Against the backdrop of a year of capacity cuts, airlines and airports met for the annual World Route Development Forum this September in Beijing with an eye as much on retaining routes as looking to develop new services.
As elsewhere in the industry, July offered some crumbs of comfort for European airports as passenger and cargo traffic was down 4% and 13% respectively - a marked improvement on the 9% and 22% falls seen across the year to date. "There is an immediate reaction to the crisis and then longer-term, how it is going to change the structure of the business," says ACI Europe director general Olivier Jankovec.
One area many European airports continue to look toward is the low-cost sector, with more dedicated facilities on the way. For example, a new€5.5 million ($8 million) terminal at Bordeaux Airport in France will become available in May next year and aims to allow turnaround times of 25min. Chief executive Pascal Personne says research shows a "real need" for a "tailored" product for the budget sector, one which will offer a simple and efficient service.
Similar projects have been put forward at Montpellier and other sites in France, while Marseille Airport launched a dedicated budget terminal three years ago. The latter pinpoints this facility as key to continued traffic growth so far this year despite the tough market conditions which have seen traffic slump elsewhere. Passenger traffic at the airport has grown nearly 4% this year with almost a quarter now generated through the low-cost terminal.
At Copenhagen Airport work continues on a new six million passenger facility dedicated to low-cost operators - the Danish airport having swiftly restored its share of low-cost traffic following last year's collapse of its then main budget operation, Sterling.
"We have been working with the biggest low-cost carriers about how it should be done, so we don't build a marble palace. We are focused on efficiency there," says Copenhagen Airport's head of route development, Ole Wieth Christensen. Users of the facility will have to meet tight criteria on turnaround times, transfer traffic and self checked-in passengers. "It's a way to allow the low-cost carriers to get rid of some of the handling facilities they do not need. We feel it will work well."
Copenhagen Airport handles around 21.5 million passengers and Christensen notes it is able to cater for both hub and budget carriers. "People always say it's either or , but why is that? We can be both. You can still be a hub, but have low-cost carrier traffic."
The move to tailor facilities to the low-cost segment had already begun before the recent crisis, but Jankovec notes: "The crisis is re-affirming the perception your [intra-European] growth opportunitiesare going to come mostly from the low-cost carriers in the medium-term."
DIVERSIFICATION
It forms part of the increasing diversification which Jankovec expects to see at European airports over the coming years, again accelerated by the current crisis. "In Europe there has for some years been a process of business transformation at airports," he says. "They are [each] trying to create their own business model. But airports still have to deal with built-in inflexibility in their own core business. Airlines can move their aircraft and crew to a more competitive market place. Airports have to try and make their own markets more competitive."
To address the near-term traffic crisis, an obvious area to target to retain and stimulate traffic is through rethinking charges. Copenhagen Airport, for example, has just struck a long-term deal on charges with airlines representing 86% of traffic at the airport. "It is absolutely essential to the airport, to the capital region and to Denmark in general that Copenhagen is able to maintain and expand its position as a Scandinavian hub by remaining an attractive partner to airlines with many transfer passengers, including SAS," explains chief executive Brian Petersen. "With a changed price structure, a reduction of the take-off charge for the largest aircraft and locked charges for 18 months, the agreement will serve to consolidate Copenhagen's position as the region's key hub in the coming years."
Copenhagen is far from alone in taking such action. Jankovec points to a survey of around 200 European airports, which showed 94% had either reduced, kept flat or lowered the rate of increase on charges - though high-profile battles and impasses between low-cost airlines and some airports over charges remain.
New charging structures form part of efforts to promotetraffic growth, together with reviewing incentive schemes and tourism authorities taking a more active role in route development - evident by the increased number attending Routes.
In the longer-term Jankovec expects more diversification and innovation among European airports as they seek to create a niche in a more competitive environment."The airport business is going to be more competitive," he says, noting the knock-on impact of the consolidation being seen in the European airline sector. "What we are going to see is less, but more powerful, airlines. That means there will be a shift in the airlines-airport relationship.You are going to see a lot more variety in the [airport]business model," he says, pointing to airports looking to tap their various niche markets for selling points. "There will also be a strategy to reduce their dependency on aviation revenues," he adds.
Source: Airline Business
