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Invest
and
build
CONTENTS
Issue 4
Volume 19
In this issue
3 Opinion
Airport World editor, Joe Bates, reflects on an eventful summer and looks forward to the
upcoming ACI-NA Annual Conference in Atlanta and The Trinity Forum in Taiwan.
9 News
10 Show time
Joe Bates picks out some of the highlights of Mays Asia-Pacific/World Annual General
Assembly, Conference & Exhibition in Seoul.
12 ACI news
A successful APEX in Safety review at Quito bodes well for the region at large,
writes Danny Boutin.
16 Chicago hope
Commissioner, Rosemarie Andolino, talks to Joe Bates about an eventful five years in the
hot seat at the Chicago Department of Aviation.
20 Invest USA
How are US airports dealing with the need to upgrade their infrastructure in the face of
ongoing funding restraints? Benet Wilson investigates.
24 Looking good!
Nicole Nelson discovers that its new privatised business model has breathed new life
into San Juans Luis Muoz Marn International Airport.
CONTENTS
Director General
Angela Gittens
Chair
Fredrick J Piccolo (Sarasota, USA)
Vice Chair
Declan Collier (London, UK)
Immediate Past Chair
Yiannis Paraschis (Athens, Greece)
27 Georgia on my mind
Nicole Nelson finds out more about the Atlanta Aerotropolis Alliances plans to
transform the area around Hartsfield-Jackson Atlanta International Airport into an
economic powerhouse.
33 Daring to be different
ICRAVEs managing director, Leah Blackman, reports on the growing trend of
transforming US departures gates with innovative new concession programmes.
36 Sound of music
Airports are increasingly turning to live music to create a unique atmosphere and
make themselves stand out from the crowd, writes Justin Burns.
41 People matters
Dr Richard Plenty and Terri Morrissey provide their thoughts on: Investing in
your organisation.
43 Busy times
A growing route network, enhanced facilities and a host of customer service and
environmental innovations ensure that these are exciting times for Montral-Trudeau,
writes Stephanie Lepage.
49 Environment news
53 ACIs World Business Partners
54 The last word
Airport World gets up close and personal with Roddy Boggus, senior vice president/
aviation director at Parsons Brinckerhoff and chairman of ACIs World Business
Partners Advisory Board.
Treasurer
Stefan Schulte (Frankfurt, Germany)
ACI WORLD GOVERNING BOARD
DIRECTORS
Africa (3)
Pascal Komla (Lom, Togo)
Bongani Maseko (Johannesburg, South Africa)
Robinson Misitala (Livingstone, Zambia)
Asia-Pacific (8)
Tan Sri Bashir Ahmad (Kuala Lumpur, Malaysia)
Dennis Chant (Gold Coast, Australia)
Rodolfo Echeverria (Amman, Jordan)
Kenichi Fukaya (Tokyo, Japan)
Saud AR Hashem (Jeddah, Saudi Arabia)
Seow Hiang Lee (Singapore)
Kerrie Mather (Sydney, Australia)
1 vacancy
Europe (7)
Declan Collier (London, UK)
Arnaud Feist (Brussels, Belgium)
Michael Kerkloh (Munich, Germany)
Tonci Peovic (Zagreb, Croatia)
Stefan Schulte (Frankfurt, Germany)
Sani Sener (Istanbul, Turkey)
Jos-Manuel Vargas (Madrid, Spain)
Latin America & Caribbean (3)
Philippe Baril (Quito, Ecuador)
Fernando Bosque (Guadalajara, Mexico)
Hctor Navarrete Muoz (Merida, Mexico)
North America (7)
Thella Bowens (San Diego, USA)
James Cherry (Montral, Canada)
Frank Miller (San Antonio, USA)
Fredrick J Piccolo (Sarasota, USA)
Mark Reis (Seattle, USA)
Maureen Riley (Salt Lake City, USA)
Tom Ruth (Edmonton, Canada)
Regional Advisers to the
World Governing Board (7)
Aaron Adderley (Hamilton, Bermuda)
Rosemarie Andolino (Chicago, USA)
Haluk Bilgi (Tunis, Tunisia)
ngel Crdova Carrera (Guayaquil, Ecuador)
Howard Eng (Toronto, Canada)
Zouhair Mohamed El Oufir (Rabat, Morocco)
1 vacancy (Europe)
Observer
World Business Partner Board Chairperson
Roddy Boggus (Parsons Brinckerhoff )
Correct as of August 15, 2014
NEWS
UK airport sale
UK airport operator Heathrow Airport Holdings (HAH) formerly known as BAA
is set to sell Southampton, Glasgow and Aberdeen airports by the end of the year.
If it goes ahead, the sale would leave the once seven-strong airport group
with just Heathrow in its portfolio.
The potential sales would reportedly help HAH fund further development
projects at the worlds third-busiest airport.
Over recent months Heathrow Airport Holdings group shareholders and
management have been considering their strategic position in relation to our
three airports, Aberdeen, Glasgow and Southampton, reads an HAH statement.
As a result, the group is now formally entering a sale process. While
there is currently no certainty that a sale will be concluded, the group intends
to work towards completing a transaction by the end of the year.
Newspaper reports in the UK claim a buyer has been in discussions with
HAH officials, and that it could be Spanish infrastructure firm Ferrovial, which
is rumoured to have tabled an 1 billion million bid, reportedly beating out a
rival bid backed by North East Scotland Pension Fund and Zurich Airport.
Ferrovial is HAHs biggest shareholder, with a 25% stake in the airport
operator, which is owned by a consortium including Britannia Airport
Partners and Singapores GIC, Qatar Holding and Alinda Capital Partners.
Retail/F&B news
ATU Duty Free has won the tender to operate
the duty free stores at Salalah Airport in
Oman. The firm, a joint venture between
TAV Airports and Unifree Duty Free/Gebr
Heinemann, has agreed a 10-year contract and
is expected to start trading in January 2015.
Fraport has expanded its international portfolio
in the global airport market by acquiring 100%
of US-based AMU Holdings Inc, which owns
concessions developer Airmall. It currently
operates 270 retail and F&B outlets across
34,000sqm of space in Airmalls at four US airports
Baltimore/Washington, Boston Logan, Cleveland
Hopkins and Pittsburgh which between them
handle 70mppa.
The Japanese government is expected to formally invite bids for the operating
rights for Kansai International Airport in October.
According to Prime Minister, Shinzo Abe, the potential privatisation deal is
expected to be among the biggest in Japans drive to inject private funds into
public infrastructure.
Up for grabs is a 45-year concession to operate both Kansai International
Airport and the smaller nearby Osaka-Itami Airport, which primarily handles
domestic flights.
Sales figures of up to $20 billion are being mentioned for the airports,
$12 billion of which would be used to pay off the debt to the state run up
during the construction of Kansai.
Making scents
Phnom Penh International Airport has introduced a new technology that diffuses
relaxing aromas at its check-in counters, arrival hall and business lounges in a bid to
enhance the passenger experience.
The implementation of the scent identity was carried out by Signature Asia, which
provides the patented technology and opened a branch in Cambodia in 2013.
Airport general manager, Chlo Lapeyre, says: The initiative further deepens our
engagement with our customers by offering them a comfortable environment when
they embark on their journey and arrive in the kingdom.
And she says that it is environmentally friendly, as the scent diffused via the air
conditioning system is free of any solvent, gas propellant or other degenerating volatile
organic compound, and has been customised to fit with the airports overall atmosphere by
harmonising three different fragrances crafted by a renowned perfumer based in Grasse.
Maxime Roussillon, CEO of Signature Asia, adds: Scenting is an important part of
the branding strategy for many businesses. Mainly used in hotel facilities, the power of
smell is so strong that many other sectors are nowadays interested in developing their
own scent identity.
Show time
Joe Bates picks out some of the highlights of Mays Asia-Pacific/World Annual General
Assembly, Conference & Exhibition in Seoul.
10
Global influence
During ACI Worlds Annual General Assembly, director general, Angela
Gittens, noted that to achieve aviations collective goals, collaboration
among all key industry stakeholders was vital.
She said: Collaboration extends our reach and makes more
progress possible. We are stronger together, but we would not be seen
as valuable allies if we were not seen as capable of providing solutions,
if we were not seen as having high standards and were not committed
to achieving them.
This is where the community of airports the promotion of
excellence comes to the fore. A big advantage that we have as airport
operators is the willingness to help each other, even in this era of more
competition. We know that weakness anywhere hurts our system and
ultimately hurts each of us.
Traffic
Talking about aviation growth, Gittens revealed that in spite of
worldwide economic uncertainty and political instability in many
countries in 2013, airports accommodated over six billion passengers,
with both passenger and cargo traffic growing at faster rates than the
previous year, indicating signs of a subdued recovery.
She pointed out that passenger traffic grew at 4.8% versus
4.4% in 2012, and cargo, although still sluggish, nearly hit the
1% growth mark, at 0.9% versus 0.5% in 2012. Movements, on
the other hand, grew at practically the same rate as the previous
year at 0.7%.
The Middle East and Asia took the lead in both passenger
and cargo growth, Gittens explained. Although Asia-Pacific only
grew 2.1% in cargo, it managed to pull the rest of the world into
positive territory due to the fact that it handles 38% of the worlds
total cargo throughput.
Economic outlook
ACI economic figures showed that the industry as a whole was
profitable in 2013, although Gittens repeated the concern that industry
profitability is primarily generated from the 20% of airports that carry
the bulk of passenger traffic.
In fact, 67% of airports globally operate at a net loss and 80% of
airports with fewer than a million passengers posted an average net
loss of 6%. Furthermore, airports with fewer than one million
passengers had a return on invested capital of -1.1%.
Annual achievements
Outlining ACI Worlds achievements over the past year, Gittens stated
that its relationship with ICAO was stronger than ever before,
something that was epitomised at the ICAO Triennial Assembly when:
ACI members and staff from all regions contributed their time and
expertise on the working groups, panels and conferences that
constitute the ICAO policy-development process.
Other industry players increasingly see airports and ACI as valued
collaborators, she added. This philosophy culminated in our first-ever
Memorandum of Understanding with IATA last October.
The MoU is followed by annexes in which ACI and IATA have agreed to
work on specific activities, including co-operation on ground handling
best practices; automated border control; improvement of existing
passenger security processes; and the joint Smart Security initiative.
She noted that the growing popularity of ACI-led initiatives such as
the Airport Excellence (APEX) in Safety, Airport Carbon Accreditation
(ACA) and Airport Service Quality (ASQ) programmes demonstrated the
11
Members of ACI Worlds APEX in Safety team and Quito International Airport staff during the
recent APEX in Safety review with Allan Padilla (centre), the airports director of operations.
World in motion
A successful APEX in Safety review at Quito bodes well for the region at large, writes Danny Boutin.
12
The review, held at the airport from July 7-11, provided its operating
management company, Airports Worldwide (formerly ADC & HAS Airports
Worldwide), with a broader network of industry contacts from around the Americas.
Safety experts from San Antonio, Aruba and Sarasota Manatee
International airports joined with the director general of ACI Latin AmericaCaribbean, Javier Martinez, and ACI World team leaders, Juan Manual
Manriquez and me, to perform the review.
ICAO has called on the industry to embrace safety as its number one
priority. APEX is the correct, comprehensive and voluntary initiative for
airports to effectively assess and improve their safety standards, said
Martinez upon Quitos successful completion of the APEX in Safety review.
I applaud Quito International Airport for its commitment to achieving
excellence in safety, supported by the expertise of the ACI APEX in Safety team.
Given his commitment to the APEX in Safety programme, Allan Padilla can
certainly be seen as a leader in promoting a safety culture within in his own
organisation, as well as the Latin America-Caribbean region at large.
It has been a tremendous experience participating once again in the
APEX programme, he said. Quito International Airport will benefit from this
safety review, performed by worldwide airport professionals.
Additionally, it is a pleasure to see how the APEX in Safety programme
has matured and improved since our first review in Honduras a couple of
years ago. I would like to take this opportunity to invite other airports in the
region, and indeed around the world, to take advantage of this great
programme, which will without a doubt enhance your airports safety and
that of your region at large.
ACIevents
2014
2014
2014
2014
September 7-10
November 8-11
October 12-14
2015
September 17-19
The Trinity Forum
Taipei, Taiwan
February 25-27
ACI Airport Economics
& Finance Conference
& Exhibition
London,
United Kingdom
ACIoffices
ACI World
Angela Gittens
Director General
PO Box 302
800 Rue du Square Victoria
Montral, Quebec H4Z 1G8
Canada
Tel: +1 514 373 1200
Fax: +1 514 373 1201
aci@aci.aero
www.aci.aero
ACI Africa
Ali Tounsi
Secretary General
Casablanca, Morocco
Tel: +212 660 156 916
atounsi@aci-africa.aero
www.aci-africa.aero
ACI Asia-Pacific
Patti Chau
Regional Director
Hong Kong SAR, China
Tel: +852 2180 9449
Fax: +852 2180 9462
info@aci-asiapac.aero
www.aci-asiapac.aero
ACI Europe
Olivier Jankovec
Director General
Brussels, Belgium
Tel: +32 (2) 552 0978
Fax: +32 (2) 502 5637
danielle.michel@aci-europe.org
www.aci-europe.org
ACI represents 591 members operating 1,861 airports in 177 countries and territories, which in 2013 handled 5.95 billion passengers, 93.6 million
tonnes of cargo and 79.6 million aircraft movements. ACI is the international association of the worlds airports. It is a non-profit organisation,
the prime purpose of which is to advance the interests of airports and promote professional excellence in airport management and operations.
13
ACI VIEWPOINT
15
15
CHICAGOS AIRPORTS
Chicago hope
Commissioner, Rosemarie Andolino, talks to Joe Bates about an eventful five years in the
hot seat at the Chicago Department of Aviation.
16
CHICAGOS AIRPORTS
Being able to handle more than 200 aircraft movements per hour
should also ensure that delays at OHare no longer have such a
negative impact on the entire US airport system, or as someone once
said, when OHare sneezes, everyone catches a cold.
Whats left with the OMP? One more runway, one more extension
and a possible 60-gate western terminal complex, says Andolino,
suggesting that the new passenger complex is more of a long-term and
demand-driven project.
Until then, enhancements of the existing terminals to maximise
their operational capacity and efficiency are likely to take priority,
she says.
Environment
Automated Passport Control (APC) kiosks in the United States; and the
fact that times have never been so robust in terms of new air services,
I think my record holds up pretty well, she says.
Andolino could also have mentioned the significant strides
Chicagos airports have taken to embrace environmental best practice
and to improve their customer service levels, or the image-enhancing
upgrades to the domestic terminals that have included, and continue to
incorporate, the introduction of a number of new concession concepts.
She quips: I may not have grown up in the aviation business, but
Ive grown up in the business of getting things done.
Customer service
Andolino states that the drive to deliver top-quality customer service
is a priority of the CDA as it wants to showcase the very best of
Chicago to visitors and reflect the citys famous Midwest hospitality.
She firmly believes that collaboration with other airport
stakeholders is the key to good customer service and argues
that all sides need to work on making improvements at their
specific touchpoints.
The customer has many touchpoints at an airport, many of
which are not under our control, so therefore everyone has to do
their part to ensure that our passengers enjoy a good experience.
For us it might be something as simple as ensuring that the
bathrooms are clean or making it easier to get assistance and
information. All frontline staff at OHare and Midway are effectively
ambassadors for our airports and therefore need to be passionate
about their jobs and the city of Chicago.
Andolino also enthusiastically talks about the CDAs new, improved
partnership with TSA and Customs and Border Protection (CBP)
staff at the airport, which she believes has helped create a more
customer-friendly environment.
We managed to change the conversation with them by opting
to work together to solve problems instead of playing the blame
game and pointing fingers at each other.
17
CHICAGOS AIRPORTS
A new route
could add up to
$200 million of
investment
per annum into
your city
She also feels that opening airport versions of a number of popular
Chicago F&B and retail outlets most noticeably in OHares newly
revamped T5 has helped enhance a sense of place, create a better
customer experience and ultimately boost higher retail revenues.
Airport roles
Between them Chicagos airports handled a total of 87.3 million
passengers in 2013 and the upturn has continued into 2014, with
volumes up by nearly 4% at OHare and 2% at Midway in the first
five months of the year.
OHare, the citys main international gateway, accounted for
66.9 million (+0.4%) and Midway which essentially handles domestic
services and international flights to Canada, Mexico and the Caribbean
accommodated 20.4 million (+5%).
The difference in traffic is down to the fact that Midway is built on a site of
just one square mile and the 6,500ft (1,980m) length of its longest runway is
not enough to accommodate non-stop flights to long-haul destinations.
It does, however, handle regional traffic, with airlines such as
Volaris and Porter serving Mexico and Canada respectively, and
Southwest serving Mexico, the Dominican Republic and Jamaica.
As a result, APC kiosks were installed at Midway earlier this year
to make it easier for US citizens on international services to pass
through its facilities.
Route development
When you talk to Rosemarie Andolino about the highlights of her
five years in charge of Chicagos airport system, the subject of route
development is right up there.
18
DFWs $2.3 billion Terminal Renewal and Improvement Program (TRIP) will help reinvent the Texas gateway.
Invest USA
How are US airports dealing with the need to upgrade their infrastructure in the face of
ongoing funding restraints? Benet Wilson investigates.
n its 2013 Capital Needs Survey, ACI-NA found that US airports need to
complete $71.3 billion worth of essential infrastructure projects between
now and 2017 in order to keep pace with demand.
The figure amounts to $14.3 billion a year, with 54% of the total
allocated for projects to accommodate traffic growth and an increase in the
use of larger aircraft, and the remainder on the rehabilitation, maintenance
and repair of existing infrastructure.
It revealed that large hubs will account for $37 billion or 52% of the
total; medium hubs for $9.3 billion (13%); small hubs for $5.8 billion
(8%); non-hubs for $5.1 billion (7.2%) and other commercial airports
for $700 million (1%).
The survey of 3,400 aviation facilities also found that the top three
states by airport capital needs are Texas ($8.3 billion), Florida ($7 billion)
and California ($6.6 billion).
The big spend in the three states is certainly borne out by a new survey
of the top airport construction projects nationwide, which reveals that
Dallas/Fort Worth (DFW), Tampa (TPA), Los Angeles (LAX) and San Diego
(SAN) alone are responsible for projects totalling nearly $10 billion.
Carried out earlier this year by Reed Construction Datas chief economist,
Bernie Markstein, the survey discovered that the biggest airport project
underway in the US is the $5.6 billion extension of the Washington DC Metrorail
system (see next issue of Airport World) to Dulles International Airport.
It is followed by the $4 billion second phase of a terminal expansion
programme at LAX; the ongoing $3 billion upgrade of Denver (DEN),
where work includes the creation of a new hotel and transit centre;
DFWs $2.3 billion TRIP programme; and a $1.8 billion airport
reconstruction project at Salt Lake City (SLC).
Looking at ACI-NAs survey, he says there is a crying need for
improvement to the US airport system and has no hesitation in stating that
the government isnt doing enough in terms of funding.
20
We havent seen support at the federal level to fill airports needs, warns
Markstein. Theres been a lot of politics over spending money. Its about the view
that spending any government money is bad. But this ignores the difference
between infrastructure investment versus spending for consumption.
Its the difference between spending money on a new roof for the house
or taking a trip to Disney World, quips Markstein. Taking the trip is
enlightening and fun, but once its consumed, its gone, he notes. But the
new roof shows benefits long after its done.
Infrastructure projects underlie the ability for the economy to grow, adds
Markstein. Until 2012, airports were hurt by a series of continuing
resolutions until Congress passed a transportation bill, he says.
Under continuing resolutions, airports couldnt make plans because
they were not sure of funding. Ironically, one of the reasons airports arent
getting money is because Congress wants to save money on government
spending, but by not having long-term funding, you actually drive up costs.
Source of funding
Passenger Facility Charge (PFC) revenue, Airport Improvement Program
(AIP) grants and bonds are, of course, the three main ways US airports
fund development projects today.
And the pot appears to be getting smaller because the AIP budget
which is funded by passengers has been cut twice in the past two years,
first in the FY2012 appropriations process from $3.5 billion to $3.35 billion
and most recently by an additional $253 million in FY2013.
The latest cut brought an end to FAA furloughs, despite that fact that
airports must fund more than $70 billion in safety, security, noise, capacity
and passenger service projects during 2013 to 2017.
While Congress has so far refused to bow to industry demands
to raise the cap on PFC revenue from $4.50 per boarded passenger
to provide airports with a much-needed cash injection to fund new facilities.
Texas TRIP
Dallas/Fort Worth International Airport is in the middle of its
seven-year, $2.3 billion Terminal Renewal and Improvement
Program (TRIP).
Honestly no one needed a lot of convincing to do this project,
says David Magana, senior manager of public affairs for the airport.
After opening Terminal D in 2005, it clearly showed that the original
terminals needed a refresh because the oldest one is 40 years old.
We needed things like self-check kiosks and new concessions.
The airport board and the airlines were ready to do it.
In getting funding in place for TRIP, DFW faced the same challenges
that other airports face: having to take on debt, said Magana.
PFCs dont keep pace with airport infrastructure needs. But we felt
strongly that the scope of TRIP had to fit within our financial realities,
he tells Airport World.
It became a matter of aligning our goals with the airlines goals. TRIP
started at $1.9 billion, but we added things like new parking garages and
more energy-efficient infrastructure, so the project is now at $2.3 billion.
These are not cost overruns, but an expansion of our scope. Were still
staying within our costs.
Tampa time
To the south-east of Texas, Floridas Tampa International Airport is in the
design phase of a $2.5 billion, 20-year airport master plan to upgrade a
facility that first opened in 1971.
CEO, Joe Lopano, has set his goals for the airport adding new flights,
growing passenger revenues and completing the master plan.
On convincing stakeholders that the programme was needed, Lopano
started by conducting a two-year study on the airports needs.
We wanted to make sure we understood all the issues and
opportunities, he explains. Once we did that, we began outreach efforts
to as many people as we could to show our solutions. If a plan is well
articulated and explained often enough, its an easy sell.
Lopano says his job was to convince stakeholders, including federal,
state and local legislators, chambers of commerce, local businesses and
anyone who makes money with the airport.
The airport is an economic driver in the region, he notes. It opened in
1971, and now is the time to invest in its growth. I emphasised that our
plan was affordable and would create 9,000 construction jobs and give us
what we need to grow for the next 20 years.
The first phase of construction will include: decongesting roadways and
passenger drop-off and pick-up kerbsides; building a consolidated rental car
facility; providing connections to regional transportation systems; adding
spaces to the long-term parking garage; increasing opportunities for
commercial development on the south part of the airport campus to diversify
the airports revenue stream; and creating new concession opportunities.
The airport lined up various forms of financing for the project, says
Lopano. We actually refinanced existing debt using direct bank loans.
Banks werent interested in that before the economic meltdown but they
are now, and we got some great rates.
21
seat at the table from the very beginning, which was one of things
that made it possible to move ahead with the project even after
the recession had set in.
The airport authority thought that funding the project might
be a problem, but the airport had a strong history of prudent finances,
which did not go unnoticed by the three rating agencies, reveals Bowens.
We had an A+ and A rating and those spoke volumes on the
management of our finances. You dont garner those kinds of ratings based
on one point in time, she enthuses.
We were fortunate to have good ratings from all three agencies. And
because the construction business was in real trouble, we were able to take
advantage of lower costs to build the project.
Construction at Denver.
Image courtesy of Ryan Gobuty.
22