Challenges and success strategies for Airports

Presented by: Renganathan K Frost & SullivanApril 10, 2014At:Emerging Airports, Abu Dhabi

What makes a resilient business

AGENDA

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Introduction

Managing Passenger Volume

Driving Revenue Per Visitor

Lifting Air cargo revenues

About Frost & Sullivan

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PASSENGER VOLUME

REVENUE PER VISITOR

AIR CARGO

INFRASTRUCTURE HUMAN RESOURCES

LAWS & REGULATIONS

A successful business…..

Strengthens its revenue streams ……

…by minimising the impact of its key challenges

REVENUE STREAMS

KEY CHALLENGE AREAS

INCREASED PROFITABILITY

Introduction

Managing Passenger Volume

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UNDERDEVELOPED AIRPORTS

• Lack of infrastructure

• Safety record

• Regulations such as fuel

taxes

DEVELOPING AIRPORTS

• Capacity congestion

• Lack of airline hubs

DEVELOPED AIRPORTS

• Airspace congestion

• Runway capacity

constraints

Infrastructural challenges vary

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UNDERDEVELOPED AIRPORTS

• Lack of infrastructure

• Safety record

• Regulations such as fuel

taxes

DEVELOPING AIRPORTS

• Capacity congestion

• Lack of airline hubs

DEVELOPED AIRPORTS

• Airspace congestion

• Runway capacity

constraints

AFRICA

Current challenges

Strategies for success

Pitfalls to look out for

• Lowest safety record

• State of infrastructure (runways)

• Perception vs reality

• EU list of banned carriers

• Align with organisations (IFC, IATA)

• Funding through PPP

• Removing misconceptions

• Align with other airports

• Expectations mismatch from PPP

• Project implementation delays

• Change in government regulations (for investors)

Managing Passenger Volume

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UNDERDEVELOPED AIRPORTS

• Lack of infrastructure

• Safety record

• Regulations such as fuel

taxes

DEVELOPING AIRPORTS

• Capacity congestion

• Lack of airline hubs

DEVELOPED AIRPORTS

• Airspace congestion

• Runway capacity

constraintsCurrent

challenges

• Delayed projects

• Competing airports

• FDI regulations

Strategies for success

Pitfalls to look out for

• Focus on low-cost carriers

• Collaboration vs competition

• Incentivise airline carriers

• Public sentiment

• Cost estimations

• Process inefficiencies

INDIA

Managing Passenger Volume

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UNDERDEVELOPED AIRPORTS

• Lack of infrastructure

• Safety record

• Regulations such as fuel

taxes

DEVELOPING AIRPORTS

• Capacity congestion

• Lack of airline hubs

DEVELOPED AIRPORTS

• Airspace congestion

• Runway capacity

constraints

Pitfalls to look out for

Strategies for success

Current challenges

• Fragmented use of airspace leading to inefficiencies.

• Lack of institutional arrangements between airports and countries for effective airspace utilisation

• Runway is a constrained resource.

• Merging civil and military airspace

• Agreements with neighbouring countries for effective usage of airspace

• Modeling techniques for efficient usage of runways

• Inordinate delays and negotiations

Managing Passenger Volume

DUBAI

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Importance of Non-aeronautical revenues

• 46% of airport revenues from non-aeronautical sources

• Growth rate of non-aeronautical revenues exceeding growth rate in aeronautical revenues in certain airports.

What needs to be done

• Diversifying revenue streams to reduce dependency on passenger volume

• Adoption of technology to deliver more value in limited space.. E.g Automated kiosks

• Aerotropolis

Driving Revenue Per Visitor

CHALLENGES

HUMAN RESOURCES

GOVERNMENT LAWS

SUCCESS STRATEGIES• Regulations impacting user fees,

restrictions on usage of real estate and other assets

• Support needed for Aetropolis

• Lack of talented employees to provide experience to passenger

• Talent shortage prevents exploration of additional revenue streams

• Identify additional revenue streams

• Collaboration with other key stakeholders to build Aetropolis

• Recruitment and training

• Monetary incentives to retain talent

Lifting Air cargo revenues

Challenges

Weak overall growth

Lack of ecosystem

Bottlenecks in Air cargo transport

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Strategies for success

Focus on domestic cargo

Pitfalls

Lack of awareness (marketing)

Cargo hubs and cargo village

Adoption of technology

Sea cargo to air cargo

Recruitment & training

Involvement of supply chain participants (freight forwarders and third party logistics)

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Lifting Air cargo revenues

• 24X7 facilities not available

• Cargo infrastructures such as cooling equipment not available.

• Long waiting time for cargo loading and unloading

• Shortage of trained professionals

• 0.42 million tonnes of Cargo Traffic in 08-09

Delhi Airport Cargo-Earlier Initiatives undertaken Current status

• Subsidiary company of investing company offers training services.

• 24X7 facilities available

• Hard copy of bills not needed

• Cargo centres positioned closer to manufacturing centres

• 0.54 million tonnes of cargo traffic in 2012-13 despite a negative macro environment

• Cargo traffic shift from Mumbai airport to Delhi airport

• Aerocity being developed near Delhi covering 250 acres of land

• Another airport city planned near Hyderabad

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