Editorial: Double Dip, Back Down to Hard Ground

Olivier Jankovec
By Olivier Jankovec, Director General, ACI EUROPE

There’s an old saying that good news doesn’t sell newspapers. With the ongoing saga of the Eurozone sovereign debt crisis, I’m sure I’m not the only one who would gladly buy a newspaper pushing an overdue wave of good news. As it stands, the headlines look set to be gloomy for some time. The impact of the sovereign debt crisis on aviation is already significant. Freight traffic stopped growing before the summer and has since gone into negative figures. Weakening business confidence has led companies to stop replenishing stocks. With industrial output in Europe now at a standstill – or even decreasing, the awful truth is evident: recession is at our doorstep.
This means that beyond freight, the surprisingly strong performance of passenger traffic into the autumn is going to be short-lived. Airlines have downsized capacity for the winter and they will keep focused on yields to protect their financial position and avoid digging into cash reserves. Their ability to keep growing unit revenues through fare and surcharge increases has been quite remarkable – with some achieving up to 32% increases in yields between January and September. In the Irish market alone, this has resulted in €300 million of additional revenues for airlines – far exceeding the total amount of charges they pay to Irish airports for a full year. Not bad in the present environment.

The same cannot be said for airports. The recovery in airport revenues has significantly lagged behind the recovery in traffic volumes. Sky rocketing capital costs have eased somewhat, but independent experts say that that too is set to be short-lived. Many airports with public shareholders are already affected by their proximity to the “sovereign”. Not so long ago, that proximity used to be an asset. It now looks like a liability, bringing tough times for getting debt refinanced or accessing fresh capital.
All this means that for Europe’s airports, securing profits will be challenging. This is not very comforting, especially when considering that profitability for the top 20 European airport groups kept decreasing last year. Tight cost control will dominate management’s thinking, with the risk of putting on hold investment in modernisation and future expansion. Meanwhile, the race to develop airport capacity continues unabated in the Middle East and Asia…

Under these circumstances, we at ACI EUROPE are more focused than ever on serving and providing value for our members – both airports and World Business Partners. We have made huge strides in shaking off the perception that airports are mere infrastructure providers, just there to “look after” their national carriers. European airports are now proper businesses in their own right, with diverse business models, strong customer focus and elaborated network development strategies. We are succeeding in getting the message out there, but that transformation still needs to be communicated, promoted and reiterated. Our social media activities (you can follow us on @ACI_EUROPE on Twitter), the new ‘Airports in the News’ feature in this magazine and our daily newsround receive great reaction from a wide range of stakeholders, for highlighting some of the excellent initiatives airports all over Europe are undertaking.

Similarly, our advocacy activities have only gained in importance, due to the constant need to raise the profile of our industry and educate policy makers about the intricacies of operating an airport in an efficient, passenger friendly, safe and sustainable way. Recessions come and go (hopefully), but regulations tend to stick around – so influencing them is paramount to fulfilling our mission.
Siim Kallas, the EC Vice President in charge of piloting European transport policy, is one of our primary institutional stakeholders. In this issue, he shares with us his views about airports as well as his priorities for European aviation. Obviously, putting him on the cover of our magazine just as he is redefining European airport policy – with a proposed focus on capacity and quality – owes nothing to coincidence.
We are releasing this issue at our 6th AIRPORT EXCHANGE event, taking place in Abu Dhabi at the end of November. While the event continues to address the full spectrum of airport management with over 1,000 delegates and a state of the art exhibition, for the first time, it is expanding beyond Europe. Thanks to our cooperation with ACI Asia-Pacific, we are indeed bringing AIRPORT EXCHANGE to the world’s fastest growing aviation market.

This will also coincide with the extension of our flagship climate change initiative – Airport Carbon Accreditation – to the Asia-Pacific region, another bold move in further raising the profile of our industry. And a refreshing piece of good news, particularly as global environment experts come together for COP17 in Durban next month.

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