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Bright Lights, Big City

Special Report - Airport CitiesAirport cities have the potential to deliver value to all aviation stakeholders

Good transport links are invariably the genesis of development. When the railroad first arrived in the small mining town of Denver in 1870, it is estimated it brought in 100 new residents on the first day. The first month alone saw more than 1,000 visitors and 13 million pounds of freight arrive. The railroad’s catalytic effect continued unabated. Denver’s population grew from around 5,000 in 1870 to nearly 100,000 in 1890. Manufacturing output went from $600,000 to $40 million in the same period.

What happened in Denver was by no means revolutionary. Before the railroad, waterways were the crucial driver in the formation of cities. Now, in the same way, people and businesses gather around airports. 

Modern gateways are facilitating the trend through the airport city concept. It is not only the shopping malls within terminals but also the myriad businesses that congregate in airport environs, keen to exploit its convenient connectivity.

Airport cities are growing in popularity. Some, such as Seoul Incheon and Amsterdam Schiphol, are already well advanced in the concept.

There is no problem with the idea of an airport city but the execution must be carefully planned. “The desire to develop a city cannot be prioritized over the need to develop an efficient gateway,” says Colin Spear, IATA Assistant Director, Airport Development. “Airports are built specifically for aviation purposes and priority must be given to airline activity and passenger facilitation.”

The argument gains strength in the current financial climate. According to The Economist, some $1 trillion in airport investment is needed over the next 20 years. But the money, for political and economic reasons, has become increasingly difficult to find. In Europe in the next 20 years, twice as many passengers are expected to squeeze through just 41% more capacity.

Nevertheless, some aspects of the city concept clearly hold benefits. Most, for example, include a multi-modal transport hub. Aviation is brought together with various forms of surface transport, connecting the airport not only to the downtown area but also to the wider region. It’s a boost to connectivity and attractive to passengers and businesses alike.

Then there are free trade centers, granted because of their location at an international gateway. This enables the airport to offer more cost-effective services than are available at urban or regional centers. It is a boost for cargo just as the gathering of companies drives passenger numbers.

A key question is how any revenue generated by an airport’s non-aeronautical services is distributed. IATA strongly supports the single till mechanism where an agreed portion of development revenue goes straight to the airport’s bottom line and directly offsets the cost to airlines of doing business at the airport. Development must acknowledge the assistance of the airlines rather than depend upon it.

“Together, airlines and airports are in the business of providing global connectivity,” says Tony Tyler, IATA Director General and CEO. “Airlines have no business without airports. And an airport without airlines would be a slightly inconveniently located shopping mall with a lot of wasted concrete. We need each other.”

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