1. EUROPEAN AIRPORTS AT A CROSSROADS
Olivier Jankovec, Director General
The European Aviation Club
Brussels, 29 April 2010

2. OVERVIEW ACI EUROPE SETTING THE SCENE
The Global Crisis & The Volcanic Ash Crisis
EVOLVING BUSINESS MODELS
KEY CHALLENGES

3. THE VOICE OF EUROPE’S AIRPORTS

4. 2009 PASSENGER TRAFFIC: -5.9%

5. 2009 FREIGHT TRAFFIC: -13.1%

6. UNPRECEDENTED IMPACT 100 MILLION PAX LOST = DOUBLE WHAMMY
Declining aeronautical revenues
Declining commercial revenues
INCREASING CAPITAL COSTS
Access to capital markets difficult/costly
Credit rating downgrades (2009)
Credit rating negative outlooks (2010)
DETERIORATION IN FINANCIAL PERFORMANCE
EBIT: decrease by up to -97% (top 25 European airports)
INCREASING AIRLINE PRESSURE (charges)

7. BUT LIMITATIONS IN BUSINESS MODEL
TIGHTENING THE BELT
COST CUTTING
STAFF reductions
Schiphol -25%, Dublin -20%, Manchester -5%, Milan -30%
OPEX reductions
CAPEX: -€2.8 billion (2009)
BUT LIMITATIONS IN BUSINESS MODEL
MOST CAPITAL INVESTMENTS CONFIRMED
€50 billion by 2013
Long lead times in airport development
Ready for the rebound = air traffic to double by 2030

8. CHARGES = RESPONSIVE
2009
2010

9. DIFFERENTIATED IMPACT
MOST SEVERELY AFFECTED MARKETS
Spain, UK, Poland, Baltic countries…
MAJOR HUBS: RESILIENCE -4.7%
Transfer traffic
Diversified portfolio of airline customers
SECONDARY HUBS: MORE AFFECTED -6.1%
Weakness of dominant carrier
(SAS, Aer Lingus, Austrian Airlines, Alitalia, LOT…)
REGIONALS: MANY LOSERS, SOME WINNERS -5.4%
Down up to -60% at some airports
Dependence on a single carrier
Growth at some locations to the detriment of others

10. VOLCANIC ASH CRISIS OVERVIEW Up to 80% of airspace closed
+100,000 flights cancelled
+10 mil pax unable to travel
AIRPORTS +16 mil pax lost
+€250m lost revenue
€10m assistance cost
Most Fixed/variable cost unchanged
AIRLINES +€1.3 bil lost revenues
€200m assistance costs (AEA)
Fuel costs savings

11. VOLCANIC ASH CRISIS - 18 April

12. VOLCANIC ASH CRISIS - 20 April

13. SLOW & GRADUAL RECOVERY
2010: PROTRACTED GROWTH
JAN: +3.9% for pax % for freight
FEB: +4% for pax… +19.8% for freight
GDP EURO AREA: +0.7%
Uncertainty…
AIRLINES: YIELD RECOVERY v. CAPACITY GROWTH
Network carrier capacity: +2%?
Low-Cost capacity: +11% (vs. +18% in 06/07)?
CONTINUED EXPOSURE TO FUEL PRICES
50% of fuel requirements hedged
Further rise in H2?

14. AIRPORT-AIRLINE RELATIONSHIP
NEW MARKET STRUCTURE
INCREASED DOMINANCE OF LOW-COST MODELS
Growing market share: +50% in 2013!
Increasing relevance to business travelers
Challenge to Hub&Spoke model
More pressure on charges expected
AIRLINE CONSOLIDATION
DOMINANT PARTY IN
AIRPORT-AIRLINE RELATIONSHIP

15. BUSINESS TRANSFORMATION
Times Past
Mere infrastructure provider
Securing needs of a flag carrier
Exclusive public ownership
Dependent upon public financing
Today
Fully fledged businesses with
diversified activities
Serving a wide range of customers with different needs
Corporatisation = a “MUST”
Privatisation
Self-financing

16. KEY STRATEGIC DIRECTIONS (I)
DIFFERENTIATE FACILITIES & SERVICES
LCCs /Network airlines (alliances)
Mainline & LC facilities
Marseille, Amsterdam, Bordeaux, Copenhagen, Malpensa, Brussels
REDUCE DOMINANT AIRLINE DEPENDENCE
Legacy carrier or LCC
COMPETITIVE AIRPORT CHARGES = A “MUST”
3.5% of airline costs (ICAO)
Airline-related charges: 22% of total airport revenues
ATC charges MUST follow the same example! 16

17. KEY STRATEGIC DIRECTIONS (II)
DEVELOP NEW REVENUE STREAMS
Commercial Developments
47% of total airport revenues
New management models
… NEW THREATS
WHO ban on Tobacco/Alcohol duty free sales
Restrictive cabin bag rules
Security
GROW INTERNATIONALLY
Fraport, Aéroports de Paris, Schiphol, Zurich, AENA, TAV…
AIRPORT ALLIANCES
Aéroports de Paris & Schiphol Group
SEA Milano & Aeroporti di Roma

18. NEW & DIVERSIFIED BUSINESS MODELS

19. ENVIRONMENT & CLIMATE CHANGE
KEY CHALLENGES
ENVIRONMENT & CLIMATE CHANGE
CAPACITY & FINANCING
SECURITY
CONNECTIVITY

20. AIRPORT CAPACITY CHALLENGE
THE CRUNCH – air traffic will double by 2030
41% capacity increase = 5 new airports & 79 new runways
… BUT 11% of demand still not accommodated!
Unprecedented congestion!
Far reaching impact: SES, environment, competitiveness
FINANCING ISSUE
From airline-centric to passenger-focused regulation
= Incentivise airports to finance development
EU funding (SESAR, environment, co-modality)
POLITICAL ISSUE
EU priority & national support (alignment with SES…)
Increasing environmental pressure
License to operate & grow at risk!

21. ENVIRONMENTAL CHALLENGE
REGULATORS & INDUSTRY TAKING ACTION…
ETS = ICAO leadership needed for global system!
SES + Clean Sky funding
Airlines committed
(IATA AGM, June 2009)
Airport Carbon Accreditation
(ACI EUROPE GA, June 2009)
…BUT CLEARER POLICY DIRECTION NEEDED
1. RECONCILE growth & environmental objectives
2. PRIORITISE environmental objectives
3. ADDRESS energy supply issues… prioritise! 21

22. CONNECTIVITY CHALLENGE (I)
AVIATION = REAL WORLDWIDE WEB
Improved air transport links key to economic benefits
BUT outdated & unfit regulatory framework
BENEFITS OF TOTAL LIBERALISATION
Intra-EU liberalisation
+ 170% increase in air routes!
1000 new city pairs ( )!
MOVING FORWARD… QUICKLY!
Pan-Mediterranean & European Aviation Area
58 countries & 1 billion consumers
BRICs (Brazil, India, China)

23. CONNECTIVITY CHALLENGE (II)

24. THE SECURITY CHALLENGE
9/11, LAGs, UNDERPANTS BOMBERS…
Costs: 35% of airport operating costs; 41% of airport staff
New technology: + €1bn LAGs + €1bn Security Scanners…
ONE-STOP SECURITY
EU & Pan-European… including public financing!
Globally
« THE AIRPORT OF THE FUTURE » by 2020
Seamless & Integrated Processes
New philosophy
Deterrence over Detection, Probable over Possible
Automated Screening & Border control
Body scanners
Biometric standards

25. LOOKING AHEAD VOLCANO AFTERMATH EC AVIATION PLATFORM
EC proposals = European Aviation Relief Plan
EU Transport Council 4 May
EC AVIATION PLATFORM
New Governance system within the EC
Towards a real Industrial Policy for Aviation?
EC WHITE PAPER – Future of Transport
MOBILITY = making a comeback?
No valid substitute to aviation