Aena Keynote

Transcript

Ignacio Biosca:Well, thank you very much. Welcome everybody to this wonderful city of Seville. I hope you have a great time here. I'm pretty sure that you must have come through one of our airports. Seville Airport is part of Seville, but also Madrid or Barcelona, in which you may have connected, are also part of Aena's network. But I'm not 100% sure that you all are familiar with what Aena is. Let me briefly introduce you to Aena. Aena is the Spanish airport operator that manages 46 airports and 2 heliports in, in Spain, including Madrid, Barcelona, Palma de Mallorca, Seville, and the ones in the Canary Islands. We also manage some airports abroad— 12 airports in Mexico, also in Jamaica and in Colombia. And one of the airports in which we are struggling, because it is a very competitive market, is the airport of London Luton. We are company that has 49% of its shares in free float. 51% is still in the hands of the state. And last year we managed 249 million passengers. This is— this figure makes Aena the biggest airport operator in the world in passenger terms. And you can see this graph here in which between 2007 and 2017, you know, traffic was not growing very significant— significantly. In the long term, of course, the trend is for the traffic to grow, but there are certain periods in which we have to struggle with, with traffic. So it's, it's not taken for granted that traffic is going to grow every year at a significant pace. And I mention that because we, we have to carry out a significant commercial activity, a marketing activity, to convince the airlines that it makes sense to operate at one of our airports. We are actually selling a product. A product which, of course, cannot be the airport itself because no one wants to go to an airport. They want to go to a destination. And that's why we cooperate very closely with the destinations, with tourism institutions like Turismo de Sevilla in this case. We cooperate to present our case, to present our product to the airlines. and to convince them that it makes sense, that it will be profitable to fly to one of our airports. Of course, each one of us, the destination and the airport operator, has its own role, and we have to deal with different issues. We have to ensure that our airports have capacity, that the costs are competitive, that the infrastructure is efficient enough for the airlines to operate there, And the destination has to have something to offer, of course, for tourism reasons, for business reasons, because the population and the purchasing power of the population is high enough to reach a certain level of demand. And with those aspects, then we have to carry out our commercial activity. How do we do that? We do it through market intelligence and with incentives and marketing support, and we cooperate closely with the institutions, local institutions, in having a global promotion that will help the airlines at the initial stages of, of the launch of a route to stimulate demand. Okay, so let's have a look at each one of those aspects that I have briefly introduced. Capacity. Of course, that is a must. If there is no capacity, then there is no point in trying to fly to an airport. And that is something that, you know, we are facing difficulties in the future. Aena invested more than €18 billion in, in around 10 years between the early 2000s and 2010-12 in order to achieve capacity at its airports. Madrid project expansion with the new terminals, the 2 new runways, €6 billion. Barcelona with a new terminal, also €3 billion. So there's a lot of capacity at our airports which has enabled the growth that we have experienced recently. Competitive costs. Our regulation states that in, in the regulatory period which covers 5 years, our costs will be reduced by 11%. And there is a law that every year that the cost is reduced, then there is a cap and it cannot grow from that level. So our costs are being competitive. Efficient infrastructure. The airports within Aena have won the ACI Best Airport Awards during the last years. Madrid and Barcelona, Alicante, also Palma de Mallorca, and this year Seville has got that award, and we're very happy for that. Market intelligence. I think afterwards during the debate we will be able to get into more detail, but that this is one of the key issues for me, what we can as an airport operator provide to the airlines. is to provide robust enough data to convince them that everything will work well when they operate at our airports. It's not only indirect passengers through MIDT or OAG data, or, you know, the tourists that travel not only using air traffic, but also by road or by train or different modes. We even have a tool that gets into the costs of the airlines. It's called Apex and gives us a hint in, you know, the period in which the airline will be able to break even when launching a route. Of course, that's only a hint, but But we think that it makes sense. And in fact, we have cooperated very closely with low-cost airlines. I would mention, of course, Norwegian, EasyJet as well, but Vueling and, well, a number of airlines by providing this, this kind of data. Of course, the incentives. We do have incentives for those airlines that open new routes. The incentive is quite significant because It offers a 100% discount in the passenger charge. The passenger charge is roughly 40-50% of the turnaround cost depending on the airport and type of aircraft. For those passengers that are going to be operated in a new route, we do also have a growth incentive on long-haul routes. So those airlines that increase the number of passengers they operate at the route that they already operated in previous seasons, they also benefit from the same kind of incentive, but for the additional passengers. We do have an incentive on transfer passengers. It's 40% of the the cost of the passenger and the security charges. And we also incentivize growth on airports below 3 million passengers, which are those in which it is more difficult to stimulate demand. We also have marketing support. This is what we more intensively do with the local institutions. We try to gather the efforts of the different players to have— to offer something jointly to the airlines that will ensure that all the efforts are on the same line, and they will benefit from what all the different stakeholders can provide to ensure that the route is a complete success. And How do we do this? Of course, we attend Routes and we have many meetings with the airlines. Last year, we shared close to 900 business cases with the airlines that include all the data that I have mentioned and include the incentives and the marketing support that we jointly can gather from the different stakeholders. And the result is that close to 450 new routes were opened within Aena. Low cost is— it's no surprise, it's a big part of the activity within our airports. 54% of our traffic comes from low-cost airlines, but there are some airports in which this percentage goes up to close to 80%. But even in Madrid, it's 32%, or in Barcelona, 69%. What does this mean? This means that the airports are flexible enough. They're suited for legacy carriers and for low-cost carriers as well. Let's focus on the main topic of this conference, which is long-haul. Long-haul is a small part of these 249 million passengers that we managed last year. It's only 15.5 million passengers, and it's focused on mainly Latin America. In Latin America, we are the leaders in Europe. Close to 25% of the market between Latin America and, and Europe goes through either Madrid or Barcelona. And But then we have 4 million passengers to North America, and the Middle East has grown quite significantly—3 million passengers—and we are below 1 million passengers to Asia. But this is going to change in the future because in the last three years the traffic to Asia has grown very significantly. It's It is 3 times what it was in 2015, and we have now routes to Chengdu, of course Hong Kong, Tokyo, Shanghai, Chengdu, Hangzhou. So there is a lot of interest from Chinese airlines and from Asian airlines to grow in Spain. So, and we welcome, we welcome that. What we are seeing is that these new models, what we are discussing these couple of days here in Seville, the long-haul low-cost, these new models can bring some additional growth to this sector. Level or Norwegian, WestJet, but not only them by themselves, but the feeding of the traffic between EasyJet and Norwegian. We think that it makes sense, and we are prepared at our airports to try to, to promote that and to facilitate that. In fact, Level and Norwegian both operate in Barcelona. Norwegian also Madrid. They operate long-haul routes, and we welcome that. We think that at our airports, given that the fact that they, they have capacity, they are flexible, costs are competitive, and we are willing to work with those that have the initiative to open long-haul routes from low-cost airlines. So we, we encourage those who are interested in, in doing so to come and talk to us and see how we can best work together in order to make it a complete success. So I would finish by saying that please do contact us, get together, and, and, and see how we can jointly promote this type of traffic. Thank you very much. Thank you, Ignacio.

Copyright policy: All transcripts on this site are the copyright of CAPA - Centre for Aviation. Our reproduction policy is as follows: you may quote up to 400 words of any transcript on the condition that you attribute the transcript to CAPA - Centre for Aviation and link to the original video page. All other use is prohibited. While we aim for 100% accuracy in the transcript, there may be some minor transcribing errors.