Aéroports de Paris plans €4.6bn investment to boost competitiveness and attractiveness

augustin de romanet chairman & ceo of aeroports de paris

Augustin de Romanet, Chairman & CEO of Aéroports de Paris, and ACI EUROPE President: “We’re going to optimise our facilities, strengthen the competitiveness of our airports through a new tariffs structure, and introduce a more proactive route development policy and incentives on fees for airlines, in order to boost international and connecting traffic.”

Augustin de Romanet, Chairman & CEO of Aéroports de Paris, and ACI EUROPE President, interviewed by Ross Falconer. (Interview done at the beginning of November).

Airport Business: Congratulations on your election as President of ACI EUROPE. What will be your initial priorities in the role?

de Romanet: “I am honoured to assume the role of President of ACI EUROPE. Recent years have shown that the air transport sector must face multiple challenges and we need strong representation among policymakers and regulators at EU level. As President, I will work in close collaboration with all our members to defend our common interests. My priority will be to meet two major challenges: to enable Europe to capture global traffic, which is on the rise, and to develop the competitiveness of our airports.”

AB: What are your views on the forthcoming new EU Aviation Strategy? What do you think this should contain, particularly in the areas of air connectivity and Open Skies?

de Romanet: “While global air traffic continues to increase, it is shifting from Western countries towards Asia and the emerging countries. For instance, while today, on average, one tourist in 14 in the world is Chinese, this ratio will increase to one in five by 2030. Traditional airlines are facing increasing competition from low-cost airlines in their short and medium-haul market, and from the Gulf airlines in the intercontinental market to Asia and Africa. The three major Gulf hubs have a volume of intercontinental connecting flights that is three times greater than that of the four major European hubs. The competitive strength of airlines is becoming more dependent on what the airport has to offer; the most important being the airport’s capacity to support the airlines as they grow, the robustness of its operations, the level of airport fees, and hospitality and quality of service.”

AB: ADP’s traffic figures so far this year have been positive. What are your forecasts for the remainder of 2015 and the coming years?

de Romanet: “Passenger traffic over the first nine months at the Paris airports has increased by 3.9% with 50.5 million passengers at Paris-Charles de Gaulle (+4.1%) mainly driven by growth in long-haul destinations such as Asia-Pacific, North America and the Middle East; and with 22.7 million passengers at Paris-Orly (+3.5%), mainly thanks to a greater low-cost offering. As a result of a very good summer season, we have revised upwards our assumption for growth for the full year – traffic growth is now expected to come in at higher than or equal to 3%. For the 2016-2020 period, we have made an average traffic growth assumption of 2.5% per annum with a favourable traffic mix: international traffic will be up by 3.6% per year. We’re going to optimise our facilities, strengthen the competitiveness of our airports through a new tariffs structure, and introduce a more proactive route development policy and incentives on fees for airlines, in order to boost international and connecting traffic. As a result, the Paris airports will be able to welcome a total of 107.5 million passengers by 2020, compared to 92.7 million last year.”

AB: Retail activities are very dynamic. Can you please provide some details on how ADP achieved this retail success?

de Romanet: “Since 2007, we have been revitalising our retail offering with new, larger and more open duty free areas, new concepts and new brands embodying the ‘Paris, the design capital’ positioning across three key product families: beauty, fashion and French art de vivre. Most of the major names can be found in the 267 retail outlets, and 120 bars and restaurants, with almost 1,000 brands available. Our organisation model has been tailored to new passenger expectations to offer a three-tiered shopping experience as a reminder of ‘Paris’. For 2015, we targeted €19 of sales per passenger in airside shops, compared to €9.8 in 2006, driven by traffic to China and the Middle East, and the good performance of our duty free shops. We’re benefitting from the positive impact of the four luxury shops on the central square in Terminal 2E’s Hall K at Paris-CDG. We aim to reach the level of €23 revenue per passenger on a full-year basis, after delivery of the infrastructure projects scheduled for 2016-2020.”

AB: In what ways are you striving to enhance the passenger experience at your airports? Are you employing any innovative technologies to streamline or enhance the passenger process?

de Romanet: “Paris-CDG and Paris-Orly were among the first in Europe to launch free unlimited WiFi for passengers. The service has been a success, with a daily average of 26,000 unique users. The new responsive design website and mobile application ‘My Airport’ boasts a new function allowing the translation of signs into Chinese, Korean, or Japanese, and ADP provides all information in real time. Our customer service agents are equipped with tablets that display real-time information on passenger numbers, waiting times, and flight schedules etc. We are also active on social networks, including China’s ‘We Chat’ app. Chinese passengers can now get real-time information about their flight status, find their way within the terminals, and prepare their journey and their stay in Paris. We also provide them with information about our special deals and duty free offers. At Paris-Orly, we opened the first digitally-connected ‘Espace Business’ for frequent flyers. This new free service uses beacon technology and is based on the passenger’s location in the airport. In the coming years, new features of this type and digital tools will allow us to further customise relations to the needs of our passengers. We are also fostering the use of self-boarding and automated baggage drop to allow the airlines to improve their operational efficiency.”

aeroports de paris 2016-2020 strategic plan

Aéroports de Paris’ 2016-2020 strategic plan includes capital expenditure of €4.6 billion. The plans include putting into service next year a dedicated area in the heart of Paris-CDG Terminal 2E international airside for connecting passengers, which will propose a hotel service, lounges, catering and relaxation services.

AB: Your 2016-2020 strategic plan includes a massive investment – can you please provide details of any infrastructure projects that will be included in this?

de Romanet: “Our capital expenditure schedule is fixed at €4.6 billion, including €3 billion for regulated activities – particularly airport infrastructure to increase competitiveness. It is focused on three key areas:

An increasing effort in maintenance, with the renovation of runways 3 and 4 at Paris-Orly, and runways 2 and 3 at Paris-CDG, but also through targeted operations, such as the refurbishment of Terminal 2B and part of Terminal 2D at Paris-CDG, and the renovation of the aircraft parking stands at both airports;

The optimisation of the capacity to roll out the one-roof concept with three projects: the linking up of the South and West Terminals at Paris-Orly (80,000sqm), Terminals 2B and 2D (34,800sqm), as well as the international satellites in Terminal 1 (26,000sqm) at Paris-CDG;

The bolstering of the competitiveness of the Paris-CDG hub, through the extension of the baggage sorting system at Terminal 2E to Halls L and M.

By 2020, capacities will have been increased to almost 80 million passengers per year at Paris-CDG, and to 32.5 million passengers at Paris-Orly, meanwhile operating costs per passenger will have been reduced by 8% over the regulated scope between 2015 and 2020.”

AB: Beyond investments, what are the main objectives of the 2016-2020 strategic plan called Connect 2020, and how will it help achieve ADP’s vision of being a leader in airport design, construction and operations?

de Romanet: “The first priority is to optimise our airport facilities and operating processes in order to reduce the average passenger cost for airlines. The second priority is to attract more traffic by working proactively with airlines to promote Paris as a destination. By exonerating aircraft based in Paris from overnight parking fees, for instance, it will also help to develop freight and airlines that choose to base their activities in Paris. We are continuing our efforts to upgrade quality of service for passengers with a target overall ACI/ASQ rating of 4. We’ll put into service next year a dedicated area in the heart of Paris-CDG Terminal 2E international airside for connecting passengers, which will propose a hotel service, lounges, catering and relaxation services. We’ll promote the CDG Express, a non-stop rail link between the centre of Paris and the airport to be commissioned at the end of 2023. Our third priority is to expand a value-creating business model that spans all of our activities, strongly rooted in territories based on a long-term commitment, especially to our CSR policy. ADP is included in the Global 100 index and will strengthen its actions in the fight against climate change by reducing the CO2 emissions per passenger by 50% between 2009 and 2020. We want to spread our international footprint, but in a controlled way that will contribute to synergies between our subsidiaries: ADP Ingénierie (ADPI) as designer and engineer, and ADP Management (ADPM) as investor and operator.”

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