Angela Gittens, Director General, ACI
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Interview of Mrs Angela Gittens, Director General, ACI
ATN: What effect will the current environment of uncertainty, including rising oil prices, Brexit, the new US Government, terrorism attacks and demographic changes, have on airport operations?
AG: What has been interesting has been that despite the many uncertainties in 2016, we saw global traffic being quite resilient. For example, traffic lost from Brussels and Istanbulairports due to the terrorism attacks, transferred temporarily to other airports. What we have been seeing for the last several years is a level of resilience in air transportation. Some factors have negative effects and some have positive effects, for example, the drop of the price of oil has allowed airline costs to be lower and this has been profitable for the airlines. The drop in oil prices has particularly helped the low-cost carriers to grow and they are now pushing into the wider market such as the business and the long haul markets. Factors affecting air travel is a mixed bag and it's very hard to therefore predict what is going to happen. We could have unfortunate trade policies, recessions, new terrorism and obviously war, but the propensity to fly is an underlying current that is growing. This is based on certain demographic changes with more and more the world's population joining the middle class, and of course, on lower fares. In certain countries the price of an air ticket might be lower than the price of an equivalent bus ticket. All these changes will have an impact but I think aviation is proving itself resilient.
ATN: During 2016 airports faced some serious terrorismattacks. What actions will ACI take in order to maximize airport security?
AG: ACI is working with the International Air Transport Association (IATA) and the International Civil Aviation Organization (ICAO) on several initiatives. We have oneprogramme under the label of Smart Security where we are looking at several approaches to strengthen security from both effectiveness and facilitation standpoints. This entails looking into more risk-based differentiation using current and emerging technology to properly assess the risk-level ofa passenger or piece of cargo before they/it actually arrives at the airport. We are moving toward a conception of the airport as one touch-point of a system that has a lot of other pieces. Other technology improving airport security includes biometrics; again a lot of this technology is already available and it is now a matter of deploying it in a strategic way under the Smart Security programme. ACI and IATA are currently conducting a series of pilots at airports around the world. Amsterdam airport for example has set up a whole different process for passenger screening that includes traditional screening but in a way which is less intimidatingand promotes higher throughput. Improved processingmachinery now allows more accurate inspection that again, improves throughput and in turn increases the passenger experience.
For the landside threat, we are working with ICAO in developing guidelines and publications. For example we recommend that airports NOT do their screening at the passenger Terminal entrance. The latest fad in terrorism is the attack on crowds and airports are targets because they have crowds. So when you screen or you have a stopping point where there is no ability for speed you are actually creating a target and increasing your security risk-level. We saw this at Ataturk airport where there were actually more casualties and damage than at Brussels airport. At Brussels people could run because they were in an area designed for dispersal. Checkpoints need to be built into the infrastructure.
Another upcoming technology is stand-off screening where passengers don't actually have to stop. While this method does not allow everything to be screened, it can screen forexplosives. What is important is identify a potential threat and to either clear or verify the threat. In this case better facilitation does not create targets.
ATN: Do you think people would sacrifice their privacy in order to increase security?
AG: I think this is in part a generational issue. As we move along I think it will be accepted as a part of life. I think what we have seen is that the level of fear dictates the acceptance of intrusion, and personally I don't like that. I think that's a very dangerous thing but I think that's what we will see. People tend to accept more and more intrusion with the assurance of safety—a modern day social contract if you will.
ATN: What are the challenges for the airports today?
AG: Today the major challenge airports face concerninfrastructure. We are infrastructure providers among other things and we have to make investment decisions based on what we know in the present, there is a high risk. That is a huge challenge when you are dealing with traffic growth. So do you say “I don't know if it's going to continue, so I'm not going to invest” and then be doomed if traffic continues to grow? But if demand really drops, and there has been investment, then airports and communities are going to be a losers too. This is the biggest challenge today.
There will always be other challenges such as changes in technology and behavior. Driverless cars, for instance, may have an impact on non-aeronautical revenue from retail, car parking and rental cars—these are big sources of revenue that could be tremendously disrupted in the next 10 to20 years for airports. These evolving challenges are out there and they are difficult to predict. Again, you need to make decisions about what you're going to spend money on and where your money is coming from: a lot of these things seems to occur out of the blue, it transforms so quickly. But airports have always dealt with change and will continue to do so.
ATN: Regarding infrastructure, the models have changed over the years and more and more we see private entities running airports. If revenues drop, do you think that this will change over the future? What do you think about the US airport model?
AG: The difference is that in North America, airports have access to the capital market and they do not need to consider privatization as a source of revenue for infrastructure investment. In most other parts of the world, it is governments that need to access capital in order to make the infrastructure improvements, and airport projects will compete with other infrastructure investment. So, as long as you have that access then in the US and partially in Canada these are considered as local assets, and this means dealing with locally elected officials, mayors and City Councilors. And, if there is no local tax money going into the airports, it's not costing them anything, and it's a source of political capital in terms of control of contracts and jobs. You have to look at what their incentive is and at what point they might give some of that up, and in exchange for what?
I have just read an article this morning about Kansas City airport, an airport that has always been very convenient, with distributed gates and good security. They're looking to build a new terminal which would be more efficient, but they are encountering public and passenger opposition from those who just like the airport the way it is because of its convenience. Now they are even talking about building a new privatized airport outside Kansas city to serve the market. The Kansas population and local government officials however are asking themselves why they should build a new airport if there's no tax money involved. So, it's a political issue because it has to do with control. If they build a new airport, it will be outside the city so the suburbs will control it. These are the kinds of issues airports are dealing with. There might be isolated instances in the US of privatization, but you're not going to see it at medium size airports. You will see it in smaller airports if they can get the private capital.
ATN: What is the percentage of non-aeronautical revenue?
AG: Worldwide non-aeronautical revenue accounts for 40% of the total. In some regions it's lower and in others it is higher, even beyond 50%.
ATN: In February 2017 ACI announced that passenger traffic grew 5.5% and that freight traffic grew 3.5%. Are you optimistic for 2017? What do you expect the 2017 figures to be?
AG: These figures confirm the trend over the last 10 years where passenger traffic has grown an average of 5% and freight 3%. But freight seems to be rebounding in the last few months and business confidence is up. We will have to see what will happen with the Brexit outcome, but there is a short-term of business confidence.
ATN: Does more liberalization mean more traffic for airports?
AG: Well I think that the protectionist issue is a concern, but frankly I think it's a short-term issue. We do not know if these sorts of the threats are going to happen but if indeed we kind get into a trade war, I don't think it's going to lastbecause the outcome would be so negative for all parties.We have had trade wars before and they don't work, the world is more connected than ever now so the negative effects will be felt even sooner. It’s populist to talk about taking care of our own. I don't know if we are going to have illiberal trade policies but if it does happen it won’t last long.
ATN: In 2016 IATA appointed its new Director General. Also ICAO re-elected Dr. Olumuyiwa Benard Aliu as its President. Is the relationship of ACI with the other organizations improving?
AG: For the most part our relationship with IATA is very good, we collaborate on a whole series of projects and we will collaborate on more: we are in discussion on three more Annexes to our MoU with IATA. I think we all recognize that there will always be odds over charges but frankly that's at the strategic level. I think over time, as airports take increasing responsibility for the overall platform, therelationship between airports and airlines at the local level will evolve. Finally, with ICAO we have excellent relationshipand we are working together on many issues of interest to both our members and to national and international regulators.