ACI AIRPORT ECONOMICS SURVEY 2006

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					ACI AIRPORT ECONOMICS SURVEY 2006




December 2006
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Tel +41 (0)22 717-8585 - Fax +41(0)22 717-8888 - e-mail: aci@aci.aero - www.aci.aero SURVEY 2006
                                                             ACI AIRPORT ECONOMICS                 
Disclaimer:
The information contained in this publication has been compiled based on information submitted to the Airports Council International
(ACI). ACI declines responsibility for contributions provided by third parties for inclusion in this document. No purchaser of the publication
or other reader should act on the basis of any such information without referring to applicable laws and regulations and/or without
taking appropriate professional advice. Although every effort has been made to ensure accuracy, ACI shall not be held responsible for
loss or damage caused by errors, omission, misprints or misinterpretation of the contents hereof.
ACI AIRPORT ECONOMICS SURVEY 2006


“EXECUTIVE SUMMARY AND ANALYSIS OF RESULTS” by Paul Behnke                                    2

  - Sample and methodology                                                                    2
  - Passenger traffic                                                                         3
  - Cargo traffic                                                                             3
  - Employment data                                                                           4
  - Revenue analysis                                                                          4
  - Regional breakdown of non-aeronautical revenues                                           6
  - Financial results                                                                         7
  - Capital expenditure                                                                       7



“ThE STATE OF ThE WORLD’S AIRPORTS” by Fitch Ratings                                          9

“NEW DEVELOPMENTS IN AIRPORT PRIVATISATION” by Centre for Asia Pacific Aviation              4

“AIRPORT RETAIL BENChMARkINg” by URS Corp                                                    20

“gLOBAL CARgO TRENDS” by Webber Air Cargo                                                    26

“AIRPORT BENChMARkINg TO MAXIMIzE EFFICIENCY” by ACI                                         35

“MAjOR NEW AND RECENT AIRPORT PROjECTS” by Momberger Airport Information                     47

“MAjOR PROjECTS COMPLETED” by Momberger Airport Information                                  5

“WhO MANAgES AIRPORTS” by Momberger Airport Information                                      52

“QUOTED AIRPORTS” by Momberger Airport Information                                           76




                                                                 ACI AIRPORT ECONOMICS SURVEY 2006   
    ACI AIRPORT ECONOMICS SURVEY 2006

    Executive summary

    ACI’s Airport Economics Survey for 2006 is an analysis of airport    • Profits of the top 100 airport companies averaged 10.3 per-
    performance based on 2005 data collected from 616 airports rep-        cent net profit, the best performance since the year 2000,
    resenting 62 percent of global passenger traffic. For 2005, buoyed     when the figure reached 14.5 percent.
    by strong traffic growth across all regions, the world’s airports
    posted gains in operating margins and in net profits, reporting      • A regional breakdown of non-aeronautical revenue by
    their best financial results in five years.                            source is a new feature included in this year’s Survey. The
                                                                           data reveal significant regional variations based largely on
    Among the highlights of the 2005 data:                                 demographic, socio-economic and cultural factors.

    • Global passenger traffic continued to increase sharply in          This expanded edition of the Survey includes contributions from:
      2005, growing by 6.6 percent to about 4.2 billion passengers.
      This followed a surge in traffic of 11.3 percent in 2004 over      • Fitch Ratings on airport creditworthiness
      2003, with strong growth across all regions. Two years of          • Centre for Asia Pacific Aviation (CAPA) on airport privatisation
      sustained growth underpinned higher aeronautical revenues          • URSCORP on retail trends at airports
      through an increase in aircraft movements and also drove non-      • Webber Air Cargo on global cargo trends
      aeronautical income higher as there were more passengers           • Momberger Airport Information, two listings for major airport
      spending on airport products and services.                           expansion projects and airport ownership
                                                                         • ACI report on airport benchmarking
    • Cargo volumes rose by a modest 3 percent in 2005 over
      2004, as fuel prices drove some domestic air cargo to road
      and rail transport, particularly in North America and in Europe.   Sample and methodology
      International cargo, however, grew at a more rapid rate, and
      the Asia/Pacific region, now a cornerstone for international       ACI began collecting economic data from its members in 1995. The
      trade in a wide variety of products, had a healthy growth rate     sample size grew from 220 airports in 1995 to 548 in 2000 to 597
      of 6 percent for 2005. The ACI FreightFlash monthly reports        in 2004. The 616 responding airports in the current survey served
      to date in 2006 indicate that cargo volumes are rebounding         some 2.6 billion passengers in 2005, or 62 percent of the total pas-
      worldwide, and if fuel prices remain at current levels, domes-     senger traffic handled by ACI member airports. The ten responding
      tic freight tonnage is likely to follow the same trend.            airports from the Middle East have been combined with Africa in
                                                                         this year’s survey, as in the past two years. As shown in Table 1,
    • Airport employment was stable in 2005, and Survey data             the five regions are well represented in the survey sample.
      indicate that airport-related jobs remained at the same strong
      level as in 2004 with approximately 4.5 million persons em-        TABLE :
      ployed on-site.                                                    CHARACTERISTICS OF THE SURVEY SAMPLE BY REGION

    • Capital expenditure. With passenger traffic forecast to dou-                                       Airports               Passengers
      ble over the next 20 years, airport operators planned to spend a   Region                        responding              served (2005)
      record USD38 billion on new capacity in 2006, up from USD36
                                                                         Africa / Middle East              40                     103 million
      billion in 2005. An independent ACI publication, the ACI Fore-
      casts 2005-2020, shows that many airports have identified sig-     Asia / Pacific                    171                    447 million
      nificant political, regulatory and environmental constraints to    Europe                            228                    847 million
      building new capacity, and at many congested airport facilities,
                                                                         Latin America / Caribbean         87                     142 million
      these constraints are holding up new construction.
                                                                         North America                     90                   1,055 million

                                                                         Total                             66                 2,594 million




2   ACI AIRPORT ECONOMICS SURVEY 2006
The size of the sample and the high response rates from all five                     Mixed results for cargo in 2005
regions permit the extrapolation of the survey results to cover
all ACI member airports. All subsequent airport statistics in this                   Global cargo tonnage increased 3 percent in 2005, as high fuel
information paper, therefore, will be estimations of regional and                    prices caused domestic cargo to be diverted to rail and truck car-
global totals based on extrapolations of the sample. Financial                       riage in domestic markets in both North America and in Europe.
figures are presented based on calendar 2005 financial perfor-                       In the Asia/Pacific region, however, cargo growth was dynamic
mance. Capital expenditure, however, is documented for calen-                        at 6 percent growth rate. Data from ACI’s FreightFlash survey
dar year 2006 as well as 2005, since funds for these programmes                      through October 2006 indicate that international cargo traffic rose
must be allocated well in advance.                                                   by nearly 6 percent for the first ten months of the year with do-
                                                                                     mestic cargo beginning to show signs of sustained growth over
                                                                                     the last three months as well.
Strong increase in passenger traffic in 2005
                                                                                     Airport operators recognise that cargo not only increases aero-
In 2005, global traffic was up 6.6 percent over 2004 to nearly 4.2                   nautical revenues, which are based largely on weight calcula-
billion passengers, with strong growth in all regions. These sta-                    tions, but that cargo can also maximise the use of scarce airport
tistics are based on ACI’s computations from a sample of over                        capacity, since operations often occur outside peak hours for pas-
1070 airports. A growth in the traffic of low-cost carriers was                      senger traffic. Indeed, many cargo operators and express pack-
responsible for some of the increased growth in 2005, but many                       age integrators schedule the bulk of their flights in the late night/
legacy carriers also saw an improvement in passengers carried,                       early morning period. An increase in cargo volumes represents,
particularly on international flights. Data from ACI’s PaxFlash                      therefore, more optimum utilisation of an airport’s expensive
survey shows that international traffic through October 2006 was                     asset base and spreads the fixed costs of the airport operator.
still registering strong rates of growth, but that the large US do-                  Increased cargo volumes also contribute to keeping user charges
mestic market had only nominal growth, a factor that adversely                       at reasonable levels.
impacted overall global domestic traffic. While Asia/Pacific and
Africa/Middle East showed strong passenger growth in the first                       In terms of the global importance of air cargo, sophisticated just-
10 months of 2006, Latin America’s traffic slowed appreciably, as                    in-time global manufacturing processes call for a fast and effi-
Brazil’s traffic languished after the Varig bankruptcy and certain                   cient global supply chain. Air cargo, therefore, accounts for some
key tourist destinations (such as Cancun) were affected by hur-                      40 percent of all world trade in value terms. As global tariffs drop
ricane damage to hotel infrastructure.                                               and more nations enter the World Trade Organization, including
                                                                                     Russia which is likely to join in the near future, air cargo stands to
                                                                                     benefit. Liberalisation of cargo market access rights in India and
                                                                                     the Persian Gulf states has also been a boost to traffic.

TABLE 2:                                                                             TABLE 3:
PASSENGER TRAFFIC TRENDS BY REGION                                                   AIR CARGO TRENDS BY REGION (2004/2005)
(2005 AS COMPARED TO 2004)
                                    Passengers                 percent change                                    Cargo-metric tonnes            % change
Region                             served (2005)                   (from 2004)       Region                         2005 (million)             (from 2004)

Africa / Middle East                 223 million                           9.9 %t    Africa / Middle East             4.9 million                    4.3%

Asia / Pacific                       897 million                             8.1%    Asia / Pacific                  25.9 million                    5.7%

Europe                               1277 million                            7.2%    Europe                          15.7 million                    1.9%

Latin America / Caribbean            267 million                           10.3%     Latin America / Caribbean        4.4 million                    2.3%

North America                        1525 million                            4.2%    North America                   30.9 million                    1.0%

Total                               489 million                             6.6%    Total                           8.8 million                    3.0%


n.b. ACI counts passengers once on arrival, once on departure and once in transfer


                                                                                                            ACI AIRPORT ECONOMICS SURVEY 2006                 3
    Over 4.5 million jobs worldwide directly                              operations found that many employees engaged in air freight ac-
    dependent on airports                                                 tivities work off-airport, as far as 50 kilometres away, as is the
                                                                          case for Tokyo’s Narita International Airport.
    Over the past decade, ACI has found that employment at airports
    does not vary greatly from year to year. While there is a compo-      In contrast with the situation in the other regions, many airport
    nent of the workforce which increases or decreases with passen-       systems in Africa/Middle East and Latin America/Caribbean are
    ger and freight numbers, the physical plant of the airport tends to   operated by national civil aviation authorities. The proportion of
    need a fairly stable number of employees to keep the expensive        public employees on the airports in these systems is therefore
    fixed assets functioning. In addition, many jobs at airports are      quite high and the outsourcing of services is limited. Moreover,
    unionized, and shedding excess workers may not occur in a timely      airports in these regions tend to have lower average traffic vol-
    manner during a slowdown in activity, as was the case after 9/11      umes than those in Europe, North America and Asia/Pacific,
    and during the SARS epidemic.                                         thereby limiting opportunities for job creation in non-aeronautical
                                                                          activities, such as retail concessions, car rentals and hotel and
    As in past years, the survey demonstrates that airports are highly    convention facilities.
    significant centres of employment generation. Independent stud-
    ies commissioned by ACI’s European and North American offices         TABLE 4:
    have placed total airport employment, including all jobs on air-      EMPLOYMENT ON AIRPORT SITES IN 2005
    ports sites, at 1.1 million and 2 million employees respectively,
                                                                                                       Employed directly     Total employees
    figures which still hold true for the 2005 Survey.                    Region                      by airport operators    on airport sites

                                                                          Africa / Middle East              50,000                    250,000
    Since both 2004 and 2005 saw a rebound in passenger traffic
    and less pronounced increases in freight volumes, intuitively         Asia / Pacific                    100,000                   950,000
    one could assume that employment would be stable, or slightly         Europe                            156,000                 1,100,000
    growing. This year’s large sample, particularly for Europe, has
                                                                          Latin America / Caribbean         25,000                    200,000
    permitted ACI to fine-tune the regional data. In 2005, several
    airports acquired new businesses which brought new employ-            North America                     43,000                  2,000,000
    ees onto the airport payroll. This was particularly the case for      Total                             374,000                 4,500,000
    FRAPORT, the parent company of Frankfurt Airport. Thus direct
    employment in Europe increased by about 20,000 employees and
    by another 1,000 in North America. This means that globally, for
    every person employed directly by an airport operator, another        Revenue analysis
    twelve work on the airport site. This ratio is much ower in North
    America (1 to 47), where many airport activities are outsourced       There has been a clear trend over recent years for the proportion
    to private contractors. Because several major European airports       of airports’ non-aeronautical revenues to rise worldwide. ICAO
    employ thousands of workers in their ground-handling subsidiar-       data from 1990 suggests that at that time only about 30 percent
    ies alone, the number of employees on the airport payroll tends       of airport revenue came from non-aeronautical sources. ACI data
    to be higher in Europe, and the ratio of airport personnel to total   shows that non-aeronautical income reached 46 percent of total
    employees is 1 to7.                                                   airport income in both the 1995 and 1996 surveys, 52 percent in
                                                                          1997 and 1998, 51 percent in 2000 and a record 53.5 percent of
    Employment data compiled in recent ACI surveys in North               total income in 2001.
    America and Europe have shown the significant extent to which
    airports also create jobs in a catchment area in the immediate        The increase in non-aeronautical revenue during the past 15
    vicinity of the airport (for example, freight-forwarders and other    years has therefore been one of the most important trends in air-
    businesses located near the airport). In addition, many airports      port economics and has resulted in a healthy diversification of
    are space-constrained and related activities therefore spill over     airport revenues which provide a cushion against external shocks
    into adjacent areas. A recent ACI questionnaire on airport cargo      to civil aviation.




4   ACI AIRPORT ECONOMICS SURVEY 2006
Non-aeronautical revenues declined slightly in 2005 to 47 percent          was distorted to a certain degree by the fact that Dubai alone
of total revenues, but ACI considers this a temporary decline as           had over USD800 million in non-aeronautical revenues, ten-fold
airports and concessionaires coped with security-driven design             its receipts from aeronautical charges. Most African airports, ex-
modifications that eroded margins. In addition, the rapid growth           cepting those in South Africa, tended to have a low percentage of
in low cost carrier traffic at secondary airports, many of which           non-aeronautical revenue. Therefore the presence of both Dubai
do not have extensive shopping or food and beverage facilities,            and the seven South African airports in the sample represent
undoubtedly led to some decline in the overall proportion of non-          something of a statistical anomaly, as the smaller African airports
aeronautical revenues. Industry experts calculate that the low             averaged closer to 30 percent non-aeronautical revenue.
cost passenger spends about 60 percent of the amount of a pas-
senger on network carriers. With nearly 30 percent of all pas-
senger traffic in North America and Europe now being served by
the low cost carriers, it was reasonable to expect some decline
in retail and duty free sales, since many low cost terminals do
not have extensive offerings in these areas. In addition, there is
a positive correlation between passenger spending and stage-
length of flights. Low cost services tend to have shorter stage
lengths than flights of network carriers.

ACI expects retail and duty free to sales to grow rapidly in the
coming decade, with airport operators placing a growing empha-
sis on customer service and on diversifying income streams. The
results of the ASQ customer service benchmarking programme
point to a strong correlation between an attractive retail offering
and customer satisfaction survey rating.

TABLE 5:
REVENUE BY SOURCE – 2005
                            Aeronautical revenue      Non-aeronautical
Region                          (USD billion)      revenue (USD billion)

Africa / Middle East               1.57                            1.77

Asia / Pacific                     7.22                            6.71

Europe                             14.79                          12.40

Latin America / Caribbean          1.66                             .75

North America                      8.48                            7.68

Total                         33.72 billion             29.3 billion



The proportion of aeronautical revenue continued to exceed non-
aeronautical revenue by a wide margin in Latin America/Carib-
bean, where the smaller size of airports tends to reduce the po-
tential for lucrative landside activities, such as parking and retail
concessions. The North America and Asia/Pacific regions had
the higher percentages of revenue derived from non-aeronauti-
cal sources. The survey data for the Africa/Middle East region




                                                                                               ACI AIRPORT ECONOMICS SURVEY 2006                 5
    Regional breakdown of
    non-aeronautical revenues

    For the first time since 1999, ACI has collected detailed data which    Please note that the 10 airports in the sample from the Middle
    illustrates the composition of non-aeronautical revenues by five        East provided excellent data, and for the following chart the re-
    sources. Table 6 highlights the extreme regional variations that ex-    sults from this region are disaggregated from the Africa region for
    ist. Economic, demographic and cultural characteristics of the pas-     the only time in this Survey.
    senger mix in each region can make a large difference in the data.

    TABLE 6: NON-AERONAUTICAL REVENUE BY REGION

                                                 Non-aeronautical revenue breakdown ( percent)

                      Retail                  Car              Rental Car         Property Income
      Region                                                                                               Advertising               Other
                    concession              parking            Concession             or Rent

        AFR            40.6%                 14.9%                 6.0%                18.9%                  7.1%                   12.5%

        ASP            37.5%                 4.4%                  0.5%                18.4%                  2.0%                   37.2%

        EUR            26.4%                 11.0%                 1.8%                18.3%                  1.7%                   40.8%

        LAC            16.9%                 8.8%                  4.0%                20.6%                  6.0%                   43.7%

       MEA             46.1%                 4.8%                  0.4%                 9.2%                  3.1%                   36.4%

       NAM             14.6%                 34.2%                14.4%                 9.3%                  1.8%                   25.7%

       Total           25.3%                 6.9%                 5.5%                5.3%                  .9%                   3.%



    There are a number of important characteristics implicit in these          tor to the African sample, has an aggressive commercial strategy
    figures. Among the most striking:                                          which accounts for the high figure (40.6 percent) reported for
                                                                               retail concessions in Africa. Similarly for the Middle East (with
    • Revenue from car parking and rental car concessions was con-             a figure of 46.1 percent), Dubai’s high retail concession income,
      siderably higher in North America than in any other region, well         over USD800 million, dominates the small sample of 10 airports.
      over double the percentages in the next closest regional results.        In Asia/Pacific (reporting 37.5 percent) certain airports in the
      ACI attributes this partly to economic reasons since a high              sample, such as Sydney, Singapore and Incheon, have a high pro-
      proportion of North Americans have automobiles, and many                 portion of long-haul flights, and it is proven that these passengers
      choose to park at airports despite the cost associated with this         have the highest rate of spending, as the article on airport retail
      alternative. An additional factor is that many North American            by URS included in the Survey confirms. While the overall figure
      airports do not have available multi-modal links to bring pas-           for retail concessions for Europe is not particularly high (26.4 per-
      sengers to the airport by alternative transport such as rail or          cent), there are many European airports where this is the most im-
      bus. On the other hand, retail concession income is the lowest           portant non-aeronautical line item, including London’s Heathrow
      in North America of the six regions analysed. Here it is likely          and Gatwick airports and Amsterdam, Athens and Milan.
      that consumers find that shopping malls and 24/7 retail chains,
      such as Walmart, provide greater choice and lower prices than         • The “other” category, which turns out to be the largest single
      airport retail. There is simply less tradition of “shopping at the      item, is readily explained. In Europe, this includes several billion
      airport” than seen in other regions of the world.                       dollars of income from airport-run ground handling operations.
                                                                              Globally, the “other” category includes such items as passenger
    • Strong results by some airports impact the retail concessions           facility charges (primarily in the US) and airport improvement
      category. The Airports Company of South Africa, a major contribu-       fees, which can run as high as USD15 per passenger.




6   ACI AIRPORT ECONOMICS SURVEY 2006
Financial results                                                    Capital expenditure rises sharply

According to Airline Business’ listing of the top 100 airport        One of the most significant findings of the Survey is the rise
companies. In 2005, operating margins increased slightly and         in capital expenditure by airports in all regions in 2005 as
profits reached 10.3 percent, the highest level since 2000.          shown in Table 8. Actual expenditure was USD38 billion, up
Airport operating margins and net profits declined sharply from      7.8 percent over the previous record year of 2004. This is
2000 through 2003: from 27.9 percent in 2000 to 17.8 percent         more impressive when it is borne in mind that expenditures
in 2003. Over the same period, profits fell over 50 percent from     on new greenfield airports are not covered by the survey.
14.5 percent in 2000 to 6.8 percent in 2003. As traffic bounced      (See related table provided by Momberger Airport Information
back in 2004, both operating margins and profits improved, up        on proposed major multi-year infrastructure projects in excess
to 21.9 percent and 9.6 percent respectively. Table 7 illustrates    of USD500 million). Airports are clearly spending heavily on
these trends.                                                        infrastructure in preparation for the anticipated doubling of
                                                                     passenger traffic over the next fifteen years.
“Global financial markets followed these trends closely, and
recent buyouts of airport companies (such as BAA and Budapest        TABLE 8:
International Airport) embodied a considerable premium on the        CAPITAL EXPENDITURE* BY REGION (USD MILLION)
share price. Airport credit ratings generally improved worldwide
(see article by Fitch Ratings in this Survey) reflecting a renewed   Region                            2005      2006       % change
confidence in the financial potential of airports.                   Africa / Middle East              3,500    3,600          2.9%

                                                                     Asia / Pacific                    3,700    3,700          None
For 2006, the outlook remains cautiously optimistic, but several
recent events, including slowing passenger growth and security       Europe                           12,800    13,800         7.8%

related expenses stemming from new security procedures for           Latin America / Caribbean          900     1,200         33.3%
liquids, gels and aerosols, could constrain profits.
                                                                     North America                    15,100    16,500         9.3%

TABLE 7:                                                             Total                            36,000    38,800         7.8%

FINANCIAL PERFORMANCE OF
THE 100 TOP GLOBAL AIRPORT GROUPS 2000-2005                          *Excludes expenditure on new airports

Operating
                2005        2004          2003    2002    2003
results                                                              Africa/Middle East and Asia/Pacific both saw negligible increases
Operating                                                            for the year as a number of large projects were completed in
               22.7%       21.9%          19.3%   20.6%   27.9%
margin
                                                                     2006. ACI estimates that this is a temporary lull, as large new
Net profit     10.3%        9.6%          6.3%    9.5%    14.5%      projects are in the final planning stages at a number of airports in
                                                                     the Middle East, in India and in China. Europe and North America
                                                                     continue to add capacity at a steady rate, although a number of
Source: Airline Business: December 2006                              airports remain congested and in need of new runway and ter-
                                                                     minal capacity. In Latin America, large new projects in Ecuador,
                                                                     Brazil and Central America gave the region a strong year in spend-
                                                                     ing in 2006, up over 33 percent from 2005.




                                                                                             ACI AIRPORT ECONOMICS SURVEY 2006              7
    Conclusion

    ACI believes that a key contributing factor for the rebound in            that capacity is an urgent issue, will airports be able to fulfil their
    financial performance is that many airport operators are applying         role as catalysts for economic growth and continue to be at the
    sophisticated managerial techniques in an increasingly complex            heart of trade, tourism and investment links which bring global
    environment. Not the least of these is airport financial perfor-          prosperity.
    mance benchmarking in a global setting, both internal within air-
    ports and in comparisons across «peer groups» of airports. Based          About the Author
    on the well-accepted principle that it is difficult to manage what        This analytical commentary was authored by Paul Behnke,
    cannot be measured, benchmarking is more than just a best prac-           Director of Economics at ACI World Headquarters for 12 years.
    tice. It has become an essential management tool for airports.            Behnke pioneered the ACI Airport Economics Survey, launch-
    Financial performance benchmarking is enabling airport operators          ing the initial edition in 1995. Working closely with the ACI
    to drive new efficiencies as they focus on enhancing their innate         Economics Standing Committee, and thanks to increasing
    strengths and correcting or ameliorating deficiencies.                    Member participation in and their in-depth responses to the
                                                                              enhanced questionnaire, he has progressively extended the
    Customer service satisfaction is yet another key indicator of             analytical scope of the survey.
    an airport’s successful management and investment policies.
    To measure this valuable input, ACI offers the Airport Service            As of January 2007, Behnke is working independently and is
    Quality (ASQ) benchmarking programme that enables airports to             based in the US. He will continue to be associated with ACI
    monitor customer feedback throughout the year, receive detailed           World Headquarters as Senior Business Advisor, maintaining
    analytical results and measure the responses both against their           responsibility for this publication and developing new ACI
    own objectives and against the results of other airport participants.     member services in the areas of economic analysis and
    Over 85 airports worldwide are enrolled, including some the               educational programmes.
    largest and most progressive in major cities. The programme
    allows airports to focus on the perceptions, needs and suggestions        Any questions or suggestions concerning the Survey can
    of their primary customer, the passenger.                                 be directed to the publication editor Nancy Gautier at
                                                                              ngautier@aci.aero
    Looking back over the past five years, airport operators have
    been remarkably resilient in coping with external shocks to the
    industry, including terrorist attacks and health crises. The airport
    community is clearly back on its feet with an excellent financial
    performance in 2005. The airline industry, however, remains
    highly volatile, and while long-term forecasts project high rates
    of growth, a number of large carriers are still in financial difficulty
    and their future is inextricably linked with their airport partners.

    Over the past year ACI has very publicly addressed the notion that
    airport capacity, given a high-growth scenario, will be insufficient
    to meet forecast traffic demand. To avoid congestion, political
    regulatory bureaucratic and environmental constraints to building
    new capacity must be removed by governments, and approvals
    for new capacity must be made on a fast-track basis. Liberali-
    sation of market access can alleviate congestion by opening up
    new point to point international services, but a number of key
    hubs in North America, Europe and Asia/Pacific remain in need
    of major injections of new capital. Only if governments recognise




8   ACI AIRPORT ECONOMICS SURVEY 2006
ThE STATE OF ThE WORLD’S AIRPORTS

Globally, airport credit quality is stable to positive. Many airports   Perhaps the most critical factor in sustaining the strong credit quality
in the developed world are maintaining solid investment grade           of airports is the essential nature of air travel, especially as the global
credit ratings, and those in emerging market economies are              economy becomes increasingly interconnected. As demand for air
achieving investment grade ratings, in some/many cases with             service is correlated to GDP, which measures economic activity and
structural enhancements. Growing demand from relatively stable          buying power, trends in global economic activity influence the capital
world-wide economic conditions, further globalisation of trade          needs of airports. The world economy remains strong in 2006. World
and commerce and the increased supply of air service is support-        GDP is expanding by 3.5 percent in 2006, above its long-run trend.
ing this credit trend.
                                                                        Fitch economists’ state, “the US bounced back from the Katrina-
At the same time, airports face increasing challenges to accom-         affected slowdown in Q405, Japan’s economy continues to fire
modate this demand for air service. Developed markets, with con-        on all cylinders and a German recovery is on its way. Mean-
gested ground and airspace networks, are dealing with expansion         while, China continues to defy expectations of an investment-
challenges and emerging markets with rapidly growing demand for         led growth slowdown.”
air service are struggling with budget and fiscal constraints to keep
up with infrastructure needs. Yet, significantly increased liquidity    However, global growth in 2007 is expected to retrench back
and better access to the capital market’s low interest rates have       towards 3 percent. Although the correlation between economic
helped facilitate the recent much-needed level of investment.           activity and demand for air service varies by region, the current
                                                                        worldwide wealth expansion, together with the proliferation of
In Europe, some countries retain strong state control and others        low cost carriers (LCCs) providing access to air service for the
are moving along the continuum to partial or full privatisation to      middle class continues to drive demand for airport services.
reduce government investment, resulting in varied approaches
to meeting airport needs. Also, innovative financing techniques         Furthermore, airports operate as monopolies, most with very
seek to optimise the cost of capital and equity returns to inves-       limited competition for origin and destination (O&D) passenger
tors. The Asia-Pacific region is still largely government controlled.   traffic within their service areas. However, government owner-
Large renovation and expansion programmes in major cities are           ship and/or regulatory systems (commercial leases or regulatory
underway to meet increased demand, and the use of the private           mechanisms) tend to limit the ability of airports to charge mo-
concession model is increasing. The US and Canada are coping            nopoly rates: in general, rates are designed to enable airport op-
with capital needs related to economic growth and the airline           erators to recover their cost of capital. The limited competition is
industry’s resurgence. In Latin America, tremendous growth is           likely to continue, since the barriers to entry – the cost of building
resulting in investment grade countries like Chile and Mexico,          a new airport, potential land use and environmental issues and
advancing their foray into concession arrangements that attract         the political nature of airports – are high. Very real competition
capital for infrastructure development.                                 exists for connecting traffic, evidenced by the growth of airports
                                                                        in the Middle East and Asia and the intense competition among
                                                                        London’s Heathrow, Holland’s Schiphol and Frankfurt’s Fraport.
The case for investment grade
                                                                        Lastly, in contrast to the financial volatility associated with the
Airport credit strength stems from the essential nature of com-         airline industry, airports are very stable operating entities. Oper-
mercial air service to the world economy, as demonstrated by the        ating revenues are generated both by charging the airlines fees
relationship between growth in gross domestic product (GDP) and         for utilising airport services and from non-airline sources. Non-
demand for air service, the limited competition among airports          airline sources include concession revenues (food and beverage
in metropolitan areas and the barriers to entry for new airports,       and retail), parking and rental car fees, land rentals, etc. It is
the small portion of airline costs represented by airport rates and     not unusual for the airline related fees to make up less than 50
charges and the commercial or regulatory mechanisms that per-           percent of an airport’s total operating revenue base, at well devel-
mit airport operators to recover their cost of capital.                 oped airports. As a result, airport charges imposed on the airlines
                                                                        remain a relatively minor portion of an airline’s expenses, ranging
                                                                        between 4-6 percent of overall airline costs.




                                                                                              ACI AIRPORT ECONOMICS SURVEY 2006                       9
     Among the factors that constrain or limit an airport’s credit             dent economic regulatory framework, with safety nets for exo-
     strength are the debt structure and/or amount of leverage chosen          genous shocks and a framework to encourage investment for the
     to finance capital development or extract equity. Other factors           long-term. To date, these rated airports have been concentrated
     that could affect an airport’s ability and willingness to repay debt      in the ‘BBB’ and ‘A’ range. As more and more airports attain high
     issued for capital development include instability at the sovereign       leverage, or are part of infrastructure funds that have optimised
     level, including transfer and convertibility and expropriation risks.     leverage at the airport company level, ratings assess whether the
     Also, the lack of adequate supply to meet regional demands for            financial structure is truly stand-alone (ring-fenced from the fund)
     air service or the implementation of capital development initia-          or dependent on the fund or the consortium that supports it. Re-
     tives that exceed demand from the underlying service area could           sultant ratings tend to be optimised, too, which at low ‘BBB’ terri-
     impact creditworthiness.                                                  tory is just the level at which banks remain happy to lend.

                                                                               “Securitisation” is the latest financial buzz word for structures,
     The regions in brief:                                                     as people digest the suggested innovative financial structure for
                                                                               BAA. If replicating other utility financings, the debt structure
     European airports – moving in different directions                        will be tranched, covenanted, and is expected to have enhanced
     European airports display an array of financial issues at the mo-         liquidity to mitigate certain risks. It will be interesting to see
     ment. Aéroports de Paris (ADP) has completed its IPO, raising suf-        whether this concept, which maximises debt proceeds, will be
     ficient funds for its near-term capital expenditure requirements          applied to other countries’ financings.
     whilst also providing yet another “French solution” to predators
     potentially buying the country’s national assets by retaining a poi-      Asia/Pacific airports – government ownership and strong
     son pill minimum 50.1 percent ownership. Meanwhile, Holland’s             traffic growth translate into capital expansion
     Schiphol Airport is expected to be privatised. Other countries            Airports in Asia-Pacific are owned primarily by central govern-
     have already passed the emotional hurdle of handing national              ments, and operate either as corporatised authorities (such as
     infrastructure to non-nationals (Aeroporti di Roma, Copenhagen,           the Hong Kong, Singapore and the Chinese airports) or through
     Brussels Airports) while others (Ireland, Spain, Portugal) have yet       long-term concessions or leaseholds (such as the Sydney or
     to decide on their stance.                                                Mumbai airports). The latter model, sometimes referred to as
                                                                               privatisation, is often being used to renovate, expand, operate
     The UK government has not intervened in the takeover of BAA,              and maintain airport facilities for long periods of time. Airport
     which owns London’s Heathrow, Gatwick and Stansted, by a                  renovation and expansion has been ongoing throughout the re-
     consortium headed up by Spanish infrastructure group Ferrovial.           gion, most notably with the opening of the new international
     The heady acquisition multiple confirms that many funds and in-           terminal at Narita International Airport. The region also boasts
     stitutions are prowling the market for airports, ports and utility        a number of major new airports, such as the Hong Kong Interna-
     infrastructure assets.                                                    tional Airport, which opened in 1998, the Incheon International
                                                                               Airport which opened in 2001, and Bangkok’s Suvarnabhumi In-
     How would Fitch approach the ratings of these different European          ternational Airport which opened this year.
     entities?
                                                                               Major airport renovation programmes will also be implemented
     When rating European airports, meaningful state ownership can             over the next five years in India and China, as these nations cope
     enhance the rating, provided that this support is clear, preferably       with increased domestic and international passenger growth driven
     explicit, and timely. These ratings tend to be in the ‘A’ rating          by economic expansion and a growing middle class. Renovation is
     category or higher. Although regulation of airport tariffs is being       also being driven by an effort to modernise the appearance and
     developed for many airports, few regulators are independent of            functionality of these airports as a gateway into their countries.
     political strings and their financial rigour in setting tariffs is less   Although India is likely to use the concession model for these reno-
     than transparent. As well as assessing the fundamentals of the            vations, China is more likely to solicit private sector participation
     business, the rating of publicly or privately owned airports can be       through limited share offerings of its government-owned airports.
     enhanced by the predictability and transparency of an indepen-




0   ACI AIRPORT ECONOMICS SURVEY 2006
Airports in the region benefit from steady but varied passenger         In China, private sector participation will be solicited with limited
traffic growth, although this was punctuated intermittently by          share offerings. Both countries exhibit a very cautious approach
global and regional events, such as the Asia financial crisis in        toward private sector participation in their airports, while desir-
the late 1990s, the SARS epidemic, the events of September 11           ing the benefits of private sector expertise and efficiencies.
and the outbreak of war in Afghanistan and Iraq. Mature markets
such as Tokyo only saw passenger traffic growth of 1.3 percent in       Within the region, Australia pioneered the long-term concession/
2005, while maturing markets such as Australia and Hong Kong            leasehold model for private sector investment and operation of air-
saw 11.5 percent and 9.7 percent growth last year respectively.         ports with a major airport privatisation programme between 1997
The high growth markets of India and China saw 17.5 percent             and 2002. While the major Australian airports exhibit strong busi-
passenger traffic growth in Beijing and Mumbai, and a whopping          ness profiles and are natural monopolies, many maintain leveraged
27 percent growth in Delhi in 2005. Most of the region’s airports       financing structures and pursue relatively aggressive financial
forecast continued passenger traffic growth, which will continue        policies with the aim of maximising equity returns. Major capital
to correlate with economic performance. Fuel price volatility is        expenditures (Capex) are also primarily funded by debt financing.
not expected to be a major factor for passenger traffic in Asia.        Therefore, most of their credit profiles are viewed in the ‘BBB’
                                                                        category and are likely to be constrained at this level due to their
Passenger traffic growth is supporting positive financial perfor-       high leverage. This experience may be similar for other airports
mance at airports throughout the region, with some exceptions,          within the region that follow the private sector concession model.
such as the Kansai Airport in Osaka, which does not produce
enough operating income to cover its debt interest payments.            US and canadian airports: beyond bankruptcy – focus on
Other airports, such as the Hong Kong International Airport, and        capacity and resources
the major Australian airports, exhibit EBITDA margin of 60 per-         The past year witnessed increasing airline stability as several
cent or better. Operating revenues in the region also benefit from      airlines completed their financial restructuring and the industry
concession revenues, such as shopping, restaurant and other ser-        maintained a disciplined approach to reining in capacity, thereby
vices that have now become a staple of Asian airport operations         generating greater pricing power. Continued strong economic
and renovation programmes. Singapore’s Changi Airport was the           growth, favourable fares that generated demand for leisure travel,
first major international Asian airport to adopt the shopping mall      and the ever-expanding reach of the LCCs, primarily Southwest
concept, and non-aeronautical revenues account for 40 percent of        Airlines and jetBlue Airways fuelled a rebound in enplanements,
its total operating income. Some airports, such as Hong Kong and        resulting in 2005 passenger volumes (739 million) exceeding the
Incheon, are now in a strong enough financial position to either        previous high established in 2000. In Canada, a revamped Air Cana-
fund capital projects or debt retirement through available cash.        da Airlines is competing with, and providing a rational level of service
                                                                        in conjunction with, Westjet Airlines. Only in late summer and fall
The Government’s role, which can take the form of owner, opera-         2006 has passenger volume stalled in the North American region.
tor, regulator, policy coordinator, and financial supporter of air-
ports in the region, is a major credit consideration for Asia Pacific   Demand related growth and the airlines’ shift towards smaller
airports. In some parts of the region, such as Hong Kong, the gov-      narrow-body jets on mainline domestic routes and greater utili-
ernment supports some airport operations and capital projects. In       sation of regional affiliates that fly even smaller regional jets
Australia, the government has a light-handed regulatory system          (RJs) is placing an increasing burden on airports’ physical plants.
for the airport concessions, which is designed to maintain a con-       This growth is straining the system, with the US Department of
straint on the misuse of market power by airports while greatly         Transportation indicating that 22.1 percent of all flights arrived at
reducing the regulatory intrusion into their commercial dealings        least 15 minutes behind schedule during the first seven months of
with airlines and other customers. In China and India, the air-         2006, the highest level since that same period in 2000.
ports are ‘highly integrated’ with the government policies for eco-
nomic growth and transportation investment. In the case of India,       It is against this backdrop of evolving aircraft size, expansion and
where public-private partnerships are being implemented through         increasing competition among the LCCs and continued demand
the concession model, the government continues to be owner,             for air service that Airports Council International – North America
operator and even equity participant within the concessionaire.         estimates the capital needs of the region’s airports at USD71.5




                                                                                              ACI AIRPORT ECONOMICS SURVEY 2006                    
     billion. Most large hub airports have either just completed sizable      concession, it developed a taste for privatisations and now the
     capital improvement programmes to create necessary capacity,             city is investigating the potential privatisation of Chicago Midway
     such as Toronto Pearson International Airport’s USD4.8 billion de-       International Airport.
     velopment programme (82 percent complete as of January 2006),
     or are currently undertaking such programmes. Two noteworthy             Airport development in Latin America & Caribbean – much
     large hub programmes underway in the US are Chicago O’Hare               is happening in a few countries
     International Airport’s programme, which includes a USD1.85              In Mexico, one of the fastest growing and most economically
     billion component for routine maintenance and improvements               stable emerging markets, the Mexican government granted 50-
     to the existing facility and USD3.3 billion for the first phase of       year concessions to operate the largest 35 airports country-wide.
     its modernisation programme to reconfigure the airfield extend-          These concessions were granted to four, mostly private, groups,
     ing through 2011, and Atlanta-Hartsfield Jackson International           with the airport groupings determined largely by geographical
     Airport’s USD5.5 billion programme that extends until 2012.              location. Mexico City airport remains Latin America’s largest air-
                                                                              port and serviced approximately 24 million passengers in 2004.
     Unlike the other regions, bonds remain the mainstay of financing         Demand for service at this airport is rather inelastic, as passen-
     capital expenditures in North America, a situation that is unlikely      ger growth rates have exhibited average annual increases of 4.8
     to change in the near future. Although airport cost structures are       percent since 1990 and showed relatively quick rebounds after the
     rising modestly, airport fees remain a very small portion of the av-     Mexican Tequila crisis of 1994 and the events of September 11.
     erage airline’s overall costs and most development programmes            During the last year, Fitch assigned a ‘BBB’ rating to a securitisa-
     are related to demand for service by the airlines and travelling         tion of cash flows from Mexico City airport including rents derived
     public. Furthermore, the intense focus on non-airline revenue            from improved retail spaces, parking revenues in the international
     generation to help offset airport rates and fees is paying off in the    parking lot, jet bridge revenue from 11 bridges and revenues gen-
     region. The Passenger Facility Charge (PFC) in the US and the Air-       erated through fees charged to all taxis picking up passengers at
     port Development Fee (ADF) in Canada provide needed funds for            the terminal.
     capital development. In Canada, the ADF is set by the individual
     airports, while the US airports have long sought ways to gain ad-        Other countries in Latin America and the Caribbean are farther
     ditional flexibility in the PFC programme, which is subject to strin-    along in the development process. Since 1995, the Chilean gov-
     gent regulation by the Federal Aviation Administration (FAA) and         ernment has entered into ten airport concessions, with a total
     a statutorily imposed rate limit of USD4.50. The current debate          value of USD345 million. The most important airport in terms
     over FAA reauthorisation (2007) may provide the rate and regula-         of investment and service is Aeropuerto de Santiago (SCL), which
     tory flexibility that airports desire, but with other tradeoffs. Also,   represents USD250 million of the total value of the concessions.
     third-party bond transactions experienced market resurgence in           In Chile, the government’s level of involvement has been strong,
     the past year, such as Project Finance and Special Facility Bonds        providing minimum annual concession fee guarantees and direct
     issued for development of consolidated rental car facilities, fuel       assistance to help an airport operator avoid bankruptcy. Traffic
     farms, single tenant terminal facilities and cargo hangers.              growth in Chile ebbed and flowed in relation to the Asian Crisis and
                                                                              contraction of the Chilean economy (1998-2002), Argentina Crisis
     A new topic for US airports is privatisation. US municipal en-           (2001), and the events of September 11 (2001-2002); however, dur-
     tities are faced with pressing financial needs and their airports        ing 2003-2005 the Chilean economy entered period of expansion,
     are profitable, although non-essential government enterprises,           the government successfully concluded several commercial free
     with untapped equity. Although the FAA developed an airport              trade agreements with other nations, and new LCCs entered the
     privatisation pilot programme in 1996, only one airport has had          market, all leading to surging passenger traffic levels.
     its application approved. The current regulatory environment and
     the need for approval from the airlines will very likely impact the      During 2001, Peru entered into a 30-year concession for Jorge
     ability of sizable US airports to privatise. However, the desire         Chavez International Airport, requiring the operator to invest
     of some US municipalities to privatise their airports has become         USD1.1 billion in Capex, achieve IATA B level in 2008, and direct
     evident. For example, after the City of Chicago received a USD1.8        46.5 percent of the gross revenues back to the State. In Aruba,
     billion up-front payment for the Chicago Skyway 99-year lease            Aruba Airport Authority, NV, a government owned corporation,




2   ACI AIRPORT ECONOMICS SURVEY 2006
operates Queen Beatrix International Airport pursuant to a con-         About Fitch Ratings
cession agreement. The authority is a self-supporting enterprise,       Fitch Ratings is a leading, global rating agency dedicated to provid-
which issued general airport revenue bonds in both 1997 and             ing the world’s credit markets with independent and prospective
1999 to modernise and expand the airport’s terminal infrastruc-         credit opinions, research, and data. With 50 offices worldwide,
ture. Then in 2004, the authority entered into a strategic coopera-     Fitch’s global expertise, built on a foundation of local market ex-
tion agreement with Schiphol International BV whereby Schiphol          perience, spans across capital markets in over 90 countries. For
provides key management and technical services to the authority         additional information, please visit www.fitchratings.com
through 2009. Fitch’s rating on the 1997 and 1999 bonds remained
stable even as enplanements declined because of conservative            Contacts:
fiscal policies and strong revenue generation. Currently, several       • Jessica Soltz Rudd, Global Project Finance San Francisco
airport developments are underway in other parts of the region,           +1 415 732-5616,
including airport concessions in Bogotá, Colombia and Carrasco            jessica.soltzrudd@fitchratings.com
International Airport, Uruguay.                                         • Peter Stettler, Global Project Finance Chicago
                                                                          +1 312 368-3176,
In almost all these concessions, a consortium consisting of one or        peter.stettler@fitchratings.com
more international airport operators (e.g., Fraport, Schiphol, ADP,     • John Hatton, Corporate Finance London
Changi Airport, etc.) and developers (e.g., Bechtel) is created, but      +44 20 7417 4283,
a national company holds the majority share/right to the conces-          john.hatton@fitchratings.com
sion and the related revenues. Furthermore, as illustrated in the       • William Streeter, International Public Finance Tokyo
Chilean example, the regulatory environments in Latin America             +813 3288 2634,
tend to be more flexible. Whereas the potential for an airport             william.streeter@fitchratings.com
operator in this region to recover its cost of capital is strong, the   • Michael Hermans, Corporate Finance Brisbane
Capex requirements, or needs, are high                                    +61 7 3222 8615,
                                                                          michael.hermans@fitchratings.com
                                                                        • Michael Wu Corporate Finance Hong Kong
                                                                          +852 2263 9696,
                                                                          michael.wu@fitchratings.com
                                                                        • Cristian Fuenzalida Corporate Finance Santiago
                                                                          +562 499 3313,
                                                                          chistian.fuenzalida@fitchratings.com




                                                                                             ACI AIRPORT ECONOMICS SURVEY 2006                  3
     NEW DEVELOPMENTS IN AIRPORT PRIVATISATION

     The second wave of airport privatisation

     Airport privatisation is a relatively new concept that has been         Other listed airports include Copenhagen, Rome and Zurich.
     with us for only 20 years or so, unlike the airlines that use air-
     ports, some of which were privately owned from the outset of            In Asia, several major airport groups have floated shares, includ-
     commercial aviation in 1919.                                            ing Beijing, Kuala Lumpur and Auckland airports, and both Hong
                                                                             Kong and Incheon (Seoul, Korea) airports intend to do the same
     A major part of the reason for this state of affairs is that airports   by 2008. Australia sold off most of its airports to consortia put
     were, and are, widely regarded as being a constituent part of the       together for the purpose in the late 1990s.
     public domain, just like libraries, parks, community and sports
     centres, bus stations and other aspects of municipal life. Accord-      In Latin America, ‘trade’ sales of airports also took place in Mex-
     ingly, they were often no more than functional, drab and grey but       ico and Argentina at that time and two of the Mexican consortia
     the public remained satisfied as most people could relate to it         have since had IPOs, with a third planned for 2007.
     being ‘their’ airport. The general public cannot ‘own’ an airline,
     which is by its nature a very portable concept.                         There are some parts of the world that have seen hardly any airport
                                                                             privatisation as it is understood in Europe and Asia. One of them,
     However, globalisation, technological enhancements, greater             surprisingly perhaps, is the Unites States. Airport development
     corporate and personal prosperity and the increasing propensity         there is financed by an established fund, the Airport Improvement
     to fly drove a huge expansion of the aviation industry during the       Program, administered by the Federal Aviation Authority, and sup-
     1960s and 70s. Existing infrastructure – runways and terminals          plemented by tax-free commercial bonds available to any citizen.
     – quickly reached capacity and often became obsolete.                   In fact, it could be argued that the larger US airports are effectively
                                                                             privatised by the involvement of the major airlines, which own and
     The challenge facing municipal and central government airport           operate the gates, and frequently entire terminals.
     owners was how to cater for this burgeoning demand without ex-
     ceeding budgets massively or imposing greater taxation. They also       But even the US is starting to search for new ways to finance
     faced pressing needs for alternative use of available funds that        its airport infrastructure. Driving the change is the same sort of
     were granted to airports. The answer was to seek some form of in-       political thinking that has driven airport privatisation elsewhere
     vestment from the private sector, in the expectation that the input     – namely that both central and local governments wish to with-
     would also bring greater management expertise and efficiency.           draw from the business of funding aviation. The mainly tax funded
                                                                             system is beginning go look rather anachronistic in the light of the
     Airport privatisation has since taken many forms: commercialisa-        requirement for major levels of investment and there are currently
     tion; corporatisation; government ownership with selected services      proposals to lease out airports at Chicago and nearby in Wiscon-
     privatised; government ownership with private management, fee-          sin. A 1996 government experiment to privatise up to six airports
     based; other forms of concession; lease; trade sale; Build-Oper-        nationally found little support, but the lease on one of them - New
     ate-Transfer (BOT) and its derivates; Public-Private-Partnership        York’s Stewart Airport - is being sold by its owner (a British bus
     (PPP); Private Finance Initiative (PFI) and stock market floatation.    operator), the first example there of an ‘on-sale’.

     The concept quickly found favour in Europe, and especially in           The other region is Africa, where many governments have airport
     the UK, where the majority of airports are by now ‘privatised’ in       privatisation policies in place, but inherent problems that are unat-
     one way or another. At the time of writing Aeroports de Paris           tractive to investors remain: chronic underinvestment allied with in-
     recently underwent a partial Initial Public (share) Offering (IPO),     sufficient passenger and freight throughput to merit that investment
     the Schiphol Group (Amsterdam), Athens and Prague airports may          in the first place. On the bright side the World Bank/IFC has become
     do also, and BAA plc, the first major IPO (1987) and world’s larg-      very active in assisting financially with African airport improvement
     est private airport operator, was bought by a consortium led by         projects and the dramatic expansion of South Africa’s airports in
     Spanish construction company Ferrovial. That transaction was the        time for the 2010 Soccer World Cup should offer an incentive to
     biggest in a series of leveraged buyouts in recent years.               other countries, especially those in the immediate region.




4   ACI AIRPORT ECONOMICS SURVEY 2006
It is fascinating to examine the enormous variety of investors in       Low cost Airports and terminals
airports today. During the 1990s there was a surfeit of companies
active in other transport sectors, mainly bus and rail, together        Examples of low cost airports in Europe include Liverpool, Don-
with property development organisations. Latterly, during the           caster-Sheffield, Blackpool, Glasgow Prestwick and West Mid-
‘second wave’ of privatisations since 2004 (and in the aftermath        lands International [Coventry] (all UK), also Frankfurt-Hahn in Ger-
of the 2001 terrorism, subsequent wars and SARS outbreak that           many (the first) and Brussels South/Charleroi in Belgium. There
previously put paid to them) a growing number of venture capitalists    are several examples in Scandinavia, as ‘low cost’ is the only
and private equity companies have moved in.                             way isolated regional airports there could grow. There is a low
                                                                        cost terminal at Marseille (France), Budapest (Hungary), Warsaw
There are some 60 leading (active and potential) global airport in-     (Poland) and one was planned for Geneva (Switzerland). Tampere
vestors at this time with access to an estimated USD50 billion in       (Finland) has an innovative terminal that is part-financed through
funds to pursue aviation infrastructure assets primarily in Europe,     a deal with an LCC on the proceeds of in-terminal catering, and
the Middle East and Asia. Amongst them are three notable new            Stavanger Airport (Norway) management has indicated it wishes
entrants – the Macquarie Group (Australia), which has become            to build a low cost terminal. However, there are regulatory issues
the world’s second largest privately owned airport company in           that have involved the European Commission and legal challenges
just two years, Dubai Aerospace Enterprise, capitalised at USD15        on accessibility, ownership and operation may be imminent.
billion, and GE, the parent of Gecas, the world’s largest aircraft
financier, working in conjunction with the Credit Suisse Bank.          The trend has started to gain acceptance in the USA, where a
                                                                        terminal is being developed for the LCC JetBlue at New York,
What attracts all these companies is the fact that airports             and one has been completed for Southwest Airlines at Balti-
consistently offer a more robust profile than airlines. Profitability   more-Washington although the concept of ‘low cost’ is quite
margins of 10 percent-60 percent are routine amongst airport            different in the US, for both airlines and airports and service
operators, while most full service/network airlines are very happy      levels in both are high by European standards. Canada has
indeed to achieve 10 percent in the very best of times and in 2005      several secondary airports that have converted wholly to the
the average was just 2.5 percent. (Some ‘low cost’ carriers (LCCs)      demands of LCCs.
have achieved 30 percent, notably Ryanair and Gol [Brazil]).
                                                                        In the Asia Pacific region there has been little development so far
This is because airports can usually anticipate costs better than can   of new-build brown or green field site airports dedicated solely
airlines, are able to benefit from an often monopolistic position in    to LCCs. The first two major projects have been the low cost
the supply chain and may put to use both the terminal itself andsur-    terminals at Kuala Lumpur (KLIA) airport and Singapore Changi
rounding land for a whole swathe of additional revenue earning op-      airport, both of which opened in Mar-06. Diosdado Macapagal
portunities that airlines can only dream of. There are few examples     International Airport, originally the (US) Clark air force base, is be-
to date of airport investors failing completely to make any money       ing redeveloped as an LCC base. The new Bangkok International
out of their speculation, unlike those that put their money into air-   Airport will not have a budget terminal though, according to the
lines. Those few examples are mostly in the ‘low cost airport’ seg-     most recent pronouncement by Airports of Thailand, (even though
ment, one that has arisen to cater specifically for the express needs   it reached capacity virtually on the day it opened, partly through
of low cost airlines by providing basic facilities across the whole     the efforts of Thailand’s budget airlines) and the future for the
airport estate or within one designated terminal.                       old Don Muang Airport in this respect remains unclear. Another
                                                                        airline initiative may be found in Indonesia, where the LCC, Lion
While some of these facilities (such as the budget terminal at          Air, signed a contract to lease the little-used Halim Perdanaku-
Singapore, which opened in March 2006) have been financed and           suma Airport in East Jakarta to accommodate its growing fleet,
built by government, many are directly the result of investment         having failed to build a terminal at Soekarno-Hatta International
into the sector by private firms; those prepared to take the risk       Airport. Airports such as Macau and Tianjin (China) envisage a
of a brown or green-field development, possibly well away from          future predominately as hosts of low cost services that cannot
centres of population, or within the boundaries of an unfashion-        or will not be absorbed by bigger airports nearby; Chek Lap Kok,
able city. Sometimes the investment is slow to generate returns.        Hong Kong, and Beijing.




                                                                                             ACI AIRPORT ECONOMICS SURVEY 2006                    5
     In the Middle East/Indian sub continent region, one that will see a
     large degree of foreign investment during the next 5-10 years, the
     huge expansion of Dubai’s airport capacity now includes provision
     of a low cost terminal and one is proposed for New Delhi, where
     extensive terminal refurbishment is required already of the suc-
     cessful modernisation concessionaire.



     The prototype low cost airport

     1. Small ticketing area. This may reflect the high percentage of          Australia. These likely developments should be factored into
        sales conducted via the Internet and now by 3G mobile tele-            any new terminal planning.
        phone technologies, and paperless travel. Although promoted
        for universal adoption by 2007 by IATA, the fastest strides in      7. Simplified, functional office accommodation not config-
        this direction – e-ticketing and boarding documents – have             ured to sell the airline and its services to the public, as the
        hitherto been made by the LCCs.                                        public is not required to use it. Similar standards for public
                                                                               offices, e.g. baggage queries.
     2. High-speed electronic check-in, including self-service
        kiosks. Conversely, low speed check-in where electronic fa-         8. Low key design and décor throughout the terminal area.
        cilities are not available and checked baggage is required. The
        ability to route incoming and outgoing passengers separately        9. Efficient systems for the rapid loading and unloading of pas-
        and to check-in passengers manually for flights at any open            sengers, baggage and freight to aid fast turnaround, typically
        station. (Off-airport advance check-in is not yet a developed          20 minutes. But passengers may be required to carry their
        feature of the majority of LCCs).                                      own baggage as far as possible, even after check-in. Some
                                                                               LCCs are incentivising passengers to take carry-on bags only,
     3. Facilities tailored to point-to-point operation. This implies          by carrot and/or stick methods
        for example specialist retail, tailored to short haul passen-
        gers; and as noted below, processes and design which permit         10. Low tech gate facilities, specifically including the use of
        fast turnaround.                                                        steps in lieu of air bridges, thus permitting aircraft to power in
                                                                                and out and access/egress through front and rear doors simul-
     4. Lounges, where they exist at all, are economy only with                 taneously. Greater use of bus surface transfer.
        limited seating.
                                                                            11. Limited seating and crowded gate areas brought about by
     5. Minimal passenger facilities airside with those that exist              free onboard seating policies.
        focused on retail and catering outlets and any form of “last
        minute requirement” revenue generation.                             12. Extended operating hours at full capacity. Typically
                                                                                0600-2400.
     6. Provision for market evolution, especially connectivity.
        Terminal requirements – notably terminal space, retail configu-     13. No standby aircraft parking permitted during daytime
        ration and lounge facilities - will begin to change as LCCs build       operations.
        alliances with other LCCs and with network carriers, leading
        to “interlining” and even mergers (possibly soon in the USA).       14. Overnight maintenance and cleaning requirement
        Already there have been experiments in North America (Amer-
        ica West/Royal Jordanian; Southwest/ATA) and Europe and in          15. Financial support packages demanded by LCC users,
        Asia, between AirAsia and its franchise partner Thai AirAsia,           including discounted and/or performance-based charges and
        and Virgin Blue, with Virgin Atlantic and United Airlines in            rentals, backed up by ready availability of slots.




6   ACI AIRPORT ECONOMICS SURVEY 2006
Greed is good

It must be accepted that making healthy profits is the ultimate aim        During 2006, airport investors have experienced several new and
of all airport investors, at the expense, if needs be, of all other con-   unwelcome trends: legal challenges to lease/concession awards,
cerns. This troubled Australia’s legislators so greatly that draconian     strong resistance from trades unions and opposition parties, and
clauses were inserted into lease contracts when the country’s air-         even, in one case, a wholesale, sudden and dramatic change of
ports were made available to the private sector, even going so far         mind about privatisation by the government, resulting in cancella-
as to prevent employee dismissal for up to a year in some cases.           tion of an awarded contract. All these examples are from Central
                                                                           and Eastern Europe, which is currently one of the world’s hotspots
When the BAA was floated in 1987, it was on the back of a fren-            for airport privatisation. In Hungary, where BAA bought 75 percent
zied series of privatisations of transport and utility companies by        of Budapest’s Ferihegy Airport shortly before BAA itself was ac-
the then Conservative government and driven by public avarice to           quired by Ferrovial, the main opposition party (which came close
‘make a fast buck’ as the share price inevitably rose in the hours         to being re-elected in a recent general election) has threatened
and days following an IPO. (This was the era of the Yuppies and            to renationalise the airport if it gets into power. Consequently,
Hollywood’s ‘Wall Street’ character Gordon Gekko, whose maxim              Ferrovial, which suffered losses during a security scare at British
was ‘Greed is Good’). BAA plc then went on to be better known              airports in August 2006, decided to sell Budapest Airport. When
for its almost religious adherence to the development of shopping          the fact that Hungary’s political situation is delicate (following an
malls in its airports, and office space away from them, rather than        admission of wrong-doing made by the Prime Minister) is thrown
the improvement of passenger facilities.                                   into the equation, it is clear that this is no firm and consistent ba-
                                                                           sis for investing to improve the airport to the benefit of its users.
Indeed, for many years BAA became a widely copied benchmark
for successful airport privatisation as airport managers increased         In fact, resistance from trades unions and the wider public to
the ratio of ‘non-aeronautical’ revenues (for example from retail          airport privatisation and development is not unusual and coun-
concessions, office space, car parking and advertising) to up to 60        tries as diverse as Mexico, Thailand and Cyprus have witnessed
percent of total revenues. Latterly, a greater degree of concern for       violent demonstrations. Moreover, environmental and ecological
the ultimate client, the passenger, is evident, as many airports           groups are gaining in strength and influence continually.
once again reach capacity restrictions they have visited upon
themselves, and even BAA has begun to repeat its mantra of the
1980s: “Say your goodbyes at the garden gate” (i.e. stay away
from the airport unless you are passing through it).

The true motive behind an airport privatisation can be difficult to
discover. It was widely believed for example, although dismissed
by the French government, that the partial floatation of Aeroports
de Paris was simply to help fill a huge hole in public service pen-
sion provision; a problem that is hardly unique to France. Officials
in Atlanta, USA, candidly admitted that a proposal to privatise
the city’s Hartsfield airport, the world’s busiest, would raise funds
not to improve or expand the airport, but to pay for a new and
much needed sewage system for the city. The plan to lease out
Chicago’s Midway Airport, which is valued at USD 5 billion, is
unashamedly an alternative to an increase in the general level of
taxation in the city and has been driven by the successful leasing
of car parking, toll road and waste disposal functions there. Who
said aviation was a ‘sexy’ business?




                                                                                                ACI AIRPORT ECONOMICS SURVEY 2006                   7
     Is airport privatisation justifiable?

     Ultimately, the question to be asked is whether the wholesale                and Doncaster-Sheffield airports. Both of these airports, approxi-
     involvement of the private sector is likely to be of benefit to an           mately 40 miles to the west and east of Manchester respectively,
     airport and its stakeholders, whether some form of public-private            are not only building up impressive budget airline networks, but also
     partnership is a better solution or would all concerned be best              entering the long haul field, which Manchester presumed it would
     served by the airport remaining under government control?                    at least have to itself. Although it has adjusted its airport charges
                                                                                  sharply downwards, and brought spiralling costs under control, pre-
     As with all other business sectors the maxim ‘horses for courses’            tax profits fell by 13 percent to GBP87.7 million in 2005-6.
     applies. Several of the airports mentioned in the text above, Frank-
     furt Hahn, Doncaster-Sheffield, Coventry, Blackpool and Liverpool,           To get back on track, it needs to obtain and maintain a 6.5-7 per-
     would have fallen into disuse altogether had it not been for the             cent annual growth rate at Manchester and across the Group over
     private sector companies that were prepared to take a risk by in-            the next five years – twice what it achieved in 2005 and up to two
     vesting in them. Collectively, they will account for over 10 million         percentage points better than that envisaged to 2015 in a 2006
     passenger journeys in 2006 and Hahn alone will handle over 120,              draft master plan strategy document. It is not doing so. In fact,
     000 tonnes of freight, relieving pressure at Frankfurt Main airport,         in 2006, matters have got decidedly worse, and in some months
     home base of Hahn’s majority shareholder, Fraport AG. But, as                traffic has actually declined over 2005 – an event almost unheard
     mentioned earlier, some have yet to declare any sort of profit.              of in two decades.

     On the other hand, consider this short case study of Manchester, (UK)        The owners must consider if the benefits of selling now, while
     a municipally owned and operated international gateway airport,              airport estate is so highly valued, outweigh the philanthropic
     corporatised since 1986 (i.e. run on commercial lines, with Directors,       reasons they put forward for holding on to the airport. Estimates
     but still in public ownership), sandwiched between Liverpool and             of its value currently run from GBP1.5 to GBP2 billion, a sum that
     Doncaster-Sheffield airports but much bigger than both, with 22.1            would at once pay for the much needed but greatly delayed ex-
     million passengers in 2005. Manchester Airport is the core asset of          pansion of a regional urban light rail network and help relieve
     the Manchester Airport Group (MAG), which includes Nottingham                some inner city poverty. Those 60 global cashed-up investors are
     East Midlands, Bournemouth and Humberside airports.                          waiting, and they would, on balance, consider it an attractive
                                                                                  proposition.
     MAG is wedded to the concept of continuing public ownership. It is
     owned by the 10 authorities that make up the Greater Manchester              However, Manchester does not want to sell, and offers a host of
     city-region, and generates GBP25 million in annual dividends for             altruistic reasons, such as its ability to generate employment to
     them. During the 1980s and 1990s, under a particularly charismatic           the benefit of the local community; its concern for the environment,
     CEO, it waged a highly successful campaign to ‘break the mould’ of           which it does not believe a private owner would emulate; a vague
     domination of the UK air transport business by the BAA airports in           commitment to local education; and even sponsorship of the arts.
     London, and British Airways, which has never done any more than
     pay lip service to the notion of offering international air services         Nevertheless, it has failed to meet its own growth targets, looks
     from UK regional airports.                                                   unlikely to do so in the immediate future despite oodles of capac-
                                                                                  ity in terminals and on runways, and has made some critically poor
     As a result, Manchester has long been Britain’s third airport                decisions, such as failing to understand the implications of the
     after London Heathrow and Gatwick (although Stansted will probably           advent of LCCs in the mid 1990s and of providing for them accord-
     overtakeitthisyear)–anestablishedairportwithglobalsignificance.But           ingly. Currently there is no external driver, such as the two unsuc-
     its performance in recent years has not been particularly encouraging.       cessful bids to host the Olympic Games in the 1980s and 1990s,
     Manchester is losing national market share – it has slipped from 10.2        and the successful one to host the Commonwealth Games in 2002,
     percent to 9.7 percent in five years and its traffic growth in that period   and the focus of attention has swung towards Liverpool, one of
     was 20.3 percent compared with a national average of 26.9 percent.           the European ‘Capitals of Culture’ in 2008. Put simply, under public
     Moreover, it is under intense and growing pressure from Liverpool            sector management,’ Manchester seems to be losing its way.




8   ACI AIRPORT ECONOMICS SURVEY 2006
Its importance was established during a period when it was the        About Centre for Asia Pacific Aviation
‘underdog’ by successfully galvanising public support for changes     Centre for Asia Pacific Aviation (www.centreforaviation.com) is
to bilateral air services agreements so that new routes might be      a specialist consultancy group focused on the aviation industry
introduced. Public bodies are extremely well suited to campaigns      in the Asia Pacific region. It provides advisory and information
within the public sector domain such as this and more of the          services to airlines, airports, governments, regulatory agencies
significant airlines were publicly owned then, too. The challenge     and suppliers. The Centre’s headquarters is in Sydney, Austra-
facing Manchester today comes almost entirely from outwith that       lia, with regional offices in Singapore, New Delhi, Geneva and
sector – from bigger, private airports such as those operated by      Manchester and representatives in Auckland, Bangkok, Beijing,
BAA (Heathrow, Gatwick, Stansted), from smaller but growing           Dhaka, Hong Kong, Shanghai and Tokyo.
ones operated also by private companies (Liverpool, Doncaster-
Sheffield, Blackpool, and soon Leeds Bradford, all quite close by)    Article submitted by the Centre for Asia Pacific Aviation. For more
and from the multitude of private sector LCCs that need to deal       information www.centreforaviation.com
with fast, responsive airport management that does not carry the
baggage of self-imposed regulation.                                   This article is an extract from Global Airport Privatisation 2007
                                                                      Edition (Number 2), which includes a region-by-region, country-
In other words, Manchester is an excessively self-regulated pub-      by-country guide to all airport privatisation activity in the last two
lic sector company operating in an entirely deregulated private       years and anticipated developments.
sector environment. And despite the ‘second wave’ of privatisa-
tions there are still many others like it.                            This key management report, published electronically and deliv-
                                                                      ered in pdf format, is appropriate to airport managers, airlines,
Would it benefit from being privatised? Time will tell. What has      financiers, investors, construction companies, airport service pro-
become clear during the current era of privatisation of public in-    viders, government officials, and lawyers. Issues covered include:
frastructure – not only airports – is that the private sector is no
more likely than the public one to ensure the enterprise is well      •   The changing nature of the airport investor;
managed unless the owners have a significant amount of their          •   The new big players in airport investment;
own funds invested in the enterprise and unless the major risks       •   New methods of financing;
remain with the owners rather than being transferred in some          •   Airlines investing in airports;
manner back to the government.                                        •   Low cost airports and terminals;
                                                                      •   Emergence of the Aerotropolis or Airport City;
                                                                      •   Where are the investment opportunities?

                                                                      Researched and written by David J Bentley, author of Global
                                                                      Airport Privatisation Edition 1 (2004) and The World Airport
                                                                      Privatisation Study (2000/2); Airline Globalisation (2001); Airport
                                                                      Security - Counting the cost of contemporary terrorism (2003) and
                                                                      Financing Emerging Airlines (2004).




                                                                                           ACI AIRPORT ECONOMICS SURVEY 2006                   9
     AIRPORT RETAIL BENChMARkINg

     Using global and regional
     comparisons to drive performance

     Published every two years, the Airport Retail Study (ARS) is a         The 46 airports and airport companies participating in the fourth
     unique benchmarking study measuring the physical attributes, fi-       edition of the ARS together account for:
     nancial performance and operational capabilities of airport retail
     programmes from around the world.                                      • around 830 million passengers (490 million international and
                                                                              340 million domestic passengers);
     Significant effort has gone into ensuring that this latest (fourth)    • around USD13.2 billion (EUR9.7m) in retail sales;
     edition of the ARS provides not only the same level of ground-         • more than 600,000 square metres (6.5 million square feet) of
     breaking benchmark analysis and performance improvement in-              retail floor space; and
     sight as previous versions, but also contains new measures and         • nearly 4,600 outlets and includes data from over 400 duty free
     data to keep pace with this constantly changing industry.                outlets and over 1,400 specialty retail outlets.

     In terms of global coverage the new edition of the ARS brings to-
     gether the data from 46 airports and airport groups from all regions
     of the world. Table 1 lists the airports participating in the study.

     TABLE :
     AIRPORT RETAIL STUDY FOURTH EDITION
     PARTICIPATING AIRPORTS

        Europe                              North America                     Asia Pacific                     Rest of the World

        BAA Group UK (BAA)                  Baltimore (BWI)                   Beijing (BWI)                    Dubai (DXB)

        Birmingham (BHX)                    Calgary (YYC)                     Brisbane (BNE)                   Santiago (SCL)

        Bristol (BRS)                       Columbus (CMH)                    Cairns (CNS)

        Brussels (BRU)                      Edmonton (YEG)                    Hong Kong (HKG)

        Faro (FAO)                          Houston (IAH)                     Incheon (INC)

        Frankfurt Hahn (HHN)                Honolulu (HNL)                    Narita (NRT)

        Geneva (GVA)                        Kansas City (MCI)                 Sydney (SYD)

        Helsinki (HEL)                      Las Vegas (LAS)                   Wellington (WLG)

        Lisbon (LIS)                        Los Angeles (LAX)

        Manchester (MAN)                    Louisville (SDF)

        Marseille (MRS)                     Miami (MIA)

        Munich (MUC)                        San Diego (SAN)

        Prague (PRG)                        San Francisco (SFO)

        Rome (ROM)                          Vancouver (YVR)

        Vienna (VIE)

        Zurich (ZRH)




20   ACI AIRPORT ECONOMICS SURVEY 2006
Headline performance

To determine the overall performance of the participating airports,        The overall results for the fourth edition have, for the first time
four headline performance measures are used as follows:                    placed Asia Pacific based airports in the top three positions. In-
                                                                           deed five airports from this region are in the top 10. In the 2003
•      gross sales per square metre;                                       edition of the ARS only three Asia Pacific airports were in the
•      gross sales per passenger;                                          top 10.
•      retail revenue per square metre; and
•      retail revenue per passenger.                                       This result appears to signify the shift of superior travel retail per-
                                                                           formance from the traditional centre of Europe to Asia Pacific. The
By ranking airports relative to the measures listed above, it is pos-      ARS results highlights the growing maturity of travel retail market
sible to produce an overall ranking. Table 2 describes the regional        in Asia Pacific and reflects the considerable level of investment in
location of the top 10.                                                    retail programme expansion, terminal development and improve-
                                                                           ment undertaken by some of the major airports in the region over
TABLE 2:                                                                   the past few years.
2005/06 AIRPORT RETAIL STUDY -TOP 10 PERFORMING
AIRPORTS                                                                   There are five European airports in the top 10 down from six in
                                                                           the 2003 ARS; interestingly there are no airports from Europe in
             Overall Airport
Rank         Performance                   Size (Pax)         Ownership
                                                                           the top three.

1st
             Asia Pacific Airport          Greater than 20m       Public
                                                                           Also for the first time no North American airports are placed in the
2nd          Asia Pacific Airport          Greater than 20m       Public   10, albeit in fairness there was only one in 2003.
3rd          Asia Pacific Airport          Greater than 20m      Private
                                                                           From an ownership perspective privately owned airports account for
4th
             European Airport              Greater than 20m      Private
                                                                           six of the top 10 with publicly owned airports making up the rest.
5th          European Airport              Greater than 20m       Public

6th          Asia Pacific Airport          Greater than 20m      Private

7th          Asia Pacific Airport          10m to 20m            Private

8th
             European Airport              Less than 10m          Public

9th
             European Airport              Less than 10m         Private

10th         European Airport              Less than 10m         Private



Source: URS Airport Retail Study 4th Edition




                                                                                                ACI AIRPORT ECONOMICS SURVEY 2006                    2
     ARS Fourth Edition Analysis                                             FIgURE :
                                                                             INDEX OF GROSS SALES & RETAIL INCOME PER M2 BY REGION
     In terms of the analysis contained within the fourth edition, two            200               Gross Sales                Retail Revenue
     examples are provided as follows:

     • a comparison, at a regional level, of the gross sales and retail           150
       revenue per square metre. The analysis supports the overall
       superior performance of Asia Pacific airports; and
                                                                                  100
     • the continued growth in total share of retail space and finan-                                                                       Average of
                                                                                                                                            all airports
       cial contribution of arrival retailing.

                                                                                   50

     Example 1-Gross Sales & Retail Revenue per m2
     Regional Comparison
                                                                                     0
     The performance indicators of gross sales and retail revenue per




                                                                                                   /s &



                                                                                                         qm



                                                                                                   /s ca



                                                                                                   /s &



                                                                                                         qm



                                                                                                   /s ca
     square metre have been included in the study since the inception


                                                                                               GS fic




                                                                                               GS eri



                                                                                               GS fic




                                                                                               GS eri
                                                                                                      /s




                                                                                                      /s
                                                                                                     qm




                                                                                                     qm



                                                                                                     qm




                                                                                                     qm
                                                                                            ld ci




                                                                                            ld ci
                                                                                                   Am




                                                                                                   Am
                                                                                                   GS




                                                                                                   GS
                                                                                          or Pa




                                                                                          or Pa
                                                                                                pe




                                                                                                pe
                                                                                              rth




                                                                                              rth
     of the ARS in 1998. They are still perhaps the best measures of
                                                                                         W sia




                                                                                         W ia
                                                                                             ro




                                                                                             ro
                                                                                       of As
                                                                                           No




                                                                                           No
                                                                                            A



                                                                                          Eu




                                                                                          Eu
     superior retail performance as they can be directly related back to
                                                                                 of
                                                                                st




                                                                                    st
                                                                              Re




                                                                                 Re
     the cost per square metre of providing terminal infrastructure.
                                                                             Source: URS Airport Retail Study fourth edition
     One of the key advantages of the ARS as a benchmarking publica-
     tion is the fact that the study contains data normally difficult to     From Figure 1 it is interesting to note the performance of the Asia
     obtain. This fact, coupled with the broad range of airports, means      Pacific/Rest of the World airports compared to the other study regions
     it is possible to examine performance on a region by region basis       and with the indexed average for all the participating airports. The
     at a meaningful level.                                                  analysis shows that the airports from the Asia Pacific region have
                                                                             gross sales per square metre and retail income per square metre 45
     Undertaking this analysis highlights, in terms of gross sales and re-   percent higher than the average for all the participating airports.
     tail revenue per square metre, results in some interesting regional
     performance differences. These differences are shown in Figure 1.       A regional comparison of these indicators is of greater interest. In
                                                                             this comparison, Asia Pacific airports outperform European airports
                                                                             in terms of gross sales and retail income per square metre by 48
                                                                             and 27 percent respectively. Although Figure 1 highlights that Euro-
                                                                             pean airports have higher retail yields (income to sales ratio).

                                                                             The figure also shows that Asia/Pacific airports outperform
                                                                             North American airports by a significant 119 and 177 percent
                                                                             for gross sales per square metre and retail revenue per square
                                                                             metre respectively.

                                                                             This analysis is of interest as a number of the Asia Pacific airports
                                                                             participating in the ARS are Asian hubs and their on-going ability
                                                                             to maintain this level of performance will be challenged due to
                                                                             the current uncertainty related to the EU and US security restric-
                                                                             tion on liquids and gels. This is a key area of future analysis that
                                                                             will be monitored as part of the ARS.




22   ACI AIRPORT ECONOMICS SURVEY 2006
Example 2-Arrival Retail Gross Sales per m2– growing fu-                           Compared to the third edition of the ARS, the relative contribu-
ture opportunity?                                                                  tion in departures airside has remained more or less the same,
It has long been understood by airport retail managers that most                   where 55 percent of space provided 67 percent of gross sales.
gross retail sales are derived from outlets located airside (post                  However, the trend is more pronounced for airside arrivals where
security/immigration). Indeed, the new edition of the ARS reports                  the space allocation has tripled since the third edition from two
that nearly 60 percent of retail space is located airside.                         percent and the share of gross sales has risen by two percent
                                                                                   from five percent.
Understandably, as a result the traditional approach adopted by
airport designers and planners, a significant proportion of total re-              This represents an important trend, which recently has gained a
tail programme area is located in the airside departures precinct.                 degree of momentum particularly with the potential adverse im-
                                                                                   pacts on traditional airport retailing (particularly duty free) result-
However, the gross retail sales contribution made by arrivals air-                 ing from the November 2006 security requirements for travellers
side retail space, first measured in the third edition of the ARS                  to the EU and North America.
and again in the fourth edition, represents a substantial growing
opportunity for airports. In fact airside arrivals retail space has                This trend has important implications in terms of future terminal
been a feature of airport retailing at airports throughout Australia               and retail programme layout planning.
and New Zealand for over a decade.
                                                                                   Indeed, the move to airside arrivals retailing highlighted by the
Figure 2 illustrates the scale of the relative contribution, in terms of           ARS has already begun with the recent announcement by the
share of gross sales, of airside departures and arrivals retail space.             Swiss Government to introduce arrivals retailing. The ARS au-
                                                                                   thors further understand that arrivals retailing will also be intro-
FIgURE 2:                                                                          duced at Swedish Airports.
AIRSIDE RETAIL SPACE AND GROSS SALES CONTRIBUTION
100%
                                                                                   Retail parameters
 80%              Departures Airside                      Arrivals Airside         Since its initial publication in 1998, the ARS has gathered, analysed
                                  66%                                              and published benchmarking performance information during per-
 60%                                                                               haps the most volatile period in aviation history – a trend that looks
               53%
                                                                                   likely to continue for the foreseeable future.

 40%
                                                                                   The key guiding goal of the original ARS is to not only measure
                                                                                   performance, but to explain the physical factors behind superior
 20%                                                                               financial and operational performance.
                                                       6%                7%
                                                                                   The new fourth edition not only continues with the now familiar
  0%
          % Retail Space     % Gross Sales        % Retail Space   % Gross Sales   performance measures and analyses of the past but adds new par-
                                                                                   ticipants, new performance measures and new key trend analysis.
Source: URS Airport Retail Study fourth edition


The figure highlights that airside departures, while providing 53
percent of the retail space, contributes 66 percent of the gross
sales. The share of arrivals space while much smaller at six per-
cent, still contributes seven percent of gross sales.




                                                                                                        ACI AIRPORT ECONOMICS SURVEY 2006                    23
     New performance indicators                                               mance indicators (previously included in specialty retail);

     The new edition of the ARS includes all the key indicators that are   • Terminal Dwell Time Analysis - in response to the need for
     recognised features of the study including:                             increased levels of security in passenger terminals around the
                                                                             world, the ARS will contain an in-depth quantification of the
     • 21 performance indicators measuring the various physical and          total time spent by passengers in check-in, the landside areas,
       financial aspects of retail programmes such as gross sales,           security/immigration and airside;
       retail income, retail yield, amount of space, location of space,
       number and location of outlets, and outlet types, all analysed      • Penetration Rate Estimates - penetration rate is defined as the
       on a per passenger and per square metre basis. This analysis          percentage of passengers who actually make a purchase. For
       will also consider these indicators on an airport size and air-       the first time, the ARS will contain penetration rate estimates
       port regional location basis where possible;                          for each of the retail categories. This penetration rate analysis
                                                                             will be undertaken for both international and domestic pas-
     • 8 insight indicators measuring the relationship between fi-           sengers; and
       nancial performance and potential explanatory variables – for
       example, whether the passenger mix (business vs leisure vs          • Impact of Low Cost Carriers - to reflect the growing trend to-
       VFR) affects financial performance; and                               wards Low Cost Carriers, the fourth edition of the ARS will
                                                                             contain analysis of the differential spend rates between this
     • over 14 management indicators which measure various                   carrier type and the traditional mainline carrier.
       aspects of management policy related to airport retail pro-
       grammes such as amount spent on programme marketing,
       contribution of the airport working population reporting struc-     Key trends
       tures and staff resources.
                                                                           Continuing with the trend analysis that commenced in the third
     In keeping with the new edition’s philosophy of undertaking data      edition, a number of key trends have been identified and have
     analysis beyond simple reporting of performance and in addition       been included in the analysis undertaken in the fourth edition of
     to the traditional performance measures listed above, the fourth      the ARS.
     ARS includes new performance indicators.
                                                                           The key fourth edition trends include:
     The inclusion of these additional measures has been as a result
     of the following:                                                     • Amount of Space - the amount of retail floor space provided
                                                                             per thousand passengers has remained steady compared to
     • airport retail and aviation trends over the past two years;           the third edition. This potentially reflects the recovery of pas-
                                                                             senger numbers over the past two years. However, this ratio
     • comment and suggestions from the airport industry on ad-              may change in the future with a number of substantial termi-
       ditional measures designed to assist their retail programme           nals and retail programmes expected to be commissioned in
       management; and                                                       the next couple of years (Heathrow T5, Beijing T3, Changi T3
                                                                             etc);
     • URS Corp Airport Retail Group experience gained over the
       past 10 years consulting and advising airports and airport          • Location of Retail Space - the trend by airports to locate the
       retailers.                                                            majority of their retail space airside continues, with almost a
                                                                             60/40 split of space airside/landside. This compares with an
     The new indicators include:                                             approximate 50/50 split of previous ARS editions. This trend
                                                                             is anticipated to continue;
     • Inclusion of News/Gift - for the first time the ARS will include
       News/Gift as a separate retail category as part of the perfor-      • Financial Performance of Space - the reported financial perfor-




24   ACI AIRPORT ECONOMICS SURVEY 2006
   mance of retail floor space per square metre terms is signifi-     About the author
   cantly higher than the previous study. This is potentially due     Ivo Favotto is the originator and author of the Airport Retail
   not only to the inclusion of additional highly retail focussed     Study.
   airports in the current study but also the recovery of passen-
   ger numbers improving the efficiency of existing retail space      He holds the position of Senior Principal – Airports Retail Group
   at participating airports; and                                     for global planning and design company, URS Corp.

• Yields (income to sales ratio) - yields appear to have stabilised   Ivo has advised many of the world’s leading airports on how to
  from the previous study and potentially reflect the recovery        maximise/improve the performance of their retail programme.
  of passenger numbers in the ARS regions and the growth of           Ivo can be reached on ph: +61-2-8925-5762
  higher yield retail categories (ie speciality retail).              or on Ivo_Favotto@urscorp.com

                                                                      The ARS will be published in December 2006 and copies of the
                                                                      ARS can be ordered from Mr Brian Carson on +61-2-8925-5670
                                                                      or on Brian_Carson@urscorp.com




                                                                                         ACI AIRPORT ECONOMICS SURVEY 2006                25
     gLOBAL CARgO TRENDS 2006

     Introduction

     The 2005 value of the worldwide air cargo industry was estimated       by a decrease in tonnage in 2001 and 2002. (See graph below)
     to have been USD92 billion, of which the US domestic air freight       While this data does not comprehensively capture all air cargo
     and express market accounted for roughly USD30 billion. A market       activity, it provides a worthy sample of worldwide trends.
     that accounts for almost one-third of global value is in no dan-       J.P. Morgan measures manufacturing output, which acts as a
     ger of becoming irrelevant, yet its market maturity and sheer size     barometer of overall operating conditions in the global manu-
     portends growth that will lag that of Asia and other less “built-      facturing sector. The no-change 50 mark separates growth from
     out” markets for the foreseeable future. With finite capacity, the     contraction. When comparing global air cargo tonnage data to
     decision to allocate new aircraft involves a largely dispassionate     global manufacturing production, a trend emerges. Both global
     decision favoring higher growth targets. Boeing indicates in their     manufacturing and air cargo declined from 2000 to 2001 as a
     biannual air cargo forecast that freight traffic worldwide will grow   result of global recession, as well as the 9-11 terrorist attacks.
     approximately six percent per year, which (with cumulative growth)     Air cargo continued to decline in 2002 as the aviation industry
     indicates the air cargo market doubles in size every 10 years. As      assessed security protocols, as well as experienced the modal
     evidenced in Table 1, growth rates exceeding the global average        shift from air to surface transport. Global manufacturing rebounded
     are intra-Asia and intercontinental segments connected to Asia.        slightly during this time period. In 2003 and 2004, both global
                                                                            manufacturing and air cargo activity increased in activity with
     TABLE :                                                               the latter increasing significantly. In 2005, air cargo continued to
     BOEING FORECASTED ANNUAL CARGO GROWTH RATES                            increase while manufacturing slipped slightly.
     FOR YEARS 2005 - 2025
                                                                            gLOBAL MANUFACTURINg AND CARgO
            DOMESTIC CHINA                                      10.8        AIR TONNAgE TRENDS 1999 - 2005
            INTRA - ASIA                                        8.6         60                                                                                                                               2,000,000

                                                                                                                                                                                                             1,800,000
            ASIA - NORTH - AMERICA                              7.1         50
                                                                                 JP Morgan Global Manufacturing PMI




                                                                                                                                                                                                             1,600,000
            EUROPE - ASIA                                       6.9                                                                                                                                          1,400,000




                                                                                                                                                                                  Global Air Cargo Tonnage
                                                                            40
                                                                                                                                                                                                             1,200,000
            EUROPE - SOUTHWEST ASIA                             6.2
                                                                            30                                                                                                                               1,000,000
            WORLD                                               6.                                                                                                                                          800,000
                                                                            20
                                                                                                                                                                                                             600,000
            LATIN AMERICA - N. AMERICA                          5.6
                                                                                                                                                                                                             400,000
                                                                            10
            LATIN AMERICA EUROPE                                5.6                                                                                                                                          200,000

                                                                            0                                                                                                                                0
            EUROPE - NORTH AMERICA                              5.4                                 1999                2000       2001      2002     2003        2004         2005
                                                                                                                      Global Manufacturing          Global Air Cargo Tonnage
            EUROPE - AFRICA                                     5.3
                                                                            By region, cargo share of total passenger airline revenues varies
            INTRA - EUROPE                                      5.0
                                                                            widely but is estimated as:
            EUROPE - MIDDLE EAST                                4.3

            NORTH AMERICA                                       3.8         • 5 percent of revenue for US major carriers
                                                                            • 15 percent of revenue for European major carriers
     Source: Boeing, Inc., World Air Cargo Forecast 2006-2007               • 20 percent to 30+ percent of revenue for Asian major carriers

     CASS USA, a division of the International Air Transport Asso-          Overall, 85 percent of airline revenue comes from passengers and 15
     ciation (IATA), has 78 member airlines that provide annual air         percent from cargo. Approximately 50 percent of air cargo is shipped
     cargo tonnages. This data indicates worldwide air cargo activ-         worldwide in the lower deck of passenger aircraft with the
     ity for the historic six-year period of 1999 to 2005 experienced       remaining shipped in freighter aircraft operators (CargoLux, Polar Air
     an up-tick in tonnage flown between 1999 and 2000, followed            Cargo, etc) and integrated express carriers (DHL, FedEx, and UPS).




26   ACI AIRPORT ECONOMICS SURVEY 2006
Industry clusters and the air freight industry

Regions throughout the US have developed into industry specific       •   Automotive - Equipment & Parts
zones of interrelated or clustered activity. Clustering has become    •   Pharmaceuticals
so intense in certain areas that host regions have become syn-        •   Computers & Computer Components
onymous with particular industries. Detroit, one of the oldest US     •   Diagnostic Equipment
clusters, is associated with the automotive industry; California’s    •   Medical Device/Equipment
Silicon Valley is the information technology cluster; Florida’s I-4   •   Software
corridor is BioTech/Medical clustering; Texas is oil and gas clus-    •   Textiles - Garments
tering; while Seattle is aerospace clustering.                        •   Perishables - Flowers, Fruit, Vegetables & Fish
                                                                      •   Economic perishables - Printed material
“Industry clustering” is not synonymous with geographically close     •   Telecommunications Equipment - Cell Phones, Blackberries
proximity. A cell phone designed in London might contain parts        •   Photographic Film
made in Canada, the US and Sweden and be assembled in China
for sale by a Finnish company. The division of labour is far from     While commodities transported by the air freight industry tend
random. High value operations are performed in advanced nations       to be high in value, relatively lightweight, and time-critical, not
with superior R&D and technical capabilities. Relatively low-         all of these attributes need apply to one shipment. For example,
value, labour-intensive operations are performed in lower cost        several containers of fresh fish will be heavy and bulky; but due
developing nations able to provide literate, skilled workforces       to the perishable nature of the product and its high value, it is
ideally with related industrial experience. Clustered industries’     often necessary to transport fresh fish via air. Due to the time-
supply chains rely heavily on the airfreight industry to connect      sensitivity of their content and high expectations by customers,
their R&D and manufacturing centres around the world, as well         newspapers such as The Wall Street Journal and other printed
as to provide access to consumers.                                    material are commonly shipped via air in spite of being lower in
                                                                      value per pound than most air freight shipments.
The optics industry is characterised by high technology, outsourc-
ing and a global division of labour. Strong external economies and    TABLE 2:
production agglomerations persist. A few areas in the US (New         INDUSTRY CLUSTERS & THE AIR CARGO ROUTES
Mexico, Colorado, Arizona) specialise in optics technology, while     THAT SERVE THEM
lower cost offshore (Puerto Rico) locales specialise in the assem-
bly tasks. Offshore activity in the optics cluster is made possible       Air Cargo Connectivity Routes                 Industy Cluster

by a variety of resources. Communications with offshore sites             Huntsville – Luxemburg                     Aerospace, Automotive
are provided via high speed Internet, information management,
                                                                          San Francisco – Tokyo                       High Tech/Computers
video conferencing and teleconferencing. The airlines transport
personnel and the air freight industry supplies the logistics for         Hong Kong – Columbus                               Textiles

supply chain management. The air freight industry responded to            Nashville – Taipei                          High Tech/Computers
shippers’ information management needs with package tracking
                                                                          Miami – Bogotá                                   Perishables
systems and alternative delivery schedules (deferred service).
                                                                          Houston – Milan - Dubai                          Oil/Energy
Clustered industries using air transport benefit both from increas-       Calgary – Prestwick                              Oil/Energy
ing their speed of inventory movements/stock turns and from
improving their stock availability. These companies’ inventories
often include high-value products with short life cycles, as well     When industry clusters scattered across the globe demand connec-
as time-critical spare parts. Industries that are relatively more     tivity for their supply chains, the air cargo industry meets their trans-
reliant on air transport include:                                     portation needs by establishing scheduled air cargo routes. Table
                                                                      2 identifies existing air cargo routes from North America to other
                                                                      points on the globe, as well as the industries these routes connect.




                                                                                               ACI AIRPORT ECONOMICS SURVEY 2006                  27
     Joining foreign direct investment, venture capital, information        FIgURE :
     and knowledge, innovation has become a critical ingredient for         hISTORIC US PATENT DATA AND hISTORIC
     the success of regions. Continuing with the US example, when           AIR CARgO TONNAgES 990 - 999
     patent statistics are compared with annual air freight tonnage         ALBUQUERQUE MSA
     activity at an airport, correlations arise. Citing just one example,   250                                                                90,000
     in Central New Mexico the high tech industry and the air cargo                                                                            80,000
                                                                            200
     industry both experienced significant growth in the 1990s. US                                                                             70,000
                                                                                                                                               60,000
     Patent data indicates utility patents have grown in the Albuquer-      150
                                                                                                                                               50,000
     que MSA at an average annual rate of 9.6 percent from 1990 to                                                                             40,000
                                                                            100
     1999, a period of robust economic expansion. Total air freight                                                                            30,000

     tonnage at Albuquerque International Sunport increased at an            50                                                                20,000
                                                                                                                                               10,000
     annual rate of 10.7 percent during the same time period. Figure
                                                                              0                                                                0
     1 tracks the number of utility patents and air cargo tonnage for              1990 1991 1992 1993 1994 1995 1996 1997 1998 1999
     Albuquerque International Sunport. Utility patents are issued for                     Total Tons                  Patents

     new inventions. In this analysis, only patents applied for by cor-
     porations were counted, while patents applied for by individuals       Source: Wilbur Smith Associates & US Patents & Trademarks Office
     were excluded.
                                                                            North America
     Correlation analysis provides a measure of direct relationship
     between two separate sets of historic data. In this case, the          As recently as 1999, many North American airport operators and
     measure is historic patent data for the Albuquerque MSA and            their air cargo service partners/tenants fretted that inadequate
     historic air cargo tonnage at Albuquerque International Sunport.       airport capacity could become a constraint on air cargo industry
     The regression analysis reflects the extent of a linear relationship   growth. Airport operators were encouraged to initiate ambitious
     between two data sets. The closer to a value of 1.0, the stronger      expansion programmes to augment on-airport cargo warehouses
     the positive correlation between two variables. When analysing         and ramp parking. Many perceived themselves as the “most likely
     the two data sets, the r-value results in .6140. An r-value be-        next major cargo hub”.
     tween .5 and 1.0 generally indicates a strong positive correlation
     between the two data sets. As a result, it can be credibly estab-      It was a credible concern at the end of a decade in which the US
     lished that innovation in the high tech sector (gauged by patent       economy had “overheated” and many airports had experienced a
     grants) has a positive relationship with air cargo demand.             doubling of cargo volumes. However, the last six years have been an
                                                                            altogether different matter. The downturn may have begun with the
                                                                            “factory recession” of 2000, then worsened by the terrorist attacks
                                                                            (and economic aftershocks) of 9/11/2001. More recently, air cargo
                                                                            growth has been dampened by substantial diversions to trucking
                                                                            caused by a variety of factors – not least of them being unprec-
                                                                            edented fuel costs. Industry consolidation has also had a profound
                                                                            effect on many markets – none more dramatically than Dayton
                                                                            which lost its former Emery Worldwide hub and Cincinnati which
                                                                            lost its former DHL hub when that carrier acquired Airborne Express
                                                                            and consolidated its hubs at Airborne’s former hub in Wilmington,
                                                                            Ohio. As leases expire at secondary facilities around the continent,
                                                                            more airports are being left with surplus cargo space in their cargo
                                                                            terminals as UPS rationalises its facilities needs with former Emery
                                                                            facilities and DHL does the same with former Airborne facilities.
                                                                            In many markets, the “capacity crisis” in cargo facilities has gone
                                                                            from being one of deficits to one of surpluses.




28   ACI AIRPORT ECONOMICS SURVEY 2006
TABLE 3:                                                                As noted in a previous section, air-dependent industry clusters
TOP NORTH AMERICAN AIR CARGO AIRPORTS                                   have also attracted international freighter service to places like
BY ANNUAL TONNAGE – 2005                                                Nashville and more recently Indianapolis, allowing these air-
WORLD CITY (CODE)                                      CARgO
                                                                        ports to join standbys Huntsville, Alabama and Calgary, Canada
RANk                                             (tonnes) percent CHG   among the less obvious alternative international gateways. Also
    1      MEMPHIS, TN (MEM)                   3 598 500          1.2   in Southern California, the all-cargo airport (and former military
    3      ANCHORAGE, AK (ANC)**               2 609 498          9.7
                                                                        base) March Global Port has already attracted the west coast
                                                                        hub operation of DHL, which may provide the leverage to attract
    7      LOS ANGELES, CA (LAX)               1 928 894          1.4
                                                                        transpacific freighters to network with the domestic regional
   10      LOUISVILLE, KY (SDF)                1 814 730          4.3
                                                                        hub – as UPS has done at nearby LA/Ontario.
   12      MIAMI, FL (MIA)                     1 761 926        (1.0)
   14      NEW YORK, NY (JFK)                  1 649 055        (3.3)
   15      CHICAGO, IL (ORD)                   1 547 859        (1.3)   Asia and India
   20      INDIANAPOLIS, IN (IND)              1 082 339          6.8
   21      NEWARK, NJ (EWR)                     957 374         (3.2)   As observed in the Boeing forecasts, the only markets projected
   25      ATLANTA, GA (ATL)                    764 717        (11.2)
                                                                        to grow above the world average are either intra-Asian or inter-
                                                                        continental serving Asia. Symptomatically, discussions of other
   28      DALLAS/FT WORTH AIRPORT, TX (DFW)    720 623         (2.8)
                                                                        regions’ cargo growth are dominated by how that region interacts
   30       OAKLAND, CA (OAK)                   675 227         (0.0)
                                                                        with Asia, particularly China. For other Asian markets, the ques-
   33      SAN FRANCISCO, CA (SFO)              584 926           3.9   tion is whether China will serve more as an engine of regional
   34      PHILADELPHIA, PA (PHL)               558 071         (4.0)   growth or as a predator that ultimately causes manufacturing
   35      ONTARIO, CA (ONT)                    521 853         (4.9)   and supporting services to uproot or divert from other regional
                                                                        markets. Globally with freighter capacity being a finite resource,
Source: Airports Council International                                  decisions to serve new routes anywhere in the world will likely
                                                                        be framed as choices between serving slower-growth markets or
                                                                        double-digit growth markets in Asia.
North America’s main cargo airports (Table 3) include global and
regional hubs for FedEx (Memphis, Indianapolis, Oakland) and            As shown in Table 4, Asia already has seven airports with
UPS (Louisville, DFW, Philadelphia and Ontario), as well as a           more than a million tonnes of annual cargo – three more than
large number of traditional international gateways. Until recently,     Europe and only one fewer than North America. Moreover, while
these airports had been spared the brunt of recent downturns but        the top fifteen in Asia includes four airports with double-digit
with UPS and FedEx ranking #1 and #2 respectively among US              growth, the only double-digit percentage figures to be found on
trucking companies, the diversions to trucking have even affected       the North American and European lists are actually double-digit
volumes at the regional hubs.                                           decreases. Asian air cargo leader and second-ranked cargo air-
                                                                        port in the world, Hong Kong added ten percent growth last year
Notwithstanding some discouraging context, individual pockets           considerably closing the gap with world leader Memphis. Unlike
of relative prosperity do exist. The growth in Asia has fuelled new     the nearly FedEx-only phenomenon that is Memphis, Hong Kong
international freighter service in major international gateways         has a much greater variety of cargo operators and a resultantly
like DFW and Atlanta. Operated by Los Angeles World Airports,           greater distribution of market shares.
the LA-Ontario International Airport located around fifty miles
from LAX will soon break ground on a major new cargo facilities         With airports like Beijing and Guangzhou growing almost twenty
development intended to ease capacity issues at LAX. The airport        percent per annum, it’s likely that additional Chinese airports will
– which already serves as a regional hub for UPS and origin of          exceed one million annual tonnes relatively soon. Both FedEx and
much of UPS’s service to China – typifies a growth trend likely         UPS are developing regional hubs in China. The US/China Bilat-
favouring those North American airports with direct air service         eral Agreement signed in July 2004 allows US carriers to estab-
to/from a booming Asia.                                                 lish cargo hubs in China with no limitations on 3rd, 4th, 5th and




                                                                                            ACI AIRPORT ECONOMICS SURVEY 2006                  29
     7th freedom rights, as well as more liberal change of gauge and        Compared with the rapid growth in the Chinese airports (including
     freedom to enter marketing agreements with any PRC carriers.           Hong Kong), most other Asian airports endured slowed growth
     The bilaterals also gave FedEx and UPS (as well as other carriers)     in 2005. Japanese airports like Tokyo Narita and Osaka actually
     six new weekly frequencies in August 2004 and six more again           incurred negative growth in 2005 – reflective as much of a weak
     in March 2005, then three more each on March 2006. Moreover,           national economy as of diversion of air cargo operations. One of
     China’s national carriers and multiple recent start-up carriers will   the more intriguing markets going forward will be Thailand with
     provide the bedrock of this growth. One complicating factor in         its new gateway airport in Bangkok and the potential initiation of
     US/China Bilaterals has been China’s dissatisfaction with its own      freighter operations by national carrier Thai Airways.
     carriers to exploit the liberalised operating environment in a man-
     ner that extracts benefits comparable to what China perceives          A little jaded, it is often stated that India has great potential – and
     it is conceding to US carriers. Owing to its extraordinary growth      always will. Evaluated against its market size and any number of
     and a domestic market size that exceeds the more mature North          other measurable economic factors, it is almost unthinkable that
     American and European continents, perhaps the most interesting         its largest cargo airport – Mumbai – ranks only #38 in the world.
     near-term development to monitor will be how the air freight           The closest population in size to that of China, India’s largest air-
     industry ultimately develops an intra-China regional hub system        port counted less than one-fourth the annual volume of Shanghai
     that will satisfy the demands of so-called secondary markets like      but also less than three other Chinese airports. India’s express
     Chongqing, Shenyang and Chengdu which sustain far larger local         cargo market has been growing at around twenty-five percent
     markets than better known existing gateways in other countries.        per annum in recent years and both DHL and TNT have pursued
                                                                            aggressive acquisition strategies. Both are developing domestic
                                                                            road-feeder services that while not unlike distribution patterns in
     TABLE 4:                                                               North America, are at least partially also driven by inadequate air
     TOP AIR CARGO AIRPORTS IN ASIA BY ANNUAL TONNAGE - 2005                cargo capacity. India’s airports and the gamut of allied services
                                                                            required to support on-airport cargo operations are widely per-
                                                                            ceived as inadequate. In addition to enhancing cargo operations
     WORLD CITY (CODE)                                     CARgO            at existing Indian airports, greenfield cargo-friendly airports are
     RANk                                            (tonnes) percent CHG
                                                                            being promoted at Mangalore and Hyderabad.
        2     HONG KONG, CN (HKG)                  3 437 050        10.1
        4     TOKYO, JP (NRT)                      2 290 346        (3.5)
        5     SEOUL, KR (ICN)                      2 149 937          0.8
        8     SHANGHAI, CN (PVG)                   1 856 328        13.7
        9     SINGAPORE, SG (SIN)                  1 854 610          3.3
       13     TAIPEI, TW (TPE)                     1 705 320          0.3
       19     BANGKOK, TH (BKK)                    1 140 836          7.8
       22     OSAKA, JP (KIX)                        869 202        (0.7)
       23     TOKYO, JP (HND)                        799 062          3.2
       24     BEIJING, CN (PEK)                      782 066        17.0
       26     GUANGZHOU, CN (CAN)                    750 552        18.7
       31     KUALA LUMPUR, MY (KUL)                 655 944          0.1
       37     SHENZHEN, CN (SZX)                     463 763          9.6
       38     MUMBAI, IN (BOM)                       434 316          8.8
       39     MANILA, PH (MNL)                       412 162        (2.6)




30   ACI AIRPORT ECONOMICS SURVEY 2006
Europe

Europe relies heavily on air cargo for commodities transported        As evidenced in Table 5, Europe’s air cargo is heavily concen-
from/to Asia and North America but like the latter, is susceptible    trated around a handful of airports with only four exceeding one
to diversions from air to truck for intra-continental cargo trans-    million annual tonnes. By comparison, eight US airports exceed
port – especially for deferred deliveries. Manufacturers transport    that mark. Only Frankfurt ranks among the world’s top ten – aided
goods to factories both in Asia and North America, while the oil      greatly by the hub operations of Lufthansa, which routinely
and gas industry relies on air connectivity to the Middle East, as    ranks among leaders in freight-tonne-kilometers. Paris (CDG)
well as Western Canada. A growing economy in Eastern Europe           ranks second – in no small part due to its regional hub for FedEx.
has somewhat bolstered growth, however. Perishables, such as          At least among Europe’s top ten, the cargo rankings are relatively
cut flowers and vegetables, are transported to Europe from Africa     unsurprising. Luxembourg’s high ranking in the #5 slot is attri-
– notably Kenya and Ethiopia. However because of the lack of de-      butable to national cargo carrier Cargolux. A variety of European
velopment in much of Africa and specifically inadequate demand        airports have endeavored to establish themselves as alternative
for consumer goods and other finished products, northbound            gateways, including World #32 and UPS European hub Cologne.
flights from Africa are often at capacity but southbound flights
may be half-filled (or worse). Consequently, triangulated services    Rising European cargo airports include even more German air-
are often utilised incorporating stops in the Middle East. In ad-     ports, including Frankfurt-Hahn (World ranking #75) and future
dition to cut flowers, fruits and vegetables, fish are commonly       DHL hub Leipzig/Halle, which ranked only #309 in the world in
air freighted to Europe from Africa. Commensurate with the well-      2005 but will soon become a major presence on the continent.
developed region it is, Europe’s industries commonly utilising air    Also surging is Munich, which features prominently as Lufthansa’s
cargo services include automotive, aerospace, computers, luxury       second hub. All of these alternative hubs are based as much on
items, medical equipment and perishable agricultural products         truck access to major markets as airfield resources. European
                                                                      carriers have long used so-called “truck flights” operating under
TABLE 5:                                                              their own flight number as a means of supplementing their route
TOP AIR CARGO AIRPORTS IN EUROPE                                      networks and adding scheduling flexibility. These operations have
BY ANNUAL TONNAGE - 2005                                              proven particularly popular as a relatively low-risk means of serv-
WORLD CITY (CODE)                                    CARgO
                                                                      ing Central and Eastern markets that may have been marginal
RANk                                           (tonnes) percent CHG   propositions for scheduled aircraft operations.
   6     FRANKFURT, DE (FRA)                1 963 141           6.7
  11     PARIS, FR (CDG)                    1 770 940           8.2
  16     AMSTERDAM, NL (AMS)                1 495 918           2.0
  17     LONDON, GB (LHR)                   1 389 591         (1.6)
  27     LUXEMBOURG, LU (LUX)                 742 758           4.2
  29     BRUSSELS, BE (BRU)                   704 569           6.0
  32     COLOGNE, DE (CGN)                    643 653           4.6
  42     MILAN, IT (MXP)                      383 957           6.3
  44     MADRID, ES (MAD)                     365 444         (3.1)
  48     ZURICH, CH (ZRH)                     348 596           2.5
  53     LIEGE, BE (LGG)                      325 713        (14.8)
  58     EAST MIDLANDS, GB (EMA)              296 996           5.1




                                                                                          ACI AIRPORT ECONOMICS SURVEY 2006                 3
     The Middle East and Africa

     Any discussion of growth in the Middle East must start with the        a significant tech-stop for operations between Asia and Europe.
     fact that the doubling of oil prices in recent years has clearly       Already the centre of the UAE’s energy industry and its political
     provided a boon to oil-exporting countries, which feature promi-       capitol, Abu Dhabi also has the hub operation of Etihad to lever-
     nently in this region. It is noteworthy that this economic growth      age. To that end, the airport is in the midst of an ambitious expan-
     has largely persisted in spite of a range of regional disturbances     sion program intended to provide adequate facilities and services
     that includes declared wars in Afghanistan and Iraq, the conflict      to command a greater role in the global cargo arena.
     in Lebanon and ongoing concerns about Iran that might spell con-
     tagion in other regions. As has been its trade history, the Middle     Africa remains the world’s most challenging regional cargo devel-
     East’s main air cargo trading partner is Europe (46 percent) fol-      opment prospect. It is common to compare Africa’s role to Europe
     lowed by Asia (29 percent) and North America (10 percent). Asia        with that of Latin America and North America. Both Africa and
     is (by far) the fastest-growing partner, having raised its market      Latin America provide contra-seasonal cut flowers and other per-
     share from an estimated 23 percent only two years earlier.             ishables to their northern trading partners and have substantial
                                                                            imbalances in favor of northbound tonnages. However in terms
     TABLE 6:                                                               of air cargo demand, it is telling that Latin America has twelve
     TOP AIR CARGO AIRPORTS IN AFRICA & THE MIDDLE EAST                     airports with more than 100,000 annual metric tonnes of air cargo
     BY ANNUAL TONNAGE – 2005                                               (a relatively modest level reached annually by around 50 North
     WORLD CITY (CODE)                                     CARgO
                                                                            American airports) but Africa has only Johannesburg, Cairo, Nai-
     RANk                                            (tonnes) percent CHG   robi and Luanda with Lagos falling just below.
       18     DUBAI, AE (DXB)                     1 314 904         12.5
                                                                            Johannesburg benefits from a relatively strong local economy
       36    SHARJAH, AE (SHJ)                      505 392         16.1
                                                                            and national carrier, as well as a geographic distance that makes
       52     BAHRAIN, BH (BAH)                     334 831         10.8
                                                                            air transport compulsory for most perishables exports to Europe.
       54     TEL-AVIV, IL (TLV)                    314 810         (7.9)
                                                                            Cairo has been a traditional transit point for cargo traversing
       61     JOHANNESBURG, ZA (JNB)                280 095          1.9    Africa and parts of the Middle East for Europe. Nairobi has a
       67     ISTANBUL, TR (IST)                    261 301         (2.0)   relatively strong origin-and-destination air cargo demand and
       73     CAIRO, EG (CAI)                       232 548          6.8    has leveraged this scale to make Nairobi one of Africa’s few air
       82     JEDDAH, SA (JED)                      221 347          0.5    cargo gateways within the continent. Given its oil industry and
       85     ABU DHABI, AE (AUH)                   215 283         31.5    other natural resources, cargo carriers have often demonstrated
                                                                            an interest in serving the market with DHL having even opened a
       87     NAIROBI, KE (NBO)                     203 210         12.0
                                                                            regional mini-hub from Lagos. Still, the Nigerian airport’s growth is
                                                                            constrained by that country’s earned reputation as an exceedingly
     Almost four times larger than the next largest cargo airport in        challenging locale in which to do business.
     the combined region, Dubai is the beneficiary of a stable, oil-rich
     home market, a tremendous long-range vision that began posi-           Unfortunately for many African economies, the obstacles are far
     tioning the airport as a gateway almost twenty years ahead of its      more difficult than merely extending a runway or building addi-
     competition and the remarkably consistent management (particu-         tional cargo warehouses. It defies belief that seemingly obvious
     larly in cargo) of its hub carrier Emirates. All of these strengths    breadbasket markets like Uganda and Ghana can render only
     combined have made it the standard-bearer for the region and al-       around 50,000 metric tonnes of cargo per year through their
     lowed Dubai to not only be a gateway to the Middle East but also       flagship airports in Entebbe and Accra but constraints to further
     an important access point for inter-regional flows between Asia,       exports include roadway issues, inadequate refrigeration chains
     Europe and East Africa in particular. Not surprisingly, Dubai’s        and general deficits in allied services. By comparison, simply
     admirers include other airports within the United Arab Emirates        building/improving facilities would be relatively simple.
     – including Sharjah, which has positioned itself over the years as




32   ACI AIRPORT ECONOMICS SURVEY 2006
Latin America

Air imports into North America from South and Central America,              Given its dependence on a faltering US, Latin America’s major
including the Caribbean, are dominated by perishables, such as              cargo airports (Table 7) have had anaemic growth rates in recent
cut flowers, vegetables and fish; textiles/footwear; transporta-            years. Its highest ranking cargo airport – Sao Paulo, Brazil – ranks
tion equipment, including aerospace and automotive; as well as              only #36 in the world. Latin America’s second largest cargo airport,
electronics. Exports to Latin America include electronics, optical          Mexico City, has benefited greatly from federal regulations that
equipment, medical devices, aerospace equipment and pharma-                 for years kept foreign carriers from diverting significant volumes
ceuticals. Northbound traffic between 1999 and 2004 grew at a               of operations to Mexican industrial magnets Guadalajara and
steady CAGR (cumulative annual growth rate) of 6.1 percent annu-            Monterrey. Third-ranked in the region, Santiago benefits greatly
ally while southbound cargo traffic grew at a much lower rate of 2.9        from being the hub airport of one of Latin America’s best-run car-
percent.1 Air cargo traffic between South and Central America, and          riers, LanChile. As noted much earlier, San Juan, Puerto Rico has
the Caribbean basin, and Europe is comprised of similar north-south         served as a magnet for off-shore value-added operations serving
commodity flows. Southbound tonnages between Latin America                  industrial clusters in larger economies. Among Central American
and Europe are slightly less than southbound traffic between North          airports, Panama’s Tocumen ranks highest (#11 in the region) and
America and Latin America. Northbound traffic from Latin America            this is largely attributable to its hub status for DHL, as well as
to Europe, however, is roughly one-third of northbound traffic be-          a traditional utilization as a gateway between North and South
tween North America and Latin America.                                      America – historically for Challenge Air Cargo, among others.
                                                                            This utility keeps Tocumen ranked higher than other area airports
Rising fuel costs have also affected Latin American air cargo               serving much more substantial origin-and-destination markets,
activity. Fish caught in the southern Caribbean basin were com-             such as perishables exporting Costa Rica (San Jose), Guatemala
monly flown on aircraft but increased fuel costs have prompted              and even El Salvador (San Salvador).
shippers to have processors freeze them and transport on ships.
Colombian flower exporters already operating on thin profit mar-
gins are also feeling the increased fuel costs and contemplating
alternatives to save on transport costs.

TABLE 7:
TOP AIR CARGO AIRPORTS IN LATIN AMERICA
BY ANNUAL TONNAGE - 2005

WORLD                   CITY (CODE)                         CARgO
RANk                                                  (tonnes) percent hg

   36     SAO PAULO, BR (GRU)                         475 182      8.3
   43     MEXICO CITY, MX (MEX)                       380 397      1.1
   62     SANTIAGO, CL (SCL)                          279 426      3.9
   71     SAN JUAN, PR (SJU)                          243 836      0.3
   94     BUENOS AIRES, AR (EZE)                      177 358      1.4
   95     LIMA, PE (LIM)                              177 064      3.2
   97     CAMPINAS, BR (VCP)                          172 208     (18.8)
  111     QUITO, EC (UIO)                             130 985      2.3
  113     MANAUS, BR (MAO)                            120 488      0.0
  121     RIO DE JANEIRO, BR (GIG)                    112 200     (7.1)
  126     PANAMA, PA (PTY)                            107 233      7.0
  127     GUADALAJARA, MX (GDL)                       104 222      0.7

1 Air Cargo Americas Presentation, Colography Group, March 2006



                                                                                                ACI AIRPORT ECONOMICS SURVEY 2006                  33
     Post-Script                                                          About the authors:

     Airports Council International recently published its regional       Michael Webber is the President of Webber Air Cargo, Inc. located
     freight totals through September 2006, providing an opportunity      in the Kansas City metro area. His principal client base is comprised
     to reflect on more recent performances in markets reviewed in the    of airport operators and civil aviation authorities but has also in-
     preceding sections. Notably, the Middle East has continued its       cluded airlines. He has completed projects throughout North Amer-
     surge recording a year-to-date increase of 11.7 percent even as      ica, as well as Latin America, Asia, Africa and the Middle East.
     hostilities in the region have continued relatively unabated. En-    He can be reached at WebberAirCargo@aol.com
     couragingly, Africa has recorded a 12.3 percent increase – albeit
     from the smallest tonnage base in the sample. Asia-Pacific has       Mike Maynard is an Aviation Project Manager with Wilbur Smith
     accrued a 6.3 percent increase and Europe a 4.9 percent increase     Associates and is based in Cincinnati. He has been an airport
     in total reported cargo by ACI’s members. Falling below the ACI      consultant for over 12 years and has experience in airport economics,
     World Average of 4.0 percent growth year-to-date, North America      airport system planning, airport site selection, air cargo, and as an
     has amassed an annual increase of 0.4 percent and Latin Amer-        airline planning analyst with DHL Worldwide Express. Maynard
     ica has actually incurred a net decrease of 2.5 percent. While it    has a Master of Arts degree in Geography from Miami University
     is tempting to take encouragement from a statistic noting that       (Ohio) and a Bachelor of Arts degree in Geography from Valparaiso
     North America experienced a humble 2.0 percent increase in the       University. His comments and viewpoints have appeared in: Air Cargo
     month of September 2006 (compared with the same individual           World, Traffic World, Airport Business Magazine and other industry
     month in 2005), North America’s slight gain was likely as much a     publications. He can be reached at mmaynard@wilbursmith.com.
     referendum on an even weaker performance in September 2005.

     While trucking has always been an integral complement to the
     air cargo industry, it appears that for the more mature North
     American and European markets, trucks will likely be exploited
     to the maximum extent possible, while new aircraft capacity is
     more likely to be dedicated to serving routes (such as transatlan-
     tic and transpacific) that can not be served effectively by other
     modes. European and North American airports should likely be
     chasing Asia service whenever the business case can be made.
     Latin American and African airport operators should likely strive
     toward enhancing their “airport product” – paying as much at-
     tention to allied services as to bricks-and-mortar. On a selective
     basis, the construction equipment that already has become part
     of the landscape of major cities in Asia and the Middle East may
     be needed at the local airports.




34   ACI AIRPORT ECONOMICS SURVEY 2006
AIRPORT BENChMARkINg TO MAXIMIzE EFFICIENCY

ACI and its worldwide membership are committed to increasing           PART I: Airport benchmarking overview
airport efficiency and cost-effectiveness, while ensuring high-level
customer service quality This ACI overview of airport industry         An economic benchmark is a standard by which business perfor-
benchmarking studies reviews the variety of products developed         mance is measured. It is used to compare productivity and effi-
to assist airports in maximising their efficiency. Peter F Drucker,    ciency, evaluate specific processes, policies and strategies and to
the world-renowned business strategist, built his organisational       assess overall organisational performance. Organisations need
theories on one overriding management principle: “What you cannot      goals and targets for their management, their stakeholders and
measure, you cannot manage.” This is the basis of modern business      their employees: benchmarks are tools which show where the
management and performance benchmarking.                               organisation is meeting its objectives, and where it is not.

Airports clearly recognise the value of benchmarking. In a globally    On a macro-economic level, some 650 airports contribute annually
competitive environment, benchmarking is a widely accepted             to the ACI Economic Survey, an exercise that collates and analyses
means to analyse business performance against objectives and           essential data on airport financial performance by region. Many of
to evaluate achievements relative to peer performance. Airports        these same airports are engaged in regional benchmarking stud-
worldwide have adopted financial and quality of service bench-         ies which involve detailed economic comparisons. Benchmarking
marking as a management tool to enhance efficiency, improve ser-       can be undertaken at varying levels of complexity: the ACI Europe
vice and drive down costs. This document provides background on        Region’s Key Airport Performance Indicators measures 30 param-
airport benchmarking, including results of a recent questionnaire      eters; the ACI-North America Airport Initiative on Measurement
completed by ACI members, and describes a number of initiatives        (AIM) compares performance across 52 variables; the ACI world-
underway in ACI’s regions.                                             wide Airport Service Quality (ASQ) programme rates customer
                                                                       satisfaction on 32 service parameters. In addition, many airports
                                                                       use internal benchmarking to monitor company, departmental and
                                                                       employee performance against strategic targets.

                                                                       In a November 2005 paper entitled Airport Benchmarking:
                                                                       a review of the current situation, Professor Anne Graham (PhD), of
                                                                       the University of Westminster, London, UK, provided an excellent
                                                                       brief on the reasons for the increasing interest in airport bench-
                                                                       marking. Some of her key points are:

                                                                       • Airport industry benchmarking has come into acceptance in
                                                                         the last 15 years, particularly as many airports moved from
                                                                         direct public sector control to autonomous authorities.
                                                                       • Aviation industry liberalisation, commercialisation and glo-
                                                                         balisation have increased airport business growth, complexity
                                                                         and competitiveness, driving the need for performance indica-
                                                                         tors.
                                                                       • Many airports have adopted an aggressive business philoso-
                                                                         phy and practices to maximize airport service and efficiency.
                                                                       • Airport operators are using continuous performance bench-
                                                                         marking internally and against other airports to gain insight
                                                                         into their operations to improve efficiency.




                                                                                           ACI AIRPORT ECONOMICS SURVEY 2006                 35
     A. Airport benchmarking objectives                                      B. Basic benchmarking structures
     In the 1990’s, with evolving business management theories and           There are two general types of benchmarking: partial, assessing
     approaches (management-by-objectives, total quality management,         and comparing individual processes/functions/services; and, holis-
     re-engineering; and performance management) and heightened              tic, creating a systematic approach for defining and assessing a
     market competition, came the need for businesses and organisa-          critical set of processes/functions/services that, when taken to-
     tions to be more strategically driven and efficient. Since corporate    gether, indicate the relative performance of the total organisation
     culture and performance are inextricably linked, management teams
     were driven to reform their organisation’s culture and practices to     Within these general categories, as mentioned above, there are
     meet these new challenges. Benchmarking became a powerful               two predominant forms of benchmarking: internal, self-bench-
     management tool to assist in identifying new approaches for in-         marking within an organisation which compares internal perfor-
     creasing efficiency and for continuously monitoring ongoing stra-       mance of processes/functions/services over time (time-series),
     tegic success. Applied properly, benchmarking can help reinforce        and external, which compares performance across organisations
     an organisation’s vision, mission, and strategies, as well as help      with peers or in other industries (cross-sectional) at a single point
     create a new corporate esprit de corps by building employee focus,      in time and through time.
     competencies and morale.
                                                                             The five basic steps of benchmarking are:
     Airport benchmarking is a component of an airport’s strategic plan-
     ning process. It is a statistical and accounting process that is used   (1) decide what to benchmark, bearing in mind that the parameters
     to monitor and compare airport economic, operational and service            must lend themselves to quantification;
     performance. Benchmarking assesses the implementation of an             (2) decide against whom to benchmark;
     airport’s strategic planning objectives to measure the performance      (3) analyse data and identify key performance differentials;
     of discrete airport functions and identifies best practices for pos-    (4) set new performance goals;
     sible incorporation into the organisation’s procedures to increase      (5) monitor progress and communicate results to decision makers.
     efficiency, quality and customer satisfaction. Thus benchmarking
     links day-to-day operations and management with an airport’s            C. Matrix of key airport benchmarks
     short and long-term strategic initiatives and action plans.             Table 1 presents a matrix of many of the key airport benchmark-
                                                                             ing areas produced for the North American AIM Benchmarking
     It is important to keep the over-arching purposes in perspective:       survey. This matrix groups measurable parameters according to
                                                                             area of airport activity: physical facilities; airfield, aircraft, termi-
     • Benchmarking is about management and organisational                   nal passenger and landside transportation processing efficiency;
       change first, measurement and technology second.                      airfield aeronautical charges; terminal aeronautical related charges;
     • Benchmarking provides a diagnostic tool to check whether all          terminal non-aeronautical concession revenues; landside non-
       systems are in alignment and working properly.                        aeronautical revenues; operating and maintenance costs; other
     • Self-benchmarking is an excellent management tool to moni-            financial including liquidity, debt, profits, asset and capital expen-
       tor performance improvements.                                         ditures; quality of community airline service; and quality of airport
     • External benchmarking is an effective way to identify best            facility and services as measured by passenger satisfaction. This
       practices to see if they can be incorporated into an organi-          particular survey is among the most ambitious and complex in the
       sation and to identify faulty practices to see if they can be         marketplace and requires considerable resources to implement.
       eliminated.                                                           Forty-five airports have committed to participating in the AIM
     • Benchmarking, in looking to create a continuous perfor-               survey, despite this resource requirement.
       mance improvement process, can be a tool to link strategic
       goals, employee involvement and productivity. (Some airport
       operators have linked employee bonuses to quantifiable per-
       formance targets.)




36   ACI AIRPORT ECONOMICS SURVEY 2006
TABLE : MATRIX OF KEY AIRPORT PERFORMANCE BENCHMARKING AREAS

Traffic Activity                                             Airfield Aircraft, Terminal Passenger, and Landside Trans-
• total passengers (originating and connecting)              portation Processing Efficiency (engineering measure of
• total cargo (mail and freight)                             throughput and level of service)
• total operations (commercial, commuter, GA and military)   • runway, taxiway, airfield design, layout and aircraft processing
                                                                efficiency
Physical Facilities                                          • airfield terminal area (ramp and gate areas) aircraft processing
• number of airports                                            efficiency
• land area, runways, taxiways, apron                        • terminal passenger flows and processing efficiency
• terminals, concourses, gates                               • terminal curb and landside processing efficiency
• ticket counter, security, and baggage
• parking spaces

Aeronautical Charges – Airfield                              Aeronautical Related Charges – Terminal
• landing & take-off fees                                    • ticket counter space
• aircraft apron, parking and gate fees                      • boarding gates and loading bridges
• aircraft environmental fees                                • administrative office space
• aircraft fuelling fees and other ground handling fees      • flight kitchens and services
                                                             • baggage processing/handling
                                                             • passenger lounges
                                                             • FIS, BIDS and CUTE fees

Non-Aeronautical Concession Revenues – Terminal              Non-Aeronautical Concession Revenues – Landside
• retail/specialty retail                                    • parking
• food/beverage                                              • rental cars
• news/gifts                                                 • taxis, buses, limos
• duty free/tax free                                         • rail and train stations
• advertising                                                • other commercial vehicles
• hotels                                                     • hotels, conference centres, office buildings
                                                             • shopping centres

Operating and Maintenance Costs                              Other Financial
• personnel costs (salaries & benefits)                      • other non-operating revenues
• soft costs/outsourcing                                     • cash flow and liquidity
• supplies and materials                                     • debt (bonds and loans)
• repairs and maintenance                                    • return on equity and assets
• communications and utilities costs                         • EBITA and net profit
• law enforcement and fire fighting costs                    • capital expenditures and costs (actual and projected)
• other operating costs

Quality of Community Airline Service                         Quality of Airport Facilities and Services (passenger satisfaction)
• number of airlines                                         • quality of experience coming to airport
• airline routes and frequencies                             • quality of passenger processing (check-in, gate, customs and
• aircraft types and fleet mix                                 immigration and security)
• airline competition and airfares                           • quality of airport commercial services
                                                             • quality of airport physical facilities




                                                                                 ACI AIRPORT ECONOMICS SURVEY 2006                 37
     D. Airport financial transparency                                     Another important ICAO policy is the cost basis for airport charges as
     Since virtually all airports are owned by or have evolved from na-    presented in Section 21 of ICAO Doc 9082/6 entitled “ICAO’s Policies
     tional or local governmental ownership, they have always been         for Airports and Air Navigation Services” (Sixth Edition – 2001):
     subject to a great deal of financial analysis, reporting and dis-
     closure requirements. These requirements are amplified by the            21. The Council considers that as a general principle it is de-
     need to provide clear financial information to the rating agencies,      sirable, where an airport is provided for international use, that
     investment banks and investors to access capital markets for air-        the users shall ultimately bear their full and fair share of the
     port investment funds.                                                   cost of providing the airport. It is therefore important that air-
                                                                              ports maintain accounts which provide information adequate
     International policies, bi-lateral agreements and national regu-         for the needs of both airports and users and that the facilities
     lations provide the framework for establishing fundamental air           and services related to airport charges be identified as pre-
     service policies and rules governing air transport access, compe-        cisely as possible. In determining and allocating the total cost
     tition and economics. The International Civil Aeronautical Organi-       to be met by charges on international air services, the list in
     zation (ICAO), the United Nation’s body responsible for promoting        Appendix 1 may serve as a general guide to the facilities and
     and regulating international aviation, promulgates international         services (including satellite services) to be taken into account.
     guidelines on airport and air navigation services operations and         Airports should maintain accounts that provide a satisfactory
     charges. ICAO recommends the following seven objectives for              basis for determining and allocating the costs to be recovered,
     the economic regulation of airports and air navigation services:         should publish their financial statements on a regular basis
                                                                              and should provide adequate financial information to users in
     • ensure non-discrimination in the application of charges;               consultations. Moreover, the Council recommends that States
     • ensure that there is no overcharging, other anti-competitive           consider the application, where appropriate, of internationally
       practices, or abuse of dominant position;                              accepted accounting standards for airports.
     • ensure transparency, including the availability and presenta-
       tion of all financial data required to determine the basis for      National governments through their departments of transporta-
       charges;                                                            tion, civil aeronautical authorities, and competition and consumer
     • assess and encourage efficiency and efficacy in the operation       commissions generally have their own economic non-discrimina-
       of service providers;                                               tion, financial transparency and pro-competitive policies to en-
     • establish and review standards, quality, and level of services      courage airport economic efficiency and fair practices. In the US,
       provided;                                                           there are legislative policy, judicial rulings and DOT and FAA rules,
     • monitor and encourage investments to meet future demand;            regulations and guidance governing airport economic policy and
     • ensure that user views are adequately taken into account.           procedures. In fact, the FAA has grant assurances that airports
                                                                           receiving Airport Improvement Program (AIP) funds must comply
                                                                           with (including economic non-discrimination to aeronautical us-
                                                                           ers and suppliers) FBO non-exclusivity, the maintenance of a fee
                                                                           and rental structure that will make the airport as self-sustaining
                                                                           as possible, the requirement that all revenues generated be used
                                                                           for the operating and capital costs of the airport, preparation of
                                                                           competition plans, etc. Also, the FAA requires all AIP grant re-
                                                                           cipients to file detailed annual financial reports which are main-
                                                                           tained in a publicly available database.




38   ACI AIRPORT ECONOMICS SURVEY 2006
In the UK, the Civil Aviation Authority and the Competition Com-       Airports as business entities must prepare comprehensive annual
mission monitor and fix airport economic policy and rates, with a      financial reports and independent audits to conform to enterprise
five-year cycle for setting and reviewing rates and charges. The       financial reporting and disclosure requirements. Also, when ac-
UK was among the first nations to link airport charges to an infla-    cessing capital markets, airports must prepare financial feasibility
tion-based structure (Retail Price Index (RPI) plus or minus x, as     studies to support their bond offering statements and they must
determined by the regulator.                                           be rated by rating firms to indicate their creditworthiness.

In Australia the regulatory agencies are the Transport Department,     Another example of rigorous airport financial disclosure and fi-
the Australian Competition and Consumer Commission (ACCC),             nancial reporting is the US, where most commercial airports are
and the Productivity Commission. The ACCC has been monitor-            owned and operated by local governments or governmentally
ing airports since the privatisation of Australian airports began      formed authorities. Airports have to report financials to the FAA,
in 1997. The ACCC’s original role involved administering price         the Securities and Exchange Commission (SEC), the Municipal
caps, price monitoring and quality of service monitoring (QSM) for     Securities Rulemaking Board (MSRB), banks, investors, boards of
Adelaide, Brisbane, Canberra, Darwin, Melbourne, Perth and Syd-        directors, airlines and the public. The financial accounting must
ney airports. The ACCC’s current role involves monitoring airport      conform to generally accepted accounting principles (GAP) and
prices, costs and profits relative to aeronautical and aeronautical-   the Government Accounting Standards Board’s (GASB) and the
related services, and monitoring airport quality of service. Quality   Financial Accounting Standards Board’s (FASB) guidelines. Also,
of service monitoring, along with airport financial reporting and      airport economic performance and financials are monitored on an
monitoring, was introduced to increase the transparency of air-        ad hoc basis by the US Government Accountability Office (GAO),
port performance. QSM is intended to discourage airports from          the Department of Transportation Inspector General’s Office (DOT
providing unsatisfactory service standards, to provide information     IG) and the Congressional Budget Office (CBO).
to airport users that will assist them in their commercial negotia-
tions with airports and to assist the government in addressing         Fully privatised, publicly traded airport companies (e.g., BAA plc.)
public interest matters relating to the regulation of airports.        and partially privatised airports (e.g., Vienna International Airport)
                                                                       must provide financial reporting to their stock markets and share-
The financial accounts reporting provisions require core-regulat-      holders. They must also conform to their national legislation for
ed airports to provide the ACCC with annual financial accounts,        public and private companies and the rules and regulations of
including consolidated accounts and financial statements (i.e.,        their financial regulatory agencies.
profit and loss statement, balance sheet and statement of cash
flows), in accordance with Australian Accounting Standards             In short, airports worldwide are subject to a large number of fi-
Board’s rules. In addition, other supporting information, such as      nancial reporting requirements to governmental transportation
statements on accounting policies, and disaggregations between         departments and regulatory agencies, to investment banks and
aeronautical and non-aeronautical costs are required. In their         rating agencies when raising investment capital, to the airlines
analysis, the ACCC uses the financial data to generate economic        during rates and charges consultations and negotiations, and to
performance indicators for the seven airports covering aeronauti-      the public at large in annual reports and financial statements.
cal prices, aeronautical revenue, costs, profits, operating margins,
rates of return on equity and assets. The economic and QSM in-
dicators are used in a regulatory framework to assess the relative
efficiency and performance of the airports to assure fair pricing
and good service quality.




                                                                                            ACI AIRPORT ECONOMICS SURVEY 2006                   39
     PART II: SURVEY 2006, ACI WORLD
     ECONOMICS STANDING COMMITTEE

     In January 2006, ACI conducted a survey of the members of the            Comments:
     ACI World Economics Standing Committee, which is made up                 • Planning is everything. Capital plans are now revised twice
     of leading airport economists and financial officers from around           each year, because of escalating construction costs, espe-
     the world. The intention of the survey was to learn more about             cially after natural disasters.
     airport strategic planning, benchmarking and financial practices         • Provide competitive air fares to passengers and more route
     and perspectives. Twelve major commercial airport organisations            choices.
     participated: Aena Spanish Airports Authority for Madrid Interna-        • Goal of achieving a five-year commercial service agreement
     tional Airport (MAD); BAA plc for Heathrow International Airport           with the airlines on user charges and service standards.
     (LHR), Gatwick (LGW) and the five other UK-based BAA-owned               • Our strategy stresses just-in-time delivery of capital improve-
     airports; Dubai International Airport (DXB); FRAPORT for Frankfurt         ments and encourages benchmarking against best practices.
     International Airport (FRA); MWAA for Dulles International (IAD)           We have airline marketing services targets and stress en-
     and Reagan Washington National Airports (DCA); Orlando Inter-              hanced stakeholder relationships.
     national Airport (MCO); San Francisco International Airport (SFO);
     Singapore’s Changi International Airport (SIN); Sydney Interna-          B. Airport financial reporting
     tional Airport (SYD); Tokyo Narita International Airport (NRT);          All twelve airports prepare comprehensive annual financial
     Toronto International Airport (YYZ); and Vancouver International         reports and conduct annual independent financial audits. Nine of
     Airport (YVR).                                                           the twelve have current bond ratings and nine provide financial
                                                                              reports to their national governments. Approximately half also
     The airport companies involved are not specifically identified in        provide financial reports to competition or ‘rates and charges’
     each of the anonymous survey comments provided hereafter.                boards and to local governments. The respondents indicated that
                                                                              they report to financial analysts, bond rating agencies and clearing
     The findings of the survey by major section are as follows:              houses, and national stock markets.

     A. Airport strategic planning and mission statements                     When asked about “other financial reporting”, five airports
     All twelve of the airport organisations have strategic plans and         responded with additional comments:
     eleven of them have clearly defined mission statements. All
     twelve have strategic planning goals and objectives to optimise          • Stock market financial reporting is required by the financial
     operational and financial efficiencies, and tenant and customer            regulator.
     services. In addition, most have targets to expand air services          • Reporting to financial analysts and bond rating firms (response
     and capital development goals in order to meet demand and                  from two airports).
     airline and stakeholder interests. Half of the respondents have          • Financial/budgeting reporting to the airlines on a quarterly
     goals and objectives to reduce aeronautical charges and cost per           basis.
     enplanement.                                                             • Federal Aviation Administration (FAA) financial reports, and
                                                                                US Security Exchange Commission (SEC) and Municipal Secu-
     When asked to indicate any other key tenets of strategic planning          rities Rule Making Board (MSRB) reporting.
     efforts that are aimed at improving financial and operational effi-
     ciencies, airline service and airport/airline relations, four airports
     responded with additional detail.




40   ACI AIRPORT ECONOMICS SURVEY 2006
C. Participation in airport benchmarking studies                       E. Overall financial perspective
Respondents were asked if their airport participates in airport        When asked to characterise their airports’ general financial oper-
performance benchmarking studies, and if so how many a year,           ation, the respondents stressed their commitment to operational
and what types of studies. All twelve indicated they participate       efficiency, to cost-related fees and charges and to non-discrimi-
in benchmarking studies: seven indicated 5 or more studies a           natory and transparent relationships with user groups.
year, two indicated up to 4/year, and three indicated up to 2/year.
All twelve also indicated their organisation conducts regular in-      When asked to describe the general financial operation and fairness
ternal performance benchmarking studies. They indicated the            of charges, several airports responded with additional comments:
following types of studies: by agreement with a general group
of airports, by agreement with peer airports, at the national level    • All fees/charges are approved by a local authority after having
(Canadian Airports Council airports, German airports, etc.), at the      been discussed in industry user committee.
global regional level, at the local regional level and at the world-   • Charges are based on an old agreement that subsidises air-
wide level. The following studies were indicated: ACI/IATA’s AE-         line costs with non-aeronautical revenues (residual agree-
TRA (now named ASQ), ACI Europe’s Airport Economic Indicators,           ment that expires in 2008, signed in 1978); therefore, it is too
ACI-NA’s Macro and AIM Benchmarking Studies, ATRS’s Airport              generous to the airlines in rewarding their inefficient business
Benchmarking Study, URS’ Airport Retail Benchmarking Study and           strategies.
national regulatory benchmarking studies as in Australia.              • The airport produces a table comparing aeronautical charges
                                                                         from various airports from around the world.
                                                                       • The airport is entitled to earn a fair return on its investment
D. Airport financial transparency                                        and its charges are justifiable based on its efficient operating
Considering their financial reporting and disclosure require-            costs, value of assets and business risk. Charges compare
ments, the respondents were asked to rate their airports’ financial      favourably with domestic charges and international charges.
transparency on a five-value scale going from “not transparent” to     • Airlines benefit from growing non-aeronautical revenues. The
“very transparent”. Nine of the twelve, rated it “very transparent”,     company has an excellent bond rating and the resulting low
the highest rating, and three rated it “above average”, the next         cost of debt is passed on to the airlines.
highest rating.

When asked about “other measures your airport takes to promote
financial transparency”, five airports responded with additional
comments:

• Annual publication of 10-year capital programme and traffic
  forecasts each year, and maintains a subscriber extranet site
  for the airlines containing detailed cash and revenue data.
• On-going consultative process with the airlines.
• Annual report and perspective documents that accompany
  bond issues.
• Post monthly financials, rates and charges, and statistics on
  the internet.
• Executive compensation disclosure.




                                                                                           ACI AIRPORT ECONOMICS SURVEY 2006                 4
           ACI’S BENCHMARKING INITIATIVES
     PART III:                                                                    Review of
     AND NEXT STEPS                                                               ACI Airport Benchmarking Studies

     ACI and its regions have been proactive in advancing airport data col-       ACI EUROPE Airport Key Performance Indicators Database
     lection and airport benchmarking. Table 2 presents a concise listing of      ACI Europe is refining its ongoing economic survey by developing
     some major on-going ACI data collection and benchmarking initiatives.        a new Key Performance Indicator (KPI) Database. This project is
     The Asia, Latin America and Pacific Regions of ACI are also coordinat-       focused on providing airports reliable economic data to support
     ing with ACI World Headquarters on new airport benchmarking initia-          management decisions and to enhance airport operational and
     tives. This year ACI inaugurated a new joint ACI-ICAO user charges           financial efficiencies.
     training course, which will be held several times a year worldwide.
     The following sections present more detailed reviews of five impor-          A web-based technique is being utilised to assure data collec-
     tant ACI airport benchmarking studies and other non-ACI worldwide,           tion timeliness, consistency, and efficiency. The KPIs are being
     regional and national airport benchmarking studies.                          carefully defined and pre-tested to assure data accuracy and ho-
                                                                                  mogeneity.
     Table 2
     Summary of ACI Key Airport Data                                              There is a strong interest among ACI Europe’s members in air-
     Collection and Benchmarking Studies                                          port performance benchmarking. Currently, there are about 30
                                                                                  airport operators participating in the pilot study. Thirty economic
               Name of Study                           Purpose
                                                                                  indicators have been vetted and grouped into six main categories
      ACI Airport Traffic Statistics     Detailed activity statistics (current/   (revenue structure and generation ratios, cost structure and ef-
                                         historical)                              ficiency ratios, staff ratios, and other financial ratios). Once the
      ACI Airport Traffic Forecasts      Detailed activity forecasts              web-based data exchange platform is finalised it will be rolled
                                                                                  out to all ACI Europe airports for their use. The protocol is volun-
      ACI Airport Service Quality Pro-   Comprehensive benchmarking study
                                                                                  tary, reciprocal, and confidential.
      gramme                             of service quality and customer ser-
                                         vice
                                                                                  Some key findings to date are:
      ACI Airport Economics Survey       Comprehensive analysis of key eco-
                                                                                  * aeronautical revenues generally exceed non-aeronautical rev-
                                         nomic and financial activities by ACI
                                                                                    enues,
                                         regions
                                                                                  * for large airports, non-aeronautical revenues average 45 per-
      ACI-Europe Key Airport Perfor-     Comprehensive analysis of 30 key           cent of turnover,
      mance Indicators                   economic indicators at some 30 Eu-       * not many performance ratios are correlated with airport size
                                         ropean airport companies                   (except commercial revenues/passengers, aeronautical rev-
      ACI-NA Airport General Infor-      Comprehensive database of physi-
                                                                                    enues/passenger, and staff costs/employees),
      mation Survey                      cal, facility, economic and financial
                                                                                  * several ratios are strongly linked to the investment cycle of
                                         characteristics (can be used for
                                                                                    the airports (such as depreciation and amortisation/operating
                                         benchmarking)
                                                                                    costs, average earnings before interest, taxes, and depreciation
                                                                                    /average capital expenditures, average capital expenditure per
      ACI-NA Airport Macro-Bench-        A detailed analysis of 5 high-visibil-     passenger, and return on capital employed).
      marking Survey                     ity economic indicators

      ACI-NA Airport Initiatives in      Comprehensive analysis of 52 key
      Measurement (AIM) Bench-           economic indicators
      marking Study
      ACI-NA Airport Parking Study       Comprehensive analysis of parking
                                         facilities, rates and charges
      ACI-NA Air Cargo Facilities        Comprehensive analysis of air cargo
      Survey                             facilities




42   ACI AIRPORT ECONOMICS SURVEY 2006
ACI-NA Macro-Benchmarking Key Economic Indicators                         ACI-NA Airport Initiatives in Measurement Key
ACI-NA and the airlines developed a small set of highly defined           Economic Indicators (AIM)
macro-benchmarks to assure accurate measurement and com-                  This initiative was started by Tampa International Airport (TPA).
parison of key, high visibility industry benchmarks. The analysis         The purpose of AIM is to attempt to find a way to benchmark
uses clearly defined statistics as the base, and adds and subtracts       various components of an airport’s operation and to use this in-
subcomponents that vary significantly across airports due to insti-       formation to develop best practices. Additionally, it is to initiate
tutional and management practice differences, to derive net mac-          and develop an ongoing airport performance measurement group
ro-benchmarks that more accurately reflect relative performance.          and to chronicle the differences among the participating airports,
Adjustments are made for airline developed/operated terminals,            to identify possible peers, define a common measurement meth-
netting out of air cargo, GA and military activities, and adjusting for   odology, and agree on compilation practices to ensure data com-
local/regional differences in prices/costs. The most significant ad-      parability. The group identified and defined 52 key comparison
justments were for airports with airline unit terminals (e.g., JFK) or    measurements. The AIM survey includes general characteristics,
where the airline leases an entire terminal (e.g., Atlanta). In these     operating revenues and costs, salaries, maintenance costs, con-
cases, ACI-NA coordinated with the airlines to get airline cost/rev-      cessions gross sales and airport revenues, parking performance,
enue data to add to the airport components to assure apples-to-           and long term debt. The first AIM draft report prepared by TPA
apples comparability.                                                     involved 13 airports and the final report focused on eight peer
The survey also includes clarifying questions to identify other           airports. In 2004, ACI-NA took over and expanded the AIM pro-
unique operations or situations that could cause the airport data         gramme to 45 airports.
not to be fully comparable with peers. These include type of air-
line agreement (compensatory, residual, hybrid), ownership and
operation of the baggage system, ownership and maintenance of             ACI-NA General Information Survey (GIS)
loading bridges, ownership of Common Use Terminal Equipment,              ACI-NA’s GIS is a comprehensive survey of general characteristics
Flight Information Display Systems, Baggage Information Display           for approximately 130 North American airports. The GIS provides
Systems and IT backbone systems. Six macro-benchmarks are ana-            detailed information on airport ownership and governance, physi-
lysed: airline landing fee rate for signatory/major carriers, passen-     cal characteristics, activity statistics, airport/airline use and lease
ger airline cost per passenger, passenger airline operating cost per      agreements, and financial and economic characteristics. Airports
enplanement, non-airline operating revenue per enplanement, and           have found the survey results to be invaluable in comparing their
debt per enplanement. In 2004, 37 airports participated in ACI-NA’s       facilities and charges with other airports. The database is ideal
Macro-Benchmarking survey.                                                for general fact finding and informal airport benchmarking, and
                                                                          is an important resource for airport planning, assessments, re-
                                                                          search, and background information for papers and articles.




                                                                                               ACI AIRPORT ECONOMICS SURVEY 2006                    43
     ACI Airport Service Quality (ASQ) Programme                               Review of Additional Worldwide Airport
     The 2006 ACI ASQ Programme currently counts over 85 airports in           Benchmarking Studies
     the sample. It is a benchmarking survey aimed at measuring the
     specific elements and the overall rating of an airport’s quality of       Focus: Airport Productivity and Efficiency
     customer service and passenger satisfaction. It provides multi-           Air Transportation Research Society (ATRS) Airport Benchmarking
     dimensional benchmarking of an airport’s service performance              Report: Global Standards for Airport Excellence The ATRS is a
     with airports of similar size, in the same region, over time and on       group of international academics, policy makers and industry ex-
     a worldwide basis. Its goal is to identify best performing airports       perts. The ATRS report measures and compares airport charac-
     on individual factors and, overall, to provide a blueprint for all air-   teristics, productivity and efficiency, unit costs and cost competi-
     ports and airlines to improve performance. Its predecessors were          tiveness, financial results and security charges in order to better
     IATA’s Global Airport Monitor Studies which were conducted from           understand differences in airport performance. It analyses labour,
     the early 1990’s and the joint ACI/IATA AETRA Survey conducted            capital, soft cost (outsourcing costs) productivity, total and variable
     in 2004 and 2005. The survey topics cover airport access/naviga-          factor productivity, revenues by source, net income, profit margin,
     tion and connectivity, airport services/facilities, security and im-      current ratio, return on assets, return-on-equity, debt-asset ratio
     migration, airport environment, arrival services, value for money         and debt-equity ratio. Its goal is to measure airport managerial and
     and overall satisfaction with the airport services.                       productivity efficiency while carefully controlling for factors beyond
                                                                               managerial control such as airport size, average aircraft size, share
     * Optimise investments: Understanding customer perceptions of             of international traffic, share of air cargo services, ownership forms
       services and infrastructure helps airports direct their invest-         and capacity shortages. The 2003 ATRS report includes full data on
       ments and efforts in areas where it will really impact customer         76 airports and partial data on 102 airports.
       satisfaction.
     * Monitor manager performance: ASQ ratings and targets are of-
       ten included in supplier Service Level Agreements (SLA). ASQ            Focus: Aeronautical Charges
       is also used as a tool by governments and top management to             Hague Consulting Group (HCG) - Benchmark Airport Charges
       assess the performance of their airport teams.                          - since the mid 1990’s, the Netherlands Directorate General of
     * Identify Best Practice: Airports participating in ASQ have full ac-     Civil Aviation has commissioned the HCG to perform research and
       cess to the results of other airports in the programme at their ser-    comprehensive benchmarking studies on airport charges around
       vice level, which allows them to benchmark against each other           the world to provide insight into the levels, types and changes in
       and identify top performing airports across all 32 service items.       airport charge policy and structure. The types of charges included
                                                                               in these studies are basic, noise- and emission-related landing
                                                                               charges, noise taxes, passenger charges and taxes, security ser-
                                                                               vice charges, runway lighting charge, aircraft parking charge, ter-
                                                                               minal navaid charges, aerobridge charges and cargo charges. In
                                                                               the 1999 study, 66 airports and 45 aircraft types were analysed.
                                                                               The purpose of the studies is to carefully assess the principal air-
                                                                               craft charges for airlines at airports. HCG and other consultants
                                                                               have performed numerous similar studies for national civil avia-
                                                                               tion authorities around the world.




44   ACI AIRPORT ECONOMICS SURVEY 2006
Focus: Airport Service Quality & Customer Satisfaction                   Focus: Airport Retail Concessions
J.D. Power Global Airport Satisfaction Index Study - J.D. Power          URS Airport Retail Study - The 2003 3rd Bi-Annual URS Airport
and Associates is a global marketing information firm that con-          Retail study benchmarked 39 airport retail programmes world-
ducts independent consumer surveys of product and service                wide that collectively represented 20 percent of the world’s pas-
quality, customer satisfaction and buyer behaviour. Each year the        sengers. The 2005 URS Airport Retail Study covers 47 airports
firm interacts with millions of consumers to better understand           and, for the first time, contains data on airport retail sales for
their opinions, perceptions and expectations about a variety of          passengers of low-cost airlines. The study defines and calculates
products and services in more than a dozen industries. The 2004          42 strategic indicators, 21 performance indicators, 7 insight in-
Global Airport Satisfaction Index Survey was based on responses          dicators, and 14 management indicators. It also assesses per-
from more than 9,000 passengers worldwide. The survey consid-            formance by world region, airport size, concession structure and
ered the following as key measures of airport satisfaction: airport      tenure, dwell times and contribution of «meters», «greeters»,
accessibility, the check-in process, security processing, terminal       «farewellers» and the airport workforce, as well as new trends
facilities, baggage claim and overall airport satisfaction.              in arrivals, retailing, and the internet. Participating airports are a
                                                                         representative mix in terms of geography, passenger throughput,
Transportation Research Laboratory (TRL) - TRL’s Airport Service         size of retail programme and ownership model.
Quality Monitor (ASQM) is a benchmarking study that assesses
actual airport services, not perception, by comparing processes
and practices of airports. The study includes more than 500 mea-         Review of
surements to cover all service areas experienced by passengers,          Regional Airport Benchmarking Studies
including monitoring the average waiting time at an airport check-
in, average time for the first bag to reach the carousel, the distance   Focus: Comprehensive North American Airport
to the furthest gate, frequency of trains between airports and city      Rates & Charges Database
centres and assessing the information is presented on the Flight         AAAE Rates & Charges Survey - a comprehensive survey of air-
Information Display Screen.                                              port physical characteristics, revenue sources and fee structures.
                                                                         Over 230 airports of all sizes responded to the 2002-2003 survey.
TRL has developed ASQM with contribution from several airports           The survey includes airport activity statistics, airport positions/
worldwide. Airport Company South Africa (ACSA) has been a                staffing, airline agreements, landing and apron fees and method-
critical contributor to the programme contents and design. The           ology, revenues, concessions and financials.
ASQM has been launched with participation from three airports
managed by ACSA: Johannesburg International, Cape Town Inter-            Focus: Airport Retail Concessions
national and Durban International. ASQM is a management tool             Airport Revenue News (ARN) - a comprehensive annual retail sur-
for reporting to regulators or stakeholders, monitoring and provid-      vey of more than 80 North American airports covering detailed
ing feedback to third parties and informing all levels of airport        passenger traffic, physical and financial characteristics with per-
staff regarding customer service.                                        formance benchmarks by airport, terminal, and concourse. The
                                                                         retail categories evaluated are F&B, specialty retail, news/gifts,
                                                                         duty-free and advertising. Key benchmarks include gross sales,
                                                                         sales per enplanement, rent revenue to airport, rent per enplane-
                                                                         ment, and square feet. Also, it presents a detailed tenant list and
                                                                         general concession characteristics.




                                                                                              ACI AIRPORT ECONOMICS SURVEY 2006                   45
     Review of
     National Airport Benchmarking Studies

     Focus: Canadian Airports Productivity Measures                           CONCLUSION
     Canadian Airports Council (CAC) - Since the de-federalisation of         ACI is committed to the benefits of industry airport benchmarking
     the Canadian airports in the early 1990’s, the nation’s airports         initiatives. As the global association of airports, ACI has three
     have been operating under a similar management paradigm (i.e.,           comparative advantages that contribute positively to airport
     not-for-profit, private authorities with a long-term operating lease     benchmarking efforts: (1) its members are enthusiastic, willing
     from Transport Canada). The Canadian model has proven to be              and able; (2) ACI Headquarters and the regional offices have
     quite effective in increasing airport development, investment,           made significant progress in developing, testing and implement-
     commercialisation, productivity, efficiency, and air service and         ing significant data collection and benchmarking studies which
     customer satisfaction. In 1997, the Calgary Airport initiated a          can be used as models; and (3) the ACI World Economics Standing
     project to exchange financial and operational data on an annual          Committee has the unique expertise to take the lead in harmon-
     basis to compare six areas of productivity: quality of commercial        ising the efforts across the regions to develop a comprehensive
     air service, passenger satisfaction, facility utilisation, cost effi-    airport data warehouse to support a global airport benchmarking
     ciency of operations, competitiveness of aviation fees and com-          programme.
     mercial productivity of the airport. The analysis evaluates 51 spe-
     cific statistical measures of productivity in these six areas. Also,     A critical step in reaching a global approach will be providing ex-
     the results are aggregated to produce a «Balanced Scorecard»             pertise to those airports that are not currently using benchmark-
     view of overall airport productivity. Canadian airports use these        ing as a management tool. To that end, ACI held the first in a
     multi-faceted measures to monitor absolute and relative perfor-          series of workshops in 2006. Benchmarking efforts will continue
     mance and to establish business plan goals for new initiatives.          to be a priority for ACI in assisting its members to fine-tune their
     These productivity measures are complemented by participation            business models and enhance their contributions to the economic
     in other benchmarking surveys worldwide, annual general meet-            stability and growth of the communities they serve.
     ings, public surveys, comment cards, stakeholder meetings and
     five-year performance reviews by the Canadian government.                This document was first compiled and edited by ACI in 2006, building
                                                                              on the submission from airport industry expert Leonard Ginn.
     Focus: US Airports Financial Reports Database
     FAA Section 127 Financial Reports - In Section 111 of the Fed-
     eral Aviation Administration Authorization Act of 1994, the US
     Congress requires airports (a) to report amounts the airport paid
     to, or services and property sold to, any other units of govern-
     ment and the purpose for each transaction, and (b) to report funds
     collected and spent at their airports. Airports report annually on
     52 detailed financial characteristics covering revenues, expenses,
     depreciation, proceeds, expenditures, debt, and assets. Congress
     enacted the reporting requirements to inform the public about
     how airports collect and disburse their funds and to provide the
     FAA with a means for evaluating airport compliance with rev-
     enue-use requirements. US law requires airports to use airport
     revenue for the capital or operating costs of the airport, the local
     airport system, or other local facilities that are directly related to
     air transportation. The FAA’s website makes available the airport
     financial reports of the approximately 550 commercial service air-
     ports that have filed reports since 1996.




46   ACI AIRPORT ECONOMICS SURVEY 2006
MAjOR NEW AND RECENT AIRPORT PROjECTS (> USD 500 million) Note: Historical dollar exchange rates

Airport/Terminal               Planned investment            Opening date/Major projects
EUROPE
London-Heathrow                USD 10.6 billion              Terminal 5 - first stage now expected to open in March 2008; improvements at the other
                               (incl. $8.1 million for T5)   four terminals (incl. Heathrow East at the site of T2) and the runway/taxiway system
Frankfurt                      USD 5.4 billion               CargoCity South expansion, T3 expansion, fourth runway (2009), third terminal (2015)
Lisbon                         USD 4.4 billion               Completely new airport at Ota by 2017
Paris (third airport)          USD 4.0 billion               New airport after 2015, if ever built
Amsterdam-Schiphol             USD 3.6 billion               Current terminal & runway projects until 2007; 5th runway completed
Paris (CDG + Orly)             USD 3.0 billion               Terminal & runway work until 2006
Moscow-Sheremetyevo            up to USD 3 billion           New Terminal 3, general upgrade of T1 & T2
Rome-Fiumicino                 USD 2.9 billion               Staged terminal expansion
London-Luton                   USD 2.7 billion               New terminal to raise capacity to 24 million pax/year
Berlin-Schönefeld              USD 2.64 billion              First-phase expansion into BBI until 2010
Madrid-Barajas                 USD 2.4 billion               New cargo terminals, general upgrading work
Lublin/Poland                  USD 2.3 billion               Completely new airport planned in eastern Poland
Barcelona                      USD 1.9 billion               Third runway (completed), new pax & cargo terminals
London-Gatwick                 USD 1.6 billion               New midfield terminal and refurbishment of facilities
Dublin                         USD 1.4 billion               Ten-year expansion plan, incl. a new terminal
Don Quijote Airport/Spain      USD 1.38 billion              Completely new airport near Ciudad Real
Manchester/UK                  USD 1.35 billion              Planned capital investments until 2010
Gran Canaria (Las Palmas)      USD 1.32 billion              New runway, terminal extension
Moscow-Vnukovo                 USD 1.3 billion               Complete overhaul of all facilities
London-Stansted                USD 1.26 million              Improving ground access; second runway; third satellite terminal
Copenhagen                     USD 1.2 billion               New pax & cargo terminals, road and rail access
Düsseldorf                     USD 1.1 billion               New terminals, rail station, runway extension
Vienna                         USD 1.1 billion               New Terminal 3, apron, tower, office park by 2008
Tenerife South                 USD 1.1 billion               General upgrade
St. Petersburg-Pulkovo         USD 1 billion                 General upgrade, new passenger terminal
Naples-Grazzanise              USD 950 million               New Naples airport on former airbase
Stuttgart                      USD 800 million               Third terminal (completed); second runway, main-line rail station
Nantes/Grand Quest             USD 760 million               New airport at Notre Dames des Landes by 2012
Stockholm-Arlanda              USD 720 million               Third runway & capacity increase (completed)
New Crete airport              USD 715 million               Planned airport west of Chania, near Kastelli
Thessaloniki ‘Makedonia Apt’   USD 715 million               Runway extension, new passenger terminal
Lyon-Satolas                   USD 700 million               Doubling of capacity
Zagreb                         USD 600 million               Master Plan projects
Prague                         USD 585 million               Major terminal expansion, new runway
Funchal/Madeira                USD 550 million               Runway, apron extension & terminal upgrade (completed)
Lisbon                         USD 530 million               Improvements at the existing Portela Airport
Hamburg                        USD 500 million               New terminal & satellites, new apron




                                                                                                     ACI AIRPORT ECONOMICS SURVEY 2006                47
     Airport/Terminal                 Planned investment         Opening date/Major projects
     MIDDLE EAST
     Jebel Ali/UAE                    USD 8.1 billion            Phase 1 of completely new airport (USD 547 million)
     Abu Dhabi/UAE                    USD 6.8 billion            Redevelopment project with a new runway, a midfield terminal; new airport by 2009
     Doha/Qatar                       USD 5.5 billion            Completely new airport for A380; Phase 1 cost estimated at USD 2.5 billion
     Dubai/UAE                        USD 5.4 billion            Third terminal, two new concourses, a mega cargo facility, and an additional runway
     Kuwait                           USD 2.1 billion            Doubling current capacity with new facilities
     Baghdad/Iraq                     USD 2 billion              General upgrade and three new terminals
     Seeb & Salalah/Oman              USD 1 billion              Major upgrade of Oman’s two airports
     Jeddah (KAIA)/Saudi Arabia       USD 1.5 billion            Two new terminals, Haj terminal expansion
     Tehran Imam Khomeini Int./Iran   USD 1 billion              Completely new airport; Phase 1 opened on 30 April 2005; project completion under
                                                                 way
     Ajman/UAE                        USD 800 million            New international airport
     Beirut/Lebanon                   USD 590 million            Terminal and runway rehabilitation


     NORTh AMERICA
     Los Angeles Int.                 USD 11 billion             Planned ‘vision for the future’ development under 15-year master plan, raising an-
                                                                 nual capacity to 89 million pax; capital investments until 2006 down-graded to USD
                                                                 1.4 billion
     New York-JFK                     USD 9.4 billion            Redevelopment programme with new terminals (e.g. the USD 875 million JetBlue
                                                                 terminal), terminal and infra-structure improvement, incl. a USD 1.5 billion ‘AirTrain’
                                                                 rail link (now operational);
     Chicago-O’Hare                   USD 6.6 billion (USD 15    Worldgate Terminal redevelopment (USD 1 bn T6 suspended temporarily), massive
                                      billion over 20 years)     runway realign-ment and 8th runway by 2011
     Louisiana Transportation         USD 6.4 billion            Planned intermodal centre between Baton Rouge and New Orleans, including a cargo
     Center                                                      airport
     Atlanta Hartsfield-Jackson       USD 6.2 billion(10- year   CIP covering new domestic and int’l terminals, fifth runway; APM
                                      development plan)
     Miami Int.                       USD 5.2 billion            Staged expansion of pax and cargo facilities; new North and South Terminals; new
                                      (Phase 1 CIP)              fourth runway
     Washington-Dulles Int. &         USD 4.6 billion            Capital improvement programme for the two airports; includes new runways, termi-
     Reagan                                                      nal concourses, people-mover, fuel farm at Dulles
     Boston-Logan                     USD 4.1 billion            Staged expansion during the next five years (2011)
     Houston-Bush                     USD 3.3 billion            1998 - 2009 upgrades, incl. Hobby and Ellington; 5th runway and new cargo complex
     Intercontinental                                            at IAH
     Minneapolis/St. Paul             USD 3.1 billion            48-gate terminal expansion, hotel; new runway (USD 900 million) opened already
     Toronto Pearson Int.             USD 2.87 billion           New three-pier terminal; new runways
     San Jose Int.                    USD 2.8 billion (down-     New concourses, new central passenger terminal & FIS, new runway
                                      sized from $4.5 billion)
     Las Vegas-McCarran               USD 2.75 billion           Five-year capital plan, incl. USD1.6 billion for T 3
     Dallas/Fort Worth Int.           USD 2.7 billion            New int’l arrivals terminal D; Runway 17C, 18L and 18R extension; replacement of
                                                                 people¬mover system by the SkyLink train system
     Phoenix Int.                     USD 2 billion              Expansion programme, incl. a new terminal, runway rehabilitatiom and a peoplemover
                                                                 system




48   ACI AIRPORT ECONOMICS SURVEY 2006
Airport/Terminal               Planned investment           Opening date/Major projects
Philadelphia                   USD 2 billion                New int’l terminal, two more runways by 2010
Baltimore/Washington Int.      USD 1.8 billion              Five-year terminal upgrade/expansion programme, incl. peoplemover and carparks
Airport/Terminal               Planned investment           Opening date/Major projects
Detroit Wayne County (DTW)     USD 1.6 billion              New midfield terminal, new runway by 2002
Newark                         USD 1.5 billion (remainder   Modernisation of Terminal B: third Terminal C concourse, new Continental widebody
                               of USD 3.8 billion recon-    hangar, roads and carparks by 2002
                               struction programme)
Indianapolis                   USD 1.5 billion              10-year CIP with USD 974 million new 40-gate midfield terminal by 2008
Tampa                          USD 1.5 billion              Five-year expansion project (to 2011)
Cleveland-Hopkins Int.         USD 1.4 billion              Major expansion project, including a runway
Oakland Int.                   USD 1.4 billion              Terminal Improvement Programme, new apron and road access
New York-LaGuardia             USD 1.2 billion              Terminal reconstruction programme
St. Louis-Lambert              USD 1.1 billion              Facility upgrade under 20-year plan, fifth runway
Salt Lake City                 USD 1.1 billion              Improvement programme
Vancouver Int.                 USD 1.05 billion             Terminal upgrades, apron and taxiway expansion; rapid-transit link
Ft Lauderdale-Hollywood        USD 1 billion                20-year terminal and airfield development plan
Louisville Int.                USD 860 million              New UPS hub/sorting facility by 2001 general airport improvement programme
                               USD 700 million
Raleigh-Durham                 USD 877 million              2006-2013 capital investment programme
Seattle-Tacoma                 USD 853 million              Third runway, Concourse A expansion
Orlando Int.                   USD 830 million              Fourth rwy by 2003; more apron stands; South Terminal (on hold)
Denver International           USD 778 million              2002 - 2007 capital expenditure; train system
Nashville                      USD 700 million              Terminal renovation, runway reconstruction to 2009
Cincinnati/Northern Kentucky   USD 750 million              Runway and terminal work
Memphis Int.                   USD 591 million              On-going expansion project (CIP)
Montreal-Trudeau (Dorval)      USD 565 million              Major terminal expansion AND redevelopment


LATIN AMERICA
Mexico City                    USD 2.3 billion              Stage 1 of a planned new airport for the capital at the Texcoco site (alternative site
                                                            now being discussed)
Buenos Aires                   USD 1.3 billion              «Nueva Ezeiza» project Facelift at Ezeiza to double passenger capacity
                               USD 570 million
Brazil                         USD 1.3 billion              moderniSation of Infraero airports, incl. third passenger terminal and new cargo
                                                            complex at Sao Paulo-Guarulhos (USD 350 million)
Bogotá                         USD 900 million              Master Plan work till 2030; USD 650 million until 2011
Qui                                                         Completely new airport at Tumbaco




                                                                                                 ACI AIRPORT ECONOMICS SURVEY 2006                   49
      Airport/Terminal                      Planned investment              Opening date/Major projects
      AFRICA
      Johannesburg                          USD 1.18 billion                Preparing the airport for the A380 and World Cup 2010 operations
      Khartoum                              USD 750 million                 Completely new airport planned
      Dakar                                 USD 580 million                 Complete rehabilitation of all facilities by 2005 or new airport
      Cairo                                 USD 554 million                 New Terminal 3, third runway
      Enfidha/Tunisia                       USD 500 million                 Completely new airport for 7 million annual pax


      ASIA-PACIFIC
      Tokyo (third airport)                 USD 35 billion                  Planned in Tokyo Bay (with land reclamation)
      Osaka - Kansai                        USD 14.6 billion                By 2007; site preparation under way
      (second runway, terminal)
      Tokyo-Haneda                          USD 8.1 billion                 Fourth runway, terminal and carpark extensions
      Long Thanh/Vietnam                    USD 8 billion                   Major new international airport for southern Vietnam;
      (Mekong delta)                                                        scheduled to open by 2011
      Incheon Int.                          USD 5 billion                   Phase 2 (new Concourse A, additional runway, cargo terminal)
      (New Seoul Apt)                                                        to be completed in June 2008
      Shanghai-Pudong                       USD 4.8 billion                 Phase 2 work of new airport; Phase 1 opened on 1 Oct. 1999
      Shenzhen                              USD 3.62 billion                Second runway, third terminal
      Bombay (now: Mumbai)                  USD 3.6 billion                 Planned new airport; after 2010
      Clark Int.,/Philippines               USD 3 billion                   Until 2010 (air base conversion project)
      Sydney-Badgerys Creek                 USD 3.0 billion                 Second Sydney airport, if ever built
      Naha/Okinawa                          USD 2.68 billion                Proposed second runway
      Manila-Ninoy Aquino                   USD 2.5 billion                 On-going terminal and airfield work; much delayed
      Beijing-Capital Airport               USD 2.01 billion                Additional passenger terminal, apron and third runway for the 2008 Olympics
      Kunming                               USD 1.9 billion                 Completely new airport in southwestern China
      Sydney (existing airport)             USD 1.67 billion                On-going investments until 2024
      Brisbane                              USD 1.1 billion                 Doubling of terminal capacity, new runway
      Vientiane/Laos                        USD 1 billion                   Completely new airport planned
      Singapore-Changi Terminal 3           USD 1 billion                   Not before 2006
      Hyderabad-Shamshabad                  USD 1 billion                   Completely new airport by 2007/8
      Bangkok-Don Muang                     USD 965 million                 Capacity-increasing measures
      Taipei-CKS International              USD 956 million                 Cargo terminal expansion to 3 million tonnes
      Guangzhou-New Baiyun Int. Apt         USD 907 million                 Phase 2 projects
      Delhi & Mumbai                        USD 760 million                 Refurbishment of existing facilities
      Medan                                 USD 600 million                 Completely new airport in planning stage
      Hong Kong                             USD 580 million                 Terminal and apron expansion from 2006 to 2010
      Jakarta T3                            USD 533 million                 Project delayed because of the financial crisis
      Nanjing-Lukou                         USD 500 million                 On-going work; Phase I opened 1997


     Compiled by Momberger Airport Information; based on confirmed figures/estimates                                                                      Nov. 2006




50   ACI AIRPORT ECONOMICS SURVEY 2006
MAjOR PROjECTS COMPLETED Note: Historical dollar conversion rates

 Airport/Terminal                      Investment                      Opening date
 Bangkok-Suvarnabhumi                  USD 5.6 billion                 Completely new airport opened on 28 Sept. 2006
 Kobe/Japan                            USD 2.9 billion                 New offshore airport opened in Februar 2006
 Nagoya - Centrair/Japan               USD 7.3 billion                 Opened on 17 February 2005 for World Expo
 Tel Aviv-Ben Gurion/Israel            USD 1 billion                   Ben Gurion 2000; third terminal (Phase I) completed in late 2004
 Cologne/Bonn                          USD 610 million                 New terminal with rail link & station (completed in 2004)
 Zürich                                USD 1.6 billion                 ‘Project 2000’ Fifth Expansion Phase, incl. mid¬field terminal, with staged opening
                                                                       in 2003 and 2004 (completed)
 Madrid-Barajas                        USD 3 billion                   Two new runways opened in 2004 and two terminals opening in 2006
 Guangzhou-Huadu                       USD 2.4 billion                 New Baiyun Int. Airport’s Phase 1 opened on 5 August 2004
 Chicago-Midway                        USD 927 million                 Six-year terminal development project completed on 8 June 2004
 Tehran Imam Khomeini Int./Iran        USD 1 billion                   Phase 1 ready since Febr. 2004; opened in 2005
 Leipzig/Halle                         USD 1 billion                   New terminal with rail station, new runway completed 30 June 2003
 Munich                                USD 1.1 billion                 Second terminal opened on 29 June 2003
 New York-JFK Int.                     USD 1.4 billion                 Terminal 4 opened on 24 May 2001
 Istanbul-Sabiha Gökcen                USD 700 million                 New airport opened on 8 April 2001
 Incheon Int. (New Seoul Apt)          USD 5.4 billion                 Phase I opened on 29 March 2001; three more phases to follow
 Athens-Spata                          USD 2.3 billion                 New airport opened on 28 March 2001
 San Francisco                         USD 3.1 billion                 Major expansion, incl. new int. terminal, opened in 2000, new cargo complex, new
                                                                       light rail link
 Sydney-Kingsford Smith Int.           USD 695 million                 Pre-Olympics terminal and airfield expansion; including ground access
                                       USD 1.5 billion                 (now completed)
 King Fahd Int./Saudi Arabia           USD 2.6 billion                 New airport opened on 27 Oct. 1999
 Shanghai-Pudong                       USD 4.8 billion                 New airport; Phase 1 on 1 Oct. 1999
 Austin-Bergstrom Int./USA             USD 685 million                 23 May 1999; conversion project
 Haikou-Meilan/China                   USD 460 million                 opened in early 1999
 London-LHR BA World Cargo-            USD 415 million                 19 January 1999;
 centre/UK                                                             annual capacity: 800 000 tonnes
 Milan-Malpensa/Italy                  USD 1 billion                   25 October 1998 - Malpensa 2000 terminal (first phase)
 Oslo-Gardermoen/Norway                USD 2.9 billion                 On 8 Oct. 1998 - new airport
 Hong Kong-Chek Lap Kok                USD 9 billion (apt only);       Phase I opened on 6 July 1998
                                       USD 20.4 bn with infra-
                                       structure and reclamation
 Kuala Lumpur-Sepang/Malaysia          USD 3.5 billion                 Phase 1 (MYR 9 bn) in June 1998
 London-LHR «Heathrow                  USD 735 million                 rail service startred in June 1998
 Express»
 Rio de Janeiro/Brazil                 USD 600 million                 Terminal 2 opened on 28 3 1998
 Macao International/Macao             USD 1.0 billion                 Opened 8 Dec. 1995
 Denver International/USA              USD 4.8 billion                 Opened 28 Feb. 1995
 Kansai International/Japan            USD 13 billion                  Phase I opened 4 Sept. 1994
 Munich International/Germany          USD 5.67 billion                Opened 17 May 1992


Compiled by Momberger Airport Information; based on confirmed figures/estimates                                                                     Nov. 2006




                                                                                                            ACI AIRPORT ECONOMICS SURVEY 2006                   5
     WhO MANAgES AIRPORTS?

     Company                                  Activities

     ABB Equity Ventures,                     Leads a team for the BOT project of a new passenger terminal at Sharm el-Sheikh Airport in Egypt;
     Switzerland                              led a consortium which built the Kruger Mpumalanga International Airport in South Africa, which is
                                              owned and operated by ABB through its specialist airport management company, Primkop Airport
                                              Management (PAM); tried unsuccessfully to sell its 90 percent stake in PAM in spring 2004;
                                              Owns 15 percent of OAMC (Oman Airports Management Company) which manages the Seeb and
                                              Salalah airports.

     Abertis Airports, Spain                  Owns 90 percent of the former TBI airports Belfast International, Cardiff, London-Luton (all in the
     (resulting from the merger in 2003       UK), Orlando-Sanford (USA), Stockholm-Skavsta (Sweden), La Paz, Santa Cruz, and Cochabamba
     of Acesa and Áurea, which led            (Bolivia), and Barranquilla (Colombia); AENA owns the remaining 10 percent (see ACDL below); Has
     to one of the leading infrastruc-        management contracts at Atlanta, Burbank, Miami (all USA), San José (Costa Rica) and Bogotà
     tures groups in Europe by market         (Colombia)
     capitalization)

     ACDL (Airport Concessions                Acquired a 92.88 percent stake in TBI plc and its airport portfolio in 2004; plans to acquire the
     & Development Ltd), Spain                remaining 7.12 percent of the target through a permanent buy order in the open market at the
     (90 percent Abertis; 10 percent          same price
     AENA)

     ACSA, South Africa                       Manages Pilanesberg Airport (since 1998) and Sun City in addition to its own nine airports (in-
     (owned 75.78 percent by the              cluding Johannesburg and Cape Town); member in a joint venture with GVK Group to manage
     Ministry of Transport, 20 percent by     and develop Mumbai International Airport in India (the private investors own 74 percent, Airports
     Aeroporti di Roma (now sold to local     Authority of India 26 percent of a joint company).
     groups), and by private investors)



     ACV - now Airport Consulting             Founded in 1992, Airport Consulting Vienna GmbH was a subsidiary of Vienna International Air-
     GmbH, Austria                            port until 2001. Now the company is owned by the managing directors Wolfgang Edelmann and
     (until 2001, Airport Consulting Vienna   Johann Frank. ACV has been successfully involved in over 100 airport consulting projects and
     (ACV) was 50 percent owned by Vienna     international airports projects and over 30 airport privatisations during the past ten years. ACV
     Airport)                                 exerted its strengths with regards to the transfer of management know-how in several projects in
                                              regions such as the Ukraine (Kiev-Boryspil Airport) and Turkey (International passenger terminal of
     Airport Consulting                       Atatürk Airport, Istanbul). This expertise was the key for Alfa to choose ACV from a large number
     Investments Ltd, Cyprus (equity          of competitors in order to play a special role in the preparation of the offer and in the organisation
     investment arm of ACV)                   of the Management Contract for Moscow-Sheremetyevo Airport.

     ADC (Airport Development                 Held a 34 percent stake in the company that managed Terminal 2/B at Budapest-Ferihegy Airport
     Corporation), Canada                     until 31 Dec. 2001; together with Houston Airport System’s HAS Development Corporation has an
                                              operating contract for Quito Airport, Ecuador




52   ACI AIRPORT ECONOMICS SURVEY 2006
Company                                  Activities

ADM Capital Inc., Canada                 Was a member of a consortium that oversaw the financing, construction and operation of the new
(owned by ADM - Aéroports de             terminal at Budapest Airport; won the concession for the Vatry cargo airport in France as a member
Montréal)                                of the SEVE consortium formed with SNC-Lavalin of Canada, Keolis, Sogaris, Pingat, Iénair, and
                                         the CCIs of Reims/Epernay, Chalons-en-Cham¬pagne and Troyes of France; holds 23.3 percent of
                                         SEVE. Was interested in managing airports in Latin America and South Africa. ADM decided in
                                         October 2000 to focus on its primary mission to manage and develop its two international airports
                                         in Montreal, Dorval and Mirabel. Its two subsidiaries, ADM International and ADM Capital, are not
                                         active any more as they are not pursuing new ventures, although they will honour their existing
                                         contracts.

ADP Management, France                   Aéroports de Paris Management operates directly or provides consulting services to over 30 air-
(airport management holding com-         ports throughout the world. Parent ADP owns and operates 14 airports and airfields in the Paris
pany, now wholly-owned by Aéro-          region. ADP Management has a 35 percent stake in Aéroports du Caméroun (ADC), which manages
ports de Paris; the former partner       three international and four provincial airports in Cameroon; holds a 34 percent stake in Aéroports du
was Vinci)                               Madagascar (ADEMA), which manages twelve airports in Madagascar; partner in SOGEAC (29 percent
                                         stake) which runs Conakry Airport in Guinea under a five-year concession and Kan Kan Airport; operates
                                         Phnom Penh-Pochentong and Siem Reap in Cambodia under a 25-year contract as a majority partner (60
                                         percent) of CAMS, which also provides groundhandling services at the airports; acquired a 25 percent
                                         stake in SAB S.A., the operating company of Liège Airport in Belgium, specializing in air freight and
                                         charter flights; operating partner with a 25.5 percent stake in Mexico’s Grupo Centro Norte airport priva-
                                         tisation through Operadora Mexicana de Aero¬puertos (OMA), together with Constructoras ICA (37.25
                                         percent) and investor VINCI SA (37.25 percent); ICA is reducing its stake by 11.5 percent to the benefit
                                         of ADP; the VINCI stake was sold to ICA in December 2005; together with Vinci acquired 10 percent of
                                         the shares of Beijing Capital International Airport (BCIA) when 35 percent of the latter’s shares were
                                         floated on the Hong Kong stock exchange (Vinci sold its 3.4 percent share in the meantime and the ADP
                                         Management stake is 6.6 percent); manages and operates Mersa Alam Airport in Egypt since October
                                         2001. Together with GTM, a subsidiary of Suez Lyonnaise des Eaux, was the preferred joint bidder for up
                                         to 49 percent of the shares of a yet-to-be privatised Sukarno-Hatta International Airport, Jakarta/Indo-
                                         nesia; Won a contract in 2006 to manage the new Algiers Airport passenger terminal. Interested in US
                                         airports (Boston-Logan Terminal 1) and Latin American airports (together with Groupe GTM/now Vinci),
                                         in Portuguese and Italian airports, Sofia Airport/Bulgaria, Shanghai-Pudong/China, and in St. Petersburg/
                                         Russia (together with US investors).

AENA Internacional (Aeropuertos          Owns 40 percent of Aeropuertos del Caribe S.A. (ACSA), which manages Barranquilla Airport in Colom-
Españoles y Navegación Aérea),           bia; handles the former Schiphol involvement in Cartagena Airport/Colombia through Sociedad Aero-
Spain                                    portuaria de la Costa, S.A. (SACSA), in which it has a 38.08 percent holding as an operating partner;
(AENA operates 47 airports in Spain;     was awarded a contract to manage Calí Airport in Colombia as partner of the Aerocali S.A. consortium
calls itself «largest airport operator   in which it holds a 33.34 percent share; owns 25.5 percent of the Mexican-Spanish consortium which
in the world», handling 160 million      acquired a 15 percent stake in Grupo Aeroportuario del Pacífico (GAP) package of 12 Pacific airports
passengers a year)                       in Mexico (the operating company is called ‘Aeropuertos Mexicanos del Pacifico, S.A.’ - AMP), the
                                         other partners being Unión Fenosa, Dragados Industrial, and Mexico’s Ángeles Group (Inversores del
                                         Noroeste and Holdinmex); manages the new international airport near Cayo Coco in Cuba under a five-
                                         year contract; involved in the new airport at Samaná/Dominican Republic; owns 10 percent of Airport
                                         Concessions & Developments (ACDL) who acquired TBI plc in late 2004 (see Abertis)




                                                                                                ACI AIRPORT ECONOMICS SURVEY 2006                     53
     Company                                 Activities

     AER Arann, Ireland                      Owns the Connemara-Inverin regional airport

     Aeroporti di Roma SpA, Italy            Owns and operates the Rome airports Fiumicino and Ciampino; acquired the Alitalia stake
     (listed on the Milan stock exchange     (15 percent) in Aeroporti di Genova SpA (Genoa Air-port) and a 16.6 percent stake in SACAL
     since 1997; 95 percent owned by         SpA (Lamezia Terme Airport, Calabria); won the tender for South African airports and owned
     Leonardo Holding; Macquarie Air-        69 percent of ADR Interna-tional Airports South Africa (Pty) Ltd which in turn held 20 percent
     ports acquired a stake and now has      of ACSA (Air-ports Company South Africa Ltd), with an option to acquire another 10 percent;
     a 44.68 percent beneficial interest;    this stake now has been sold. Interested in managing airports elsewhere in Italy and in Latin
     the Leonardo stake was reduced to       America Owns 100 percent of ADR Engineering; owns 90.29 percent of ADR Handling SpA (ADR
     51.08 percent; local authorities hold   Engineering owns the remaining 9.71 percent); owned 20 percent of two catering com-panies,
     3 percent and others 1.2 percent.)      Sodecaer SpA and Ligabue Gourmet Roma SpA which have been sold



     Aeroporti Holding S.r.l., Italy         Holds a 24 percent stake in SAGAT Turin Airport S.p.A. together with Nuova Holding Subalpina
     (Benetton Group)                        SpA, SAB SpA, and AviaPartner (combined stake of 41.33 percent), Municipality of Turin (38.0
     Set up on 7 Aug. 2003 by SAGAT          percent), Piedmont Region (8.0 percent), Province of Turin (5.0 percent), Chamber of Commerce
     S.p.A. (60 percent), Sanpaolo IMI       of Turin (4.71 percent), Sicind of the Fiat Group (2.0 percent), and SEA SpA - Milan Airports (0.96
     Private Equity S.p.A. (30 percent) e    percent); has a 29 percent holding in SAF SpA, the company which manages Florence airport;
     Tecno Holding S.p.A. (10 percent).      plans to acquire a 5 percent stake in Bologna Airport’s operator SAB; Turin and Florence are
                                             part of a project which aims to construct a network of integrated Italian airports, with a strong
                                             capacity to offer modern services and high added value. Owns 57.09 percent of Autogrill, the
                                             world leader in catering and retail services for travellers (motorway and airport catering).



     Aeropuertos Argentina 2000 S.A.         Operates 33 airports in Argentina since 1999, with USD 600 million in planned investments
     (AA2000), Argentina (consortium         over the concession period; as a member of the Cerealsur (now ‘Puerta del Sur’) consortium
     including Corpora¬ción América          (compris-ing Italy’s SEA SpA, American International of the USA, and Argentina’s Corporación
     Sudamericana, owned by Eduardo          América Sudamericana, each holding 33 percent), won the 30-year concession to manage and
     Eurnekian, 63 percent; SEA SpA,         develop Montevideo’s Carrasco International Airport; won a 30-year concession to run Yerevan-
     28 percent; Siemest, 8 percent; and     Zwartnots Airport in Armenia; winning bidder for a 15-year concession to develop and operate
     Riva, 1 percent)                        Guayaquil’s ‘Simon Bolivar’ Airport in Ecuador as a partner in the TAGSA consortium; interested
                                             in running other Latin American and Eastern European airports



     Aeroterm US, Inc. (USA)                 Acquires, owns and develops airport properties at a dozen airports in the Unites States and
     (Aeroterm, headquartered in Mon-        in Canada totalling 4 million ft². The company recently added warehouses at nine US airports:
     treal with regional offices in An-      Dallas/Fort Worth International and George Bush Intercontinental in Houston/TX; Kansas City,
     napolis, MD and Houston, TX is one      MO; General Mitchell International in Milwaukee; Louis Armstrong New Orleans International;
     of the largest air cargo warehouse      Norfolk, VA; Pensacola, FL; Philadelphia International; and Hancock International in Syracuse,
     specialists. The company’s parent is    NY. The nine air cargo warehouses have a total of 75 tenants, including delivery companies like
     Realterm)                               Fed Ex, which sublet space from the owners




54   ACI AIRPORT ECONOMICS SURVEY 2006
Company                                 Activities

Aer Rianta, Ireland                     Owns and operates three Irish airports (Dublin, Shannon, Cork); holds a 24.125 percent stake in
(now Dublin Airport Authority)          Birmingham International Airport Ltd/UK, the same stake as Bridgepoint Capital - formerly Nat-
                                        West Equity Partners/ NatWest Ventures (ARI/NWV Ltd); Bridgepoint stake (24.125 percent)
                                        now held by Macquarie Airports Group Ltd; 40 percent stake in the Airport Partners GmbH joint
                                        venture with Hochtief at Düsseldorf Airport; owns 49 percent of the privatised Hamburg Airport
                                        company together with Hochtief, split 80 percent Hochtief and 20 percent Aer Rianta; interested
                                        in other European airports; Aer Rianta International (ARI) has duty-free operating and manage-
                                        ment contracts at airports in Bahrain, Canada/Montreal-Dorval + Mirabel, Cyprus/Larnaca +
                                        Paphos, Kuwait, Lebanon/Beirut, Pakistan/Karachi, Russia/Moscow + St Petersburg, Syria/Da-
                                        mascus, and Ukraine/Kiev, plus consultancy contracts

AFCO - Aviation Facilities Co., Inc.,   Has developed or acquired over 47 facilities, and currently owns, or has leaseholds and is de-
USA                                     veloping or operating facilities at 23 airports in North America and one in the UK AFCO has
                                        developed and owns stakes in cargo buildings at Albany, Baltimore-Washington, Pittsburgh,
                                        Richmond, Jackson, Jacksonville, Kansas City and Washington-Dulles airports and truck parking
                                        facilities at Dallas/Fort Worth and shuttle parking facilities at Chicago-Midway; has acquired
                                        and renovated cargo facilities at Baltimore-Washington, Seattle-Tacoma, Pittsburgh, Hartford,
                                        Austin, Bakersfield, Lou-isville Orlando, Rickenbacker, Philadelphia, Dallas Fort/Worth, Kansas
                                        City, Los Angeles and Dayton airports; has joint-ventured in the development of taxiway and
                                        apron facilities at London-Luton. AFCO developed an FBO at Pittsburgh, and is currently in the
                                        process of developing an entire angicial airport at Branson, Missouri. AFCO is actively acquir-
                                        ing stakes in FBO’s, hangars, and other airports, and is discussing the development of several
                                        other new airports, both public and private. AFCO’s UK subsidiary CAFCOHL owns South West
                                        Regional Airports Ltd (SRAL) which now operates Coventry Airport.

AGUNSA - Agencias Universales           Partner in the SCL Terminal Aéreo Santiago consortium, formed together with Sabco Administrador
S.A., Chile                             de Fondos de Inversión S.A. of Chile (13 percent), Grupo Dragados of Spain (30 percent with FCC),
                                        and YVRAS holding 10 percent. Agunsa holds a 47 percent stake; Holding 35 percent of the MBJ
                                        Airports consortium which has won a 30-year concession to develop Sangster International Air-
                                        port, Montego Bay/Jamaica. The consortium also includes YVR Airport Services Ltd (15 percent),
                                        Ashtrom Group Ltd (15 percent), and Dragados Concesiones de Infraestructuras S.A. (35 percent)

AIF - Australian Infra¬structure        Holds stakes in seven Australian airports (Melbourne, Perth, Gold Coast, Launceston, Darwin, Alice
Fund Pty Ltd, Australia (controlled     Springs, and Tenant Creek) through Australia Pacific Airports Corp. and in Auckland International
by Hastings Fund Management)            Airport in New Zealand through Westralia Airports Corporation. Bought a 49.1 percent stake in the
                                        Townsville and Mount Isa airports in the Australian state of Queensland for AUD 24 million, with
                                        its wholesale Queensland Infrastructure Fund owning another 25 percent. AIF already owns a 15
                                        percent stake in Gold Coast (Coolangatta) Airport.

AIG Financial Products Corp.            Together with Global Infrastructure Partners (GIP), the infrastructure joint venture between Credit
(AIG-FP), USA                           Suisse and GE Infrastructure, AIF-FP acquired London City Airport in autumn 2006 from Airport
wholly-owned subsidiary of Ameri-       Management and Investment Ltd (Dermot Desmond-owned); AIG-FP owns 50 percent of LCY
can International Group, Inc. (AIG)




                                                                                            ACI AIRPORT ECONOMICS SURVEY 2006                 55
     Company                                 Activities

     Air-India, India                        Holds a 5 percent stake in Cochin International Airport Ltd in India

     Airis Corp., USA                        Operates a USD 100 million two-building cargo facility at New York’s JFK International Air-
     (world’s largest private devel-oper     port for the Port Authority of New York & New Jersey, a mixed-use facility (offices/cargo) for
     of aviation facilities)                 LanChile at Miami International Air-port, the International Air Cargo Center (IACC) at Newark
                                             International Airport for six major airlines, and facilities at Los Angeles International Air-port

     Airport Authority of Hong Kong,         To take a 35 percent share in China’s tenth largest airport of Hangzhou Xiaoshan International
     Hong Kong                               Airport, for CNY 1.99 billion (USD 240 million). Hangzhou Airport is the main hub for flights into
                                             the eastern province of Zhejiang.

     Airport Group Interna-tional, Inc.      Managed 29 airports, including Burbank-Glendale-Pasadena Airport, CA (since 1978), Albany
     (AGI), USA                              County Airport, NY; Rickenbacher Int. Airport; Columbus/OH; Stewart International, Newburgh/
     AGI was jointly owned by Lockheed       NY; the International Terminal (Concourse E) at Atlanta-Hartsfield, GA; and under a five-year
     Martin (38.7 percent) and Soros         contract the Trillium Terminal at Pearson International Airport, Toronto/Canada (which AGI had
     Capital (28.4 percent). Strate-gic      owned and sold back to the Government in early 1997); the Albany contract was lost to Av-
     investors in AGI included GE Capi-      Ports in mid-2005 won a contract for three airports in Bolivia and formed SABSA (Servicios
     tal Services (9.4 percent), the DFS     de Aeropuertos Bolivianos) to manage, operate, and maintain the La Paz-El Alto, Cochabamba
     Group (3.5 percent), SunAmerica         and Santa Cruz airports for a period of 25 years; owned a stake in Haikou-Meilan Int. Airport in
     and United Infrastructure, a joint      Hainan/China; Perth/Australia (through Airstralia Development Group, of which AGI owned 16
     venture of Bechtel and Kiewit (4.7      percent); Darwin, Alice Springs, Tennant Creek/Australia through Airport Development Group,
     percent); TBI plc in the UK acquired    now Northern Territory Airports (NTA), of which AGI owned 49 percent; Hobart International,
     AGI on 20 Sept. 1999 by pay-ing         Tasmania/Australia through HIAPL; member with a 25 percent share in a consortium that won
     USD 45.4 million in cash and USD        a 30-year concession for London-Luton Airport and which also included Bechtel Enterprises (10
     98 million in new TBI shares. In late   percent), Barclays Private Equity (32.5 percent), Barclays UK Infrastructure Fund (32.5 percent);
     2004, TBI plc completed the sale of     TBI now owns 100 percent of the Luton Airport company, after having acquired the 28.6 percent
     AGI, its airport services business in   share of Alterra Partners in 2004; 20-year concession to manage San José International Airport
     the USA, to BBA Group.                  in Costa Rica together with local partners; preferred bidder for the new Ciudad Real Airport near
     TBI stands for Thomas Bailey Invest-    Madrid/Spain.
     ments; the company was started by       NOTE: All activities had been taken over by TBI plc, but the AGI name was still used. TBI was
     brothers Peter and Stanley Thomas       acquired by ACDL (see there) in 2004

     Airport Management & Aero-              Built and operates the new Sabiha Gökçen International Airport in Istanbul as part of the Ad-
     nautical Industries Inc., Turkey        vanced Technology Industrial Park (ATIP) project developed by the Ministry of Defence’s Under
                                             Secretariat of Defence Industries

     Airport Management and                  Owned and operated London City Airport until it was sold in autumn 2006 to AIG-FP and GIP
     Investment Ltd, Gibraltar (owned        (see there); also see IIU
     by Dermot Desmond)

     Air Wales, UK                           Acquired Swansea Airport in Wales from Martin & Louisa Morgan




56   ACI AIRPORT ECONOMICS SURVEY 2006
Company                              Activities

Alpar AG, Switzerland                Owns and operates Bern Airport since 1985. The largest single shareholder in Alpar is Swiss Inter-
(Alpar-Flug- und Flugplatz-gesell-   national with a 23 percent stake; other shareholders include Bern canton and local municipalities
schaft AG) Fax: <41> (31) 960 2201   (11 percent), companies in the Bern region (27 percent), private individuals (18 percent), other
                                     airlines (3 percent), and special-interest associations (2 percent).

Altenrhein Realco, Switzerland       The Dutch investor Rinse Strikwerda owns St. Gallen/Altenrhein Airport in Switzerland through
                                     Airport Altenrhein AG (100 percent)

Alterra Partners, UK                 Through Bechtel Enterprises, had shareholder interests in London-Luton Airport (28.6 percent),
(owned 50 percent each by Bechtel    which it sold to UK-based airport operator TBI plc in 2004; Singapore Changi Airport Enterprise
and SCAE/Singapore)                  (SCAE) also decided to sell its share of Luton Airport to TBI as part of plans to pursue new invest-
                                     ment opportunities in Asia, particularly China and India; TBI was in turn taken over by ACDL (see
                                     there) Alterra Partners Costa Rica won a 20-year management and development concession for San
                                     José’s Juan Santamaria International Airport in Costa Rica, together with a group of companies
                                     including Bechtel Enterprises, AGI, Cormar, Agencia Datsun, Singapore Changi Airport Enterprise,
                                     and Edica Ltda. Alterra holds 85 percent of the consortium; Holds a 57.25 percent interest in a 30-
                                     year concession to operate and develop Jorge Chavez International Airport, Lima/Peru with partner
                                     Fraport AG holding 42.75 percent; a local contractor Cosapi S.A. held 14.50 percent initially and sold
                                     out to Alterra; Signed a 30-year concession agreement in late 2002 to develop Hato International
                                     Airport in Curaçao/Netherlands Antilles together with consortium partners Trabajos Industriales y
                                     Mecanicos from Venezuela, and Janssen de Jong Caribbean from the Netherlands Antilles; pursuing
                                     airport privatisation projects in Europe and Latin America

AMB     Property    Corporation,     AMB is a leading owner and operator of industrial real estate with a focus on high-speed distribu-
USA                                  tion buildings at the world’s biggest airports in North America, Europe and Asia. As of 30 June
                                     2003, AMB owned, managed and had renovation and development projects totalling 96.5 million
                                     square feet (9.0 million m²) and 1005 buildings in 30 markets. In the USA, AMB has 22.9 million
                                     square feet of on-airport and near-airport distribution centre space owned, managed and under de-
                                     velopment at 15 big US airports, including Los Angeles, San Francisco, Seattle-Tacoma,Dallas/Ft.
                                     Worth, Chicago, JFK, Washington-Dulles, Miami and Atlanta-Hartsfield. Their on-tarmac proper-
                                     ties total 2.3 million square feet at 12 US international airports; acquired 37 facilities (360 000 m²)
                                     at seven US airports from IAC in October 2003

ANA (Aeroportos de Portugal),        Owns and operates three mainland and four island airports (Lisbon, Porto, Faro, Ponta Delgada,
Portugal                             Flores, Horta, and Santa Maria) in Portugal; owns 70 percent of the Madeira (Funchal) airport op-
                                     erator ANAM; owned 49 percent of ADA, the company which operates Macau International Airport
                                     in China (Macao SAR), before Macau was returned to China

Ángeles Group, Mexico                Leading partner of the consortium which won a concession for the Grupo Aeroportuario del Pacifico
(Grupo Ángeles, 100 percent Mexi-    (GAP) package of Pacific airports in Mexico, the other partners being AENA Internacional, Unión
can-owned)                           Fenosa, and Dragados; the operating company is called ‘Aeropuertos Mexicanos del Pacifico, S.A.’




                                                                                           ACI AIRPORT ECONOMICS SURVEY 2006                   57
     Company                              Activities

     APAC (Australia Pacific Airports     Owns and operates Melbourne-Tullamarine International Airport as well as 90 percent of Laun-
     Consortium), Australia               ceston Airport; APAC is currently owned by four shareholders: AMP, Australia’s largest insurance
                                          and financial services company (41 percent), REEF Infrastructure/ex- Deutsche Asset Management
                                          (26 percent), Hastings Funds Managements (13 percent) and BAA (20 percent). BAA plans to sell
                                          its stake. (Hastings, the responsible entity for Australian Infrastructure Fund, is one of the largest
                                          infrastructure asset managers in Australia with approximately AUD 1.9 billion under management
                                          at end March 2003; the Westpac Bank acquired a 51 percent stake in Hastings in August 2002.)

     Arkia Israeli Airlines, Israel       Owns and operates the civil part of Ovda Airport, 40 km north of Eilat

     ATCO Airports Ltd, Canada            Operates Edmonton City Center Airport (since January 2000) and the airports at Castlegar, B.C.;
     (50:50 joint venture of ATCO Fron-   North Bay, Ont.; Iqaluit; Moose Jaw, Sas.; and St. Andrews, Man., all in Canada; also provides secu-
     tec Corp. and Winnipeg Airport       rity services at Winnipeg Int. Airport; operates Lismore Airport in Australia together with Ambidji
     Services Corp.)

     Australian Infrastructure Fund       Airports represent 45 percent of AIX’s total investments. The company’s airport holdings include
     (AIX), Australia                     Australian Development Group (Darwin, Alice Springs and Tenant Creek Airports in the Northern
     (Hastings Funds Management is        Territory) (25.4 percent) AUD 15.8 million; Australian Development Group (Perth Airport, Western
     the responsible entity for Austra-   Australia) (24.9 percent) AUD 106.7 million; Australia Pacific Airports Corporation (APAC) (Mel-
     lian Infrastructure Fund)            bourne, Vic and Launceston, Tasmania) (5.0 percent) AUD 46.5 million. In May 2002 Melbourne
                                          Airport bought back from Ansett Administrators the former Ansett-operated terminal.

     AvPORTS, USA                         Manages and develops Teterboro Airport (TEB) under contract to PANY&NJ and manages Atlantic
     (ex-Johnson Controls)                City International Airport (ACY) in New Jersey; Republic Airport (FRG); Tweed New Haven Regional
     AvPORTS is a division of Macquarie   Airport (HVN); White Plaines/Westchester County Airport (HPN) in New York State, and the 34th
     Infrastructure Co.                   Street Metroport heliport in New York City; the FBO AvCenter at the Greater Pittsburgh Inter-
                                          national Airport; Johnson Controls AvCenter at Sandiford Field, Louisville/Kentucky; and Albany
                                          International Airport (since mid-2005)




58   ACI AIRPORT ECONOMICS SURVEY 2006
Company                                 Activities

BAA International (wholly               Owns and operates seven UK airports;
owned by BAA plc, UK)                   through BAA USA has manage the entire airport system at Indianapolis, IN/USA since 1995 (10-
BAA USA, Inc.                           year contract) and the concessions at Pittsburgh Airport/USA, in Terminals B, D/E at Boston-Lo-
(The British Airports Authority was     gan and at Baltimore/Washington (10-year contract awarded in March 2004); similar contracts
part of the British Aviation Ministry   for the Harrisburg/PA International Airport and the Capital City/PA reliever airport in the USA
from 1946 to 1966, and then became      have been cancelled; holds a 65 percent stake in GESAC, the Naples/Italy airport company;
an independent Agency owned by          owns 19.8 percent in APAC (Australia Pacific Airports Corporation) which runs Melbourne Inter-
the Government. In 1987, the British    national Airport and Launceston Airport/Australia under a 50-year lease; in early 2001, a BAA
Airports Authority was privatised to    plc-led consortium also including the Australian Infrastructure Fund (Hastings) and the Utilities
form BAA plc and is now active at       Trust of Australia took over TBI’s Australian airport holdings - with the exception of Hobart.
20 airports worldwide.                  Together, they took a 16.1 percent stake in Perth International Airport and a 19.9 percent stake
The company was taken over by           in Northern Territory Airports (Darwin, Alice Springs, Tennant Creek). BAA’s share in the deal is
a Ferrovial-led consortium in mid-      15 percent in Perth and 10 percent in Northern Territory Airports. Owned 25 percent of OAMC
2006 and Ferrovial is now selling       (Oman Airports Management Company) which managed the Seeb and Salalah airports for a
the non-UK airport stakes).             short time until the contract was cancelled; Acquired Budapest Airport in December 2005 and
                                        selling it again to Hochtief AirPort in autumn 2006.
                                        Before being taken over by Ferrovial, BAA was seeking international opportunities to use its
                                        expertise and experience gained in operating the UK’s leading airports. BAA was interested in
                                        Indonesian, Latin American, and other Italian airports; signed a contract with the CIR holding of
                                        Italy’s De Benedetti group for the acquisition and development of Italian airports and entered a
                                        joint venture in China to manage airports. Ferrovial now is selling the non-UK airport stakes.

Babcock & Brown, Australia              Acquired Black Forest Airport, Lahr in Germany and Plzen-Lin Airport in the Czech Republic from
                                        PlaneStation which went into voluntary administration on 26 July 2005; interested in a 33 per-
                                        cent stake in SEA SpA, Milan/Italy

Baden Airpark GmbH, Germany             Owns Karlsruhe/Baden-Baden Airport, an ex-Canadian air base in the upper Rhine valley; Baden
                                        Airpark GmbH is jointly owned by Flughafen Stuttgart GmbH (64 percent) and Baden-Airpark
                                        Beteiligungsgesellschaft mbH (36 percent), a group of local authorities located around the airport

                                        Owns the Filton company airfield near Bristol, UK
BAE Systems plc, UK
                                        Owns 35 percent of OAMC (Oman Airports Management Company) which manages the Seeb
Bahwan Trading Co., Oman                and Salalah airports.

                                        Operates Samui International Airport, Sukhothai Airport, and Trat Airport under 20-year lease
Bangkok Airways, Thailand               agreements; plans to expand its business from a regional carrier to an airport operator in neigh-
                                        bouring countries, e.g. to Cambodia (Luang Prabang) and Myanmar

                                        The Barclays Group held a 65 percent stake in the consortium which acquired a 30-year conces-
Barclays Capital, UK                    sion to operate London-Luton Airport from the Luton Borough Council. Barclays Private Equity
(investment division of the Barclays    holds 32.5 percent, Barclays UK Infrastructure Fund 32.5 percent; other consortium members
Group)                                  were AGI and Bechtel Enterprises. The Barclays stake was taken over by TBI plc and Bechtel
                                        Enterprises




                                                                                            ACI AIRPORT ECONOMICS SURVEY 2006                59
     Company                                Activities

     Bayindir Holding, Turkey               Operated the new terminal at Antalya Airport/Turkey under an 8-year concession agreement in
                                            joint venture with Fraport AG (see there)

     Bechtel Enterprises International      Through Alterra (see there) held a 28.6 percent stake in the London-Luton Airport, which TBI
     Ltd & Bechtel Civil, USA               acquired in 2004; holds a stake in Alterra Partners Costa Rica which manages San José Airport
                                            in Costa Rica; through Alterra holds a stake in a consortium that was awarded a 30-year con-
                                            cession to develop and operate Lima’s Jorge Chavez International Airport in Peru along with
                                            consortium partner Fraport AG

                                            Holds a minority stake in Cochin International Airport Ltd in India
     Bharat Petroleum, India
                                            Operates the Brussels Airport terminals; won a contract from the regional Flemish Government
     BIAC (Brussels International Airport   to temporarily manage Ostend Airport
     Company), Belgium
                                            Owns about 60 percent of SEAF, the operator of Forlí Airport
     Bologna Airport (SAB), Italy
                                            Partner in SALT (Société Aéroportuaire de Lomé-Tokoin), the operator of Lomé-Tokoin Airport in
     Bordeaux CCI/Airport, France           Togo; partner in SAM (Société des Aéroports de Mauritanie), holding 5 percent; other sharehold-
                                            ers are Air Mauritanie, ASECNA, Air Afrique, and the Government of Mauritania, each holding
                                            10 percent. The remainder is held by private investors, including TotalFinaElf and banks

                                            Held a 48.25 percent stake in Birmingham Airport Holdings Ltd/UK together with Aer Rianta
     Bridgepoint Capital Ltd, UK            International (ex-ARI/NWV Ltd); exchanged contracts with Macquarie Airports Group Ltd who
     (formerly NatWest Equity Partners/     acquired its 24.125 percent shareholding in Birmingham Airport Holdings Ltd
     NatWest Ventures)
                                            Owned the Plymouth and Newquay airports through Brymon Airways; now sold to Sutton Harbour
     British Airways, UK                    Holdings plc (see there)

                                            Brussels Airport and the City of Albena had formed a consortium to apply for a 35-year concession
     Brussels Airport, Belgium              to operate the airports serving Varna and Bourgas in Bulgaria; the project failed

                                            Manages Siófok-Kiliti-Ságvár Airport, a general aviation airfield 120 km from Budapest
     Budapest Ferihegy International
     Airport Operating Plc., Hungary
                                            Owns and operates the Singapore airports; interested in managing foreign airports via Singapore
     CAAS, Singapore                        Changi Airport Enterprise (SCAE; see there)

                                            AFCO’s UK subsidiary owns South West Regional Airports Ltd (SRAL) which now operates Cov-
     CAFCOHL, UK                            entry Airport. (Also see AFCO)




60   ACI AIRPORT ECONOMICS SURVEY 2006
Company                              Activities

 CAISA, Uruguay                      The CAISA Consortium has a 20-year concession agreement with the Government of Uruguay to de-
(Consorcio Aeropuertos Internacio-   velop, manage, and operate the Punta del Este International Airport. Partners in CAISA are: Compa-
nales S.A.)                          ñía Oriental de Transporte S.A. of Uruguay; London Supply S.A.C.I.F.I. of Argentina; Norlit S.A. of Uru-
                                     guay; International Finance Corporation of the World Bank; and PAXPORT Laguna Inc. of Canada.

Cape Clear Aviation, Ireland and     Cape Clear Aviation rents Balaton Airport - Sármellék for 99 years since 2003. Fly Balaton is co-
Hungary¨                             owned by the municipalities of Sármellék and neighboring town Zalavár.

Capital Airport Group, Australia     Owns and operates Canberra International Airport in Australia

Capital Airports Holding Co          China’s largest airport company controls 16 Chinese airports and has stakes in another four air-
(CAH), China                         ports

Catullo SpA, Italy                   Operates the Verona-Villafranca and Brescia-Montechiari airports in northern Italy
(Società Aeroporto Valerio Catullo
SpA)

City Hopper Airports Group, UK       Operates Wolverhampton International Airport in the UK; acquired Blackpool International Air-
                                     port together with MAR Properties Ltd in 2004; operates Biella Airport in northern Italy since 1
                                     Sept. 2004 under a 25-year concession agreement

Comarco Services, Inc., USA          Manages twelve small-carrier and general-aviation airports in the United States. including five
                                     in Los Angeles County

Connaught Airport Development        Operates Knock International Airport in Co. Mayo/Ireland which was privately financed and built
Co. Ltd, Ireland

Copenhagen Airports                  Operates the Copenhagen-Kastrup and Roskilde airports in Denmark; is a partner in the Tribasa
International A/S,                   consortium (which won the 50-year concession contract for nine airports in Mexico’s south eastern,
(parent Copenhagen Airports A/S      Yucatan region) through its 36.5 percent equity stake in ITA S.A. (Inversiones y Tecnicas Aeropor-
has been a private company since     tuarias S.A. de C.V. - ITA), which held 15 percent of Grupo Aeroportuario del Sureste S.A. (ASUR)
1994; Maquarie Airports acquired     and a 2.5 percent direct equity interest in ASUR. ITA is now 63.5 percent owned by Mexican busi-
an 11.3 percent stake in 2005)       nessman Fernando Chico Pardo, and 36.5 percent by Copenhagen Airports; temporarily bought a
                                     36.7 percent share in Rygge Sivile Lufthavn A/S in Norway and plans to convert the Rygge military
                                     airfield 60 km south of Oslo into a civil airport together with the Norwegian conglomerate Orkla;
                                     in May 2001 acquired a 49 percent stake in Newcastle Airport in the UK (NIAL Holdings Plc)
                                     through CPH Newcastle Ltd (a wholly-owned holding company); signed an agreement with Hainan
                                     Meilan Airport Company Ltd in China to buy 20 percent of that company’s shares at a price to be
                                     determined, but not to exceed HKD 515 million; was selected the preferred bidder for the Black
                                     Sea airports (Burgas and Varna) in Bulgaria in April 2005; interested in acquiring stakes in further
                                     airports




                                                                                           ACI AIRPORT ECONOMICS SURVEY 2006                    6
     Company                               Activities

     Corporación Aeroportuaria del         Operates Punta Cana International Airport (PUJ)
     Este, Dominican Republic

     Cosapi S.A.                           Local partner which held 14.5 percent in a consortium that was awarded a 30-year concession
     Ingeniería y Construcción, Peru       todevelop and operate Lima’s Jorge Chavez International Airport in Peru along with consortium
                                           partner Alterra Partners/Bechtel Enterprises International Ltd (42.75 percent) and Fraport AG (42.75
                                           percent); has sold its stake to Alterra

     Diversified Asset Management          Will own and develop Brown Field near San Diego, California
     Group, USA

     Dragados y Construcciones S.A.,       Owns 29 percent of the Mexican-Spanish consortium which acquired a 15 percent stake in Grupo
     Spain (Grupo Dragados)                Aeroportuario del Pacifico (GAP) package of Pacific airports in Mexico, the other partners being
                                           AENA, Unión Fenosa, and the Angeles Group (Inversora del Noroeste and Holdinmex); the operating
                                           company is called ‘Aeropuertos Mexicanos del Pacifico, S.A.’; Member of the consortium which
                                           operates the international terminal at Santiago de Chile’s Arturo Benitez International Airport; Man-
                                           ages the second runway at Bogotá’s Eldorado Airport in Colombia;Together with YVRAS, Agunsa,
                                           and Ashtrom (an Israel-based construction company that has been working in Jamaica for over
                                           30 years) won a 30-year contract to develop, manage and operate Sangster International Aiport,
                                           Montego Bay/Jamaica.

     Düsseldorf Airport - Flughafen        Majority-shareholder (70.03 percent) in Flughafen Mönchengladbach GmbH (Mönchengladbach
     Düsseldorf GmbH (FDG), Germany        Airport), which it runs as Düsseldorf Express Airport; Düsseldorf Airport itself is part-privatised (50
                                           percent stake sold to private investors Air Partners GmbH in 1997; Hochtief AirPort GmbH owns 60
                                           percent, Aer Rianta International 40 percent of Air Partners GmbH; the City of Düsseldorf owns the
                                           remaining 50 percent)

     Erinaceous Group plc, UK              Acquired the Shoreham airfield, also known as Brighton City Airport, in the UK in July 2006

     FAA, USA                              Owns Atlantic City Airport, which is managed by AmPorts (ex-Johnson Controls)

     FAC - Federal Airports Corporation,   Had operated 21 Australian airports, all of which have been sold; has provided management
     Australia                             assistance at SSR International Airport, Mauritius through AMS - Airport Management Services Ltd

     FCC Agua y Entorno Urbano,            Partner in the SCL Terminal Aéreo Santiago consortium, formed together with Agencias Universales
     Spain (handling company now           S.A. (Agunsa; 47 percent) and Sabco Administrador de Fondos de Inversión S.A. of Chile (13 per-
     called Flightcare)                    cent), Grupo Dragados of Spain (30 percent with FCC), with YVRAS holding 10 percent; acquired the
                                           ground-handling activities of Sabena at Brussels Airport




62   ACI AIRPORT ECONOMICS SURVEY 2006
Company                                  Activities

Ferrovial Aeropuertos, Spain             Owns 24.5 percent of the Tribasa consortium which won the concession for Mexico’s nine south-
Formerly: Cintra (Concesiones de         eastern airports - Aeropuertos Sureste ASUR (Cancún, Cozumel, Huatulco, Mérida, Minatitlán, Oax-
Infraestructuras de Transporte,          aca, Tapachula, Veracruz, and Villahermosa), the three other partners are Copenhagen Airports A/S,
S.A.; toll-road unit of the Madrid-      Grupo Tribasa (Mexican contractors), and GTM of France; winner of the Antofagasta Airport/Chile
based Grupo Ferrovial, S.A.)             management concession and Niagara Falls Airport/ USA; acquired the 50 percent stake in Bristol
                                         International Airport from FirstGroup together with Macquarie; provided 19.6 percent of the equity
Ferrovial is one of the world’s lead-    of the Southern Cross consortium (Southern Cross Airports Corporation Holdings Ltd - SCACH), led
ing private-sector developers of         by Australia’s investment bank Macquarie Bank Ltd, which acquired Sydney Airport Corporation in
transport infrastructure, with com-      2002; the Cintra stake has been increased to 20.68 percent in the meantime; acquired all shares
mitted investment in concession          of Belfast City Airport, Northern Ireland, from Bombardier Services (UK) Ltd; in early 2006 made
companies’ equity that totals over       an 810-pence-per-share bid for BAA plc together with Canadian investment fund Caisse de Dépôt
EUR 2.2 billion. This activity is car-   et Placement du Québec (CDP) and GIC Special Investments Pte Ltd, the private equity arm of the
ried on through the development          Singapore Government, later increased to 900 pence; meanwhile owns 28.7 percent of BAA Plc;
and management of toll roads and         The Devon County Council named South West Airports Corp., a company comprising a Macquarie
parking lots (through Cintra) and air-   Airports Group and Ferrovial as the preferred bidder to buy a stake in the Exeter Airport company.
port management.

FirstGroup, UK                           Owned 51 percent of Bristol International Airport; stake sold to Cintra/Ferrovial and Macquarie

Fraport AG, Germany                      Acquired a 20 percent stake in Flughafen Hannover GmbH, with Nord/LB holding 10 percent and
(Frankfurt Airport)                      the remaining 70 percent continue to be owned equally by the State of Lower Saxony and the City
                                         of Hannover; acquired a 74.9 percent stake in Flug¬hafen Hahn GmbH (FFHG), the operator of the
                                         Hahn/Germany cargo airport, and 74.9 percent of Holding Unternehmen Hahn, the airport’s holding
                                         company, with the State of Rhineland-Palatinate holding a 25.1 percent blocking minority in the two
                                         companies; the FFHG stake was reduced to 65 percent from January 2005, when the State of Hesse
                                         entered as a shareholder; holds a 51 percent equity investment in the Saarbrücken Airport operating
                                         company; holds a minority stake in the FAL cargo handling company at Leipzig/Halle Airport; acquired
                                         a 25 percent stake in Ningbo-Lishe Airport in eastern China and is in talks for an even bigger stake in
                                         Xi’an’s Xianyang airport in northwest China; has been providing management assistance at Sharjah
                                         International Airport since the 1970s; provides advisory services for Athens International Airport S.A.
                                         at the new Athens airport (through FASP - Flughafen Athen-Spata Projektgesellschaft mbH), which
                                         holds a 0.125 percent stake in AIA S.A.; handling contracts at seven Spanish airports through Ineuro-
                                         pa Handling U.T.E., in which Fraport has a 20 percent stake; holds a stake in Goldair Aviation Handling
                                         in Athens/Greece; holds a 10 percent stake in African Cargo Handling Ltd of Nairobi/ Kenya; operates
                                         the new terminal at Antalya Airport/Turkey under an 8-year concession agreement in joint venture
                                         (50:50) with Bayindir Holding; held a 25 percent stake in the Philippine International Air Terminals, Co.
                                         (PIATCO) consortium for building and operating Terminal 3 at Ninoy Aquino International Airport, Ma-
                                         nila. The terminal has been completed but is not yet in operation. Fraport has written down its stake
                                         and legal action is under way; partner in the Aguadilla Consortium for Transportation (ACT) which has
                                         won the operating and development contract for Aguadilla ‘Rafael Hernandez’ International Airport,
                                         Puerto Rico; holds 42.75 percent in a consortium that was awarded a 30-year concession to develop
                                         and operate Lima’s Jorge Chavez International Airport in Peru along with consortium partner Bechtel
                                         Enterprises International Ltd (57.25 percent); acquired a 1 percent stake in Brisbane Airport Corpora-
                                         tion Ltd (BACL) and joins a consortium led by the Schiphol Group in the management of the Australian
                                         airport; interested in managing other airports throughout Europe and Latin America



                                                                                                ACI AIRPORT ECONOMICS SURVEY 2006                    63
     Company                              Activities

     Global Infrastructure Partners       Together with AIF-FP (see AIG) acquired London City Airport in autumn 2006 from Airport Man-
     (GIP)                                agement and Investment Ltd (Dermot Desmond-owned); GIP owns 50 percent of LCY
     (infrastructure joint venture be-
     tween Credit Suisse and GE Infra-
     structure)

     GlobeGround Berlin GmbH              Built, operates and owns a cargo terminal at Riga International Airport in Latvia; provides ground
     (ex-B.L.A.S. GmbH), Germany          handling services at the Berlin airports, at Munich and, temporarily, through a subsidiary, at
                                          Niederrhein Airport in Germany

     GMR Group, India                     With partners Fraport, Malaysia Airports, and infrastructure firm IDFC owns 74 percent of the
                                          company that will upgrade Delhi Airport; Owns 63 percent of the company that upgrades Hyder-
                                          abad Airport
     Groupe GTM, France
     (owned by VINCI since 2000; see      Together with ADP, was a joint bidder for up to 49 percent of the shares of a yet-to-be privatised
     VINCI Airports)                      Sukarno-Hatta International Airport, Jakarta/Indonesia

     Guangdong Airport Management
     Corp., China                         Manages Guangzhou’s Baiyun International Airport, Shantou Airport, Zhanjiang Airport, and
                                          Meixian Airport - all in China’s Guangdong province
     Hainan Airlines, China
     (HNA Group)                          Owns 68 percent of Haikou-Meilan International Airport Company which it manages; the other
                                          shareholders are or were: American Aviation LDC (George Soros; 14.8 percent), Central Admin-
                                          istration of China Civil Aviation Industry, Hainan International Trust & Investment Co. Ltd, China
                                          Aviation Fuel Co. Ltd, Hainan Aviation Holding Group, and China Southern Airlines; Copenhagen
                                          Airport A/S acquired a 20 percent stake; the HNA Group is in talks to acquire stakes in other
                                          Chinese airports, e.g. in Fuzhou Airport and in airports in the Guizhou and Shanxi provinces; a
                                          contract was signed for the development and operation of the airport of Kelamayi City/Xinjiang

     Highlands & Islands Air-ports Ltd    Manages and maintains the ten airports throughout the Highlands and Islands of Scotland,
     (HIAL), UK                           providing vital social, business and welfare links to the people who live there. HIAL’s Head Of-
     HIAL is a company wholly owned       fice is based at Inverness Airport but HIAL is responsible for the airports in Barra, Benbecula,
     by Scottish Ministers and spon-      Campbeltown, Inverness, Islay, Kirkwall, Stornoway, Sumburgh, Tiree, and Wick.
     sored by the Scottish Executive
     through the Transport Group of the
     Enterprise, Transport and Lifelong
     Learning Department.

     Hindustan Aeronautics Ltd            Owns and operates a company airfield which is being used as Bangalore Airport in India; to be
     (HAL), India                         replaced from 2005 by a privatised airport




64   ACI AIRPORT ECONOMICS SURVEY 2006
Company                               Activities

Hochtief AirPort GmbH (HTA),          HTA owns 26.7 percent, HTAC 13.3 percent of Athens International Airport S.A., the operator of
Germany (wholly-owned subsidiary      the new Athens International Airport at Spata; purchased a 50 percent stake in the Düsseldorf
of Hochtief AG)                       Airport company FDG together with Aer Rianta of Ireland (their joint-venture company Airport Part-
                                      ners GmbH is owned 60 percent by Hochtief and 40 percent by Aer Rianta International plc), giving
                                      Hochtief a 30 percent stake (HTA 20 percent, HTAC 10 percent); FDG in turn owns 70.03 percent of
                                      Flughafen Mönchengladbach GmbH;

Hochtief AirPort Capital GmbH         HTA owns 26.1 percent, HTAC 13.1 percent of the privatised Hamburg Airport company together
& Co. KGaA (HTAC), owned by           with Aer Rianta (the joint-venture Hamburg Airport Partners GmbH is owned 80 percent by Hochtief,
Hastings Funds Management (50         20 percent by Aer Rianta International plc); HTA owns 5.4 percent, HTAC 5.1 percent of the Southern
percent), Caisse de dépôt et place-   Cross consortium, led by Australia’s investment bank Macquarie Bank Ltd, which acquired Sydney
ment du Québec (40 percent) and       Airport Corporation via the Southern Cross Airports Corporation Holdings Ltd - SCACH in 2002;leads
KfW IPEX-Bank (10 percent)            the Airport Partners Tirana consortium in Albania which has won a 20-year concession to develop
                                      and operate Tirana International Airport. The consortium, which is headed by Hochtief AirPort (47
                                      percent stake), includes Deutsche Investitions- und Entwicklungsgesellschaft (DEG; 31.7 percent)
                                      and the Albanian American Enterprise Fund (AAEF; 21.3 percent);

The Houston Airport System            ADC & HAS Management, a joint venture of ADC Canada, Toronto and the Houston Airport System,
(HAS), USA (HAS Development Cor-      has an operating contract for ‘Mariscal Sucre International Airport’, Quito/Ecuador
poration - HASDC; non-profit corp.)

Howard Holdings plc;                  Bought Coventry Airport in January 2006 for more than GBP 10 million and is already looking at
UK & Ireland                          acquiring a second airport in Spain. Plans to to acquire up to ten regional airports across Europe
                                      in the next three years

Hutchison Port Holdings,              Owns Grand Bahama Airport jointly with the Grand Bahama Airport Authority and has management
Hong Kong                             control

IAC (International Airport Cen-       Owns real estate at US airports; sold 37 facilities at seven international airports to AMB in
ters), USA                            October 2003

IAT (International Aviation Ter-      Owns and leases real estate at North American airports
minals Inc.), USA

ICA                                   Partner (37.25 percent) in Operadora Mexicana de Aero¬puertos (OMA), together with ADP 25.5
(Ingenieros Civiles Asociados),       percent and investor VINCI SA (37.25 percent), both of France, which operates Mexico’s priva-
Mexico (also called Constructoras     tised Grupo Centro Norte airports; VINCI sold its stake to ICA in December 2005
ICA)

IDC-Concesiones S.A., Chile           Operates the Puerto Montt, Serena and Calama airports in Chile in joint venture with Unique Zürich
(Gestión e Ingeniería IDC S.A.)       Airport;as partner of the OPAIN consortium, won a 20-year concession to operate Bogota’s El Dorado
                                      Airport; won a 20-year management contract to run Isla de Margarita Airport in Venezuela in joint
                                      venture with Unique Zürich Airport




                                                                                          ACI AIRPORT ECONOMICS SURVEY 2006                 65
     Company                                  Activities

     IIU Ltd, Ireland                         Owned and operated London City Airport, UK until its take-over by the AIG-FP/GIP consortium in
     (International Investment & Un-          autumn 2006; IIU owner Dermot Desmond holds a 5 percent stake in TBI plc
     derwriting Ltd, owned by financier
     Dermot Desmond)



     Impregilo SpA, Italy                     Partner in the ‘Aeropuertos Dominicanos Siglo XXI, S.A.’ consortium that manages four airports
                                              in the Dominican Republic; closed a contract in Sept. 2005 for the sale to Gemina S.p.A. of its 11
                                              percent equity investment in Leonardo S.r.l., the company that holds 51.08 percent of Aeroporti di
                                              Roma S.p.A.

     Infratil NZ Ltd, New Zealand             Through Infratil Australia Ltd holds a 49.5 percent stake in Airstralia Development Group, which
     Infratil International Ltd,              manages Perth Airport, and 51 percent in Airport Development Group (ADG), now Northern Terri-
     Australia                                tory Airports (NTA), which manages Alice Springs, Darwin and Tennant Creek in Australia; part-
     Infratil Airports Europe Ltd             nered with AGI (now TBI) in these projects; Infratil NZ owned 1 percent of Auckland Int. Airport
     (IAEL), UK                               Ltd before AIAL went public in July 1998; holds a 66 percent stake in Wellington Int. Airport Ltd
     (The Infrastructure & Utilities units    (WIAL) through NZ Airports, wholly owned by Infratil New Zealand Ltd (the remaining 34 percent
     of Infratil are subsidiaries of H.R.L.   are owned by Wellington City Council);
     Morrison & Co. Ltd, Brisbane, owned      IAEL acquired a 67.3 percent stake of Glasgow Prestwick International Airport in Scotland for GBP
     25 percent by Lendlease Corp.; the       14.8 million in January 2001. The total purchase cost was GBP 34.5 million. The balance of equity,
     Australian Infrastructure Fund - AIX     GBP 7.2 million, was provided by the Special Utilities Investment Trust plc, a UK-based utility inves-
     owns 31 percent of Infratil)             tor, and the Omniport consortium of Scottish business interests. In March 2004, Infratil increased
                                              its holding to 100 percent; took over Kent International Airport in the UK from PlaneStation in 2005;
                                              made a down payment to acquire 90 percent of Flughafen Lübeck GmbH in Germany;

     Intelcan Technosystems Inc.,             To build a USD 100 million international airport in Ghimbav, Brasov County in Romania, under a
     Canada                                   public-private partnership with Romanian authorities

     Inter-Consult, Tanzania                  Owns 24 percent of Kilimanjaro Airports Development Company (KADCO), operated under a
                                              25-year concession together with Mott MacDonald of the UK (75 percent) and the Tanzania
                                              Government (1 percent); Schiphol Group is the airport operating partner

     Inverness Air Terminal Ltd, UK           Has privately financed a GBP 9 million terminal refurbishment project at Inverness Airport in
     (partners in the company are the         Scotland under the Private Finance Initiative (PFI)
     M.J. Gleeson Group, Canmore
     Partnership, Noble & Company,
     and MPM Adams)

     Johnson Controls                         See: AvPorts

     Kallax Cargo AB, Sweden                  Temporarily acquired the LFV-owned Luleå-Kallax air base in northern Sweden for development
                                              into an international cargo centre. The company’s mission is to organise, develop and market
                                              cargo operations at Kallax with the help of co-operative service partners, who provide, for ex-
                                              ample, fuelling and aircraft maintenance, transhipping, warehousing and logistics.




66   ACI AIRPORT ECONOMICS SURVEY 2006
Company                              Activities

Kato Investment Group, Egypt         Developing the new El Alamein Airport in Egypt on a BOT basis

Keolis (resulting from a merger of   Partner in the consortium which manages Europort Vatry, the multi-modal airport in France. Sold
Via GTI/Paribas Group and Cariane    its 23.31 percent stake in 2005; manages the new Angers-Marcé Airport and the La Mole airfield
in 2001), France                     near St. Tropez in France and provides ground transport services at a number of French airports;
                                     manages Grenoble Airport and Chambéry/Aix les Bains Airport in France in joint venture with Vinci
                                     Airports since 2004

Moh. Abdulmohsin                     Through its local subsidiary EMAK, has a BOT contract and 40-year concession for Mersa Alam
al-Kharafi Group, Kuwait             Airport and an associated tourist resort, marina and port development in Egypt; airport is operated
                                     by ADP since October 2001

Laing Investments Ltd, UK            Equity (14.5 percent) in the Adelaide Airport Ltd consortium which owns the Adelaide and
                                     Parafield airports in Australia (see Manchester Airport below); holds 14.55 percent in North-
                                     ern Territories Airports by acquiring the 29.1 percent TBI plc (ex-AGI) holding in Darwin, Alice
                                     Springs and Tennant Creek together with National Australia Asset Management; former stake
                                     holder in Birmingham International Airport - BIA Ltd (4 percent) in the UK

LCOR Inc., USA                       LCOR has been involved in the USD 3 billion JFK International Air Terminal (Terminal 4)/Delta
                                     expansion, the largest public/private airport project in US history, completed in 2001 ; manages
                                     T4 together with Schiphol USA LLC and Lehman Brothers

Lehman Brothers, Inc., USA           Partner and financial advisor for the new Terminal 4 at New York-JFK; is firmly established as
                                     one of the leading investment banking firms in structuring and underwriting securities for airport
                                     improvement projects. Since 1990, has served as book-running senior manager for 24 airport
                                     projects totalling USD 4 billion, as co-senior manager for 15 transactions totaling USD 1.5 billion,
                                     and as co-manager for an additional 36 transactions representing USD 6 billion. Lehman Brothers
                                     maintains a dedicated Airport & Transportation Finance Group staffed with five investment banking
                                     professionals with significant experience in airport financings. The group’s expertise includes in-
                                     troducing new airport credits to the capital markets, preparing strategic financial plans, developing
                                     new bond documents and structuring innovative refinancing techniques.

Linfox Transport Group, Australia    Operates the Melbourne-Essendon and Avalon general aviation airports

London Supply, Argentina             Owns and operates Ushuhaia Airport/Tierra del Fuego and five airports in Neuquén province in Ar-
                                     gentina (including Trelew, Rio Grande, El Calafate and Valle del Conlara-Merlo); member of CAISA
                                     (Consorcio Aeropuertos Internacionales SA) which has owned, operated and developed the new
                                     terminal at Punta del Este Airport in Uruguay (see CAISA) since 1995; builds and manages a new
                                     duty-free zone at Puerto Iguazú on the border with Brazil

Lufthansa Cargo, Germany             Has a 29 percent stake in a consortium building and operating a cargo terminal at Shanghai’s new
                                     Pudong International Airport




                                                                                          ACI AIRPORT ECONOMICS SURVEY 2006                  67
     Company                         Activities

     Lynxs CargoPorts, USA           The Lynxs Group is an international developer of distribution space emphasizing in on airport facili-
                                     ties, including services and management related to these facilities. Provides interactive, intermod-
                                     al and international distribution facility solutions for emerging regions CargoPorts, e.g. Anchorage,
                                     Austin, Chicago, Ft Lauderdale, Houston, Sacramento, San Antonia, Stewart, Tulsa, and London.

     Lyon CCI/Airport, France        Manages the two Lyon airports, Satolas/”Exupéry” (international) and Bron (general aviation);
                                     managed Grenoble-St. Géoirs Airport temporarily

     Malaysia Airports Holding Bhd   Manages and operates 39 airports in Malaysia: 5 international, 16 domestic and 18 Short Take-Off
     (MAHB), Malaysia                and Landing Ports (STOLports). On 30 November 1999, MAHB became the first airport company to
                                     be listed in Asia.Holds a 40% stake in CAMS which operates Phnom Penh-Pochentong Airport in
                                     Cambodia; Holds an 11 percent stake in Hyderabad International Airport Ltd, the consortium that
                                     builds the new Hyderabad Airport in India; the other partners are GMR Group (63 percent), Airports
                                     Authority of India (13 percent) and the government of Andhra Pradesh (13 percent); Has a 10 per-
                                     cent stake through Malaysia Airports (Mauritius) Pvt Ltd in Delhi International Airport Ltd (DIAL)
                                     that will modernize New Delhi’s Indira Gandhi International Airport; the other partners are: Airports
                                     Authority of India (26 percent), GMR Infrastructure (31.1 percent), GMR Energy (10 percent), GVL
                                     Investments (9 percent), India Development Fund (3.9 percent), and Fraport AG (10 percent). Was
                                     interested in managing South African and Central Asian airports

     The Manchester Airports Group   Manages the Adelaide and Parafield airports in Australia owned by the Adelaide Airport Ltd
     (MAG), UK                       consortium, together with Serco Asia Pacific, under a 50-year lease started in 1998; acquired
                                     an 82.7 percent stake in the former municipally-owned Humberside Airport; acquired the East
                                     Midlands (now: Nottingham East Midlands) and Bournemouth airports, previously owned by
                                     National Express; owns the operating companies Manchester Airport Plc, Manchester Airport
                                     Development Ltd, Manchester Airport Aviation Services, and Ringway Handling Services Ltd

     Macquarie Airports Group Ltd    Acquired the 50 percent stake in Bristol International Airport from FirstGroup; exchanged contracts
     (MAG), Australia and UK         with Bridgepoint Capital Ltd to acquire its 24.125 percent shareholding in Birmingham Airport Hold-
                                     ings Ltd in the UK;in 2005, the Devon County Council named South West Airports Corp., a company
                                     comprising a Macquarie Airports Group and Ferrovial, as the preferred bidder to buy a stake in the
                                     Exeter Airport company; acquired 11.7 percent of the Southern Cross consortium (Southern Cross
                                     Airports Corporation Holdings Ltd - SCACH) which acquired Sydney Airport Corporation Ltd (SACL)
                                     in 2002; plans to acquire most of the 4.96 percent Abbey National stake in SCACH

     Macquarie Airports (MAp),       Holds a 61.6 percent interest in MAG (see above); has a total beneficial interest of 55.5 percent in
     Australia                       Sydney Airport Corporation Ltd; acquired a 52.5 percent interest in Brussels International Airport
                                     Corporation (BIAC) in 2004, increased to 53.9 percent in Sept. 2006; holds a total beneficial interest
                                     of 33.6 percent in Aeroporti di Roma; acquired an 11.3 percent stake in Copenhagen Airports A/S
                                     in 2005 which was increased to a controlling 53.4 percent in 2006; through its controlling interest
                                     in Copenhagen Airports A/S, holds a stake in ITA, the strategic partner of Mexican airport operator
                                     ASUR




68   ACI AIRPORT ECONOMICS SURVEY 2006
Company                             Activities

Macquarie Infrastructure            Owns, operates and invests in a diversified group of infrastructure busi-nesses, which provide
Company, New York/USA               basic, everyday services, in the USA and other de-veloped countries. Its businesses and invest-
                                    ments consist of an airport services business (Atlantic and AvPorts), an airport parking business
                                    (PCAA and Avistar) and a district energy business (Thermal Chicago and North-wind Aladdin), a 50
                                    percent interest in the company that operates the Yorkshire Link shadow toll road and investments
                                    in South East Water, a UK regulated water utility and in Macquarie Communications Infrastructure
                                    Group; acquired six off-airport parking facilities in Buffalo, Columbus, Houston, Oklahoma City,
                                    Philadelphia, and St. Louis in Oct. 2005 for a total purchase price of $64.9 million

Marseille CCI/Airport, France       Majority stakeholder (75 percent) of Kilimanjaro Airports Development Company (KADCO), operated
                                    under a 25-year concession together with Inter-Consult of Tanzania and the Tanzania Government

Mott MacDonald Group, UK            Former equity holder in Birmingham International Airport - BIA Ltd (4.25 percent) in the UK

National Express Group Plc, UK      Owned the East Midlands & Bournemouth airports in the UK, which it sold to Manchester Airport;
(Airports Division)                 provided management consultancy at Subic Bay/Philippines for a 12-month period; under a 99-year
                                    lease agreement by the New York State Department of Transportation, National Express Corporation
                                    (NEC) is the operator of the first privatised US airport, Stewart International Airport (NEC is the US
                                    subsidiary of the National Express Group, PLC, which operates bus services in the UK, Australia and
                                    the USA). National Express has a worldwide revenue of USD 2.5 billion and is quoted on the London
                                    Stock Exchange



Ogden Aviation, USA                 Managing partner (29 percent) in the MASC-Ogden ground-handling joint venture at Macau In-
(taken over by Menzies in the UK)   ternational Airport; partner in the Aeropuertos Argentina 2000 S.A. consortium that purchased 32
                                    Argentinean airports (28 percent); BOT partner in runway consortium at Bogotá Airport/Colombia;
                                    Managing partner in the ‘Aeropuertos Dominicanos Siglo XXI, S.A.’ consortium that manages four
                                    airports in the Dominican Republic: Santo Domingo (‘Las Americas’), Puerto Plata (‘Gregorio Luper-
                                    ón’), Samaná (‘Arroyo Barril’), and Barahona (‘Maria Montez’); Partner in ADR Handling at the Rome
                                    airports; manages the fuel facilities at Tocumen International/Panama and San Juan-Luiz Muñoz
                                    Marin/Puerto Rico; operates cargo terminals, e.g. in Amsterdam, Barcelona, Madrid, Prague, and
                                    other airport facilities. Altogether, Ogden was present at 121 airports in 25 countries

Oman Aviation Services, Oman        Owns 5 percent of OAMC (Oman Airports Management Company) which manages the Seeb and
                                    Salalah airports.

Omniport plc, UK                    Has successfully completed an arrangement with Norfolk County Council and Norwich City
                                    Council to acquire Norwich International Airport. Omniport will own 80.1 percent of Norwich
                                    Airport Ltd with 19.9 percent of the equity remaining with the two councils. owned and oper-
                                    ated Glasgow Prestwick International Airport, which was sold to Infratil




                                                                                         ACI AIRPORT ECONOMICS SURVEY 2006                   69
     Company                                  Activities

     Peel Airports Ltd, UK                    Owns 76 percent of Liverpool’s ‘John Lennon Airport’, UK after having acquired British Aerospace
     (subsidiary of property group Peel       (Liverpool Airport) Ltd in 1997; acquired the Doncaster-Finningly RAF station in South Yorkshire
     Holdings Ltd, owners of the Man-         which has been transformed into the regional ‘Robin Hood Airport’ (Doncaster/Sheffield); owns 50
     chester Ship Canal)                      percent of Sheffield City Airport Ltd; became a strategic partner of Teesside International Airport
                                              by acquiring a 75 percent stake in 2003; now called ‘Durham Tees Valley Airport’

     Penambang Group, Malaysia                Manages and develops Pietersburg’s Gateway International Airport in Northern Province/South
                                              Africa, a former air force base, under a 50-year concession since 2002; holds 90 percent of the
                                              airport company’s stock

     The Perot family, USA                    Owns Alliance Airport in Texas where American Airlines has built a USD 480 million mainte-
                                              nance base

     Piaggio Aero Industries, Italy           Owns 13 percent of Società Aeroporto Toscano (SAT), the operator of Pisa Airport in Italy

     PlaneStation Group plc, UK               Was the owner of the Kent International (Manston) Airport in the UK and developed it as London-
     (ex-Wiggins)                             Manston Airport; had acquired a 50-year lease of Smyrna Airport, Nashville, TN/USA, through
     (company went into voluntary ad-         its PlaneStation US subsidiary; was considering a 30-year concession to operate and develop
     ministration on 26 July 2005; Infratil   Odense Airport in Denmark but failed to agree with the military; was considering operating
     and Babcock & Brown took over the        concessions for the airports of Plzen-Lin/Czech Republic and Marangá in Paraná State/Brazil;
     airport assets)                          held an operating licence for the international terminal of Melbourne Airport, Florida/USA for
                                              an initial period of 10 years with five consecutive five year extensions, subject to performance
                                              thresholds, up to a total of 35 years;had acquired Lahr ‘Black Forest Airport’ in Germany and
                                              planned to acquire Parchim in Germany, Cuneo-Levaldigi in Italy, Székesfehérvár-Börgönd in
                                              Hungary, plus long leaseholds at other European airports to set up PlaneStations and develop a
                                              worldwide cargo service network

     Primkop Airport Management,              Manages the new Kruger Mpumalanga International Airport in South Africa (see ABB)
     South Africa

     ProLogis, USA                            Real-estate developer specializing in logistics facilities; will build a large-scale multi-tenant
                                              physical distribution centre in Central Japan International Airport

     Raytheon Infrastructure, Inc.,           Partner in the Aguadilla Consortium for Transportation (ACT) which has won the operating and
     USA                                      development contract for Aguadilla ‘Rafael Hernandez’ International Airport, Puerto Rico

     Regional Airports Ltd (RAL), UK          Owns and operates Southend Airport (London Express Airport) and London Biggin Hill Airport,
     (founded by Andrew Walters in            UK RAL operates as a holding company for subsidiary airport operations. Regional Airports Ltd
     1990 as a private company)               also operates Northolt Handling, the Premier Service passenger handling service for commercial
                                              flights at RAF Northolt

     SAT - Società Aeroporto Toscano          Owns 100 percent of Pisa Airport and 86 percent of Elba’s Marina di Campo Airport
     SpA, Italy




70   ACI AIRPORT ECONOMICS SURVEY 2006
Company                               Activities

SATS, Singapore                       Has a 24.5 percent stake in Asia Airfreight Terminal Co Ltd (AAT), Hong Kong International Airport
Singapore Airport Terminal Services   and a 30 percent stake in Tan Son Nhat Cargo Services Ltd (TCS), Ho Chi Minh City/Vietnam; has a
(Pte) Ltd                             joint venture in Beijing/China since 1995, Beijing Aviation Ground Services (BGS)

SCAE, Singapore (Singapore Changi     Acquired a 7.14 percent stake in Auckland International Airport in New Zealand, previously held by
Airport Enterprise Pte Ltd)           North Shore City Council, and had plans to acquire another 25.8 percent; sold its stake in December
                                      2001 in a surprise move. Took a 50 percent share in Alterra Partners (see there); SCAE has decided
                                      to sell its share of Luton Airport to UK-based airport operator TBI plc as part of plans to pursue
                                      new investment opportunities in Asia, particularly China and India; In June 2005 signed an initial
                                      agreement to spend up to CNY 1.6 billion (USD 19 million) for up to 45 percent of Nanjing-Lukou
                                      Airport; together with Alterra had planned to acquire stakes in the Omani airports (Seeb & Salalah)
                                      and the two Cyprus airports (Larnaca & Paphos); both projects failed



Schiphol Group, The Netherlands       Schiphol Group owns and operates the Amsterdam-Schiphol, Rotterdam and Lelystad airports,
(trade name of N.V. Luchthaven        and acquired a 51 percent stake in Eindhoven Airport, all in The Netherlands; through its Schiphol
Schiphol, owned 75.8 percent by       International division, is a partner in the management companies of Brisbane Airport in Australia
the State of the Netherlands, 21.8    (15.62 percent stake in BACL, which has a 50-year lease); manages the International Air Terminal
percent by the City of Amsterdam,     at JFK International, New York through Schiphol USA LLC (40 percent stake in JFKIAT) with part-
and 2.4 percent by the City of Rot-   ners LCOR Inc. and Lehman Brothers; holds a 1 percent stake in Vienna International Airport plc;
terdam)                               formed the Pantares alliance with Fraport AG, Frankfurt; has a joint venture with Angkasa Pura
                                      II/Indonesia (nine airports) to introduce a passenger loyalty programme based on iris identification
                                      at Indonesian airports and seaports; since 2004, has a 7-year contract to assist the management of
                                      Aruba’s Reina Beatrix Airport in the Netherlands Antilles. Interested in managing other European,
                                      US, Latin American and Australasian airports/terminals

                                      Schiphol Real Estate
                                      Schiphol Real Estate, a fully-owned Schiphol Group subsidiary, develops, invests in, manages
                                      and markets commercial property. Schiphol Real Estate is active at and around Amsterdam Air-
                                      port as well as at Eindhoven Airport and Rotterdam Airport in the Netherlands. Internationally,
                                      the company has operations near Milan-Malpensa Airport in Italy and at Hong Kong Airport.

Stagecoach Aviation Group,            Owned Glasgow Prestwick International Airport, operated by PIK Ltd; sold its stake to a con-
UK (subsidiary of Stagecoach Hold-    sortium comprising Omniport, a Scottish company that will operate the airport, Infrastructure &
ings Plc)                             Utilities NZ (Infratil; see there), and Specialist Utilities Investment Trust

Sutton Harbour Holdings plc, UK       Purchased Plymouth City Airport Ltd in the UK, together with the management contract for
                                      Newquay Cornwall Airport from British Airways in April 2000



Sverdrup Aviation, USA                Operates the new MidAtlantic Airport, the second-largest privatised airport in the USA




                                                                                          ACI AIRPORT ECONOMICS SURVEY 2006                  7
     Company                                 Activities

     TAG Aviation SA, Luxembourg             Manages and develops the former Ministry of Defence aerodrome at Farnborough, Hampshire/
     subsidiary of TAG-Heuer, (watch         UK into a business aviation centre, 35 miles from Central London, under a conditional leasing
     makers and aviation sponsors of         agreement; the Farnborough airfield was officially handed over to TAG Aviation on 5 February
     Switzerland), and the Saudi family      2003. operates the Prangins/VD general aviation airfield near Geneva/ Switzerland
     Aziz Ojjeh

     TAV Group Holding Co                    TAV Group currently operates in Istanbul-Atatürk’s Airport Domestic, International and General
     Tepe Akfen Ventures, Turkey             Aviation Terminals and a parking garage. TAV Airport Holding Co. managed the airport and avia-
                                             tion services since 3 July 2005 for a period of 15.5 years under an operational lease with 5.5
                                             years of BOT model in Atatürk International Terminal. In addition, TAV Airports Group also man-
                                             ages and operates the following airports under long-term BOT contracts: Ankara’s Esenboga
                                             Airport Domestic and International Terminals, and Izmir’s Adnan Menderes Airport International
                                             Terminal in Turkey; and the Tblisi and Batumi airports in the Georgian Republic as a member of
                                             a consortium. Won the contract in late 2004 to build Cairo Airport’s Terminal 3. The Holding Co.
                                             also includes Havas, a leading Turkish ground handling services company; ATU, Turkey’s largest
                                             duty free operator; BTA, a food & beverage company; an aviation security arm; an airport opera-
                                             tions and maintenance company; and an IT services provider specializing in airport applications.
                                             Bidding for several BOT and airport construction projects in the Middle East, in North Africa and
                                             Eastern Europe

     TBI Airport Holdings Ltd,               Owned and operated Cardiff-Wales (since 1995) & Belfast International in Northern Ireland
     (TBI plc) UK                            (since 1996); owned Central Florida Terminals, the owner and operator of Orlando Sanford Inter-
     (now owns AGI; see there)               national Airport (through TBI Airport Management, Inc.); acquired 90.1 percent of Skavsta Air-
     TBI stands for Thomas Bailey Invest-    port in Sweden; by acquiring AGI in Sept. 1999 (see there), gained access to airports in Australia,
     ments; the company was started by       Bolivia, Costa Rica, North America (airport services at 17 locations) and to Luton/UK, i.e. a total
     brothers Peter and Stanley Thomas,      of 37 airports; in May 2001, TBI sold a 29.1 percent interest from a total holding of 49 percent in
     the main shareholders; Dermot           the Northern Territory Airports in Australia to National Australia Asset Management and John
     Desmond holds a 5 percent stake         Laing Investment Private Ltd. The Northern Territory Airports comprise Darwin International Air-
     in TBI plc; In January 2005, TBI was    port, Alice Springs Airport and Tennant Creek Airport. TBI sold the remaining stakes - except
     acquired by Airport Concessions         Hobart - to a BAA-led consortium. The Australian airport interests were originally purchased
     & Development Ltd, a company 90         by Airport Group International Holdings. TBI plc took control of London-Luton Airport (formerly
     percent owned by Abertis, the Span-     owned by London Luton Airport Holdings Ltd) by buying out Barclays Private Equity, the bank that
     ish construction and toll-road group,   had a controlling interest in the airport operating company. TBI thus increased its stake from 25
     and 10 percent owned by Aena In-        percent by 46 percent to 71.4 percent. Bechtel exercised a right to increase its former 10 percent
     ternacional, the operator of over 40    shareholding (ex-AGI) to 28.6 percent. Singapore Changi Airport Enterprise (SCAE) has decided
     Spanish airports                        to sell its share of Luton Airport to TBI as part of plans to pursue new investment opportunities
                                             in Asia, particularly China and India. TBI then acquired the 28.6 percent shareholding of Luton
                                             Airport from Alterra Partners, the 50:50 joint venture between SCAE and US-based Bechtel. TBI
                                             plc completed the sale of AGI, its airport services business in the USA, to BBA Group PLC in
                                             late 2004.




72   ACI AIRPORT ECONOMICS SURVEY 2006
Company                            Activities

Toronto Airport (Greater Toronto   Proposed as the operating partner in a Lagos/Nigeria BOT terminal project undertaken by the
Airport Authority), Canada         Canadian company, Sanders Investment Ltd

TradePort International Corp.,     Manages the John C. Munro Hamilton International Airport /Mount Hope Airport in Ontario/
Canada                             Canada under a 40-year concession with the City of Hamilton; TradePort International Corpora-
                                   tion is a consortium of Westpark Developments, a local Hamilton land development company,
                                   the Labourers International Union of North America (LIUNA) and YVR Airport Services.

Tribasa, Mexico                    The Tribasa consortium had won the 50-year concession contract for nine airports in Mexico’s
(construction company owned by     southeastern region - Aeropuertos Sureste (ASUR), together with three other partners: Copen-
the Peñaloza family)               hagen Airports A/S, Cintra of Spain, and GTM of France (now VINCI). The nine southeastern
                                   airports are: Cancún, Cozumel, Huatulco, Mérida, Minatitlán, Oaxaca, Tapachula, Veracruz, and
                                   Villahermosa

Unión Fenosa, Spain & Mexico       Member of Grupo Aeroportuario del Pacífico (GAP) with operates the Pacific airports in Mexico,
(third-largest Spanish utility)    the other partners being AENA, Dragados, and the Angeles Group; the operating company is
                                   called ‘Aeropuertos Mexicanos del Pacifico, S.A.’

Unique (Flughafen Zürich AG),      Operates Zürich Airport; Holds a 17 percent stake in Bangalore International Airport Ltd (BIAL), a
Switzerland                        consortium with Siemens Airports & Larsen & Toubro, that is building the new Bangalore Airport
                                   in India; joint venture with IDC S.A. in Chile, called Unique Airports Latin America (UALA), to
                                   operate three airports in Chile (Calama, La Serena, Puerto Montt) and other Latin American air-
                                   ports; has a 20-year management contract to run Isla de Margarita Airport in Venezuela in a joint
                                   venture with IDC, Chile; a consortium around Unique has been awarded a 20-year concession
                                   to operate El Dorado Airport in Bogotá/Colombia. The Swiss airport operator is not planning to
                                   participate in Bogotá’s USD 650 million expansion scheme. The new management services will
                                   bring Unique CHF 1 to 2 million per year.

Vienna International Airport,      Vienna International Airport plc has been a private company since 1992; Manages Vöslau/Aus-
Austria (Vienna International      tria and part-owns Buda¬örs/Hungary; Was a joint-venture partner in the BOT contract for the
Beteiligungsmanagement Ges. mbH    new international terminal at Istanbul’s Atatürk International Airport, holding a 5 percent stake
(VINT)                             in TEPE-Akfen-VIE Investment, Construction & Operation Inc.; Is a joint-venture partner in the
                                   Barcelona/Venezuela privatisation project; Was interested in operating airports in Germany
                                   (e.g. Eberswalde-Finow near Berlin); was a partner holding 7 percent in the Berlin-Schöne¬feld
                                   consortium; Acquired an 18.7 percent stake in the consortium that will build and operate Ciudad
                                   Real Airport in Spain; Owns 57.1 percent of Malta Mediterranean Link Consortium Ltd (MML)
                                   which holds 40 percent of Malta International Airport plc and manages the airport; the stake
                                   gives VIE a 22.8 percent share in Malta International Airport plc. VIE Malta Ltd, a wholly-owned
                                   subsidiary of Flughafen Wien AG, acquired a 10 percent stake in MIA Ltd in early 2006; Is a
                                   partner in the TwoOne consortium which acquired a majority 66 percent stake in Košice Airport
                                   in eastern Slovakia, the country’s second most busy airport. The consortium includes the Slovak
                                   capital group Penta, as well as Vienna Airport and Austria’s Raiffeisen Zentralbank; Interested
                                   in operating airports in Iran (Mashad), Greece (Eastern Crete), Italy (Trieste), South Africa, Ar-
                                   gentina




                                                                                      ACI AIRPORT ECONOMICS SURVEY 2006                 73
     Company                              Activities

     VINCI Airports, France (ex-S.G.E.)   Groupe GTM’s activities in airport management & concessions have been transferred to VINCI
                                          Concessions; GTM is now a subsidiary of VINCI. VINCI Concessions has been renamed VINCI
                                          Airports, the newly constituted company for activities in airport management and services. In
                                          airport management, VINCI Airports held a participation in concessions in Mexico Centro Norte
                                          (OMA) through SETA (Servicios de Tecnologia Aeroportuaria) - 13 airports, Mexico South East
                                          (ASUR*) - 9 air¬ports, Cambodian airports (SCA) 2 airports, via ADP Management - 24 air¬ports
                                          (Liege Airport, Beijing Capital International Airport, Cameroon - 7 airports, Guinea - 2 airports,
                                          Madagascar - 12 airports, Egypt-Marsa Alam airport + operation of the Phnom Penh and Siem
                                          Reap in Cambodia through CAMS); * the 24.5 percent stake in Inversiones y Tecnicas Aeropor-
                                          tuarias (ITA), which has a 15 percent stake in Mexico’s airport operator ASUR, was sold in April
                                          2004, followed by the 34.25 percent stake in SETA in December 2005, therefore, VINCI is no
                                          longer involved in managing Mexican airports; manages Grenoble Airport and Chambéry/Aix les
                                          Bains Airport in France in joint venture with Keolis Grooup since 2004; sold its 3.4 percent stake
                                          in the Beijing airport operator BCIA through a sale on the Hong Kong stock market (Vinci and ADP
                                          together had owned 10 percent in BCIA through ADP Management; on 30 December 2004, Vinci
                                          and ADP ended their partnership). In airport services, VINCI acquired Worldwide Flight Services
                                          (ground handling) and SFS (cargo handling) in 2001. Acquired SEN’s ground handling activities at
                                          French airports in 2002. Airports services are located at 94 airports and serve over 150 airlines
                                          & freight forwarders worldwide. VINCI Airports is the world’s No. 1 in cargo handling. Through
                                          VINCI companies in the fields of construction (building, civil engineering, roads, tarmacs,
                                          runways), Information Technology, facility management, VINCI is also a major actor in contracting.

     Warsaw Airport, Poland Polish Air-   Operates Mazury Airport at Szymany in Poland through Port Lotniczy Mazury S.A.;
     ports State Enterprise (PPL)         the Military Property Agency (AMW) and PPL jointly own the Modlin military airfield which is to
                                          be transformed into a low-cost airport

     Westralia Airports Corp.,            Operates Perth International Airport; manages Christmas Island International Airport and Cocos
     Australia (owned by Hasting Funds    (Keeling) Island Airport Westralia Airports Corp. was a wholly-owned subsidiary of Airstralia De-
     Management/85 percent and            velopment Group (ADG) set up by Infratil Australia Ltd which held a 49.5 percent equity interest,
     BAA/15 percent)                      Perth Airport Property Fund (PAPF; 24.6 percent), Australian Infrastructure Fund - AIF (Hastings;
                                          9.8 percent), and Airport Group International Holdings LLC (16.1 percent). PAPF and AIF were
                                          managed by Hastings Funds Management Limited giving them a total equity interest of 34.4
                                          percent. The AGI share has subsequently been taken over by TBI and more recently by BAA plc
                                          (see there). After the latest transaction, the owners of Westralia are Hasting Funds Manage-
                                          ment (85 percent) and BAA (15 percent).

     WFS (Worldwide Flight Services),     Operates more than 100 air cargo terminals worldwide and handled 3.5 million tonnes of cargo
     USA (subsidiary of VINCI)            in 2005

     Wiggins Group plc, UK                See: PlaneStation Group (now in receivership)

     World Investment Group, Egypt        Will develop the Farafira Oasis and Al Bahria Oasis airports in Egypt under BOT projects together
                                          with ABB




74   ACI AIRPORT ECONOMICS SURVEY 2006
Company                                Activities

YVR Airport Services Ltd               Manages Bermuda International Airport and six local Canadian airports (Cranbrook, BC; Fort St.
YVRAS, Canada                          John, BC; Hamilton, ON; Grande Prairie, AL; Kamloops, BC; Moncton, NB) via incentive contracts
(90 percent owned by the Vancou-       and a management fee; Won the 15-year Santiago/Chile passenger terminal concession as a
ver International Airport Authority,   member of the SCL Terminal Aéreo Santiago consortium, formed together with Agencias Univer-
10 percent by CDC Capital Partners,    sales S.A. (Agunsa; 47 percent) and Sabco Administrador de Fondos de Inversión S.A. of Chile
London/UK); YVRAS was set up in        (13 percent), contractors FCC and Grupo Dragados of Spain (30 percent), with YVRAS holding
1994 as a for-profit company           10 percent; Won a 15-year contract to manage the new terminal and carpark of Providenciales
                                       International Airport in the Turks & Caicos Islands; Partner in the ‘Aeropuertos Dominicanos
                                       Siglo XXI, S.A.’ consortium that manages four airports in the Dominican Republic: Santo Do-
                                       mingo (‘Las Americas’), Puerto Plata (‘Gregorio Luperón’), Samaná (‘Arroyo Barril’), and Barahona
                                       (‘Maria Montez’); Won a management and development contract for Rarotonga International
                                       Airport in the Cook Islands; Won a 30-year contract to develop, manage and operate Sangster
                                       International Airport, Montego Bay/Jamaica together with Agunsa, Dragados and Ashtrom (an
                                       Israel-based construction company that has been working in Jamaica for over 30 years);
                                       In 2004, acquired the 10 percent stake of San Francisco International Airport in the InterAirports
                                       consortium which manages four airports in Honduras; YVRAS has been awarded a ten-year
                                       Operations and Management Agreement for operating and developing Nassau International
                                       Airport in the Bahamas; Was partner in the consortium for a 25-year concession to manage and
                                       develop Montevideo’s Carrasco Int. Airport, which was cancelled. Adviser to Wellington Airport/
                                       New Zealand on commercial and retailing matters; bidding for airports in Cyprus, Latin America
                                       and Canada; providing consultancy in China, Norway, Oman, Russia, Thailand.




                                       Compiled and kept updated by Momberger Airport Information                        July 2006
                                       Contact : Fax <49> (7152) 55005 E-mail : aptinfo@aol.com Internet : http://www.momberger.com




                                                                                          ACI AIRPORT ECONOMICS SURVEY 2006                 75
     QUOTED AIRPORTS


      Former name                                  New name                                                    Year of privatisation
      British Airports Authority                   BAA PLC                                                             1987
      Flughafen Wien Ges. mbH                      Flughafen Wien AG/Vienna Airport plc                                1992
      Copenhagen Airports Authority                Copenhagen Airports A/S (formed 1990)                             1993/94
      Hongqiao International Airport Co. Ltd       Shanghai International Airport Co. Ltd                              1994
      Xiamen-Gaoji International Airport           Xiamen International Airport Group Co. Ltd                          1996
      Ljubljana Airport, Slovenia                  Aerodrom Ljubljana plc                                              1997
      Aeroporti di Roma S.p.A.                     (now delisted)                                                      1997
      Auckland International Airport               Auckland International Airport Ltd (AIAL)                           1998
      Malaysia Airports Holdings Bhd               Malaysia Airports Holdings Bhd                                      1999
      Beijing Capital Airport/CAAC                 Beijing Capital International Airport Co. Ltd                       1999
      Zürich (FDZ + FIG)                           Flughafen Zürich AG - Unique Zurich Apt                             2000
      Aeroporti di Roma S.p.A. (ADR)               Aeroporti di Roma S.p.A.                                            2000
      SAF (Società Aeroporto Fiorentino SpA)       Aeroporto di Firenze S.p.A. - AdF                                   2000
      Shanghai-Hongqiao Int. Airport               Shanghai International Airport Co. Ltd                              2000
      Flughafen Frankfurt AG                       Fraport AG                                                          2001
      Haikou Meilan Int. Airport, China            Hainan Meilan Airport Co. Ltd                                       2002
      Malta International Airport                  Malta International Airport Ltd                                     2002
      Macquarie Airports                           Macquarie Airport Group                                             2002
      Guangzhou-Baiyun International Apt           Guangzhou Baiyun International Airport Co. Ltd                      2003
      Airports Authority of Thailand (AAT)         Airports of Thailand Public Co. Ltd (AoT)                           2004
      Brussels (Régie des Voies Aériennes)         BIAC (Brussels International Airport Company)                       2004
      Budapest Airport Rt.                         Budapest Airport                                                    2005


     Compiled by Momberger Airport Information - November 2006



     About the Author
     Momberger Airport Information was established by Manfred Momberger and Karin Momberger, who have been associated with civil
     aviation since 1966.

     Both worked for Dornier, the German aircraft manufacturer, and Interavia, the international aviation publishers then based in Geneva/Swit-
     zerland, before setting up their own business in 1973.

     Martin Lamprecht joined Momberger as North American Editor and Webmaster in 2002.

     He has a Master’s degree with specialisation in commercial air transportation from the University of Regina in Canada and over 20
     years of experience in the industry, including background in airline management and airport consultancy. Their main product is the
     ‘Momberger Airport Information’ newsletter, published since 1992 initially entitled ‘airport forum news’.

     They also provide marketing support to their subscribers.




76   ACI AIRPORT ECONOMICS SURVEY 2006

				
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