Policy Outlook

8/4/2019 Policy Outlook

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Fcn te Cenes of te 21st Cent

An Outlook or Europes Airports


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Over the last decade, European citizens have enjoyedthe benets o unprecedented growth in trade and

tourism links, between all the regions o the continentand the world beyond. These benets are the directresult o the liberalisation o European air transport

a policy that has not only changed the rules o thegame or airlines, but also led European airportsto undergo a process o business transormation.

With governments unwilling to und airport inrastructureand airlines getting unrestricted access to a European-

wide airport superstore in which to shop or the best deal,airports have evolved rom mere inrastructure providersdependent on public subsidies to sel nanced, diversied

and competitive businesses. The global economic andnancial crisis that started in 2008 has only reinorcedcompetitive pressures on airports. While airlines are

already not paying the ull cost o the inrastructure theyuse, the consolidation process under way will resultin ewer and more dominant airline groups or the 500

airports o the European aviation network. Competitionwill also increase externally as European airports will need

to attract a growing share o fiers rom ast developingnations across the globe.

These competitive pressures mean that the business

transormation o airports will continue. Indeed, new

business models or European airports are nowemerging, with each airport striving to leverage

its unique market position and increase its economicand operational eciency.

Crucially, the act that airports have become businessesin their own right has allowed them to act as competitivedynamos or local and regional economic growth with

ar reaching benets at national and European levels.Airport operators in Europe directly employ 156,000sta, along with a total o 1,200,000 employees on

airport sites. These airport related jobs amount to a 59billion annual contribution to European GDP. For every1,000 airport onsite jobs there are around 2,100 indirect

jobs supported nationally.

Airports in Europe are not just supporting their local

economy increasingly, they are dening it. This situationrefects the act that air transport lies at the heart omodern, globalised economies and that there is simply

no viable substitute to the 150,000 routes that constitutethe air transport network connecting Europe.

However, i they are to continue to oster economicgrowth and job creation, a new market-based outlooko airports and their role in the European economy is

needed. Aviation is at a crossroads. The sustainability

ExECuTivE Summary


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agenda means that over time, new economic andtechnological undamentals will substantially redene the

entire sector. In this context, policy makers and regulatorsneed to treat airports as dynamic and independentbusinesses. More specically, European airports need

to be empowered to address 4 key strategic challenges.

1. The Capacity Challenge

Notwithstanding the global crisis, demand or airservices in Europe is still expected to double by 2030.While European airports have committed a total o

120 billion to new acilities between 2000 and 2015,and plan an overall 41% capacity increase by 2030, thiswill be ar rom enough. Authoritative projections rom

EUROCONTROL show that by that time, 11% to 25%o demand or air services will not be accommodated.Europe is thereore acing an airport capacity crunch.

This will result in unprecedented levels o congestion with ar reaching repercussions on the environment andthe competitiveness o our economies.

Airport capacity needs to become a top priority or the

EU transport policy, with the aim o aligning ATM andairport capacity objectives. This involves a ull integration

o airports into the new European ATM system presentlyunder development with the Single European Sky andSESAR. There also needs to be a proactive and

consistent monitoring o airport capacity at EU level,along with best-practice guidelines on land-use planning

around airports linking local, national and communityregulations and objectives and delivering consistentprocesses throughout the EU. Finally, European airports

need to be empowered to move towards a morecommercial approach when setting user-chargesand allocating slots.

2. The Environmental ChallengeThe greening o all modes o transport representsan ambitious yet necessary policy objective. For aviation,

this is an unprecedented challenge with ar reachingtechnological and economic consequences. Europeanairports are rising to this challenge, building on years o

environmental actions. ACI EUROPE and its membershave ormally committed to carbon neutrality or allactivities controlled by airport operators. The launch

oAirport Carbon Accreditation in June 2009 is a urtherstep, providing an institutionally-endorsed programmethat assesses and recognises eorts by airports

to manage and reduce their carbon emissions.

However, EU policy and regulations need to

unambiguously reconcile aviation growth with ambitiousenvironmental objectives. This includes setting a clearpriority between occasionally conficting environmental

objectives as improvements in one area could becancelled out by an increase in other environmental

burdens. Green taxes and other blunt economicinstrument should be avoided and repealed wherethey exist, since they do not deliver signicant

improvement to the environment. Europes airportsully support the inclusion o aviation within an opeemissions trading scheme ultimately at a world level

building on balanced European initiatives as a rst ste

3. The Connectivity ChallengeAviation is the real worldwide web and the liberalisation

o European aviation has demonstrated extendedbenets. Without urther improvement in Europes airtransport links with the wider world, our continent risks

losing the economic and social benets o an increasinintegrated global market place. Yet, access to manymarkets outside the EU remains constrained by

antiquated government to government restrictions.These restrictions oten prevent hub airports romincreasing existing services and regional airports rom

opening new international connections to improve the

connectivity o their communities or whom accessto the wider world is exclusively dependent on aviation

European airports support the ull liberalisation o airservices agreements at EU level. Priority should be giv

A new market-based outlook o airports andtheir role in the European economy is needed

Executive Summary


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to achieving an Open Aviation Area with the US andCanada without any restriction, to achieving a Pan-

European and Mediterranean Aviation Area comprisingall EU neighbouring countries by 2013 and to initiatingnegotiations with Brazil, Russia, India, China and Japan.

4. The Security ChallengeIn the present geo-political environment, eective security

is paramount. However, the current security regimeremains inecient. It is mainly reactive, essentially ocusedon detection aimed at addressing what is possible

rather than what is probable. The lack o genuineharmonisation both within the EU and across the worldhas only made the ideal o one stop security a system

where checks and controls perormed at airports locatedin other countries are ully recognised, thus avoidingduplication all the more remote.

This situation has resulted in air travel being increasinglyperceived as an unpleasant experience by the travelling

public. It also results in an extremely challenging operatingenvironment with escalating costs or European airports

security now accounting or 35% o airpor t operatingcosts. Unlike the rest o the world, European airports

bear the bulk o these costs as no or very little publicnancing is made available or what remains a primeState responsibility.

Harmonisation at EU and worldwide level needsto be guaranteed based on the implementation

o the one stop security concept and an increasedocus on intelligence and deterrence. Public nancingalso needs to be made available, not least because

urther improvements will be deliverable only throughresearch and new technology, which in turn will requireadditional investments by airports in equipment

and related processes. Indeed, it is about timethat European governments bear their air shareo responsibility or unding measures protecting

citizens at large.

One undamental principle binds all elements o this

vision. As Europes airports adapt to an increasinglycompetitive marketplace by improving eciency andcustomer service, they will need a lighter and better

regulatory touch. They need to be empoweredto manage their own destinies, to the benet oall Europes citizens.

4 Executive Summary


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European citizens are enjoying, as never beore,the benets o an increasingly sae, ecient and

aordable air transport system. Eective mobilityin Europe has long been one o the primary visionso the EU; in the European Commissions own words:

The ree movement o people, goods and servicesis a driving orce behind the sustained developmento the Community. 1

The last decade has seen an unprecedented growthin trade and tourist links especially between the

most recent EU Member States and their neighboursin the west. Outside the capital cities, in the regionso Europe where most o the continents citizens live,

the liberalisation o European air transport andthe resulting revolution in low-cost air services haveproved especially benecial. Europe and its regionsnow enjoy an ever-expanding network o air services,

linking the continents communities to the world.

But how long will citizens and their communities

benet rom increasing air services and lower ares?

How long will the resulting economic and socialbenets continue to fow? Will uture generations see

the early years o the 21st century as a short-livedgolden age o European travel?

Beyond cyclical economic crises, aviation is nowconronted with volatile oil prices and the uture

prospect o an oil shortage. Over time, newtechnological and economic undamentalswill substantially re-dene the whole sector.

This evolution will only be accelerated by the needto address the impact o greater mobility on theenvironment. While economic growth will continue

to be the bedrock to guaranteeing the uture welareo all citizens, society now demands, that suchgrowth takes place within a commonly accepted

environmental ramework.

Europes transport systems thus ace the

unprecedented challenge o having to activelycontribute to the greening o the economy.A strategic review o the EU Transport Policy is

already underway, and the unique role and benetso aviation are key issues to be considered in thisrespect. Indeed, there is simply no viable substitute

or most o the 150,000 routes that constitute the airtransport network connecting Europe. As a result,

the EU has no alternative but to unambiguouslyand proactively reconcile the growth o aviationwith its ambitious environmental objectives.

With the environmental impact o aviation beingelt most acutely at and around airports, Europes

airports are at the heart o this debate. But withthe benets they generate as gateways to the globaeconomy spanning ar beyond their immediate

surrounding areas, airport development remainsa prerequisite or a competitive economy anda truly cosmopolitan society.

This requires a new way o looking at airports anda new policy approach, both at European and natio

level allowing them to proactively address the kechallenges that they ace.

With the right policy approach, airports can becatalysts or positive societal change and wealthcreation. But with the wrong approach they will

become bottlenecks, unable to deliver sustainablemobility and economic growth needed or Europeto compete in the global market place.

Introduction

iNTrOduCTiON


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Like the continent itsel, Europes airports havechanged. Twenty years ago, air ports were mere

inrastructure providers, dependent on publicnances and essentially ocused on the interestso their countrys fag carrier. Today, airports are

diversied and complex businesses, increasinglyindependent and sel-nanced, responding tothe needs o diversied customers.

European airports have thus undergone a processo business transormation. This process has

primarily been driven by i ncreasing competitionand changing attitudes rom Governments.

The times when airports could simply and only relyon their national fag carrier or trac growth areover. By changing the rules o the game or airlines,

the liberalisation policy o the EU also had a directand ar reaching impact on airports. No longerconstrained by route, capacity and pricing

restrictions, airlines now have access to a European-wide airport superstore in which to shop or the

best deal. This means that airports, whatevertheir size, are actively competing with eachother to attract and retain new customers passengers, airlines and shippers.

Along with aviation liberalisation, Europeangovernments came to expect that airpor ts wherever

possible, would stand on their own two eet.Why should they und costly airpor t developmentwhen airports can manage the job themselves?

As airport charges paid by airlines and passengersdo not cover the cost o the inrastructure they

use, other revenue sources had to be ound anddeveloped. European airports have thus becomeextremely ecient in generating revenues rom an

array o non-aeronautical activities such as retail,restaurants and bars, parking, conerence centres,real estate, consulting, etc. These activities play

an increasing role in nancing the modernisationand expansion o airport acilities. They currentlyaccount or almost 50% o airport revenues,

rising above 70% in some cases.

This development means that the airport business

in Europe operates just in the same way as othercompetitive concerns winning customers

and delivering a return or shareholders, bethey private or public, through operationaland economic e ciency.

a NEw way OF lOOkiNg aT airpOrTSCopeve Dyaos o Gowh ad Couy Awaeess


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A New Way of Looking at Airport

The unprecedented economic and nancialcrisis that began in 2008 will urther the business

transormation o European airports. While long-termundamentals or aviation remain strong, with airtrac still expected to double by 2030, the structur

o the aviation market will be very dierent in thecoming years and will only reinorce competitivepressures on airports, both externally and

domestically within Europe.

As the European aviation market has reached

maturity, a lot o uture demand growth wi ll comerom ast developing nations, where the desire anpropensity to fy will increase tremendously along

with the standard o li ving. Attracting these uturefiers to and through Europes airports will meanincreased competition with airports located

in other world regions.

Within Europe, the crisis has accelerated airline

consolidation or network airlines, but also or low coscarriers (LCC). This is likely to result in signicant route

network concentration around 5 major airline groupwith the l ow cost segment becoming dominant ointra-European trac and more prone than evermove aircrat and crews in search o the best mar

Traffic vary significantly

Dependence on LCC/

regional carriers

No transfer traffic

Only narrow body aircraft

Diverse carrier mix

Limited transfer traffic

LCC traffic up to 50%

Mainly narrow body aircraft

Diverse carrier mix

Medium share of transfer trafficGrowing share of LCC traffic

B787, A350

Global flag carrier/alliance

High share of transfer trafficSmall share of LCC traffic

A380, B747-8, B787, A350

Small Regional Airports

25m Passengers

Aggressive growth

7-11%

Sustained growth

5%

Dynamic growth

4-7%

Sustained growth3-5%

Exhibit Increasing Airport Competition1

European Airport Sector Average Annual Growth 2003-2007


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8 A New Way of Looking at Airports

location. Overall, much ewer ai rlines or 50 0European airports li ke any other business,

there will be winners and losers.

Against this background, new airport business

models are emerging in Europe, away romthe traditional ones: the hub airport, the regionalspoke/hub destination airport and the leisure/low

cost airport. While they are not mutually exclusive,these new models involve tailor-made approachesto leverage each airports unique market position

and strengths. This increasing specialisationrefects the need or each airport to securetheir own competitive advantage over others

through diversication and innovation.

The on-going business transormation o

European airports has not only beneitedthe aviation system. Crucially, it has allowedairports to become competitive dynamos or local

and regional economic growth. As a result, airportsnow play a unique role in setting the economic

agenda o their communities, with ar reachingbenets at national and European level.

Co-ordinated Airport Group

at national and/or regional level

Aena (Spain), LFV (Sweden)

PPL (Poland), Manchester

Airport Group (UK)

Airport Network

Hub where the major airline

alliance groups connectLondon-Heathrow,

Paris CDG, FrankfurtAlliance Anchor Hub

Airport that provides all major

services of a city, without

leaving the site

Munich, ZurichAirport City

Airport that tailors to business

traffic (scheduled and/or

non-scheduled)

London City, Farnborough,

Le BourgetBusiness Traffic

Airport which focuses

on low cost airlinesBergamo, Charleroi,

London-Stansted

Low Cost Base

Airport specifically cateringto the needs of freight

operators

Liege, LeipzigFreight Platform

Established

Emerging

Airport that providesa retail/service centre for

their own communityAthens

Airport as FinalDestination

Airport city with strong

intermodal connectionsAmsterdam-SchipholMulti-modal Port

Exhibit New Business Model for Airports2


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COMMITTEE OF THE REGIONS & NEW WAYOF LOOKING AT AIRPORTS

With EU enlargement, regional airports areplaying an increasingly important role in theareas o greater cohesion and economic growtGreater cohesion arises in a number o ways

including the ability o citizens to travel quickland easily across the EU. This is particularlyimportant or the more remote areas in the EU

The economic benets come in our main wayFirstly the direct benet o employment and

income that is wholly or largely related to theoperation o the airport. Then the indirect beno the employment and income generated in theconomy o the airports local area in the chao suppliers o goods and services.

There is the induced benet o employment aincome generated in the economy o the regiby the spending o the incomes o those direand indirect employees.

Finally we have the catalytic benet. Here wehave employment and income generated in thregional economy by the wider role o the airpoin improving the productivity o busines s andattracting economic activities, such as inwainvestment and inbound tourism. EU regionairports and regional air services are a Europeasuccess story in so many dierent ways.

Gordon Keymer, Rapporteur on RegionalAirports, Committee of the Regions

A New Way of Looking at Airport

For every 1,000 airport jobs there are around2,100 indirect jobs supported nationally

Within Europe, the number o jobs created

directly by the air transport industry is estimatedto have reached 1.53 million in 2006.2

Around 748,000 people work or airlines orhandling agents at airports (e.g. as ight crew,check-in sta, maintenance crew, etc.). 156,000

people work directly or airport operators (e.g.in airport management, maintenance, security,etc.), while more than 308,000 work on-site at

airports in retail outlets, restaurants, hotels,etc. Nearly 314,000 people are employed in thecivil aerospace sector (manuacture o aircrat

systems, rames and engines, etc.).

Today, airports are not only instrumental in boostingtourism; they act as a magnet or the establishment

o new businesses. The immediate proximity o awell-connected airport remains one o the top criteriaor company location. It also helps attracting skilled

labour and acilitates economic transormation.

In recent years, airports have indeed enabledthe diversication o local economies away rom

declining sectors to more promising ones. Moreover,or the islands and outermost regions o Europe,airports are the lieline. It is thereore no surprise that

airports have developed into economic communitiesin their own right.

Around large hub airports, these economiccommunities are now called Airport Cities,refecting the act that these airports are economic

engines comparable to the metropolitan area theyserve. Airport Cities have become a destinationor business, shopping and leisure, based

on multi-aceted development. They arethe new global transportation and businesscentres o the 21st century.

Similarly, smaller airports have developedinto dynamic micro-economies. Refecting theirspecialisation and niche market positioning

in segments such as cargo, business aviation

or low cost point-to-point services, they haveattracted warehouses, business complexes,

leisure activities and hotels to service andcomplement their core business. In time,


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many o these niche airports will evolve intolarger ones, with even broader activity and

income bases.

European airports are not just supporting their local

economy in many cases they are dening it, andthe potential or urther economic growth basedaround airport development is huge.

Paris Charles-de-Gaulle Airportalone isresponsible or approximately 90,000 directjobs on and around the airport site3 and270,000 indirect or inerred jobs in theRoissy employment basin.

The Dutch government estimates thatAmsterdam Airport Schipholaccounts ornearly 2% o GDP, with this fgure expected torise to 2.8% in 2015.4 Freight companies buildnew warehouses and manuacturers buildactories close to the runway or speedy delivery

times. The signifcance o Amsterdam AirportSchiphol was proven in the March 2009 decision

by the Dutch government, repealing their airpassenger tax, as it was driving trafc away.

Munich Airport is Bavarias second largestcompany and a magnet or enterprise in itsel every 18 days a new company sets-up businessin the area surrounding the airport. Every dayMunich airport creates up to 4 additional newjobs (direct and indirect). With regard to theuture, the workorce at the airport is expectedto keep growing: By 2020, Munich airport willhave a total workorce o 41,000 employees.

Airports o all sizes can play an important rolein uelling economic growth, with even smalland medium sized airports transorming localeconomies.Birmingham International Airportin the UK has a total o 130 companies employing7,000 people on site at the airport.5 Since Sloveniajoined the European Union in May 2004,LjubljanaAirporthas seen a 75% increase in touristsrom other European countries passing through

the airport.

To allow airports to continue to oster economicgrowth and the benets or Europes citizens that

it brings, a new market-based outlook o Europesairports and their role in the European economyis needed. Over the next ew years, Europes

airports ace several major strategic challenges.Policy-makers and regulators will have to treatairports as dynamic businesses, giving them

the reedom to implement the key enabling policies

o a better air transport industry. In particular,there are our areas where Europes airports

ace serious challenges:

The Capacity Challenge: how should Europes

airports plan, und and deliver appropriate capacityimprovements in the ace o ever-increasingand complex restrictions and delayed decision-

making processes?

The Environmental Challenge:how should

Europes airports balance the demand ormore passengers and services with the need

to be increasingly sensitive to local, nationaland global environmental protection measures?

European airports are not just supportingtheir local economy in many cases,

they are dening it

10 A New Way of Looking at Airports


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A New Way of Looking at Airports

The Connectivity Challenge: how shouldEuropes airpor ts ensure the continents citizens

can continue to benet rom the growth in airtravel and trade locally and throughout the world?

The Security Challenge: how should Europesairports make travelling through the terminala more comortable experience, while improving

levels o security?

To meet these challenges, ACI EUROPE the

voice o Europes airports has developeda series o positions which it believes are vitalnot just to Europes air transport industry, but

the economic, social and environmental well-beingo the continent itsel. These positions steer a clearcourse or the development o an integrated and

proactive EU policy or airports.

EAST MIDLANDS AIRPORT & NEW WAY OF LOOKING AT AIRPORTS

East Midlands Airports location at the centre o the UK has contributed signicantly to its successin growing both its passenger and reight business. Originally owned by the ve surroundinglocal authorities, EMA opened as a commercial airport in 1965 on the site o a ormer RAF baseand handled some 118,000 passengers in its rst year. Today, ater being privatised in 1993,EMA is owned by Manchester Airports Group and annual passenger throughput is approaching

six million.

Timely extensions to the runway and terminal acilities in the 1970s, 80s and 90s attracted

a mixture o European scheduled and chartered services. However, it was the low-costrevolution and the arrival o Go (later taken over by easyJet) in 2002 ollowed by bmibabyand Ryanair that galvanised EMA into creating cost-eective solutions to the needso the low-cost airlines.

We have also exploited our unique location adjacent to the national motorway networkand within our hours trucking time o 90% o the UK mainland. As a result, DHL, UPS,TNT and the Royal Mail have helped to make EMA the UKs largest pure reight and mail hub.

Our airport is a vibrant economic hub providing over 7,000 jobs on the site. Recently, theairport has received planning permission to extend the existing 2893 metre runway by 190metres. The extended length will enable aircrat to depart carrying more uel, passengers orcargo and make the airports runway the third longest civilian runway in the UK. Our ocus isto continue to develop in a sustainable way and make our ground operations carbon neutral

by 2012 and to ensure we provide an airport that encourages and excites passengersto make East Midlands Airpor t their rst choice when travelling.

Penny Coates, Managing Director, East Midlands Airport


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Key

Points Airports have developed into complex, mature global

businesses but many of the regulations governingtheir operations are still stuck in the 1970s.

All airports, large and small, have a critical economicand social role to play.

Airports need a lighter and better regulatory touch

and they need to be empowered to manage their owndestinies to the benet of all Europes citizens.

Europes airports face four major challenges theywill have to address if they are to meet the needs

of their customers and the communities they serve.Capacity, Environment, Connectivity and Security.


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14 Meeting the Capacity Challenge

Where Are We Now?To compete and attract new airline services, Europes

airports have committed a total o 120 billion in newacilities between 2000 and 2015. These investmentsare largely paid or through the development o

commercial revenues and external debt, in orderto keep airport charges paid by passengers andairlines at competitive levels.

Going orward, a 41% increase in capacity is currentlyplanned by European airports by 2030. Out o the 500

commercial airports o the European aviation network,such plans include 5 new airports, 29 new runwaysand new airside (taxiways, apron, etc) or landside

(terminals) extensions at 106 airports.

Yet, despite these plans and signicant investments,

airport capacity will be the main bottleneck othe European aviation system. Authoritative 2008projections rom EUROCONTROL show that by

2030, between 11% and 25% o demand or airservices will not be accommodated. This translates

into 19 to 39 airports ully saturated (in other words,acing operating conditions similar to those oLondon-Heathrow today!) and 160 to 490 millionpassengers potentially aected.

Saudi Arabia

OmanUnited Arab

Emirates

Qatar

Kuwait

BahrainDoha Sharjah

Dubai

Muscat

Abu Dhabi

5.5 billion investment in new terminal

and runway, part of 32-40 billionin new airport investment

Initial passenger capacity of 20 million

2 parallel runways

Abu Dhabi

Gulf-based airlines are investing heavily and have placed orders worth 43 billion for 350 aircraft.20% of the latest generation long haul jets on order (A380, 787, etc.) are going to airlines based in the region.

Fast becoming formidable players in the global airport industry, airports in the Gulf pose a particular threat

to Europes major hub airports

3.6 billion expansion of existing

airport for capacity of 75 millionpassengers

Planned 26 billion for new Dubai

World Central Airport, business,

logistics and intermodal centre

Up to 120 million passenger capacity

Up to 6 parallel runways

Dubai

8.7 billion new airport development 50 million passenger capacity 2 parallel runways

Doha

Exhibit Competing Hubs in the Gulf3

Source: Airport Business, Janes Airport Review , ACI 2007 Airport Economics Survey, and airport websites


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Meeting the Capacity Challenge

Beyond these gures, the emerging picture orthe uture o our air transport system is one o chao

with passengers and airlines exposed to cascadindelays and fight cancellations on an unprecedentscale. While this situation will concern primarily

the larger hub airports, many medium sized airportsor even small airports will also be aected, eitherbecause they themselves have little capacity to

spare or simply because o the domino eect

o the capacity shortage spreading throughoutthe network.

Airports and airlines are willing to work more closelywith high-speed rail to develop intermodal links

as a means o improving the use o increasinglyscarce airport assets. Good intermodal connectionsincrease route choice and improve travel times to

and rom airports. They also increase the airportscatchment area by linking more regions to theairports, while at the same time reducing traveller

total travel time and emissions. The developmento adequate ground inrastructure is thereore a key

success actor or airports and the regions theyserve. However, surace links cannot oer viablealternatives to all the transport challenges oa continent as complex and diverse as Europe.

Exhibit European Airports Capacity Crunch4

Source: EUROCONTROLs 2008 studyChallenges o Growth

By 2030, up to 39 European

airports will be fully congested

Up to 25% of European air

trafc unaccommodated

50% of airports affected

160 to 490 million passengers

potentially affected


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Air transport is simply aster, more ecientand more dynamic at developing connectivity

across Europe.

The magnitude o the airport capacity crunch

that Europe is acing is such that even i somemitigation eects can be expected rom betteruse o existing capacity and rom the development

o intermodality with rail, the only real solution is

the development o new airport inrastructure.This is proving ex tremely challenging or airports

as they ace increasing diculties in securingpermission to build and nancing expansion.

As local and national environmental restrictionstend to dictate the capacity o an airport,planning and authorisation processes or

expansion have become extremely cumbersome,both in terms o time and costs involved.For example, the planning process or Munich

airport took 22 years at a cost o 800 million.In addition, expansion plans are oten at the

mercy o politics, adding great uncertaintyand potentially resulting in the interesto the ew prevailing over those o themajority. In these conditions, European

airports are simply not in a position to respondto market demand.

Added to the hazards o planning processes,simply nancing capacity expansion is becoming

more and more dicult. Historically, airlinesin Europe have enjoyed very cheap airportinrastructure. Airports public shareholders

used not to expect a substantial nancial

return on their investment and were essentiallysubsidising airlines shareholders through low

airport charges. The positive evolution o airportsas businesses in their own right means thatthose days are now over. Moreover, airports

are also acing increasing external costs,especially or utilities and all securityrelated activities.

While airport competition now ensures that airlinesnever pay the ull cost o the inrastructure they

use, they will probably need to pay a airer shareo these costs in the uture. Yet, many airlines

do not accept the normalisation o the airportbusiness. Negotiations over airports chargeshave become extremely dicult over the last years,oten leading to disagreement and legal battles.

Exhibit High Speed Rail NetworkServices

5

EUROCONTROL & CAPACITY

At its core, the challenge o delivering the Single European Sky presents all aviationstakeholders with the undamental priority o agreeing to one ATM process in Europethat aligns capacity on the ground with capacity in the air. EUROCONTROL has beendocumenting the need or more airport capacity or some time now. The looming airportcapacity crunch remains an issue that needs a lot more visibility.

David McMillan, Director General, EUROCONTROL

Source: EUROCONTROL

High Speed Rail Network in the EU Currently offer: 98 City Pairs

Potential growth to 300 City Pairs

Air Services Network in the EU Currently offer: 150,000 City Pairs


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Airlines constantly call or widespread andintrusive economic regulation o airports, which

can jeopardise airport expansion when chargesare capped at unrealistic levels. Moreover, airportcapacity also plays a key role in driving airline

competition, while inadequate economic regulationcan be a very eective way or an airline to protectits dominant position at an airport. This is precisely

where the interests o the airlines do not coincide

with those o the travelling public.

A Strategy for the FutureWhile airport capacity remains an issue o nationalcompetence, the ar-reaching consequences o thelooming capacity crunch are clearly o common

European interest. This needs to be addressedaccordingly. This means that the EU should nallycome to terms with the challenge o airport capacity

and make it a true priority o i ts Transport Policy along with the Single European Sky projectand SESAR (Single European Sky ATM Research).

The report delivered in 2007 by the High LevelGroup o aviation experts to the European

Commission6 conrmed that airport capacitywill be the main bottleneck in the European air

DUBLIN AIRPORT AUTHORITY & CAPACITY

We are all amiliar with the airport dilemma in Europe congestion increasing at major airportsas passenger numbers grow while the fexibility to add terminal and runway capacity in line withthis growth is cur tailed by planning, economic or environmental constraints.

All this is happening while airports are struggling to accommodate a rapidly changing demandand demographic prole rom passengers who are fying more requently, and fying at an olderage. Passengers are less tolerant o congested acilities than in the past, but at the same timechoose airlines which vigorously challenge the cost o airports providing the acilities they demand.

The result is that airports are under pressure to provide more capacity and better services at lowercost than ever beore we are obliged to do a lot more with less. While the challenge to be moreecient is one that commercial airports are used to, we are reaching a stage at many airportswhere congestion cannot be dealt with except by additional investment, and investments cannot

be made unless they are remunerated appropriately.

As airlines are increasingly deregulated on a regional and global level, airports ace growing regulatoryconstraints, requently at the behest o these same airlines. This creates a dilemma or airports as they

have signicantly less scope than other businesses to use their initiative and enterprise to addressthese myriad problems and challenges. Increasingly, regulation adds to airport costs. Balanced and

appropriate regulation is required in specic instances, i an airport has a dominant market position, butexcessive regulation as aced by many airports is very costly and counter-productive. The Irish Regulator,the CAR, disallowed 78% o the capital programme or Dublin Airport in 2001 which consigned the

airport to years o congestion, lowered service levels and stunted the airport potential to contribute

more eectively to the key economic aviation gateway to the Irish economy. Not all regulation is goodregulation, regulation is not a panacea, and should only be introduced where absolutely necessary.

Airports ace many competitive pressures and airports need the same reedom as airlinesto respond to a dynamic market place.

Declan Collier, CEO, Dublin Airport Authority


20/40


transport network, that merely optimising existingcapacity will not solve the problem and that new

inrastructure will be needed. The report advocatesa new total aviation system approach at EU levelaimed at aligning ATM and airport capacity

objectives in order to ensure the overall eciencyo the air transport network.

ACI EUROPE ully supports this approach and is

cooperating closely with the European Commissionand EUROCONTROL7. Many o Europes airportsare already str iving to optimise their own operations.

Airport ramp activities will need to be streamlined andaircrat turnarounds managed in a more ecient way.Beyond these tactical improvements, Europes

airports are promoting a three-point strategyto meet the capacity challenge.

1. Consistent monitoring o airport capacityat EU level.An inventory o airport capacity and related data is

required, aording a comprehensive understanding

o the issue and the implications o nationaldecisions on the European aviation network.

2. EU best-practice guidelines on la nd-useplanning around airports.

These guidelines will link local, nationaland community regulations and objectives,so local authorities may use a common ramework

when considering airport expansion schemes.This should speed planning decisions whiledelivering a consistent process throughout the

EU. In addition, these guidelines need to take into

account the importance o protecting areas aroundairports rom residential development, so that

airports can expand whilst avoiding confictswith new communities.

3. Empowering airports in relation to airport

charges and slot allocation.Europes airports are now competing businesses.

They need to be empowered to move towardscommercial approaches when setting user-charges,which should refect investments needed to

maximise their capacity (in particular throughprogrammes identied by SESAR) and urther

develop their acilities. They also need to bein a position to eectively infuence slot allocation

processes, so that airlines become incentivised touse scarce airport capacity in a more ecient way.

To improve and build the inrastructure requiredto meet uture demand, Europes airports needto be able to make investments now. They need

a lighter regulatory touch. This means developingan appropriate and supportive economic regulatoryramework where economic regulations

can be develope d to promote, not deter,

capacity increases.

Airport capacity plays a key role in drivingairline competition


21/40

Key

Points Demand for air trafc is expected to double by 2030

far exceeding the future capacity of the European airportnetwork.

Airport capacity needs to become a top priority ofthe EU transport policy with the aim of aligning ATM

and airport capacity objectives. This involves a fullintegration of airports and ground activities within

the new European ATM system presently underdevelopment through the Single European Sky

and SESAR.

The evolution and development of airport capacityneeds to be closely monitored by inventory at EU level.

Best-practice guidelines on land-use planningaround airports are needed, linking local, national

and community regulations and objectives.

Europes airports need to be empowered to move

towards more commercial and efcient approachesin relation to user-charges and slot allocation.



22/40

The ChallengeAlong with the economic and social benets that

it brings, aviation has environmental impacts includingnoise and gaseous emissions. Over the last ew years,climate change has rapidly risen up the political

agenda in Europe, resulting in the ormulation oan integrated energy and climate change policy.The Climate Change Package adopted by the EU

in December 2008 aims at implementing its ambitious

commitment to reduce CO2 and related greenhousegas emissions by 20% by 2020. In this context,

greening all modes o transport represents anambitious yet necessary policy objective.

For aviation, this is an unprecedented challenge with arreaching technological and economic consequences.Aviation currently accounts or approximately 3%8

o worldwide greenhouse gas emissions rom ossiluel use with European aviation accounting or 0.5% oworldwide carbon dioxide (CO2) emissions

9. All industry

stakeholders are committed to making an active andmeaningul contribution to the reduction o aviations

gaseous emissions.

Yet airports are acing an array o contradictoryrequirements and pressures rom local, national,

European and international institutions ollowingdierent priorities and responsibilities. Airports need

to provide more capacity, while lowering their impacton the environment at the same time.

Where Are We Now?Since the 1970s, European airports have launchedar-reaching programmes to manage and mitigate

the impact o aviation across a wide range o areas.

Initially, their ocus was on the local environmentalimpact as they sought to address noise issues,

local air quality, water management and biodiversity.In parallel, regulators took steps to reduce aircratnoise through the introduction o noise and movement

limits, thereby restricting the use o the l oudestaircrat types.

However, within the contemporary context o climatechange, Europes airports are now also addressingthe global environmental impact o aviation. Airports

may be responsible or only a small raction o totalaviation emissions, up to 5%, but they are committed

to tackling this impact, as evidenced by the landmarkResolution adopted by the General Assemblyo ACI EUROPE in June 2008. With this resolution,Europes airports have committed to reducing their

How should Europes airports balance the demand or more passengers and

services with the need to be increasingly sensitive to local, national and globalenvironmental protection measures?

mEETiNg ThE ENvirONmENTal ChallENgE


23/40

Meeting the Environmental Challenge

own carbon emissions with the ultimate goalo becoming carbon neutral.

Beyond this ormal commitment, Europes airports areactively working on making their carbon neutral vision

become a reality. In June 2009, ACI EUROPE launchedAirport Carbon Accreditation, the only institutionally-endorsed programme which assesses and recognises

eorts by airports to manage and reduce their carbon

emissions.

Airport Carbon Accreditation launched in June2009 with more than 30 airports in 11 countries,representing 26% o European air passenger trafc.

BAA has established an absolute CO2 emissions reductions target o15% below 1990 levels by 2010, despite a projected growth in passengernumbers o around 70% during this period. This is being achieved throughimprovements in energy eciency and conser vation and through increasingthe use o renewable energy sources. BAA also continues to invest in publictransport alternatives or access to airports, to encourage passengers andsta to leave their cars at home.

Operation o aircrat auxiliary power units (APU) which provide energy andpreconditioned air to parked aircrat causes gaseous emissions and noise,thus oten contributing signicantly to the local air quality and site noise.

As an alternative, xed energy systems (FES) mitigate these impacts.At Zurich Airport all terminal stands connected to the concourses bypassenger loading bridges provide FES. The use o APUs is subject torestrictions and airlines are obliged to use FES primarily. The ecologicalbenets o the FES are convincing: In 2001, the use o FES saved 12,170 to uel amounting to 38,500 t o CO2 and 75 t o NOx. The reduction o NOxemissions amounted to 4.3% o all airport induced NOx emissions and 60%o all APU induced NOx emissions.

In 2006 Oslo Airport was one o the rst airports to be declared carbon-neutralIn 2007 Avinor initiated and managed a research and documentation project,Aviation in Norway Sustainability and Social Benet, in cooperation withthe Norwegian airlines. To ensure a thorough and transparent process, the mainstakeholders, including the three major green groups in Norway, participatedin a resource group, and The Norwegian Institute o Transport Economicsand Cicero the Centre or International Climate and Environmental Researchcontributed background materials to the project. The project identied over50 emission reducing initiatives. The other 45 airports in the Avinor networkwere declared carbon neutral rom 2008.

La Palma Airport in the Canary Islands has become the rst in Spain to beequipped with wind power generators. The plant consists o two 660kWnominal strength wind generators that produce most o the energy needed

to run the airport acilities. The wind generator turbines are situated in theeastern part o the airport where they do not interere with air navigation.Over a seven month period, 943 MWh were produced.

EmissionControlStandards

Fixed EnergySystems or

Aircrat (FES)

CarbonNeutrality

Wind PowerGeneration

BAA Airports,UK

ZurichAirport,Switzerland

Avinor(Norwegian

Airports)

La PalmaAirport, Spain

Exhibit Examples of Environmental Initiatives at European Airports6


24/40

22 Meeting the Environmental Challenge

Europes airports recognise the years o predict and

provide are now long gone; they understand that therewill have to be urther action on aircrat noise levels,local air quality and the emission o greenhouse gases.

Airports can only provide new inrastructure i this isdone in a responsible manner. This also involves bettercommunication with local communities on mitigation

aspects and compensation, where applicable.

Airports are working hard to earn their licenseto grow by lowering the impact o their operations,in cooperation with other stakeholders or example,by improving the eciency o aircrat turnarounds,

building energy-ecient acilities, encouragingthe use o electrically-powered ground-handlingvehicles and actively promoting public transport

surace links to and rom the airport, as wellas eective intermodal connections.

However, like all other aviation stakeholders in Europe,airports are lacking a clear policy direction at EU levelthat denes where the priorities lie between dierent

environmental impacts. Indeed, improvements in onearea such as the emission o greenhouse gases couldbe cancelled out by an increase in environmental burden

in another area such as local air quality or noise levels.

LFV is working toward zero emissions o carbon dioxide in its own operations

Focus is on actions where the possibilities to have an eect are greatest:

Electricity and heating

Vehicles at the airport

LFV Own Emissions and Emissions rom PassengerTransports on the Ground 2006

349,206 tons CO2 (2005: 359,010)

Source: LFV

13,746 tons CO2 (2005: 15,180)

LFV Own Emissions 2006

Exhibit LFV, the Swedish Airport Company, Has Become Swedens 1st Major

Climate Neutral Company

7

Passenger transports

(on the ground)

to/from airports96%

Own emissions

4%

Own vehicles

45%

Fire drills3%

Business travel

12%

Electricity and heating

40%

EU policy and regulations need tounambigiously reconcile aviation growth

with ambitious environmental goals


25/40

These contradictions need to be addressed by regulatorswho have to set priorities or operators to ollow.

Furthermore, EU policy and regulations needto unambiguously reconcile aviation growth with

ambitious environmental goals. Simply constraininggrowth by limiting capacity is not an option. As theStern Review The Economics o Climate Change

concluded, capacity limits are a orm o rationing

which is an inecient way o regulating demandleading to more congestion and delays needlessly

polluting the atmosphere as aircrat waste uel,fying in circles until a landing slot becomes ree.

Regulators must agree at local, national and EUlevel how land-use measures can be developedto saeguard areas around airports rom urban

development and how market-based incentivesshould be introduced to encourage quieter andcleaner aircrat operations.

A Strategy for the FutureAviation growth must be placed within anenvironmentally responsible ramework that also

recognises the social and economic value that itbrings. This means that a more comprehensive,

ATHENS INTERNATIONAL AIRPORT & THE ENVIRONMENT

The climate change challenge is one o the major environmental issues or internationalorganisations, governments, and enterprises as well. With a high degree o responsibilitytowards the new challenges, Athens International Airpor t developed a Climate ChangeCorporate Action Plan that includes eight initiatives relating to airport operations, transportation,energy management and natural environment, contr ibuting to the reduction o the airports

impact on climate change. As a rst result o our eorts, we were distinguished in 2008 withthe GreenBuilding Award, a signicant European distinction within the ramework o thevoluntary GreenBuilding programme initiated by the European Commission, in recognition

o the remarkable energy saving perormance o Athens Airports acilities and buildingsduring 2006 and 2007. In act, Athens International Airport reduced its CO2 emissions

by 3,560 tones in 2006 and 2,775 tones in 2007.

Our approach towards climate change represents only a part o our successulmultiaceted environmental management system, which incorporates waste & watermanagement, noise, air quality, natural environment, energy saving, culture, and socia lprogrammes. It is worth mentioning, or example, that by continuously promoting recyclingactivity and providing relative incentives, in 2007 we managed to bring our recycling rateto over 34% (i.e., 4.846 tons), while in 2008 it exceeded 38%.

Dr. Yiannis Paraschis, CEO, Athens International Airport



26/40

24 Meeting the Environmental Challenge

consistent and aligned regulatory approach isneeded, taking into account the need or more

investment, more ecient operations andthe introduction o economic instruments toencourage environmentally sensitive practices.

An EU policy that reconciles aviation growthwith ambitious environmental goals is an absolute

prerequisite i aviation is to continue to deli ver thewide-ranging benets it brings to society. That policyshould be based on the ollowing measures:

1. Investment in new technology.More research unding is required both at EU and

national level to develop urther aviation technologicalimprovements. Although carbon dioxide (CO2) emissionand uel burn rates have improved 70% since the

development o rst-generation jet engines, moreneeds to be done to reduce uel consumptionand control aviations environmental ootprint.Technical improvements should be refected in new

internationally-agreed regulatory standards. These must

be ambitious but achievable, covering areas such asnitrous oxide (NOx) emissions and noise, with a view

to encouraging the introduction o new technologyinto airline feets as soon as possible.

2. Efcient inrastructure and operations.Improved operational measures are needed, especially

in areas such as air trac management (ATM) andairport capacity enhancement, to ensure airlines arefying the shortest routes with the most appropriate

aircrat, the ewest delays and the quietest procedures.The Single European Sky and SESAR are key projectsthat need to be implemented switly given their

strategic importance or the European aviation system.

3. Meaningul economic instruments.

Green taxes that are simply blunt instruments orpublic revenue generation, without delivering signicantenvironmental benets must be repealed where they

exist. At the very least, related revenues should beinvested directly back into the industry or inrastructureimprovement or research into new technology. On the

other hand, new economic instruments, such asemissions trading schemes and local environmental

charges, can play a part in reducing aviations impacton the environment but they should not duplicate

existing instruments. European airports supportthe inclusion o aviation within an open emissions

trading scheme at a world level, ultimately buildingon balanced and tested European initiatives as a rststep. The scheme should be environmentally cred ible,

economically easible and eective.

Europes airports have long understood that they

have to work within a ramework o environmentalresponsibility. But once this has been establishedthey must be given the reedom to operate and grow

as appropriate. They need a stable and predictableoperating environment, with consistent regulations andcoordination between the dierent levels o decision-

making, while preserving the fexibility to implementlocal solutions.

AMSTERDAM SCHIPHOL AIRPORT & THE ENVIRONMENT

At Schiphol Group, we have taken the lead on sustainability through setting up an entrepreneurial climate strategy and policyor our airports, by controlling our own activities, guiding others in nding revolutionary solutions or their activities and

by infuencing others to join Schiphol in taking responsibility. We are starting in our own backyard by making our operationscarbon neutral beore 2012. In order to become a green airport, we are dedicated to producing 20% o our energy demandon-site rom sustainable sources by 2020. Buildings and extensions are evaluated in terms o sustainability, bothduring construction and the total lie-cycle. We support sustainable mobility by promoting public transport, excellentconnections with rail transport and by setting up innovative transport concepts on and to the airport. Furthermore, our green

Airport City should provide an inspirational experience or companies and individuals in the eld o climate strategy.

In the end, both the climate and aviation deserve a thriving and sustainable uture.

Jos Nijhuis, President & CEO of Schiphol Group


27/40

Key

Points Europes airports have for long been committed

to their environmental responsibilities and continue tomake signicant progress in managing and mitigating

environmental impacts.

Launched in June 2009,Airport Carbon Accreditationis the collective industry response to the challenge

of Climate Change.

The EU needs to reconcile aviation growth withits ambitious environmental goals.

Regulators need to dene where the prioritieslie between different environmental impacts.

Green taxes and other blunt economic instrumentswhich do not deliver signicant improvements must

be avoided.

A global and open Emissions Trading Scheme foraviation should be the objective.



28/40

The ChallengeAviation is the real worldwide web.10 It is vital to

the uture o the European Union. Without urtherimprovement in the continents air transport linkswith the wider world, Europe risks losing the economic

and social benets o an increasingly integrated globalmarket-place. Yet, the aviation industry still needsto be treated internationally as a normal, commercial

business. It continues to be held back by antiquated

rules restricting market access and airline investment.

Where Are We Now?To this day, Europe remains the only example o aneective liberalisation o aviation on a regional basis.

With airlines ree to start new services betweenwhichever airports they choose, the number oair routes within the EU has increased by 170%

since the creation o a single aviation market in 1993.11More recently, 1,000 new city pairs were added toEuropean airline schedules between 2003 and 2007.12

As a result, competition has fourished throughout theairport sector, rom small regional airports to the largesthubs. This has allowed aviation to play a key role in

advancing the integration o new entrant EU memberstates with the rest o the Community.

Signicant eorts have been deployed by the EuropeanCommission to export its liberalisation policy beyond

the EU. Results have started to yield, in particular withthe US and Canada, but also with Morocco. For therst time, non-stop intercontinental air services are now

available rom European regional airports (or example,Bristol, Pisa, Stuttgart, Venice and Rzeszw have directfights to the United States).

By 2013, some 25 million additional passengers and80,000 new jobs are anticipated rom the frst stage

o the EU-US Open Skies agreement13 alone, withexpected economic benefts totalling 12 billion.

I Europe is to maintain its status in world trade, it will needbetter transport links with other markets outside the

continent. However, urther progress needs to be madeand remaining government-to-government restrictionson air routes, capacity, pricing and airline ownership

and control need to be lited on a larger scale.

A Strategy for the FutureEuropes airports support the opening-up o new servicesrom the continent to airports throughout the world rom

TiTlEHow should Europes airports ensure the continents citizens can continue tobeneft rom the growth in air travel and trade locally and throughout the world?

mEETiNg ThE CONNECTiviTy ChallENgE


29/40

Meeting the Connectivity Challenge

both capital-cities and the regions. They want to ensurethat Europe will not miss out on the trend towards global

connectivity be it through very large aircrat connectingmajor European hubs with super hubs in Asia, MiddleEast and North America or through new international

services rom regional airports. The next generationo medium-sized long-haul aircrat such as the Boeing787 and Airbus A350 will open up urther opportunities

or direct global connections rom regional airports.

This is particularly important or smaller airports serving

the continents regional economies where there is stillsubstantial capacity or growth. At the periphery oEurope, airports promote the interests o remote

communities whose most important access tothe wider world is the air service.

Trac rights liberalisation and the relaxation o airlineownership limitations allow European airports to competeor new carriers and new routes. This in turn allows

airports to improve their trac mix, reduce theirdependence on a dominant carrier (or one type o trac)and optimise their network o destinations all key

success actors or airports and the communities theyserve. This particularly applies to regional airports whichtend to rely on one particular type o trac and are

DUSSELDORF & CONNECTIVITY

Dsseldor has developed into one o the most interesting airport locations in Germany.Ater Frankurt and Munich, Dsseldor is the only airport with signicant intercontinental trac:We are Germanys upcoming hub. In particular, the Air Berlin Group and Luthansa are bettingon North Rhine-Westphalias largest airport.

We are the most important airport in Germanys largest economic region. At DsseldorInternational, airlines nd a strong market with great potential. The Rhine-Ruhr-region is the third

largest economic region in Europe. Ten o the thirty DAX-companies are based in North Rhine-

Westphalia, and 18 million people live within a radius o 100 kilometres o the airport.

We want to be the airport with the shortest and easiest transers. In cooperation with the airlines,we will expand our airport to optimally implement hub unctions. We have an excellent starting pointor this. For example, the airport o the short paths guarantees its passengers the shortesttranser time o 35 minutes. We have added an investment program amounting to some 300

million to prepare the airpor t over the next three years or its uture as a hub. In 2007, we launcheda 3 year investment programme amounting to some 200 million, to develop the airports utureas a hub, expanding the airports inrastructure and building up the non-aviation segment.

Christoph Blume, CEO of Flughafen Dsseldorf GmbH


30/40

actively seeking to diversiy. At congested airports,aviation liberalisation can help to optimise the use

o existing capacity by encouraging the use o scarceslots or long haul routes.

Thereore remaining regulatory barriers to growth such as restrictive bilateral air services agreementand inadequate slot allocation policies should

be abolished.

Europes airports support the European Commissions

eorts to ully liberalise international air servicesagreements at EU level. They consider that priorityshould be given to:

1. Achieving ull liberalisation with the USand Canada at the earliest.

2. Achieving a Pan-European and Pan-Mediterranean aviation area comprisingall EU neighbouring countries by 2013.

3. Initiating negotiations with the EUs main tradingpartners (Brazil, Russia, India, China and Japan)

at the earliest opportunity.

FINAVIA & CONNECTIVITY

The economic centres o gravity in the world are changing: Europe needs to adapt quickly. Globalisationand especially the rapid economic development in Asia are underlining the importance o aviation sectoror European competitiveness. As the inrastructure o global economy, European airports are providingthe mobility or European companies and its citizens to be present in the growing markets. The role o

airports is vital and can not be replaced. This important role means big responsibility: we have to deliverour customers the adequate cost-eective inrastructure needed or that connectivity every day.

Finavia is running a network o 25 airports to the benet o Finnish society and the travellers using Helsinki-

Vantaa airport or ast connection between Asia and Europe. The Helsinki-Vantaa gateway links 40European destinations to 10 destinations in Northeast Asia and India. This gateway position benets theFinnish society as a whole. In addition to new destinations in Asia, we are enjoying remarkably enlargedchoice o destinations and requencies in Europe. This is essential or the Finnish regions which havetheir global link and presence through the network o Finavia airports. Being an island at the edgeo the European Union, this link is one o the cornerstones or the competitiveness o Finland.

Helsinki-Vantaa airport is responsible or 3.2% o Finnish GNP. It is a signicant gure, but atthe end o the day the quarterly gures o our customers are more important. For example,the numbers o the big Finnish global player, Nokia, always get special attention. The actthat Nokia still keeps its headquarters, R&D activities and high-end production in Finland

is not sel evident. An important part o the rationale is the good connectivity providedby the airlines and Helsinki-Vantaa airport.

The story is the same all over Europe: airports are essential or their communities.We have a mission to ull we have a responsibility to deliver.Samuli Haapasalo, CEO of Finavia


31/40

European airports are willing to contribute to theseobjectives by directly participating to international

aviation negotiations once the exclusive remit othe State and the national fag carrier, which togetherset the policy and the route network or airpor ts.

Airports are indeed keen to develop their networko destinations with the requencies and capacitythat match the demand o the travelling public

and the need o their communities, while complying

with local environmental restrictions.

European consumers and regions stand to benetmost rom the wider choice o destinations andservices made possible through aviation liberalisation.

Thereore Europes airports will need to play an evenmore active role in these aviation negotiations to ensurethe benets and macro-economic impact o new

air services are ully taken into account.

European consumers and regions stand tobenet most rom urther aviation liberalisation

EU27

ECAA countries

Aviation agreements in force

Aviation agreements under negotiation

Other neighbouring countries

Exhibit Pan-European/Mediterranean Aviation Area8

Source: Cartography DG TREN, European Commission (2008)

58 States Approx. 1 Billion Inhabitants



32/40

30 Meeting the Connectivity Challenge

Exhibit Example of the EU-Morocco Aviation Agreement10

Total passenger trac increased by over 22% in 2007 rom 6.6

million to 8 million.

More than 50 new routes (rom Fez, Tanger, Oujda, Gerona,

Marseille, Bergamo, Gatwick etc.).

12 new air carriers have entered into the EU-Morocco market.

Cross investments between the two shores o the Mediterranean:

allow the development o the Moroccan air carrier Jet4You nanced

by European investment (TUIfy) and should acilitate the process o

privatisation o Royal Air Maroc (RAM).

Source: European Commission

3000

2000

1000

2500

1500

500

Number of routes (city to city EU-27)

0

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2004

2003

2002

2001

2000

2005

2006

2008

2007

Domestic Intra-EU

Exhibit New Routes Within Europe9

The number o airline routes within the EU has increased dramatically since

the creation o the single aviation market in 1993

Source: OAG & Flying Together, EU Ai r Transport Policy 2007, DG or Energy & Transport,European Commission

Europes airports will need to play an evenmore active role in aviation negotiations


33/40

Key

Points Increased and diversied aviation links are vital

to the economic, social and cultural future of Europe.

Airports promote the interests of local and remotecommunities for which access to the wider world

is the air service.

Aviation liberalisation allows airports to improvetheir connectivity and to optimise their network

of destinations, all key success factors for airportsand their communities.

Europes airports support the full liberalisationof air service agreements at EU level.

Airports need to play a more active role in aviationnegotiations to ensure the macro-economic impacts

of new air services are fully taken into account.



34/40

The ChallengeIn the present geo-political conditions, eective security

is paramount, not only to the air transport industry,but to society as a whole. In this regard the eventso 11 September 2001 resulted in a paradigm shit

in aviation security. The terrorist plot uncovered in theUK, in August 2006 and the ailed attempt to bomba transatlantic airliner on Christmas Day 2009, urther

complicated the lives o air passengers and impacted

severely upon airport operations.

While maintaining the integrity o the security chain,urther technological development is needed toproduce genuinely harmonised security standards,

speeding passenger and cargo screening throughone-stop processes.

However the current system remains mainly reactive;broadly, it comprises layer ater layer o new regulationswith little appreciation o how these will impact the

overall aviation system. This means that as passengernumbers rise, the air travel experience will becomeeven more uncomortable. The current measures

oten increase tension between passengers andairport sta most notably when sudden newmeasures are introduced, such as limits on liquids

in hand-luggage to the detriment o the overalleciency o the security system.

Where Are We Now?For Europes airports the current situation is

unsustainable this is why they are working hardto improve security services by redesigning acilitiesand providing expertise and advice to regulators on

the assessment o new initiatives such as passenger-

proling, automation and biometrics. Airports alsorecognise that less intrusive security is needed.

They believe that adding more detection-centricregulation is not a sustainable solution. An entirere-think o the aviation security system is overdue.

The present lack o genuine harmonisation both withinthe EU and across the world has only made the ideal

o one-stop security all the more remote. Increasinglycomplex security procedures are draining airportbudgets and adding to the hassle actor o air line travel.

Security now accounts or 35% o airport operatingcosts. On average, over 40% o the entire airport stais security-related.

Europes airports are picking up most o the bill orimproved aviation security unlike their competitors

How should Europes airports make travelling through the terminala more comortable experience, while improving levels o security?

mEETiNg ThE SECuriTy ChallENgE


35/40

Meeting the Security Challenge

in other parts o the world. Yet societies are the ultimatetarget and governments should bear responsibility or

unding the measures which will better protect theircitizens. At the moment it is the European aviationsystem that is paying the bill or what is essentially

a government duty and this contradicts ICAOguidelines on the roles and responsibility o Statesor protecting the travelling public.

A Strategy for the FutureIt is time to take a more proactive view o howto best protect passengers, sta, communities

and societies.

Improvements should be aordable, ecient and

agreed by both European and national regulators.This consensus-building approach has a d istinctadvantage: while allowing or process standardisation

across the European Union, it also provides thenecessary level o harmonisation required or credibleinternational dialogue. That dialogue is essential or

achieving our ultimate goal, namely, to ensure thata one-stop security space is built on as global a basis

as possible. That space will provide ecient securityprocesses globally, while ensuring the highest levelo travel acilitation.

LJUBLJANA AIRPORT & SECURITY

The increased need or stricter security imposed by EU regulation coincided with Slovenian-amended Aviation Act. In 2006, it set out conditions whereby the implementation o basic securityscreening o passengers and their hand baggage could be handed over to airport operators.To this end, a working group was ormed, bringing together representatives rom the Ministryo Transports Civil Aviation Directorate, the Ministry o the Interiors General Police Directorate

and airport operators. The working groups main task has been to ensure the transitiono the relevant tasks to the airpor t operator.

This was a major challenge or Aerodrom Ljubljana, since meeting the legal requirementsmeant adapting existing operative procedures to the new conditions and the employmentand training o an additional 35 security personnel. The Police handed over the implementationo security screening o passengers and hand baggage to Aerodrom Ljubljana on 6 November

2007. Responsibility or security screening o passengers and new security conditions wereimplemented smoothly and successully.

However, this changeover saw enormous increases in security costs up 60% comparedto year beore! As a result, we reluctantly had to take the very unpopular step o introducing

a security tax o 3.90. O course, we have aced some objections, mainly rom air carriers.The tax has had a negative marketing eect among some airlines, as it in act means highercosts being transerred to passenger ares, but it was the only way to cover increasing

security costs.

Zmago Skobir, President of the Management Board, Aerodrom Ljubljana, plc

S i 35%


36/40

34 Meeting the Security Challenge

Europes aviation security regulators need to worktowards a mutual recognition o security standards

with countries outside o Europe. There should alsobe closer ties between government agencies, airportsand airlines. Indeed the act that aviation is aced

with a constantly evolving terrorist threat requiresa dierent approach combining improved detectionwith a renewed ocus on better intelligence and

passenger proling. This new approach wouldrecognise that prompt exchange o vital securityinormation between national security bodies

and airports is essential when a security threat isidentied. It would also recognise that the airportis just one oppor tunity to prevent a terrorist act.

Research into advanced detection systems shouldensure advanced technologies are both eective and

cost-ecient. Researchers and manuacturers need todevelop more automated technologies and improvedprocedures which make passenger and cargo

screening more thorough, aster and less intrusive.

The European Commission has allocated 2 billion

or transport security research. Airports are asking thata air proportion o this unding be all ocated to the

air transport sector. Aviation remains an iconic industry,especially in terms o the security dimension, to a ar

greater extent than rail and the allocation o researchunds should refect this.

Finally, in uture cases where regulators decide thatnew measures are necessary, it should be clear howthese will be unded and implemented and what the

phase-out strategy should be once the new measuresare no longer needed.

Security now accounts or 35%o airport operating costs


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Key

Points There needs to be an effective harmonisation at EU

and eventually, at World level improving securitywhile increasing passenger and cargo throughput

at European level including one-stop security.

New technically advanced, efcient and cost-effective systems and procedures are required.

This should include a renewed focus on betterintelligence and passenger proling.

Governments should bear their fair share of theresponsibility for funding the measures which will

better protect their citizens.

Additional security measures need to be properlyfunded, implemented and phased-out when no

longer needed.

Meeting the Security Challenge


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36 The Way Forward

The considerable success o the EuropeanTransport policy over the last decade has raised

the expectations o European citizens acrossthe EU-27 and even beyond. While establishedachievements need to be saeguarded, mobility

in Europe needs to become ever saer andsecure, aordable and ecient, sustainable andde-carbonised. Aviation will continue to play a key

part in these developments, with European airportsresponding to these challenges.

Looking ahead, the global economy will continueto evolve, nding new ways o expanding andensuring that the long-term undamentals or aviation

remain strong. But by 2030, the world will be verydierent, as new economic powerhouses in Asia andLatin America will have become rmly established.

While this will potentially lessen the cyclical nature othe world economy, it will conront European aviationwith a new realit y.

Already by 2017, Asia will become the No 1 aviationmarket in the world in terms o passenger demand

and growth prospects. This evolution is not only

attributable to mere economic growth. It results romthe act that many governments in Asia integrate

aviation within their development strategies recognising the benets that our sector brings tosociety and the pivotal role o airports in this regard.

I Europe is to take up the challenges o a multi-polar world and achieve its ambitious economic,

environmental and social objectives, a strategicrethink o how its air transport system should beurther developed is needed. This should include

looking at airports with resh eyes as businessesin their own right.

ACI EUROPE and its membership o well over 400airports in 46 European countries have a vision otheir uture. This vision encompasses their on-going

business transormation and the our key challengeswhich they ace:

Capacity

Environment

Connectivity

Security.

These challenges are not airport-specic. Addressingthem successully at EU level will benet the European

aviation system and is indeed key to its competitiveness.

As Europes airports themselves are adapting to an

increasingly competitive marketplace by constantlyimproving their eciency and customer service,they need a lighter and better regulatory touch.

They need to be empowered to address thesechallenges and manage their own destinies

to the benet o all Europeans citizens.

ThE way FOrwardA Saegy ad Ouook fo Euopes Apos


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1. Source: http://ec.europa.eu/health-eu/care_or_me/mobility_ieurope/index_en.htm

2. Source: ATAG, The Economic and Social Benefts o Air Transport3. Source: Les Echos newspaper, 18 September 20084 Source: ATAG,Air Cargo: Engine o Economic Development,

Kasarda, J.D, Green, J. and Sullivan, D (2004)5. Source: Birmingham International Airport website

www.bhx.co.uk6. Report or the uture European aviation regulatory ramework

European Aviation: a Framework or Driving Perormance7. ACI EUROPE has signed a Memorandum o Understanding w

EUROCONTROL or the implementation o Airport-CollaboratDecision-Making (and other programmes) at major airports in Ewhich will yield capacity and environmental eciencies.

8. Source: The Intergovernmental Panel on Climate Change9. EU Energy and Transport in Figures, Eurostat 200410. Source:Aviation, The Real World Wide Web 2009, Oxord Econ11. Source: Flying Together, EU Air Transport Policy 2007,

DG or Energy & Transport, European Commission12. Source: Flying Lessons, The Ec onomist, July 17, 200813. Source: The Economict Impacts o an Open Aviation Area

between the EU and the US, DG or Energy & Transport,European Commission, January 2007s

The analysis and opinions expressed in this document are those EUROPE and may not necessarily refect the opinions o individual mo the association. This document is published by ACI EUROPE

inormation purposes. It may be copied in whole or in par t, providACI EUROPE is mentioned as the source and it is not used or compurposes (i.e. or nancial gain). The inormation in this document be modied without prior written permission rom ACI EUROPE.

FOOtnOtES

DiSClAimEr


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38 Title

Produced by ACI EUROPE and its membership,in association with Exambela Consulting.

www.aci-europe.org

Copyright ACI EUROPE 2010

For every 1,000 airport jobs there are around

2,100 indirect jobs supported nationally

Policy Outlook

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