21-FEB-2023
How long does it take to inaugurate an airport and at what cost? The problem of matching capacity with demand
Aviation demand has shown to be resilient to diverse calamities that range from economic downturns to pandemics. The demand levels dropped drastically during Covid-19 pandemic to levels never seen before. However; all the agencies agree that aviation will recover the 2019 levels in a few years and then it is expected its continue growth. The following figure illustrates the expectations of Airbus, one of the main aircraft manufacturers. As they expect, the trend will continue; however, with a shift of 2 years.
Due to this demand growth, before the pandemic, there was a strong necessity for more capacity in airport networks as many suffered from congestion problems revealing a mismatch between demand and capacity. These problems are expected to continue in the short future as the demand is reaching levels pre-pandemic, and in some cases, the current demand is causing acute problems even in mega hubs that – in theory – have plenty of Capacity (https://www.iamexpat.nl/expat-info/dutch-expat-news/staff-shortages-lead-more-queues-and-chaos-schiphol-airport). Some of these problems are a consequence of the cut in capacity during pandemic like in the case of Schiphol in Amsterdam or other airports in Europe like Frankfurt or Paris.
The functions of an airport
Airports worldwide are very important as they connect the world by transporting people and goods; with the emergence of low-cost airline business models, it had become cheaper to travel creating more demand for the industry. As demand has been growing very fast over the last few years, airports were not able to cope with the demand increasing the aforementioned mismatch. Furthermore, Airports facilities have evolved by complementing their function of transporting people and goods from A to B with other activities and functions which make them more relevant:
- Transport from A to C
- Connection with other modes of transport
- Shopping centers
- Museums
- Business Offices and locations
However; their main function is still the transportation of people and goods. We use them for traveling from A to B (point to point) and sometimes from A to C via B (hub).
For the previous reasons and its importance in the economic ecosystem, governments and airport operators are finding ways of absorbing the growing demand trying to take the opportunity of re-positioning themselves on the international scene after the pandemic. To cope with the demand, to date, there are only 3 options:
- expand the facilities
- optimize the current capacity
- find a different management paradigm
The most applied solution has been always expanding or creating new infrastructures as it is easier just to increase the capacity whenever possible instead of solving a root problem. The remaining text focuses on the first approach.
The uncertainty associated with expansion
Despite the relatively easy solution that means spending money to increase infrastructures and capacity; fiscal planning, unexpected problems, and sometimes even political situations make it problematic to provide the solution in a timely manner.
To exemplify the problems and risks associated with the development of new airport facilities, I present some relevant efforts on this matter, while most of them are expansions others are completely new airport constructions.
Istambul airport (IST).
The work consisted in building a mega-hub in phases that eventually would have a capacity of 200 million passengers/yr. The first phase of the project started in May 2015 and it was officially opened in Oct 2018. It took 42 months to be constructed (3.5 years) setting a record at the time. It is located 45 km from the city center and it takes approx. 50 min to get by private transport. Its estimated cost is 12 B USD and the government needed to retire the old Ataturk Airport to force the airlines to move to the new one.
Schiphol new terminal (AMS) (Pier A)
The airport of Amsterdam (Schiphol) is one of the 5 biggest airports in Europe and the demand has been growing constantly before the pandemic when it reached 72 million passengers in 2019. Due to the expected demand- before pandemic-, the expansion of Pier A started in 2019, it consisted of 55,000 m2 (https://nieuws.schiphol.nl/ballast-nedam-en-tav-construction-bouwen-nieuwe-pier-schiphol/?). It was expected to be finished in 2020 and then in 2021 due to the pandemic (https://www.schiphol.nl/en/projects/page/project-new-pier/ ). However, the project could not be finished leaving the facility halfway; the latest news is that it will be demolished as the demand is still uncertain. It is located 15 km from the city center and it takes approx. 28 min to reach it using a private car.
Munich Terminal 2 Satellite Terminal
The project comprised the building of 125,000 m2 of a new satellite terminal, the associated cost of the project was 1 billion USD and it took almost 4 years to be ready. It started in 2012 and it was ready in April 2016; it took 4 years to be ready and operational, expanding the capacity of the airport (https://www.munich-airport.com/munich-airport-s-midfield-terminal-marks-birthday-1755245). No runways were involved in the project. It is located at approx. 30 km from the city center and it takes approx. 30 min to go from the Aiport to the city center in a private car.
Beijing Daxing Airport
This airport was developed from scratch, it was officially announced in January 2013 and opened to operations in September 2019. It comprised a facility of 2679 ha. with a terminal building of 700,000 m2; It was considered a great achievement by the Chinese government to have it finished and fully operational in more than 4 years. It is expected to handle 72 mill pax in 2025. It is located 46 km south of Beijing. It consisted of a central building with 6 arms. Measuring 1.3 km in diameter, it has 79 gates with air bridges. It is located at approx. 50 km from the city center taking 1hr to travel from the city center to the airport by private transport. Its estimated cost was 63 B USD
Berlin Airport
A special mention deserves the pride of German infrastructure. The construction started in 2006 with a planned opening in 2011 and it was finally opened to the public in October 2020, 14 yrs after the start of construction. As it opened with such delay, some of its infrastructures were obsolete when they opened to the public. It is located approx. 20 km from the city center and it takes approx. 45 mins to get to the city center using private transport. the construction cost was approx 8.2 B USD.
AIFA new airport in Mexico City.
This airport was built also from scratch, It was opened on March 21st 2022 in a record of 2.5 yrs only, comprising 2 commercial runways and 1 military runway, a terminal building, and also other facilities including a museum and shopping center. It is located approx. 37 km from the city center and it takes approximately 50 mins to get there by using private transport. The estimated cost was 74,000 Mill Pesos (approx 3.7 Bill USD); it was built after the cancellation of a previous one (NAIM) the cost of cancellation was approx 5 bill USD.
What other options are there?
As can be seen from the examples presented there is no certainty with regards to the time to build or expand infrastructures; on the contrary, there is high uncertainty as with any infrastructure (megaprojects and risk). It could be an exceptionally fast time for construction cases like AIFA in Mexico or Istambul in Turkey but most likely it could take some years and even a decade to complete one as in the case of Berlin Airport.
When there are capacity shortages in airports, there are other options like the optimization of facilities with the use of the proper tools, and the change of new management paradigms. Together with my colleagues from IGAMT and the scientific community, we have advocated for the use of optimization and simulation-based risk analysis to minimize the risk of failure when trying to match demand and capacity (REF). For the time being, infrastructure operators can still breathe as the effect of covid is not over yet, but after a couple of years, the matching of demand with capacity will become an issue again.