Non-passenger revenues key to future-proofing airports

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A white paper produced by the Netherlands Airport Consultants (NACO) highlights that airport real estate and non-passenger related revenues are key to future-proofing airports.

Following a decline in passenger numbers in the wake of COVID-19, the paper found that with almost 90% of airport revenues being passenger related, there is a clear need for airports to diversify their revenue streams in order to reduce both revenue volatility and the immediate negative effects of declining passenger traffic on their business.

Pieter van der Horst, Airport City Development Expert at NACO explained that the white paper explores the impact of country lockdowns and airport closures as a result of the coronavirus pandemic. He noted that, “specifically the data indicates how airport real estate and non-passenger related revenues have been essential in ‘cushioning’ the impact of the economic downturn.”

Noting that the almost complete contraction in passenger-related revenues has led to a near evaporation of earnings for airports, the paper found that this will in turn make post-crisis levels structurally low for years to come.

“We see three developments at play which strengthen the case for diversification in non-passenger related revenues. Firstly, the pre-pandemic trend of decreasing retail revenues per passenger; secondly, major uncertainty around the recovery of air travel; and finally, the introduction of green taxes and conditions for government support to airlines, which add to the uncertainty.”

However, green initiatives could provide an opportunity for airports to extend their networks with rail services, create multi-modal hubs and become more attractive overall for commercial and real estate development.

The paper also argues that developing Airport Cities, even for smaller regional airports, through long-term lease contracts and fixed charges that ensure a stable revenue stream from airport real estate.

Van der Horst concluded: “In many ways, COVID-19 is a test in the run-up to bigger questions facing the industry such as climate change and potentially declining passenger traffic. Those who understand this then develop and diversify their airports to address these questions will be better positioned to ride out periods of uncertainty.”

To find out more from Pieter van der Horst on non-passenger revenues, see the current issue of Regional Gateway magazine.

Pascan Aviation’s expanded network to benefit regional hubs in Canada

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A leading regional carrier in Quebec, Pascan Aviation is expanding its network. From 17 August, the airline will add Gaspé, Baie-Comeau, and Montreal-Trudeau to its existing network, which already includes daily scheduled flights covering eight airports (St. Hubert, Quebec, Bonaventure, Madeleine Islands, Bagotville, Mont-Joli, Sept-Iles and Fermont-Wabush).

Early morning flights from Fermont-Wabush connecting to Sept-Îles, Quebec and Montreal-Trudeau will also be added.

“Since its inception, Pascan’s mission is to connect the regions to city-centers, but also to connect the regions between themselves,” said Yani Gagnon, Pascan Aviation’s co-owner. “With the expansion of our regional services, we now offer never-equaled connectivity in Eastern Quebec, with connecting possibility for international and interprovincial flights in Montreal-Trudeau and Quebec airports. We want to reassure the population in the regions that we are poised to fill the void left by the withdrawal of Air Canada in the regional market,” he added.

Gagnon’s sentiments were echoed by his co-owner, Julian Roberts, who commented: “Our priority has always been to offer safe and reliable services while responding to the needs of the regions. There are currently a lot of discussions on issues relating to regional air transportation, and we have decided to take immediate actions to ensure a leading role in regional aviation.”

Just a few months ago, Pascan initiated an aircraft fleet changeover process. It can now serve the regional market with turboprop SAAB 340B aircraft, with 34-seat configuration and full on-board services. The carrier is also in the final stages of planning interlining agreements with national and international airlines.

Airbus delivery flights refuelled with SAF at Hamburg Finkenwerder

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Marking a first for the Airbus plant in Hamburg, Germany, two delivery flights for Air Transat flew from Hamburg Finkenwerder Airport (where the aircraft manufacturer’s Hamburg plant is based), fuelled with a kerosene blend containing 10% sustainable aviation fuel (SAF). Previously SAF was only offered to Airbus customers at its plants in Toulosue, France and Mobile, Alabama.

Both flights were bound for Montreal-Trudeau International Airport in Canada and the SAF was supplied by aviation fuel supplier, Air bp and produced by Neste. Commenting on the SAF fuelling, Jean-François Lemay, President and General Manager, Air Transat, said: “This initiative is part of our commitment to reducing our own carbon footprint while contributing to the achievement of the airline industry’s ambitious decarbonization targets.”

In addition to refuelling with SAF, both delivery flights were carbon-neutral because the kerosene fuel portion was offset by the purchase of carbon credits, making Air Transat the first Canadian carrier to operate carbon-neutral flights.

Christian Scherer, CCO Airbus commented:

Sustainability and efficiency are essential for our customers and for Airbus. Sustainable aviation fuel developments will play a key role in reducing the environmental footprint of the aviation industry. By using sustainable aviation fuels on delivery flights with partners like AerCap and Air Transat, who are flying the aircraft from Hamburg to their Canadian home base non-stop, we take concrete action to contribute to a more sustainable aviation future.

To enable SAF to be used for these flights Air bp was tasked with establishing a supply route, including transportation and storage facilities at Hamburg Finkenwerder Airport. “We are excited to extend our collaboration with Airbus to fuel delivery flights from hamburg for the first time with SAF, building on previous delivery flights from Mobile, Alabama. We believe SAF is one of the aviation industry’s key routes to reducing carbon emissions and we are committed to supporting our customers to realise their low carbon ambitions.”

Air Transat recently announced another important SAF initiative. The carrier has reached an agreement with the SAF + Consortium of Montreal to purchase a large portion of its SAF production, which will be made from CO2 produced by large industrial emitters. Using a process called Fischer Tropsch (FT), the CO2 will be captured and converted into synthetic aircraft fuel, which is estimated to have an 80% lower carbon footprint than conventional jet fuel.

Hawaii airports partner with NEC Corp to tackle COVID-19

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The Hawaii Department of Transportation (HDOT) has selected NEC Corporation, and their partner, Infrared Cameras Inc., to provide thermal temperature screening and facial imaging technology across its airport network. The companies combined resources to submit a unified proposal for the project.

“Taking these steps to implement the technology at our airports shows our commitment to providing preventative measures against COVID-19 for the community,” said Gov. David Ige. “We recognise that temperature screening won’t catch every infected passenger, but it is an available tool that can be implemented and combined with the additional measures the State is providing to help prevent the spread of this virus, while helping rebuild the economy.”

The thermal temperature screening equipment will be installed immediately at the Daniel K. Inouye International Airport (HNL), Kahului Airport (OGG), Lihue Airport (LIH), Ellison Onizuka Kona International Airport at Keahole (KOA) and Hilo International Airport (ITO). Phase 1 will have the temperature scanners installed this month at the gates currently being used for arriving trans-Pacific flights.

Phase 2 will have the temperature scanners installed at the remaining gates in the coming weeks.

Phase 3 expects to have the facial imaging equipment installed by December 31, 2020.

Costs involved

NEC and Infrared Cameras were selected by HDOT in part because of their innovative concept and functionality to deliver accurate and efficient thermal temperature screening for people traveling to Hawaii. Their proposal comprises a $23.3 million investment in equipment and installation and a 10-year maintenance plan of $1.42 million annually for a total contract amount of $37.5 million.

“We are honoured to become a part of this significant project for Hawaii towards the revival of tourism and businesses in the state,” said Toshifumi Yoshizaki, Senior Vice President, NEC Corporation. “We believe NEC’s technology will help to ensure the safety and health of visitors and residents of Hawaii against COVID-19, and our team will make every effort to ensure the success of this public and private joint project together with all of the partner companies.”

“Team NEC’s approach is predicated on enhancing existing processes and services rather than introducing a bottleneck or negative impact to processing speed,” said Raffie Beroukhim, Chief Experience Officer for NEC Corporation of America. “We look forward to working with the State of Hawaii to further automate and enhance the travelers’ experiences with our high throughput, multi-person thermal screening solution.”

Privacy concerns

To allay privacy concerns over the use of facial recognition technology and data protection NEC underlines that the system will only temporarily retain a picture of a person with an elevated temperature of 100.4 degrees. This will help airport representatives identify the respective passenger and conduct additional assessments to determine if health precautions are necessary. The picture will be erased within 30 minutes and will not be shared with any outside agencies. Anyone with a temperature below 100.4 degrees will not have their image retained at all.

The system will not have a person’s personal information, such as their name, address or driver license number. It will not contain information about criminal history or outstanding warrants.

According to NEC, the use of the thermal image capture technology is anticipated to be safer and more cost effective than manual temperature checks. Without the use of facial imaging technology, an employee would need to be next to each camera at all times to pull a person aside as they walk by the camera, creating bottlenecks and further exposing employees to travelers and, thus, possible COVID-19 infection.

Alabama airports vital contributors to American economy

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According to a report commissioned by the Aviation Council of Alabama and titled ‘the Economic Impact of Alabama’s Six Major Commercial Service Airports on the State’s Economy’, the total spending impact of the Alabama airports amounted to approximately $5 billion in 2019. It is also estimated that approximately $1.7 billion of this sum is solely due to aviation and aviation related activities.

Describing airports as more than runways and a terminal, the report stated: “They are powerful engines of economic growth and they are one of the most fundamental components of business infrastructures, because they facilitate continuous economic growth for contiguous economic regions. Airports also provide both economic benefits and economic impacts for their respective regions.”

The total employment and payroll impact attributable to Alabama Airports is approximately 69,200 direct and indirect jobs and more than $2.6 billion of additional payroll to the economy of the State.

Alabama is home to 76 airports. Six of which are commercial hubs and the remaining 70 airports are general aviation facilities. The purpose of Dr. Keivan Deravi’s (Economic Research Services, Inc.) report is to provide an estimate of the economic impact for Alabama’s six commercial service aviation facilities. These include: Birmingham-Shuttleworth International, Huntsville International-Carl T Jones Field, Mobile Regional, Montgomery Regional (Dannelly Field), Dothan Regional, and Northwest Alabama Regional airports.

These six Alabama commercial service airports and their auxiliary businesses collectively add a total of $948.1 million to the State’s economy in the form of non-payroll business transactions. In summary, the airports are directly (not counting tourist spending and the induced and indirect impacts at any level) responsible for a total employment of 16,200 individuals and a total direct addition of $1.6 billion to the State’s economy.

Economic impacts are typically measured in terms of the additional employment and earnings for the community that are directly attributable to the airport’s business and aviation operations. Meanwhile, the economic benefits (the dollar value of time and resources saved) are measured in terms of transportation efficiency, which can include safety, convenience, access and time savings.

“The passage of the Coronavirus Aid Relief and Economic Security Act (CARES Act) was an important step toward delivering broad-based relief across the aviation industry, however, the relief is only temporary,” said Todd Storey, Aviation Council of Alabama President.

“This report shows that it is imperative that air travel regains momentum and that organisations return to the sky as a part of conducting business. This is because if they do not it will be detrimental to not only aviation and the airports, but also to the local community and national economic recovery as a whole,” he continued.

Rick Tucker, ACA Legislative Committee Chair/ Huntsville International Airport CEO added: “”This report illustrates the impact of Alabama’s Six Major Commercial Service Airports on the State’s Economy. For every $1 investment in these airport core businesses it can generate $5 of additional income for the local community and state of Alabama. It validates the need for continued development, expansion and improvement to Alabama airports in order for them to meet the needs of tomorrow’s business environment so that they will continue to substantially impact Alabama’s economy.”

Header image: Huntsville International-Carl T Jones Field Airport

European airports report slow recovery

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With only a marginal increase in traffic for June European airports have revised their recovery projection to 2024.

Passenger traffic across Airports Council International (ACI) Europe’s network stood at -93% in June compared to the same period last year – a marginal improvement over May which saw a -98% movement in passenger traffic. Compared with the 240 million passengers travelling through their doors in June 2019, Europe’s airports only welcomed 16.8 million passengers in June 2020.

“It’s a slower pace than we’d hoped for,” says ACI Europe Director General, Olivier Jankovec.

The initial data for July also indicates we’re likely to recover only 19% of last year’s traffic rather than the 30% we had forecast. This is down to the still incomplete lifting of travel restrictions within the EU/ Schengen area and the UK – as well as the permanence of travel bans for most other countries. The fact that EU and Schengen states have nto yet managed to effectively coordinate and align over their travel policies does not help, as it is not conducive to restoring confidence in travel and tourism in the middle of the peak summer season.

In its revised traffic forecast, ACI Europe is now predicting that a full recovery in passenger traffic to 2019 levels is now expected for 2024, rather than 2023 as per the previous forecast issued in May. It also notes that Europe’s airport’s are set to lose -1.57 million passengers in 2020, a decrease of -64% compared to the previous year with airport revenues set to decrease by -€32.4 billion in 2020.

ACI also highlights that airport revenues are being significantly impacted by the fact that reinstated flights are generally achieving low load factors, with passenger volumes trailing behind flight numbers. While airport operating costs are driven by aircraft movements, the bulk (76%) of their revenues come from passengers (through passenger charges for the use of their facilities and passenger-driven commercial revenues – in particular retail).

“The financial situation of airports is not significantly improving… Considering that the peak summer season normally accounts for a large share of annual revenues and the fact that the temporary unemployment schemes are coming to an end in many EU States liquidity will remain an on-going concern through the winter. Many airports, especially smaller regional airports, will need financial relief,” said Jankovec.

Editor’s comment: In recovery mode

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Virgin Atlantic, which was recently at risk of entering into administration, has this week unveiled a £1.2 billion rescue deal that is expected to salvage thousands of aviation jobs. The airline has reached a funding agreement with key financial stakeholders, making it one of the first users of a new court-sanctioned process introduced as part of government reforms to enable smoother corporate restructurings during the pandemic.

While the rescue package has removed the risk of the airline collapsing into administration in the medium term,Virgin Atlantic is still cutting around a third of its work force. It has also ceased flights from London Gatwick as part of its restructuring plans. It will instead concentrate its UK operations out of London Heathrow and Manchester with flight schedules due to restart on 20 July.

This week has also seen Budapest Airport in Hungary welcome growing passenger numbers and new routes, while Brisbane Airport in Australia has inaugurated its second runway. And, having welcomed Blue Islands as a new carrier last week, Southampton Airport in the UK is now calling for its local community, businesses and organisations to get behind its plan to extend the runway. Steve Szalay, Southampton’s Managing Director, said the 164m extension is “essential” to ensuring the airport thrives.

“A highly connected regional airport is vital to the recovery of the regional economy. To achieve its potential, our region needs a successful airport that can provide strong air connectivity.

“The extra length of runway will enable us to bring in the routes and airlines needed to drive the recovery of the economy and support local business and trade,” he added.

It’s still early days and the road to recovery is still filled with twists and turns. Nonetheless, it’s great to hear airports and their partners not just reporting on how they are restarting operations but how they are forging ahead with plans to aid a successful medium and long-term recovery.

Have a great weekend and if you haven’t already registered for next week’s Africa Tomorrow virtual business conference on Tuesday 21 July, you can do so by following this link.

I’ll be moderating the airport session, looking at the “new normal” for African airports. Having attended a rehearsal this week with my fellow panellists – Fundi Sithebe from Airports Company South Africa, Lawal Abdullahi from Federal Airports Authority Nigeria and Nicolas Deviller from Ravinala Airports in Madagascar and ADP International – I’m excited for what is set to be an enlightening discussion and a packed day of conferencing sessions.

Best wishes,

Chloë Greenbank, Regional Gateway Editor.

Brisbane Airport inaugurates second runway

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The main gateway to Australia’s Queensland region, Brisbane Airport opened its second runway on 12 July.

Completed at a cost of $764,170,000 the 10,826-ft long privately-funded runway project has been five decades in the planning with approvals commencing in 2005 and construction in 2012.

Home carrier, Virgin Australia, had the honour of operating the first departure from the new runway flying to Cairns.

Ben Garnett, Deputy Project Manager for Brisbane’s new runway explained that the COVID situation has certainly changed how the team worked to reach the practical completion of the project. “It’s really changed how we’ve had to focus and consider the additional safety for the people that needed to be on site – our essential workers. We definitely changed how we approached our work, we rescheduled, we moved to an online environment, if we had to be out here in the airfield, it meant multiple vehicles and separation of people. I think we have been very fortunate to adapt and finalise the construction ahead of time despite the hurdles.”

Brisbane Airport Corporation (BAC) opened the new runway which is more than three metres thick and which has 400 km of ducting pipes under the tarmac to run cables for the 2,2000 LED lights and optic fibre communication cables.

According to BAC the new runway will lead to the creation of 7,800 new jobs and contribute an additional $5 billion in annual economic benefit to the region by 2035. It has been described by BAC as a “key piece of infrastructure that will enable the continued growth of Brisbane, our region and the nation. Furthermore the new runway will enable Brisbane Airport to better meet the demands of the community it serves, now and for future generations.”

Canadian regional hubs welcome return of services from Central Mountain Air

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Having resumed scheduled services to five British Columbian cities on 7 July, Central Mountain Air (CMA) is now restarting services between three additional Alberta and British Columbia destinations: Fort Nelson (YYE), High Level (YOJ)  and Edmonton (YEG).

“We are very pleased that CMA is working toward restoring scheduled air service to the community of High Level,” said High Level Mayor Crystal McAteer. “CMA has provided a valuable service to our community and been a valued corporate sponsor. The Town recognises the toll that COVID has taken on our businesses and our citizens. We are aware of the affect this virus has had on air carriers and greatly appreciate CMA’s effort to restore our access to this important mode of travel.”

CANSO partners with Micro Nav to support ANSPs

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The Civil Air Navigation Services Organisation (CANSO) has partnered with Micro Nav to support CANSO’s air navigation service providers (ANSPs) members as air traffic services prepare to resume. The prolonged lack of air traffic as a result of COVID-19  has led to a number of challenges, including the provision of training.

The partnership sees Micro Nav making the full capabilities of their air traffic control (ATC) radar and tower simulator available as a cloud-based tool to CANSO members to help air traffic controllers maintain their services.

CANSO’s Director General, Simon Hocquard believes the partnership will provide significant value to its members and will enable them to be as prepared as possible for the restart and recovery. “The partnership is another great example of organisations collaborating to safeguard the resiliency of our industry and to build a better future together,” he said.

The BEST ATC simulation platform will be available to member ANSPs until the end of November 2020, along with associated online training and technical support, to enable users to maximise the benefit of this tool for their recovery.

“Our vision, to make a positive difference to the world through simulation, has never been so appropriate as during these times,” said Micro Nav’s Managing Director, Greg Pile.