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Good afternoon. I hope you will agree that this has been an outstanding conference and exhibition—I’ve enjoyed catching up with so many of you and have certainly been delighted in the hospitality and entertainment so generously bestowed upon us by our host, Incheon International Airport. I’d like to thank Hong-Yeol Choi and his entire team for their hospitality in beautiful Seoul.
Since our last Assembly we have had many successes and have turned a new corner in working in partnership with our industry colleagues and with ICAO. , but let’s start with a report on the state of our industry with some data on traffic and economics. In spite of worldwide economic uncertainty and political instability in many countries in 2013, airports accommodated over 6 billion passengers.
In fact, both passenger and cargo traffic actually grew at faster rates than the previous year, indicating signs of a timid recovery. Passenger traffic grew at 4.8% vs. 4.4% in 2012 and cargo, although still sluggish, almost hit the 1% growth mark, at 0.9% vs. 0.5% in 2012.
Movements grew at practically the same rate as the previous year at 0.7%. The Middle East and Asia took the lead in both passenger and cargo growth. Although Asia-Pacific only grew 2.1% in cargo, it managed to pull the rest of the world into positive territory due to the fact that it handles 38% of the world’s total cargo throughput. Four of the top five cargo airports are in Asia-Pacific.
As far as individual airports go, the big story is Dubai, which jumped three positions to number 7 in our world passenger traffic rankings, with over 66 million passengers, in the same league as Los Angeles and Chicago. Dubai wasn’t even in the top 50 ten years ago—it was 54th.
Turning to economics, airport income as a whole in 2012 grew by 4.4% for 2012 over 2011, reaching US$117 billion.
The industry as a whole was profitable with a net profit margin of 13%, but industry profitability is primarily generated from the 20% of airports that carry the bulk of passenger traffic. 67% of airports globally operate at a net loss. Size matters. 80% of airports with fewer than a million passengers posted an average net loss of 6%.
We know that airports need to invest heavily in infrastructure improvements. So, looking at the picture from the perspective of return on invested capital, airports worldwide had an average return on invested capital of 5.9%, with the highest return generated by airports with passenger volume between 15 and 25 million. Airports with fewer than one million passengers had a negative return on invested capital of -1.1%.
So with a very general overall picture, let me now talk about what ACI has been doing.
At our last Assembly, June 2013 in Istanbul, we talked about airports taking the next step. That we had reached the point in our internal mechanisms at the world and regional levels where we could truly function as a Community of Airports, helping each other in more ways than ever, and setting standards for ourselves—that we had reached the point in our external standing where we were now seen as valued and sought-after contributors to the policy-setting mechanisms at the global level.
These two are not unrelated. The more we can benchmark, identify best practices and hold ourselves as a sector to achieving them as a norm, the more we know about ourselves. The more we can serve as a source of reliable, insightful data; the more we can provide solutions to our own problems; the more others want to work with us and listen to us. As a result, we strengthen our value proposition to others.
So, how has this played out since the last time we gathered?
Let’s start with the ICAO Triennial Assembly, which was held in October of last year. First, all year and the year before, ACI members and staff from all Regions contributed their time and expertise on the Working Groups, Panels, and Conferences that constitute the ICAO policy-development process.
You urged ICAO to recommend that States should involve airport operators when considering Performance-Based Navigation (PBN) routes so that airports can consult fully with their local communities. The Assembly endorsed this position.
You urged ICAO to support the introduction of Airport Collaborative Decision Making (A-CDM), including the provision of guidance material. The Assembly supported this and we have just learned that ICAO will now set up a Working Group to develop guidance. We will of course make sure to have heavy participation on that Working Group.
You urged ICAO to recognize that airports are central to the development of better security and to develop systems and guidance in cooperation with ACI. The Assembly amended one of its Resolutions to specifically encourage States to work in partnership with industry to develop and conduct operational trials of and implement effective security measures. This was the first time that the Assembly recognized industry as a valued partner in the security regimen.
You urged ICAO to establish core principles and work with industry to develop guidance material to help States achieve satisfactory passenger service in both normal operations and periods of flight disruption. The Assembly essentially endorsed this position, albeit in a somewhat diluted fashion.
Lastly, you urged States to recognize the collective will of the aviation industry to develop a global approach to address international civil aviation CO2 emissions and recognize that industry can be part of the solution. We worked closely within the Air Transport Action Group to convince a reluctant Assembly on the need to develop a global market-based measures solution as a part of its policy response to climate change.
Other positive activities at ICAO in 2013 included the publication of the new edition of Annex 14, Volume I – Aerodrome Operations and Services, and the entirely new Annex 19 – Safety Management. Our work continues in the Aerodromes Panel to lead Annex 14 in new and improved directions and in the Safety Management Panel, with developing a second edition of Annex 19.
A particular positive for airports at ICAO was the endorsement of reduced taxiway separation standards by the Aerodromes Panel, including a 6.5 meter reduction for Code F aircraft and a 4-meter reduction for Code E aircraft. This, too, was the result of years of determined effort by members and staff, working with other industry representatives at the Working Group level. This has more steps to go before adoption by the ICAO Council but we are hopeful of a favourable outcome.
On top of the direct benefits to airports from these changes in ICAO, which will then be adopted by States, is the fact that other industry players increasingly see airports and ACI as valued collaborators. They now come to us with issues where we can be aligned, and we prefer alignment over conflict.
This philosophy culminated in our first-ever Memorandum of Understanding with IATA last October: it was signed during the ICAO Assembly under the watchful eye of the ICAO President and Secretary General. The MoU is followed by Annexes in which we agree to work on specific activities. The first four projects being: cooperation on ground handling best practices; automated border control; Improvement of existing passenger security processes; and, Smart Security.
This latter, Smart Security, is a blend of the former ACI Europe Better Security project and the IATA Checkpoint of the Future project. The steering body of the project consists of equal numbers of airports, airlines and governments, with ACI and IATA forming the Secretariat.
We owe a great debt of gratitude to Robert Deillon, CEO of Geneva Airport, who has offered to provide the secondee to fulfill the ACI role. Robert: you were a great host of the ACI office and you continue to demonstrate your strong support of the airport community. Thank you.
A fairly new endeavour that we have joined with ICAO and other industry is that of cyber security—you heard a bit about the threat and some solutions at the conference—more to come about an industry-wide approach to mitigating the risk to us all.
Collaboration extends our reach, makes more progress more possible. But it does take effort and resources and we are dependent on the generosity of our members to support these efforts. All of us, World and Regions are working to diversify our revenue sources, just as you do, to acquire the resources needed to seize the opportunities we now have to promote your interests and excellence in airport performance. We know we have to set priorities although at the same time we have to respect the agenda of ICAO and our industry colleagues and strike the right balance.
You will start to see more collaborations on conferences as well as we seek to join with ICAO, IATA and others on selected events that can benefit our respective members. You will see us reach outside of the industry to kindred spirits like the World Travel and Tourism Council with whom we have joined on projects of common interest, notably convincing governments to better facilitate the visa process.
Yes, we are stronger together. But we would not be seen as valuable allies if we were not seen as capable of providing solutions—if we were not seen as having high standards and were not committed to achieving them. This is where the Community of Airports, the promotion of excellence, comes to the fore. A big advantage that we have as airport operators is the willingness to help each other, even in this era of more competition. We know that weakness anywhere hurts our system and ultimately hurts each of us.
In addition to the knowledge sharing that has come from our conferences and the guidance materials developed by our strong Committees at World and Regional levels, you have embraced the more direct, hands-on approach embodied in the APEX Excellence in Safety programme, where we currently have 19 commitments for APEX reviews this year and over 55 individual airport and airport operators serving as Safety Partners. We have had airports go on to achieve certification after having had an APEX in Safety peer review. We have also had airports that are already certified request peer reviews on their journey of continuous improvement. It is a programme for all airports in all parts of the world; every airport is a member of the Community of Airports.
The programme has attracted the interest of governments that want to support the effort, that view it as a solution for them. ICAO of course has been a contributor from the very beginning, and now the U.S. Federal Aviation Administration has committed to providing inspectors, the Turkish Civil Aviation authority is participating and the European Civil Aviation Conference will likely play a role.
The success of this first venture, even while we continue to scale it up, has led to a call to extend the concept to security, where we hope to have one or two pilots as early as this year. The Economics Committee intends to pilot an APEX in Airport Business programme this year as well.
APEX is a virtuous circle. It helps the Host airport, it enriches the experience of the Partner expert, it raises the credibility of the airport sector, it informs ACI of the training and guidance needs of our membership and it encourages us to develop benchmarking and best practices guidance.
Our Safety Committee has developed a set of Key Performance Indicators for airfield safety, a significant milestone for our sector. Airports are notoriously difficult to compare and we tread carefully whenever we advance KPI’s. But we know that we cannot claim to have evolved into businesses in our own right and ask for self-determination if we cannot hold ourselves to objective evaluation, particularly in the discipline that is our top priority, Safety.
We already have this objective evaluation on the environmental front with the ACI Europe Airport Carbon Accreditation programme, which now reaches three Regions and covers 21% of worldwide passenger traffic and 76% of European passenger traffic. We can expect that the programme will ultimately be available in every Region. We also hope to get data from the users of the Airport Carbon and Emissions Reporting Tool (ACERT), the Transport Canada-developed programme designed for smaller airports that can also serve as an entry level to the Carbon Accreditation programme.
We are now also able to offer objective evaluations to airport managers for their Human Factors in Security and their IT Security through a benchmarking tool. This tool, once proven, will be replicable for other benchmarking applications—it is quite promising and I will be able to report results by the time of our next Assembly.
On another note, our training programme goes from strength to strength. We now have 14 training centers; last year we delivered 124 classroom courses with over 2,000 students and over 14,000 hours of online coursework.
Eight new courses were launched to meet a range of training needs for airports large and small. We have increased our language capabilities so that we can deliver more French and Spanish language classes. We also delivered our first course in Arabic and another simultaneously translated into Mandarin. There is more to come as we explore new ways to collaborate with regional training channels to gain broader language coverage.
And the Community of Airports embraces those airports from developing countries through the Developing Nation Airport (DNA) Assistance programme, which delivered 9 DNA courses in English and French, welcoming 302 participants from 60 different countries. As well, scholarships were provided to developing nation airports for online courses.
As I reported last year, the Airport Operations Diploma Programme is fully online with all three modules—Airside, Landside and Terminal and Business Operations—and is being translated into Spanish, starting with the Airside module.
And, finally, our first collaboration with ICAO, the Airport Management Professional Accreditation Programme (AMPAP), has matured and I'm very proud to report that through the end of 2013, the AMPAP programme has seen 700 International Airport Professional Diploma graduates and 72 Associate Diploma graduates. Directly after this Assembly we will celebrate the graduation of 100 more. These graduates will be solid proponents of the Community of Airports and the importance of Forging Industry Partnerships.
Let me close by thanking the World Governing Board, which works hard for you, makes the strategic decisions and sets the policies that have made ACI strong. Their leadership and guidance is unwavering and allows us to be bold in the best interests of our industry.
I salute my colleagues that lead the Regions and welcome our newest colleague, Kevin Burke, President of ACI-North America. He couldn’t be with us this time because of a pre-existing commitment but you will meet him in due course and he is ably represented here by Deborah McElroy. This is a dedicated and effective group of leaders who not only serve their Regions but collaborate with World and each other for the benefit of the entire Community of Airports. In their own Regions, they too collaborate with key industry players and they too form strategic alliances.
And let me thank my energetic World staff that allows us “to punch above our weight,” covering the many issues and projects that come our way as well as initiating new undertakings. They have embraced the art of collaboration, with each other, with their Regional counterparts and with our industry colleagues. And they are fully committed to the Community of Airports and to you, our Members. We thank you for allowing us to serve you.
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