AFA - Aerospace Forum Asia

16th Airports Council International Pacific Regional Assembly
Airports: Sustaining the Growth Momentum
17 May 2006
Reported by Liz Bosher

. . . NO FREE LUNCHES . . .

Glorious clear and sunny Golden Week weather and magnificent views of the Lantau hills provided a stunning backdrop for this year's ACI Pacific Regional Assembly, Conference and Exhibition held from 8-11 May at the new AsiaWorld-Expo facility at the Hong Kong International Airport.

In tune with the weather, the some 300 speakers and delegates were generally in bullish mood. This was also an historic occasion which saw the merging of the formerly separate Asia and Pacific Regions to form a single Asia Pacific Region, bringing together more than 400 airports in the Middle East, India, China, North East and South East Asia, Oceania and the Pacific rim - a quarter of all airports worldwide in countries which represent 60% of the world’s population.

Day One was given over to the CEO Forum which focused on the theme of the conference: Airports: Sustaining the Growth Momentum. Joint hosts and organizers ACI and Airport Authority Hong Kong (AAHK) brought together a broad range of participants to achieve a balance of perspectives, not just from the Asia Pacific Region but from Europe, the Middle East, Africa and North America.

Under the guidance of moderator Dora Kay, AAHK Head of International Marketing, speakers from 16 airports shared common ground on the importance of efficiency and customer service. CEOs from Beijing, Shanghai, Dubai, Incheon and South Africa placed emphasis on the role of on-going investment in infrastructure to sustain growth. However, some speakers cautioned on the dangers of over-investment, particularly at hubs vulnerable to new competition or (as in a US case study) which depend for business on one or two airlines. Rising GDP, and continuing expansion of middle classes in China, India and Africa - with increasing means and propensity to travel - would be the main drivers of future growth, but airports could not afford to ignore the potential threats to their business associated with high fuel costs, security concerns and the potentially dire impact of a global avian flu pandemic.

Day Two opened with a session on Liberalization - another topic very much on the minds of participants. Ms. Feng Liu, Director of International Affairs of CAAC outlined the steps which the Chinese authorities are taking to progressively open up the Mainland's domestic and international aviation markets and relax limitations on overseas investment in areas such as MRO and cargo handling.

Director General of the Association of Asia Pacific Airlines (AAPA), Andrew Herdman, responded with a presentation packed full of information on the current health and status of aviation in the region. He cautioned against placing too much emphasis on liberalization of air services as the driver of the huge growth in air travel over the past thirty years, citing technical innovation in the design of aircraft and increasing freedom to travel among the world population as being at least of equal if not greater significance.

The airline industry had responded to growing demand with current investment in aircraft and equipment valued at a massive US$600 billion compared with some US$300 billion invested in airport infrastructure.

Then followed a stimulating and good humoured debate, presided over by the Chairman of Sydney Airport Corporation and newly-elected President of the Asia Pacific Region, Max Moore-Wilton, on the relative merits of IPO versus Trade Sale approaches to airport privatization and how to balance the interests of vendor and purchaser of airport shares or assets. However, there was no disagreement amongst the panel’s members on the overall merits of privatization, whether as a community owned asset or as part of a wider global investment portfolio.

Closing sessions of the conference highlighted the importance of growing non-aeronautical revenues, through innovative retail and food and beverage offerings, tailored to local market profiles and through value-added services.

Of course, the vexed and ever-vexing question of airport charges did come up. CEO of Narita International Airport, Masahiko Kurono, explained the thinking behind his airport’s decision to reduce charges. In answer to a question from the floor as to whether airports should accede to the position taken by some budget carriers that airports should not charge airlines for bringing them business the resounding sentiment was . . . "There's no such thing as a free lunch!"