Asia-Pacific airports face their challenges
Airports in the Asia-Pacific region are looking ahead to strong growth. But with growth comes challenges. Michael Mackey reports from the Airport Council International’s recent Assembly in Phuket.
The Airport Council International’s (ACI) Asia Pacific Regional Assembly held recently in Phuket was a quiet, even muted, affair.
Airports in the region are doing well, will continue to do so based on traffic forecasts and are expected to keep on delivering broader economic benefits. But with this planning for future growth comes issues related to the high cost of building and expanding airports and the political squabbling that goes with it – along with environmental concerns.
Nowhere is this truer than host country Thailand which is planning for 99.6 million passengers and 649,952 flights at its airports by 2015, Somchai Sawasdeepon, senior executive vice-president, Airports of Thailand told the Assembly.
That is sharply up, to put it mildly, on 2012’s total of 76.1 million passengers and 499,494 flights.
Much of the expansion will be at two airports, Bangkok’s Suvarnabhumi and Phuket International, Somchai added. Passengers at the capital will rise approximately by a third to 60 million from last year’s 45 million, whilst throughput at Phuket, currently being refurbished, will double to 12.5 million passengers in 2015, he said.
Asia looks set to become the biggest aviation market in the world, although there are challenges with this, said Tan Sri Bashir Ahmad Abdul Majid, president of ACI for the Asia-Pacific and managing director of Malaysia Airports Holdings.
The region’s passenger market has grown 5.5 per cent to 1.5 billion passengers and in 2012 had accounted for just under a third of global passenger movements. Taking into consideration the region’s airports’ service levels, he said the industry had “done very well”. But it is the future and not the immediate past he is concerned with.
“We must meet the challenge and ensure we have enough capacity to grow,” he said, adding there are “huge challenges in front of us”.
Malaysia is doing its bit to deal with its own capacity issues and is on the verge of opening two new airport facilities soon.
The capital will see Kuala Lumpur International Airport 2 or KLIA2– which is a designated low cost carrier facility – open “at the end of June”, Bashir told Asian Aviation. KLIA2 will have a 4km runway, a new control tower, 68 gates and capacity for 45 million passengers, he added. This will follow the opening of the refurbished Penang airport.
More broadly, Bashir advocates a co-operative strategy to deal with the problems the industry faces, working with other stakeholders such as governments, tourism authorities, airlines and world business partners.
His remarks and his approach are similar to that of neighbouring Thailand, although each supplements the other at key points.
AOT’s Somchai says issues that airports in the region will have to deal with in the future include South East Asia’s open skies policies, technological innovation such as the Airbus A380 and communications, the increasing role played by low-cost carriers, future competition as well as government policies and environmental problems.
He too advocates a co-operative approach. Problems could be eased and then solved by working with partners such as tourism authorities and travel agents over a number of issues such as routes, new destinations and the environment, he said. However, he acknowledged that “it is not easy keeping up with passenger expectations.”
One of the issues the conference addressed in depth was human resources as labour markets, and especially the skilled type an airport needs, becomes increasingly hard to find. Patrick Ong, chief executive officer of Macau International Airport, says this issue needs to be taken much more seriously.
Macau’s airport is one of the stars of the region. Last year it handled 4.49 million passengers, 27,000 tonnes of cargo and 41,900 aircraft movements. Passenger traffic grew by 11.1 per cent.
Ong was the first to admit his airport, like its home town, is small and despite being a purpose-built facility on the South China Coast it is neither an easy place to manage or find the right human resources.
Macau is small. Its legal population is approximately half a million and of the working age population over half work in the tourism trade, including one in five of the total workforce working in the enclave’s casinos.
Demand for labour is greater than the supply. Ten years ago, the median labour cost US$590 a month; it is now US$2,200.
This presents bureaucratic and financial issues to Macau airport. “There is a lot of money and a lot of effort to train staff,” said Ong.
Interns normally come from universities, but not in Macau where the airport goes into high schools to recruit interns and offers them scholarships and sponsorships. “It’s a tough challenge,” said Ong.
It’s also going to become a pan-Asian rather than just a Macau issue. Throughout Asia birth rates are falling, and in some countries such as Singapore they have already fallen sharply. Against this, economies are developing which means demand for labour will rise as the pool of available labour starts to decline.
Macau hints at a future where much more attention will have to be paid to recruiting, training and retaining labour.
“Aviation is no longer the same as it was ten years ago,” Bashir said on the human resources challenges it faces. His advice is HR departments, which he regards as the most important in any airport company, must attract the right talent and motivate it. For airports this problem is intensified as they are the poor cousins of the sector.
“Aviation is airlines and airlines are glamorous,” said Bashir. “We must attract that talent. We must offer them something,” he added. The advice he gave sounds trite but isn’t. Beyond pay and benefits people must believe they will enjoy working at airports and they must have a good brand. “They want to have that pride,” he said.
They also want to have a work-life balance so the Assembly also looked at the ways this can be done, including an open day for families, sporting opportunities, flexible working hours, sabbaticals and even tele-commuting.
A sign of the airport sector’s maturity is examining its outlook, identifying problems and beginning to tackle them. Although, when it comes to the environment, as Somchai said: “Environmental protection is everyone’s duty.”
During the Assembly, the ACI Environment Committee met for the first time and looked at “possible benchmarking” in areas such as greenhouse gas emissions, noise, wastewater, carbon waste and carbon capture, a committee official told Asian Aviation.
What this is trying to do is square two big and vitally important circles. Firstly, the environmental goal, by airports meeting today’s needs without compromising those of future generations. Or “expanding the activity without increasing the impact”, according to Xavier Oh, ACI’s senior manager for environmental protection.
The second circle is economic. Airlines in the Asia Pacific region support 21.4 million jobs, according to Vinoop Goel, head of infrastructure and government relations, Asia Pacific for the International Air Transport Association. “We do a lot of good,” he said.
Balancing this, the industry releases 676 million tons of carbon dioxide (CO2) – some 2 per cent of the world’s CO2 emissions.
“That number will rise if we don’t do anything,” he added.
Airports can and are doing something in this area. These actions can be grouped into four pillars, said Rhys Boswell, general manager planning and environment for Christchurch International Airport – technology, operations, infrastructure and economic instruments.
Technology, for example, brings benefits in the form of new airframes, engines and fuels, he noted, whilst operations can move towards maximum effort and minimum weight. Infrastructure improves air routes and airport procedures, while economic instruments such as offsets and trading are an incentive for airports (and others) to be more environmentally friendly. It also means initiatives can be local and small to begin with.
“It needn’t be a multi-million dollar thing that gets you on your way,” Boswell told the Assembly.
Some are already well on their journey. One clear example is Hong Kong which has conducted a carbon audit and a cross benefit analysis. Neither is required by law, said Mike Kilburn, senior manager environment with the Airport Authority of Hong Kong.
The strategy, he added, is designed “to meet air quality objectives that are due to be introduced rather than those already enforced”.
If that becomes an industry template, the future might be very green indeed.