UAE airport leaders committed to meeting customer needs
Has the airport industry remained on the expected track?
Preliminary figures indicate that passenger traffic finished the year 2018 with stable growth. Despite minor monthly fluctuations, the general passenger traffic growth trend was quite stable. On the other hand, the global air freight market experienced significant volatility as 2018 drew to a close. Preliminary data indicates that the industry should record robust but moderating results in 2018.
Isn’t the growth in passenger numbers and technology too fast for airports to catch up?
Aviation is one of the fastest-growing and most technologically advanced sectors in the transportation industry and this has far-reaching implications for airport operations. Technology can offer opportunities to maximize efficiency as it has a direct impact on the facilitation of traffic, passenger processing and security. As passenger traffic continues to grow and technology continues to accelerate, one of the factors determining the future of the airport industry is the level of investment to upgrade the infrastructure and increase the use of adequate technology.
Global traffic surpassed the 8.2 billion passenger mark in 2017 and the ACI World Airport Traffic Forecast 2018-2040 projects that it is expected to double by 2034 based on a projected growth rate of 4.3% per annum.
Existing airport infrastructure in many mature markets worldwide will not be able to handle the expected growth so substantial investment in infrastructure and technology is required to allow the aviation industry to meet growing demand.
Now is the time for airport leaders throughout the globe to embrace the digital transformation. At ACI, we support the development of quality airport infrastructure commensurate with the level of projected growth. Moreover, we encourage airports to use this common understanding as a platform to present the economic and social benefits of aviation to their regulators, to investment banks and to aid agencies as they seek to invest in economic development projects that are sustainable.
Stakeholders across the aviation industry are in broad agreement that investment in airport infrastructure is critical to the global economy and global and national connectivity especially in achieving the United Nations (UN) Sustainable Development Goals.
Towards this end, the ACI World Airport Information Technology Standing Committee and the Economics Standing Committee will continue to work in close collaboration with our members to provide guidance and council and help shape current policy and operational issues.
Are UAE airports good learning places for the global aviation industry?
The UAE stands out as a market that has embraced aviation as a sunrise industry on all fronts. According to our latest traffic report, from a historical perspective, it is among the world’s fastest-growing nations in terms of air transport demand thanks to its ideal geographic location for connecting intercontinental traffic flows. Airport leaders in the UAE are clearly committed to meeting customer needs. In 2018, both Abu Dhabi International Airport and Dubai International were rated among the best in the world and have been recognized by our ACI Airport Service Quality (ASQ) awards programme for their on-going commitment to continuously improve the passenger experience.
We also consistently see UAE airports leading the way in technology enhancements, trialling new processes and implementing leading edge systems.
With modern airports, forward thinking management and close relationships between regulators, airlines and airports, the UAE is the perfect testing ground for innovation. This helps all airports globally to draw from other’s experiences, and helps to support projects like ACI’s New Experience in Travel and Technologies (NEXTT) initiative which articulates a vision for the future of air transport.
And when it comes to revenue diversification, UAE airports understood the importance of developing the commercial side of their business. Airports in this region continue to have the highest proportion of non-aeronautical revenue attributed to retail concessions. Because airports have limited opportunities to raise aeronautical revenues, a focus on non-aeronautical revenues has become an imperative to maintain operations and accommodate growth in air service demand. We encourage other airports to follow the lead.
How much investments are currently in airports developments worldwide?
The G20’s Global Infrastructure Outlook reports that, to meet the global traffic demand that ACI World estimates at 10.7 billion passengers by 2022, a sample of the airport investment plans of 50 countries totals US$355 billion in the 2018–2022 period—but their actual investment needs are more than US$433 billion. Airports need to invest in infrastructure to meet future demand.
Year after year, ACI estimates that airports in the world invest, on average, in the realm of US$5 per traffic unit in capital expenditure (CAPEX). Therefore, the estimations point to US$40 billion in yearly CAPEX. This is a reasonable figure given US$170+ billion size of the industry.
ACI data reveal that 60% of all investment is concentrated in two major domains: aircraft movement areas, comprised of runways, taxiways, aprons and other major airside infrastructure, and terminal buildings. The rest goes to car parking facilities, roadways, renewing equipment and vehicles and other areas and facilities.
Construction expenses represent a significant chunk of all airport CAPEX, some 60%. This often comes in a bundle with technological improvements: energy saving materials and equipment, more efficient baggage handling systems and so on. Capital expenditure is essential for the sustainability of the airport sector. All around the world we see terminal structures inaugurated in 1940s, 1950s and 1960s while they receive state-of-art latest generation aircraft. Of course, this testifies to the fixed nature of infrastructure, but certainly many airports need to bridge the gap, and better sooner than later.
What innovation and technology is going to change the airport experience by 2020/2030?
Technology has advanced significantly in the last few decades. There have been numerous ground-breaking advancements that have revolutionized the way things are done within our industry. Today, airport competition is a fixed feature of the industry, and the market power of airports has decreased as increasingly airlines pick and choose between various airports and destinations, moving aircraft, routes and bases. Airports compete with other airports for freight, connecting passengers, aircraft technical stops and for the services of low-cost carriers. This competition has forced airports to put a particular focus on the customer experience as the relationship between customer satisfaction and revenue is crucial.
Airports, airlines, control authorities and system suppliers all have a role to play in making the airport experience more pleasant, efficient and effective. ACI is working closely with the industry and partners on several initiatives such as NEXTT and Smart Security. NEXTT is a joint initiative between ACI and IATA. It identifies three emerging themes; off-airport processing, interactive decision making and advanced processing. Each of these emerging themes involve several new and emerging technologies. Many aviation stakeholders have trialed or implemented technologies that are in line with the NEXTT vision such as biometric identity management, robotics and autonomous vehicles, IoT, AR/VR, blockchain, automation and many others which have great potential to positively change our industry.
The second initiative, Smart Security, brings together industry partners to seek innovative solutions that improve security effectiveness, efficiency and the passenger experience. Smart Security has made tremendous progress and is now able to help all airports through the delivery of regional workshops, comprehensive guidance materials and information sharing sessions. In fact, we have just launched the ACI Certificate in Smart Security to assist airports and screening authorities to adopt innovative screening solutions that strengthen security, increase operational efficiency and improve the passenger experience.
Is customer service going to be key in the drive to better airports?
Absolutely. With stronger competition, the notion of excellence in customer experience at airports has become even more important in recent years. Recognizing that passengers are demanding more customized services based on their specific needs, requirements and tastes, and the importance of having an airport culture of service quality, which requires involving and including all various airport stakeholders to truly be effective, we urge States to take, in many respects, appropriate measures aimed at facilitating and boosting the sector.
ACI is committed to helping airports remain competitive by improving the passenger journey. The Airport Service Quality (ASQ) programme, the world-renowned and globally established global benchmarking programme measuring passengers’ satisfaction while they are travelling through an airport, offers a range of products and services. They include: the customer experience, through the ASQ Departure Survey, the ASQ Arrivals Survey, the Commercial Survey and the Employee Surveys for Customer Experience.
However, in an increasingly competitive market, ACI does not advocate that the quality of service provided to passengers and airlines should be regulated through service-level agreements. Rather, it should be recommended and carefully monitored. We are convinced that ACI’s ASQ programme can continue to support this objective rather than impose a system that only focuses on penalizing the airport without an incentive to continuously improve service quality.
Does the Middle East need more airports?
The Middle East does not necessarily need more airports but might require more airport infrastructure in the long-run, subject to traffic growth. The post–World War II economic expansion was a period of strong economic growth, when many governments invested in developing infrastructure, including airports. The immense number of airports all over the world are a good testament to this period and that economic policy in particular. This means that in most cases airports already exist where they should be. However, not all airports are capable of handling traffic growth and not all of them meet today’s standards.
Of course, like in any other domain, there might be exceptions. For example, it might be cheaper or more efficient to build a Greenfield airport rather than working on a brownfield one, and there are few cases like this. But in general, the Middle East does not require more airports in numerical terms. The Middle East has the second highest urbanization rate after North America, where all major cities have at least one airport. At this stage, it is more a question of quality rather than quantity, especially considering the disparity in quality of infrastructure at small airports in comparison to the large-size super hubs.