How will the changing global geopolitical trends affect the airport and aviation industry? And what factors hold the key to enable airports to cope with the ever growing demand from rising customer numbers and expectations? We hear from the experts at GAD World 2018.
The rise of Asia in a world driven by populism
Global air passenger numbers are expected to double over the next two decades, as outlined by the International Air Transport Association (IATA) in its latest 20-year forecast. The extent to which that estimate is exceeded or undermined, however, depends on the extent to which politics continue to be driven by populism and protectionism, IATA Chief Economist Brian Pearce told delegates attending GAD World in Hamburg this week.
"If we return to a world where there are fewer frictions on borders, we could see air traffic almost tripling over 20 years, but if we see a spiralling into a more protectionist, inwardly-focused world then growth is going to be less – perhaps one and a half times rather than three times," said Pearce.
The rise in populism that saw the 2016 election of President Donald Trump in the US and the Brexit vote in the UK presents "a real danger to our industry", because "we depend on open borders, not just for cargo but also for the facilitation of travel", warned Pearce.
Nevertheless, even if the world continues down this path the growth in prosperity in countries such as China and India looks set to ensure that air transport growth continues apace in the longer term.
"Even if we do have a protectionist world, we're going to still see people wanting to fly," said Pearce, pointing to the correlation between the rise in living standards in developing countries and the increase in the number of people wanting to travel.
The centre of gravity for air transport hubs will continue to shift eastwards as vast swathes of people in developing Asian nations see their living standards continue to improve, enabling them to take to the skies.
"Under any scenario, there are common patterns about where growth is likely to take place. Most scenarios show the rise of Asia…as a common thread," said Pearce.
Innovative technology is key to managing capacity
As airports look for ways to cope with this growth in demand without negatively impacting the passenger experience, it is clear that they need to think beyond simply adding bricks and mortar. Technology will play a major role in managing capacity, as will working collaboratively with other stakeholders and other airports.
During a panel session at GAD World to discuss the challenges they face, airport operators all agreed that innovative technology and co-operation with airlines, regulators, other airports and public authorities will be key when it comes to capacity management.
"We have to do things differently and think out of the box to maximise capacity," said Rafael Fernández Villasante, Director of Operations, Safety, Security and Services at Spanish airports operator Aena. At the 48 facilities Aena manages in Spain, passenger traffic has increased by 75 million over the last five years.
The numbers are even more extreme in India, where Bangalore International Airport Ltd (BIAL) Chief Strategy and Development Officer, Satyaki Raghunath, explained that annual passenger trips will increase five-fold by 2025 and the number of aircraft will double. At Bangalore Airport alone, passenger numbers have trebled to 27 million in the 10 years since it opened and will treble again in the coming years.
"How do we deal with this explosive growth?" asks Raghunath. In addition to a second runway, which is due to be commissioned next year, and a second terminal that will open in 2021, BIAL has "taken the view that we will focus much more on technology and innovation".
Working collaboratively and have all players on-board
Pointing to India's Digi Yatra initiative – a biometric trusted traveller platform designed to provide seamless, paper-free air journeys throughout the country – Raghunath stressed the importance of not only embracing new technology, but of working collaboratively with others to achieve a shared goal.
"Five private airports came together to develop Digi Yatra…and it's been fantastic," said Raghunath, noting that there is "no point" in trying to solve a common problem airport by airport.
P.S. Nair, Chief Executive of the Corporate Airports Sector at GMR Group, also stressed the importance of working collaboratively to address the capacity challenges presented by rising traffic.
"We need to have all players on board, and it's extremely important to have the regulatory authorities on board," said Nair. At Hyderabad Airport, which was constructed to handle 12 million passengers a year and now handles 18 million, Nair said that technology has been used "to a great extent".
Enabling passengers to do as much as possible before arriving at the terminal will enable them to travel more smoothly through the airport, and technology is the key to making that happen. The use of big data and the Internet of Things, for instance, "gives the opportunity to improve dramatically the passenger experience and also to improve capacity in the terminal areas", according to Aena's Villasante.
Managing capacity requires a holistic approach, where all stakeholders are working together to improve the flow. Ray Gray, Chief Financial Officer at Dublin Airport – which has seen "phenomenal" growth over the last six years – is also a firm believer in working together.
"When you talk about capacity and effective management of it, to me it's about managing the whole system," he said. "The whole issue of managing capacity comes back to engaging with a whole range of stakeholders."
