Programme
5th ACI-WORLD BANK ANNUAL AVIATION SYMPOSIUM PROGRAMME
Tuesday, 12 March 2019 – 9.00–17.30
PRIVATE CAPITAL IN A CHANGING WORLD
08.00 – 09.00 REGISTRATION & REFRESHMENTS ON ARRIVAL
09.00 – 09.45 INTRODUCTION
09.45 – 11.10 SESSION ONE: ACADEMIC SESSION ON PPP THEORY (including a briefing by The World Bank)
11.10 – 11.40 NETWORKING REFRESHMENT BREAK
11.40 – 13.00 SESSION TWO: FROM DOWNSIDE TO UPSIDE RISKS – A GLIMPSE INTO THE FUTURE OF AIR TRANSPORT DEMAND
Forecasts of air transport demand are crucial for the determination of aircraft fleet, future airport capacity requirements and overall planning across the air transport value chain. Intrinsically linked to economic and demographic variables, a data-driven understanding of potential demand and various scenarios gives aviation stakeholders valuable insights for effective decision making.
Based on ACI’s data and forecasts, global airport passenger traffic is estimated to reach 8.8 billion in 2018 and is poised to double in less than 20 years. Over the long term, it is projected to grow at an annualized rate of 4.1%, reaching 20.9 billion by 2040. Air cargo has also experienced an important resurgence in recent years in tandem strengthened trade and industrial production. However, with a shift away from liberalized economic policies, how can we quantify the downside risks to air transport demand amidst sanctioned trade wars and ongoing geopolitical tensions? On the other hand, based on “business as usual” traffic projections, as we look to the upside, what are some of the supply-side considerations, capacity constraints and bottlenecks that we face?
13.00 – 14.00 NETWORKING LUNCH
14.00 – 16.00 SESSION THREE: PRACTICAL EXERCISE
This session will concentrate on two or three airport projects experiencing different kinds of challenges (eg. lack of support by regulator, or unions) – the airport will present the project and the challenges being experienced and then the participants will split into groups to explore possible solutions.
16.00 – 16.15 SYMPOSIUM CONCLUSION
18.30 – 20.00 ACI AIRPORT ECONOMICS & FINANCE CONFERENCE & EXHIBITION WELCOME RECEPTION
ACI 11TH ANNUAL AIRPORT ECONOMICS & FINANCE CONFERENCE PROGRAMME
Wednesday, 13 and Thursday, 14 March 2019 – 09.00–17.30
PARADIGM SHIFTS IN INFRASTRUCTURE DEVELOPMENT AND THE AIRPORT BUSINESS
Ever evolving aviation market dynamics, changing consumer habits, and digitalisation are increasing competitive pressures upon airports. At the same time, passenger traffic numbers are soaring year-after-year, and many airports find themselves in a quandary where existing infrastructure is insufficient to meet current and projected demand. In the past year, global markets have been unsettled, with a decade of easy monetary policy and low interest rates ending. Weakening confidence in emerging markets is leading investors to de-risk with asset flows back into safer markets.
Competitive pressures, huge investment requirements and changing economic conditions: these trends have far-reaching implications for economic regulation, airport slot allocation, commercial revenues generation, route development, concessions and infrastructure financing. This year’s conference will explore how to navigate these challenges under the theme “Paradigm shifts in infrastructure development and the airport business.”
WEDNESDAY 13 MARCH
08.00 – 09.00 REFRESHMENTS ON ARRIVAL IN THE EXHIBITION
09.00 – 10.30 WELCOME AND KEYNOTE ADDRESSES
10.30 – 11.00 NETWORKING REFRESHMENT BREAK IN THE EXHIBITION
11.00 – 12.45 SESSION ONE: ECONOMIC REGULATION IN THE ERA OF AIRLINE CONSOLIDATION AND AIRPORT COMPETITION? (PANEL DISCUSSION)
While it is argued that the blurring or hybridization of business models between traditional full-service carriers and low-cost carriers continues to be an important industry development in certain markets to the benefit of passengers, industry consolidations in the form of mergers and bankruptcies can have the opposite effect by reducing competition. At the same time, airport competition has intensified. While changing business models have induced new efficiencies and reduced transport costs for passengers, continued airline consolidation may act as a hindrance to this trend.
It raises the question as to whether there is a need for heavy handed regulation on airport’s aeronautical services. Are market-based solutions such as long-term contracts and bilateral agreements between airports and airlines the most efficient and cost-effective apparatus for certain markets? How safe are regulated revenues in an era of airline consolidation and airport competition?
12.45 – 13.45 NETWORKING LUNCH IN THE EXHIBITION
13.45 – 14.45 SESSION TWO: THE CHANGING DYNAMICS OF AIRPORT COMMERCIAL REVENUES (PANEL DISCUSSION)
As air travel continues to extend its reach to the world’s populations through affordable choices and variety in destinations, the demographic composition of the world is changing. Whereas many advanced economies continue to experience an ageing population, major emerging markets have also observed an expansion in their working age populations which has contributed to a burgeoning middle class. The demographic shift occurring in many countries coupled with the exponential rise in mobile telephony penetration rates has huge implications on airports’ commercial activities and the bottom line. There is no doubt that, along with disruptive technologies such as easy and ubiquitous access to online retail and e-commerce platforms, increased retail competition outside the purview of the airport has limited the growth prospects for airports’ non-aeronautical revenues. The traditional brick and mortar retail and duty-free stores have lost some of their exclusivity in certain markets.
In an effort to better understand the traveling passenger at the world’s airports, how can we capture and model their tastes and preferences across these changing markets? What are some of the opportunities or challenges that lay ahead for the commercial business and duty free as a result of these changes?
14.45 – 15.30 KEYNOTE PRESENTATION – THE FORK IN THE ROAD ON BREXIT EVE – WHERE DO WE GO FROM HERE?
15.30 – 16.00 NETWORKING REFRESHMENT BREAK IN THE EXHIBITION
16.00 – 17.15 SESSION THREE: ROADMAPS TO MANAGE SCARCE CAPACITY – THE ECONOMICS AND POLITICS OF SLOTS (PANEL DISCUSSION)
Many airports find themselves in a predicament where a surge in air transport demand is outstripping the infrastructure available to accommodate growing markets. However, when existing airport infrastructure is not used to its optimal capacity, the resultant allocation of resources will be inefficient, generating delays, weakening connectivity and reducing the quality of service for aviation stakeholders. However, many airport operators have very little say in how slots are allocated.
What are the challenges and pitfalls of the current global slot allocation regimes and guidelines, on both a regional and global level? How can aviation stakeholders work together to overcome some of these capacity challenges in the interest of the traveling public? From a pure economic perspective, what is the best approach to allocating slots over the short and long term?
THURSDAY 14 MARCH
08.30 – 09.00 REFRESHMENTS ON ARRIVAL IN THE EXHIBITION
09.00 – 09.15 INTRODUCTION FROM THE CHAIRPERSON
09.15 – 10.30 SESSION FOUR: COMPETING FOR PASSENGERS – ROUTE DEVELOPMENT AND INCENTIVES (PANEL DISCUSSION)
Over the last 20 years, Air Service Development has become an integral module of every airport’s
business development strategy. At the same time, it has evolved from a simple sales pitch to a dynamic and complex process with airports going beyond just attracting airlines or adding new destinations. Airports have crafted a great array of support programmes aiming at persuading airlines to select them and gain a competitive advantage over their peers. Incentive packages have become widely used throughout the industry as part of air service development strategy to share with airlines part of the risk of a new route or an additional frequency.
What should therefore a successful Air Service Development include? What are some of the tools, incentive schemes and marketing activities in place that allow airports ‘win’ new routes and increase passenger traffic? Besides the upside gains, what are some of the risks and unforeseen pitfalls that could occur when instituting an incentives or a marketing support programme? How should airport operators position themselves vis-à-vis tourism authorities.
10.30 – 10.45 LIVE INTERVIEW
10.45 – 11.15 NETWORKING REFRESHMENT BREAK IN THE EXHIBITION
11.15 – 12.30 SESSION FIVE: RISKY BUSINESS – CRAFTING THE CONCESSION AGREEMENT IN FOREIGN LANDS
Approaches to Public-Private-Partnerships and privatization models used depends both on
government objectives and the requirements of the private operator/investor(s) the government hopes to attract. A balance needs to exist between transferring the risk of financing large capital expenditures from governments and taxpayers to private sector investors, on one hand; and private sector requirements to recover the costs of operating airports and generate risk proportionate returns on investment, on the other. An inherent traffic risk exists in the airport business. This must be factored in when considering and designing privatization and regulatory frameworks. In some cases, the airport economic regulatory framework is unclear, or is amended unexpectedly after privatization occurs. This creates uncertainty for investors and is an additional barrier to financing infrastructure sustainably.
How are risks assessed when investing in the airport sector? As many airport infrastructure investments are over long-time horizons with huge immediate outlays, have airport projects adequately captured and priced the risk accordingly? What incentives should governments ensure are in place to adequately strike a balance between national objectives and investor requirements?
12.30 – 12.45 CLOSING REMARKS
12.45 – 13.45 NETWORKING LUNCH IN THE EXHIBITION