Positive Trend
The asphyxiating economic and traffic slump that besieged the air transport industry over a year ago now is clearing away. And in the last few months the industry has been experiencing some respite arising from reported economic growth as well as a gradually strengthening passenger and freight traffic. These are now expected to be nurtured into firm industry growth projected to occur from 2011. Airports, airlines and other aviation service providers lost much revenue from the recession-induced traffic ebb.
Airports particularly suffered under-utilization of their facilities and freezing of upgrade and expansion projects as airlines cut capacity and frequencies. Airports have earnestly awaited the return of their customers; and good fortune is beginning to come their way again. ACI reports that traffic registered strong positive growth in both passenger numbers and freight tonnage in November 2009 with global passenger traffic up by 4% and freight up by 11%.
 According to the Director General of ACI World, Ms. Angela Gittens: “In the first quarter 2009 airports registered an alarming downward spiral, yet since mid-year we have witnessed the return of demand – first for domestic and now for international travel…Nonetheless positive passenger growth in all categories – overall global, international and domestic – indicates that the industry remains on track for a rebound.” The strong traffic results continued through December 2009 creating a positive outlook among airports and related businesses.
IATA’s perspective on industry performance also attests to the positive trend: “Air freight volumes surged at the end of 2009, signaling a strengthening of the economic recovery. The year-on-year rise of 9.5% in November was exaggerated by the collapse at the same time last year. Nevertheless, there were strong month-to-month increases in October and November confirming the acceleration in world trade growth.
Passenger demand has been slower to rise but RPK levels are now 6-7% higher than the earlier lows.” And from tourism perspective, according to the UN World Tourism Organization’s World Tourism Barometer, international tourist arrivals fell by an estimated 4% in 2009, but “prospects have, however, improved with arrivals now forecast to grow between 3% and 4% in 2010. This outlook is confirmed by the remarkable rise of the UNWTO Panel of Experts Confidence Index,” UNWTO states. The current trend in traffic requires concentrated action from airports in Africa to make the rebound beneficial to the airports.
Can Airports Drive Traffic Rebound?
Airports have evolved as business units which deploy marketing and business development strategies to draw more users and expand their market shares. The airport business would continue to grow as air transport assumes greater relevance in the world economy. ACI says: “Despite the loss of traffic in 2009, ACI’s long-term forecast is that pre-2008 growth levels will rebound in 2012,” forecasting further that air traffic will double by 2030 with airports serving nine billion passengers by then. Here, therefore, individual African airports must determine their share in this expected growth by consciously driving their own traffic using effective route development and marketing strategies.
Again, considering that IATA’s calculations indicate 2009 as marking the deepest demand recession seen by the industry; airports need strong efforts to help recover lost traffic and also attract new traffic. And because airlines may be expecting a loss of 5.8 billion in 2010, they may tread carefully in terms of route and frequency expansion. For Africa, this could further be spurred by IATA’s projection that “African carriers will deliver a loss of US$100 million in 2010 - consistent with the US$100 million loss of 2009.
Relatively strong economies and increasingly liberal markets are being offset by competitiveness challenges.” Presently, airlines indeed need to reverse their traffic haemorrhage and start filling out where they have lost. And to encourage airlines launch out strongly to new routes or frequencies would require equally strong incentives and prospects. There are already good reasons for airlines to intensify operations in Africa.
 The loss of market share to foreign airlines would drive local airlines to ‘take their market,’ while foreign airlines would intensify servings to Africa where they see a ‘huge market,’ – African airports should position for this traffic. Besides ACI’s projection, for the prospects already for 2010 the encouraging news is that expectations for traffic demand are positive, as IATA says “following a decline of 4.1% in 2009, passenger traffic is expected to grow by 4.5% in 2010 (stronger than the previously forecast 3.2% in September). A total of 2.28 billion people are expected to fly in 2010, bringing total passenger numbers back in line with the peak recorded in 2007.”
IATA adds further that “cargo demand is expected to grow by 7% to 37.7 million tonnes in 2010 (stronger than the previously forecast 5% in September), following a 13% decline in 2009. Total freight volumes will remain 10% below the 41.8 million tonne peak recorded in 2007. Cargo demand is rising faster than world trade as depleted inventories are rebuilt. Once the inventory cycle completes, growth is expected to fall back in line with world trade.” This may be strong boost for the airlines to power back into abandoned airports. But it may not be enough to drive airlines to particular airports.
Therefore, airports should present their own incentives to airlines in form of upgraded facilities, cost and management efficiencies, and the savvy, for instance, to know when to sacrifice even necessary charges in order to gain more airlines flying in. African airports should show more discretion by embracing measures to help reduce losses such as the IATA groundhandling audit, among others. Already, ACI says it is in bilateral discussions with IATA about its ISAGO Audit programme for Ground Handlers, which is closely related to airport operators’ overall safety responsibility.
To drive traffic, airports should develop other businesses that would enable them reduce pressure of charges on airlines. These non-aeronautical revenue earners are potentially available among African airports, but very many of them are not well-marketed and, in cases, are wrongly managed. Global trend favours dwindling dependence on airline-related revenue and build-up of non-aeronautical revenue for airports.
ACI estimates worldwide total airport income in 2008 reached USD 96 billion; and aeronautical revenue, defined as passenger and airline user charges, accounts for 54% of industry-wide income. In the non-aeronautical category, ACI also adds, retail is the largest contributor, closely followed by car parking and property management, with significant regional variations. Only 22% of total airport industry revenues, ACI says, were airline-related and not more than 4% of the total worldwide operating cost of scheduled airlines in 2008.
Airports should eschew charges that would discourage traffic rebound, but rather capitalize on strategies to drive up passenger volumes. According to Mr. Abdelhanine Benallou, CEO of Moroccan Airports Authority (ONDA), African airports should shun wrong examples such as prohibitive passenger charges imposed by some European airports, even though the efficiencies in airports management created by such airports need be adopted by African airports. While Morocco’s open skies with the EU has brought on a flurry of low-cost and full-service airlines to the tourist spots in the sunny North African State, for instance, Morocco’s airport authorities have a positive disposition to drawing larger volumes of African traffic with, for instance, a subsisting 100% incentive for new airlines. Such incentives the Federal Airports Authority of Nigeria (FAAN) and a number of other African airports currently provide. However, such incentives as should be encouraged among African airports, also need be augmented with good business climates and attractive airports infrastructure in more African airports.
Effective online marketing is a factor that will enable airports surpass the competition in the current airport business climate. Functional and friendly websites help project the image and relevance of airports. Ghana, for example, is changing the appeal of its major airport to present it as a world-class regional hub. But above all, it showed improvements in web-resource which won it the shortlisting in the Best Airport Website category of the Flight Global Webbies Award for 2008, alongside leading airports like Schipol, San Francisco International Airport, Athens International Airport and Mogave Skies.
Vital it is that African airports must understand the dynamics of the current and future passenger who needs more comfort and efficiency, and increasingly sees airports as extension of the business platforms. Airport development strategies should focus on developing airport cities with a view to making people want to use the airports as business centres, besides airports’ primary function as flying centres. Airports in the hinterland with potential tourism in their neighbourhoods or those in low-volume trade regions also need to work with governments to realize these potentials and accelerate movement of people and goods by air. But for other airports in the frontiers of Middle East and Europe mainly - including Egypt, Morocco, Tunisia, Algeria, and Libya - the lure of especially tourism regions that they serve make them easy choices for tourism-carrying European and Middle East airlines.
Other airports in East and Southern Africa’s tourist regions are expected to receive more tourists from around the world as global economy improves. And the business opportunities in populous West African markets and their emerging tourism spots lay the airports in their regions attractive to more local and foreign airlines that bring tourist and business traffic. Given evolving passenger and airline needs, airports in all these regions should promptly create passenger and airline-friendly facilities to provide value-added services.
To draw traffic also, airports should avoid negative actions from interests groups and others which discourage traffic flow. Airports must also adopt appropriate security measures that give confidence among airport users. Also, there are complaints about delays at some key African airports. Such airports negatively capitalize on the lack of alternative means of transport such as fast trains and inland waterways.
 However, at some even smaller airports, some delays are attributable to on-going construction works forming part of the collective development drive that should be strengthened across African airports. African airports should adopt strategies to address delays so as to retain more users and boost revenue. Massive airports investments help decongest airports and reduce emissions. This is encouraged by ICAO as Mr. Roberto Kobeh Gonzalez, President of ICAO Council, says: “We also need to invest massively in airport and air traffic control facilities to cope with the anticipated increase in flights and passengers.”
Examples of the like of Cape Town International Airport and OR Tambo International Airport, Johannesburg, in which the Airport Company South Africa (ACSA) has invested massively in readiness for the 2010 World Cup, nay the A380, need be emulated by other African airports. Such investments should be evened out between passenger needs and aircraft requirements at the airports, with particular attention to ICT-efficient and self-services facilities for passengers. Airports adjacent to South Africa including Zambia’s Lusaka International Airport, Livingstone International Airport are readied as alternates to South African airports for the 2010 World Cup fiesta. National Airports Corporation Limited (NACL) mapped out K22.1 billion for various projects to upgrade infrastructure and passenger facilitation at Lusaka, Ndola and Livingstone International Airports. Airports elsewhere in Burkina Fasso and Congo Brazaville, among others, are also undergoing upgrades.
Making Gains From Traffic Recovery
Airports should make it a priority now to position to reap the benefits of the traffic rebound because only deliberate and dedicated strategies would deliver optimum benefits at the airports.
- Use Of Technology
Automation of airport systems is vital to improve efficiencies, comfort and service quality among African airports. This is still at an unsatisfactory level and airports must come up to speed with relevant technologies to translate emerging opportunities into concrete gains for the airports. Airports with less ICT deployment may learn a few lessons from Cairo Terminal 3, ACSA’s renewed airports system, or the Bole International Airport with its 2-D bar-coded boarding pass initiative, among others. African cargo and passenger airports require necessary technology to boost traffic.
- Adequate Human Capacity
Qualified and adequate number of personnel are essential to provide efficient services at the airports. Without this, airports may see themselves as existing outside the benefits of the emerging upturn in traffic.
- Airport Management cum Privatisation
To achieve the gains of the current traffic rebound, airports need be properly managed. Privatization helps better manage airports. ACI says: “Privatization can bring a spirit of innovation and entrepreneurship to airport management. It can release an airport operator from political considerations and agendas. It can also lead to gains in productivity of employees, once they accept changes in corporate culture. In Australia, operational efficiency was enhanced after the 19 FAC airports were privatised, with estimated gains of 25% in employee productivity. Privatisation can also open up new sources of capital to build capacity, which in today’s growth market is a very positive factor.” ACI says “if the traffic forecasts are robust and the infrastructure capable of handling more capacity, the scenario for a private investor is ideal.”
- Industry Collaboration
Through the instrumentality of ACI-Africa, airports should work with regulators and continental groups such as African Airlines Association (AFRAA) and African Civil Aviation Commission (AFCAC), among others, to enhance mutual benefits. The agreement in 2008 for cooperation among ACI, AFRAA and AFCAC in Nairobi should be strengthened.
Sustaining Future Growth
Airports growth is expected to continue in line with traffic growth. Airports provide facilities in anticipation of traffic growth and in response to traffic growth. Considering that Africa is an emerging market where very low percentage of the population currently flies, the utilization of air transport is bound to surge in the continent. And this will positively influence the growth and development of airports in Africa, which must, therefore, adjust to overcome occasional downturns in the industry, and importantly make the most of upswings in traffic, whether these come after industry crises such as the September 11 and economic recession or even during normal times. Airports in Africa should reposition as profitable business entities that meet new realities of the global aviation system and contribute more to national GDP.
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