Grant Woods, Sydney Airport’s general manager airport operations, ponders the future of airport security in the Asia-Pacific region.

As aviation in the region grows there is significant advantage in major airlines, airports and governments collaborating to ensure that aviation security remains effective whilst enabling the movement of passengers and cargo.

Air traffic growth is a defining characteristic of the early 21st century and nowhere is this more significant than in the Asia-Pacific region.

The fast developing economies of China and other Asian states and the process of globalisation mean that business and leisure travel in the region is growing strongly.

One third of the 28,000 jet aircraft built over the next 20 years are destined for the Asia-Pacific region. Regional airlines are pioneering new routes and business models with varying degrees of success.

Growth in the region has involved both full service carriers and a multitude of new start-up airlines across market segments. Low-cost carriers in particular have been beneficiaries of the economic upturn. Some major airports in the region have had to invest quickly in greater capacity and supporting infrastructure.

As markets develop, more airports will be required to serve major cities across the region and the emerging role of the major regional hubs is particularly significant. As both intra and inter regional traffic rises, hub airports are becoming increasingly important ‘switching points’ between the region and the other major aviation markets in North America and Europe. If not already, these hubs are also developing into major destinations and business centres in their own rights.

Hub airports now serve destinations vastly different from those of the traditional ‘safe’ routes. Flights today link them with locations where the security threat both at home and abroad is real. As a consequence, airports must consider these risks and new security challenges, particularly from inbound aircraft.

Control and management of airport security must become ‘outcomes-focused’ and move forward towards more self-regulation, with airports taking greater responsibility for their own security coordination, allowing quicker responses to specific security threats targeted at the airport.

Border and security agencies are required to respond to the emerging risks. From an aviation perspective, Asia-Pacific holds many unique challenges. Active terrorist organisations and radicalised individuals are evident in several countries in the region. At the same time, travel patterns within the region link countries with significantly different threat profiles and perceptions of the terrorist threat. Aviation security standards vary across the region and it is likely that this variability will persist and may grow.

A key challenge will be to achieve a consistent focus on aviation security across the region. Some estimates suggest that a major aviation event in the region would likely result in tens of billion dollars in economic damage. There is growing recognition in the region that aviation security is an important contributing factor to sustaining regional growth in the short and long term.

Large airports are leading the way by integrating security more fully into business models and passenger processes. But large airports and airlines can only do so much in isolation to improve standards. Arguably new strategies are needed to manage the Asia-Pacific aviation security environment over the next twenty years.

The threat however is not simply about terrorism. As global travel grows, serious and organised crime groups are seeking to use the aviation system to move money, goods and people clandestinely.

An important objective for both government and industry is to ensure that new approaches to passenger travel and security are implemented in a timely, co-ordinated and measured way across the region – aviation security is only as good as the weakest link in the network.

There have been lost opportunities. All EU member countries jointly introduced enhanced security measures to limit the amount of Liquids, Aerosols and Gels (LAGs) passing through the passenger screening points. The US also enabled similar rules that required passenger searches to US standards. But, the LAGs response continues to be piecemeal across the Asia-Pacific region.

Evolving technology has the potential to reduce security costs, while at the same time increasing security outcomes. Although technologies may be more invasive they are likely to be accepted as providing improved security outcomes if introduced and managed effectively.

At present the region has no standards for access control and emerging technologies to consider for future implementation to assist in managing risk. However, airport security is always interested in emerging technologies that in the longer term may ensure higher levels of passenger throughput or greater security. Regional airports will need to consider the ever increasing sophisticated solutions and their applications.

There should be stronger regional ties with the overseas last port of call and destination countries and greater emphasis on harmonisation of security systems and services.

The region’s governments have a key challenge to improve regional aviation security co-ordination in an effort to mitigate risks in the system and to support the hub airports. Governments must ensure close harmonisation and learning outcomes for better practise legislation.

The role of the hub airports in this circumstance is particularly important. Hubs are key interchange points between the security systems of countries and airports in the region. Vulnerabilities in aviation security in one country may be transmitted through hubs to other countries. Hubs are also vulnerable to the disruptions associated with local and international aviation security events and changes.

The aviation industry is highly networked and the performance of hub airports affects overall system performance. Major airlines have a significant stake in the security performance at hub airports. Conversely security performance at the hubs is heavily influenced by the performance of major airlines, including their security activities.

A tripartite collaboration between government, major airports and airlines provides one possible avenue to advance aviation security outcomes in the region. By working together major government and corporate players in the region can assist one another in maintaining a secure foundation for sustained development.

As the major airports continue to grow, the present arrangements for national intelligence gathering and information sharing may not respond adequately to airport security requirements of the future.

The established hierarchy for responding to threats and the identification of risk has the potential for delay and a model of airport security co-ordination that devolves the management of security risk down to the airport operator is a sound governance regime.

For governments such collaboration is complementary to existing capacity development activities and provides a further practical avenue to improve and advance security performance. For major airports and airlines the ability to work closely with and influence governments in their approach to aviation security can assist in managing risk, passenger facilitation and investment flows. What would the collaboration seek to achieve:
• Support for high quality aviation security that balances security, passenger facilitation and business outcomes
• Share and promote good practice
• Contribute to the implementation of new security technologies and processes
• Enhance information flows to industry and passengers
• Provide coordinated support within the region for further building capability across all economies

It’s not necessary to develop a system that has global influence like the EU or TSA in America but why can’t we start with key regional airports implementing consistent measures to ease the security burden and avoid confusion?

Food for thought?

About the author Grant Woods is Sydney Airport’s general manager airport operations and chairman of ACI Asia-Pacific’s Aviation Security Committee.

Asia-Pacific Airports 2008 Issue 3

 

Keith Strandberg reports on the continued development and growth of Hong Kong International Airport.

A decade on from its much-trumpeted opening, Hong Kong International Airport continues to set the standards that other Asian gateways strive to follow.

The gateway, which replaced Kowloon-located Kai Tak in 1998, handled 47.8 million passengers (+7.5%) last year to maintain its status as Asia-Pacific’s third busiest airport after Tokyo Haneda and Beijing Capital.

While the 3.7 million tonnes of cargo (+4.5%) to pass through its facilities in 2007 ensured that it maintained its lofty position as the region’s leading cargo hub and the world’s second biggest cargo airport after FedEx’s Memphis home base.

The importance of the gateway to the Hong Kong economy has also grown significantly over the last 10 years according to official figures, which reveal that the aviation activity now accounts for over 3% of the Special Administrative Region’s gross domestic product (GDP).

Air cargo has been bringing huge economic value to Hong Kong. In the first nine months of 2007, the industry handled more than HK$1,404 billion worth of air cargo, representing about 35% of the total external trade of Hong Kong.

And the best is yet to come, as Stanley Hui – CEO of Airport Authority Hong Kong – has big plans for the airport.

“To meet rising demand and to enhance the airport experience, a number of projects and investments, estimated to cost billions of dollars, are being planned to ensure we have sustainable growth,” Hui says.

“We budgeted about HK$4.5 billion in early 2006 for a series of large-scale projects to enhance the capacity of Terminal 1 and the airfield. Construction works are being implemented in phases and are expected to be completed by the end of 2010. One of the highlights is a new 10-bridge-served North Satellite Concourse. Custom-built to cater to the growing market of narrow-bodied aircraft, the new facility is designed to handle five million passengers annually and is expected to be in service at the end of 2009.”

In addition, the airport is reviewing plans for a midfield concourse, to satisfy demand for more parking bays and terminal capacity.

After these enhancement projects are completed, Hong Kong International Airport (HKIA) will have a total of around one million square metres of terminal areas, including the existing Terminals 1 and 2, the future midfield concourse, the North Satellite Concourse and the permanent ferry terminal.

The airport and Hong Kong’s Civil Aviation Department (CAD) have also commissioned UK-based consultant, National Air Traffic Services (NATS), to look into possible ways of enhancing airfield efficiency at the gateway.

“The findings suggests that the number of hourly aircraft movements at Hong Kong International Airport can be increased, subject to the implementation of a number of changes in air traffic management procedures,” explains Hui.

“The Financial Secretary of the Hong Kong SAR Government announced at the end of February 2008 that the government is confident the capacity of the existing runways can be gradually increased to 68 aircraft movements per hour by 2015 with support of the airport authority and the industry.”

“NATS is now conducting a study to determine how many additional aircraft movements a third runway might handle,” says Hui. “We will also study the technical and environmental feasibilities of building a third runway before making any decisions.”

Currently, HKIA connects Hong Kong with more than 150 destinations worldwide, including about 40 mainland cities, but Hui has no qualms in admitting that he wants more to “maintain the airport’s international and regional aviation hub status”.

“We are committed to expanding our international and mainland route network as the over 85 airlines operating here today play a crucial role in making Hong Kong a leading regional and international air hub,” he says.

The airport is certainly no stranger to marketing campaigns aimed at attracting new carriers or encouraging existing operators to launch new services, having had a new destination incentive arrangement (NDIA) in place since 2001.

Enthuses Hui: “The current NDIA programme repays the airlines 75% of the landing charges during the first six months of operation and 25% of the landing charges in the following six months on scheduled flights from HKIA to new destinations.”

And it appears to be paying dividends as seven airlines launched services from HKIA in 2007 – Aeroflot Cargo, Yangtze River Express, Jett 8, China Cargo Airlines, Thai Global Cargo, Uni Air and East Star – and Royal Jordanian commenced scheduled flights between Amman and Hong Kong earlier this year.

Hui insists that the support of home-based carriers Cathay Pacific Airways, Dragonair, Hong Kong Airlines, Hong Kong Express Airways and Air Hong Kong (all-cargo) all have a vital role to play in ensuring that the airport continues to provide a “world-class service” to passengers.

The notable absentee from that list is long-haul, low-cost carrier Oasis Hong Kong Airlines, which stopped flying in April after going into liquidation just 18 months after its launch.

The airport’s geographical location means that its future development is inevitably linked to the giant neighbour on its doorstep, and with this in mind, the airport has adopted an ambitious policy of investing in Mainland Chinese gateways.

“To be an integral part of the mainland aviation industry, we have invested in Hangzhou Xiaoshan International Airport, taking out a 35% stake in the airport and entering into a management joint venture for the Zhuhai Airport for the next 20 years,” says Hui.

“We also provided consultancy services to Beijing Capital International Airport (BCIA) for the commissioning of its newly opened Terminal 3. In addition, the Hong Kong and Shenzhen governments have plans to build a direct rail link to connect Hong Kong and Shenzhen airports, and we are also participating in the feasibility study now.”

Hui is particularly proud of HKIA’s efforts to enhance its facilities and services – through infrastructure upgrades like the opening of Terminal 2 and initiatives such as the use of radio frequency identification technology (RFID) in baggage handling.

Enthuses Hui: “Hong Kong is an airport pioneer in the adoption of RFID technology. At the end of last year, we started using an integrated bag tag combining an embedded RFID chip with a traditional barcode. RFID tags can be quickly read from a distance and at an angle, with enhanced read-rates of 97% versus an average of 80% for the barcode-only tags.”

Hui and HKIA also work hard to be a truly multi-modal transport hub that integrates air, sea, rail and land transport. For HKIA not only connects the SAR with over 150 worldwide destinations, it also provides a comprehensive sea and land transport network to the Pearl River Delta (PRD).

Indeed passengers can take high-speed cross-boundary ferries to travel between HKIA and six PRD ports – Jiuzhou, Macau, Fuyoug, Shekou, Humen and Zhongshan. While cross-boundary coaches make 240 round trips between HKIA and 70 mainland destinations everyday, cross-border limousine services are also available at HKIA to provide direct and fast link services.

So what does Hui believe the future holds for Hong Kong International Airport?

“It is all good,” says Hui. “I believe that in ten years’ time we will still be a key international and regional hub and a major gateway hub of Mainland China, but with a massively enhanced route network of sea and land connections to the mainland.

“Most importantly, the airport will continue to contribute to the economies and social development of both Hong Kong and Mainland China.”

In line with this prediction, Hui is confident that the airport will continue to set new records, handling up to 80 million passengers, eight million tonnes of cargo and 490,000 aircraft movements annually by 2025.

With the Civil Aviation Administration of China (CAAC) estimating that Chinese airports will enjoy average annual growth rates of 10% up to 2020, who would bet against it?

Asia-Pacific Airports 2008 Issue 1

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

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