation and reiterated that there is “no basis to the claim that Ryanair's low cost base at Brussels Charleroi constitutes state aid.” It added in a statement that the deal “was similar, or in fact slightly more expensive, than other such cost bases © Ignasi Ragàs 2003

on offer to Ryanair at both public and private airports.” The airline said it is confident the investigation will demonstrate that the airport is complying with the private investor principle and that similar agreements were and are available to all other airlines who wish to invest at Charleroi. Some provincial airports in France also receive strong support from their local institutions through the Chambers of Commerce.

3.2. Economic and employment impact Most regions try to take full advantage of the economic and employment impacts of airports. Although the commonly used ratio of 1,000 full-time jobs for each additional million passengers can be challenged and this ratio is becoming lower, airports are still major sources of employment opportunities. Nevertheless some points have to be mentioned concerning airport-related employment: -

Although airports offer a wide range of employment opportunities to people with different skills, an increasing number of airport-related jobs require low skills and have unattractive work conditions (un-social schedules, shifts, short-term contracts, etc.)

Public transport is perceived as a key issue to help young and low-skilled people to get to the airport with acceptable costs. Since most major airports are having 24-hour operation, night and weekend shifts make public transport schemes more costly.

There is often a mismatch between the airport companies needs and the skills taught by the regional systems of education and vocational training.

To offer airport employment opportunities to residents living in its vicinity is an important factor in securing social acceptance of noise and environmental impacts.

Many airport regions have begun to develop airport-employment programmes often in partnership with their airport operators. Possibly the most sophisticated approach has been done by ADP at Roissy Charles de Gaulle with the GIP Emploi. It is a partnership bringing together the airport and airport companies with more than 80 local authorities and institutions. The GIP offers information and career advice services, an observatory of airport-related jobs, vocational training, activities to help local SME’s to become providers and suppliers to the airport companies, subsidised transportation to help young or less-favoured people get access to airport jobs, etc.

3.3. Territorial impact and land-planning

Another approach to the economic promotion policies at airports regards the development of business centres, business parks, airport-related activities, convention centres, hotels, offices for multinational headquarters, etc. More recently airports and their surroundings are attracting an ever increasing wide range of activities such as casinos, health and fitness centres, shopping malls, etc. with a lesser connection with air travel. This process is related to the development of the Airport City concept. As noted in recent literature (GULLER, GULLER 2000), revenues from landside activities are becoming more important for airport operators than airside ones. That’s why airport companies have engaged actively in real estate developments. This new situation challenges the traditional balance of responsibilities between different levels of government concerning airport developments. When most airport developments were in the airside the authority responsible for permissions was the national Civil Aviation Authority, with a marginal role for regional authorities. But when most airport developments are in the landside the main responsability should be on local and regional planning authorities. Since “Airport Cities” can become the most dynamic nodes in terms of economic activities in some metropolitan areas, it could be wise that planning schemes are not limited to the airport site and immediate surroundings but cover a wider area, an “Airport Economic Area”, to co-ordinate and manage the development projects. A typical issue in these cases is to handle the location of activities that choose to be placed near the airport for image reasons (such as corporate headquarters) but do not really need it, so as to make sure that activities that really need to be in the physical proximity of the airport can be placed. Usually some corporate headquarters or international offices can be offered locations with quick connections with the airport but not with physical proximity to the platform. Traditionally the relations between airports and local planning authorities have been difficult when airport enlargement projects are put forward. Airports often complain that local authorities have allowed the expansion of urban areas to the limits of the airport facilities, making expansion impossible or very difficult. So airports that are located in dense metropolitan areas tend to have extreme difficulties to expand. But on the other hand, network airlines (as opposed to low cost) tend to prefer these airports that other situated in more peripheral locations in the metropolitan areas they are serving. (The example of Dorval and Mirabel airports in Montreal is possibly the most notable). In many cases local planning authorities have played an unpleasant role defending their local interests against its airport and against its central government. Most often when a conflict has been reached, it has meant that decisions have been postponed for too long periods of time (Munich new airport, Heathrow’s 5th terminal). There is no magic solution to manage the conflicts of interests that often appear in airport expansion processes. Some different successful approaches have been tried in Europe.

(a) A deep involvement of the airport with the local community since the airport is owned and managed by local authorities, as is the case of Manchester. (b) A wide partnership approach involving national, regional and local authorities as well as the airport operator as experienced in Schiphol. (c) A legally binding contract negotiated by local planning authorities and the airport operator such as Gatwick’s Concordat (d) The discussion of the airport expansion in the context of a wide planning or infrastructure scheme, such as Barcelona’s Delta Plan. These examples have been ordered by the level of real involvement of regional and local authorities in the process. One could find many other examples across Europe, depending on the different institutional organisation and political practices. To avoid these deadlock conflict situations airports and local planning authorities will have to co-operate in the design and conception of airport cities that integrate in the metropolitan area and preserve the quality of life of citizens and the landscape. Airport planning should not anymore “hurt” the metropolitan tissues and city and metropolitan planning should naturally integrate the airport and its environments. Since airports and airport cities are becoming “metropolitan centres” they should aim at having a similar level of urban quality as city centres.

3.4.Transport and accessibility Surface accessibility to and from airports is one of the main reasons of concern of local authorities. Road congestion can be a major source of noise and pollution in some cases even to a greater degree than pollution produced by aircraft. Since very recently most airport operators were reluctant to involve themselves in public transport schemes. BAA’s involvement in the rail link Heathrow Express was a milestone of a new conception among airport operators. From 1998, British airports with scheduled traffic were required to create “Airport Transport Forums” bringing together representatives from local communities and business with the airport operators in order to set up long and short term strategies to reduce the usage of private cars. Public transport accessibility to airports has three main faces: •

To offer a quick connections to the city centre: dedicated trains or links to the suburban rail systems.

•

To link local communities near the airport among themselves (usually the airport is a barrier) and with the airport itself. This last point has, as mentioned before, a crucial importance for labour market policies.

•

To link the airport with the regional and national transport networks.

Many airports are integrating these three levels of accessibility with the development of intermodal exchange nodes integrating air transport with the different levels of land transport (Frankfurt, Schiphol, CDG). The combination of these intermodal exchange nodes with the airport city brings an additional attractiveness to the airport economic area as a major business centre at regional level. The development of this concept usually involves difficult planning processes involving different authorities.

3.5. Environmental impact Noise is by far the bigger environmental concern of local communities around airports. That’s why noise reduction and monitoring procedures are common requirements from local authorities to airport operators and now most major airports in Western Europe are involved to some degree to them . Regional and local environmental policies concerning airports can take different approaches that are summarised in three groups (ARC, 2002): Table 2. Approaches to airport environmental policies Noise

Air quality

Other environmental issues

• • •

• • • • •

• •

• • • • • • •

Noise measure procedures. Noise zoning Setting up of committees to monitor noise procedures. Additional charges on noisiest aircraft. Setting up of noise limits. Penalties on aircraft infringing noise limits. Track penalties. Night curfews. Financial contribution to noise insulation. Take-off and landing procedures. Ground noise limits.

Monitoring procedures Modelling and research Ground level air quality Charges and penalties Odours

•

Water pollution Landscape protection and environment Environmental implication of surface access

A key issue is the transparency and involvement of local communities in the monitoring of these procedures. Most British airports have set up committees that bring together residents and the airport to follow-up noise monitoring and abatement procedures. Manchester airport had to commit itself to 100 environmental measures before being granted the permission to build its second runway. One of these measures was to set up a fund for local civic projects that receives the revenues from noise infringement fines.

In most major airports in Germany, Scandinavia, The Netherlands, Switzerland and Britain, noise and environmental regulations involving different levels of local and regional governments have developed to complex and sophisticated procedures that sometimes have had important effects in the operation of the airports. It should be accepted than in some cases these constraints have impacted negatively on the capacity and attractiveness of the airport. So some airports affected by strong environmental restrictions have looked for other smaller airports as providers of alternative capacity (Frankfurt Hahn in the case of Fraport, Moenchengladbach in the case of Düsseldorf).

3.6. Public safety Although regulations concerning security and safety in air transport are not in the field of local and regional authorities, they have some ground to be concerned by them. Since many accidents and emergencies tend to impact areas outside the airport a good co-ordination of local emergency services with the airports prevention and emergency services is critical. It could be argued that local emergency services are sometimes in a better position to co-ordinate emergency operations than airport emergency services that tend to be more specialised (specially when dealing with subjects such as distribution of casualties to variuos hospitals, management of traffic to allow quick evacuations, repairing public infrastructure and services, warnings to the public, etc.) Security and immigration brings sometimes other burdens to local authorities in some airports when immigrants or refugees are not allowed to fly and then local social services have to look after them.

3.7. Quality and image Airports are considered as the gateways of their regions, and usually the first feature a traveller sees of a particular country or region. So countries and regions have tried that their airports transmit some conceptions, values or images of the place they are located in or have a link with their cultural heritage. Many airports in Arab or Gulf countries inspire themselves in the tradition of Islamic architecture. Other airports in newly industrialised countries of Asia try to transmit an image of modernity and high-tech. In Europe some airports have been designed to transmit regional values (Göteborg airport used a local artist to design some features inspired by the region’s heritage). The world’s more renowned architects are now busy in airport design. Nevertheless some airport operators are fearful that “gold plating”, i.e. overinvestment in grand airport projects, involve higher costs that may have a negative impact on their competitiveness. Also some architectural projects have proved not to be enought functional in terms of the airport operations. On the other © Ignasi Ragàs 2003

hand many planning authorities complain about the poor design quality of many airport-related facilities or business parks near airports. Again a middle way has to be found involving both partners.

4. Conclusions Airports are not constrained as airlines to develop as global operators. (Except in the EU, bilateral agreements still prevent airlines to lose their nationality and become true global operators). So some airports are experiencing with international alliances such as Fraport with Schiphol. Other operators have become true global companies (BAA, Fraport, Schiphol, Aer Rianta, AdP, etc. ). At a time when a good partnership between airports and regions seem to be more important, airports are loosening their traditional ties with their host territories. Recently some airport brands tend to hide their local origin: “Fraport” in place of Frankfurt Airport, “Unique” in place of Zurich Airport. Airport enlargement and the development of airport cities involving intermodal exchange stations pose a major challenge involving not only planning and design issues but also governance ones: Who should be responsible for the planning, permissions, promotion and management of an airport city that usually will go beyond municipal boundaries? Who should run an intermodal station located in the airport or in the airport city, that involve various transport operators? In any case regional and local authorities have the democratic legitimacy to become major partners in airport issues that affect their territories and the wellbeing of their inhabitants. It can be added that sometimes local authorities have to deal and find a balance between the “airport protesters” and the usually positive impacts of the airport to local business and workforce. But to fulfil this role with full responsibility, regional and local authorities still need sometimes to be more familiar with the air transport industry in order to understand the context in which airports operate. That means that developing a clear and comprehensive airport policy is still a challenge for many local and regional authorities hosting these infrastructures. Local and regional airport-related policies can be more difficult to develop in situations where these authorities are weak or fragmented. In these cases aiports tend to show more muscle or even play a “divide and win” game, unless local authorities decide to co-operate among themselves. European experience shows that when airports and regional and local authorities have committed themselves to a partnership approach concerning expansion projects a win-win option can be found. Nevertheless in densely populated and environmentally sensitive Western Europe, big expansion projects will become more difficult in the future. From the examples mentioned in this paper it can be seen that partnership between airports and regional/local governments can go beyond planning and © Ignasi Ragàs 2003

regulatory issues and cover other aspects such as economic and employment promotion, public transportation, safety, urban quality, etc. Ownership (total or partial) of airports by local-regional governments is not necessary to build these partnerships. Some examples of good neigbourhood and co-operation can be found in private airports such as BAA. Nevertheless public regional ownership makes it easier that partnership is really strategic in the midlong term. In many cases the relations with local authorities are managed by the “Public relations and marketing” departments of the airport companies, which shows that sometimes these partnerships are more tactical than strategic. Total or partial ownership can produce sometimes conflicts of interests when the region or local authority acts both as a regulator outside the airport and as a shareholder inside the company. A possible solution to these kind of conflicts of interests could be to establish a clear divide between: i) ii)

a political representation of public interests at a general assembly that approves the broad strategies of the airport and the board of directors and the day to day management that will be carried out by professionals.

This approach has been proposed by the Strategic Plan of Barcelona as an alternative model for the management of Barcelona Airport. This model could bring together efficiency and professional management with strategic partnership between the airport and its territory.

Ignasi Ragàs Economist Ajuntament de Barcelona iragas@mail.bcn.es

References: ARC (1999): “Regions and Airports, partners for sustainable prosperity” ARC (2002): “Assessment of Good Practice on Environmental issues” ASSOCIACIÓ PLA ESTRATEGIC METROPOLITÀ DE BARCELONA (2003): “Un nou model de gestió per a l’aeroport de Barcelona” GÁMIR, Agustín; RAMOS, David (2002): “Transporte Aéreo y Territorio”. Ariel GRAHAM, Anne (2001): “Managing Airports. An international perspective”. Routeledge.

GULLER, Mathis; GULLER, Michael (2001): “From Airport to Airport City”, ARC. MASON, Nigel(2000): “Future trends in Airport-related Employment”. ARC