Managing external cost: Infrastructure & Fuel
Airport Development
Airport Charges
Fuel Supply and Prices
Airport Development
IATA Airport Development Campaigns
Protect our member airlines’ operational interests by promoting cost-effective, functional, but most importantly, affordable airport development.
How?
- Forging partnerships and building consensus among key
stakeholders
- Promoting the development of airport master plans that allow
incremental expansion (incl. cargo, maintenance and fuel)
- Ensuring airport development is demand driven, optimizing CAPEX
- Removing sub-system bottlenecks, adding capacity when justified
- Developing and maintaining the Airport Development Reference
Manual (ADRM)
Asymmetrical efficiencies demonstrate the need
intervention
↗Airlines cutting prices – but airport charges keep rising
CAPEX should be focused to address determined bottlenecks
CGK Jakarta 390,984 -2.0% 2022 57.2 -4.8% FULLHND Tokyo Haneda 425,064 5.5% FULL 72.8 5.7% 2024BKK Bangkok 293,534 -2.7% 2023 46.4 -9.6% FULL
PEK Beijing 581,953 2.5% 2018 86.1 2.9% FULL
SHA Shanghai 402,105 8.3% 2019 51.7 9.5% 2017
HKG Hong Kong 401,848 5.0% FULL 63.1 5.9% FULLAMS Amsterdam 452,687 2.9% 2016 55.0 4.6% 2018IST Istanbul 439,532 8.2% 2016 56.7 10.5% 2017LHR London Heathrow 472,817 0.2% FULL 73.4 1.4% 2026BOG Bogota 337,161 4.5% 2020 27.5 9.8% FULL
GRU Sao Paulo 304,559 7.2% 2020 39.8 9.9% 2018MEX Mexico 409,954 3.4% 2019 34.3 8.6% FULLDOH Doha 218,204 6.1% 2026 26.5 13.2% 2017AUH Abu Dhabi 154,821 14.5% 2032 19.9 20.2% FULLDXB Dubai 357,339 -3.4% 2019 70.5 6.1% 2019YYZ Toronto 432,825 0.3% 2024 38.6 6.8% 2018
EWR Newark 395,524 -5.8% 2017 35.6 1.7% 2029LGA La Guardia 360,834 -2.9% FULL 27.0 0.9% 2021
North
America
Latin
America
Capacity limit
reached
North
Asia
Asia
Pacific
Europe
Middle
East
Region IATA
Code Name
RUNWAYS TERMINAL
Aircraft
Movements
Growth
Rate
Capacity
limit reached
Passengers
in Millions
Growth
Rate
Airport Charges
IATA Airport Charges Campaigns
Lead and represent member airlines during airport charges’ setting to deliver targeted savings for the industry
How?
- Reviewing capital and operating costs, traffic forecasts
- Benchmarking aircraft turnaround costs
- Determining validity of cost increases/need for reductions
- Building consensus with AOCs/BARs, airlines and associations
- Engaging with C-level at airports
- Negotiating airport charges
- Leveraging ICAO guidelines
Technical assumptions: MTOW 74t, seating capacity 150, occupancy 85%, no transfer/transit, turnaround 1 hour
Source: IATA Aviation Charges Intelligence Center
Identified high priority airports (CAPEX and charges)
9
Europe
ASPAC /
North Asia
Middle
East /
Africa
Americas
LHR AMS CPH BRU LIS FRA MUC
SIN HKG BNIA Navi Mumbai DEL BLR HYD Western
Sydney
MEX LIM GRU YYZ BOG BSB SSA GIG
JNB, CPT
DOH
MCT
JED
RUH
FCO
ZRH
BER
CDG
ARN
DUB
MAD (Aena)
New
Manila
CGK
SGN
BKK
ICN
AKL
Fuel
IATA Fuel Campaigns
Ensure reliable supply and safe delivery of clean, dry, on-spec jet fuel into aircraft on time and at a competitive price
How ?
Cost campaigns on fuel pricing, reliability of supply, implementation of best practices
- Driving industry consensus through Fuel Forum/working groups
- Developing and implementing industry best practices
- Developing key tools for airlines
- Model contract for fuel purchasing
- Into plane standard, airport fuel storage guidelines, crisis management
- Extending quality compliance coverage
Competition
Fuel Pricing
Taxes
Fuel Fees
Supply Reliability
Five fronts of our lobbying activities
Fuel Campaigns in Africa and Middle East
Europe, Russia and CIS
Asia Pacific
Americas
Positive Examples
Regulatory Framework - London Heathrow
Well defined regulatory framework
Concept of ‘constructive engagement’ allowed 93 airlines to agree on a GBP 3 billion CAPEX plan across 5 terminals
Regulator made decisions on OPEX, Cost of Capital
Airport proposal of RPI +5.9 % over 5 years reduced to RPI -1.5% as a result of the constructive engagement and regulatory decisions
Saving airlines more than $ 2.8 billion over 5 years.
18
Consultation Process - South African Airports
Consultation in place since late 90s
Differences in airport – airline views surrounding 2010 World Cup CAPEX slowly being resolved
Airport master plans now in place, with short to medium term CAPEX identified to support future growth
All stakeholders (AOC, AASA, BARSA & IATA) now have opportunity to review & agree on future development options
Regulating Committee provided valued oversight
However, government intervention blocking Regulators decision19
Engagement with airlines - Incheon Airport
Recipient of numerous awards for Best Airport
Maintains a partnership approach with airlines through regular and open communication with airlines.
No regulation obligations but conducts direct negotiation with IATA and AOC and has provided reductions in airport charges over the past several years
New Terminal 2 development expected to be fully funded by airport corporation without impacting current airport charges.
Latest agreement for the period Jan 2016 – Dec 2017 to yield $56 million in savings for airlines.
.
20
Stakeholder collaboration - Accra airport
High fuel prices meant airlines having to tanker fuel in for onward journey
IATA, airlines, fuel supplier, airport, National Petroleum Agency and Minister of Transport met to determine road map to reduce prices
Agreement resulted in reduction in taxes ex-refinery and other fees
Over 20% reduction in pricing overall
Campaign ongoing going but new prices save airlines $128 million over 5 years
. 21
Tracking our progress
33%
22%
32%
13%
AirportChargesFuel Fees
ANSPChargesIndustryTaxation
0
200
400
600
800
1,000
1,200
1,400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Imp
act
$m
Monthly Progress
Reductions
Result: US$1,174
million
2015 Board Monitored Activity KPI - Airport and ANSP charges, fuel fees and taxes
Target: Reduce airport and ANSP charges, fuel fees and taxes in 2015-16 by US$800m
and proposed increases by 27%
66%
0.001%
2%
32%
AirportCharges
Fuel Fees
ANSP Charges
IndustryTaxation
Cost avoidance
Result: 42% (US$539 million)
Total costs
avoided
Final
increases
implemente
d
0
200
400
600
800
1,000
1,200
1,400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Re
du
ctio
ns
$m
Monthly Progress
32%
4%34%
30%
AirportChargesFuel Fees
ANSPChargesIndustryTaxation
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Imp
act
$m
Monthly Progress
Reductions
Result: US$346 million
2016 Board Monitored Activity KPI - Airport and ANSP charges, fuel fees and taxes
Target: Reduce airport and ANSP charges, fuel fees and taxes in 2016-17 by US$800m and proposed increases by 27%
47%
0.025
5%
46%
AirportCharges
Fuel Fees
ANSPCharges
IndustryTaxation
Cost avoidance
Result: 41% (US$997 million)
Total costs avoided
Final increases
implemented
0
50
100
150
200
250
300
350
400
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Re
du
ctio
ns
$m
Monthly Progress
To represent, lead and serve the airline industry
Thank you
Questions?