Airports look to future at ACI Europe’s Annual Congress

The soon-to-open new East Wing of Geneva Airport welcomed over 250 delegates this week as it hosted ACI Europe’s 31st Annual Congress & General Assembly, and it proved to be a lively affair, and welcome tonic for many participants, some of which were physically attending their first industry event in two years.

The association’s director general, Olivier Jankovec, used his ‘State of the Industry’ address to review the impact the COVID-19 crisis has had on Europe’s airports and spell out the wide ranging challenges that lie ahead.

Specifically, he addressed the financial and operational challenges, fast changing market structures, new business fundamentals and the imperative of business adaptation.

He said: “Europe’s airports are facing an investment crunch, which will hit their ability to finance decarbonisation and digitalisation – as well as needed capacity.

“The analysis we published just before the summer revealed that airport revenues will remain insufficient to meet investment costs until well after passenger traffic has fully recovered – at least until 2032.

“The fact that 15 of the largest European airport operators have already cut down planned investment by nearly €14 billion between 2020 and 2023 is a warning bell.”

Jankovec noted that the COVID-19 pandemic has also turbo-charged market developments and societal changes that are redefining aviation.

“The rise and dominance of Ultra-Low Cost Carriers – led by Ryanair and Wizzair – combined with retrenched yet more agile network carriers, further hybridisation and the inevitability of airline consolidation will only mean one thing: unprecedented competitive pressures upon Europe’s airports,” said Jankovec.

“This reality is in the making and make no mistake, it will impact all, from our mega hubs down to our smaller regional airports.

“These market developments blend with aviation’s decarbonisation imperative, which Europe’s airports have fully embraced together with their industry partners. These is no escaping the fact that decarbonisation will drive up costs and induce a slower pace of traffic growth than we have been accustomed to. For volume-dependent businesses like airports, this is a major challenge.”

As a result, said Jankovec, airports will need to adapt and future-proof their business model with the focus on transformation, re-risking and resilience.

Perhaps the biggest challenge of all in taking the European airport business model to this next level is the delicate balance necessary between these three pillars – which are critically interdependent.

He noted that the now-familiar mantra of ‘build back better’, wholeheartedly embraced by European airports in their net zero commitments, goes hand-in-glove with their need to safeguard revenue generation and access to financial markets.

And both are reliant upon the airports’ ability to transition to hyper-efficient and digitalised operations.

“The COVID-19 pandemic has put an end to the illusion that airports are risk-free businesses. They are now facing the dual challenge of recovery and decarbonisation – and they need to adapt their business model accordingly,” he stated.

“With this will come a renewed societal relevance and acceptance which our airport community is more than ready to meet. But let’s be under no illusion here, this will not be an easy journey ahead as we recover from catastrophic losses and glaring inadequacies in the financial and governmental response framework which could have been deployed with very different results.

“Of the 780 airports in our footprint, less than 10 were profitable last year. That’s a big mountain to climb.”

He was followed on to the podium by ACI Europe’s outgoing president, and CEO and president of Munich Airport, Jost Lammers, who pulled no punches in outling the need for greater global co-operation in easing travel restrictions and standardising COVID related practices and procedures despite opening with the admission that Europe’s airports are “now in a much better place” and could “look to the future with guarded optimism”.

Ultimately, ACI Europe believes that a fully digitised global standard for health status verification will be the imperative if airports are to handle gradually increasing passenger traffic.

Lammers said: “More international guidance is needed to address the incredible patchwork of travel regimes across the world. Until this is achieved, the full recovery of tourism and aviation will remain a moving target.

“With Health status credentials set to be a lasting feature of air travel, airports need verification processes to be fully digitalised globally. If those processes remain manual and paper-based and if they do not integrate Passenger Locator Forms, we will be unable to cope when more people return to the skies.

“The EU Digital Covid Certificate is the solution – it must become the global standard. We now need Europe to work on more integrated and more effective EU response mechanisms for future pandemics.”

On the current traffic downturn and financial pressures facing airports, he agreed with Jankovec that there would be no going back to the market of 2019, and that financial weakness have become systemic across the airport industry.

“Europe’s airports have kept operating for months with nearly no revenues and without the kind of financial largesse extended to selected but major airlines,” said Lammers.

“Airports were deliberately left out of the €750 billion EU recovery plan, and had no other option than to recourse to massive debt. With their costs trimmed down as much as possible, they are now into a cost-intensive and revenue-weak recovery.

“This is simply not sustainable as it directly threatens airports’ ability to keep investing in sustainability, digitalisation and capacity.

“So, unless governments are prepared to provide more financial support and convince the European Commission that this is compatible with State aid rules, the only option for many airports will be to increase their user charges.”

Panel discussions on Day 1 of the conference included ‘The Big Debate: The Future of Travel’; followed by ‘The Airport Leaders’ Symposium’; and ending with ‘Head-to-Head: Sustainability and the Financial Conundrum: So Who Pays?’

Speaking in the first of these sessions, Dick Benschop, president and CEO of the Royal Schiphol Group, believed that ‘digitalisation’ and ‘sustainability’ would be key trends for airports moving forward.

He said: “Digitalisation and sustainability will impact on how much we travel and the way we travel. In terms of the way we travel, I think the buzzwords will be smart and seamless and we will need the tech companies to help us on the digital journey. So, in the future, airports will have to be smart, seemless and sustainable.”

Benschop noted that as part of its sustainability initiatives the Royal Schiphol Group had committed €15 million towards the development and use of sustainable aviation fuels at Amsterdam Schiphol.

While Athens Airport CEO, Yiannis Paraschis, felt that ‘leisure’, ‘point-to-point’, ‘short-haul’ and ‘summer’ had fared best in the current crisis while ‘business’, ‘long-haul’, ‘transfers’ and ‘winter’ were the losers.

Looking ahead, Paraschis said: “Economic, social and environmental sustainability and AI/digital will be important, but airports will also face two other pressures in the medium term – transitioning energy costs to the green economy and inflation.”

Day 2 began with ‘In the Hot Seat: The EU Decarbonisation Agenda and Aviation: The Way Forward’, which in essence was an interview by Andrew Charlton, managing director of Aviation Advocacy with Clara De La Torre, deputy general of the European Commission’s DG CLIMA.

Next up was a session called ‘The New Operational Reality’ where Geneva Airport’s CEO, André Schneider; Salzburg Airport CEO, Bettina Ganghofer; and Paris CDG’s deputy executive officer, Marc Houalla, spoke about how the pandemic has affected their gateways and how it might impact on their future business models.

Houalla noted that COVID has taught Paris CDG and Groupe ADP “to manage the uncertainty”, Ganghofer felt that a big challenge going forward would be to “keep hold of good people”, while Geneva’s Schneider believed that the crisis had showed airports that the future was no longer clear and predictable.

Schneider said: “We were an industry where we basically had a clear path where we had to go, but I think this crisis has, quite frankly, shown us that this is no longer the case.

“So, for me, it’s not only a new operational reality but a new planning and strategy reality where we have to be very agile and re-think where we want to go.”

A lively debate on the new realities of route development, moderated by KPI Aviation Marketing Solutions’ managing director, George Karamanos, and featuring Bordeaux Airport’s Jean-Luc Poiroux; Riga Airport’s Arturs Saveljevs; Vienna International Airport’s Belina Neumann; EGIS Airport’s Anthony Martin; and Hermes Airport’s Eleni Kaloyirou brought the event to a close.

• All pictures courtesy of Aviation Media/Tadej Bernik.