Growth chokes airports

Massive passenger growth in key cities across the region is overwhelming airport capacity, despite multi-billion dollar investments in new terminals and runways.

by CHIEF CORRESPONDENT, TOM BALLANTYNE  

March 1st 2015

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A recurring theme of any gathering of Asia-Pacific airline leaders is the inability of the region’s airports, with a few exceptions, to keep pace with passenger growth. Read More »

At the annual Association of Asia-Pacific Airlines (AAPA) Assembly of Presidents last November, director-general, Andrew Herdman, said facilities were being built, but rarely fast enough to match regional airline expansion. It was an enduring “ headache”, he said.

Beijing forecast to become the busiest airport in the world in 2015

In China alone, said the AAPA, infrastructure needed to double every six years to keep up with Mainland Chinese passenger demand. These “doubling periods” meant that by the time airports were opened, they were operating at full capacity. Herdman identified Indonesia, particularly Jakarta, the Philippines, India and Hong Kong as “trouble spots”.

In a recent OAG report, Airport Infrastructure: Keeping up with demand in the Asia-Pacific, its authors included Singapore, South Korea’s Incheon, Taipei, Kuala Lumpur, Bangkok and Tokyo/Haneda on the list.

So what is happening on the Asia-Pacific airport development front? Consultancy CAPA said projects valued at US$115 billion are planned or in the pipeline for the region. The OAG report acknowledges this investment, but argued while there is an abundance of airport projects either planned or commenced in the region, there can be a gap between intention and infrastructure delivery.

Several airport projects have been announced in the last two months. Indonesia’s government-owned airport operator, PT Angkasa Pura II, has earmarked $240 million for a third runway at Jakarta’s Soekarno-Hatta International Airport, with construction to start in 2016.

Jakarta is the busiest airport in Southeast Asia. It processes more than 60 million passengers a year, nearly three times its design capacity of 22 million travelers annually. The airport is expanding two of its three terminals, to double capacity from around 18 million travelers to 37 million a year, by 2017.

In Thailand, Airports of Thailand (AoT) recently approved the construction of a reserve runway and a passenger terminal at Bangkok’s Suvarnabhumi airport, at a cost of $147 million. AoT board chairman, Prasong Phunthanet, said the 2.9 km reserve runway, estimated to cost $61 million and to be operating in 2017, would be built in the same area as a planned full third runway. The new $86 million passenger terminal, which will lift the airport’s capacity from 45 million passengers a year to 65 million per annum, will be completed in 2019.

The Philippines transportation secretary, Joseph Emilio Abaya, recently said the government plans to develop an international airport for Manila at Sangley Point, although no details of the cost or a date for construction was specified, despite Abaya’s statement that the new facility should be built by 2025. Sangley Point, formerly a U.S. naval facility, is the Phillipine Air Force’s Danilo Atienza Air Base, 17 kms from Manila. The airport will replace Manila’s Ninoy Aquino International Airport, one of the region’s most congested facilities.

Airport hot spots Hong Kong According to Hong Kong International Airport (HKIA), traffic volumes are running one to three years ahead of the HKIA “Master Plan 2030” and the airport is pressing the case for a third runway which has recently been granted its environmental permit. The design capacity of 420,000 aircraft movements annually is now in sight as there were 370,000 movements in 2013. Even with a new runway in place, scheduled for 2023, the airport said the planned capacity increases at HKIA and the other four Greater Pearl River Delta airports will leave a shortfall in capacity equivalent to 100 million passenger trips by 2030. Singapore Like Hong Kong, Singapore Changi International Airport operates with two runways. The airport handled 343,765 aircraft movements in 2013 and, although traffic growth has been sluggish, there are plans for a much needed new runway, expected to open for commercial service in 2020. Changi is on schedule to open its fourth terminal in 2017 with a fifth planned for operation in another decade. From its current capacity of 66 million, the five terminal and three-runway system will increase Changi’s capacity 135 million passengers a year. Seoul Incheon South Korea’s Incheon International Airport opened in 2001, with a long-term four stage development plan. Phases 1 and 2 are completed, with the airport operating with three runways and one terminal. Construction of phase 3 construction, a new passenger terminal, began in September 2013 and is scheduled is to be finished in 2016, taking capacity to 62 million from 44 million a year. By 2020, additions to the facility will allow it handle 100 million passengers a year, in an expansion that could include a fourth runway beyond 2020. Taipei Taipei Airport handled 30.7 million passengers in 2013 with two terminals and two runways, with a design capacity of 32 million a year. A planned third terminal, which will increase capacity to 43 million passengers a year, will be finished in five years. A third runway is also planned, but is not likely to be in place before 2030. Kuala Lumpur Kuala Lumpur International Airport saw 51.4 million passengers through its doors in 2013, well beyond its operating capacity. The airport opened its third runway in October 2013 and completed its low-cost terminal, KLIA2, in May last year. The LCC terminal enables the airport to handle up to 70 million passengers annually. The airport is ahead of most other hub airports in the region in terms of capacity. “The design of KLIA2 “reflects the evolving mode of operations of low cost carriers’ operations in connecting passenger journeys and is possibly a standard bearer for the future of airport terminal development”, said the OAG report. Tokyo Haneda Tokyo’s four runway Haneda Airport handled more than 68 million passengers in 2013 and has a capacity of 90 million per year. Extension of one of the runways and expansion of the terminal building has increased slots to 447,000 in March in 2014. More slots are to become available since recent regulations for flight paths into and out of Tokyo have been eased. Haneda and Narita are forecast to reach capacity around 2022 or shortly thereafter. Government strategy aims to triple foreign visitors to 30 million annually by 2030 with proposals in place for possible post 2020 infrastructure needs including a fifth runway.

Chengdu, the largest city in southwest China, joined the January rash of announcements with the news it had received regulatory approval to build a $11.2 billion, three runway airport. The new Chengdu airport will replace the 77-year -old Shuangliu Airport, which is the fifth busiest airport in China. Passenger numbers increased 12.8%, to over 37 million last year, more than doubling the volume of 13.9 million passengers in 2005.

Last month, star global architect, Zaha Hadid, and ADP Ingeniere unveiled the “starfish” design of the terminal complex of Beijing’s planned airport, in Daxing, south of the city. The $13 billion airport will have up to eight runways, 150 passenger aircraft parking bays and 24 cargo airplane spaces. At its opening, scheduled for 2018, it is planned to process up to 45 million passengers a year, building to 72 million passengers, two million tonnes of cargo and 620,000 airplanes per annum by 2025. Inclusion of a low-cost carrier terminal in the project is being considered.

Beijing Capital International Airport is the world’s second largest airport, in capacity terms, after Atlanta in the U.S., but it is expected to overtake the southern American city this year. The airport is operating beyond its design capacity of 80 million passengers per year. It reached 83 million passengers annually in 2013, despite the fact the facility’s terminal 3 is the second largest passenger terminal in the world. Passenger volumes are forecast to rise to 113 million in 2015 and 142 million in 2020.

Several other Chinese cities are planning new or expanded airports to handle fast rising passenger demand. Dalian, which is close in latitude to North and South Korea, will invest $4.2 billion in an airport on a 20.9 sq. kms artificial island off the city’s coast.

The OAG report said 10 airports opened in China last year and another 50 to 60 airports will come on stream in the short-term, adding to the country’s 200 airports. Chinese airports handled 754 million passengers in 2013. Aircraft manufacturers have estimated an average of one new plane a day must take to Chinese skies for the next 20 years to meet passenger demand.

India opened no new airports last year. Indonesia built six new facilities, but labours under the inadequacies of its capital city airport, which is operating at twice its intended capacity.

While OAG’s projections may be speculative, most analysts agreed statistics reveal capacity growth forecasts, particularly for the booming Asia-Pacific, often fall short of the mark. The region’s airlines added an average of almost 300,000 seats every day last year. OAG’s business development director, Mark Clarkson, said: “In 2014, scheduled airline seat capacity to, from and within the Asia-Pacific region reached 1.6 billion for the first time, continuing a trend of rapid growth that has seen capacity more than double in 10 years.

“Annual growth has averaged 8% every year for the last decade. Looking forward, there can be no doubt that the focus of growth in the aviation industry is shifting east. IATA confirmed this in October 2014 when they published their first 20-year passenger forecast, which put China firmly at the forefront of future demand for air connectivity, “ he said.

IATA forecast China will overtake the U.S. as the world’s largest passenger market by 2030, to reach 1.3 billion.

“Whilst propensity to fly (number of air trips per capita) is a standard measure of demand for air travel, seat capacity per capita can also be used as a proxy measure,” said OAG. “On average, there were 326 airline seats per 1,000 people across Asia in 2014. Compare this to Europe where the equivalent figure was 1,482 seats and the U.S. where it was 2,938.

“It is clear that airline capacity in Asia could triple or quadruple and individuals would still not be flying at the same rate as in Europe or the US.”