Airlines and Airports Show Brotherly Love

Industry content from the latest issue of the air service development magazine, Routes News.

The biggest issues for airports are around infrastructure. The demand for air services is growing pretty much everywhere in the world. All points are seeing an increase in traffic. At the same time, airports are becoming competitive because airlines can go shopping now and they are driving hard bargains.

This means airlines are no longer a major source of revenue even though a huge amount of money is needed to improve the infrastructure to handle the extra traffic. So the challenge for airports is where do they find a source of revenue that won’t repel the airlines but that provides enough money to keep a facility up-to-date and able to meet the demands of the local community.

And Angela Gittens, director general, Airports Council International, believes airport and airlines are finally beginning to show some mutual respect.

Q) Can changes in airport design help to accommodate the increase in traffic without resorting to massive infrastructure projects?
A) “Absolutely. There is a capacity challenge that means airports must become more flexible in the ways they use their infrastructure. Facilities must be designed in such a way that they still work efficiently even if an airline’s business model changes. Different business models have different requirements relating to security processing, retail opportunities or baggage space and an airline can change its business model quickly – far quicker than infrastructure can change if it is not designed properly. But airports must also understand what they are, what they could become and what serves their community best. There are basically two types of passenger now. The ageing baby boomer generation and the younger, alwaysconnected traveller. A facility must reflect the best ways to serve both types of passenger.”

Q) Can the industry ever persuade the public and governments that such airport development as a new runway is beneficial?
A) “We have to point them towards the economics. Aviation is a driving force for job creation and GDP growth. More connectivity is a positive thing. But the point is this dialogue must be ongoing. You can’t start the conversation with “hi, I’d like to build a runway by your house”. We must constantly show what aviation means to the community. And we must be responsible about how we build. We must understand that a new development can be a double-edged sword and that any issues with noise and air quality for a minority must still be tackled. We must be sensitive and environmentally aware and mitigate any potential negative impact.”

Q) The majority of airports – smaller gateways in particular – lose money. What can be done to help them?
A) “ACI provides plenty of material on commercial management. The main points are developing new air services and non-aeronautical revenue. Typically, the amount of traffic at an airport drives its profitability. So for airports under 1 million passengers it is always going to be difficult. You need a runway whether you are serving two flights a day or hundreds. And obviously you can’t charge those two flights at a rate that will cover the cost of the runway. But there may be other opportunities. Land development around the airport is one possibility. Perhaps the airport could serve the air cargo sector and become a logistics centre. An airport has to look for business opportunities aside from its main commercial purpose."

Q) There is always a debate over airport charges. Is the financial oversight of airports good enough?
A) “As you pointed out, most airports don’t make money. And even the ones that do are a long way from being Google or Microsoft. If anything, the financial oversight of airports is too robust because it is archaic. It comes from a time when airports were monopolies. That is simply not true anymore and you can see that at any Routes event. Airports compete! Take London Heathrow. It is not just a case of competing against other airports in London or even against other airports in the UK. Actually, it is Dubai that is taking over its mantle as the world’s busiest international gateway. So in fact, I would say that it is the airlines that are dominant now. This is what is happening in 2015 and we can’t apply rules to airports that were set up for a different era.”

Q) Does it matter who owns an airport?
A) “Whether a facility is public or private is not a distinguishing factor. A government can easily set up an airport in a way that mimics privatisation. It is better to think in terms of corporatisation. The principles under which an airport is governed are what matters – not ownership. That way you would avoid political decisions and instead get business decisions dictated by the market.”

Q) ACI is co-operating with the International Air Transport Association on Smart Security. What is the latest progress with the project?
A) “Security can be up to 50% of the operational cost for an airport and that is unsustainable. So it is vital for both airports and airlines that we find a way to have effective security without that size of cost through technological improvement and refinement of the security process. There are Smart Security trials going on and we have more memoranda of understanding in place. The project is looking ahead and examining how to improve the entire security concept. We also have a project called Security Access and Egress. This is about dealing with the here and now. It is looking at the existing situation and asks how do we do it better. These two projects are now merging. Amsterdam Schiphol is trialling a new checkpoint now that uses a different layout and different lighting, for example. We need to start propagating the lessons learned from these trials and that process will start at the forthcoming AVSEC conference, being held at the end of October in Dublin.”

Q) Given such collaborative projects, is the airport-airline relationship improving?
A) “Yes, it is improving all the time. I liken it to two brothers, one six years older. When they’re both young, about 12 and six, the youngest follows his older brother around and wants to do everything the older brother does. But the older brother, not yet mature himself, isn’t so keen and tries to stop the younger brother doing things. As they get older – let’s say 19 and 25 – as the younger brother has developed his own aspirations and thoughts. Move ahead 10 years and we see the relationship develop further. There may be an occasional flare-up but the mutual respect is there even though they may be different people. The airport-airline relationship is following this path and we are now grown up. We are not squabbling children any more. So it is time now for the governments – the parents – to move out of the day-to-day relationship and only step in if necessary. As long as government needs are met then the airport-airline relationship shouldn’t worry them. After all, the government has put the framework in place – in aviation terms, items like safety, security and consumer protection, for example. It is up to the airports and airlines to adhere to that framework and get on with their jobs.”

Q) You have extensive experience in aviation. What does it take to be an industry leader?
A) “The qualities needed are much the same as when I started. Most of all you need to be able to deal with things in an informal way. It’s important because so much of what happens at an airport doesn’t concern airport staff. That is very different from most other businesses. You need to find common ground, a way to talk to each other and a way to lead that allows for the smooth flow of passengers and for the airport community to function – even though each partner may have different objectives. If anything, even more leadership is required now than when I started. Technology is helping to a degree. The ability to share data provides real-time transparency in operations. Air traffic control, ground handling, retail - it should all be in sync. The passenger shouldn’t see any change in the way things operate just because their flight has been delayed. Ground handlers or food and beverage retailers shouldn’t just pack up and go home. Such a situation can be avoided if the knowledge of the delay is shared as soon as it is known. Somebody always has that knowledge. Airports are at different stages in this process and all the partners in the aviation value chain must come together to ensure its success. That level of co-operation requires real leadership. We can’t do things the way we used to do them. We must do more with what we have”.

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