Regional Airports: The time for change has come…

It’s been nearly 20 years since the federal government distributed airports to local councils and local bodies to own and operate. In that time, the demand on regional airports has radically changed.

Just earlier this month Bundaberg Council released figures for 2013 showing a 17.4% increase in passenger numbers compared to 2012. The airport provides a gateway for tourism as well as providing hundreds of jobs and commercial opportunities for local residents.

So what’s the problem? Well, airports are ageing and starting to decay in some areas. If they are going to match demand for both services and tourism, some serious transformation is needed to turn airports into cash flow positive enterprises.

Airports are currently feeling the pressure from demands, operations, new regulations, safety, security and even changing aircraft types.

This has left many operators in search for knowledge, looking to uncover the real challenges facing the future operation of airports. It’s time start planning for the long term.

To gain some insight, I recently caught up with Bill Burke, CEO of Mildura Airports and  frequent sounding board for CEOs needing advice; he expressed the urgency for long term transformation planning:

Plan for the long term

“People often see airports as long-term assets that need little or no maintenance. All of a sudden, the day arrives when runways start to deteriorate and assets that had been considered indestructible suddenly start to fall apart. It then takes a lot of capital to fix them.

“It’s difficult to give specific time scales on when improvements are needed within the airport lifecycle. Just consider that every asset has a design life and once that benchmark is passed, the chances are some capital is going to be required for the repairs.”

Bill emphasised how it’s not just the runway that needs to be considered, terminals also decay and technology provides both new opportunities and new challenges:

“It’s about really understanding the needs of your airport as a whole and considering the wider vision beyond individual repairs and developments. Here at Mildura, we’ve recently completed the development of a new terminal building. When we presented it to the community, we received criticism over the size and direction the airport was taking. When we communicated the long term vision for the airport, exploring the logic of the layout, potential for expansion and how it fits the circulation of expected people, we managed to win the community round.”

“The terminal will allow the airport to operate for the next ten years, without any problems. Looking beyond that, I also built expansion opportunities into the plan, allowing the airport to evolve into the next phase. It will build on the facility that’s already here and be fairly simple and cost effective. The terminal will be able to double in size to accommodate growth.”

Be prepared to look for capital:

“Even with your long term plans in place, airports require large levels of capital to be sourced to adequately develop into an ‘airport of the future’. We can’t hide from that. I’m in the position currently where I need $20 million for a runway upgrade, without that capital the runway won’t be able to operate and provide the same level of service as it has before.”

Bill warns that too many people are just riding out the lifecycle and could land themselves in hot water:

“Too many airports – and I’ve seen too much of it in my career – have done little in the way of planning, they’ve never really looked far enough forward to think of where they might be right outside the square.”

Strive to achieve your potential

It’s not just asset management that will take regional airports to the next level, more has to be done to maximise existing revenue streams that could help secure larger capital and keep the day to day operations cash flow positive:

“Too few airports look at their operation in the bigger picture and put down a footprint and work to a blueprint that is expandable and can be developed in almost any direction to satisfy almost any requirement.”

“Regional airports need to look at everything they can. For some airports, there is opportunity for utilisation of the land resources – for industrial, commercial, maybe even sometimes retail activities”

“They need to also look at other commercial activities in terms of the facilities they have; in some cases they could lend themselves to aviation infrastructure uses.”

“You’ve got to identify what potential there is and what the market might be. There’s no point making a lot of noise and knocking on a lot of doors if you can’t deliver a product. I think every year an airport just has to evaluate its own potential.”

“Look at location and what’s happening in the wider community, try and work out where the airport fits in and where there’s potential to tap resources, do something bigger and better.”

“Airports that thrive in the future will be willing to embrace change, think long term and embrace knowledge.”

Bill will be joined by some of Australia’s leading airports during the 2014 Regional Airport Development Conference. The agenda has been designed to assist you on your journey of building and commercialising the airport of the future.

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