Vietnamese gateway set to open new terminal in 2011.

The planned new terminal at Da Nang International Airport is described as a landmark project for Central Vietnam that has become one of the nation’s top investment priorities.

Passenger throughput soared by 15% to 1.4 million in 2009 and, although the gateway is equipped to accommodate up to 2.5mppa, operator Middle Airports Authority (MAA) is in no doubt that a new international terminal is needed to handle the growing number of overseas visitors, which currently account for about 30% of the traffic.

Initially designed to handle 4mppa, the new 20,000sqm terminal will have five gates capable of handling aircraft up to the size of the B747, a state-of-the-art baggage handling system provided by Vanderlande Industries, and the latest FIDS, CUTE and security technologies.

The terminal will also allow MAA to introduce a number of new retail and F&B outlets that are expected to make the airport more appealing to passengers when it opens in February 2011.

In order to ensure that the building’s design meets the highest international standards, the Vietnamese government has drafted in an experienced team of architects and consultants to oversee the project.

A consortium led by The Louis Berger Group with Netherlands Airport Consultants (NACO) and Vietnam National Construction Consultants (VNCC) is responsible for the design of the terminal, while supervision of its construction is being led by Wilbur Smith Associates with Airport Design & Construction Company and ADPi.

Wilbur Smith, which will oversee all aspects of the project from construction to equipment procurement (international suppliers) and installation, describes the design of the new terminal as “contemporary”.

Ian McGovern, Wilbur Smith’s director for South East Asia, enthuses: “The new International Terminal Building is a landmark project for the development of tourism in Central Vietnam.

It is currently the top investment priority of the Vietnamese Transport Ministry.

“The terminal is a contemporary design that will allow for future expansion.

Its development is in line with the Vietnamese government’s plans to upgrade the country’s regional airports.”

Construction of the basement and ground floor of the terminal has already been completed.

Next on the agenda is the construction of the superstructure and roof, which will be followed by the addition of support infrastructure such as a new, elevated roadway and car parks.

The airport, which is located just 3.2 kilometres from downtown Da Nang, currently boasts a single terminal and two runways, the 3,050m length of the main landing strip ensuring that it is capable of handling B777 and B747 size aircraft.

The current passenger throughput at Da Nang ensures that it is Vietnam’s third busiest gateway after Ho Chi Minh–Tan Son Nhat International Airport and Hanoi–Noi Bai International Airport.

It is currently served by a handful of airlines that between them operate services to five Vietnamese cities (Buon Ma Thot, Hanoi, Ho Chi Minh City, Nha Trang and Pleiku) and three international destinations Singapore, Taipei–Taoyuan and the recently introduced Guangzhou.

The Vietnamese government is hoping that the opening of the new terminal will act as the catalyst for the launch of more flights to Phnom Penh, Hong Kong, Siem Reap, Japan, South Korea and Thailand.

Based on the rapidly growing economies of Vietnam and other South East Asian countries, it is predicted that passenger throughput at Da Nang could reach 4mppa by 2020.

Asia-Pacific Airports 2010 Issue 2

Greg Duffell, CEO of the Pacific Asia Travel Association (PATA), predicts better times for the region, although he doesn’t expect previous 6% per annum growth rates to return before 2012.

Airline chiefs around the world will have welcomed the ACI traffic figures published on 31 March 2010.

For these figures, which showed a continuing improvement in global traffic, may indicate that the elusive green shoots of recovery are now starting to emerge in some markets around the world.

But these figures, with a reported 6.8% year-on-year increase in total passenger traffic, are not yet sufficient reason to open the champagne bottles in celebration.

It is important to bear in mind that we are comparing traffic against a period in early 2009 when the global economic recession was biting hard and the Type A (H1N1) influenza outbreak was creating widespread levels of uncertainty amongst business and leisure travellers.

If we look back to the early months of 2008 we will see that the most recent figures for 2010 are down in comparison – and that’s a clear indication that we’re not yet out of the woods.

Of course, it’s not all ‘doom and gloom’ in the aviation world.

The LCCs in the Asia-Pacific region have continued to expand as business and leisure travellers continue to take the ‘no-frills’ option.

Legacy carriers, keen to increase bookings in their premium cabins, have been responding with aggressive marketing campaigns.

It’s a fascinating time for industry analysts but the stress levels remain high in the corporate offices of legacy carriers around the world.

PATA’s latest annual tourism forecasts, for the period 2010-2012, indicate that, at the aggregate level, international arrival numbers will increase by an average of around 2.7% each year to 2012.

These forecasts show a significant slowing in growth rates from the pre-financial crisis level of 6% per annum, reflecting the reality of the current market conditions and pointing to a gradual and uneven recovery as the region picks itself up from the 3% decline in arrivals in 2009.

In line with expectations on how the global economy is expected to perform generally, the overall international arrivals growth to Asia-Pacific destinations are predicted to be marginal at just over 1% in 2010, rising to around 4.5% in 2011 and then stabilising at around 4% in 2012.

This marginal increase for 2010 suggests that the battle for market share is set to continue and the drive to more profitable times is likely to prove extremely challenging.

PATA’s forecasts state that the previous stable growth of 6% from 2004, in the early period after SARS, is not expected to be regained in the forecast period of 2010-2012.

On a sub-regional grouping basis, destinations that, in aggregate, make up South Asia are forecast to grow the fastest at an average rate of 4.

9% per annum over the period to 2012, followed by South East Asia at 4.8%.

North East Asia is predicted to expand at a rate of 2.2% per year over the same period, while the Pacific can look to increases of around 2% per annum.

The Americas has the lowest projected growth of 1.9%.

Growth is, however, predicted to be very uneven at a number of levels but especially at the individual origin-to-destination country level.

One significant aspect of these forecasts is that the overall growth rates will remain very much lower for the next few years and most certainly lower than has been the case in the recent past.

This, in turn, heralds the need for tourism-based businesses to continue to find profits in cost containment rather than in volume growth, at least for the current three-year cycle.

We do know that the propensity to travel remains strong – but the global economic downturn has prompted a dramatic change in travel trends.

Business travellers have deserted the premium cabins as corporate CFOs demand cost savings.

Leisure travellers, whilst ring fencing their vacation plans, are choosing destinations closer to home.

And that, for some, means staying at home and holidaying in the domestic market rather than flying to a short, medium or long-haul city or resort

It’s a time for realism and pragmatism.

The latest authoritative forecasts from PATA reflect the reality of the current market conditions.

They point to a gradual and uneven recovery as the region picks itself up from the 3% decline in arrivals in 2009.

We have witnessed significant changes in travel trends during the global economic recession.

These changes have brought benefits to some and caused difficulties for others and it is clear that the next three years will prove to be both challenging and increasingly competitive.

Asia-Pacific Airports 2010 Issue 2

Jim Martin considers what service-enhancing passenger handling and security technologies airports will be investing in this year.

With the outlook appearing a little brighter this year, following several months of modest traffic growth, it is likely that airports will continue to strive to improve their passenger and security systems to ensure that they are equipped to meet future demand.

In terms of passenger technology drivers for 2010, airport operators will continue to improve capacity, while taking into consideration ways to reduce costs and improve customer satisfaction in the coming years.

These movers are driven by the changing dynamics of the airport business, where operators have to start looking at their premises as a commercial entity competing for investor and tourist dollars.

Operators will look at enhancing airport capacity by adopting new passenger processing and baggage systems such as self-service check-in kiosks and off airport baggage drop points.

These will also reduce costs in terms of deploying fewer personnel to oversee airport operations.

Airport operators will also have to cater to the new breed of passenger, who will expect to be ‘connected’ at all times within the airport.

This will result in operators working closely with IT vendors to evaluate new technologies at their airports.

In terms of security technology drivers for 2010, enhancing airport security, as we all know, has taken on a new meaning following the 9/11 terrorist attacks in the United States.

And the gradual awareness that business must move in tandem with security has prompted airport operators to implement new technologies such as Electronic Borders, baggage screening, passenger reconciliation systems (PRS) and cargo security, while boosting its conventional security equipment such as close circuit televisions.

These do not come without challenges, however, as operators will need to ensure that the technology is able to keep up with threat sophistication and be interoperable across multiple airports.


Current trends

The aviation industry has gone through many changes over the last decade.

The emergence of low-cost carriers, and the Asia-Pacific region’s prominence in hosting world-class events have brought about an unprecedented rise in air travellers.

Over the past decade, the region hosted the 2002 soccer world cup in Japan and South Korea, the Beijing Olympics in 2008 and soon – the Shanghai World Expo this year.

Concurrently, low-cost carriers such as AirAsia and Tiger Airways have started providing cheaper air travel for the mass market.

This has resulted in airports placing focus on improving security and deploying predeparture passenger screening systems to help identify potential threats.

In some countries, Advanced Passenger Information must be supplied during check-in or passengers will be unable to fly.

Advanced Passenger Information Systems (APIS) will increasingly be adopted by government agencies around the world because it provides pre-arrival and pre-departure manifest data on all passengers and crew, improving border security.


New airport technologies for 2010

The prime drivers of new airport technologies are twofold: lowering costs from all aspects of the business, and meeting the needs of the new and sophisticated air traveller.

Mobile applications will feature very prominently in some of the key technologies this year.

The convergence between mobile devices and passenger processing systems has become closer with technological advancement.

To explore this further, mobile devices are expected to become a focal point for passengers where they can purchase airline tickets, check-in and board an aircraft. When this becomes more popular amongst airlines and passengers, the use of paper boarding passes may eventually be phased out.

The advantages of mobile check-in are numerous; passengers will have better control of their flight itinerary while airports will be able to process passengers more efficiently.

Remote check-in is also gaining popularity with Asia-Pacific airports.

Operators see value in enabling passengers to check-in from offsite locations such as airport hotels and convention centres.

This will help to alleviate congestion at the airports and provide a new level of convenience for passengers.

A good example of this is Hong Kong’s downtown check-in service, available free for passengers travelling on many major airlines.

Finally, we will see more airports and airlines supporting the new Common Use Passenger Processing System (CUPPS) platform.

CUPPS technology is expected to provide savings for the aviation industry by introducing a uniform electronic interface for passenger applications.

It will give software developers at all airlines a common set of specifications, eliminating costly custom engineering and making passenger applications fully portable between airports.


New airport security technologies for 2010

Aviation security practices such as APIS and Passenger Name Recording (PNR) are becoming standard procedures in many countries.

With the implementation of APIS technology, airport security and immigration can perform enforcement and security checks on passengers against the databases of various law enforcement agencies before they arrive and depart.

These databases include those of the police, immigration, and customs and excise departments.

The technology will also help the airlines weed out unwanted individuals before they board the aircraft, which will eleviate the threat that they could pose on an aircraft and other passengers.

Meanwhile, ARINC’s PNR technology will enable governments to access data contained in a customs and excise or immigration automated reservation and departure control systems.

Airport operators will also need to focus on enhancing cargo security in their respective airports, given its importance as an economic contributor.

Korean immigration, customs and airport operators such as Incheon International Airport have adopted the APIS and PNR systems to prevent unwanted passengers from illegally entering and departing the country.

PRS will also feature prominently as an upcoming airport security technology.

PRS enhances passenger security checks, given that technology has enabled passengers to check-in via different modes (from home or mobile phone, for example), which may lead to the creation of fraudulent boarding passes.

PRS systems verify the authenticity and validity of boarding passes in real time with the airline database.

Singapore Changi is the first airport in the world to implement PRS at both Terminals 1 and 2 using ARINC’s VeriPax system, which is IATA’s preferred method of boarding pass validation in accordance with its Bar Coded Boarding Passes (BCBP) standards.

Other airport security technologies, like full-body scans and passenger profiling, are being developed and trialled for future implementation.

However, its success will be dependant in part on passenger privacy issues that need to be addressed.


How can today’s technology help?

The general consensus is that technology has been an enabler for airport operators to achieve cost savings and provide for a more pleasant travel experience for passengers.

However, while the focus of this article has been on the importance of technology, we should not forget the importance of making it inter-operable among countries, and having a uniformed regulatory structure to combat issues such as aviation security.

A good example of this is the implementation of APIS and PNR, which has still not achieved a 100% consensus among countries due to privacy and other issues.

This must be resolved in order for the airport and aviation community to progress.

What criteria should stakeholders consider when investing in new technology? The article has touched on new technologies such as mobile passenger applications, PRS, APIS and PNR, and the essence of these new systems is to help bring costs down for airports and airlines, while providing a higher level of convenience and security to the ever-demanding passenger.

Cost will be an important factor as airports transform into commercial entities over the next few years.

As airport operators view their companies as a business, it will be natural for them to evaluate and implement the latest technologies at the best possible price.

Other factors that also need to be considered include system maintenance, scalability and personnel training to ensure that systems implemented run smoothly and provide maximum returns on investments.


Conclusion

At ARINC, we believe that cost reduction and providing new services to enhance passenger satisfaction will be a major driving force in the investment patterns of airport operators.

In a space that is becoming increasingly competitive, airport operators and IT providers will have to work together to reap the most benefits from technology to provide the best value for investors, customers and passengers.

Asia-Pacific Airports 2011 Issue 2

Gordon Bevan takes a closer look at developments in the Chinese market and their potential impact on the whole of Asia.

Asia, and China in particular, are helping pick the airline industry up again after it suffered the worst decline in traffic since the Second World War.

We cannot, however, expect business as usual after such a bruising recession.

IATA says we have lost two and a half years of business – that’s revenues we can never recover – but we have to live with the cost consequences in terms of lay-offs, debt burdens and cost reductions and, more recently, industrial unrest.

At least the Chinese are travelling again.

Travelling but not necessarily flying, because many will be trying to climb aboard high-speed trains from railway platforms rather than fastening their seat belts at airports.

The need to stimulate domestic economic activity, possibly accelerated by the economic crisis, saw the Chinese government starting to build 1,180km of new high-speed train tracks in 2008.

In 2009, 2,300km of new track was being laid exclusively for high-speed trains (capable of zooming along at up to 300km/hour).

Around 13,000km of high-speed track will have been laid by 2020.

By 2012 China will lead the world in terms of track mileage.

It is precisely this domestic travel market that has stoked expansion and growth within the Chinese airline sector.

Domestic traffic grew by 13% during the latter months of 2009.

Again, a package of economic stimuli encouraged the Chinese to travel within China, but we have not seen the Chinese take out their passports and travel overseas at the levels seen in 2007, ironically the year before the Olympic Games.

Euromonitor says 17.

1 million arrivals and departures flew to and from China in 2007.

However, it is possible that 2010 will see a resurgence of international travel.

The Chinese will not travel simply because of the provision of service and at the right price.

AirAsia and AirAsia X, masters at the low-fares game, have had to cut services to provincial Chinese destinations because of market conditions.

Major centres like Guilin and Haikou struggled to fill aircraft and Tianjin returns after a low season suspension.

It remains quite tough to stimulate two-way traffic from some of China’s regional centres.

The threat of rail competition in China is forcing local airlines to revisit their plans.

Prices are being cut, routes are being shelved and aircraft are being diverted to international markets.

In the same way that Europeans have discovered the pleasure of inter-city travel by train, the Chinese, too, are enjoying city-to-city travel by rail that removes the airport ordeal.

One analyst suggests that all rail/air routes of up to 800 miles will succumb to rail dominance.

China Southern, for one, has expressed the need to redeploy some of its fleet onto overseas routes as it finds the domestic market gets tougher.

If this is the general case, then where could the carriers place those aircraft? The most obvious market for expansion is regional.

Aircraft that the Chinese airlines use on domestic services can easily be reassigned to international operations to neighbouring countries. At the same time, the huge amounts of money that China has pumped into infrastructure development to curb the worst of the financial crisis is coming to an end.

The next set of government cash to be pumped into the market is to stimulate consumer spending.

This is good news for airlines, however, as it puts money into peoples’ pockets.

The airlines now fly to hugely expanded airports and their source markets are about to benefit from government consumption stimuli packages – a good combination.

Poor JAL Additionally, the weakened state of Japan Airlines (JAL) provides carriers with an ideal market in which to expand or to place surplus domestic aircraft.

The China–Japan market is an extremely mature and large market.

In addition, newly released international slots at Haneda Airport means that new Tokyo services are on the cards.

There could be 20 additional flights per day (another four are under negotiation) between China and the newly expanded Haneda, according to Japanese travel websites.

This is one of the few deregulated markets still to be opened up in the region.

In fact, the weakness of JAL represents an opportunity not just for Chinese carriers as Korean Air has also said it will focus on serving the Japanese market, particularly in the regions.

It would draw international traffic away from Narita (or Haneda) to its hub at Incheon International Airport in Seoul.

There are 12 daily flights earmarked for Haneda–South Korea services.

It’s not clear if these services would be in addition to Narita operations, or simply replacements with the capacity shifting across town.

Where to next? Any airline with a hub in the Beijing and Seoul markets can effectively serve the Japanese markets to international destinations.

However, such northerly hubs are less effective for those markets in South East Asia.

How can a Chinese airline hub traffic between South East Asia and Southern China via Beijing, or even Shanghai? The routing requires a costly backhaul and pushes unnecessary traffic through Beijing Capital’s already busy terminals.

Perhaps this is a clue to the proposed acquisition of Shenzhen Airlines by Air China.

As well as providing the national carrier with a hub in the Pearl Delta sufficient to rival China Southern in Guangzhou, and even Cathay Pacific in Hong Kong, it also provides the market with an element of equilibrium after the merger of China Eastern and Shanghai Airlines.

A southern hub allows carriers to use narrow-bodied aircraft to operate in more South East Asian markets such as Kuala Lumpur, Singapore and Jakarta.

These are also markets with large traffic flows to the US, Europe and the Middle East, and there are large ethnic Chinese populations living there.

A hub in southern China also enables Air China to deal with incursions into this market by low-cost carriers – effectively AirAsia.

Air China can collect traffic from the Chinese hinterland and not simply rely upon price stimulation to fill its Airbus aircraft.

The Chinese government has made no secret of its enthusiasm for more airline consolidation.

While there is an element of competition remaining between the ‘Big Three’ – Air China, China Eastern and China Southern – there are also the economies of scale that will help propel these carriers into global carriers.

This is precisely what is felt is needed to take on the global alliances, the mega European and American carriers and the increasing expansion of the Gulf carriers in the region.

All change As mentioned earlier, this financial crisis has forced changes, some even permanent, on to the carriers.

They have shaved capacity and cut fares and costs to survive.

Profitability and even growth is emerging.

However, airlines are having to redesign their fleet and cabin mix.

For Qantas, first class is dead in some markets; for Malaysia Airlines, narrow-bodied fleet expansion is the way ahead; and for Air New Zealand it is product innovation that will determine its future.

Korean sees its future in larger business-class cabins, and even AirAsia X feels it is worth investing in a lie-flat product.

We are used to growth and expansion in the aviation sector; for many airlines there is no other way than to expand in order to survive.

What is clear is that the growth in Asia will be different to what we are used to.

Fleets of two-class Airbus or Boeing aircraft being rolled out into the usual regulated markets is what we are used to; the changes forced upon airlines (even those that are cash-rich) will ensure development will be far more fragmented and that we can expect to see more innovation in this market as a path to securing profitability.

Overlay a process of open skies regulatory regimes on this, as is proposed between the US and Japan, and the opportunity for growth strategies to become a lot more creative.

What is clear to me is that the role of airports becomes even more important.

Feeding airlines ideas has always been the role of airport marketing departments.

However, with more liberal air service agreements in place, the opportunity to feed carriers even more interesting air service options becomes compelling.

We also know that the risks are higher, but that there are fewer obvious markets to serve anymore

So the easy stuff has been done – it definitely gets harder from now on.

I guarantee that more change will emerge, probably as a result of the next recession – and that’s already being talked about.

Asia-Pacific Airports 2010 Issue 2

What does 2010 hold for traffic growth at Mainland China’s airports? Derek Sadubin reports.

Beijing Capital International Airport’s passenger numbers exceeded 65 million in the 12 months ended December 31, 2009, making it by far the largest airport in China, and the third largest airport in the world, according to ACI.

Beijing is on track to overtake London Heathrow this year and could overtake Hartsfield-Jackson Atlanta as the world’s busiest as early as 2012, if recent trends are maintained.

By then, Beijing will again be operating close to its design capacity. The pressure is now on officials to make some progress on the much-delayed second Beijing project, reports the Centre for Asia Pacific Aviation.

Beijing Capital, which reported passenger growth of 16.8% in 2009 (with passenger traffic up 170% from 2001 levels), was the only airport amongst the world’s Top 10 to report growth in the challenging year.

Only seven of the world’s 30 largest airports reported growth last year (of these, Beijing reported the strongest growth, while Jakarta and Guangzhou also reported double-digit growth).

Hong Kong (45.6 million) was 13th largest, while Guangzhou Airport was the 22nd largest airport worldwide in 2009, handling 37 million passengers.

Mainland Chinese airports A total of 14 Mainland Chinese airports reported annual traffic of more than ten million passengers in 2009, with all the major airports handling more than five million passengers per annum, reporting solid year-on-year growth

The smaller airports of Chengdu, Changsha, Sanya, Harbin and Guiyan reported growth of above 30%.

Beijing was also the fastest growing of the nation’s five largest airports (the others being Guangzhou, Shanghai Pudong, Shanghai Hongqiao and Shenzhen), driven by strong year-on-year growth in the first half of 2009, off a weaker base than in the same period in 2008.

Airports in China have been defying the weakness experienced by most of their global counterparts, as they benefit from the strong recovery of Chinese domestic travel demand, driven partly by government stimulus measures, which have buoyed the economy.

The rise in size and global importance of China’s airports is set to continue, with the CAAC now forecasting a 12% increase in passenger and freight traffic this year from 2009’s 230 million passengers and 4.46 million tonnes of cargo.

China to surge past the US Civil Aviation Administration of China (CAAC) director, Li Jiaxiang, expects passenger numbers to grow to 700 million passengers per year by 2020 – and to double that to 1.5 billion by 2030.

Meanwhile, a forecast issued by the US Federal Aviation Administration (FAA) for the US market over a similar timeframe provides a clear window into the differences between mature and developing markets.

US mainline and regional enplanements already reached 704 million in 2009 – 11 years before China is supposed to get there.

But the growth rate tells the tale.

The FAA’s 20-year forecast for fiscal years 2010-2030 predicts domestic passenger enplanements will increase by a comparatively meagre 0.5% in 2010 and then grow at an average of an anaemic 2.5% per year during the remaining forecast period; this contrasts strikingly with the robust Chinese predictions. It also looks as though China will also outpace the US at the end of the forecast period; no surprise there, given the growing economy coupled with the differences in population.

While the FAA expects the US market to reach a billion passengers by 2023, enplanements will be 1.21 billion at the forecast period end in 2030, well shy of the 1.5 billion expected that year by Chinese airlines.

As recently as 2005, the administration projected the US market would grow to a billion passengers by 2015.

Today, a mere five years on, the FAA does not see the US market reaching that size until 2023 – eight years later than the prediction it made so recently.

There is much more to this than merely a status issue – although that is always important too, especially when it comes to marketing US aviation products, coming from a position as a world leader, as opposed to a diminishing power.

This is because the difference in growth rates translates immediately to job creation, to business activity and to tourism potential.

To support the near-term rapid growth, China plans to acquire 218 aircraft in 2010 to keep pace with passenger demand.

CAAC added that in 2010, China will invest $13.2 billion in fixed assets and will implement 25 key construction projects, following the construction or renovation of 22 airports in 2009.

Beijing is committed to maintaining this level of investment for years to come, helping China to keep moving up the global aviation league tables.

Asia-Pacific Airports 2010 Issue 2

Asia-Pacific Airports magazine finds out more about the importance of commercial revenues to Malaysia Airports Holdings Berhad (MAHB).

Never one to be conservative in his ambitions, Malaysia Airports Holdings Berhad (MAHB) managing director, Tan Sri Bashir Ahmad Abdul Majid, has set an ambitious new target – to double the operator’s revenues over the next five years.

He certainly doesn’t make life easy for himself, as 2009 was the best yet for the Malaysian airport operator, which posted a record profit of $116 million from an operating income of $500 million.

Doubling its revenues over the next five years would mean MAHB enjoying an income of over $1 billion by 2014.

MAHB enjoyed an all-time high earnings before interest, tax, depreciation and amortisation (EBITDA) of $200 million in 2009, but Bashir wants this figure to exceed $300 million per annum by 2014, when he is also expects the group’s Return on Equity (ROE) to have risen by at least 10%.

And MAHB, which predicts that passenger numbers will increase from the 51.3 million that passed through its 39 Malaysian airports last year to 60mppa during the same five-year period, expects the new low-cost carrier terminal at Kuala Lumpur International Airport (KLIA) to provide “a huge commercial opportunity”.

The desire to ramp up its commercial revenues is revealed in MAHB’s ‘Runway To Success – Building A World-Class Airport Business 2010-2014’ plan, drawn up after MAHB completed its financial restructuring and signed new operating agreements with
the Malaysian government.

Bashir claims that the new operating agreement with the government has provided MAHB with a clear mandate for it to focus on its core business as an airport operator.

He says: “Leveraging on our renewed and reaffirmed airport operator status, we have revalidated our vision and mission and embarked on the development of this five-year business direction to grow our airport management and operations business
domestically and internationally.

“In building a world-class airport business, we have to be creative and innovative in maximising revenue from nonaeronautical activities. This will continue to allow us to minimise increments in aeronautical charges and offer the best value in the
region to airlines operating out of our airports. Non-aeronautical revenue at Malaysia Airports grew by 66% in the past five years and contributed 57% of our total revenue as at 2008.

“In addition, we have achieved significant cost and service improvements from our Continuous Improvement Programme. This puts us in a stronger position to aim towards doubling our revenues by 2014 while continuing to provide excellent service at
good value to passengers and airlines.

“The greatest testimony to our operating expertise is being able to be involved in managing airports overseas. We have managed airports in Kazakhstan and Cambodia and are now managing airports in India and Turkey, our first foothold in Europe. We are looking at managing two more airports in Asia with the hope of securing them by the end of this year.”

Bashir said traffic growth is central to MAHB’s business as it operates in an aviation industry that has not fully recovered from the effects of the economic crisis in 2008, the H1N1 pandemic and fluctuating oil prices.

“Our key challenge is to ensure that we provide adequate capacity at our airports to cater for the expected growth in traffic,” he says.

“We have planned for capacity growth at our airports by developing and receiving approval for the National Airport Master Plan, which lays out the future requirements for airport development throughout the country. “The immediate major project we are embarking on is the construction of Kuala Lumpur International Airport’s new terminal for low-cost carriers to replace the current, temporary LCCT. It is designed to initially serve up to 30 million passengers and will also be a catalyst for innovative new offerings, including an air-ground multi-modal interchange and a suite of airport city facilities.

“On service excellence, our focus is on developing staff to deliver service level standards of the highest quality. As part of our talent development efforts, we are working closely with ACI and ICAO on an international accreditation programme to recognise airport management as a professional occupation. Operational excellence and customer service are critical factors to further boost traffic at our airports. As in the past, we will work closely with our industry partners such as IATA to lead in airport innovation, providing new experiences and world-class service standards to all our customers.”

Adds Bashir: “Commercial development will be one of the key drivers of profitability for Malaysia Airports over the next five years.

Strategies are in place to revolutionise the retail experience and drive new income streams to double our revenue by 2014. Growth through commercial activities is essential for delivering strong returns to shareholders whilst enabling aviation charges to remain competitive, in turn driving further airport growth.

“We have revamped the product mix and renovated the layout at KLIA and selected regional airports. This is part of a programme to enhance the shopping experience at our airports.”

MAHB’s attempt to boost its revenues also extends to developing new commercial facilities on its various airport sites.

They include the construction of the Malaysia International Aerospace Centre (MIAC) at Sultan Abdul Aziz Shah Airport in Subang and a host of ‘airport city’ projects at KLIA.

“We have an extensive land bank that is available for commercial development where we will establish strategic alliances with major commercial property developers before the end of the year,” reveals Bashir.

“In the meantime, the major contributor will be the new terminal at KLIA, which is designed to provide the most exciting shopping and dining experience in Asia. We cannot be average. We have to strive for excellence.”

Asia-Pacific Airports 2010 Issue 2

Does the opening of Hong Kong’s new SkyPier herald the start of a new era for water connections at Asia-Pacific airports? Robin Stone investigates.

Snaking its way 1,400 miles through southern China, the Pearl River ends its journey when it flows into the South China Sea between Hong Kong and Macau.

Its famous delta has become one of the top manufacturing regions in Asia, ever since the Chinese government’s adoption of a more liberal economic policy in 1979 heralded a surge in foreign investment.

Today, the Pearl River Delta’s manufacturing portfolio of textiles, toys, electronics and brewing accounts for a staggering 5% of all goods produced worldwide.

But while the remarkable economic growth of China, India and Japan has been reflected in the scramble for route rights among leading Western carriers, the expansion of international transport links in the wider Pacific Rim has not been confined to the air.

The opening in mid-January of Hong Kong International Airport’s (HKIA’s) much-vaunted SkyPier, a new cross-boundary ferry terminal, which represented an investment by the airport authority of around HK$1 billion, is a classic example.

Operated by a joint venture company, the Hong Kong International Airport Ferry Terminal Services Limited, SkyPier enables passengers travelling between the former British colony and the Pearl River Delta to bypass local customs and immigration
control, trimming travel times and smoothing air-to-sea or sea-to-air transfers.

And to serve as a reminder that many airports around the world serve as multi-modal transport hubs – flying people in by air and sending them on their onward journey by water, and vice-versa – HKIA combined the SkyPier launch with the official opening of its north satellite concourse.

“The new SkyPier and north satellite concourse are part of HKIA’s growth projects to enhance service levels and meet future demand,” says Dr Marvin Cheung Kin-tung, chairman of the Airport Authority Hong Kong.

“The SkyPier efficiently conveys passengers travelling between the Pearl River Delta and the world via HKIA, while the North Satellite Concourse enables about 98% of our passengers to embark and disembark airplanes in an indoor, weatherproof environment.”

Strong demand for cross-boundary transport saw a temporary SkyPier established in 2003 to facilitate passenger flow between HKIA and the Pearl River Delta (PRD). Today, eight ferry routes are split between two operators – TurboJet and the Chu Kong Passenger Transport Company – whose high-speed ferries make an average of 90 trips every day.

They shuttle around 6,000 passengers between Hong Kong airport and six PRD ports – Zhongshan, Zhuhai Jiuzhou, Dongguan Humen, Guangzhou Nansha, Shenzhen Shekou and Shenzhen Fuyong – as well as Macau’s Taipai and Maritime Ferry Terminal.

Passengers heading overseas via SkyPier are exempt from the HK$120 airport departure tax. In addition, upstream check-in services at major SkyPier ports, allows passengers to obtain boarding passes and check in luggage, simplifying the ferry crossing to the airport.

The temporary SkyPier served nearly 10 million passengers in its seven years of operation. By contrast, the new facility, which began with the construction of a permanent pier on the eastern tip of the island in 2006, can handle up to eight million passengers in a single year.

Its 16,500sqm dwarf the old pier by a ratio of eight to one, and it boasts 20 airline check-in desks and five security screening channels; both can be expanded to meet growing demand.

The airport’s automated people mover system has now been extended to the SkyPier, halving the time for passengers transferring between the ferry pier and Terminal 1 to about four minutes.

But while SkyPier has attracted most of the attention among ‘maritime’ airports in the Asia-Pacific region, other countries miles removed from Hong Kong and China have not been slow to embrace the ferry sector.

Japan, where island airports such as Kobe and Nagoya require speedy links with the mainland, is a prime example. Kobe and Kansai airports are linked by a high-speed ferry service every 45 minutes across Kanku Bay. Run by Kaijo Access since July 2007, the service brings Kansai and Kobe within half an hour’s reach of each other.

It’s a vitally important link. Kobe – still relatively new in airport terms, having opened just four years ago – operates principally domestic flights, but is also geared up to handle international charters, so large numbers of leisure passengers can now be literally ferried between the two airports.

A shuttle bus service linking Kansai with the ferry terminal picks passengers up outside first-floor arrivals, and drops them off around eight minutes later. Ferry tickets can be bought for 1,500 yen (children half-price) at a dedicated counter at the northern end of the passenger terminal building. Buses are timed to match all ferry sailings.

Nagoya’s Central Japan International Airport – Japan’s third maritime gateway after Nagasaki and Kansai – is also well served by ferries.

Located on an artificial island in Ise Bay 35km south of Nagoya, the airport is the main international gateway for the Chubu (“central”) region of Japan. Three high-speed ferry services link the airport to Tsu, Matsusaka and Toba, with an automated people mover connecting ferry port with passenger terminal.

Hong Kong’s SkyPier is unique in that it was purpose-built by the airport to facilitate ferry crossings, but those airports not in that envious position are generally well served by specialist transfer operators.

Brisbane’s BCT, for example, services all airport and cruise ship terminals in Perth, Sydney and south-east Queensland.

The company, which has been operating since 1999, transfers more than 5,000 passengers every month, and offers them a ‘meet and greet’ service, plus assistance with their luggage. Customers can even watch a DVD during their journey.

In 2008, BCT became the first airport transfer franchise in Australia. It is in the process of expanding across Australia and into both the north and south islands of New Zealand.

The Tasmanian Tour Company offers two services to and from the island’s Devonport Airport and the ferry terminal. Devonport is the home-port of the two luxury Spirit of Tasmania passenger ferries which sail nightly to Melbourne, increasing to double frequency during peak periods.

And was it purely coincidence that Sealink opened a state-of-the-art ferry terminal at Cape Jervis hard on the heels of Adelaide Airport’s new passenger terminal just over four years ago? No, according to the South Australian tourism minister, Dr Jane Lomax-Smith, who insisted that the dual openings combined to provide “another important boost for the South Australian tourism industry,” making the state’s top tourist attractions such as Kangaroo Island more accessible than ever before.

With travellers becoming ever-more adventurous, the multi-modal travel sector is flourishing, and many airports are getting in on the act by selling ferry and train tickets. Using the Airport Link rail network, travellers heading for Manly, for example, can buy a combined ferry-train ticket at Sydney airport’s domestic terminal.

For the passenger, of course, this integration of different transportation modes across international boundaries can only be of benefit, so it’s worth returning to Hong Kong’s SkyPier to see how it can work in practice.

Check-in for flights to Japan is now available at both Shenzhen and Macau, which means, for instance, that a business traveller taking an ANA flight from Hong Kong to Tokyo can check-in at either ferry port and not see his baggage again until he walks into the reclaim hall at Narita.

From a temporary terminal to a permanent fixture, SkyPier – the pearl of Asia-Pacific’s airport ferry terminals – is very much here to stay and, if anything, will grow further in the years ahead as aviation grows and continues to develop its intermodal links.

Asia-Pacific Airports 2010 Issue 2