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Challenges and success strategies for Airports
Presented by: Renganathan K Frost & SullivanApril 10, 2014At:Emerging Airports, Abu Dhabi
What makes a resilient business
AGENDA
2
Introduction
Managing Passenger Volume
Driving Revenue Per Visitor
Lifting Air cargo revenues
About Frost & Sullivan
1
2
3
4
5
3
PASSENGER VOLUME
REVENUE PER VISITOR
AIR CARGO
INFRASTRUCTURE HUMAN RESOURCES
LAWS & REGULATIONS
A successful business…..
Strengthens its revenue streams ……
…by minimising the impact of its key challenges
REVENUE STREAMS
KEY CHALLENGE AREAS
INCREASED PROFITABILITY
Introduction
Managing Passenger Volume
4
UNDERDEVELOPED AIRPORTS
• Lack of infrastructure
• Safety record
• Regulations such as fuel
taxes
DEVELOPING AIRPORTS
• Capacity congestion
• Lack of airline hubs
DEVELOPED AIRPORTS
• Airspace congestion
• Runway capacity
constraints
Infrastructural challenges vary
5
UNDERDEVELOPED AIRPORTS
• Lack of infrastructure
• Safety record
• Regulations such as fuel
taxes
DEVELOPING AIRPORTS
• Capacity congestion
• Lack of airline hubs
DEVELOPED AIRPORTS
• Airspace congestion
• Runway capacity
constraints
AFRICA
Current challenges
Strategies for success
Pitfalls to look out for
• Lowest safety record
• State of infrastructure (runways)
• Perception vs reality
• EU list of banned carriers
• Align with organisations (IFC, IATA)
• Funding through PPP
• Removing misconceptions
• Align with other airports
• Expectations mismatch from PPP
• Project implementation delays
• Change in government regulations (for investors)
Managing Passenger Volume
6
UNDERDEVELOPED AIRPORTS
• Lack of infrastructure
• Safety record
• Regulations such as fuel
taxes
DEVELOPING AIRPORTS
• Capacity congestion
• Lack of airline hubs
DEVELOPED AIRPORTS
• Airspace congestion
• Runway capacity
constraintsCurrent
challenges
• Delayed projects
• Competing airports
• FDI regulations
Strategies for success
Pitfalls to look out for
• Focus on low-cost carriers
• Collaboration vs competition
• Incentivise airline carriers
• Public sentiment
• Cost estimations
• Process inefficiencies
INDIA
Managing Passenger Volume
7
UNDERDEVELOPED AIRPORTS
• Lack of infrastructure
• Safety record
• Regulations such as fuel
taxes
DEVELOPING AIRPORTS
• Capacity congestion
• Lack of airline hubs
DEVELOPED AIRPORTS
• Airspace congestion
• Runway capacity
constraints
Pitfalls to look out for
Strategies for success
Current challenges
• Fragmented use of airspace leading to inefficiencies.
• Lack of institutional arrangements between airports and countries for effective airspace utilisation
• Runway is a constrained resource.
• Merging civil and military airspace
• Agreements with neighbouring countries for effective usage of airspace
• Modeling techniques for efficient usage of runways
• Inordinate delays and negotiations
Managing Passenger Volume
DUBAI
8
Importance of Non-aeronautical revenues
• 46% of airport revenues from non-aeronautical sources
• Growth rate of non-aeronautical revenues exceeding growth rate in aeronautical revenues in certain airports.
What needs to be done
• Diversifying revenue streams to reduce dependency on passenger volume
• Adoption of technology to deliver more value in limited space.. E.g Automated kiosks
• Aerotropolis
Driving Revenue Per Visitor
CHALLENGES
HUMAN RESOURCES
GOVERNMENT LAWS
SUCCESS STRATEGIES• Regulations impacting user fees,
restrictions on usage of real estate and other assets
• Support needed for Aetropolis
• Lack of talented employees to provide experience to passenger
• Talent shortage prevents exploration of additional revenue streams
• Identify additional revenue streams
• Collaboration with other key stakeholders to build Aetropolis
• Recruitment and training
• Monetary incentives to retain talent
Lifting Air cargo revenues
Challenges
Weak overall growth
Lack of ecosystem
Bottlenecks in Air cargo transport
9
Strategies for success
Focus on domestic cargo
Pitfalls
Lack of awareness (marketing)
Cargo hubs and cargo village
Adoption of technology
Sea cargo to air cargo
Recruitment & training
Involvement of supply chain participants (freight forwarders and third party logistics)
10
Lifting Air cargo revenues
• 24X7 facilities not available
• Cargo infrastructures such as cooling equipment not available.
• Long waiting time for cargo loading and unloading
• Shortage of trained professionals
• 0.42 million tonnes of Cargo Traffic in 08-09
Delhi Airport Cargo-Earlier Initiatives undertaken Current status
• Subsidiary company of investing company offers training services.
• 24X7 facilities available
• Hard copy of bills not needed
• Cargo centres positioned closer to manufacturing centres
• 0.54 million tonnes of cargo traffic in 2012-13 despite a negative macro environment
• Cargo traffic shift from Mumbai airport to Delhi airport
• Aerocity being developed near Delhi covering 250 acres of land
• Another airport city planned near Hyderabad
The Frost & Sullivan Story
Who is Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages 50 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from more than 40 offices on six continents.
To join our Growth Partnership, please visit http://www.frost.com.
What Makes Us Unique
All services aligned on growth to help clients develop and implement innovative growth strategies
Continuous monitoring of industries and their convergence, giving clients first mover advantage in emerging opportunities
More than 40 global offices ensure that clients gain global perspective to mitigate risk and sustain long term growth
Proprietary TEAM Methodology integrates 7 critical research perspectives to optimize growth investments
Career research and case studies for the CEOs’ Growth Team to ensure growth strategy implementation at best practice levels
Close collaboration with clients in developing their research-based visionary perspective to drive GIL
Focused on Growth
IndustryCoverage
Global Footprint
Career Best Practices
360 Degree Perspective
Visionary Innovation Partner
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Frost & Sullivan’s proprietary TEAM Methodology ensures that clients have a complete 360 Degree
PerspectiveTM from which to drive decision making. Technical, Econometric, Application, and Market
information ensures that clients have a comprehensive view of industries, markets, and technology.
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