2 Concourse A opens in Dubai

3 UK aviation infrastructure – lining up the arguments

City pairs and global connectivity

4 Berlin Brandenburg – still waiting

5 Sky-high ambition for China’s airports

6 Whose level playing field?

ICAN comes of age

7 Stopping the clock on the EU ETS

8 They said it best

9 New Silk Road: China, Brazil and the “New Global South”

10 Sector insight from a European perspective

12 Emirates Foundation in Uganda

Fast Facts

OpenSkyThe public affairs journal of Emirates

Issue 15 | February 2013

Airports and connectivity is the theme of

our latest Open Sky. Often outshone by their

airline customers, airports are the essential

building blocks to global aviation and a key

catalyst to economic growth. They have the

power to reshape global traffic flows and

create new trade and tourism connections

beween disparate regions.

Our focus on airports is prompted by the

recent opening of Concourse A at Dubai

International, the culmination of four years

of construction, or 160 million man-hours,

and $3.5 billion worth of investment.

Despite their overwhelming local and

national economic value, adding new airport

infrastructure is often fraught with complexity,

as this edition of Open Sky illustrates.

In the UK, a contentious ongoing debate

on aviation infrastructure policy may not

see another airport built for the South East

until the 2030s. In Germany, 17 years after

Berlin Brandenburg airport received federal

approval, costs are spiralling following

a fourth construction delay, to the ire of

German and foreign airlines alike.

In China, meanwhile, the Government has

pegged aviation as a major growth facilitator

and plans to build 82 new airports by 2016,

in an ambitious plan to spur economic

growth in metropolitan and regional areas.

No issue of Open Sky would be complete

without commentary from industry experts,

and in this edition we interview Olivier

Jankovec of Airports Council International

Europe. We also feature the EU’s “stopping

the clock” decision on ETS, and the success

of ICAN on its fifth anniversary. Finally, we

discuss the “New Global South” comprising

China and its trading partners in the

developing world, and the implications for

global aviation.

Welcome: the airports issue

In January, Dubai International Airport opened its new

Concourse A after a four-year construction period,

increasing capacity by 15 million passengers a year.

The new facility, which is 11 stories tall and

contains 20 aircraft stands, is home for

Airbus A380 flights into Dubai and expands

the handling capacity of Dubai International

from 60 million to 75 million passengers

per year. Currently, Emirates Airline is

operating its A380s into the terminal, while

Qantas will operate their superjumbos into

Concourse A on April 1. Meanwhile, Dubai

International’s existing facilities continue to

be used to great extent by roughly 150 other

airlines from around the world.

Built at a cost of $3.5 billion, the facility

is part of a larger development plan for

Dubai International, including opening a

fourth concourse in 2015. Increasingly,

infrastructure at the airport will be financed

using retail sales as collateral after Dubai

Duty Free last year raised $1.7 billion from

26 regional and international banks to

support funding requirements for its own

growth and that of the airport.

Concourse A opens in Dubai as home for the Airbus A380

Airport infrastructure in Dubai

Contrary to claims of massive overcapacity, infrastructure at Dubai International

is built in a pragmatic and structured way, in order to stay ahead of traffic growth.

Concourse A has been opened just as passenger volumes at Dubai International were

expected to exceed the operational capacity of the airport this year.

A second airport in the emirate – Al Maktoum International, in the Dubai World

Central development – is often billed incorrectly as the world’s largest airport.

It currently features just a single runway and small-scale cargo and passenger

facilities. Only as traffic volumes outstrip capacity at Dubai International sometime

in the next decade is Dubai World Central expected to be developed into the main

airport for Dubai.

Airlines operating to Dubai

Dubai International – capacity developed in line with traffic growth

Countries

Top passenger markets at Dubai International in 2012

Visitors (1,000s)

Visitors (1,000s)

Cities

Source: Dubai Airports

Source: Dubai Airports, 2012 summer schedule

Source: Dubai Airports

2

Many argue the UK faces an urgent need for new airport

capacity, especially at London Heathrow, with prospects

hinging on political cooperation and consensus-building.

The latest round of policy making has

seen the government set up an airports

commission to consider how the country can

maintain its hub status. The timing of this

move has been criticised as it will not report

until mid-2015, after the next general election.

Earlier, hopes for a way forward to promote UK

economic competitiveness focused on plans

for a third runway at Heathrow, announced in

2003 and projected to be completed within 12

years. Five years later, however, the plans were

scrapped by a new incoming government

due to environmental objections.

The debate in the UK comes at a time when

the country’s growth rate and ability to

trade are being constrained by declining

competiveness as an air hub, due to

capacity issues and high aviation taxes.

The difficulty for the airline industry is that

there are fears it may not be until the 2030s

when new runways or terminals may be

operational, considering any commission

recommendations will undergo a lengthy

planning approval and construction process.

Terminal 5 at Heathrow, for example, took

27 years from concept to inauguration.

Separately, Parliament’s Transport Select

Committee is conducting an inquiry into UK

aviation policy, and has received testimony

arguing for different outcomes. London

Heathrow CEO Colin Matthews lobbied for

a “One Hub or None” plan to expand his

hub as a cost effective solution. Meanwhile,

some regional airports, led by Birmingham,

believe the debate is too focused on the

South East and warned the Government not

to “put all its eggs in one basket”.

UK aviation infrastructure – lining up the arguments

The world’s biggest international air hubs – London Heathrow, Paris Charles de Gaulle,

Dubai International, Hong Kong and Amsterdam Schiphol – are seeing competition

intensify between them as globalisation shrinks markets.

As a result, these hubs are increasingly seeking new markets to boost growth. As the

above map shows, they are forging bonds with cities in far-flung locales. The largest

gaining city pairs among the world’s top airports can sometimes be attributed to recent

geopolitical events, such as political change or economic reforms in a particular country.

In other cases, the growth is the result of new airline connections opening up previously

untapped markets.

Casablanca

Paris

Moscow

Abuja

Annaba

Zanzibar

Vishakhapatnam Yangon

St. Petersburg

Osaka

Sapporo

London HeathrowLondon Gatwick

Tripoli Sharm El Sheikh

DubaiRas al Khaimah

Baghdad

Medina

Tunis

Amsterdam

Abidjan

Sydney

Dublin

ChengduFrom Hong Kong

From Hong Kong

Dallas/Fort Worth

Caracas

Oujda

Chicago To Chicago

To Caracas

City pairs and global connectivityGrowth in annual

passenger bookings

London HeathrowYangon 114%

Sharm El Sheikh 99%

Tripoli 96%

Ras al Khaimah 73%

Baghdad 64%

Paris Charles de Gaulle Zanzibar 61%

Abidjan 59%

Chengdu 57%

Sapporo 45%

Annaba 43%

Dubai International Vishakhapatnam 135%

Dublin 88%

Abuja 65%

Dallas/Fort Worth 57%

Medina 51%

Hong Kong InternationalLondon Gatwick 99%

St. Petersburg 67%

Caracas 38%

Chicago 32%

Moscow 24%

Amsterdam Schiphol Tunis 72%

Oujda 44%

Osaka 34%

Casablanca 23%

Sydney 20%

Where are the world’s biggest international airports growing?

Source: MIDT data for 12 months ending Nov’12 vs previous year, travel between city pairs with at least 10 passengers per day, per direction

3

Building a new airport can span decades. Berlin

Brandenburg Willy Brandt Airport (BER) received federal

go-ahead in 1996.

However, the project then spent the next

10 years as a blueprint as the city of Berlin,

the surrounding state of Brandenburg and

the federal government resolved differences

amongst themselves and with stakeholders.

The airport was originally slated to open

in October 2011, but prior to opening new

dates were announced and revised. Just

a few weeks before its scheduled opening

in June 2012, technical problems with the

fire protection systems forced yet another

delay. Speculation was rife that the October

2013 deadline would not be met; this was

confirmed in early January, with a new date

not being set.

The new airport is of vital importance to the

German capital as it looks to replace the

existing outdated and overcrowded Tegel

and Schönefeld airports. More importantly,

Berlin and the State of Brandenburg hope to

reap the economic benefits of a centralized

and improved aviation infrastructure:

better connectivity, an increase in incoming

tourists and job creation.

Government forecasts suggest the new

airport could generate 40,000 new jobs.

Unfortunately for the Berlin economy, the

delays have resulted in numerous missed

opportunities and additional costs.

Even before the latest delay, total

construction costs had more than doubled

from early estimates, to €4.3 billion.

These estimates do not include expected

compensation claims by the airport’s

adversely impacted retailers and airlines.

This includes Air Berlin, which plans to use

the airport as its hub and has filed a lawsuit

seeking damages.

The additional costs were covered by the

airport’s public owners, and so ultimately

it is the German taxpayer who will have to

pay for the delays. Meanwhile, the expected

benefits of this public expenditure –

increased long-haul connectivity – will

have to wait.

Berlin Brandenburg – still waiting

Berlin Brandenburg ownership

FederalGovernment

26%

State ofBrandenburg

37%

City of Berlin 37%

Illustration by Björn Rolle/Flughafen Berlin Brandenburg

2006After 10 years of administrative

struggle, federal courts issue approval,

construction begins

May 2012Opening

date revised to

March 2013

Jan 2013BER will not open October 2013 as

announced, new date unknown

June 2010Airport announces

opening will be delayed by 8 months,

from October 2011 to June 2012

1996BER plans

receive government

approval

Sep 2012Airport opening

delayed to October 2013

Waiting for takeoff

4

Nowhere in the world is aviation as ambitious as in

China, which is planning huge airport investments

outlined in its latest Five-Year Plan.

The Civil Aviation Administration of China

(CAAC) is targeting 82 new airports by

2016, and the renovation and expansion

of a further 110 existing airports. CAAC

Minister Li Jiaxiang has championed the

plan to bring 80% of China’s population

within 100km of an airport within a decade.

While the project’s full costs are unknown,

the government has stated that over the

same timeframe it would invest 1.5 trillion

yuan ($240 billion) into the aviation sector,

spread across state enterprise, local

governments, airports and the CAAC.

Most new airports slated for construction

are designed to serve fewer than 500,000

passengers annually, and will be used to

further develop China’s long-term hub and

feeder strategy. The flow of passengers

will be directed towards designated hubs

for domestic and international transfers

currently dominated by Air China, China

Eastern and China Southern.

Each of the large Chinese network carriers

have established secondary hubs in

developing inland cities – Air China in

Chengdu, China Southern in Urumqi and

Dalian, and China Eastern in Kunming and

Xi’an. These secondary hubs are designed

to boost efficiency, serving as domestic

aggregators to draw passengers from

developing but populous catch basins and

depositing them in other regional points, or

towards the coastal hubs.

Increasingly, these secondary cities are also

courting international flights. Chengdu,

Chongqing and Xi’an are scaling up their

investments to turn themselves into hubs

for international traffic with new terminals,

transfer services, and incentives for airlines

planning to launch new services. This year

for example, British Airways will launch

flights to Chengdu, while Finnair is planning

to open services to Xi’an, having already

inaugurated services to Chongqing.

One of the new aiports under construction,

Beijing Daxing International, is slated

to become the world’s largest airport.

Its development has generated intense

discussion internally, as the Chinese

Government decides which airlines and

flights will be permitted to operate at the

airport, and whether authorities will split

the various Beijing airports between major

Chinese carriers and their alliances.

Chinese airports are also venturing

abroad to learn best practices and share

experiences. Last year, five separate Chinese

airport delegations visited Dubai to meet

with officials from the airport and Emirates.

Sky-high ambition for China’s airports

Yudongbei

Jiuhuashan

WudalianchiJiagedaqi

Linfen

Yueyang

LiupanshuiBijie

Cangyuan

Luguhu

Daocheng

Naqu

Delingha

Bayanzhuoer

ShuozhouZhangye

Wushan

GuoluoLongnan

Xiahe

Hongyuan

Pingdingshan

WulongYichun

Fuyuan

Jiansanjiang

Suifenhe

Songyuan

Tonghua

Xingtai

Yingkou

Suzhong

Rizhao

ZhalantunHuolinhe

Baicheng

Chengde

Beijing (Daxing)

Shangqiu

WuhuJiaxing

Xinyang

Lishui

ShaoguanSanming

Putian

Shangrao

Huizhou

HengyangWugang

HuangpingHechi

Qionghai

Lancang

Honghe

ZunyiLeshan

WutaishanJinchang

ShiyanShennongjia

Shache

Shihezi

Fuyun

WulanchabuA'ershan

Zhangjiakou

FuguLvliang

Zhanzhou

Note: Map details all announced airport projects (70 of 82 planned)

China’s new airports 2013 – 2016

90.0Millions

80.0

70.0

60.0

50.0

40.0

30.0

20.0

10.0

0.0 5.0 10.0 15.0 20.0 25.0

% Passenger Growth (2011)

+25%

Guangzhou

HangzhouNanjing

Wenzhou

Zhengzhou

Haikou GuiyangShenyang

ShijiazhuangHarbin

Kunming

Dalian

FuzhouNingbo

Xian

Guilin

Shanghai Pudong

Shanghai HongqiaoShenzhen Chengdu

Beijing

Chinese airports – passenger traffic and year-on-year growth

Source: CAPA

5

One of the most repeated bits of jargon used in Europe

is “level playing field”, often used fondly in forums and

governments, corporates and interest groups alike.

It is typically an attempt to place oneself

in an international context. Some Europe-

based members of the Star Alliance

regularly use the concept in combination

with allegations of subsidies that some

efficient and often profitable competitors are

said to receive on a recurring basis.

Its use in Europe is particularly noteworthy

in conjunction with the amount of

interventionist support measures European

governments have implemented, or are

planning to implement in the near future.

Brussels Airlines, for example, has

convinced the Belgian Government that they

and other Belgian carriers are faced with

“unfair competition” and therefore need an

annual €20 million relief package to help

ease social costs levied on them until 2020.

Poland’s government said in December that

it is considering a bailout for LOT after the

airline requested more than 400 million

zlotys (€96 million) in aid.

Meanwhile, the EU is also investigating

four capital injections into Slovenia’s

Adria Airways between 2007 and 2011

amounting to €85.5 million, to decide if the

injections conferred unfair advantages over

competitors. It remains to be seen whether

this support will pass the scrutiny tests of

the EU’s competition watchdog.

Nevertheless the revival of state

intervention calls into question the

scaremongering by those carriers

concerning alleged subsidies and “anti-

competitive behaviour” in the international

sphere, in the name of “levelling the playing

field”. While European governments are

likely to remain ready to intervene in their

industries of national importance, the

debate should therefore also move from

being conceptual to fact-based and apply to

all industry participants.

In early December, Saudi Arabia hosted the fifth ICAO

Air Services Negotiation Conference (ICAN 2012) in

Jeddah, drawing over 350 delegates from 62 countries.

Known as speed-dating for countries seeking to add new air services agreements or

strengthen existing ones, the gathering saw impressive results: participants held

hundreds of separate bilateral meetings, yielding 130 new agreements. ICAO heralded ICAN

2012 for “providing the basis for expanding market access and route connectivity.”

International air traffic is scheduled to double over the next two decades from the current

2.7 billion passengers a year to some 6 billion. This rate of growth is dependent, however,

on a corresponding increase in new air services agreements between states.

The first ICAN in 2008 was hosted in Dubai amidst doubts that a speed-dating format

– meetings scheduled in one, two and three-hour blocs – was workable for air services

negotiations. That first gathering was attended by just 27 countries, yielding 20 completed

agreements. The success of ICAN 2012 in Jeddah demonstrates that the conference has

come of age as the world’s primary venue for advancing aviation liberalisation.

Whose level playing field?

ICAN Comes of Age

Recent proposed state aid in Europe

Belgium – €160 millionto 2020 for Belgian carriers

Poland – 400 million zlotys(€96 million) for LOT

Slovenia – €85.5 millionfor Adria Airways

What the playing field looks like for airlines

6

In November EU Climate Commissioner Connie

Hedegaard announced plans to “stop the clock”

regarding the EU Emissions Trading Scheme.

The pause, which will be implemented

for a period of one year, was in response

to recent progress on the issue by ICAO,

which was delegated by the UN to deal with

reducing greenhouse gas emissions related

to aviation. Ms Hedegaard went on to say

that the announcement was intended to

create “a positive atmosphere” for further

negotiations at ICAO. It was probably no

coincidence that the news came one day

before the US Congress passed the ‘EU

ETS Prohibition Act’, signed into law by

President Obama two weeks later.

The EU’s emissions scheme is one of

several environmental charges faced by

airlines worldwide, requiring significant

resources and staff hours to be devoted

to compliance. Time-consuming efforts to

comply with the ETS apply to an estimated

10,000 aircraft operators of all types that

fly to, from and within the EU member

states. In addition to the ETS, international

airlines also encounter environmental taxes

in Germany, Austria, the UK (Air Passenger

Duty) and Australia (Passenger Movement

Charge), to name a few.

Instead of applying the moratorium to all

EU flights, the Commission applied it to

international flights between non-EU points

and EU points. CO2 emissions from all ‘intra-

EU’ flights (those to and from points within

the 27 EU Member States, and several other

states cooperating with the scheme) still

have to be accounted for in 2012.

With the pause yet to be ratified by the

European Parliament, it was still unclear at

the time of going to press whether operators

affected by the EU ETS will have to report

and account for emissions from all EU

flights (as usual), or for ‘intra-EU’ flights

only (as per the postponement proposal).

It is unlikely that operators will know the

answer to this question prior to submitting

their verified 2012 emissions reports before

the March 31 deadline.

Emirates cautiously welcomes the EU

moratorium announcement, but believes a

more equitable outcome would have been

for the postponement to apply to all flights.

Emirates operated a small number of ‘intra-

EU’ passenger and cargo flights in 2012

that will be covered by the paused ETS, and

will therefore still need to submit verified

emissions monitoring reports for 2012 and

the associated number of allowances to

offset those emissions.

Just as before the announcement, Emirates

will comply under protest with the extra-

territorial, unilateral application of the

EU ETS, with parallel concerns about the

destination of monies raised. At the same

time, Emirates continues to believe a global

solution to deal with international aviation

emissions, designed and administered by

ICAO, is the best approach.

The EU stops the clock on ETS, but questions remain

Reactions to the ETS pause“The Commission’s pragmatic decision

clearly recognizes the progress that has

been made towards a global solution for

managing aviation’s carbon emissions.” –

Tony Tyler, Director General and CEO, IATA

“While I am pleased the EU has temporarily

suspended its efforts to unilaterally

impose a tax on our airlines flying over

US and international airspace, the EU’s

announcement does not rule out future

efforts to tax foreign carriers.” – John

Thune, US Senator and sponsor of ‘EU ETS

Prohibition Act’ of 2012

“Any part suspension of the EU ETS must

not result in different rules applying to

different airlines dependent on the routes

they operate.” – Simon Buck, CEO, British

Air Transport Association

“The positive cooperation between ICAO

and the European Commission provides

the international community with a real

chance to make progress on a worldwide

agreement on aviation CO2 emissions,

and to prepare a sustainable future for

international aviation.” – Fabrice Brégier,

CEO, Airbus

7

“Competition makes companies better” –

Richard Anderson, CEO, Delta Air Lines

“What is needed in the aviation industry

is a levelling of the playing field, allowing

airlines to compete without market-

distorting regulations, for example allowing

fifth freedom or seventh freedom rights …

This levelling of the playing field is what

would really benefit passengers, offering

them more choices and lower prices on

routes currently dominated by a handful of

competitors, not the moving of an airline

stake from one owner to another. It would

also ensure that the most efficient airlines

with the best service levels survive, not the

ones that limp along for years and years.”

– Prof. Loizos Heracleous, Warwick

Business School

“Instead of getting the visitors into the

country and taxing them when they’re here,

you guys are standing by the runway like

latter-day highway robbers.” – Michael

O’Leary, CEO, Ryanair, on the UK Air

Passenger Duty

“If you coddle companies at home

by allowing them to exploit Canadian

consumers in order to be big on the world

stage, you have done your own people a

disservice ... If that’s the way that a deal

comes in, wrapping itself in the flag, I’m

skeptical about the real efficiencies that are

pushing the deal.” – Melanie Aitken, former

head of Canada’s Competition Bureau

“State aid is a fact of life. It happens...

but it has to be tied to performance targets

and it has to be used to restructure an

airline. If an airline is losing money and its

owners, whether private shareholders or

Governments, get more capital into it that is

simply spent in subsidising operating losses,

then you have not solved the problem. And

sooner or later it will have to come back for

more. Meanwhile, other competitors have to

deal with a company that is not charging an

economic rate because its costs are higher

than its revenues. And that is a problem

whether it is a state or private-owned

airline.”– Tony Tyler, Director General

and CEO, IATA

“In 2004 we belonged to the first carriers

who warned about the growing competition

from the Gulf carriers. But let’s be

pragmatic. If you can’t beat them, join them.

Regarding the routes to Northern or Southern

America I don’t expect serious competition

from the Gulf carriers. For Europeans the

detour via Abu Dhabi would be too long. The

same applies for services to Northern Asia.”

– Alexandre de Juniac, CEO, Air France

“It is not the strong state-support for Gulf

airlines like Emirates from Dubai that is the

problem for German airlines but the missing

political support in one’s own homeland.

For the most part this is their own fault; in

recent years airline managers showed too

much arrogance in Bonn and later in Berlin.

And it is about the missing political support

in one’s own house. The restructuring of

Lufthansa, for example, proceeds way too

slowly. Too many employees and executive

managers do not want to realize these new

realities.” – Handelsblatt, Düsseldorf

based newspaper

“There is strong evidence to suggest that

the imposition of the highest taxes on flying

in the world costs the UK economy over

90,000 jobs and over £4bn in lost business

in 2012 alone. With the air passenger

duty raising £2.6bn last year, we believe

the Treasury is failing to exercise proper

diligence in its management of the taxation

system – effectively killing the goose that

lays the golden egg.” – Simon Buck, CEO of

the British Air Transport Association

“Yes to more technology, yes to greater

opportunity, and yes please to removing

barriers to growth.” – Maria Miller, MP, UK

Secretary of State for Culture, Media and Sport

“John Segaert (senior director of Air

Canada’s System Operations Control)

looks at a Toronto-Frankfurt flight with 340

passengers, and discovers 282 passengers

are making connections to cities in Europe,

the Middle East and India. ‘That’s a flight

you don’t want to be late,’ he said.” –

Toronto Star, revealing that in December

2012 transfer traffic made up 83% of

Air Canada’s Toronto-Frankfurt flights

They said it best...

Open Sky brings you the best quotes on liberalisation,

alliances, aeropolitical protection, free and fair trade,

economic policy and global business.

Fred Hochberg

President and

Chairman,

US Export-Import Bank

“In terms of jobs supported by our

financing, we went from 115,000 in

2008 to 255,000 last year. Added up,

we supported 950,000 export-related

jobs over the past four years – nearly

one million jobs. We did all this at no

cost to the taxpayers. What we earn

from our customers pays all operating

costs of the Ex-Im Bank – and what’s

left over goes to the US Treasury. Just

last month, after closing the books on

our fiscal year 2012, we sent $803

million back to the Treasury – our

CFO did it with one keystroke – on

top of the $1.9bn we sent back in

the previous five years.”

8

Slowly but surely, China is on its way to supplanting the

US as the largest trade partner to many Central and

South American nations.

Already the top trading partner of Brazil

and Chile, two of the strongest economies

in Latin America, China is fast developing

major trade relationships with countries

such as Argentina, Uruguay, Cuba,

Venezuela, Peru, Ecuador, Colombia and

Costa Rica.

Driven by Chinese demand for resources

and Latin America’s increasing appetite

for Chinese consumer goods, this trade

relationship has risen over the past decade.

In 2000 trade between China and Latin

America topped $10 billion, and has since

grown exponentially, reaching $250 billion

in 2012. Two-way trade is expected to grow

another 60% by 2016, to $400 billion,

which will make it one of the most

important trade relationships in the world.

Over the same time period, one in four new

air travellers for the global aviation market

will be Chinese, signalling strong potential

for passenger travel between the two

regions as well.

China and Latin America are part of the

“New Global South”, a term which describes

emerging trade relationships between

developing economies, most of which lie at

or below the equator. As China diversifies its

economy away from traditional dependence

on the US and Europe, it will increasingly

promote ties with its southern partners such

as Latin America, Africa and India.

Emirates has served the Latin America-

China trade relationship since 2007,

when it began operations to São Paulo,

having earlier launched operations to Hong

Kong and mainland China. More recently,

Emirates has begun passenger flights to Rio

de Janeiro and Buenos Aires, and dedicated

cargo operations to Viracopos, Brazil.

Brazilian goods carried on Emirates

SkyCargo include metal, ores, minerals,

plastics, chemicals and foodstuffs.

Meanwhile, Chinese goods carried on Emirates

flights to Brazil and Argentina include

textiles, apparel, silk, leather goods, footwear,

jewellery, handicrafts, precious stones, and

automotive parts. In December, SkyCargo

extended its Viracopos service with seasonal

flights to Santiago, Chile, carrying cherries

and other fresh berries to Dubai and onwards

to China and other Asian destinations.

New Silk Road: China, Brazil and the “New Global South”

Beijing

Shanghai

Dubai Hong KongGuangzhou

São PauloRio de Janeiro

Buenos Aires

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Emirates serves the trading partners of the “New Global South”

9

What are the main political and operational

challenges that European airports are

facing this year?

The main challenge for Europe’s airports

this year will be the continued impact of the

European sovereign debt crisis and the fact

that economic growth remains sluggish in

many countries.

This hit demand for air transport for most

of 2012, with freight traffic in recession

for almost 18 consecutive months and

passenger traffic coming to a standstill

as of October. As capital intensive and

predominantly fixed cost businesses,

airports depend on traffic growth for their

economic sustainability.

The European economy is unlikely to start

recovering before the second half of 2013

at best, and this is not good news for us.

This means traffic will remain depressed at

many airports in the coming months, with

most European airlines unlikely to add more

capacity in the market, not to mention the

risk of some going bust.

At the moment, about 48% of Europe’s

airports are loss-making and beyond the

impact on traffic and revenues, the sovereign

debt crisis is also causing a surge in our

capital costs, increasing difficulties in

accessing capital markets and retreating

public financing in airports.

All this means our members are focusing

on boosting their competitive positions

to incentivise traffic growth as much as

possible and on improving both their

economic and operational performance.

The main political challenge is to get

European policy makers to come to terms

with the fact that aviation is a key strategic

sector for the economy, especially as our

continent increasingly becomes dependent

on trade with new economic powerhouses in

Asia and Latin America.

We need the EU and national governments

to support the competitiveness of European

aviation, and not to hinder it as is still too

often the case.

Just look at the damaging aviation taxes that

exist in the UK, Germany, Austria and France

or the increasing difficulties to develop

airport infrastructure and secure our license

to grow in too many parts of Europe, or the

disproportionate costs of EU passenger

rights legislation. We still need a European

industrial policy for aviation.

Over the past five years, what have

European airports done right, and what

could they have done better?

The last five years have been quite bumpy.

We have gone from record traffic levels in

2007/2008 to a record slump in 2009,

losing 100 million passengers in just one

year, followed by a very dynamic recovery

in 2010 before seeing traffic taking a

sliding path again last year. In that context,

European airports have done a lot of work to

build more resilience in their business.

This has been done in different ways.

Firstly by incentivising traffic as much as

they could, in particular through significant

decreases or freezes in airport charges

where possible. Secondly, by further

developing alternative revenue sources,

especially in the areas of retail, food and

beverage, advertising and real estate.

Lastly, by cutting costs and reviewing

operational processes.

Where we still need to do a better job is on

improving service quality for the passenger.

Significant efforts are being made in that

area, from increasing capital expenditure

on quality aspects to embracing digital

technology and better communicating

with passengers.

With the smartphone revolution, many new

opportunities are appearing. For service

quality, we need a concerted effort and an

aligned vision from all operational partners

that use our infrastructure such as airlines,

ground handlers, customs and ground

transportation companies.

Sector Insight

Olivier Jankovec has headed the European region of the

airport organisation since 2006. We asked him about

emerging challenges facing European aviation.

Olivier Jankovec

Director General

at Airports Council

International Europe

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What will come out of the European

Commission’s work to strengthen its

position in the external relations sphere?

Can airports play a bigger role here?

At this point in time, much depends on

whether the EU Member States will be

supportive of the Commission’s new policy

proposals and whether they are ready to

abandon the old bilateral system and move

towards more open aviation agreements

negotiated at the EU level.

The Commission’s appeasing move in

relation to the EU Emissions Trading

Scheme and the prospect of a global

solution on aviation and climate change

should hopefully lead other States to

accept that concept. Historically, airports

have generally been kept out of the loop

regarding aviation negotiations. Yet, traffic

rights and aviation liberalisation directly

impact our revenues and development

capabilities. It also directly affects the

local economy.

We need to play a bigger role in these

issues, not just to represent our own

businesses but also the interest of our

communities, which have often tended to

be overlooked, if not ignored entirely. This

is precisely what ACI Europe advocates

and this is why we closely follow all EU

led aviation negotiations. Beyond our

members’ interests, we see further aviation

liberalisation at EU level as a prerequisite to

ensuring Europe’s global relevance.

European airports were among the first

globally to act as transfer hubs, but other

regions have now caught up, and in the

future we will see significant airport

developments in China and the Gulf, for

example. What will European airport hubs

look like in 2025?

I think it is fair to recognise that Europe’s

airports invented the hub model. In the

face of increasing global competition, in

particular from now prominent airports

in the Gulf, it is quite clear we need to

up our game. This means reinventing the

passenger experience, continuing to develop

intermodality and non-aviation activities, as

well as building a genuine airport brand.

This also means coming up with new

services and reviewing cooperation models

with airlines. There appears to be significant

potential for airports in facilitating or even

offering connectivity between flights of

airlines which do not belong to the same

alliances or even do not offer any interline

enabled services – like low cost airlines.

This could open new perspectives for

hubbing capabilities.

Airport financing can be a contentious

issue. While some airports are privately

funded, isn’t provision of infrastructure

still commonly a government’s domain?

Worldwide, airport infrastructure

development still largely remains a “public

affair”. However, Europe has been at the

forefront of airport privatization since

the late 1980s. Today, more than 20%

of Europe’s airports are privatized or run

as a public-private partnership. With the

sovereign debt crisis, we are now seeing less

appetite from European States to finance

airport development. So we are likely to

see even more private involvement into the

sector, as already shown with the recent

privatization of the Portuguese airports.

Having said that, securing private interest is

not always a given for Europe’s airports.

Apart from weaker growth prospects

compared to airports in other regions,

aviation policy in Europe is not necessarily

helping the day when it comes to

providing the required legal certainty and

stability, as well as helping to boost our

competitive position.

... from a European perspective

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Every year, donations by Emirates passengers

to the Emirates Airline Foundation help

to improve the lives of the world’s poor.

Recently, Emirates Foundation turned its

attention to the residents of Uganda’s Fort

Portal and Rwebisengo communities.

The foundation partnered with the non-profit

Outreach for Africa to arrange a visit by

Travis McDonald, a California-based doctor,

in October last year.

Dr McDonald and his wife provided medical

care to 500 people of all ages with a variety

of medical ailments during their month-long

stay, using medication, vitamins, syringes

and surgical items donated by California

businesses and families. “The experiences

we shared during our work in Uganda will

forever remain with us, and we hope to

make this service a lifelong tradition,”

Dr McDonald said. “We wish to thank

Emirates customers for their donation.”

Emirates Foundation in Uganda

Zaragoza

Gothenburg

Liege

Lilongwe

Viracopos

Taipei

Chittagong

Almaty

Kabul

Eldoret

Djibouti

Domodedovo

Venice

Newcastle

Toronto

Casablanca

Lisbon

Paris

Nice

Athens

Rome

Moscow

St. Petersburg

Copenhagen

SeoulBeijing

OsakaTokyo

Glasgow

ManchesterBirminghamLondon

Geneva MunichVienna

Milan

LarnacaTripoli

TunisMalta

Zurich

HamburgAmsterdam

Istanbul

DusseldorfWarsaw

Frankfurt

Shanghai

SingaporeKuala Lumpur

ManilaBangkok

Jakarta

Addis Ababa

Entebbe

Dar es Salaam

Johannesburg

Cape Town

Nairobi

LagosAccraAbidjan

Dakar Khartoum

Cairo

DubaiKolkata Hong Kong

Dhaka Guangzhou

Melbourne

Adelaide Sydney

Brisbane

Perth

Auckland

Christchurch

Thiruvananthapuram

ChennaiBengaluruKozhikode

LahoreIslamabad

Peshawar

HyderabadMumbai

Delhi

KarachiAhmedabad

Malé

KochiColombo

Mauritius

Seychelles

LusakaHarare

São PauloRio de Janeiro

Buenos Aires

New YorkWashington, DC

Los Angeles

San Francisco

Seattle

Houston

Dallas/Fort Worth

Luanda

Durban

Madrid BarcelonaAlgiers

Prague

Dublin

Ho Chi Minh CityPhuket

Lyon

Muscat

DammamBahrain

Riyadh Doha

Sana’a

JeddahMedina

BasraKuwait

Tehran

Amman DamascusBeirut Baghdad

Dubai

Erbil

Passenger Routes Freighter Routes Passenger & Freighter Routes

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Middle East Network

Fast Facts

Please visit our website for more information on our public affairs and environment activitieswww.emirates.com or write to us pea@emirates.com

Aircraft in fleet 198Number of destinations 129Passengers (H1 2012) 18.7 millionCargo (H1 2012) 1.03 million tonnesPassenger Seat Factor (H1 2012) 80%Employees - Airline (1 Jan 2013) 39,465Nationalities - Airline (1 Jan 2013) 163Emirates dedicated lounges 31Number of on-board meals a day 150,000Emirates flights daily 390 (arrivals and departures)Recycling at our Dubai offices (2011/12) 5,340,000 kgsFinancial Auditor PwCFinancials (Airline - H1 2012) Revenue $9.7 billion, profit $464 millionFuel Costs (Airline - H1 2012) $3.6 billionFirst flight October 25, 1985Longest flight Dubai - Los Angeles (16 hours 20 minutes)New passenger routes (2012/13) Adelaide, Algiers, Barcelona, Erbil, Ho Chi

Minh City, Lisbon, Lyon, Phuket, Warsaw

and Washington DCA380 fleet 31 (on order 59)Boeing fleet 126 (on order 72)

Credit: ELLIS + LANE

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