LOW FLYING . . . the Heathrow Express will carry passengers between Heathrow and Paddington station from June next year
UK model could help SA airports lift off
The Airports Company of SA is looking for an experienced partner to take it to new heights, writes DAVID BULLARD
During the years of isolation, the country's main airport had two daily peaks of chaotic activity. In the morning, most European flights would arrive to facilities which were barely capable of handling one jumbo jet load of people. In the evening the opposite occurred and after enduring a nightmarish check-in procedure, hapless passengers would be forced to sit in a large hall with no retail outlets and wait for their flight to be called.
Four years ago, the Airports Company of SA (ACSA) was formed to manage the country's airports, and the difference was almost immediately noticeable. Access to the main airports has improved (although it is far from perfect), check-in is easier, and the departure lounges have far more people willing to sell you something.
In the latest annual report, chairman Neal Chapman says income from retail operations grew by nearly 75%. More impressive, though, is that the Airports Company seems to have finally instilled a service ethic among most airport staff. At last travelling to and from SA is becoming a less stressful and more friendly experience.
As part of the government's privatisation policy, the decision has been taken to sell 49% of the Airports Company. A strategic equity partner will be offered the opportunity to bid for 20% of the company, and Transport Minister Mac Maharaj recently announced that the successful bidder will be allowed to increase its stake to 30% in the initial public offer. The company is currently valued at between R2-billion and R2.5-billion and there are about five international airport management companies believed to be considering taking a stake in it even though they would not have outright control. Apart from the attraction to government of raising cash by selling off part of a national asset, the intention is to bring in a partner whose experience in airport management will introduce the necessary expertise to maximise business potential. A country's airport is the first and last thing a foreign visitor experiences, so it is important for future tourist business that a favourable impression is created. Another of government's criteria in selecting an equity partner will be a proven commitment to empowerment, training and job creation. One of the companies keen to take a stake is British Airports Authority plc (BAA), itself the result of a privatisation in 1987.
BAA is the world's largest commercial airport operator. It owns and operates seven British airports including Heathrow and Gatwick. It also has growing international interests which include managing the Indianapolis airport system, the retail and food facilities at Pittsburgh which, after a $13-million investment by BAA, has almost tripled passenger spending, and membership of the consortium which owns and manages Melbourne airport. The latest addition to the portfolio is Naples airport.
BAA's figures are impressive. It handles 71% of al UK air passengers and 81% of air cargo. Over 100-million passengers pass through their airports every year with Heathrow alone handling some 56-million. Over the past five years, the total number of passengers passing through UK airports has grown by a staggering 5-million a year so the need for more astute management of existing resources is essential, particularly as the number of runways is unlikely to increase.
For example, Heathrow has only two runways, one for incoming flights and one for outgoing. Every 30 seconds an aircraft is either arriving or departing. Easy access is vitally important as passenger traffic is to increase. London's Heathrow has more than 16 000 daily bus, coach and train arrivals from more than 1 000 different destinations. The airport has a good but busy road access and is also served by the London underground, although anyone who has managed to carry a suitcase down the escalator in a tube station and get themselves and their luggage onto a crowded commuter train to Heathrow deserves an award for heroism.
Which is why BAA has decided to build the Heathrow Express at a cost of £450-million. Due to be launched in June 1998, the custom-built train will leave every 15 minutes from Paddington station and service every Heathrow terminal. The journey time will be between 15 and 20 minutes and the high-tech trains will feature video screens to keep passengers in touch with latest news and travel information, facilities for wheelchair users and technology which will allow cellphones to work even when the train roars into a tunnel at 160km an hour. The train will operate on an existing upgraded track route and will move 4-million passengers in its first year of operation. It is calculated that this will reduce road traffic in the area by 3 000 vehicles a day.
Apart from the day-to-day running of an airport, which includes responsibility for managing air traffic flow, security screening, the fire service, road management, airport safety and looking after the general well being of the travelling public, BAA has three other core functions. Over the past 10 years it has managed building projects with a capital investment programme of £4.4-billion, making it one of the construction industry's largest clients in the UK. It also runs a major property portfolio leasing retail space, warehouses, hangars, hotels and offices.
However, it is in the retail side of the business that BAA has really scored by unashamedly aiming airport stores at the upper end of the market and creating a competitive environment within airport terminals. At Heathrow's Terminal 4 the shopper has a choice of at least a dozen different clothing brands. Retail operations contributed 44% to BAA's bottom line and that figure is expected to grow. As Des Wilson, sirector corporate and public affairs, comments: "The security element and sheer volume of passengers has made it necessary for people to spend more time at an airport, so food and retail outlets have become an essential feature. As tourists are attracted to SA they will demand better shopping facilities."
Imaginative tenant mix and innovative marketing skills persuade 40% of departing passengers to part with their money while waiting for flights. Airports have always had a reputation for ripping off the trapped consumer, so BAA has introduced a worldwide "no quibble" guarantee on any goods bought in its terminals. It will refund passengers (at no expense) or exchange goods. BAA also guarantees its prices are no higher than high street prices.
BAA concedes that airports do not make particularly good neighbours and so it tries to mitigate the irritation factor by constantly monitoring and, wherever possible, controlling noise. It encourages airlines to use quieter aircraft by offering a lower fee structure. People living within a certain distance of an airport can have their house insulated at BAA's expense. That should pose an interesting conundrum for SA airport management: to insulate or rebuild?
BAA has an excellent labour record and boasts of no compulsory redundancies since its privatisation. The company also aims at a transfer of skills after training so employees have access to variety of different jobs within the company.
It is clear SA has great potential for airport growth as far as passenger traffic and cargo are concerned. How we exploit those opportunities will determine whether we take our rightful place in the first world or slide back into the depressingly low standards of the Third World.