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Editor’s comment: The new normal

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Back in March before lockdown changed everything and it was still possible to fly pretty much wherever and whenever,  I was lined up to attend several airport conferences and exhibitions. One of which was AviaDev’s African airport and airline event in Madagascar back in May. If you had told me at that point that instead of travelling and meeting my contemporaries in person, the following months would see me doing pretty much every meeting online including a virtual conference… Well, I probably would have said, “As if!”

Unsurprisingly, I didn’t travel to the island nation located off Africa’s east coast in the Indian Ocean in May – Madagascar’s borders remain closed with all international and domestic flights suspended. However, this week did see me take part in a virtual business conference that brought together airport and airline leaders from across Africa for a full day of networking, insightful conferencing sessions and panel discussions. All from my desk at home.

As part of Africa Tomorrow, which took place on 21 July under the theme ‘Reinventing resilience in Africa’s aviation, travel and hospitality sectors’, I moderated a session on the New Normal – the African Airport Experience. I was joined by Fundi Sithebe, Chief Operating Officer, at Airports Company South Africa (ACSA); Nicolas Deviller, Deputy CEO, Ravinala Airports in Madagascar; and Lawal Abdullahi, Operations Officer and Special Assistant to the CEO of the Federal Airports Authority of Nigeria (FAAN).

With South Africa having undergone one of the strictest lockdowns in the world, ACSA has now reopened all nine of the airports in its portfolio. However, international flights are still not permitted; the airports are only serving domestic traffic. As part of the ‘new normal’ ACSA has introduced mandatory health screening, self-service check-in desks and COVID-19 monitors (employees who support passengers as they move through the airport terminals).

Similar measures have been adopted at the airports operated by FAAN. These include passengers being encouraged to check in before arriving, contact between staff and passengers during security screening being kept to a minimum and bags being disinfected before being allowed inside the terminals.

While Madagascar’s airports remain closed, Nicolas Deviller explained how Groupe Aéroports de Paris (ADP), which formed the Ravinala concession in Madgascar, is exploring the introduction of a new international sanitary standard in air travel (in line with the European Union Aviation Safety Agency (EASA) guidelines) to ensure health and safety standards are met throughout the traveller journey. Suitable for all size airports, the programme has already been tested in Benin, Guinea and Madagascar as well as other hubs around the world. The group has also introduced ‘sanitary corridors’ on certain flights between Paris Charles de Gaulle Airport and Réunion, with other hubs in Africa and elsewhere set to follow. The aim is to ensure consistent regulations and processes are adopted across different airports to minimise the risk of virus transmission and instil passenger confidence. Deviller stressed the need for continued collaboration between all stakeholders as the industry looks to a post-pandemic landscape.

Fundi Sithebe agreed, saying: “If there is one thing I’ve learned in this journey, it’s that collaboration is critical. This situation has forced us to integrate and we need to continue working together to ensure our standard operating procedures are aligned and that we have the same common desire to increase passenger confidence and bring air traffic back to levels that are as normal as they can be. I am pleased to report that ACSA and its airlines have been working well together.”

Lawal Abdullahi added that exploring non-aeronautical and more importantly ‘non-passenger’ revenues will be key to ensuring airports remain buoyant in the future. “We are looking at exploring all the unique opportunities offered by each of our airports, many of which offer extensive real estate opportunities. It could be that we look into property development, agricultural use or the option of building leisure attractions such as a shopping mall or cinema.”

The resounding message from the panel discussion was that while the depth of the downturn caused by the coronavirus pandemic is epic, the continent’s aviation sector is still ripe for growth. Yes, stakeholders will need to dig deep, business models will need to be rethought and preparing how to successfully navigate another pandemic must be integral to plans going forward, but airport leaders are ready to embrace this ‘new normal’.

You can read a full account of my session from Africa Tomorrow in the September issue of Regional Gateway magazine, so make sure you’re signed up to receive your complimentary copy.

As for me… I’ve adapted to my new working environment and being able to network extensively with colleagues far and wide via my computer has proved invaluable. However, I miss the ability to travel freely and meet with people face-to-face. And I can’t wait to fly out to Madagascar in June 2021 for AviaDev Africa’s postponed Aviation Development conference.

Have a great weekend,

Chloë Greenbank, Regional Gateway Editor.

July 23, 2020

UK airports to suffer a £4 billion loss in 2020

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The full impact of the coronavirus pandemic on UK airports is proving utterly devastating.

According to the Airport Operators Association (AOA), during the first four months of the pandemic UK airports lost just under £2 billion, the equivalent of more than £150 million per day, or more than £10,000 per minute.

The group predicts that collectively its member airports will lose at least £4 billion in revenue by the end of 2020. This doesn’t account for the multiplier effect on the businesses and wider community within an airport’s catchment.

“These projections reinforce the significant challenges that UK airports continue to face after the worst four months in the history of commercial aviation,” said Karen Dee, AOA’s Chief Executive.

“Whilst we have seen passengers begin to return, passenger numbers are not expected to reach pre-Covid levels for a considerable period and airports will continue to face challenges and pressures unimaginable six months ago,” she continued.

A case in point is Exeter Airport, which despite the Channel Islands-based carrier Blue Islands starting new routes, and leisure carrier TUI restarting its summer holiday programme from 1 August, is cutting jobs. The airport – part of the Regional and City Airports group which also owns and operates Bournemouth, Coventry and Norwich Airports – blames the economic fallout from the coronavirus health crisis for changing the way it must operate. It is understood that 96 jobs will go with those affected employed in a range of roles. They include baggage handlers, air traffic control, ground crew, security and the fire station.

To prevent further job losses and support the sector through the unprecedented crisis, the AOA alongside CEOs of UK airports have written to the Prime Minister Boris Johnson seeking relief from business rates payments for 2020-2021; additional support with employment costs beyond the October end of the coronavirus job retention scheme; funding for the Civil Aviation Authority for the 2020-2021 charging period; and a suspension of Air Passenger Duty (APD) for at least six months to stimulate increased airline activity.

Stating that airports have done everything in their power to weather the storm without specific government support afforded to other sectors, Dee said that the loss of close to £2 billion during the lockdown should serve as a wakeup call to Government. “It should lead them to finally grasp the severity of the challenge and threat that the pandemic has posed and continues to pose to the sector.”

We cannot have a full national economic recovery without a thriving aviation sector; airports are essential components of Britain’s ambition to be a global trading nation and form a vital network for economic stimulus across the UK, levelling up the regions. These figures show that it is high time that the government acts with urgency and supports airlines through the biggest challenge that they have ever faced.

Karen Dee, Chief Executive, Airport Operators Association (AOA).

July 22, 2020

Decline in passenger traffic sees Swedavia push ahead with redundancies

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Looking back at the first half of 2020 Swedavia, has noted that the impact of COVID-19 was particularly dramatic during the second quarter of this year when 321,000 passengers (compared to 10.7 million in 2019) flew to or from the Swedish operator’s airports. A decrease of 97%.

To replace the company’s decrease in net revenue (which amounted to around 1.3 billion Swedish kronor), Swedavia’s owner – the Swedish state – provided a capital injection of 3.15 billion kronor. During the last few weeks of the quarter, the aviation market showed signs that a recovery had begun with the market moving towards a new normal with new conditions following the pandemic.

“Swedavia entered the crisis in a very good financial position,” said Jonas Abrahamsson, Swedavia’s President and CEO. “However, our operations are entirely dependent on variable revenue from our customers, and the crisis entailed lost revenue for Swedavia of almost 500 million kronor a month during the quarter. The 3.15 billion kronor capital injection has been vital to the company’s ability to create long-term value and to safeguard critical Swedish infrastructure.”

Swedavia has taken proactive measures to counter the decline in air travel, and it is expected that these measures will cut the company’s costs by about one billion kronor and reduce investments by the same amount in 2020. “In the short term, Swedavia’s view is that the aviation market in both 2020 and 2021 will be strongly affected, which will have consequences both for access and for the companies that operate in this market,” said Abrahamsson. He added that short-term cost savings need to be implemented with further efficiency improvements and long-term sustainable measures.

He concluded that, “Unfortunately, among other moves, it means that we need to carry out a major part of the redundancies of 800 full-time positions that we announced in March, during the second half of the year. This is a difficult but necessary decision that no one could have imagined we  would need to make when we started the year. The changed market situation also means that we are now giving priority in our investment portfolio to projects and measures that increase efficiency, flexibility and service rather than to capacity.”

July 21, 2020

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.

July 20, 2020

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.

July 20, 2020

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.

July 20, 2020

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
July 20, 2020

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.

July 16, 2020

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.

July 16, 2020

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.”

July 14, 2020