in Features / Airports

Support our industry call from new ACI boss

Posted 15 August 2018 · Add Comment

Bongani Maseko, new chairman of the Airports Council International (ACI), believes that, despite challenges, African aviation is becoming a strong contributor to global economic growth.

Bongani Maseko is fully committed to ensuring that all member airports perform well in terms of operational efficiencies, which ultimately contribute to the value chain, providing a smooth end-to-end passenger experience.
He believes airports are increasingly relevant in a globalised environment and that African airports have played, and will continue to play, a pivotal role in the global arena.
In this new era, where there is increased risk of economic nationalism and inward-looking policies, and with the continuous and evolving security threat facing the aviation industry, he says airports must address mounting political pressures, pervasive economic uncertainty, plus downside investment risks.
“In spite of this, we must never forget that our industry is, first and foremost, a model of global sustainability,” he said. “Airports have always adapted to new circumstances and have evolved to fulfil the needs of the communities they serve. However, our industry cannot sustain its positive contribution to the global economy without being adequately equipped and supported.”
In 2016, passenger traffic in Africa decreased by 0.4%, while it increased by 6.5% worldwide.
According to Maseko, African airports in general have not grown significantly over recent years compared to other regions. “Failure to liberalise in Africa has meant that it has not benefitted in the same way as other regions from the growth of low-cost carriers and access to the Chinese and Indian markets,” he stressed.
Furthermore, northern African countries have experienced significant security concerns and the poor connectivity of several African countries has been detrimental to increasing the travel demand.
Last year’s figures show some “hopeful trends”, he said. “We expect passenger traffic growth in the region of 5.7% during the first 11 months of the year and cargo traffic growth above 14%.”
For this to be sustained, and in an economic climate where states are increasingly cutting expenditure, government financing and ownership of airports is not always a viable and sustainable option – particularly in instances where a significant outlay is required to finance much-needed infrastructure.
Maseko calls for more private-sector participation to help capital flow to the airport industry.
Access to private equity is still very low in Africa compared to other regions. According to the latest ACI data, airports with private investment account for only 11% of total traffic.
“The potential for value creation and market innovation materialises only in circumstances where airport operators are as free to grow as any other enterprises, benefiting from a clear regulatory system, a streamlined governance that can reduce the level of dispute and a transport policy that equips the sector with a long-term strategy to boost the economy by incentivising the growth of the sector,” said Maseko.
Funding infrastructure development is another important issue, especially for small airports without sufficient traffic to drive down costs and achieve economies of scale or to generate significant aeronautical revenue or commercial opportunities.
Government subsidies or grants help to cover the shortfall or deficits. In some cases, profitable airports cross-subsidise or compensate net losses of smaller airports through the airport network model.
Nearly half of the world’s airports belong to networks and handle annual traffic of 2.9 billion passengers, representing 38% of global passenger traffic.
In Africa, 89% of airports belong to networks, providing for 78% of the regional share of traffic.
Workforce development, talent management and retention of well-trained staff, are also major concerns for airports.
Governments and industry also remain challenged with the current global security climate and repeated terrorist threats and attacks. Safety and security is of critical importance to the aviation industry.
“Security culture is one of the top priorities globally at the International Civil Aviation Organization (ICAO), through all countries and aviation stakeholders. Engendering a good security culture is not something that can simply be taught; it requires buy-in from senior management and a commitment to considering security in all aspects of operations,” pointed out Maseko.
Elements of security culture include regular communication with staff, strong policies, rewards for good performance, robust monitoring of performance, and staff empowerment.
Globally, 56% of airport revenue come from aeronautical charges. But non-aeronautical revenue has become a vital source of income for airports, now making up around 40%.
The picture is quite different in Africa, where 70% of airport revenue comes from aeronautical activities, and only 26% from commercial activities. This is due mainly to airport size and the fact that commercial activities have not been developed to their full potential.
Like airports worldwide, those in Africa are also seeking to reduce their environmental impact. Maseko thinks they do not need much investment to become ‘greener’. Simple initiatives can reduce consumption in new infrastructure development projects.
Bold measures and leadership are necessary as “the next 20 years will see most growth in passenger numbers coming from Africa”, he concluded.
 

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