Even in times of economic difficulty, people take to the skies. “We saw healthy demand growth in 2013, despite the very difficult economic environment,” says Tony Tyler, chief executive of the International Air Transport Association (IATA). “Last year’s demand performance demonstrates the essential and growing role that aviation-enabled connectivity plays in our world.”
Airports foster economic development in the regions they serve. Take Dubai, for example. In the 1960s, this city was virtually unknown. Today Dubai International Airport accommodates more than 57 million passengers annually, ranking it alongside Paris, London and Hong Kong as a world leader for international passenger traffic.
Dubai reaps the benefits
Already reaping the benefits of this growth is the Dubai Airport Freezone, which was built to foster inward FDI. Tenants include Boeing, Johnson & Johnson, Nike, Toyota, Chanel, Heinz, Panasonic Avionics and Rolls Royce. The Dubai Airport Freezone Authority says 2013 revenues increased by 42% on 2012.
Dubai International Airport’s success is attributed the fact it is a hub with liberal air transport policies. Open Skies agreements apply between the United Arab Emirates and more than 60 other countries.
The upshot of this liberal policy is that the Middle East will handle some 400 million passengers a year by 2020, according to projections by the Arab Air Carriers Organisation. Last year, the IATA reported that to accommodate this huge number of travellers, Gulf countries have planned investments of more than $313bn in airport development.
Dubai is set to develop a huge new airport, which will be the central component of the Dubai World Central commercial complex. It is being designed to encompass five runways by 2030 and eventually accommodate 160 million passengers a year. Authorities say it will become the largest airport in the world in terms of passenger capacity.
Turkey thinks big
Giving Dubai a run for its money, however, is Istanbul Ataturk International Airport, home to Turkish Airlines. From Istanbul Ataturk, Turkish Airlines serves 230 destinations worldwide – 100 more than that of Dubai’s leading carrier, Emirates.
Turkey is also planning to build what it hopes will be the world’s biggest airport. To be located on the Black Sea with a capacity of 150 million passengers a year, the airport is scheduled to be operational by 2018. Dovetailing with the development are plans to build Istanbul Metropolitan, a satellite city with a projected population of 1.5 million people.
Dr Rafael Echevarne, director of economics and programme development for the Airports Council International (ACI) based in Montreal, emphasises that what gives Istanbul an advantage over Dubai is the fact Dubai is so reliant on transient passenger traffic and transhipment cargo. “Turkey has a population of more than 75 million and an important industrial base,” he says. “This ensures not only growth in cargo shipments but passenger traffic.”
Flight offerings with ample capacity and good infrastructure are critical for an airport’s success. London Heathrow, for example, is ranked third in the world for passenger traffic, behind Hartsfield-Jackson Atlanta International Airport and Beijing Capital International Airport, according to the ACI. The airport has been an enormous driver for tourism and economic development in the UK.
Currently, debate is under way regarding adding a third runway at Heathrow. Operator Heathrow Airport Ltd reports the additional runway would create 100,000 jobs and add $168bn to the UK economy. It also claims it would open up 40 new routes and serve the whole UK, due to its geographical location and links to railway lines including HS2, the proposed high-speed rail linking London with many of the UK's other major cities. London Gatwick is also vying for additional runway capacity.
Having passenger demand, a favourable geographical location and superb infrastructure does not spell instant success, however. Consulting firm Strategy& emphasises that local or even national aviation policy decisions can make or break a city's vision of becoming an international hub. “And good policy-making is not easy,” it states.
Take, for example, Frankfurt Airport. Night flights into the hub have recently been banned, causing Lufthansa Cargo to look elsewhere for critical transcontinental flights.
Amsterdam's right mix
Among the airports Strategy& identifies as having the right mix are Amsterdam Schiphol, Hong Kong International and Singapore Changi. Not only does Amsterdam Schiphol facilitate 99 scheduled airlines that in 2013 carried 52.6 million passengers and more than 1.5 million tonnes of cargo worldwide to 323 direct destinations, it also offers state-of-the-art facilities. The Netherlands’ flag carrier KLM and its partners in the SkyTeam alliance account for about 70% of the airport’s traffic.
Amsterdam Schiphol, the SkyTeam hub network and the surrounding Amsterdam metropolitan region have jointly developed Mainport Schiphol, a hub of businesses and linked activities. “Together they create an international and multimodal junction where flows of people, goods, information, knowledge and culture all converge,” the Schiphol Group’s website explains. To accommodate selective growth at Amsterdam Schiphol, a business plan has been drawn up by Schiphol Group for phased development of Lelystad Airport, scheduled to open in 2018. Lelystad Airport would offer a regional alternative to Amsterdam Schiphol.
To accommodate selective growth at Amsterdam Schiphol, a business plan has been drawn up by Schiphol Group for phased development of Lelystad Airport, scheduled to open in 2018. Lelystad Airport would offer a regional alternative to Amsterdam Schiphol. “The development of Lelystad Airport is important for the growth of Mainport Schiphol,” says Jos Nijhuis, Schiphol Group chief executive. “This investment will enable Schiphol to remain a competitive international mainport in a competitive region.”
Another airport with the right mix is Hartsfield-Jackson Atlanta International Airport, the busiest airport in the world with more than 94 million passengers a year passing through, according to the ACI. It is also home to Delta Air Lines.
Located adjacent to the airport is Atlanta Aerotropolis, a 50-hectare project being developed to attract companies that want to be near the airport. It is already home to the US headquarters of Porsche Cars North America, a site that includes a Porsche museum and restoration centre, as well as amenities for guests and employees such as restaurants, a gym and a business centre.
“This is intended to be a landmark facility for Atlanta and will be one of the most dramatic things people will see when flying into Atlanta,” says Joseph Folz, general counsel at Porsche.
Up and coming
Dallas/Fort Worth International Airport will jump to second place in the US in 2022 for passenger traffic, according to aviation consultant Michael Boyd. With 34.9 million passengers, it will pass Los Angeles International Airport and Chicago’s O’Hare International Airport, thanks in part to the merger between American Airlines and US Airways, and a federal law expiring in October 2014 that will allow airlines to fly nonstop anywhere in the US out of Dallas/Fort Worth.
Austin-Bergstrom International Airport, which serves Austin in Texas, offers opportunities to carriers such as British Airways. Currently there are no other long-haul airlines serving the Austin market, giving British Airways a corner on the market.
In March, IAG Cargo – the cargo handling division of International Airlines Group, which is the holding company of British Airways and Iberia – launched the first ever regular British Airways transatlantic flights to London to support Austin’s growing technology and pharmaceutical industries.
What was the rationale for flying to Austin? “When we looked at the number of UK companies that have their North American headquarters in Austin, we saw that it was considerable,” says David Shepherd, IAG Cargo's head of commercial sales. “The advantage for these companies is they can fly their cargo to London Heathrow and transship them to points beyond.”
Experts contend that this should further expand economic development and possibly FDI opportunities for Austin. In March, German prosthetics company Ottobock Healthcare announced plans to relocate its North American headquarters from Minneapolis to Austin, a ringing endorsement of the city and its airport connections.