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Hermes Airports played host to the ACI Europe 2019 congress in the delightful location of Limassol, Cyprus. Held between June 25-27, the daytime temperatures hardly dropped below 30[degrees]C (86[degrees]F) and were often nearer to 40[degrees].

Given the heat, it seemed appropriate that carbon emissions and sustainability were central to the theme of the two-day event. More than 350 aviation executives from over 40 countries attended and, on day one, ACI Europe's member airports committed to achieving net zero CO2 emissions by 2050 with the launch of its new Sustainability Strategy for Airports, which formalises its environmental goals. A key part of the move is called NetZero2050, whereby airports aim to reach 'net zero' carbon emissions under their control by 2050, at the latest. ACI Europe said its members are responding to the climate emergency--and acting on the latest scientific evidence presented by the Special Report on Global Warming of 1.5[degrees]C, issued by the United Nations Intergovernmental Panel on Climate Change (IPCC) in March.

The new sustainability strategy was designed to address a wide range of environmental issues and also social and economic ones. In this way, ACI said it has equipped European airports with an industry-wide framework and guidance, thereby enabling them to place sustainability at the core of their business strategy.

At the same time, ACI Europe also called for the entire aviation sector to develop a joint ambition and initial roadmap towards a net zero carbon emissions air transport system. It said this was needed to "supplement the significant efforts already being made by the aviation sector under the ICAO's long-running Basket of Measures," which includes its Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA).

The airports council said its NetZero2050 move is currently backed by 194 airports run by 40 airport operators across 24 European countries. Each has individually committed to the same objective. Based on Europe's airports current traffic volumes (2.34bn passengers in 2018) and estimated carbon footprint, ACI said the net zero commitment will eliminate a total of 3.46m tons of annual C02 emissions as of 2050.

Dr Michael Kerkloh, CEO of Munich Airport, who also happened to be speaking on what was his last day as president of ACI Europe, commented: "Europe's airports have been leading climate action with annual reductions announced every year for the past decade. Forty-three of them have actually become carbon neutral, supported by the global industry standard Airport Carbon Accreditation. However, today's commitment brings a new dimension to this--no offsets. Crucially, with its NetZero2050 commitment, the airport industry is aligning itself with the Paris Agreement and the ambitions of the vast majority of EU countries."

He added: "Europe's airports have already started delivering and I am confident that many will reach net zero before 2050. There are already three net zero airports in Europe--Lulea, Ronneby and Visby--operated by the Swedish airport operator, Swedavia. Swedavia aims to achieve net zero emissions for all its airports including Stockholm Arlanda by 2020, along with Hamburg airport by 2022-while Amsterdam-Schiphol, Eindhoven and Copenhagen airports have set this goal for 2030."

Patricia Espinosa, executive secretary, UN Climate Change, said: "The IPCC Special Report from last October is unequivocal about the need to achieve net zero emissions by mid-century. We need all sectors of society working towards this ultimate goal. It is therefore encouraging to see the airport industry voluntarily raising its ambitions and we look forward to working with this vital sector."

Hole models

In 2017, ACI Europe committed to having 100 carbon neutral airports by 2030. While the NetZero2050 move builds on this, it raises the stakes for airport operators as they will no longer have the option to purchase offset credits to reach net zero status. A press release issued during the event said that ACI Europe regarded offsetting as a temporary measure that allowed airports to address residual emissions.

They will now be required to gradually replace offsetting with on-site carbon reductions as new 'greener' technologies and practices become available.

The airports council's view is that as society increasingly demands more inclusive business models and corporate culture, the concept of sustainability has gone beyond a purely environmental focus to include wider social and economic aspects as well.

ACI said airports are a key interface between a wide range of aviation and non-aviation stakeholders--providing essential services to their communities--but they are also the ambassadors of aviation on the ground, and often on the frontline when dealing with aviation's critics. ACI said this gives airports the opportunity to be role models and encourage transformational change beyond their own remits.

Its director general, Olivier Jankovec, explained: "Times have changed. Economic disruption, rising inequality, depleted resources, new societal values and political dynamics mean that airport operators are facing a new imperative --putting their societal purpose at the heart of their business strategy. This is about embracing a new business-to-people paradigm." He added that this comes with the need for airports to "maximise the added value they provide to society" but also highlighted their "enhanced engagement with their communities and other stakeholders."

He continued: "This strategy is about scoping what sustainability means" and he pointed out how airports can be involved, adding "...identifying pathways for progress as well as defining metrics and enablers.

In doing so, ACI Europe is providing airports with concrete guidance on how to move towards more sustainable operations. Our ambition is for this strategy to drive positive change over time--and we look forward to seeing how it is interpreted and implemented in the years to come."

He said the strategy is based on a shared vision of the sustainable airport of the future: "Every airport builds local and global partnerships to accelerate the journey towards fair, prosperous and environmentally responsible societies. It also relates to the UN Sustainable Development Goals (SDGs) and the Global Reporting Initiative. We will regularly review and update it, to ensure continued relevance and credibility."

Day two

The second day of the conference considered how investment, competition and international expansion drives the airport business.

In terms of air traffic and air connectivity developments, Europe's airports set yet another record last year by handling more than 2.34bn passengers.

Over the past five years, passenger traffic has expanded by +36%--that's an additional 630m passengers using their facilities. This year, although it is moderating, ACI believes the pace of growth remains dynamic (+4.4%), especially at EU airports (+5.1%). However, freight traffic has fallen (-3%) and continues to worsen.

Mr Jankovec commented: "There are signs that the traffic momentum is fading for Europe's airports. A synchronised slowdown in the global economy and significant geopolitical risks are combining with volatile oil prices, ATM disruptions and overcapacity to exert downward pressures on both demand and supply."

As a result, airlines are becoming more risk averse and very much focused on protecting their yields. Along with airline bankruptcies and airport capacity constraints-especially at peak times--this is also hitting air connectivity.

The new Airport Industry Connectivity Report released by ACI Europe shows that direct air connectivity in Europe is expanding by just +1.2% this year, with the intra-European market and the Europe-North America market underperforming at +0.7% and -0.8%, respectively."

Competition and investment

Among the market dynamics and business drivers reviewed by ACI Europe, airport competition clearly stands out. It noted that airport competition continues to be driven by several factors--in particular the hybridisation of airline business models. Low cost carriers (LCCs) have successfully moved into primary airports while full service carriers (FSCs) are focusing their growth on their own LCC units. ACI believes that all the gains in direct connectivity at EU airports over the past ten years have been delivered by LCCs (+137%), with FSCs now offering lower levels of direct services

(-7%) compared with 2009.

The council's view is that airline hybridization and consolidation is putting more competitive pressures on airports at a time when the European aviation market is moving towards fewer and more dominant airlines. Mr Jankovec noted: "We are still far from the concentration levels of the US airlines, but there is little doubt that this is where the European market is going to go--even if at a slower pace.

As the European Commission rightly noted last year, airports are becoming the battlegrounds for airline dominance. That also explains why we continue to see airlines opposed to airport investment in new capacity. As airline competition drives the level of air fares, these obstacles to capacity enhancements result in higher air fares for consumers and less connectivity for our communities."

International ambition

ACI figures show the top 50 European airports are currently planning to invest [euro]43.3bn over the next five years. It says that investment will go into new terminals and runways, but also on upgrades to improve operational efficiency on the ground--hopefully lowering related costs for airlines--plus security and sustainability requirements. Of course, the council hopes this investment will play a key role in supporting economic activity and jobs.

Looking ahead, one major feature of European airports' business models over the past ten years has been the growth of the international activities of the major European airports groups: Aena, Fraport, Groupe ADP, Egis, Royal Schiphol Group, VINCI Airports and Zurich Airport. These groups have extensive activities beyond the EU/EEA, investing in and managing airports in 68 locations around the world. As a result, they collectively generated [euro]3.18bn in revenues from these activities last year. Mr Jankovec commented: "The international expansion and success of our European airport groups is still not really appreciated. Yet, it speaks volumes about their entrepreneurship and know-how. It really shows the value and relevance of our European airport business model. These international activities now make up on average 20% of their total revenues, up from about 5% a decade ago. These are truly European champions that the EU should also recognise and support."

Annual Assembly

At the council's annual assembly that day, Jost Lammers, CEO of Budapest Airport since 2007, was elected to lead the organisation as president.

Addressing the membership, Mr Lammers said: "I am very honoured to accept the position and I thank the members for their trust. This comes at a timely moment--it coincides with a new European Parliament and a new European Commission in the autumn, with renewed priorities and a new work programme.

"I am confident that our association is well equipped to guide and represent us in the next five years. But there will be no easy wins. These include the escalating capacity crunch at the big European hubs, the steadily rising costs in aviation security, the implications of structural transformation within the airline industry and the need to cut emissions. These issues are at the top of the agenda and cross-border co-operation among airports will play a key role in addressing them."

Mr Lammers previously worked at Flughafen Dusseldorf Ground Handling, HOCHTIEF AirPort and Athens International Airport. He has also been a member of the supervisory board of Hamburg Airport since 2016.

During this year's general assembly, the following people were also appointed to the board of ACI Europe for a first term: Arnaud Feist, CEO, Brussels Airport; Birgit Otto, COO, Royal Schiphol Group; Eleni Kaloyirou, CEO, Hermes Airports; Jonas Abrahamsson, CEO, Swedavia; Julian Jager, CEO, Vienna Airport; Maurici Lucena, president and CEO, Aena; and Thorgeir Landevaag, CEO of Avinor's Trondheim and Stavanger airports. In the same meeting, Thomas Woldbye, CEO, Copenhagen Airports was reappointed to the board for a second term.

The event closed with the formal handover to the 2020 event hosts, Geneva Airport.
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Title Annotation:EVENTS ACI EUROPE 2019
Author:Allett, Tom
Publication:Airports International
Date:Jul 1, 2019

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