Global Airport Development preview: 'Y Viva Aeropuertos Espanoles'
Oh this year I'm off to Sunny Spain, Y Viva Espana!
I'm taking the Costa Brava 'plane, Y Viva Espana!
If you'd like to chat a matador, in some cool cabana And meet senoritas by the score, Espana por favor!!♪
(A 1970’s song popularised by Sylvia Vrethammar, which unaccountably sold over one million copies.)
The 18th Annual Global Airport Development (GAD) conference gets under way in Barcelona, Spain on 07-Nov-2011, running through until 11-Nov. Last year’s event, in Dublin, was dominated by concerns about Irish and UK passenger taxes. This year the main talking point will undoubtedly be the postponed concession deal on the airports in Barcelona, where the event is being held (foresight or fortune?), and Madrid. But there will be plenty else to discuss as we attempt here to anticipate the main concerns.
The most frequently heard criticism of all conferences – not merely those in the air transport sector – is that the same old ‘talking heads’ appear year after year, often regurgitating the same message they did the last time out. Irrespective of the fact that those old heads still have something important to say, the conference organisers have tried to mix things up a bit this time around, by inviting Swedavia’s CEO, Torborg Chetkovich; Carlos Madeira, VP of ANA Aeroportos de Portugal; Thomas Woldbye, CEO of Copenhagen Airport; Nick Dunn, the CFO of Gatwick Airport; his equivalent at Denver International Airport, Patrick Heck; and John Bruen, corporate development director of Ferrovial Aeropuertos.
Ms Chetkovich will speak as Swedavia proceeds slowly though its partial privatisation programme, on the subject of ‘creating profitable regional airport models’. Portugal’s ANA is effectively ‘next in line’ for privatisation after neighbouring AENA, but just when is anyone’s guess. Delegates will be hoping Madeira can shed some light on. Interestingly, Mr Madeira will speak at a debate titled, ‘Keep calm and carry on’ – a Cold War era slogan favoured by the British Government (in the event of nuclear war), which found new currency in the aftermath of the credit crunch and subsequent global economic meltdown – along with Declan Collier, the CEO of Dublin Airports Authority, and Yiannis Parachis, his counterpart at Athens International Airport. Are we to read something into that?
Thomas Woldbye’s Copenhagen Airports has recently said goodbye to MAp Airports and hello to Canada’s Ontario Teachers’ Pension Plan while gaining what is the last low-cost terminal to open in Europe, perhaps the last ever. Just what benefits majority ownership by a pension scheme confers on airports is a topic that is rarely explored in depth at conferences; perhaps an explanation will be offered and some delegates will be keen to know when, or if, Newcastle Airport will be sold.
Last year, London Gatwick Airport sent CEO Stewart Wingate to GAD. This time around the representative is the CFO, Nick Dunn. Four separate pension or sovereign wealth funds acquired equity in the airport in the year following its purchase by GIP from BAA and it will be interesting to learn how such disparate ownership affects the management of GIP’s leading asset. Moreover, Gatwick has other issues to contend with. Gatwick finally seems to have woken up to the fact that it needs a second runway (for which it is protecting land) and probably before the 2019 date before which it cannot commence construction. Delegates will be fascinated to hear of Gatwick’s reaction to the British Government’s immensely silly ‘Heathwick’ high-speed rail proposal to link the capacity constrained Gatwick and Heathrow airports without adding any runway capacity at either.
John Bruen may be able to explain which direction Ferrovial will take in future, having recently reduced its stake in BAA to less than 50% while setting out its stall as a serious bidder for both Madrid (which it is favourite to win) and Barcelona airports. There will be at least a few delegates wondering if its recent exit from Chile’s Antofagasta Airport (in favour of new concessionaires from Zurich Airport) draws a line under its involvement in Latin America or whether its ‘Grupo Aeropuertos Avance’ consortium bid with Macquarie for Luis Munoz Marin Airport in Puerto Rico demonstrated that it still harbours ambitions in the region.
Denver’s Patrick Heck is new to GAD but will be familiar to delegates at the other principal airport financing conference held by ACI World and ACI Europe in London each March. There are several senior executives from big airports in the US who make the journey to these conferences each year. Oddly enough, they almost always fail to see the value of privatisation as it is understood in Europe. Is there even the slightest hint of a change in that attitude?
The first day is taken up with the ‘Investing in Airports’ summit, which was exceptionally well attended in Dublin last year. Apart from the usual highly focused (and occasionally too complex to decipher, especially when they are delivered at the speed of light) presentations on aviation market forecast, airport valuations, structuring transactions, and ‘the global opportunity pipeline’, there is a new innovation for 2011.
‘The Open Session – You set the agenda’ throws open to the audience, as it says on the tin, the opportunity to discuss breaking news and items of importance. It is not quite a ‘live interview’ as questions are solicited in advance and on the day by email. There will be plenty of them, and little chance of the killer question arising spontaneously from the floor, but the erudite panel of Andrew Paulson, executive director, secured debt markets at RBS; Macky Tall, VP investments infrastructure and energy, CDPQ; and Colin Campbell, founding partner at Citi Infrastructure Partners, are well equipped to handle them.
Later in the day a session asks the lengthy question: ‘Is there a new breed of airport operator emerging and how are different business models driving their choice of assets and how to manage them?’ Amongst the panel is Amit Rikhy, VP business development, YVR Airport Services, a company which was questioned probingly by a couple of delegates last year (including the writer) on YVRAS’s buy-in to the UK’s Peel Airports (65%). A year on, with Liverpool and Doncaster-Sheffield airports are stable despite the poor trading conditions in Britain but with Durham Tees Valley facing the prospect of closure (it would be the second in the UK this year), it will be interesting to learn of his opinion on asset selection, with the benefit of hindsight.
The entire nine-hour day is replete with heavyweight names from the world of airport finance and promises to be dynamic.
Day two is the Airport CEO 'Thought Leadership Forum' and features the GAD Industry Address, from Zhang Guanghui, president and CEO of Beijing Capital International Airport Co. With construction of Beijing’s second airport project apparently delayed indefinitely, and serious questions now being asked about whether China can continue to sustain 10% per annum growth for much longer – a factor on which airline equipment and airport infrastructure projections are predicated – his speech is highly anticipated.
Day two may also see a presentation from Juan Lema (invited), the president of AENA, titled, ‘Inside the Dynamics of Spanish airports and the future structure of the national network’.
Day three sees another new face to GAD, Fariba Alamdari, vice president of business strategy and marketing for Boeing, giving the 'Aviation Thought Leadership Address': ‘What’s on the horizon for airline business? Forecasting emerging airline business models, competition and growth.’ Delegates will no doubt be keen to hear her view on the Boeing 787, which commenced commercial operations for launch customer ANA on 26-Oct-2011, and whether Boeing can achieve its aspired-to completion of 10 B787s per month by 2013, how it will compete with the A350 when that model comes on line and what these two smaller, fuel-efficient long-range aircraft mean for secondary level airports.
The much anticipated 'Head to Head' interview between influential air transport guru Professor Rigas Doganis and a hapless Palooka from the country where the GAD is held will not this year feature a representative from the airport sector (possibly for language reasons but perhaps because AENA didn’t fancy the bout?) but, instead, the low-cost airline Vueling’s combative CEO Alex Cruz, who is nobody’s pushover. Spain has a high incidence of ‘foreign’ LCC incursion, especially from Ryanair (though it is about to cut back extensively at Alicante in a row over enforced use of air bridges), and Vueling’s role seems set to change as Iberia (which part-owns Vueling) will shortly introduce another new LCC, Iberia Express. But it is undoubtedly Vueling's opinion on the painfully protracted airport privatisation, as well as on the salaries of strike-happy millionaire Spanish air traffic controllers, that will be of greatest interest to delegates.
Black Swan attack
Typically on the fourth day of any conference delegates are wilting and their numbers dwindling. But GAD usually delivers some intriguing presentations on the last day. This year they include one on the sustainability of 'Small and Regional Airports by Low Cost Airports Group’s Paul Whelan', who is a partner in one of the ‘privatised’ Swedish airports, with prior experience of secondary airports in the UK, Italy and Croatia. Manix Groot of Lufthansa Consulting boldly proclaims he can ‘increase your airports’ net Ebitda’ [sic] while Michael Fairbanks of Helios will opine on airport resilience and preparation for ‘black swans’, by which we assume he refers to the theory of that name, which proposes that events typically are a surprise to the observer and have a major and often unexpected impact. Meanwhile Aeroports de Paris will present on airport retail strategy.
Wrapping up the conference in the afternoon is a case study from the afore-mentioned Liverpool Airport ('Turning an airport around'), a session on managing for excellence, and one on low cost terminals.
CAPA will be represented at the GAD event by European Associate and Editor of Airport Investor Monthly, David J Bentley.