It’s an unusual major hub these days that doesn’t have at least one large construction project under way at any one time, and in most cases there are several. Along with new airports, which continue to be built at quite a pace, other gateways are adding runways, taxiways, stands and terminals. Managing this complexity is becoming an industry in itself, reports Chris Lewis
Worldwide, there are a mind-boggling 2,300 or more airport construction projects, worth over US$500 billion, listed in the CAPA Centre for Aviation’s database. They include some 300 new (either green or brown field) airport developments. Even these figures are probably an underestimate; CAPA lists only projects it knows about.
As might be expected, the Asia-Pacific region leads the way on such programmes, with not far short of $200 billion worth of investment involved. Europe, North America and the Middle East each have around $100 billion of ongoing investment.
Faltering economies in China and elsewhere could put the brakes on that country’s hitherto seemingly unstoppable new airport and airport expansion programme. There is, however, a certain degree of momentum involved with airport projects, many of which are simply too big, expensive and complex to put on hold even though money may have become tight. Moreover, governments see investment in airports – as well as other infrastructure such as power or rail systems – as important in maintaining or stimulating national economic growth.
Effective project management of the design and construction of major airport projects is essential, but also highly challenging, say Murray Rowden and David Fox, respectively managing director of infrastructure and head of transport at the global programme management consultancy Turner & Townsend.
The company operates in the property, natural resources and infrastructure sectors, and airports form an important part of its work – particularly in the UK, Middle East, Australia and, increasingly, the US. Turner & Townsend is not an architect; it programme manages the complex projects and capital programmes involved in taking a major construction scheme from initiation through to completion.
For example, Rowden informs: “For the Heathrow Terminal 2 scheme we were involved from the start in how the supply chain should be procured through to the programme management of airline moves.”
Around the world, public-private partnerships (PPPs) are becoming more popular as the funding vehicle for airport schemes, Fox adds. In most countries, pure private finance initiatives (PFIs) in the aviation sector are in their infancy, partly because of the large number of different influences on airports and their spending. However, PFIs are already being used to fund specific facilities within larger schemes.
Turner & Townsend is also helping airports explore different delivery models. One area of difficulty is how an airport developer contracts with the many different players in the supply chain. Actually, says Rowden, projects are easier to manage when they are broken up into several smaller management portions. He argues that the traditional ‘lump sum’ approach can often be more challenging, placing opening dates and the budget at greater risk than alternative models.
Technology is rapidly changing the face of airports, even within the lifetime of a project. One only has to think of the near disappearance of traditional check-in desks at some airports that has come about within the past decade. There are also tighter and ever-changing security requirements, larger aircraft and many other influences. As a result, projects need to have flexibility for the future built in to take such developments in their stride over the course of the project cycle.
Turner & Townsend works in many different sectors besides aviation. In comparison with other industries, airport schemes are complex, but not uniquely so, Fox observes. There are similarities with rail schemes – access to work sites is tightly controlled, and construction often needs to be carried out while the facility remains open to the public, without affecting the performance of the whole.
Another characteristic of aviation development is the amount of upfront spending that must be committed before the facility opens, and all the issues related to sustainability. Airports also have very high levels of stakeholder requirements, with very specific and at times competing interests; they must all be signed up to the development brief. Security, of course, is also a very big issue in aviation, now more than ever.
At a basic level, airports exist to get passengers on and off aircraft as quickly and efficiently as possible, but these days they are trying to achieve a lot more. “Airports increasingly look upon themselves as a customer experience,” Rowden notes. “It’s not just things like shops; some airports even have art galleries and will consider other options to enhance their proposition.” Needless to say, all this makes for more challenging and complex project realisation.
It’s a rare airport these days – at least among any of the major global or regional hubs – that doesn’t have at least one ongoing building project of some sort at any given time, probably more. Often, it means adding to or modifying a system that continues to remain in daily use. “You may need to ‘break in’ to a baggage handling system, for example,” Fox says.
The airport infrastructure business is at vastly different stages of maturity in different parts of the world. In emerging markets such as Africa, major developments of both Entebbe and Cape Town airports are either planned or under way, and there could be plenty more to come. Funding may be a challenge in certain parts of the world, but the World Bank and other institutions are playing their part in exploring new models to facilitate opening up the market for investors.
Given the aviation sector’s high profile, when airport projects don’t go as planned, they attract widespread media coverage. Everyone in the UK remembers the teething problems with Heathrow Terminal 5’s high-tech baggage handling system, though in Fox’s opinion the airport actually managed this issue extremely well.
While they may not be perfect, Heathrow Terminal 2 and other schemes have achieved the difficult feat of transforming the passenger experience against the backdrop of one of the busiest gateways in the world.
A huge amount of work goes into pre-planning major infrastructure projects, too. Heathrow’s Terminal 5 scheme was preceded by a ‘Fit for 5’ pre-planning exercise to build up the supply chain and create a master plan which could adapt to future developments.
The long-term nature of airport developments means that these schemes often have to be drawn up and planned in detail before the final investment decision is secured. Sometimes, it means wasted effort if a scheme is not given the green light – the UK government’s continued agonising over Heathrow’s third runway is a case in point – but failure to do so can result in a costly hiatus between the go-ahead being given and work actually starting.
Dynamic development
The aviation industry remains very dynamic; development is happening incredibly fast and competition is fierce, says Amsterdam Airport Schiphol spokeswoman Annemieke Herberigs.
Schiphol may be one of the oldest airports in the world – it celebrates its 100-year anniversary this year – but it cannot afford to remain as it is.
Only recently, in March this year, the Schiphol Group’s shareholders (the Dutch state, the municipality of Amsterdam, the municipality of Rotterdam and Aéroports de Paris) gave their final approval to plans to develop a new pier and terminal at the gateway. The new terminal, to be constructed next to the air control tower, will be connected to the existing terminal and is scheduled for completion in 2023.
The new pier will be positioned near Cargo Station 1 and is expected to be ready for use in late 2019. It will be able to accommodate up to three widebody and five narrowbody aircraft, or a total of 11 narrowbodies.
Herberigs explains: “There are two drivers for Schiphol: capacity and quality. There is a lack of capacity on aprons and aircraft stands. The number of passengers and aircraft is growing very fast, and without extending the infrastructure that puts pressure on quality and customer satisfaction.”
Current expansion projects focus on terminal and pier developments as described above, changes to the road system and extending parking facilities. Moreover, Herberigs says, Schiphol may not be the world’s biggest airport, but it aims to be the smartest and most creative. “We are using smart IT technologies and we are constructing in a flexible and future-proof way.”
The current round of projects will be developed and realised in the 2016-26 period. After that, there will be further pier extensions to create more aircraft stand capacity.
Ongoing plans for airport development are derived from a master plan covering both airside and landside, Herberigs continues. “It’s a spatial plan – we call it a planological concept in which we make a future design for the airport, taking into account all kinds of future developments, like growth of passengers, aircraft movements, completion or government regulations. We do that every five years; then we make an update.”
Schiphol finances these projects itself, rather than resorting to bank loans or mortgages. “We are able to reinvest a part of the revenues from real estate, parking and commercial activities (such as shops at the airport), and reinvest that in future extension of infrastructure and buildings, in close co-operation with our direct partners, the airlines.”
The airport is hiring a large number of specialist providers, including architects for design work, contractors for construction and consultants in the field of sustainability or procurement, but all under its own management.
Like many European airports, it has also taken its expertise further afield. Currently, Schiphol subsidiaries are involved in the extension of Terminal 4 at New York’s JFK and a runway extension and other developments at Australia’s Brisbane Airport.
Potential
In many parts of the world, airport development schemes form part of wide-ranging regional or national infrastructure strategies that encompass not only transport but also wider urban development. The US is embracing a more strategic approach to infrastructure planning in which many gateways are regarded as part of putative ‘airport city’ developments. Australia is amongst other nations doing the same.
Airports everywhere are an important part of the national economy but in some places they are absolutely central, not only to economic development but also to a nation’s sense of self.
Governments, too, have made the link – some would say rather late in the day – between global accessibility and economic prosperity.
There is plenty of potential for airport construction in countries that are emerging from the shadows of international sanctions. For instance, Iranian President Hassan Rouhani signed a memorandum of understanding with Aéroports de Paris and Bouygues Bâtiment International for the renovation of the existing terminal as well as design, construction and operation of new terminals at Teheran’s Iman Khomeini International Airport, in an effort to bring its handling capacity up to an annual 34 million passengers by 2020 (compared to a current annual handling capacity of 6.5 million passengers).
Rapidly developing markets such as China are another big growth area, as evidenced by the recent launch of the five-year 10 million euro (US$11.4 million) EU-China Aviation Partnership Project (APP) intended to link the two countries’ technical expertise. Funded by the Partnership Instrument of the European Union and supported by the Civil Aviation Administration of China, it aims to increase co-operation and mutual understanding in key areas such as safety and environmental protection in all areas of aviation, including airports.
Expansion at Munich
Germany has a very dynamic airport scene, in part because the traditional main hub at Frankfurt is running up against its physical capacity limits and significant volumes of long-haul growth has been directed towards regional hubs, notably Düsseldorf and Munich International airports.
Thomas Weyer, who is both chief financial officer and responsible for infrastructure at the latter gateway, says that recent and current projects include a new satellite terminal that opened in April 2016 and a new pier for which tenders are taking place, with a final decision and construction start date expected in 2017.
Less certain, because it is subject to a political decision by the Bavarian government, which holds a 51% stake in the airport, is a third new runway, although all the legal provisions that would allow construction to begin are in place. A final decision on when, and indeed whether, the new runway should be built could come within the next three years.
As in all EU countries, there are in Germany specific European Union rules on procurement that are designed to ensure that companies in other EU member states are not unfairly excluded from bidding. However, says Weyer, while the tender for design and construction of new airport piers is EU-wide, in practice the work still goes to local German firms. There are only a few international firms involved in this area and such is the cut-throat competition in this business, companies that would have to bring personnel and equipment in from outside probably wouldn’t be able to make enough of a margin to find the job worthwhile. Plus, airport terminal design is quite a specialised field and the firms involved are quite small – again, not a recipe for cross-border operation.
If Munich’s third runway project gets the go-ahead, as with previous schemes, the airport would probably handle the contract management and the interfaces between the different parts of the project itself. Munich has enough ongoing construction work to justify having its own teams of highly qualified engineers and managers capable of taking on these tasks. Of course, for less expansionist airports this may not be the case, especially in Germany where hiring and firing staff isn’t straightforward.
While Weyer would welcome approaches from international firms, he doesn’t see it happening much in the current climate. Meanwhile, though, Weyer says he is more than satisfied with the airport’s own in-house contract management. “We’re on time and on budget, which in the current climate I think is quite an achievement.”
Meanwhile, preliminary design work for the new runway has taken place and its possible future presence is of course taken into account in the design of other facilities. However, starting preliminary physical work in advance of a decision by the Bavarian state government would be politically unacceptable.
Weyer adds that the need for enhanced security – even before the recent outrages in Brussels – has increased the cost of airport construction schemes. Quite apart from anything else, the need for vetting of personnel restricts the available labour pool. However, security measures are a fact of life in all areas these days, and particularly in the aviation sector.
Dublin looks forward
Ireland’s airport operator daa has meanwhile dusted down a 3.1 million euro ($3.5 million) plan to build a new 3,110 metre runway at Dublin Airport, 1.6km north of the existing main runway, which is expected to open in about 2020. The plan, which has existed in some form for several decades, was shelved during the recession but with strong recent traffic growth it is now seen as essential to open up new routes to Asia, Africa and South America.
Dublin had its busiest ever year in 2015 (with 25 million passengers passing through the gateway), yet growth has continued into 2016. Enabling work is expected to start later this year, with construction proper commencing in 2017.
