Like much of the rest of air transport, the world's airports saw traffic come back on track last year as the Asian crisis worked itself out of the system. Yet the re-emergence of healthy growth also provides a timely reminder that the issue of airport capacity constraints, although it may have been muted over the past couple of years, is still far from resolved.
The extent of the recovery is clear from a glance across the preliminary results provided by Airports Council International (ACI). Passenger growth for 1999 was back close to 5% after having failed to make the 3%mark a year earlier and cargo was at a still more buoyant 6% after struggling to stay level in 1998.Leading the charge was a recovery among the major Asia-Pacific airports. Looking across the ranking of the world's top 100 airports (see tables page 60-66) shows that only 10 registered a decline in passenger numbers and 13 showed double-digit growth, led by European and US gateways benefiting from last summer's capacity boom on the North Atlantic - itself a fall out of the Asian crisis.
A year ago a quarter of airports in the top 100 ranking were showing declines in passenger throughput, led by the Asian hubs. But last year, the main hubs of South Korea, for example, which were among the earliest and most severe casualties of the crisis, were back showing double-digit hikes in passenger and cargo demand.
Allowing for any further unexpected crises in the world economy, passenger numbers seem to have settled back to a long-term growth rate of around 5% per year. At that rate, the 3 billion passengers that travelled through the world's airports last year could almost double over the next decade and treble by 20 year's time. And if forecasters are correct, the jet aircraft fleet too should have all but doubled by then. The question is whether there will be sufficient airport capacity to deal with this growth.
Europe's capacity
As ever, not all regions, or individual airports, face the issue to the same degree - or at least not in the near term. Deep concerns over growth levels in the Asia-Pacific region have been somewhat abated by a string of major airport projects, which, combined with the economic downturn, has helped take the steam out of fears for capacity constraints. Brand new hubs have opened at Hong Kong, Shanghai and Kuala Lumpur over the past couple of years, while expansions have taken place at Beijing, Singapore and elsewhere. The US market too has other more pressing battles to fight. The Air Transport Association (ATA) says airport capacity is very much a secondary issue compared with the perennial problem of air traffic control.
At present it is Europe where the airport capacity question is at its most immediate - not helped by rising environmental pressures to curtail growth. Again, the situation varies by airport. Paris Charles de Gaulle, which recently opened its new CDG2 terminal, showed a 12.7%rise in passenger numbers last year, standing out as the strongest growing among Europe's established hubs. The growth rate is almost double that of Frankfurt and Amsterdam, while London Heathrow, the classic case of an airport facing capacity crisis, managed only 2.6%. Heathrow's constraint is in contrast to the major projects under way at rival hubs. New runways are being built at Paris CDG and Schiphol, while Frankfurt is hopeful that it will get agreement on a runway extension this year.
A decision on Heathrow's long anticipated Terminal Terminal Five, which has already undergone the longest public enquiry in UK history, is not expected until the end of the year at the earliest. With BAA, operator of London's main airports, reporting passenger growth in March this year of just under 7%, the British Air Transport Association (BATA) which represents the UK's major airlines, is warning of a "gridlock unless more capacity can be created".
BATA predicts that in five years, demand for flights from Heathrow and Gatwick will exceed supply by more than 18 million passengers per year. Based on current growth forecasts, and assuming a fifth terminal is built at Heathrow, BATA estimates that by the year 2030 the combined overspill from London's two major airports would be 91 million passengers. To put that in perspective, the world's largest airport, Atlanta Hartsfield, currently counts less than 80 million passengers a year.
Although London is perhaps the best known example of the capacity problem, at least in Europe, other airports in the region are far from immune. Peter Mackenzie-Williams, head of aviation at consultancy firm Transport Research Laboratory, notes that using the least declared capacities from the International Air Transport Association (IATA) as a rough benchmark, every top 20 airport within Europe will be congested by 2010 if traffic growth continues at forecast levels. And the prospects for a wave of new capacity coming on line are not hopeful. At present there are just three new airport building programmes in the region at Athens, Berlin and Lisbon. There are another 13 new runway projects and 19 new terminals, of which nine will be completed this year.
However, Mackenzie-Williams points out that although the received wisdom is that there are indeed airport capacity problems in a number of areas in the world, the scale of the problem is not well defined. "The problem with trying to set capacity growth forecasts against traffic growth forecasts is that the definitions of capacity may change over time without major infrastructure increases," he warns. Heathrow, he points out, was deemed to be virtually full 20 years ago, yet has doubled passenger throughput without an extra runway.
Heathrow occasionally has mixed-mode operations on parallel runways, which is commonplace in the USA. Mackenzie-Williams argues that such operations on a full-time basis at Heathrow would increase overall runway capacity by around 15%. Other European airports have also increased runway movements despite a climate of capacity constraint (see table, right).
Squeezing more capacity through higher runway use is not the only way to overcome capacity constraints. Another key tool is the expected increase in point-to-point services, bypassing congested hubs. It is an argument taken up by Philippe Rochat, new executive director of the Air Transport Action Group (ATAG) - the pressure group established by IATA and others to push the case for sustainable air transport growth.
ATAG's figures for the five years to 1998 show that Europe's secondary airport traffic grew more rapidly than at the region's major hubs. The one exception was at Schiphol. Spearheading that growth has been the rise of the low-cost airline. This is demonstrated by the debut of London Stansted (home to Ryanair, Go and now Buzz) in the top 100 ranking for the first time with just under 10 million passengers. There are similar stories elsewhere in Europe but not yet quite on this scale. Ryanair last year helped put Hahn on the map as an alternative to Frankfurt-Main, having already done much the same to budding low-cost airports on the outskirts of Brussels, Stockholm and Paris.
Also in Germany, Düsseldorf Express Airport in Moenchengladbach is taking the overflow from the main international airport, with its severe environmental limits. German travellers could also benefit if Liege, in south-east Belgium but close to the German border, develops as a low-cost airport. Belgian carrier City Bird is considering using the airport as a new base.
At the same time, British Airways has helped open the debate about the logic of major carriers continuing to fill their hubs with barely profitable economy transfer traffic. BA for one has set out its ambition to focus more tightly on the high-yield, direct business traveller.
"If the industry's love affair with transfer traffic is waning, there are significant implications for the ways in which traffic may be distributed between airports in the future," says Mackenzie-Williams. He notes that while some passengers on BA's low-cost operation Go would be newly generated traffic, there are also a number who would previously have been back-of-cabin passengers on mainline flights. "If BA and other airlines become less concerned to maximise transfer traffic, it follows that they will need to do less soul searching before transferring services from busy to less busy airports," he adds.
| Runway capacities for selected European airports | |||
| Runway movements per hour | |||
| Airport | declared | actual | Gap |
| Copenhagen Int'l | 60 | 76 | +16 |
| Frankfurt am Main | 64 | 74 | +10 |
| Rome Fiumicino | 50 | 72 | +22 |
| Madrid Barajas | 30 | 50 | +20 |
| NOTE: IATA declared capacities from 1987 compared with actual movements in 1997. Source: TRL | |||
Not everyone is betting on a decline in pressure at the major hubs, as witnessed by the Airbus push to launch its high capacity A3XX, but even it agrees that the global trend may be in favour of more frequent, direct flights. That is also supported by the latest OAG scheduled traffic data in the Top 100 ranking, which shows that frequencies grew by 8.4% - a significant premium on the 5% traffic growth. Average seats per flight remained static at 128, up just 0.5%.
Funding growth
Then there is the old bone of contention about who actually pays for the infrastructure, especially terminal development. In Europe, state funding is becoming more scarce and even in Asia several airports are looking to pay for upgrades through stock market flotations or similar schemes. Malaysia Airports, Beijing Capital and Auckland International have all been listed and others are expected to follow suit. Hong Kong and Thai operators are seen as possibles, while the Korean Government is looking for foreign investors. The Indian Government has said it wants to lease out its main international gateways, although privatisations in India have a reputation for being hit by delays.
In the USA, federal funds are available for expansion, and are mainly raised by transport-related taxes. Mackenzie-Williams says that "these funds do not seem to be made available to the extent that they are needed, or to the extent that the funds themselves are available." He estimates that by 1999, uncommitted funds in the USAir Travel Fund stood at $4.3 billion. Instead the airports have tended to rely on tax-efficient bond issues and partnerships, including airlines funding terminals.
In Europe, such moves are still the exception rather than the rule - notably at Munich where Lufthansa has established a joint venture with the airport to build, operate and finance a new terminal with a capacity of 20 million passengers. The airline points out that this is not part of a policy of airport investment, but a one-off case.
Commentators are divided about the chances of further such airline investments. Roger Elliott, analyst at Salomon Smith Barney feels airports will often have stronger balance sheets than airlines, so will find it easier to raise capital But even if the airlines would welcome operating their own terminals, the airports have to date not shown much evidence of feeling the same about such a move. There is no doubt, however, that a number of airports are going to need large amounts of capital for expansion if traffic keeps growing at predicted levels. Keeping up with passenger demand is not going to be cheap.
Source: Airline Business
