London City Airport - proud sponsor of the Air Transport News interview programme
London City Airport is celebrating its 30th anniversary year in 2017. Officially opened by Her Majesty The Queen on 5 November 1987, the airport has welcomed more than 50m passengers and 1.5m flights over the last three decades.
LCY is a first choice for business travellers to and from the UK, and is loved for its location just minutes from Canary Wharf and the City of London, the speed it offers to passengers with a quick check-in (20 minutes door to lounge) and quick arrival (15 minutes tarmac to train), and excellent customer experience, with unlimited free wifi for all passengers, free drop-off, and a business-class feel throughout.
The only airport actually in London, a major expansion programme is underway to increase runway and terminal capacity at LCY, enabling it to welcome 6.5m passengers and 111,000 flights per year by 2025.
In the meantime, a £20m upgrade to departure gates is now open and new routes continue to launch, with Berlin, Cardiff, Rennes and Bergerac amongst the latest to join the LCY network.
Find out more at www.londoncityairport.com
HAPPY BIRTHDAY LONDON CITY AIRPORT!
ATN: What are the main challenges as Chairman of ACI?
DC: I would first like to say that being the Chairman of ACI is very enjoyable, so I don't really see it as a huge challenge but of course, when you think about it, the main challenge of any type of membership organization, especially a federal organization like the ACI, is membership engagement. It is really important that we speak as an industry with one, common voice and so the main challenges are engagement and communication. We have to constantly communicate with our members both to tell them what we think about the current big issues and to highlight the big things that may arise, but also, to listen to them, to hear what they have to say, and consider, what are the big challenges and issues that they want addressed? Once we reach a common view on those areas we can engage more effectively. Continuous engagement, that’s probably the biggest challenge as chair of the organization.
ATN: What are the biggest challenges for airports in general?
DC: I think there are probably three main challenges for the airport industry globally – and these can be characterised as the ‘three Cs’ - namely Capacity; Capability; and Community. When we talk about capacity I think the real challenge for airports now and into the future will be, infrastructure. Having the right infrastructure to meet the demand that is currently coming through the airports and that is projected in terms of passengers and aircraft in the future. Today, many airports are struggling to keep pace with the growth in numbers of passengers, the sheer volume of business coming through. The current regulatory and planning systems in many countries are too slow or cumbersome and are thus slowing down the delivery of infrastructure that is needed and we have to do something about that. Far too often as an industry we are slowed in providing delivery of infrastructure when it's needed and we need to address that. So a big focus for the future is finding better ways to allow the delivery of the right infrastructure at the right time.
The second challenge is capability - the airport industry is competing in a global market for talent. To be successful, we will need to attract the right people and we have to get capable people with the right competencies to come and work in our business. Aviation is a fantastically exciting area to build a career, however, as an airports industry we’ve been slow to use our strength as a global business to attract the right people. It is improving, and increasingly, and we are seeing a new workforce coming into the airports industry from other sectors and industries, with my own background, for example, in the oil/gas industry. But the real challenge is to attract the right people and develop and retain them.
The next challenge is related to the communities that airports work in and with. I'm talking about the challenges presented by issues like noise and air quality. There's an increasing focus and debate around the issue of noise and how it impacts communities. This is a big challenge for us, which we’re responding to both as individual airports and as an industry. We are pursuing a lot of very important initiatives in that sphere, as we work closely with airlines, aircraft and engine manufacturers and encourage them to produce aircraft that are quieter, more fuel efficient and more capable of operating in increasingly urban environments. In terms of air quality we are also working to minimise the impact on the environment. As an organization, the ACI launched the Airport Carbon Accreditation program in Europe five years ago and it is now a global program, with 188 airports certified worldwide. About 65% of Europe’s passengers are going through airports that are registered in the program, which is reducing the carbon impact on the environment. For the year July 2015 to June 2016, CO2 was reduced by more than 200,000 tonnes across certified airports worldwide – enough to power 86,000 households for a year. And of course airports are huge generators of economic development and employment for the communities they serve.
ATN: London City is one of the six airports here in London what are the key points of the differentiation the other airports here in London?
DC: The key differentiator for London City Airport is that it is the only London Airport that is actually in London. We are directly connected to the centre of London by a fast and efficient public transport connection which means that more than 70% of our passengers depart or arrive to the airport by public transport. We are 13 minutes from Canary Wharf, 20 minutes from the City of London and 30 minutes from Westminster. We offer our passengers an arrival service that is exceptional in terms of customer experience. Passengers arrive in London City Airport and 15 minutes after they enter the arrival hall we have them getting onto a train or into a taxi, 13 minutes later they arrive in Canary Wharf, 20 minutes later in the city, 30 minutes later in Westminster or the West End. No other airport in London can do that.
We also offer an unrivalled experience for departing passengers. 20 minutes after they reach our front door they can walk through our airport and get ready to board their aircraft. No other airport in London has the fastest train-to-plane and plane-to-train service that London City Airport can offer. So, our strengths lie in speed, convenience, location and customer service. Our core customer proposition is our speed and the convenience of what we offer but combined with our passenger experience. We have been very fortunate to be recognized for this service by organisations around the world but most importantly by our passengers. We recognise we need to work hard to continue to deliver. We are one of the fastest-growing airports in the UK, certainly in London, but we are increasingly capacity constrained. This year we celebrate our 30th birthday - and we are operating with the infrastructure which is 30 years old and it is just too small for what we want to do. So, the big challenge is to expand our infrastructure to grow, so that we can improve the passenger experience yet again. That is the big challenge.
ATN: UK citizens decided for Brexit how can these influence London City Airport operations?
DC: Brexit is going to have a profound impact not just on London City Airport but on the UK as a whole. It is a fundamental and far-reaching decision, and Brexit is going to happen whether we like it or not. It will create uncertainty and business challenges but the UK is not going to disappear after Brexit. The UK will continue to exist and if anything, Brexit will, in the medium to long-term I think, offer huge opportunities for UK airports. The UK will again become very much ‘an island nation’, geographically and economically, it will disconnect itself from an economic community of six hundred million and revert to one of the sixty million on the outside of an economic community of 550 million - that's going to be a real challenge. But it's going to mean that building connections and growing connectivity will be more important than ever and that's where we as an airport can provide the crucial links to the relevant destinations; so that UK businesses and individuals can go out to sell and trade, to do what they do best. It will also allow the world to come to London, in our case, and to the UK in general, to grow tourism, trade and investment.
ATN: Finally there was a decision about Heathrow Airport and the new runway. Does have this an impact on London City Airport operations?
DC: No, I don't think it will in fact. Yes, the decision has been made to start the process but we think that it will be 2030 at the earliest before the runway and the infrastructure starts operating in London. So, between now and 2030, London City Airport has a huge opportunity, as one of the few airports in the UK and London that has permission to grow. We are about to start a £350 million development program, to improve the infrastructure and passenger experience at the airport. What the program will do is to allow another 35,000 flights per year into the London airport system. The London airport system is desperately short of capacity so our development will provide a vital addition. I think that when we look to the future we don't believe that Heathrow’s expansion will impact us materially. We see the extra capacity that we are putting in as being a key enabler to launching ‘next generation’ aircraft. Those jets include the Bombardier C Series; the E2 from Embraer; the Sukhoi Superjet and the MRJ. We hope that all of those aircraft will be able to fly from London City Airport. Within the next few weeks we will be certifying the C Series for operations in London City and what's really exciting about the C Series is that it offers us 3 times the range from London City Airport. Direct connections with more passengers at a lower seat cost. To more destinations directly from London City across Europe for example to Athens, into the Greek Islands, and we are really excited about that. We also hope to expand what BA have been doing for years from LCY - an all business class offering between London City and JFK in New York. We're looking at all business class services from London City to Lagos in Nigeria, and West Africa, as well as Mumbai and Delhi in India, down to the Gulf, to Doha, Abu Dhabi and Dubai. To the west, there are opportunities for direct flights to Chicago; Toronto; Boston, as well as New York.
ATN: What is the percentage of business passenger traffic?
DC: London City Airport is unique in that 52- 53% of our passengers are traveling on business. To put that in context, the next highest percentage of business passengers is Heathrow’s with around 34%. So, we have a very high percentage of business passengers traveling through the airport and a growing number of leisure passengers. The business passengers are important to us in particular as the average earnings for instance, of those passengers going through London City Airport, is about £110,000 a year or so.
ATN: Do you think that the figure of the business passenger will increase?
DC: I think we will see a very slight decline, with closer to a 50/50 split in the future, as more leisure passengers use the airport. We are currently expanding our leisure opportunities, adding to the types of leisure destinations that we already operate, for example Santorini, Mykonos, Florence and Venice. Currently, it is a premium leisure type of destination we serve where many of our business passengers can come back in jeans with their family, and continue to use London City Airport. But there are really exciting opportunities to expand the premium leisure offer further, and we will continue to work with our airline partners to do that.
ATN: Customer experience is very important for the airport can you elaborate more on this?
DC: We strongly believe in the benefits of technology and we have invested heavily in it in terms of using technology to improve the passenger experience. Over the last few years we have pioneered a system which is called Crowd Vision. Crowd Vision uses technology which was initially unique to London City, and has now spreading to other airports around the world. The system allows us to track passengers in real time around and through the airport and it uses a series of cameras and smart algorithms to give us real time information on the passenger flow through the airport. Our terminal team can monitor exactly how long it takes for passengers to get from the front door to the back door and vice versa.
You remember I told you our customer promise is 20 minutes from our front door to the gate? We know absolutely that we can meet and better that, with an average time from front door to gate for our passengers of fewer than 15 minutes. We know that, because we can track them in real time in the airport. That's Level 1 in terms of the potential for the system, and it allows us to operationally ensure we deliver our promise. Level 2 is where we are able to take that real time information and combine it with sophisticated modelling information to assess how passengers move through the terminal and in turn, improve processes or infrastructure, where required. So, for instance if the UK Government comes to us and says they want to change the security screening protocols not to allow cabin baggage to be taken on aircraft we can tell them what the impact will be on queue times, on check-in times etc.This is very important because it allows us to model changes in processes and infrastructure and take the right decisions about what to do and when to do it, whether that change is a change to the layout of check-in hall or the addition of a series of new gates. This system tells us what the impact will be and it models out the impact many years ahead. The really exciting area is when we take this to Level 3 which we have just started. That is investigating behavioral opportunities, using the real time information and combining it with other sources. For instance, if we combine real-time passenger flows and purchasing flows with POS (point of sales data) from retailers, we are able to tell just how much, what and when passengers are buying and why they are buying. This means we are able to talk with more certainty about the effectiveness of price, placement, and/or promotion, or whether it is the right product. But also as part of the process we can look at passenger densities within the lounge and we now know that when densities reach a certain level, it affects purchasing. We can pass that on to our retailers who can provide appropriate staffing levels at certain times, helping to save costs. So, there's a whole range of benefits that we can get from this technology.
ATN: What is the percentage of the non-aeronautical revenue what do you expect to be in the next years?
DC: Well, the percentage differs by airport. When I was running the Irish airports about 70 - 75% of our income was coming from non aviation commercial activities. At London City only 22%-23% of all revenues comes from non aeronautical and the rest from aeronautical. A key reason for that is the lack of space. We have consciously dedicated our limited space to allow our passengers to flow through the airport. When we look to the future, we would see non aero revenue having the potential to grow to somewhere between 20% and 35%. We have a whole series of ideas we are thinking about doing on that as well, which we think it will be radically different from what we have launched until now.
ATN: London City is constraint due of the runway. What the airport can do when will reach the roof?
DC: We are spending £350 million this year to radically expand the airport but we are not changing the length of the runway. Instead, we are building a parallel taxiway and seven new parking stands, capable of taking larger aircraft, and we are building an extension to the west and to the east of the terminal, which in turn increases the amount of passenger and commercial space. From an extremely small base, I think we will increase by five times the amount of the retailing space we have in the airport and very importantly increase the amount of space for passengers. That development is going to keep us going for quite a few years and that remains our focus.
ATN: How do you see the world in 2030?
DC: No one has any real idea what the world will look like in 2030, it’s hard enough predicting what it will be like next year. However, we will continue to see a huge amount of change over the next 12-15 years and I believe that technology will be an important driver of that change. I think that passenger experience will be the measure by which successful airports will live and die. Airports like Changi, Munich, Schiphol and others like London City who focus on improving passenger experience will be best prepared to face whatever challenges the future brings – those are the airports that will prosper.