Airport Competition

 

April 2014

Keith Chappell

These figures and the ferocious need to drive towards profitable and sustainable growth mean ever more that Airports are reviewing their property portfolios as more than just an operational by-product to running safe and efficient infrastructure.

 

Since it was established in 2009, Chappell King Aviation Real Estate has been increasingly engaged by Airports  large and small to review how property ownership / structuring might be leveraged to add to the Airports potential commercial returns , from piecemeal development on the one hand to the prospects for significant Airport City development at the other. It is clear that such analysis is featuring more and more as a potentially significant line in Aviation industry business plans moving forward.

 

 

 

 

 

 

 

 

 

 

Furthermore the analysis is becoming increasingly stark in terms

of establishing an Airports competitiveness in an era when the UK Government has opened up Airport ownership to new investors

who need to drive returns from their new infrastructure assets, with Property very much featuring in the business plan as the effect of liberialisation and the requirement for commercially driven airports feeds through to a need to deliver results across the “portfolio”. Aeroports de Paris are reporting real estate revenue is contributing to a consolidated revenue boost of 4.7 percent in the past nine months. Currently their airport city development is generating

9.6 percent of the group’s revenue.

 

Chappell King believe this trend is likely to continue as the Aviation Industry powers into the next generation of a more competitive Airport environment.

Whilst the global economy emerges from its slumber of the last few years a profitability struggle continues to be faced

by airports large and small throughout all Continents.

 

Recent data estimates that nearly 70% of the world’s airport’s operate at a net loss.

 

 

UK Cargo Trending at the South East Airports

 

Chappell King provide commentary and analysis to Clients in relation to established aviation indices. Our latest abstract can be seen below

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Note: data researched from individual airports and CAA figs 2014

Note: 2014 figures are to February 2014

 

IATA’s quarterly survey of airline CFO’s in January 2014 interestingly revealed a positive mood with over 50% seeing growth in airfreight volumes over the previous 3 months.   With the air cargo market being at the forefront of global economic growth it remains to be seen whether this positive sentiment will convert into improved economic activity.

 

Chappell Kings next abstract will be provided in Q3 2014.

March 2014

Andy King

Heathrow Airport (tonnes)

 

• 2013 Cargo tonnage down

c. 3% on 2012.

 

• Graph indicates a ‘rolling’ 12 months

to February 2014 bottoming out

2013's downward trend.

 

• Growing passenger numbers ‘v’ falling

cargo – will the trend continue ?

1,600,000

 

1,400,000

 

1,200,000

 

1,000,000

 

800,000

 

600,000

 

400,000

 

200,000

 

0

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Gatwick Airport (tonnes)

 

• 2013 Cargo tonnage up

c. 2% on 2012.

 

• Graph indicates a ‘rolling’ 12 months

to February 2014 trending lower

than 2013.

 

• Will Gatwick’s passenger growth

and new routes inject growth

into its cargo volume ?

350,000

 

300,000

 

250,000

 

200,000

 

150,000

 

100,000

 

50,000

 

0

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Stansted Airport (tonnes)

 

• 2013 Cargo tonnage down

c. 1.3% on 2012.

 

• Graph indicates a ‘rolling’ 12 months

to February 2014 trend ‘holding up’.

 

• With a change of airport ownership

and the impact of the closure at

Manston Airport - will Stansted’s market share and cargo volume

increase during 2014 ?

350,000

 

300,000

 

250,000

 

200,000

 

150,000

 

100,000

 

50,000

 

0

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

The Development of the Super-Airport

 

December 2013

Keith Chappell

In November 2013 Keith Chappell and Andy King visited Dubai's massive new airport—World Central Airport Dubai. This inspiring piece of infrastructure is expected to become the world's busiest airport. That said a new generation of Airport Infrastructure is being planned and is taking shape in Asia and the Middle East, The Super-airport boom has begun.

 

Chappell King prides itself on having visited 17 of the World’s Top 20 Airports and it is likely new destinations will be on the horizon very soon as new mega Airports and all things air transit take shape even rivalling the size of the cities they serve ! After all the world's first nine-runway airport is currently being planned in China.

Beijing is reacting to accommodate the massive increase in air travel in China by building a new Airport in a rural area roughly 30 miles outside of the city. This £7 billion project is expected to complete

in 2018. It will be built to serve anywhere from 120 to 200 million passengers a year on nine runways—three more than the current world title holder, Denver International. It will outsize Heathrow and JFK, and will shuttle passengers to and from Beijing on high-speed rail in less than 30 minutes.

 

Recently we visited Hamad International Airport, Doha. The 9,000-acre Hamad will be two thirds the size of the city of Doha itself,

and the terminal will have an "oasis theme," with a curving roofline and planting watered automatically with recycled greywater. Hamad—along with Dubai and Abu Dhabi's new airports—are part of a new air travel boom being driven by the Middle East Three; Emirates, Etihad and Qatar Airways.

 

We will be visiting Incheon Airport, South Korea in October. At just over a decade old, it serves as a model for many of the new Super Airport projects above having developed game-changing baggage handling systems and transit infrastructure. Incheon is also a small city with it's own casino and museum which is exactly the idea behind many of the other new "free economic zone" airports now being planned. The Airport and its surrounds attract medical tourists who use a nine-story hospital directly adjacent to the airport. Theoretically, you could fly in for your treatment, take in some culture, shop, eat, and never even leave the Airport !

New routes to China will create new routes for investors

 

July 2012

Keith Chappell

 

Property Week

Airside feature

China is still on track to overtake the US as the world’s largest economy by 2020. There are 1.3 billion Chinese people and they are on the move further and more frequently than ever before. China’s aviation growth ambitions are daunting. A burgeoning middle class with a new-found ability to travel the world is but one factor characterising this inevitable and exciting explosion of growth.

 

China’s outbound tourism is growing at around 11% a year and Chinese travellers to the UK have trebled since 2001. This is predicted to treble again in the next five years. By 2030 China will have more air travellers than the US, so anybody in the airport supply chain, including those in the provision of aviation real estate, needs to be ready to react.

 

UK airports say they are focusing much of their new business generation effort upon securing routes in and out of their airports with China, such as the recent introduction of the China Southern route from Guangzhou to Heathrow. If successful, these new and growing routes will create real estate opportunities from check-in

desks to warehousing, hotels, offices and catering facilities, to possibly an entire airport purchase.

 

China’s GDP growth of 7%–8% has driven steady high domestic traffic demand and now the country’s principal carriers are looking globally. The main Chinese airlines — Air China, China Eastern and China Southern and Hainan Airlines — are already among the most profitable in the world and have some of the highest market capitalisation. They planned to buy more than 300 aircraft in 2011/12 to meet an expected surge in air travel and, over the next 20 years, Boeing projects that the world’s most populous nation will

become its biggest customer.

 

Today, less than 3% of China’s population travels by air, which means an increase of 10% would represent around 90 million additional passengers. Passenger traffic from China is expected to exceed 700 million by 2030 and 1.4 billion by 2050. This will likely translate to a multitude of real estate requirements on and around the UK’s airports, which can provide exciting opportunities for owners and funders of aviation real estate.

 

However, this relies upon there being sufficient capacity. The

government’s decision earlier this month to delay the aviation

review has met with dismay among many in the industry, who

urge that a policy framework must be put in place as quickly

as possible to ensure competing nations do not take trade

and commerce away from the UK.

 

 

 

Keith Chappell

keith@chappellking.com

+44(0)7785 392996

Andrew King

andy@chappellking.com

+44(0)7785 254741

© ChappellKing Aviation Real Estate Limited  2014